The Annual Audit Letter for Wye Valley NHS Trust

Transcription

1 The Annual Audit Letter for Wye Valley NHS Trust Year ended 31 March July 2016 Grant Patterson Engagement Lead T E Grant.B.Patterson@uk.gt.com Suzanne Joberns Audit Manager T E Suzanne.Joberns@uk.gt.com Jonathan Meek In Charge Auditor T E Jonathan.J.Meek@uk.gt.com 2016 Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June 2016

2 Contents Section Page 1. Executive summary 3 2. Audit of the accounts 5 3. Value for Money conclusion 9 4. Quality Accounts Working with the Trust Grant Thornton in Health 14 Appendix Reports issued and fees Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

3 Executive summary Purpose of this letter Our work Our Annual Audit Letter (Letter) summarises the key findings arising from the work that we have carried out at Wye Valley NHS Trust (the Trust) for the year ended 31 March This Letter is intended to provide a commentary on the results of our work to the Trust and its external stakeholders, and to highlight issues that we wish to draw to the attention of the public. In preparing this letter, we have followed the National Audit Office (NAO)'s Code of Audit Practice and Auditor Guidance Note (AGN) 07 'Auditor Reporting'. We reported the detailed findings from our audit work to the Trust's Audit Committee, as those charged with governance in our Audit Findings Report on 25 May 2016 and to the Trust Board on 26 May Our responsibilities We have carried out our audit in accordance with the NAO's Code of Audit Practice, which reflects the requirements of the Local Audit and Accountability Act 2014 (the Act). Our key responsibilities are to: give an opinion on the Trust's financial statements (section two), and assess the Trust's arrangements for securing economy, efficiency and effectiveness in its use of resources (the value for money conclusion) (section three). In our audit of the Trust's financial statements, we comply with International Standards on Auditing (UK and Ireland) (ISAs) and other guidance issued by the NAO. Financial statements opinion IAS 1 requires management to assess, as part of the accounts preparation process, the Trust's ability to continue as a going concern. Management concluded that there are material uncertainties related to the financial sustainability (profitability and liquidity) of the Trust which may cast significant doubt about the ability of the Trust to continue as a going concern. We requested additional disclosures in the financial statements to reflect this which have been made. We gave an unqualified opinion on the Trust's financial statements on 27 May 2016 which included an emphasis of matter paragraph, drawing the note on going concern to the attention of readers of the financial statements. Value for money conclusion We concluded that because of the significance of the matters we identified in respect of financial sustainability and the quality of patient care, as highlighted by the CQC rating of inadequate, we are not satisfied that the Trust has been able to demonstrate it has proper arrangements to secure economy, efficiency and effectiveness in its use of resources. We therefore gave a qualified 'adverse' conclusion on 27 May Quality Accounts We completed our limited assurance audit processes and gave un an unqualified conclusion on your Quality Account on 29 June We believe there are opportunities to make their production and audit more efficient and effective and have therefore recommended that the Trust improves its process for producing and agreeing its Quality Account in Consolidation template We also reported on the consistency of the consolidation schedules submitted to the Department of Health with the audited financial statements. We concluded that these were consistent Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

