APPROVED
NHS Grampian (NHSG)
Minute of the Audit Committee Meeting
Tuesday 24 June 2014, 1000-1300
Conference Room, Summerfield House
Present
Mr David Anderson, Non-Executive Director, NHSG (Chair)
Prof Mike Greaves, Non-Executive Director, NHSG
Mr Terry Mackie, Non-Executive Director, NHSG
In Attendance
Mr Jim Boyle, Audit Partner, Deloitte LLP
Mr Richard Carey, Chief Executive, NHSG
Mr Alan Gray, Director of Finance, NHSG
Cllr Bill Howatson, Chairman, NHSG
Mr Garry Kidd, Assistant Director of Finance, NHSG
Ms Karlyn Watt, Audit Manager, Deloitte LLP
Mr Mark White, Director, PricewaterhouseCoopers LLP (PwC) – via teleconference
Ms Tracey Leete, Minuting Secretary
Item
1
Subject
Welcome
Mr Anderson welcomed Professor Greaves, who had recently joined the
Committee as a replacement for Mrs Greener and thanked Mr Mackie for
attending in Mrs Duncan’s absence.
Apologies
Cllr Barney Crockett, Non-Executive Director, NHSG
Mrs Sharon Duncan, Employee Director, NHSG
Dr Lynda Lynch, Non-Executive Director, NHSG
2
Minute of Meeting Held on 18 March 2014
The Minute of the previous meeting was approved as an accurate record.
3
Matters Arising
3.1
Action Log of 18 March 2014
The Committee reviewed the action log from the previous meeting
and noted the following points not covered elsewhere on the agenda:
1
Action
APPROVED
Item
Subject
Action
10 12 13 – Item 5.1 – Progress Report – Theatre Utilisation
Cllr Howatson advised that the recommendations and associated
management action arising from the internal audit review of Theatre
utilisation were considered at the meeting of the Performance
Governance Committee (PGC) held in March 2014. A further
progress report setting out the productivity of the theatres at ARI and
Woodend Hospitals and detailing the specific actions that will lead to
an improvement in overall performance will be available for
consideration at the September meeting of the PGC.
Mr Kidd to request an update on progress for the September
2014 meeting of the Audit Committee.
GK
10 12 13 – Item 5.3 – Waiting Times Progress Report
Mr Gray stated that effectiveness of monitoring arrangements to
measure the timing and quality of follow up treatment were now being
considered by a short life working group which includes
representation from Non Executive Board members. A detailed
action plan has been developed and the PGC will monitor progress
against the agreed actions on an ongoing basis..
The Committee agreed that as this issue is now being
progressed under the oversight of the PGC it should be removed
from the Audit Committee action list.
18 3 14 – Item 7.1 – External Audit – External Auditor Progress
Report
Ms Watt explained that the best value report on Health and
Social Care Integration will now be available for consideration at
the September 2014 meeting.
18 3 14 – Item 11.2 – Single Tender Register – Extension of
Measured Term Contract
Mr Gray advised that although NHSG are fully involved in discussions
to establish a national framework there is still no assurance that this
can be in place by March 2015 when the existing extension to local
arrangements runs out. Accordingly, in line with the Committee’s
previous agreement, NHSG will proceed to advertise and appoint a
local framework of Measured Term Contractors. This local framework
will not be exclusive and NHSG will retain flexibility to move to a new
National Framework should this option become available in future.
2
Deloitte
APPROVED
Item
Subject
Action
The Committee agreed that this action was complete and should
be removed from the action log.
18 3 14 – Item 13.1 – Primary Care Practitioners – Payment
Verification Assurance Annual Report
Mr Kidd explained that he was in the process of seeking clarification
regarding the extent of involvement of NHSG’s local Dental clinical
lead in all matters raised through the Dental Reference Service.
Mr Kidd to provide an update for the September meeting.
3.2
Other matters arising not on the action log
None.
4
Internal Audit
4.1
Annual Report for Year Ending March 2014
Mr White explained that the purpose of the report was to present
PWC's opinion, as internal auditors, of NHS Grampian's systems of
internal control. Mr White asked the Committee to note that the
terminology used for the audit opinion had been updated, compared
to previous years, in order to comply with 2013/14 Public Sector
Internal Audit Standards.
The opinion for the year ending 31 March 2014 was that there is some
risk management’s objectives may not be fully achieved. This opinion
was based upon the work conducted during the year in line with the
annual internal audit plan agreed by the Committee. Identified findings
were rated as low, moderate and high and actions for improvement
were identified in these areas to enhance the adequacy and/or
effectiveness of governance, risk management and control.
Mr White highlighted that the number of high risk rated findings had
increased from zero in 2012/13 to 7 in 2013/14 but that he considered
this was an indication that the internal audit activity was focused on the
right areas of the organisation. Professor Greaves asked how the
Committee could be assured that this wasn’t indicative of many other
high risk areas which had not been reviewed. Mr White responded by
explaining that the annual operational internal audit plan was based on
a full risk assessment and agreed by the Committee at the beginning
3
GK
APPROVED
Item
Subject
of the year with progress reviewed on an ongoing basis by the
Committee throughout the year. Mr Gray stated that Committee
members and executive Management have the opportunity to inform
the development of the internal audit plan. Mr Kidd added that the
Boards key governance and financial processes are a standard
component of the annual audit plan.
The Committee noted the report.
4.2
Progress Report
Mr White presented the report, which detailed progress against the
internal audit programme and highlighted the following :
Key Financial Controls
The report concluded that key financial controls in place have been
operating effectively and are designed suitably. No critical or high risk
recommendations were identified.
Risk Management
