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Ratified minutes of the Audit Committee meetings held on 15 April 2015 and 27 May 2015 July 2015 Public Board - 1 –

SOMERSET PARTNERSHIP NHS FOUNDATION TRUST

RATIFIED MINUTES OF THE AUDIT COMMITTEE MEETINGS HELD ON 15 APRIL 2015 AND 27 MAY 2015

Report to the Trust Board – 21 July 2015

Sponsoring Director: Director of Finance and Business Development/Director of Governance and Corporate Development/Chairman of the Audit Committee.

Author: Secretary to the Trust.

Purpose of the report: The purpose of the report is to present the ratified minutes of the Audit Committee meetings held on 15 April 2015 and 27 May 2015 to the Board for information.

Key Issues and Recommendations:

The report set out the discussions held at the Audit Committee meeting held on 15 April 2015:

particular issues discussed were:

progress report from the Integrated Governance Committee, including areas on which further assurance was required;

Counter Fraud work plan for 2015/16 and progress

report; concluding counter fraud report relating to an

allegation of working for another organisation whilst in receipt of sick pay from the Trust – this allegation was unfounded in relation to the Trust;

concluding reports on travel expenses – actions

had been taken to clarify the deduction of home to base mileage, including the development of a new mileage claim form;

follow up review on pre-employment checks; progress report on the implementation of counter

fraud audit recommendations; CQUINS internal audit report, and in particular the

Friends and Family Test; main financial systems internal audit report;

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Ratified minutes of the Audit Committee meetings held on 15 April 2015 and 27 May 2015 July 2015 Public Board - 2 –

cost improvement programme internal audit report; Board Assurance Framework internal audit report; business development and contract management

internal audit report; internal audit 2014/15 annual report; progress report on the implementation of internal

audit recommendations; 2015/16 audit plan; 2014/15 Assurance Framework progress report; losses and special payments; hospitality/sponsorship register; the outcome of the external audit tender.

The Audit Committee discussed a risk in relation to culture and noted that this was a high priority area and a cultural thermometer and clear measures will be developed. The Audit Committee identified a risk in relation to staff and unintended consequences in relation to culture.

The main focus of the Audit Committee meeting held on 27 May 2015 related to the 2014/15 Annual Accounts, Annual Report, Quality Report and the “Going Concern” statement, which were subsequently approved at the Board meeting held on 27 May 2015. The Audit Committee also considered: the internal audit memorandum – management and

service redesign – service integration;

the IT Review – Information Commissioners’ Office Action Plan internal audit report.

Actions required by the Board:

The Board is asked to note the ratified minutes of the Audit Committee meetings held on 15 April 2015 and 27 May 2015.

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Ratified Minutes of the Audit Committee meeting held on 15 April 2015 July 2015 Public Board - 1 –


MINUTES OF THE AUDIT COMMITTEE MEETING HELD ON 15 APRIL 2015 IN THE BOARDROOM, FOUNDATION HOUSE,

TAUNTON

PRESENT: Judith Newman Non-Executive Director (Chair) Phil Dolan Non-Executive Director Roger Powell Non-Executive Director IN ATTENDANCE: Lynne Pamment Price Waterhouse Coopers Greg Rubins BDO Adam Spires BDO Andy Knight Dorset and Somerset Counter Fraud Service Phil Brice Director of Governance and Corporate Development Pippa Moger Director of Finance and Business Development Ria Zandvliet Secretary to the Trust 1. APOLOGIES

Apologies were received from Barbara Clift (Non-Executive Director). Judith Newman welcomed David Allen, Governor, to the meeting.

2. DECLARATION OF INTERESTS RELATING TO ITEMS ON THE AGENDA There were no declarations of interests relating to items on the agenda.

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MINUTES OF MEETING HELD ON 21 JANUARY 2015 The minutes of the meeting held on 21 January 2015 were approved as a true and accurate record with the following amendment: page two – fourth paragraph – to replace “evident” with

“evidence”. Pippa Moger proposed, Roger Powell seconded and the Audit Committee approved the minutes of the meeting held on 21 January 2015.

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4. PROGRESS REPORT FROM THE INTEGRATED GOVERNANCE COMMITTEE Phil Brice presented the report on David Wood’s behalf and highlighted the work undertaken by the Committee since its last report to the Audit Committee including feedback on the detailed review of assurances in relation to the management and prevention of pressure ulcers within the Trust. Judith Newman commented that the progress report was helpful and provided the Audit Committee with assurance about the areas reported to and discussed by the Integrated Governance Committee. Roger Powell was also a member of the Integrated Governance Committee and highlighted the areas identified by the Committee as requiring further assurances: joint working with other organisations – a further internal

audit was planned and it was expected that this audit will provide further assurance;

cultural barometer – this was an area of high focus by the Trust and consideration will be given by the Committee on how to obtain assurance on the effectiveness of systems;

Care Quality Commission compliance (CQC) – notification of a CQC inspection had now been received. The inspection will be carried out week commencing 7 September 2015 and the timing of the audit will be linked to the inspection date.