4 Use of statutory powers We did not identify any matters which required us to exercise our additional statutory powers. Certificate We certify that we have completed the audit of the accounts of Wye Valley NHS Trust in accordance with the requirements of the Code of Audit Practice. Working with the Trust During the year we have worked with you and delivered a number of successful outcomes: An efficient audit we continued to work with you to strengthen the Trust's arrangements during 2015/16. Through this and adapting our audit approach we completed the audit 10 working days earlier than 2014/15 and 7 days before the statutory deadline. This is a significant achievement and helps release your finance team for other work. Improved financial processes during the year we updated our assessment of your financial systems and processes and followed up our previous detailed work on your IT controls. You resolved the issue around the use of one-sided journals through an upgrade to your general ledger and this will remove this risk for 2016/17. Improving your annual reporting we provided guidance, training and benchmarking to help you to comply with the new reporting requirements for your Annual Report and to report effectively to your stakeholders. Sharing our insight we provided regular Audit Committee updates covering best practice. We also shared our thought leadership reports. Providing training your finance team attend our training sessions aimed at the preparers of the accounts, we shared all the relevant information to assist you. Providing information we shared the information from our data analytics team highlighting health conditions and lifestyle needs in your area. Understanding your operational health through the value for money conclusion we seek to provide you with assurance on your operational effectiveness. The challenges that the Trust is experiencing in terms of meeting its constitutional targets, its financial position and being in CQC special measures has meant we are not in a position to currently be able to do this. We will continue to work with the Trust and provide insight into those areas where we believe we can add most value such as best practice in governance, strategy development and the challenge presented by the Trust's cost improvement target of 5.4 million, particularly the need for the CIP programme to be developed and implemented as early as possible in order to ensure improvement on the 70% that was delivered in 2015/16. We also noted how important it was that the larger scale transformational measures identified in conjunction with the 'Five Year Sustainability and Transformation Plan', the Strategic Healthcare Alliance and 'One Herefordshire' are progressed at sufficient pace. We would like to record our appreciation for the assistance and co-operation provided to us during our audit by the Trust's staff. Grant Thornton UK LLP July Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

5 Audit of the accounts Our audit approach Materiality In our audit of the Trust's financial statements, we use the concept of materiality to determine the nature, timing and extent of our work, and in evaluating the results of our work. We define materiality as the size of the misstatement in the financial statements that would lead a reasonably knowledgeable person to change or influence their economic decisions. We determined materiality for our audit of the Trust's accounts to be 3,364,000 which is 1.8% of the Trust's gross revenue expenditure. We used this benchmark as in our view, users of the Trust's financial statements are most interested in where the Trust has spent the income it made in the year. We also set a lower level of specific materiality, at 50,000, for auditor remuneration and disclosures of senior manager salaries and allowances in the remuneration report. For cash and cash equivalents we applied our triviality level for materiality. The scope of our audit Our audit involves obtaining enough evidence about the amounts and disclosures in the financial statements to give reasonable assurance that they are free from material misstatement, whether caused by fraud or error. This includes assessing whether: the Trust's accounting policies are appropriate, have been consistently applied and adequately disclosed; significant accounting estimates made by management are reasonable; and the overall presentation of the financial statements gives a true and fair view. We also read the Annual Report to check it is consistent with our understanding of the Trust and with the accounts on which we give our opinion. We carry out our audit in line with ISAs (UK and Ireland) and the NAO Code of Audit Practice. We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit approach was based on a thorough understanding of the Trust's business and is risk based. We identified key risks and set out overleaf the work we performed in response to these risks and the results of this work Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

6 Audit of the accounts These are the risks which had the greatest impact on our overall strategy and where we focused more of our work. Risks identified in our audit plan Healthcare Income 89% of the Trust's income is from Healthcare revenues including income from healthcare commissioners. Under ISA 240 there is a presumed risk that revenue may be misstated due to improper revenue recognition. We, therefore, identified the valuation of healthcare income as a significant risk requiring special audit consideration. Non-healthcare income 11% of the Trust's income is from non- healthcare sources such as pharmacy sales and research and development income. Under ISA 240 there is a presumed risk that revenue may be misstated due to improper revenue recognition. We, therefore, identified the occurrence of non-healthcare income as a significant risk requiring special audit consideration. How we responded to the risk Our audit work included: evaluating the Trust's accounting policy for revenue recognition of healthcare income for appropriateness and consistency with the prior year; gaining an understanding of the Trust's system for accounting for health care income and the associated controls; using an analysis provided by the Department of Health to identify any significant differences in income balances with contracting NHS bodies; agreeing, on a sample basis, amounts recognised in income in the financial statements to signed contracts; agreeing, on a sample basis, accrued income and additional income to contract variations and non-contractual income adjustments to supporting documentation; and agreeing, on a sample basis, other revenue transactions to supporting documentation. The Trust's accounting policy on income recognition is shown in note 1.4 to the financial statements and related disclosures are included in notes 3-4. Our audit work did not identify any issues in respect of healthcare income. However, we did identify that contracts with Welsh health bodies for 2015/16 were unsigned as at 31 March These have now been agreed. We recognise that the Trust has little influence in respect of the Welsh health processes but that Welsh health bodies have agreed to ensure contract discussions for 2016/17 are concluded by November This creates risks for the certainty of the Trust's income which it needs to manage. Our audit work included: evaluating the Trust's accounting policy for revenue recognition of non-healthcare income for appropriateness and consistency with the prior year; gaining an understanding of the Trust's system for accounting for non-healthcare income and the associated controls; agreeing, on a sample basis, amounts recognised in income in the financial statements to invoices and other supporting documentation; and agreeing the Trust's accounting policy on income recognition, as shown in note 1.4 to the financial statements is consistent with accounting standards and related disclosures included in note 5 are appropriate and fairly stated. Our audit work did not identify any issues in respect of non healthcare income Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

