1. finance
2. accounting and auditing

NHS Board Meeting
25 March 2013 Paper 13
NHS Board Meeting
Monday 25 March 2013
Subject
Minutes of the Audit Committee
Purpose
To report to the Board
Recommendation
To receive the draft Audit Committee Minutes of
16 January 2013
1.
Background
1.1
Committees of the Board should submit approved and draft minutes to the Board.
2.
Current situation
2.1
Attached are the draft minutes of 16 January 2013.
3.
Conclusion
3.1
The Board is asked to receive the minutes.
Alistair McKie, Chair – Non-Executive Director
[Derek Lindsay, Director of Finance]
1 March 2013
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Minutes of NHS Ayrshire and Arran Audit Committee Meeting
held on Wednesday, 16th January 2013 at 14.15 hours in Meeting Room 2, Eglinton
House, Ailsa Hospital
Present
Alistair McKie (Chair), Non-Executive Board Member
William Gibson, Non-Executive Board Member
In attendance
John Burns, Chief Executive
Derek Lindsay, Director of Finance
Margo McGurk, Assistant Director of Finance
Joanne Brown, PricewaterhouseCoopers
Nikki Green, PricewaterhouseCoopers
David Jamieson, Audit Scotland
Alison McAdam, Audit Scotland
Frances Forsyth (Minutes)
1.
Apologies
Kirsty Darwent, Non-Executive Board Member
Susan Dunn, Non-Executive Board Member
The meeting was inquorate, the Chair agreed to homologate the minutes.
2.
Declaration of interests
There were none.
3.
Minutes of the previous meetings held on 14th and 29th November 2012
3.1
Margo McGurk requested a small change to the way the second sentence of
paragraph 12.2 had been worded. It was also noted that the number of general ledger
transactions involved in the data migration to the national single instance was
incorrect, this would be changed to 3.4 million. Following these amendments the
minutes were agreed as an accurate record of the meeting.
3.2
The minutes for the special meeting held on 29th November were agreed as an
accurate record of the meeting.
4.
Matters arising
4.1
4.3 – Margo McGurk explained that a ‘LearnPro’ course had been developed to help
staff using the new procurement procedures. The course was similar to one being
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used in NHS Lothian and should be available to staff by the end of the financial year.
Alistair McKie asked Margo to confirm to the Committee when the course was
available.
Action: Margo McGurk
4.2
6.2 – Joanne Brown confirmed that the Waiting Times report had met the deadline for
finalisation and submission to the Scottish Government.
4.3
8.1 – A paper on the governance of corporate risks had been included on the agenda
for the meeting.
4.4
12.1 – Derek Lindsay confirmed that the contract for Internal Audit services with
PricewaterhouseCoopers had been extended for a further year.
4.5
12.3 – A paper on the Terms of Reference for the Audit Committee had been included
on the agenda for the meeting.
5.0
Internal Audit
5.1
Status report by PricewaterhouseCoopers on the Internal Audit Programme
Joanne Brown noted that three reports had been finalised since the previous meeting
and were on the agenda and that three draft reports had been issued for management
consideration or were due to be issued shortly. She confirmed that the phasing of
reports during 2013/14 would be given careful consideration to try to ensure an even
flow of reports throughout the year. Alistair McKie expressed concern about the
backlog of reports from the 2012/13 programme which had still to be presented to the
Committee. Derek Lindsay expressed a hope that the meetings scheduled for March
and May should be able to handle the outstanding reports prior to the annual accounts
meeting in June.
5.2
Waiting Times
The Committee received the Waiting Times report which had been revised for
typographical errors and management comments since the special meeting held on
29th November 2012, the improvement plan had also been updated and was presented
to the Committee. Derek Lindsay noted that the report and improvement plan would
be on the agenda for the Board meeting on 28th January. He also drew the
Committee’s attention to a letter which had been received on 9th January 2013 from
Derek Feeley, Chief Executive NHS Scotland in which he requested that a letter of
assurance be sent by the Chair of the Audit Committee to the Scottish Government
Health and Wellbeing Audit and Risk Committee. Derek Lindsay agreed to draft this
for signature by Alistair McKie.
Action: Derek Lindsay
In addition all Boards were asked to forward a copy of their improvement plan and to
ensure that a follow up audit is carried out within the next 18 months.
Derek Lindsay reviewed the improvement plan noting that the first recommendation,
concerning the review of management arrangements had been completed, including
the formation of a new weekly, Director led “Access Monitoring Group which was now
operational.
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The second recommendation involved the development of data dashboards which was
being taken forward by the Assistant Director of Information Services and was also
linked to the introduction of ‘QlikView’.
Recommendation three required a review of access controls and was being taken
forward by the Caldicott Guardian, the Executive Medical Director.