Judith Newman advised that when considering internal audit reports, the Audit Committee should also consider whether the Integrated Governance Committee should be requested to obtain further assurances. Previous requests for further assurances had related to pressure ulcers and medicines management.

5. COUNTER FRAUD UPDATE Workplan 2015/16 Andy Knight presented the 2015/16 workplan and advised that although the plan was ambitious, the number of days had remained at 85. Andy Knight advised that the work plan had been developed following discussions with the Director of Finance and Business Development and highlighted the areas of work in relation to strategic governance; inform and involve; prevent and deter; and hold to account.

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Pippa Moger advised that the workplan was challenging but in view of the considerable work undertaken in 2014/15 in relation to raising fraud awareness generally and with specific teams, it was expected that there may not be a need to continue to put a high focus on this area of counter fraud during 2015/16. It was expected that the annual survey on fraud awareness will show improvements in fraud awareness amongst staff. The Committee discussed the workplan and noted that: standard 3.6 - a procurement audit of the Yeovil District

Hospital NHS Foundation Trust’s procurement system had been carried out in 2014/15 and this audit will not be repeated in 2015/16 but assurance will be sought on the implementation of the recommendations;

standard 3.7 – invoicing fraud and corruption risks – details of the work to be carried out had not yet been agreed with the Director of Finance and Business Development.

The Audit Committee approved the 2015/16 workplan. Concluding Report – Op Taru/Parri Andy Knight advised that this investigation related to an allegation that a member of staff may have been working for the Trust whilst in receipt of sick pay from another trust. The investigation concluded that criminal proceedings by the Trust were not warranted as the member of staff did not work for the Trust during periods whereby the member of staff would have been contracted to work at another trust. It was noted that the other trust was considering the findings of the investigation. Concluding Report – Op Peka Andy Knight advised that during a pro active exercise on travel expenses, a sample of claims was investigated and it appeared that some of the claims examined had been incorrect as the appropriate home to base deductions had not been made. This investigation, and Op Peel and Patrin, was undertaken as a follow up to the pro active exercise. The investigation established that the guidance issued to staff had been confusing, sometimes inaccurate and contradictory and this had contributed to the incorrect home to base deductions. In view of this, the investigation concluded that there was insufficient evidence to pursue criminal sanctions in relation to this matter.

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Pippa Moger advised that since the investigation has been undertaken revised guidance had been issued to staff and the expenses claim form had been revised to clearly indicate that, if appropriate, home to base deductions will need to be made. All staff will be expected to use this new form and from 1 July 2015 any old forms will be returned unpaid. The form now also included a self declaration in relation to a valid driving license, MOT and insurance Pippa Moger confirmed that the staff expenses handbook had been withdrawn and the Agenda for Change handbook was now the only reference handbook available to staff. Pippa Moger advised that as the overpayment came to light following the pro active exercise, the recommendation to recover overpayments will not be followed up. If it was decided to recover any overpayments, this would need to be based on a review of expenses claims of all staff. It was noted that the relevant member of staff (and the staff referred to in Op Peel and Patrin) had been informed of the errors in the travel expenses forms. The Audit Committee agreed not to recover any historic overpayments for this member of staff and the staff referred to in Op Peel and Patrin. Concluding Report – Op Peel Discussed as part of the Op Peka concluding report. Concluding Report – Op Patrin Discussed as part of the Op Peka concluding report. Local Proactive Exercise – Travel Expenses Andy Knight presented the report and advised that the report had been presented to a previous Audit Committee meeting but the report had been updated to take account of management updates. The issue of home to base deductions and self declaration in relation to valid driving license, MOT and insurance had already been covered earlier on the agenda. A follow up audit, including a larger sample of claims, had been undertaken in February 2015 and this report will be presented to the July 2015 Audit Committee meeting. The audit had identified further overpayments but it had now been agreed not to recover historic overpayments. Future overpayments will however be recovered. The Audit Committee agreed that overall responsibility for checking claim forms rested with the line manager and not with payroll staff.