The report concluded that NHSG has a relatively mature risk
management plan, with appropriate risk register software and a
detailed formal strategy. No critical or high risk issues were identified.
There were three medium risk recommendations relating to the
ownership, monitoring and reporting of risks for which an associated
action plan has been agreed with management.
Mr Anderson noted that the number of strategic risks highlighted
within NHSG was lower than in peer Boards and asked if this was an
area for concern. Mr White responded that the NHSG risk register
was well “tuned” with no obvious omissions.
Board Governance
The report concluded that NHSG has a functional and compliant
governance structure and a Committee framework which is in line with
recognised best practice and peer organisations.
No critical or high risk findings were identified. There were four
medium risk recommendations relating to the regular review of role,
remit and membership of key governance committee’s, alignment of
strategic risks and the ongoing review of effectiveness by each
4
Action
APPROVED
Item
Subject
Action
Committee.
Mr Carey stated that the review exemplifies how high performing
organisations continually improve their performance.
Cllr Howatson welcomed the review and informed the Committee that
he would be meeting with Mr Anderson in the near future, supported
by Executive Management, to review the recommendations arising
from the report and agree necessary action for consideration at the
Board development day scheduled for September 2014.
Mr Anderson and Cllr Howatson to provide an update on
progress at the September 2014 Meeting.
Complaints
The review highlighted a number of improvements which are required
to achieve the performance targets set by the Scottish Government.
No critical issues were identified. There were two high risk and four
medium risk recommendations relating to compliance with response
timescales set by the Scottish Public Service Ombudsman, process
for use of feedback on lessons learnt to drive improvement,
assessment of severity of complaints, access to training, availability of
management information and effectiveness of local operating
procedures.
The findings had been agreed with management who were in the
process of finalising an action plan to meet the key recommendations.
Mr Carey welcomed the report and informed the Committee that he
personally reviews all responses and the quality is generally high. The
key issue, is availability of clinical time to respond to complex
complaints which require thorough investigation and retrieval of notes
in order to ensure a quality response. The key challenge is to raise
the profile and priority of complaint handling with clinicians.
.
Professor Greaves stated that this issue was not widely understood
by clinicians and some further education in this area may be
beneficial.
Mr Anderson asked if staff receive the necessary training in the key
skills required to support effective communication and report writing
and whether a lack of training/familiarisation in the Datix system may
be contributing to the problems. Mr Carey responded that individual
responses are prepared separately to the Datix system, which is an
incident recording system only. All responses are quality reviewed
5
DA/BH
APPROVED
Item
Subject
Action
with feedback to the originator regarding lessons learned.
Mr Carey also acknowledged that NHSG have a light staffing
complement dedicated to complaints handling when compared to
other NHS Scotland Health Boards.
The Committee noted that an action plan was under development
by management and requested that Mr Gray liaise with Executive
colleagues to provide an update on progress at the September
2014 meeting.
AG
Delayed Discharge
The review highlighted a number of improvements that are required to
help NHSG more effectively manage delayed discharges. No critical
issues were identified. There were two high risk and four medium risk
recommendations relating to the appropriateness of the current joint
adult Health and Social Care discharge policy and procedure, timing
of social work involvement in assessment for discharge, recording of
information to support discharge and co-ordination and attendance at
joint working groups.
Mr Carey welcomed the report but highlighted that some of the
recommendations related to actions that were influenced by progress
on closer integration of Health and Social Care and in some cases by
Government policy.
The Committee noted that an action plan was under development
by management and requested that Mr Gray liaise with Executive
colleagues to provide an update on progress at the September
2014 meeting.
The Committee thanked Mr White for his update and noted the key
issues highlighted to date.
4.3
High Priority Recommendations
Mr White introduced the report summarising progress in relation to the
implementation of high priority internal audit recommendations and
highlighted the following key areas :
Theatre Utilisation
One of the three actions is fully implemented with the remaining two
actions relating to establishment of an agreed dataset for BOXI
6
AG
APPROVED
Item
Subject
Action
reporting and development of standard operating procedures partially
in place.
Mr Gray stated that there is regular management oversight to ensure
delivery of the various improvement actions and that formal reporting
on progress to the Performance Governance Committee is now in
place.
The Committee noted the position and requested an update on
progress against the remaining action for the September meeting PwC
Budgetary Controls
Four out of five actions are fully implemented with the remaining action
relating to the development of a corporate cost reduction plan partially
implemented. Individual Sectors are still in the process of refining their
cost reduction plans.
The Committee noted the position and requested an update on
progress against the remaining action for the September meeting. PwC
The Committee noted the report.
4.4
2014/15 Operational Audit Plan
Mr White presented the 2014/15 Internal Audit Plan which has been
updated to include the following requirements discussed at the March
2014 meeting:

Clinical participation in leadership and management of the
organisation (Francis Report);

Partnership working with Universities and other third parties
(Innovation);

Health and Social Integration (Major Change Programmes); and

The impact of access to diagnostic tests on in-patient length of
stay (Emergency Care Centre – PPE).
It was also requested that the Operational Performance Management
review included, within scope, the workload that performance
management and audit systems cause clinical areas (particularly
nursing staff) and provide assurance of the necessity of the current
processes, ensuring duplication does not exist.
Mr Gray has
7
APPROVED
Item
Subject
Action
requested that this is performed in a second phase of the review during
the third and fourth quarter of 2014/15. This review is not yet included
in the 2014/15 Audit Plan and will be discussed with Mr Gray.
The Committee agreed the following actions :



4.5
Approval of the internal audit plan for 2014/15;
Future updates to include only relevant changes to the PwC
plan;
Mr Whyte to prepare a summary version of the plan for
circulation to all Board members; and
The draft scope for all future internal audit reviews to be
circulated to Committee members for comment prior to
finalisation.
Medical Staffing – Job Planning Update
The Committee noted the paper prepared by the Director of
Workforce detailing NHSG’s 2013/14 Job Planning Submissions
and requested Mr Kidd invite the Boards Director of Workforce GK
and Medical Director to provide a further update on progress at
the September 2014 meeting.
5
2013/14 Annual Accounts
5.1
Annual Accounts
Mr Gray presented the 2013/14 annual accounts for consideration and
highlighted the following key matters:

The Board’s external auditors, Deloitte LLP, had issued an
unqualified audit opinion (presented under item 5.2 below).

For 2013/14 the annual accounts were required to consolidate
the results of Grampian Health Board and Grampian Health
Board Endowment Funds in line with Government Financial
Reporting Manual (FReM) and International Accounting
Standard No. 27.

Deloitte LLP were also the appointed auditors for the NHS
Grampian Endowment Funds and had issued an unqualified
audit opinion on the Endowment Funds accounts also.

The Board had achieved the three financial targets set by the
Scottish Government Health and Social Care Directorate
8
APPROVED
Item
Subject
(SGHSCD). The results of the Endowment Fund did not form
part of these statutory financial targets.

The accounting policies under which the accounts were
prepared were previously approved by the Audit Committee in
March 2014.

The Chief Executive had confirmed his approval of the
Governance Statement on pages 20 to 22. The Statement sets
out his review of the adequacy and effectiveness of the Board’s
system of internal control.
Mr Gray provided a synopsis of the content of the financial statements.
The Committee noted the paper.
5.2
Annual Audit Report
Mr Boyle presented the report from the Board’s external auditors and
informed the Committee that Deloitte LLP were content to sign a clean,
unqualified audit opinion.
The Audit close out meeting was held on Friday 13 th June with Mr Gray
and Mr Kidd in attendance and no significant issues were identified.
Mr Boyle highlighted the following points relating to the 2013/14
accounts:

Consolidation of NHSG Endowments Funds for the first year
with net assets of £42.6m

The Aberdeen Health and Community Care Village, the first Hub
contract in Scotland, was brought on balance sheet at a
valuation of £14.6m.

NHSG exceeded a turnover in excess of £1billion for the first
time in 2013/14..

First year there has been a requirement for a strategic report.

