AUDIT AND CORPORATE GOVERNANCE COMMITTEE (ACG) TERMS OF
REFERENCE
PURPOSE OF THE COMMITTEE
ACG will both challenge management and seek independent assurances on
the adequacy of the CQC’s corporate risk management, financial controls and
corporate governance systems.
ROLE
ACG will advise the Board and Accounting Officer on the:
 management of corporate risk, financial controls and corporate governance and
requirements for the organisation, ensuring value for money;
 production of Governance Statement;
 accounting policies, the accounts, and the annual report of the organisation, including
the process for review of the accounts prior to submission for audit, levels of error
identified, and management’s letter of representation to the external auditors;
 planned activity and results of both internal and external audit;
 adequacy of management response to issues identified by audit activity, including
external audit’s management letter;
 proposals for tendering internal audit services;
 CQC and Health Watch England’s (HWE) procedures for detecting fraud including
arrangements for special investigations
 CQC’s and HWE’s systems and controls for the prevention of bribery and receive
reports on non-compliance Anti-fraud and bribery policies.
DUTIES
Financial Reporting
The Committee will review and challenge where necessary –
 The consistency of and any changes to accounting policies year on year and across
the organisation
 The process for reviewing the accounts prior to submission for audit, levels of error
identified and the management letter of representation from external audit including
management’s response to these.
 The clarity of disclosure in the financial reports, including the Governance Statement,
and the context in which statements are made. The Committee will ensure that the
HWE Committee is aware of any disclosure statements or accounting issues relevant
to HWE
 Planned activity of the external auditor
Internal Controls and Corporate Risk management and Governance systems
The committee shall
 Keep under review the CQC’s and HWE’s overall corporate risk assessment
processes that inform the Board’s decision making, ensuring both qualitative and
quantitative metrics are used
 Review regularly and approve the parameters used in these measures and the
methodology adopted
 Set a standard for the accurate and timely monitoring of large exposures and certain
risk types of critical importance
 Review the CQC’s and HWE’s capability and to identify and manage new risk types
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Review reports on any material breaches of risk limits and the adequacy of proposed
action
Keep under review the effectiveness of the CQC’s internal financial controls and
internal controls and risk management systems and review and approve the
statements to be included in the annual report including internal controls and risk
management
Keep under review the Corporate Governance Framework, ensuring it is regularly
reviewed to ensure the structures (eg Board committees), processes (eg risk
management and assurance) and roles (eg SIRO (Senior Information Risk Officer),
Caldicott Guardian) support the effective implementation and development of open
and transparent corporate governance across the organisation
The approach to the delegation of authority within the CQC as expressed in the CQC
Scheme of Delegation is kept under review and the Committee will make
recommendations for any amendments to the Board.
Counter Fraud and Bribery and Information Security
The committee shall ensure there is an effective counter-fraud function established by
management that meets treasury requirements on prevention of fraud and provides
appropriate independent assurance to the Accounting Officer and Board. ACG will:
 Received a report on fraud and irregular activity for information and consideration
 Be advised on a timely basis by the Executive Director Corporate Services of any
active investigations
 Review the Commission’s systems and controls for the prevention of bribery and
receive reports on non-compliance in relation to CQC and HWE
 Receive a report on information security risk management and any breach of
information security
Internal Audit Responsibilities
The Committee will ensure that there is an effective Internal Audit function which provides
appropriate independent assurance to the Committee, the CQC Board, the HWE Committee
(where appropriate) and the Accounting Officer on:
 Consideration of the provision of Internal Auditors
 Review and approval of the Internal Audit Strategy, operational plan and more
detailed programme of work, ensuring that this is consistent with the audit needs of
CQC and HWE. The programme will be shared with the Regulatory Governance and
Values Committee (RGC).
 Consideration of the major findings of internal audit work and management’s
response, and to ensure the co-ordination between the Internal and External auditors
to optimise audit resources via a progress report from the Head of Internal Audit
summarising:
- Work performed (and a comparison with work planned)
- Key issues emerging from Internal Audit work
- Management response to audit recommendations
- Changes to the Periodic plan
- Any resourcing issues affecting the delivery of Internal Audit objectives
 Ensure relevant internal audit reports are shared with the RGC
 Ensuring the Internal Audit function is adequately resourced and has appropriate
standing within the Commission
 Annual reviews of the effectiveness of Internal Audit
 Head of Internal Audit to have free and confidential access to the Chair of the
Committee.