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Pippa Moger advised that E-roster will enable electronic travel claims to be produced and the software will automatically deduct home to base mileage. This E-roster package will be introduced in 2015/16. There had been a delay in rolling this software out due to issues with the travel claims form and these were being addressed nationally. Local Proactive Exercise – Follow-Up Review – Pre-Employment Checks Andy Knight presented the follow up review of pre-employment checks and highlighted the conclusions of the report. Overall improvements had been made since the original review was undertaken but a small number of issues had been identified in relation to the marking of copies of original identity, right to work and qualification certificates. In view of the changes in HR leadership, it was queried how the recommendations will be implemented and Pippa Moger agreed to liaise with Sally Fox, Interim Director of Human Resources and Workforce Development. Counter Fraud Recommendation Tracker Andy Knight advised that the recommendation in relation to the travel expenses had been completed. The remaining two recommendations related to the Managing Absence policy and the Policy for the Use of Bank and Agency staff and Phil Brice advised that the approval of these policies will be followed up with Sally Fox. The Audit Committee agreed that the recommendation in relation to the commissioning of a follow up review had been completed. Counter Fraud Work Plan 2014/15 Progress Report Andy Knight provided an overview of the progress made against the 2014/15 Counter Fraud Workplan and highlighted progress in relation to the strategic governance, inform and involve, prevent and deter, and hold to account areas. The annual survey of fraud awareness had now closed and 210 staff had completed the survey which was a significant improvement from the previous year. 99% of staff who had responded indicated that they would report fraud. Andy Knight highlighted the investigation into excess mileage being claimed via the standard mileage claim form at full mileage rate and advised that the findings of the investigation will be presented to the July 2015 Audit Committee meeting. The Audit Committee agreed that the volume of overpayments showed the impact the change in mileage claim rules had on individual members of staff.

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Andy Knight commented that some managers did not want to challenge staff about incorrect travel claims and one manager asked Andy Knight to explain the changes to the team. The Audit Committee agreed that this was a cultural issue and, going forward, any overpayments will be recovered from staff. The Audit Committee acknowledged that the impact of the changes in mileage claims on community staff had not been anticipated. Phil Brice advised that the implementation of the Integration Phase 2 project and Agile working will address some of the issues as not all staff will be required to go to a work base. The Audit Committee recognised that there was a risk that staff may take other actions to compensate for a loss in travel expenses, i.e. productivity, and Pippa Moger was asked to raise this with Andy Heron.

6. BDO INTERNAL AUDIT REPORT CQUINS Audit Report Greg Rubins presented the report and advised that the report provided limited assurance for both design and effectiveness. The report covered both pressure ulcers and the friends and family test and as the main recommendations related to the friends and family test, moderate assurance would have been provided for pressure ulcers. Seven medium priority and two low priority recommendations had been made. Greg Rubins highlighted the recommendations and it was noted that a number of the recommendation had not been accepted by management. The recommendations which had not been accepted related to the completion of the friends and family test by a nurse on a patient’s behalf; the timing of the completion of the form; the inclusion of an unique reference number on the form; a process for monitoring whether patients have been provided with a form; and the inclusion of patients under the age of 17 in the friends and family test: Greg Rubins advised that from an auditor’s point of view, it was essential to have proper controls in place, together with the ability to validate information. Management’s view was that this was only one test and the friends and family test results could be triangulated with other tests. Phil Brice advised that the audit was a CQUINs audit and his understanding was that the purpose of the audit was to monitor whether information in relation to the CQUIN targets was being collected. He had not been involved at the early stages of the audit as it had been defined as a CQUIN audit. The recommendations did not however relate to the collection of CQUIN data. The Trust’s performance in relation to collecting friends and

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family test data was well above the required response rate. Some of the recommendations were linked to the Minor Injury Unit response rate and the token system, but this system was no longer in use. In relation to the findings that it was not in line with the national guidance for nurses to complete the form on behalf of the patient, the guidance did indicate that patients could be supported in completing the form and on this basis, the recommendation had not been accepted. In addition, the number of friends and family test responses was very low compared to the number of patients seen each month and there was also not a requirement actively to give every patient a form but to make sure that all patients were able to feedback if they wished to do so. Numbering all forms therefore seemed to be an excessive action. Pippa Moger advised that the management comments had been discussed with Rachael Tomlinson but the assurance level had not changed as a result of the discussion. Roger Powell commented that it was important that as many patients as possible completed a friends and family feedback form and if that meant that they would need to be supported filling out the form, that should be acceptable. The purpose of the audit should be to look for assurance that information was accurate and that data was not manipulated. Implementing the recommendations will make the feedback process very bureaucratic and will not reduce the risk of data being manipulated. Greg Rubins agreed that the recommendations will not eliminate all risks but felt uncomfortable with the current process. The Audit Committee agreed that it was important to trust staff and the work taking place in relation to culture will help to mitigate risks. In addition, the friends and family test response rates can be triangulated with other information. The Audit Committee acknowledged the views from internal auditors but accepted the management responses. Lynne Pamment commented that it was worth noting that internal auditors had not identified any non compliance with national guidance and this was confirmed by Greg Rubins. Phil Brice advised that spot checks will be carried out and agreed to consider whether the spot checks can be carried out by independent organisations/groups.