7 Audit findings Audit of the accounts Risks identified in our audit plan Going Concern The Trust is in receipt of Financial Support as at 31 March 2016 and received a working capital loan. The Trust incurred a sizeable financial deficit in delivering its services in 2015/16 and management anticipate that it may take some time before the Trust can achieve financial balance on a sustainable basis. We therefore identified going concern as a significant risk requiring special audit consideration. Upgrade to the general ledger During 2015/16 the Trust upgraded its general ledger which involved transferring data from one ledger system to another. We therefore identified the upgrade to the general ledger as a significant risk requiring special audit consideration. How we responded to the risk Our audit work included: reviewing and concluding on whether management's information and procedures for assessing going concern were adequate for a period of twelve months from the planned date of approval of the financial statements; and reviewing the adequacy of the Trust's disclosures within its financial statements in relation to material uncertainties and their impact on our audit opinion. The Trust Board carefully considered the principle of Going Concern and the Directors concluded that there were material uncertainties related to the financial sustainability (profitability and liquidity) of the Trust which may cast significant doubt about the ability of the Trust to continue as a going concern. We therefore included an emphasis of matter with the financial statements opinion Our audit work included: gaining an understanding of the Trusts general IT controls over the ledger ; and reviewing the transfer of data between the ledger systems to gain assurance on the completion of the data transfer. Our audit work has not identified any issues in respect of the upgrade to the general ledger. Our audit work has not identified any issues in respect of the upgrade to the general ledger. Use of One Sided Journals During our work on the control environment for journals we identified that the general ledger has been out of balance every month (to date) due to an error in purchase ledger feed. To correct this the finance team have posted one-sided journals. These are highly unusual transactions. Employee remuneration and operating expenditure Employee remuneration accruals understated (Remuneration expenses not correct) Creditors understated or not recorded in the correct period (Operating expenses understated) Our audit work included: Review of the response of the ledger provide to correct the error Testing the single sided journal entries Ensuring the ledger was 'in balance' following the journals. No issues were noted with the testing of these journals and the ledger was in balance on a monthly basis (and at year end) following these journal entries. The Trust have confirmed that issue has been resolved as part of the upgrade and no single sided journals will be necessary in 2016/17. Our audit work included, but was not restricted to: gaining an understanding of the systems used to recognise salaries and wages and the associated controls other tests, including monthly trend analysis and review of the payroll control account reconciliations, to provide sufficient assurance that employee costs were not materially understated gaining an understanding of the systems used to recognise non-pay expenditure and year-end accruals, and the associated controls; testing, on a sample basis, post year-end payments to confirm the completeness of accruals. Our audit work did not identified any issues in respect of the completeness of employee remuneration or operating expenditure Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

