Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
at 9:00am in the Brooke Suite at Warwick Hospital
Present:
Diane Colley
Tony Boorman
Veronica Cotterill
David Derbyshire
(DC)
(TB)
(VC)
(DD)
Non-Executive Director and Chair of the Audit Committee
Non-Executive Director
Non-Executive Director
Non-Executive Director
In attendance:
Alan Harrison
Jenny Horrabin
(AH)
(JH)
Ruth Mawby
Emily Mayne
Mark Stocks
Meg Mold
Sophie Gilkes
David Moon
Glen Burley
Kim Li
Tracey Stuart
Sarah Wallington
Tasha Millward
(RM)
(EM)
(MS)
(MM)
(SG)
(DM)
(GB)
(KL)
(TS)
MINUTE
10.031
(TM)
Non-Executive Director
Chief Internal Auditor, CW Audit Services, the Trust’s Internal Auditor
(left and returned during minute 10.034.02)
Internal Audit Manager (left and returned during minute 10.034.02)
Engagement Manager, Audit Commission (the Trust’s External Auditor)
Engagement Lead, Audit Commission (the Trust’s External Auditor)
Trust Secretary
Communications Manager
Director of Finance (left and returned during minute 10.034.02)
Chief Executive
Deputy Director of Finance
Senior Finance Manager
Finance Trainee
Committee Administrator
ACTION
Apologies for Absence
None noted.
10.032
Declarations of Interest
The Director of Finance declared an interest as Chair of the Coventry and
Warwickshire Audit Consortium.
The Director of Finance, Chief Internal Auditor and Internal Audit Manager
declared an interest under minute 10.034.02 (Consideration whether the
Trust’s Internal Audit arrangements should be reviewed in 2010/11).
10.033
Minutes of the Meeting held on Wednesday 5 May 2010
The Minutes of the meeting held on Wednesday 5 May 2010 were agreed as
an accurate record of the meeting, and signed by the Chair, subject to the
inclusion of David Derbyshire, Non-Executive Director in the present list not
the in attendance list.
Resolved – that the Minutes of the meeting held on Wednesday 5 May
2010 were agreed as an accurate record of the meeting and signed by
the Chair, subject to the above amendment.
Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
10.034
ACTION
Matters Arising and Progress Monitoring Report
10.034.01
Meeting Dates (Minute 10.030.02)
It was noted that the action to reschedule the Audit Committee meeting in
December 2010 and for the Trust Secretary to send out formal notification of
change had been completed.
Non-Executive Director (TB) gave his
apologies for the 7 December 2010 Audit Committee meeting and this was to
be noted by the Committee Administrator.
TM
Resolved – that the position be noted, and action recorded as
completed.
TM
10.034.02
Internal Audit – Action Plan 2010/13 (Minute 10.008.01)
Director of Finance noted that the action to discuss with the Chairman and
Chief Executive whether the Trust’s interest in the pathology network should
be included in the Internal Audit Plan for 2010/11 was outstanding. The
Chief Internal Auditor informed the Committee that this action had been
referenced in the Internal Audit Plan.
(The Director of Finance, Chief Internal Auditor and Internal Audit Manager
declared an interest as noted under minute 10.032 and left the meeting at
this point.)
The Chief Executive noted that the action for consideration of whether the
Trust’s Internal Audit arrangements should be reviewed in 2010/11 had been
addressed. It was reported that because the Healthcare Consortium
framework had 3 listed suppliers with agreed fee rates of which CWAS were
currently the lowest and as a core client we received an additional discount,
this resulted in a low price for a good quality service. The Chief Executive’s
suggestion to the committee was to roll forward the contract for a further two
years and then do a further benchmark process to review the price and
quality. The Engagement Manager confirmed that external audit were happy
with this suggestion and had found that it worked well. Non-Executive
Director (TB) raised the question if this would be dealt with via a tender
process. The Chief Executive stated that at the point of review if it was felt
benchmarking was not sufficient then the use of a tender process would be
looked into. Non-Executive Director and Chair of the Audit Committee
presented the proposal from the Chief Executive to the Committee and all
agreed.