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Main Financial Systems Audit Report Greg Rubins presented the report and advised that the report provided moderate assurance for both design and effectiveness. One high, three medium and one low priority recommendations had been made. The recommendations related to the efficiency of debt recovery and the timeliness of chasing up debts. It was noted that the majority of the recommendations had already been implemented. Cost Improvement Programme Audit Report Greg Rubins presented the report and advised that the report provided moderate assurance for both design and effectiveness. One medium and two low priority recommendations had been made. The recommendations related to the need to formalise the process for signing off the cost improvement programme and to develop action plans for each cost improvement programme scheme. It was queried whether the cost improvement programme had been discussed at the Finance and Performance Committee. Phil Dolan advised that the cost improvement programme had been discussed by the Committee, together with ways on how to escalate elements of the programme which the Committee felt were not progressing as well as expected or on which the Committee required more information. The responsibility for monitoring the cost improvement programme will need to pass formally on to the Finance and Performance Committee and the Board will need to receive assurance on the cost improvement programme process. It was agreed that the Committee’s Term of Reference will need to be updated. Board Assurance Framework Audit Report Greg Rubins presented the report and advised that the report provided moderate assurance for both design and effectiveness. Two medium and three low priority recommendations had been made. Controls for both the Board Assurance Framework and the Corporate Risk Register worked well and the majority of the recommendations related to the divisional risk registers. It was noted that a revised Risk Management Policy will be presented to the May 2015 Board meeting. Business Development and Contract Management Audit Report Greg Rubins presented the report and advised that the report provided substantial assurance for design and moderate assurance for effectiveness. Two medium and one low priority recommendations had been made. The majority of the

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recommendations related to the Yeovil District Hospital NHS Foundation Trust procurement system and contract management. 2014/15 Annual Report Greg Rubins presented the annual report and advised that the Head of Internal Audit opinion provided moderate assurance that there was a sound system of internal control, designed to meet the Trust’s objectives and that controls were being applied consistently. Moderate assurance was the second highest level of assurance and it was noted that it was unusual for auditors to issue the highest level of assurance. Greg Rubins highlighted progress made against the 2014/15 audit plan and advised that two audits had not yet been finalised – the IT Review and the second part of the Management and Service Redesign audits. Greg Rubins agreed to present the outstanding reports to the May 2015 Audit Committee meeting. Ria Zandvliet agreed to invite Andy Heron to the May 2015 Audit Committee meeting. In relation to the audit feedback forms, it was noted that some feedback forms had now been received. Recommendation Tracker Greg Rubins presented the recommendations tracker and advised that 33% of the recommendations had been implemented, 22% had been partially completed and 15% had not been implemented. The ten completed recommendations will be removed from the tracker. The partially completed recommendations mainly related to HR recommendations and in view of the current change in HR leadership, it had been difficult to obtain feedback on progress made. A recommendation follow up process had been agreed with Pippa Moger and an overview of the process was included in the report. Judith Newman advised that she will be meeting with Pippa Moger two weeks prior to an Audit Committee meeting to discuss progress made and to decide whether any Executive Directors will need to be invited to the next Audit Committee meeting. The Audit Committee noted that the recommendation in relation to the Patient Safety Walkrounds action plan had been completed and that progress will be signed off by the Clinical Governance Group. Feedback from the Clinical Governance Group will be presented to the Integrated Governance Group.

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Judith Newman advised that, in view of the current changes in HR leadership, progress against the HR audit recommendations will be discussed at the July 2015 Audit Committee meeting. 2015/16 Audit Plan Greg Rubins presented the audit plan for 2015/16 and advised that the plan had been discussed with the Director of Finance and Business Development and the Director of Governance and Corporate Development. Greg Rubins highlighted the delayed discharges audit and advised that the Clinical Commissioning Group had suggested carrying out a Somerset health economy wide review of delayed discharges with every organisation allocating internal audit days towards the audit. The audit will be carried out jointly with Grant Thornton LLP. The scope of the audit was still to be developed and will be circulated for comments. The Audit Committee expressed concern about the value of the audit as it was felt likely that the audit will not identify any issues not already known or that issues identified may not be implemented. It was suggested that a working group with the necessary authority will need to be set up following the audit to implement the audit recommendations. The Audit Committee accepted the audit on the understanding that the recommendations will be implemented, if necessary through a working group. Greg Rubins agreed to advise the Clinical Commissioning Group accordingly. Other audits proposed included: volunteers, medicines management, infection control, Care Quality Commission assurance and compliance, Information Governance Toolkit, duty of candour and risk management. The total number of audit days was 210 and this included 16 days carried over from 2014/15. It was suggested by management to also carry out a corporate records management audit but this had not yet been included in the audit plan. Pippa Moger advised that the audit plan had been shared with and agreed by the Executive Team and David Wood as Chairman of the Integrated Governance Committee. Roger Powell commented that a training audit had been carried out in 2014/15 but this audit had looked at the collection of data and not at the effectiveness of training. The audit did not provide assurance that staff received the training in the most appropriate and effective way and Roger Powell queried whether this was still a priority for inclusion in the audit plan. Greg Rubins advised that elements of training can be audited but it will be difficult to assess the effectiveness of training and this would require professional input. The Audit Committee agreed to further discuss this and the