8 Audit of the accounts Audit opinion The draft financial statements for the year ended 31 March 2016 recorded a retained deficit of 20.5 million. We did not identify any adjustments or unadjusted misstatement affecting the Trust's retained deficit position. However, we recommended a number of adjustments to improve the presentation of the financial statements. In previous years we have commented on the qualitative aspects of the Trust's financial statement production, in particular the number of disclosure errors and delays in and the quality of working papers. Revised arrangements were put in place by the Director of Finance and Information for 2015/16 to improve the quality of the financial statements and supporting working papers. These arrangements have significantly improved the quality of the accounts presented for audit and the timeliness of working papers. Annual Governance Statement and Annual Report We are also required to review the Trust's Annual Governance Statement and Annual Report. The Trust provided these on a timely basis and we liaised with management to highlight some areas for improvement. The Trust were then able to make these changes before the final documents were recommended for approval by the Trust Board by the Audit Committee. Whole of Government Accounts (WGA) We submitted information to the NAO in respect of Whole of Government Accounts. No detailed work was required to be carried out but we provided a copy of the forms that underpin the accounts and our audit findings report as required. We reported the key issues from our audit to the Trust's Audit Committee on 25 May 2016 and to the Trust Board on 26 May. As already stated whilst we gave an unqualified opinion on the Trust's financial statements on 27 May 2016, it included an emphasis of matter paragraph, drawing the note on going concern to the attention of readers of the financial statements Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

9 Value for Money conclusion Background We carried out our review in accordance with the NAO Code of Audit Practice, following the guidance issued by the NAO in November 2015 which specified the criterion for auditors to evaluate as "In all significant respects, the audited body takes properly informed decisions and deploys resources to achieve planned and sustainable outcomes for taxpayers and local people." Key findings Our first step in carrying out our work was to perform a risk assessment and identify the key risks where we concentrated our work. The key risks we identified and the work we performed are set out in the tables below. Overall VfM conclusion We concluded that because of the significance of the matters we identified in respect of financial sustainability and the quality of patient care, as highlighted by the CQC rating of inadequate, we are not satisfied that the Trust has made proper arrangements to secure economy, efficiency and effectiveness in its use of resources. We therefore gave a qualified 'adverse' conclusion. Risk identified Work carried out Findings and conclusions Financial outturn The Trust is forecasting that it will incur a deficit in 2015/16 of 19.9million. This will be challenging to achieve. Financial sustainability The Trust has identified a significant savings gap in its projections for 2016/17 onwards that it needs to address in its medium term financial plan We reviewed the Trust's arrangements for updating, agreeing and monitoring its financial and operational plans, and for communicating key findings to the Board through meetings with key officers and review of documents and reports. We reviewed the Trust's arrangements for putting together and agreeing its budget, including identification of savings plans; and its arrangements for monitoring and managing delivery of its budget and savings plans for 2016/17, including the impact on service delivery, through meetings with key officers and review of documents and reports. The original budget was set at an 18.4m deficit. By month 7 the Trust were forecasting a 19.9m deficit due to increased Agency and Locum spend. The Trust controlled expenditure it was directly responsible for to achieve this position at year end. However, this final position was adjusted for the application of fines of 3.5m (increasing the deficit), and for a capital to revenue transfer of 2.9m (reducing the deficit), taking the final outturn to 20.5m. The Trust had a target of 5.6m of Cost Improvement Programme (CIP) Savings and achieved 3.8m, 70% of the original target. Whilst the level of deterioration is not as great as that experienced by some other Trusts nationally in 2015/16, and there was clear reporting of the financial position throughout the year, we concluded that the deterioration and growing scale of the deficit meant there were weaknesses in the Trust's arrangements for planning finances to support its strategic priorities. At the 31 March 2016 the Trust did not have an up-to-date 3-5 year sustainable medium term financial strategy. For 2016/17 the Trust has set a deficit budget of 31.5m with a CIP programme of 5.4m. This is a significant deterioration in the financial stability of the Trust. The primary reasons for this are the Trust's current configuration and the additional costs arising from the increased staffing levels to improve the quality of patient care. The Trust also only succeeded in delivering 70% of its CIP programme in 2015/16. A similar performance in 2016/17 will make achieving the budgeted out-turn a challenge. The issue is evidence of weaknesses in the Trust's arrangements for planning finances to support its strategic priorities Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