The fourth and fifth recommendations required a review of policies and procedures
which was ongoing and being taken forward by the Associate Medical Director,
following which detailed operating procedures would be produced.
With regard to the sixth, seventh and eighth recommendations, John Burns confirmed
that immediate action had been taken to ensure staff were aware of the importance of
recording all information on TrakCare on a ‘real time’ basis, and that the reason for
non-attendance for an appointment was understood by staff and accurately recorded.
John Burns confirmed that additional training would be provided to all relevant staff by
31 March 2013. He confirmed that it was the intention to remove any remaining
‘Kardex’ systems.
Recommendation nine related to the recording of information where patients are
referred to the Golden Jubilee Hospital. John Burns confirmed that the Healthcare
Director of Integrated Care and Emergency Services was taking this forward and
would have revised processes and staff training in place by the end of March 2013.
Alistair McKie asked what the process for ongoing review of the improvement plan
was. John Burns explained that it would be subject to continual review by the
Corporate Management Team.
5.3
Financial Savings Arrangements
Nikki Green explained that, in common with all other Boards, Ayrshire and Arran faced
a period of financial challenge where the identification and operation of savings plans
was imperative. The audit review had looked at the key controls around financial
savings plans focussing particularly on Prescribing (due to its high budget) and Mental
Health Services ( because it showed the greatest slippage from savings plans).
The review had identified only two low risk recommendations and had generally found
that controls were acting as intended; auditors noted a particularly good reporting
structure.
5.4
Payroll Interface Review
Nikki Green explained that this review had been carried out due to the move from the
old SSPS Payroll system to the ePayroll system on 1 October 2012. She explained
that SSPS had an interface between the Human Resources system Empower, but that
there was no interface available into ePayroll until the new Human Resource system,
eESS is introduced later in 2013. The audit review had looked at the interim
arrangements by ‘walking through’ the process looking at the key controls, and no
exceptions had been identified.
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The audit review had made one recommendation relating to the reconciliation of data
in the two systems. Margo McGurk noted that, at the time of the audit review the new
system had not been operating for a full month and therefore a full reconciliation had
not been possible. She confirmed that at the month end a full reconciliation of the
system was carried out and had found no material differences, and that this would be
done at the end of every month.
5.5
Family Health Services Expenditure Review
Nikki Green noted that payments to Family Health Service Contractors amounted to
£46 million per annum and that it was the responsibility of the Board to ensure the
probity of these payments. She explained that the audit review had involved
examining the process and checking that key controls were in place.
Two low risks relating to documentation and one medium risk relating to the
segregation of duties between staff members who can amend/add to Practitioner lists
and those that can authorise payments were identified. Board management had noted
that the risk related only to payments made locally which amount to less than £1
million and that procedures would be amended to ensure that these payments were
authorised by the Head of Primary Care to ensure segregation of duties. Management
had undertaken to complete all actions by 31 March 2013.
6.
Outstanding high risk recommendations
6.1
There were none
7.
External Audit
7.1
Annual Audit Plan
David Jamieson highlighted the external audit work planned to give assurance on the
2012/13 accounts and explained the responsibility of Audit Scotland, as the Board’s
external auditor to provide assurance on the financial statements and the internal
control environment as well as to provide a view on the performance, regularity and
use of resources. This would be provided through a series of reports with delivery
dates as specified in the report provided to the Committee. David Jamieson also
explained the relationship between internal and external audit and outlined the areas
where external audit would place reliance on work carried out by internal audit.
It was confirmed that work had already commenced on the testing of the Board’s
financial systems in order for external audit to be able to provide the necessary
assurance.
It was noted that there was a ‘cross over’ between Appendix A of the External Audit
plan and the Corporate Risk Register. David Jamieson confirmed that external audit
monitored risks on an ongoing basis.
The Committee noted the agreed audit fee of £225,280 and heard that this was 4.5%
lower than the previous year, and that an additional one-off rebate of around 6% of the
2011/12 fee would be received.
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7.2
Overview of internal audit 2012/13
Alison McAdam explained that in order to be able to place reliance on internal audit,
Audit Scotland carry out an assessment of its function, looking at processes and
reporting. These had been found to be in accordance with Government Internal Audit
Standards. Alison also noted areas where external audit would place reliance on
internal audit for an indication of the Boards performance and governance. Joanne
Brown noted that Business Continuity would need to be removed from the plan as the
Audit Committee had previously agreed that this internal audit should be postponed
until the 2013/14 audit programme. Alison McAdam noted this and said that they
would add the Payroll review which had been added to the original internal audit plan.
Action: Alison McAdam
8.
Audit Scotland Reports
8.1
Health Inequalities in Scotland
Derek Lindsay introduced this report, noting that it had been published in December
2012. He commented that the main issue identified by the report was the widening of
the health gap between the most deprived and least deprived areas.