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timing of an audit with the new Director of Human Resources and Workforce Development when appointed.

7. EXTERNAL AUDIT REPORT Progress Report Lynn Pamment provided a verbal update on the external audit plan and advised that the interim visit had been completed and this “walk through” audit had not identified any significant issues. The final audit will commence towards the end of April 2015 and a report on the annual accounts and annual report and quality report will be presented to the May 2015 Audit Committee meeting.

8. 2014/15 ASSURANCE FRAMEWORK Phil Brice presented the final version of the 2014/15 Assurance Framework and advised that all risks had been grouped under the Five Year Plan’s Strategic Themes and Strategic Objectives and the objectives for 2014/15 and provided a clear link to the strategic goals and Business Action Plan. Phil Brice advised that a number of risks had been mitigated to the target risk. Phil Brice highlighted the progress made in relation to the strategic themes: integration – progress in relation to the implementation of

the IP2 plan was in line with the timescale. The implementation plan had been developed alongside contract negotiations and no significant contractual implications for 2015/16 had been identified which could affect the proposed savings plan;

service delivery – reducing the average length of stay was one of the highest risks and it was expected that this risk will remain high as this was linked to an increase in delayed discharges;

viability and growth – the Trust had delivered its financial plans for 2014/15. The Trust had been successful in gaining new business in 2015/16 but had also lost some of its existing services;

quality and safety – safer staffing levels remained another high risk area and not sufficient progress had been made in year to be able to reduce the risk. The recruitment of nursing staff will be a key priority for the new Director of Human Resources and Workforce Development;

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innovation – information and technology systems – the majority of the actions had been completed. An ICO audit had been undertaken in 2014/15 and an IG Toolkit audit had been scheduled for 2015/16;

culture and people – although actions had been taken in relation to the roll out of the leadership programme, this remained a risk and an audit had not been included in the 2015/16 audit plan. Culture and people was high on the agenda of the Integrated Governance Committee.

Phil Brice advised that the 2015/16 Assurance Framework was being developed and this will take account of the Trust’s strategic objectives and annual objectives for 2015/16. The 2015/16 Assurance Framework will be presented to the July 2015 Audit Committee meeting. Roger Powell observed that three risks had been mitigated to target risks but queried whether the other risks had not been mitigated sufficiently because the target scores were too ambitious or whether actions had not been implemented. Phil Brice advised that there was a combination of factors but assured the Committee that the risks will remain on the Corporate or Divisional Risk Registers.

9. TERMS OF REFERENCE PROGRESS REPORT The Audit Committee had agreed to use its Terms of References as the Committee’s work programme and the progress made had been highlighted in the Terms of Reference progress report. The Audit Committee discussed the Terms of Reference and agreed that the report accurately reflected the progress made.

10. LOSSES AND SPECIAL PAYMENTS Pippa Moger presented the summary of losses and special payments report and highlighted the high number of other bad debts. The majority of these debts related to dental charges and the high number of debts reflected the end of year process. Although the number of debts was high, the individual amounts were small. Dental staff encouraged patients to pay at the time of treatment but this was not always possible. It was noted that the number of debts relating to dental charges was consistent with 2013/14. The Audit Committee noted the report.

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11. HOSPITALITY/SPONSORSHIP REGISTER Pippa Moger presented the hospitality/sponsorship register and advised that no declarations of hospitality/sponsorship had been received since the last Audit Committee meeting.

12. MATTERS ARISING HR and Training Audit Report Greg Rubins advised that discussions had taken place with Andre Frullo about a future audit and the timing of the audit. In view of the significant transformation project which was currently taking place, it was decided to include the audit in the 2016/17 audit programme as an earlier audit would not add significant value to the Trust. Ethical Standards Policy Phil Brice confirmed that an article reminding staff of the Ethical Standards Policy had been included in the staff newsletter What’s@On. Integration Phase 2 Project It was noted that an External Stakeholders Reference Group had not been established as external involvement was now included in the work of the focused work streams.