Resolved – that the Audit Committee agreed to the proposal to
continue with the current Trust’s Internal Audit arrangements with CW
Audit Services for a further two years at which point a benchmarking
process would be undertaken required.
(The Director of Finance, Chief Internal Auditor and Internal Audit Manager
returned to the meeting at this point.)
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Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
10.034.03
ACTION
Board Declaration on Going Concern and Fraud and Breaches in Internal
Control (Minute 10.022)
It was noted that the action to ensure the required amendments were made
and that the Audit Committee recommend to the Board that the Trust was
considered to be a going concern at the present time had been completed.
Resolved – that the position be noted and recorded as completed.
10.034.04
Draft Statement on Internal Control – South Warwickshire General Hospitals
NHS Trust (Minute 10.023.01)
It was noted that the action to report to the Chief Executive the requested
amendments and queries highlighted by Audit Committee had been
completed.
Resolved – that the position be noted and recorded as completed.
10.034.05
Draft Statement on Internal Control – South Warwickshire NHS Foundation
Trust (Minute 10.023.02)
It was noted that the action to report to the Chief Executive the requested
amendments and queries highlighted by the Audit Committee had been
completed.
It was also noted that the action to check the Statement on Internal Control
against Monitor’s template had been completed.
Resolved – that the position be noted and recorded as completed.
10.034.06
Draft Annual Report (and Quality Accounts) 2009/10 (Minute 10.024)
It was noted that the action to review the document and to make the required
amendments had been completed.
Resolved – that the position be noted and recorded as completed.
10.034.07
LCFS Operational Plan (Minute 10.025.03)
It was noted that the action to investigate the proposal to undertake a spot
check audit on the verification process for entitlement to free prescriptions
within the Pharmacy Department had been completed. The results of the
work will be reported to a future Audit Committee meeting
DM
Resolved – that the position be noted and recorded as completed.
10.034.08
Engagement letter for South Warwickshire NHS FT(Minute 10.026.03)
It was noted the action to make the required amendments had been
completed.
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Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
ACTION
It was also noted that the action for the Director of Finance to sign on behalf
of the Trust had been completed.
Resolved – that the position be noted and recorded as completed.
10.034.09
Proposed fee letter for 2010/11 (Minute 10.026.04)
It was noted by the Director of Finance that the action to produce a letter of
engagement authorising external audit to undertake any additional pieces of
work at the Trust was in the process of being carried out and would still need
to be presented to the Council of Governors for approval.
EM/DM
Resolved – that (A) the position be noted and.
(B) the Director of Finance and Engagement Manager be requested to
submit a letter of engagement to the Council of Governors for approval. EM/DM
10.034.10
Medical Agency Staffing follow-up Review (Minute 10.027.02)
It was noted that the action to investigate the process for checking
qualification and verification of Medical agency staff arriving on site would be
reported to Audit Committee on Tuesday 7 December 2010.
DM & JH
Resolved – that the position be noted.
10.034.11
Nurse Bank (Minute 10.027.07)
It was noted that action to update the Committee on progress relating to the
implementation of the Nurse Bank System would be reported to Audit
Committee on Tuesday 7 December 2010.
JH
Resolved – that the position be noted.
10.034.12
Car parking Income follow-up (Minute 10.027.08)
The Chief Internal Auditor agreed to provide the Committee Administrator
with the date for when the progress report would be reported to Audit
Committee.
JH
Resolved – that the position be noted and action adhered to.
10.035
Schedule of Business – Update
All requirements met as per Schedule of Business.
Resolved – that the position be noted.
10.036
Annual Accounts
10.036.01
External Audit Opinion/ISA260 1 April 2009 to 28 February 2010 Report
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JH
Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
ACTION
The Engagement Lead, Audit Commission introduced the External Audit
Opinion/ISA260 1 April 2009 to 28 February 2010 report, attached to the
agenda as enclosure ‘D’.