External Audit
The Committee will review the work and findings of the appointed External Auditor by:
 Consideration of the performance of the External Auditor (as far as the Audit
Commission’s rules permit)
 Discussions and agreement with the External Auditor, before the audit commences,
of the nature and scope of the audit as set out in the Annual Plan
 Discussions with the External Auditors of their local evaluation of audit risks and
associated impact on the audit fee, if applicable;
 Review all External Audit reports, including agreement of the annual audit letter
before submission to the Board, and any work carried on outside the annual audit
plan, together with the appropriateness of management responses.
 To review the External Audit fees on an annual basis.
The External Auditor will have free and confidential access to the Chair of the Committee.
Ensuring Probity
The Committee will keep under review the arrangements in place for ensuring probity in the
conduct of business by both CQC and HWE. This will be achieved by:
 Agreeing annual work plans with local Counter Fraud Specialist and receiving regular
summary reports on implementation
 Receiving reports concerning any waiver of competitive tendering requirements
 Receiving reports of instances where the CQC or HWE Standing Financial
Instructions have been waived or varied under delegated powers;
 Review at least annually the Losses and Special Payments Register and otherwise
consider reports on specific losses referred to in Standing Financial Instructions and
make recommendations to the Board
Where the Committee considers there is evidence of ultra vires transactions, evidence of
improper acts, or if there are other important matters the Committee wishes to raise, the
Chairman of the Committee must raise the matter either at a full meeting of the CQC Board
or, where the matter relates to HWE, at a meeting of the HWE Committee, and seek legal
advice if required. Exceptionally, the matter may need to be referred to the Department of
Health (to the Director of Finance in the first instance).
The ACG will also periodically review its own effectiveness and report the results of that
review to the Board.
Membership
 The Committee will be established by the CQC Board and will have a Chair who is
non-executive CQC Board Member and at least two other members who are
members of the CQC Board, one of which should a member of the Regulatory
Governance and Values Committee.
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HW England Committee will nominate a member to the ACG
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The CQC Chair and HW England Chair may not be Members of ACG.
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The Committee will appoint one of its members as Deputy to act as Chair in their
absence.
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The Board may appoint or co-opt independent external members. Any co-opted or
independent Member will have the same rights and responsibilities as any other
Committee member but may not serve as Chair of the Committee.
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At least one member of the committee must be a professionally qualified Accountant
Support
A member of the Secretariat will act as the Secretary to the Committee.
Quorum
A minimum of two members of the Committee must be present for the meeting to be
quorate; one of whom must be a Board member. Either the Committee Chair or Deputy
Chair must be present at each meeting.
Frequency
The Committee will meet at least four times a year. Each meeting will be in two parts: Part
One dedicated to CQC matters and Part Two dedicated to HWE matters (see appendix one)
Additional meetings shall be arranged by the Secretary of the Committee
Members of the Committee will be appointed for an initial two year term. The Board will
approve further terms of appointment.
A Member of the Secretariat will act as the Secretary to the Committee.
Minutes of the Meeting
 The Committee Secretary will write minutes, including the key points and decisions of
all committee meetings, including those for HWE, and the names of those present at
the meeting. The minutes of the previous meeting must be approved and signed off
by the Chair as a true record at each meeting.
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The Chair will establish, at the beginning of each meeting, the existence of any
conflicts of interest and they should be minuted accordingly
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The minutes of the committee meetings will be circulated promptly to all members of
the Committee.
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The Minutes of the Meeting will be shared with the RGC
Reporting Responsibilities
 The Committee chairman shall report formally to the Board on its proceedings after
each meeting on matters within its duties and responsibilities
 The Committee shall make whatever recommendations to the Board it deems
appropriate on any area within its remit where action or improvement is needed
 The committee shall produce a report on its activities to be included in the CQC’s
annual report.
October 2013