13. RISKS IDENTIFIED AND LESSONS LEARNED Roger Powell queried whether the culture in relation to travel claims was a risk and whether there was a risk that staff would leave the Trust because of the change in travel mileage rules. It was noted that culture was already a high priority area and was being followed up by the Integrated Governance Committee and also by other Committees. Phil Brice advised that culture had been raised as part of the staff survey findings discussions and the development of a cultural thermometer with clear measures was being followed up with the Interim Director of Human Resources and Workforce Development. Phil Brice and Pippa Moger were asked to take this back to the Executive Team meeting and to ask the Executive Team to develop a process for agreeing cultural measures and the monitoring of the measures. The Audit Committee agreed that there was a risk in relation to staff and unintended consequences in relation to culture.

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14. ANY OTHER BUSINESS Lynn Pamment, Andy Knight and Greg Rubins left the meeting for this agenda item. External Audit Tender Pippa Moger advised that PriceWaterhouseCoopers’ contract will expire on 31 May 2015. As the contract had already been extended to the maximum number of years, a tender exercise had been undertaken. An Evaluation Panel, which also included Roger Powell, Judith Newman and two Governors, had been set up to review the tenders and presentations by two bidders took place in December 2014. Pippa Moger set out the findings of the tender exercise and it was noted that the Audit Committee will be required to present its recommendation on the successful bidder to the February 2015 Council of Governors meeting. The Audit Committee accepted the recommendation from the Evaluation Panel to award the contract to KPMG. Judith Newman advised that the recommendation will be presented to the Council of Governors meeting for their approval. Minutes of the Confidential Audit Committee meeting held on 15 October 2014 The minutes of the Confidential meeting held on 15 October 2014 were approved as a true and accurate record. Roger Powell proposed, Judith Newman seconded and the Audit Committee approved the minutes of the meeting held on 15 October 2014. Lynn Pamment, Andy Knight and Greg Rubins rejoined the meeting. Outstanding Internal Audit Reports It was agreed that any outstanding audit reports will be presented to the May 2015 Audit Committee meeting.

15. DATE AND TIME OF NEXT MEETING The dates for 2015 were confirmed as follows: Wednesday 27 May 2015 (annual accounts) (Room 4, BCH) Wednesday 1 July 2015 (Room 4, BCH) Wednesday 14 October 2015 (Room 2, BCH)

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Wednesday 13 January 2016 (Room 2, BCH) Wednesday 20 April 2016 (Room 2, BCH) It was noted that all future Audit Committee meetings will be held in Bridgwater Community Hospital.

16. INFORMAL SESSION FOR AUDITORS/NON-EXECUTIVE DIRECTORS

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Ratified Minutes of the Audit Committee meeting held on 27 May 2015 July 2015 Public Board - 1 –


MINUTES OF THE AUDIT COMMITTEE MEETING HELD ON 27 MAY 2015 IN THE SHEPPEY ROOM, THE EXCHANGE,

BRIDGWATER

PRESENT: Judith Newman Non-Executive Director (Chair) Barbara Clift Non-Executive Director Roger Powell Non-Executive Director IN ATTENDANCE: Lynne Pamment Price Waterhouse Coopers Rachael Tomlinson BDO Adam Spires BDO Stephen Ladyman Chairman Edward Colgan Chief Executive Phil Brice Director of Governance and Corporate Development Pippa Moger Director of Finance and Business Development Andy Heron Chief Operating Officer (for item 7) Claudine Brown Integration Phase 2 Project Manager (for item 7) Lindsey Blackford Deputy Director of Finance Richard Hogger Interim Associate Director of Finance Chris Upham Assistant Director of Finance Ria Zandvliet Secretary to the Trust 1. APOLOGIES

Apologies were received from Phil Dolan (Non-Executive Director).

2. DECLARATION OF INTERESTS RELATING TO ITEMS ON THE AGENDA There were no declarations of interests relating to items on the agenda.

7. INTERNAL AUDIT MEMORANDUM – MANAGEMENT AND SERVICE REDESIGN – SERVICE INTEGRATION It was agreed to bring the internal audit agenda items forward on the agenda. Rachael Tomlinson presented the report and advised that the second phase of the audit had highlighted areas of good practice, including the skill mix review and staff consultation. The decision to