10 Value for Money conclusion Risk identified Work carried out Findings and conclusions Strategic Healthcare Alliance The Trust is in the process of developing a strategic health care partnership for Herefordshire between Wye Valley NHS Trust and 2gether NHS Foundation Trust. We reviewed the progress the Trust has made in developing the partnership through meetings with key officers and review of documents and reports. The Trust is working towards a strategic healthcare alliance with a number of the key partners in Herefordshire ('One Herefordshire') and regular updates are provided to the Board on the transformation programme. At the time we concluded our work in May 2016 we found that the programme was at too early a stage to formally consider the Trust's arrangements for working with other parties but that the progress being made enabled us to conclude that the risk was sufficiently mitigated. Since our work was completed the Trust has formalised strategic healthcare alliance arrangements within Herefordshire and the sustainability transformation plan for Herefordshire & Worcestershire has been submitted. We will review the progress and impact of these arrangements as a risk for consideration as part of 2016/17 Value for Money conclusion responsibilities. Care Quality Commission inspection An inspection report by the Care Quality Commission in January 2016 rated the Trust as inadequate overall, with particular areas of weakness being: - High use of bank and agency staffing to cover vacancies - Mortality rates with high Summary Hospital Mortality Indicator (SHMI) and Hospital Standardised Mortality Ratio (HSMR) - Not consistently achieving national targets We reviewed how the Trust's arrangements for implementing and monitoring delivery of the action plan agreed to address the findings of the original CQC inspection in June 2014 and the re-inspection in September 2015, through meetings with key officers and review of documents and reports. We found that the Trust has established an action plan and reports regularly on progress to the Board, which holds managers to account for delivery of the action plan. The action plan is RAG rated with clear deadlines. However, at the end of March there was concern that key milestones would not be met and there was insufficient pace and urgency attached to the completion of the necessary documents that underpinned the plan. At the time we concluded our work we noted that any inspection of services will be considering both the qualitative and operational performance of those services. Whilst recognising the Trust Board and Committees received relevant financial and performance information and that the Trust had made progress on its improvement plan, it had been unable to demonstrate there had been sufficient pace to address the issues raised by CQC during the audit year and the recruitment, development and retention of staff is a key challenge. This is consistent with the Trust's Head of Internal Audit's Opinion which concluded that the themes in the recommendations raised in its CQC follow-up work echoed the report from the CQC re-inspection and therefore it was not possible to conclude that actions were taken to reduce or eliminate the risk for the majority of the financial year under audit. Overall, our view was that the Trust has responded proactively in seeking to address the issues raised by the CQC Quality Improvement Plan but that there remained work to do in advance of the next follow up inspection by the Care Quality Commission due in July This continues to be a key priority for the Board and we understand the pace significantly quickened after the year end. However, for the period our conclusion covers we were unable to conclude that the Trust had proper arrangements in place to plan, organise and develop the workforce effectively to deliver its strategic priorities Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

11 Quality Accounts The Quality Account The Quality Account is an annual report to the public from NHS Trusts about the quality of services they deliver. It allows Trust Boards and staff to show their commitment to continuous improvement of service quality, and to explain progress to the public. Scope of work We carry out an independent assurance engagement on the Trust's Quality Account, following Department of Health (DH) guidance. We give an opinion as to whether we have found anything from our work which leads us to believe that: the Quality Account is not prepared in line with the DH criteria; the Quality Account is not consistent with other documents specified in the DH guidance; and the two indicators in the Quality Account where we carry out detailed work are not compiled in line with the DH regulations and meet expected dimensions of data quality. Key messages We confirmed that the Quality Account had been prepared in line with the requirements of the Regulations. We confirmed that the Quality Account was consistent with the sources specified in the Guidance We confirmed that the commentary on indicators in the Quality Account was consistent with the reported outcomes Our testing of two indicators included in the Quality Account found that these were materially reasonably stated in accordance with the Regulations and six dimensions of data quality Quality Account Indicator testing In line with the auditor guidance, we tested the following indicators: Percentage of patients risk-assessed for venous thromboembolism (VTE): selected from the subset of mandated indicators based on risk and agreed with the Trust. Percentage of patient safety incidents resulting in severe harm or death: selected from the subset of mandated indicators based on risk and agreed with the Trust. We reviewed the processes used to collect data for the indicators and checked that the indicators presented reconciled to the underlying data. We then tested a sample of cases to check the accuracy, completeness, timeliness, validity, relevance and reliability of the data, and whether the calculation is in accordance with the definition. No issues were note with this testing. Reflections of this years arrangements The terms of our appointment as the auditors of the Quality Account are restricted to our role in providing a limited assurance opinion. However, we recognise as your auditors we seek to work with you to add value. We would therefore like to provide the following reflections on the work we have undertaken this year: In terms of the production of the Quality Accounts it is the first year of a new team being in place. Following challenge from the NED's on the initial draft, and discussions with ourselves, the Trust agreed that the draft did not appropriately reflect the journey the Trust had been on during 2015/16, seeking to move out of special measures. A significant redraft was undertaken; Whilst the re-draft was an improvement on the original it reflected the tight timescales it was produced in. We also felt it was a missed opportunity to fully reflect the positive changes the Trust had made in its arrangements for providing quality services, prior to the CQC re-inspection in July We have therefore recommend that the Trust improves its process for producing and agreeing its Quality Account in Conclusion As a result of this we issued an unqualified conclusion on your Quality Account on 29 June Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