The report detailed the areas where the Scottish Government had given targeted
funding to tackle health inequalities totalling £170M. Derek Lindsay used the targeting
of drug misuse as an example noting that of the total of £29M given to this area, £1.7M
had been received by Ayrshire and Arran. The report stressed the importance of joint
working between local authorities and Health Boards and the ability to record where
money was spent and the outcomes achieved.
John Burns confirmed that there would be a Board workshop on ‘population health’ in
April, this would address the issue of how the Board contributes to the community
planning debate and how it can work with its partners to target and tackle inequalities.
Councillor Gibson said that he was aware that there was good work ongoing but that
the effects were not apparent as yet. John Burns agreed that appropriate targeting of
spending was important.
The Committee agreed that the report should be passed to the Community Planning
Partnership groups for discussion.
9.
Fraud
9.1
Margo McGurk explained that there had been no new referrals since November, and
that an internal investigation was ongoing into the one outstanding referral.
Margo discussed an ongoing reactive investigation which had been identified through
the payment verification process. As a result, the Primary Care contractor involved
had been removed from their professional list and was no longer able to practice. The
Procurator Fiscal had indicated that it was likely that the case would become the
subject of a criminal investigation; Margo noted that this would result in media
attention. Councillor Gibson asked whether the Board had a Communications team
who would handle this, Margo confirmed that this was the case. It was also noted that
the Practitioner Services Division was discussing the possibility of recovering the
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fraudulent claims which may amount to a six figure sum. Margo McGurk agreed to
keep the Committee appraised of progress with this case.
Action: Margo McGurk
10.
Tenders
10.1 Two exceptions to the tender process in relation to services from ADT were included
on the report. Derek Lindsay explained that he had identified the Board’s
commitments to this company as a concern and had met with Estates colleagues. The
outcome of this discussion had been that Estates had agreed that where fire detection
equipment was being installed into new facilities the work would be put out to tender
and that the entire lifecycle cost of the equipment, it’s maintenance and upgrading
should be taken into consideration. However, it had been agreed that where existing
ADT equipment was in-situ it was not practicable to use another supplier to service or
to upgrade the system. The Committee were pleased to note that the situation had
been reviewed and accepted the findings.
The remaining exceptions to the process involved items where only one supplier was
available or there had only been one tender received; the Committee noted these.
11.
Risk
11.1 Risk Management Structure
There was discussion at the last Audit Committee regarding the role of the Audit
Committee in terms of risk management. At a Board workshop on 12 December 2012
this was discussed further and it was agreed that the Audit Committee played a probity
role and should agree the framework and processes for monitoring risks and this could
then be incorporated in the Risk Management Strategy. The Committee agreed with
the proposals contained in the paper, however, were of the opinion that all board
members should be aware of all corporate risks. It was agreed that Governance
Committee’s should ‘flag’ high risks to the Board outwith the bi-annual reporting
structure and that this could be done through their minutes which are submitted to
Board meetings. John Burns and Derek Lindsay agreed to produce a guidance
document for governance committee’s describing the process for identifying and
highlighting risks to the Board. The Risk Management strategy was due to be
considered by the Board at its meeting in March, it was agreed that the guidance
document should be prepared in advance of this.
Action: John Burns/Derek Lindsay
11.2 Corporate Risk Register
The Committee considered the eight risks from the Corporate Risk Register
specifically related to audit, six of which were rated as moderate risk and two high risk.
The high risks related to the funding of backlog maintenance and the failure of the
disposal programme to generate sufficient income to fund new capital programmes.
Committee members felt that the Internal Audit report which had looked at the
monitoring of efficiency savings demonstrated that the Board had robust systems in
place which would mitigate the two risks related to efficiency savings which were
included on the register.
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The status of all risks was noted and Derek Lindsay confirmed that they were
monitored on an ongoing basis by the Corporate Management Team. Derek Lindsay
also noted that the risks would be used to inform the audit programme for the following
year.
12.0 Internal audit reports – for information
None to note
13
Any other competent business
13.1 Audit Committee Terms of Reference – Derek Lindsay explained that following
changes to the Governance Committee structure terms of reference for all committee’s
were being reviewed. A standard format had been adopted and comments from
committee chair’s had been requested prior to the Board meeting in March.
Committee members were asked to give Alistair McKie their comments no later than
the second week in February. Councillor Gibson queried whether the membership
should be reviewed in view of the difficulty ensuring a quorum.
14.
Date of next meeting
14.2 The next meeting will take place on Wednesday 13th March 2013 at 2.15pm in room
2, Eglinton House, Ailsa Hospital.
Signed: …………………………………………………………. Date: …………………………………………
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