The Engagement Lead, Audit Commission noted the following key areas:a) Financial Statements – it was planned to issue an unqualified audit
opinion on the financial statements, which were free from material
error and there was an adequate internal control environment.
b) Due to the tight time scale the following areas were outstanding;1. Receipt of the revised Statement on Internal Control including
additional disclosures covering the arrangements around the
quality accounts,
2. Final review of the annual report for amendments made in
compliance with the Annual Reporting Manual,
3. Verification of the figures within the cashflow statement,
4. Review of the financial instrument disclosures,
5. Review of the latest Board minutes to consider any
unreported post statement of financial performance events.
c) External audit felt that the Trust performed well in respect of the
preparation and audit of the 2009/10 financial statements, especially
given the need to prepare two sets of accounts within a short
timescale.
d) A recommendation had been put forward to consider whether the
current fixed asset system (CARs) was appropriate to enable the
Trust to manage its asset base going forward. This was highlighted
by the fact of the considerable time spent by the auditors to gain
assurance that the figures in the final version of the accounts were
not materially misstated.
e) The Valuation of land under the MEA for Warwick and Stratford was
fine, although External Audit were concerned that 0.32 Hectares at
Stratford Hospital had not been valued under MEA but that this led to
a potential misstatement of £0.588m however, given that this was not
material the Trust had decided not to adjust..
f) The trust had disclosed the Insulin pumps transaction in the financial
statements as a pre-payment (debtor), with the appropriate monthly
debtor being released each month to match the income. This was an
incorrect classification and should be shown in full as an NHS debtor.
g) The trust had included a disclosure note (Note 42) that highlighted the
income and expenditure, assets and liabilities based upon the
pathology service contract agreement with University Hospitals
Coventry and Warwickshire NHS Trust.
h) An overview of ‘Appendix 2 – Amendments to draft accounts Table 3’
was presented to the Committee.
In response to point (d) above the Director of Finance reported that the main
issue regarding fixed assets for last year was CAR’s. Discussions had taken
place, which had identified the way forward would be to no longer use CAR’s
and resort to spread sheets instead. The Non-Executive Director and Chair
of the Audit Committee requested that a progress report be brought to the
August Meeting.
DM
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Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
ACTION
In response to point (e) above the Director of Finance reported that the Trust
believed that the valuations included within its accounts were strictly in
accordance with the MEA valuation, that this was an appropriate valuation
basis for the land and did not believe that any amendments to the accounts
were required. If at any point in the future the status of any of the Trust’s land
changes then it would seek an appropriate revaluation as necessary. This
was noted and addressed in the letter of representation.
In response to point (f) above the Director of Finance reported the
contractual agreement with NHS Warwickshire (PCT) charged each month
1/48th of the full cost of the insulin pump (thus charged over the pumps
useful life) . In order to show the full outstanding debtor as an NHS debtor
this treatment would result in differences in the consolidated NHS accounts
as the PCT was not recognising an opposite creditor. This was not material
on the face of the accounts and would require a formal contract change
which would not take effect until 2010/11 at the earliest. Therefore the Trust
was not proposing to change this disclosure. This was noted and addressed
in the letter of representation.
In response to point (g) above the Director of Finance reported that an
additional disclosure would be produced.
DM
Request for amendments received from Non-Executive Director (AH) that all
references of Board of Directors throughout Appendix 1 to be changed to
Council of Governors.
EM
Resolved – that (A) the External Audit Opinion/ISA260 1 April 2009 to 28
February 2010 report be received and noted;
(B) the Director of Finance to provide a progress report to the August
Committee meeting in relation to CAR’s;
DM
(C) the Director of Finance to produce the pathology additional
disclosure, and
DM
(D) the Engagement Manager to amend the wording Board of Directors
throughout Appendix 1 to Council of Governors.
EM
10.036.02
External Audit Opinion/ISA260 1 March 2010 to 31 March 2010 Report
The Engagement Lead, Audit Commission introduced the External Audit
Opinion/ISA260 1 March 2010 to 31 March 2010 report, attached to the
agenda as enclosure ‘D’.
