AUDIT COMMITTEE
Terms of Reference
1.
Constitution
The Board of Cornwall Partnership NHS Foundation Trust hereby resolves to establish a
Committee of the Board to be known as the Audit Committee (The Committee). The
Committee is a non-executive committee for the Board and has no executive powers,
other than those specifically delegated in the Terms of Reference and those delegated by
the Board in Public Session.
2.
Membership
The Committee shall be appointed by the Board from amongst the Non Executive
Directors of the Trust and shall consist of not less than three members. The Board will
appoint one of the members as Chair of the Committee. The Chair of the Committee
cannot also serve as the Vice Chair or Senior Independent Director of the Trust. The
Chair of the Trust cannot be a member of the Committee. If the Chair of the Committee is
unable to attend a meeting, the members present may elect one of them to act as Chair,
notwithstanding the provisions of Section 3 below. At least one member of the Committee
must have recent and relevant financial experience.
3.
Quorum
There shall be any two members present in order for a meeting to be declared quorate.
4.
Frequency
Meetings shall be held at least six times a year. The Chair of the Audit Committee,
External Auditor or Head of Internal Audit may request an additional meeting if they
consider that one is necessary.
5.
Attendance
The Director of Finance and appropriate Internal and External Audit representatives shall
normally attend meetings. However, the Committee will also meet privately with External
and Internal Auditors, if required, following each meeting of the Committee. The Chief
Executive and other Executive Directors will be invited to attend, as required, particularly
when the Committee is discussing areas of risk or operational matters that are the
responsibility of that Director. A nominated member of staff shall attend to take minutes
of the meeting and provide appropriate support to the Chair and committee members.
6.
Reporting
The Trust Board will receive an activity summary and any recommendations/reports from
the Committee as appropriate. The minutes of the Audit Committee meetings shall be
formally recorded and distributed to Board members. The Chair of the Committee shall
draw to the attention of the Board any issues that require disclosure to the full Board, or
require executive action. The Committee will report to the Board annually on its work in
support of the Annual Governance Statement specifically commenting on the fitness for
purpose of the Assurance Framework, the completeness and embeddedness of risk
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management in the organisation, the integration of governance arrangements and the
appropriateness of the evidence that shows the organisation is fulfilling regulatory
requirements relating to the status as a Foundation Trust.
7.
Authority
The Committee is authorised by the Board to investigate any activity within its terms of
reference. It is authorised to seek any information from any employee and all employees
are directed to co-operate with any request made by the Committee. The Committee is
authorised by the Board to obtain legal or other independent professional advice and to
secure the attendance of outsiders with relevant experience and expertise if it considers
this necessary. The Committee is also given delegated authority by the Board to establish
sub-committees or working groups, or to align itself as part of a joint committee as
required.
8.
Duties
The duties of the Committee can be categorised as follows:
(i)
Governance, Risk Management and Internal Control
The Committee shall review the establishment and maintenance of an effective system of
integrated governance and internal control, across the whole of the organisation’s activities
(both clinical and non-clinical), which support the achievement of the organisation’s
objectives. In particular, the Committee will review the adequacy of:

The actual review of evidence, for the Annual Governance Statement, together with
the accompanying Head of Internal Audit Statement, External Audit opinion and other
appropriate independent assurances, prior to final approval by the Board and
subsequent review throughout the year;

The underlying assurance process that indicates: the degree of the achievement of
strategic objectives, the effectiveness of the management of principal risks and the
appropriateness of the above disclosure statements;

The policies for ensuring compliance with relevant regulatory, legal and code of
conduct requirements;

The Board Assurance Framework and Corporate Risk Register to ensure that the
controls in place are sound and complete, the assurances noted are reliable and of
good quality and that the data the assurances are based on is reliable (ie sound and
accurate);

The policies and procedures for all work related to fraud, bribery and corruption as
required by NHS Protect.

The arrangements that allow staff and other individuals where relevant, to raise in
confidence, concerns about possible improprieties in matters of financial reporting and
control, clinical quality, patient safety and other matters. The Audit Committee shall
ensure that arrangements are in place for the proportionate and independent
investigation of such matters and for appropriate follow-up action including ensuring
safeguards for those who raise concerns are in place and operate effectively.
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In carrying out this work the Committee will primarily utilise the work of Internal Audit,
External Audit and other assurance functions, but will not be limited to these audit
functions. It will also seek reports and assurances from directors and managers as
appropriate, concentrating on the overarching systems of integrated governance, risk
management and internal control, together with indicators of their effectiveness.
This will be evidenced through the Committee’s use of an effective Assurance Framework
to guide its work and that of the audit and assurance functions that report to it.
The Committee shall also report to the Council of Governors upon any matters of concern
which have not been adequately addressed by the Board of Directors and which it
considers that action or improvement is needed, making recommendations as to the steps
to be taken.
(ii)
Internal Audit
The Committee shall ensure that there is an effective internal audit function established by
management that meets mandatory Public Sector Internal Audit Standards and provides
appropriate independent assurance to the Audit Committee, Chief Executive and Board.
This will be achieved by:

Consideration of the provision of the Internal Audit service, the cost of the audit and
any questions of resignation and dismissal;

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 the
organisation as identified in the Assurance Framework;

Consideration of the major findings of internal audit work (and management’s
response), and ensure co-ordination between the Internal and External Auditors to
optimise audit resources;

Ensuring that the Internal Audit function is adequately resourced and has appropriate
standing within the organisation; and

Monitoring and regularly reviewing the effectiveness of the Trust’s Internal Audit
function.
(iii) External Audit
The Committee shall review the work and findings of the appointed External Auditor and
consider the implications and management’s responses to their work. This will be
achieved by:

Monitoring and regularly reviewing the independence, objectivity and effectiveness of
the Trust’s External Auditors and of the audit process, taking into consideration
relevant UK professional and regulatory requirements;

Formal consideration of the appointment, re-appointment, removal and performance of
the External Auditor and making formal recommendation to the Council of Governors
in this respect;

Formal approval of the remuneration and terms of engagement of the External Auditor;

Formal consideration of the engagement of the External Auditor to supply non-audit
services to the Trust, taking into account relevant ethical guidance regarding the
provision of non-audit services by the External Audit provider;
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(iv)

Discussion 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, and ensure coordination, as appropriate, with other External Auditors in the local health economy;

Discussion with the External Auditors of their local evaluation of audit risks and
assessment of the Trust and associated impact on the audit fee; and

Review all External Audit reports, including agreement of the final draft of the annual
report of External Audit before submission to the Board and any work carried outside
the annual audit plan, together with the appropriateness of management responses.

To receive the External Auditor’s report on the Quality Account to consider whether
there are any implications for the Annual Governance Statement.
Counter Fraud
The Committee shall satisfy itself that the organisation has adequate arrangements in
place for counter fraud and security that meet NHS Protect’s standards and shall review
the outcomes of work in these areas.
(v) Other Assurance Functions
The Audit Committee shall review the findings of other significant assurance functions,
both internal and external to the organisation, and consider the implications to the
governance of the organisation.
These will include, but will not be limited to, any reviews by Department of Health, Arm’s
Length Bodies or Regulator/Inspectors (eg Care Quality Commission, NHS Litigation
Authority, etc), professional bodies with responsibility for the performance of staff or
functions (eg Royal Colleges, accreditation bodies etc.)
The Audit Committee will review the Bad Debt proposal on an annual basis. In
accordance with the Trust’s Standing Financial Instructions; if assured, the Committee will
recommend the paper to the Board for authorisation.
In addition, the Committee will review the work of other committees within the organisation,
whose work can provide relevant assurance to the Audit Committee’s own scope of work.
This will particularly include the Performance, Finance and Investments Committee, the
Quality and Governance Committee and any Risk Management groups that are
established.
In reviewing the work of the Quality and Governance Committee, and issues around
clinical risk management, the Audit Committee will wish to be satisfied on the assurance
that can be gained from the clinical audit function.
The Audit Committee shall satisfy itself of the processes for the review of the Quality
Report and the Auditor’s Report on the Quality Report.
(vi) Management
The Committee shall request and review reports and positive assurances from Directors
and managers on the overall arrangement for integrated governance, and internal control.
They may also request specific reports from individual functions within the organisation
(e.g. clinical audit), as they may be appropriate to the overall arrangements.
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(vii) Financial Reporting
The Committee shall monitor the integrity of the financial statements of the Trust, and any
formal announcements relating to the Trust’s financial performance, reviewing significant
financial reporting judgements contained therein.
The Committee shall review and approve the relevant financial and assurance aspects of
the Annual Report and Financial Statements before recommending to the Board, focusing
particularly on:

The wording in the Annual Governance Statement and other disclosures relevant to
the Terms of Reference of the Committee;

Changes in, and compliance with, accounting policies and practices;

Unadjusted mis-statements in the financial statements;

Major judgmental areas;

Significant adjustments resulting from the audit.
The Committee shall also ensure that the systems for financial reporting to the Board,
including those of budgetary control, are subject to review as to completeness and
accuracy of the information provided to the Board.
9.
Administration
It shall be the responsibility of the Chair to arrange for:

Publication of an annual list with the dates, time and venue of each meeting;

A schedule of papers to support the work of the Committee detailing documents to be
received and reviewed by the Committee. The Committee shall review the schedule of
papers at each meeting.

Production of minutes from each meeting;

The agenda and relevant papers to be distributed to the Committee, no later than three
working days prior to the meeting;

A record of any action points to be made and for this to be distributed to the
Committee, no later than 14 days following the meeting;

Ensuring that action points carried forward to future meetings are followed up;

Providing a commentary to the Board upon matters of significance which need to
brought to the Board’s attention; and

Liaison with Chairs of other Board Committees, raising matters of significance which
need to be brought to the attention of those Committees, ensuring that the Chair and
Chief Executive are aware at all times.
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10. Review
The Terms of Reference shall be reviewed on an annual cycle, or at the direction of the
Board when compliance with them will be monitored against the minutes of the meetings
held in the previous 12 month period.
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