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carry out extensive consultation will delay the project by a few weeks, but it was good practice to consult. The second phase audit had identified one high and one medium priority recommendation. The high priority recommendation related to the need for the implementation plan to include monitoring and progress information for all tasks, to record all actions to be undertaken by each of the Task and Finish Groups and to monitor progress against these actions. It was acknowledged that improvements had already been made to the format of the implementation plan. The medium priority recommendation related to the need to ensure that the scoring of the risks in the IP2 risk register was consistent with the risks in the Board Assurance Framework and for lead managers to be identified for all risks. Andy Heron commented that the IP2 project had been very successful to date but the transformation model and the financial savings were not yet being delivered. The project took more the form of a programme and Andy Heron felt that internal auditors had not fully understood what the programme was aiming to achieve. Andy Heron further advised that a large number of staff were involved in what was a highly complex area and it was recognised that it was important to remain flexible and develop new strands of work if required. Project Board meetings took place on a regular basis and in addition fortnightly staff consultation meetings had been set up. All meetings were formally recorded. The risk register and action plan were reviewed and updated on an ongoing basis. The risk register will be amended to ensure that it was aligned to the Board Assurance Framework. Clear and measurable KPIs will be developed and will be aligned to the objectives of the project plan. It was recognised that not sufficient attention had been paid to providing sufficient assurance on the robustness of processes and project support and admin support was being recruited to strengthen the project team. Claudine Brown commented that the original project plan was very task based and was not suitable for driving this large project forward. The plan had now been simplified and the key milestones were now clearly identifiable. The actions to be undertaken by the Task and Finish Groups were recorded separately from the implementation plan and this had not been highlighted as an issue as part of the first phased audit. Progress against the key milestones was on target in spite of the four week delay resulting from the consultation process.

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Claudine Brown reported that the work of the Task and Finish Groups was nearing completion and the implementation plan will be amended to take account of the work of the Task and Finish Groups. Claudine Brown tabled a copy of the current implementation plan, IP2 risk register and the IP2 dashboard and it was noted that the implementation plan will be discussed at the June 2015 Finance and Performance Committee meeting. The IP2 balanced dashboard included clear KPIs and linked the IP2 objectives to the strategic priorities. Judith Newman advised that she was encouraged by the significant amount of work that had taken place and asked auditors views on the progress made. Auditors were asked to share and exchange information with the IP2 project team on an ongoing basis and not necessarily await the next audit. Rachael Tomlinson confirmed that discussions had taken place with Andy Heron and Claudine Brown about the sharing of information on an ongoing basis. Roger Powell commented that the difference between the implementation plan and the Board Assurance Framework as commented on by internal auditors did not concern him and he expected there to be differences. What was a concern to him was whether there was a clear understanding what the IP2 project was going to deliver as he felt that not all Board members may have a clear overview. This view was reiterated by Barbara Clift. Barbara Clift commented that it was expected that financial targets will be met but asked for more assurance on the impact of the project on clinical pathways. Claudine Brown advised that this work was being taken forward by Tash and Finish Groups whose work on developing clinical models for i.e. people with long term conditions, was near completion and the process was still very much a “live” process. Following the completion of the work of the Groups the findings will need to be communicated and this included a report to the Board. Andy Heron advised that a number of project critical meetings will be held in the next few weeks and it was expected that more detailed information will be available mid June 2015. Rachael Tomlinson confirmed that, from an auditor’s perspective, she was content with the progress made. Andy Heron and Claudine Brown left the meeting.

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6. INTERNAL AUDIT REPORT – IT REVIEW – ICO ACTION PLAN Adam Spires presented the report and advised that the report provided moderate assurance for design but limited assurance for the effectiveness of processes. The scope of the audit had been limited to the assessment of the level of implementation of the ICO action plan. The audit had identified one high priority recommendation relating to the need to review the agreed ICO actions and re-assess the resources required for their full implementation and to prepare a revised action plan with realistic timescales for agreement with the ICO. The limited assurance was as a result of two high risk related actions not having been fully completed. Adam Spires advised that it was recognised that significant improvements had been made since the appointment of a new Information Governance Manager and the revised action plan submitted to the ICO showed a fair reflection of progress made. Phil Brice advised that the audit had been useful. In relation to the findings of the audit, the comments in relation to the timescales were fair and the delay had been caused by three out of the eight directorate team members being off for a long time. Contingency plans had been developed to support greater resilience in the event of future workforce challenges that impact on service delivery. The two high risk areas related to the ability to close down certain parts of RiO if a patient objected to the sharing of their information and the need to ensure that contracts were in place with organisations with whom it handled data. These actions were being implemented. It was noted that the final action plan had been submitted to the Information Commissioner’s Office on 10 April 2015 but the ICO’s response on the final action plan and evidence submitted was still awaited.

3.