The Engagement Lead, Audit Commission noted the following key areas:a) Financial Statements – it was planned to issue an unqualified audit
opinion on the financial statements which were free from material
error and there was an adequate internal control environment.
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Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
ACTION
b) Due to the tight time scale that had been recognised by external audit
the following areas were outstanding;1. Final review of the annual report for amendments made in
compliance with the Manual for Accounts.
2. Review of the financial instrument disclosures
3. Review of the remuneration report
4. Review of the latest Board minutes to consider any reported
post statement of financial performance events
5. Verification of cash balance to third party letters - requested
but still awaiting them and was expected to be ready in time
for us to sign the opinion.
c) the same points were relevant to the one-month financial statements
as in points d), e), f), g) and h) above, (Minute 10.036.01 refers).
d) Pharmacy inventory balance (extrapolated) – the year end stock take
in pharmacy had identified an error rate of 1% across the sample.
This had only been reported due to the level of materiality set for the
one-month set of accounts.
e) Stock take – the Trust had carried out a stock take in February 2010
and not another in March 2010. Most stock was calculated via
electronic systems but approx £400k was manually counted. The
Trust believed that there would be no material change and indeed
between 2008/09 and 2009/10 there was only a relatively small
movement but again there was a potential element of uncertainty to
the stock valuation at 31 March 2010.
f) Partially completed spells – the calculation for partially completed
spells debtors used for March 2010 financial statements had come
from February 2010, although this was not unreasonable it had
produced uncertainty as the Trust had not re-performed the
calculation.
In response to points d), e) and f) above the Director of Finance reported that
this was noted and addressed in the letter of representation.
Resolved – that (A) the External Audit Opinion/ISA260 1 March 2010 to
31 March 2010 report be received and noted;
(B) the Director of Finance to provide a progress report to August
Committee in relation to CAR’s, and
DM
(C) the Director of Finance to produce the pathology additional
disclosure.
DM
10.036.02
Letter of Representation
The Director of Finance introduced the Letter of representation, here tabled
as enclosure ‘E’. The letter detailed the Trust’s response to the issues
identified in the external audit opinion/ISA 260 (Minutes 10.036.01 and
10.036.02 refer) and the reasons for not correcting the misstatements. No
comments or questions arose from the Committee.
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Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
ACTION
Resolved – that the Letter of Representation be received and noted and
the reasons for not correcting the misstatements detailed in the
External audit Opinion/ISA 260 reports, be approved.
10.036.03
Annual Accounts – 1 April 2009 to 28 February 2010
The Director of Finance introduced the Annual Accounts, 1 April 2009 to 28
February 2010, attached to the agenda as enclosure ‘F’. It was noted there
were still some outstanding issues on the accounts, as listed in Minutes
10.036.01 and 10.036.02 above. No comments or questions arose from the
Committee.
Resolved – that the Annual Accounts, 1 April 2009 to 28 February 2010
be received and noted and subject to the conclusion of the outstanding
issues, be submitted to the Board of Directors for approval.
10.036.04
Annual Accounts - 1 March 2010 to 31 March 2010
The Director of Finance introduced the Annual Accounts, 1 March 2010 to 31
March 2010, attached to the agenda as enclosure ‘G’. It was noted there
were still some outstanding issues on the accounts, as listed in Minutes
10.036.01 and 10.036.02 above.
The Director of Finance noted that the surplus was the same as before and
the Senior Finance Manager reported that on page 44 two additional items
would be included, a memorandum note from Pathology and a note of
Directors’ Remuneration.
TS
Resolved – (A) the Annual Accounts, 1 March 2010 to 31 March 2010 be
received and noted, and subject to the conclusion of the outstanding
issues, be submitted to the Board of Directors for approval, and
(B) Senior Finance Manager to include an additional memorandum note
from Pathology and a note of Directors Remuneration.
TS
10.036.05
Final Annual Report (+ Quality Accounts 2009/10)
The Communications Manager introduced the Final Annual Report (+ Quality
Accounts 2009/10) attached to the agenda as enclosure ‘H’.