Changes in format and presentation of the remuneration report
with inclusion of a single total figure of remuneration for the first
timw in 2013/14.
Mr Boyle thanked Mr Gray and Mr Kidd and the whole finance team for
9
Action
APPROVED
Item
Subject
Action
their co-operation and support in a smooth audit process.
The Committee noted the report and thanked Mr Boyle and his
team who had worked extremely well with the Board Finance team
to deliver a thorough and professional audit within very tight
deadlines.
5.3
Recommendation to NHSG Board for Approval of the Accounts
The Committee agreed to recommend the 2013/14 annual DA
accounts to the NHSG Board for approval.
The Committee thanked Mr Kidd and the Finance Team for all the
hard work and effort made to finalise the annual accounts within GK
very tight timescales and asked that Mr Kidd ensure the whole
Finance Team are aware their work is appreciated.
6
Audit Scotland National Studies - Update
Mr Kidd presented an update on the status of recent national study reports
prepared by Audit Scotland including any agreed local management action.
Me Anderson asked if the recommendations from the report on managing
early departures from the Scottish Public sector had been implemented within
NHSG. Mr Carey responded that this report had been considered by the
Remuneration Committee and that consequently tighter controls are now in
place regarding settlement agreements.
The Committee noted the report and asked Mr Kidd to invite the General
Manager for Facilities and Estates to discuss progress on the
recommendations from the report on Renewable Energy alongside GK
backlog maintenance and other energy efficiency measures at the
September 2014 meeting.
7
Service Audit Reports
Mr Kidd presented a paper to update the Committee on the key points arising
from the 2013/14 service audit reports relating to services provided by NSS
and NHS Ayrshire and Arran. Each of the services provided to NHS Grampian
by NSS during 2013/14 (Practitioner Services and National IT Services) and
by NHS Ayrshire and Arran (Financial system) received an unqualified audit
opinion.
The Committee noted the reports.
10
APPROVED
Item
8
Subject
Action
Risk Management Annual Report
Mr Gray presented the annual report on the effectiveness of risk management
arrangements.
Mr Carey welcomed the reformatted report and asked that further work is
undertaken to develop the reporting of the impact of mitigating action on risk
classification as a source of assurance on the effectiveness of the risk
management arrangements to the Board.
Professor Greaves asked if an assessment of risk classification post mitigation
is available. Mr Gray responded that this was not currently available but it is
an area targeted for future development.
The Committee
 Noted the arrangements in place to provide assurance on the
effectiveness of risk management arrangements during 2013/14;
 Noted the actions planned to improve existing processes during
2014/15.
 Asked Mr Gray to provide an update on progress at the September AG
2014 meeting.
9
Single Tender Actions
Mr Kidd presented the single tender actions authorised since the last meeting,
together with a summary of the justification.
The Committee noted the single tender actions authorised since the last
meeting (No 110 – 119 inclusive).
10
Counter Fraud, Losses and Special Payments
Mr Kidd presented the counter fraud progress report.
The Committee:
Noted progress on counter fraud matters during 2013/14;

Noted
the
comparative
information
on
clinical
negligence/employer liability claims across NHS boards available
for 2013/14;
11
APPROVED
Item
Subject

11
Action
Authorised submission of the monitoring information for the first GK
two months of 2014/15 to NHS Counter Fraud Services.
Patients Private Funds – Abstract of Receipts and Payments
Mr Kidd presented a summary of the 2013/14 abstract of receipts and
payments for Patients Private Funds, which has been independently audited,
for the Committee’s review before formal approval by the Board.
Mr Anderson asked for an update on progress with the Government Banking
Service. Mr Kidd responded that the National tendering exercise did not
include the facility for an interest bearing current account, contrary to the
information previously provided to NHSG. An exercise is underway to review
options for both Patients Private Funds and Endowment banking services.
The Committee requested Mr Kidd provide an update on progress to the
September 2014 meeting.
GK
The Committee agreed to recommend the 2013/14 abstract of receipts
and payments for Patients Private Funds to the Board for approval.
DA
12
Letter of Notification from Sponsored Body Audit Committees
Mr Anderson advised that, as Chair, he had been asked to notify the Scottish
Government Health and Wellbeing Audit and Risk Committee of any
significant issues or frauds which arose during 2013/14.
A draft response, confirming that there have been no significant issues
or frauds identified by or reported to the Committee, was approved for DA
submission.
13
Audit Committee Development Sessions Feedback
The Committee considered the minute of the development session held on 18
March 2014 and noted the agreed actions.
The Committee agreed to hold an annual development event after the
March meeting and to invite Delioitte LLP the Boards external auditors to
facilitate the session in March 2015.
DA/GK
14
Report to the Board
The Committee agreed that the following items would be of interest to all
Board members :
12
APPROVED
Item
Subject




Governance Review
Complaints and Feedback Review
2014/15 Audit Plan
Delay Discharges
Mr Kidd to draft the report to the Board for Mr Anderson’s review.
15
Future Meeting Dates
The list of future dates up to and including March 2016 circulated was
approved by the Committee.
16
AOCB
None.
17
Action
Date of Next Meeting
The next meeting will be held on Tuesday 30 September 2014 at 1000-1300 in
the Conference Room, Summerfield House.
13
GK/DA