12 Working with the Trust Our work with you in 2015/16 We are really pleased to have worked with you over the past year. We have continued our positive and constructive relationship with the Trust. We have continued to work closely with your finance team as we have developed and delivered our audit strategy for the year. Improving your annual reporting we provided you with: benchmarking information comparing your previous Annual Report with others and key areas as identified in our NHS Governance and Financial Resilience review 2016, including: Together we have delivered some great outcomes: An efficient audit the Trust's arrangements continued to be strengthened in 2015/16. We adapted our audit approach to undertake early testing around employee remuneration, operating expenditure, PPE additions and the PFI disclosure, which enabled us to have an efficient year end visit. This has enabled the completion of the audit 10 working days earlier than 2014/15 which is a significant achievement. Improved financial processes during the year we reviewed your financial systems and processes including employee remuneration, non-pay expenditure and healthcare revenues. We followed up our previous detailed work on your IT controls and confirmed our previous findings to remain valid. You resolved the issue around the use of one-sided journals through an upgrade to your general ledger and this will remove this risk for 2016/17. Sharing our insight we provided regular Audit Committee updates including briefings on emerging issues and development. The areas we covered included The Five year Forward View, TDA quarterly reports, Better Care Fund, Manual for Accounts, NAO Code of Practice and Lessons learned from Mid Staffordshire. We also shared our thought leadership reports on Finance and Governance and Mental Health collaboration. Providing training your finance team attend our training sessions aimed at the preparers of the accounts, we shared all the relevant information to assist you. Leadership People and Culture Financial and quality governance balance Governing integration Transparency of stakeholder relationships you were invited to a workshop to take you through the new requirements for the Annual Report in 2015/16. As a result our guidance and our specific feedback on your draft Annual Report, you were able to make some improvements to meet the new requirements and to report effectively to your stakeholders. Understanding your operational health through the value for money conclusion we seek to provide you with assurance on your operational effectiveness. The challenges that the Trust is experiencing in terms of meeting its constitutional targets, its financial position and being in CQC special measures has meant we are not in a position to currently be able to do this. We will continue to work with the Trust and provide insight into those areas where we believe we can add most value such as best practice in governance, strategy development and the challenge presented by the Trust's cost improvement target of 5.4 million, particularly the need for the CIP programme to be developed and implemented as early as possible in order to ensure improvement on the 70% that was delivered in 2015/16. We also noted how important it was that the larger scale transformational measures identified in conjunction with the 'Five Year Sustainability and Transformation Plan', the Strategic Healthcare Alliance and 'One Herefordshire' are progressed at sufficient pace Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