The Communications Manager noted that the following amendments had
been made to the document since the last meeting of the Committee:a) Page 15&16 – updated the financial figures
b) Page 24 – additional information added about 2010/11 priorities based
on feedback from the staff survey in 2009
c) Page 46 – Changed Trust Board attendances by Board members to
include both additional meetings
d) Page 72 – A&E figure had been changed from 96% to 96.56%
e) Page 77,78&79 – PCT, LINk’s and Trust statements included for the
Quality Accounts
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Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
ACTION
f) Page 83&85 – Additional paragraph added to the Statement of
Internal Control regarding the Quality Accounts
g) Page 89,90&91 – Changed financial summary statements
h) Page 92 – Management Costs now added.
Resolved – that the Final Annual Report (+ Quality Accounts 2009/10)
be received and noted and submitted to the Board of Directors for
approval.
10.037
External Audit
10.037.01
2009/2010 PbR Data Assurance Framework
The Engagement Lead, introduced the PbR Data Assurance Framework,
attached to the agenda as enclosure ‘I’. It was noted that unlike previous
years the Trust’s results were worse than average. The Director of Finance
expressed some concern over the comparison with other Trusts as the error
rate was based on HRG v3.5 not HRG v4.2 and there was a considerable
difference. That said the results were disappointing and the Trust needed to
move forward with an action plan. The Director of Finance questioned
whether this should be taken up via the Clinical Governance Committee but
Non-Executive Director (VC) thought this was inappropriate and that the
Executive Team should take ownership of the issues and drive them forward.
Resolved – that the Director of Finance to discuss with the Executive
Team how to improve the clinical coding performance in the areas
detailed within the report and also the standard of patient notes.
DM
10.038
Internal Audit
10.038.01
Internal Audit KPI’s 2009/10 Report
The Chief Internal Auditor, CW Audit Services introduced the Internal Audit
KPI’s 2009/10 Report, attached to the agenda as enclosure ‘J’. No
comments or questions arose from Committee.
Resolved – that the report be received and noted.
10.038.02
Internal Audit Progress Report
The Chief Internal Auditor, CW Audit Services introduced the Internal Audit
Progress Report, attached to the agenda as enclosure ‘K’.
The Chief Internal Auditor, CW Audit Services noted that the work was
progressing well and page 7 identified 38 outstanding recommendations.
The Deputy Director of Finance responded that this had been highlighted
and the plan was to allocate individuals responsible for any action when
rolling out the recommendations. No other comments or questions arose
from the Committee.
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Minutes of the Audit Committee meeting held on Wednesday 2 June 2010
MINUTE
10.038.03
ACTION
Resolved – that the report be received and noted.
10/WG/10 Financial Management Final Report
The Chief Internal Auditor, CW Audit Services introduced the Internal Audit
10/WG/10 Financial Management Final Report, attached to the agenda as
enclosure ‘L’. No comments or questions arose from Committee.
Resolved – that the report be received and noted.
10.038.04
10/WG/12 Asset Management Final Report
The Chief Internal Auditor, CW Audit Services introduced the Internal Audit
10/WG/12 Asset Management Final Report, attached to the agenda as
enclosure ‘M’. It was highlighted that overall significant assurance could be
given however there was limited assurance on asset disposal and that the
Trust needed to ensure that it had good systems in place to ensure that
disposals were removed from the asset register. There was also some
resonance with the External Audit findings.
Resolved – that the report be received and noted.
10.038.05
10/WG/14 Risk Management Final Report
The Chief Internal Auditor, CW Audit Services introduced the Internal Audit
Progress Report, attached to the agenda as enclosure ‘N’.
The Chief Internal Auditor, CW Audit Services noted that there was
significant assurance; the training issues with management had been
addressed and the delay with the risk assessment had now been escalated.
No other comments or questions arose from the Committee.
Resolved – that the report be received and noted.
10.039
Any Other Business
There was no further business.
10.040
Time of next meeting
It was noted that the next Audit Committee meeting would be held on
Wednesday 11 August 2010 at 9.00 in the Brooke Suite, Warwick Hospital.
Signed:________________________________ (Chair)
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Date___________________