13 Working with the Trust Working with you in 2016/17 We will continue to work with you and support you over the next financial year. Nationally we are planning the following events: Health and Social Care Integration we are working with the Manchester authorities so that we are able to share insight into how best to integrate health and social care. We will share the outcome of our work early in Thought leadership we are preparing thought leadership reports on Future of Primary Care and on NHS commercial structures. Audit updates - we will continue to provide regular Audit Committee updates covering best practice and emerging issues in the sector Providing training we will continue to provide financial accounts and annual reporting training. Improving your annual reporting we will benchmark your annual report and highlight potential areas for improvement. Providing insight we will update our Health and Well Being analysis and share our information on key health conditions and lifestyle needs in your area. Locally our focus will be on: An efficient audit continuing to deliver an efficient audit, further enhancing our audit approach. Improved financial processes we will focus our work on the key areas of pay and non pay expenditure and healthcare revenue. Understanding your operational health target our value for money conclusion work on the risk areas, such as the progress made with your CIP in conjunction with work with your partners on the Sustainability and Transformation Plan, the Strategic Healthcare Alliance and 'One Herefordshire'. Supporting development - during 2016/17 our NED Network will continue to focus on key themes for NHS organisations, giving network members an opportunity to learn and debate topics with experts and peers. Support outside of the audit we will work with you on improving the Quality Account production process and we can call upon our advisory team at any time to support you and help you to take on new opportunities Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

14 Grant Thornton in Health We are proud of our position as the largest supplier of external audit services to the NHS and the contribution we make to the challenges it faces. Here are some of our credentials showing how we deliver on this responsibility. Our client base and delivery We are the largest supplier of external audit services to the NHS We audit over 120 NHS organisations 99% of 2015/16 audit reports were issued by the national deadline Our clients scored us 8 out of 10 or higher Our connections We meet regularly with and second people to the Department of Health, CQC, NHS Improvement and NHS England We work closely with local government and blue light services We work with the Think Tanks and legal firms to develop workshops and good practice We provide thought leadership, seminars and training to support our clients and to provide solutions. In 2016 we issued reports on Mental Health Collaboration, and NHS governance and finance. We will publish reviews on the Future of Primary Care and on NHS commercial structures later this year. Our quality We fully meet the criteria for appointment as external auditors. Our audit approach complies with the NAO's Code of Audit Practice, and International Standards on Auditing. We are fully compliant with ethical standards. We have passed all external quality inspections including QAD and AQRT. Our support for the sector We are sponsors for HFMA and work with the provider faculty, mental health faculty and commissioning faculty. We regularly speak at HFMA events to share best practice and solutions. We provide auditor briefings into what is happening with department policy, sector regulation, and at other NHS organisations to help support our clients. We provide Key Issues Bulletins that summarise what is happening in the sector. We hold regular 'free to access' financial reporting and other training sessions for finance staff to ensure they have the latest technical guidance. Our technical support We are members of all of the key NAO, ICAEW, and HFMA technical forums. We have specialists leads for Public Sector Audit quality and Public Sector technical. We provide national technical guidance on emerging auditing, financial reporting and ethical areas. Local teams are supported on information technology by specialist IT auditors. We use specialist audit software to identify and assess audit risk. Our people We have over 30 engagement leads accredited by ICAEW to issue NHS audit reports. We have over 300 public sector specialists. We invest heavily in our people including technical and personal development training. We invest in the future of the public sector and employ over 80 Public Sector trainee accountants Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June 2016

15 Appendix: Reports issued and fees We confirm below our final fees charged for the audit and confirm there were no fees for the provision of non audit services. Fees Planned Actual fees 2014/15 fees Statutory audit 66,072 66,072 88,096 Charitable fund independent examination 900 TBC 1 4,988 2 Total fees 34,200 TBC 1 45,600 Fees for other services Service Fees Audit related services Assurance on your quality report 10,000 1 Our independent examination of the Trust's Charitable Fund has not yet taken place and so we are unable to confirm the final fee at this stage. 2 In 2014/15 the charitable funds were subject to a full audit as the income was above the charitable commission threshold. Reports issued Report Date issued Audit Plan 9 March 2016 Audit Committee progress report and emerging issues & developments 30 September 2015, 21 January 2016, 9 March 2016 Audit Findings Report 27 May 2016 Quality Account Limited Assurance Report 29 June 2016 Annual Audit Letter 11 July Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June

16 2016 Grant Thornton UK LLP The Annual Audit Letter for Wye Valley NHS Trust 28 June 2016