“GOING CONCERN” STATEMENT Judith Newman acknowledged that the timescale for producing the annual accounts, report and quality report was very tight and that there was great pressure on teams to meet the timescales. The achievement of the timescales was a credit to all teams. Pippa Moger presented the report and advised that in preparing the accounts, the Trust must consider whether the “going concern” assumption was appropriate. Management had assessed that the Trust was a “going concern” and the report set out the basis for this

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assessment and included an overview of the 12 month rolling cash flow. The Audit Committee discussed the “Going Concern” statement and noted the proposed disclosure to be included in the annual report. Roger Powell proposed, Judith Newman seconded and the Audit Committee agreed to recommend to the Board the approval of management’s assessment that the Partnership Trust is a “going concern”, that the accounts have been prepared correctly on that basis and that the following disclosure will be made in the annual report and accounts: “The annual accounts have been prepared on the basis that the Trust is a going concern. This means that the Trust’s assets and liabilities reflect the ongoing nature of the Trust’s activities. After making enquiries, the directors have a reasonable expectation that Somerset Partnership NHS Foundation Trust has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the “going concern basis in preparing the accounts.”

4. ANNUAL ACCOUNTS AND ANNUAL REPORT 2014/15 INCLUDING THE ANNUAL GOVERNANCE STATEMENT AND ACCOUNTING POLICIES The Committee agreed to reorder this agenda item and to first discuss the external audit report. External Audit Report – report to those charged with governance Lynn Pamment presented the external audit report on the annual accounts and annual report and advised that all audit work had now been completed and an unqualified audit opinion will be issued. A small number of issues were outstanding at the time of producing the report, but these had now been completed and no additional issues had been identified which will need to be drawn to the attention of the Audit Committee. An updated ISA 260 report was tabled. Lynn Pamment highlighted the audit approach – which was consistent with the 2014/15 external audit plan presented to the Audit Committee and set out the significant and elevated risks identified in the audit plan and the audit approach taken to address the risks: risk of management override of controls – a testing exercise

was undertaken and no issues had been identified;

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risk of fraud in revenue recognition – the testing exercise

showed that auditors were satisfied that the revenue amounts recognised in the account were materially correct and that disclosures were in line with the FT ARM;

risk of fraud in expenditure recognition – the testing exercise showed that auditors were satisfied that expenditure amounts recognised in the account were materially correct and that disclosures were in line with the FT ARM;

valuation of property, plant and equipment - a number of issues were identified from the detailed review relating to the historic cost accumulated depreciation balance and in year historic cost depreciation charges in certain instances, and impairment and revaluation postings. A number of adjustments to the accounts were made and, following these adjustments, auditors were satisfied that the valuation of property, plant and equipment recognised within the accounts were materially correct and that disclosures were in line with the FT ARM.

Lynne Pamment further highlighted: the confirmation of auditors’ independence;

the review of the Annual Governance Statement – no areas

of concern had been identified;

the assessment of the Trust’s arrangements for ensuring the economic, efficient and effective exercising of its functions;

the Quality Report audit requirements;

the recommendations in relation to capital accounting and the valuation of property, plant and equipment;

progress against the 2013/14 external audit recommendations;

the need to assess the risk of fraud that financial statements taken as a whole were free from material misstatement, whether caused by fraud or error;

the fees update for 2014/15;

the summary of the corrected misstatements – all relating to the valuation of property, plant and equipment;

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the enhanced audit report to the Council of Governors, which was a new requirement and which focused on the scope of the audit and areas of focus;

the letter of representation to be signed by the Trust. The Audit Committee noted the clean audit report and congratulated the finance team on this excellent achievement. The Audit Committee asked Pippa Moger to give an update on the actions to be taken to resolve the valuation of property, plant and equipment issues going forward. It was recognised that these issues were historic issues and that they did not affect the financial position. Pippa Moger advised that the issues were historic issues and impacted on the reconciliation of the ledger and asset register. To avoid carrying these issues forward into subsequent years, it has been decided to set up a new fixed asset register. The development of the new asset register will ensure that all historic information will be recorded in one area and this will make it easier to ensure that all District Valuer entries will be included in the relevant parts of the accounts and not fed through I&E. In addition, work had also been carried out on the revaluation reserve. These actions will ensure that the same issues will not re-occur in subsequent years. Pippa Moger advised that the recommendation from the 2013/14 external audit relating to the sign off of budgets by budgetholders had not been fully completed. Although not all budgetholders had signed off their initial 2014/15 budgets the budget setting process had been improved and initial budgets for 2015/16 had been signed off by all budgetholders. In relation to the identification of capital commitments, Richard Hogger advised that a formal process had been put in place in year. The Audit Committee discussed and noted the external audit report and thanked Lynn Pamment, her team and the finance team for the excellent audit result. 2014/15 Annual Accounts Judith Newman advised that a reconciliation report had been produced to link the annual accounts information to the March 2015 finance report. Richard Hogger presented the report and advised that the monthly finance reports were set up to support divisional reporting whilst the annual accounts were set up in a different way.

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The majority of the information was the same, and the main difference related to the need to include movements in property balances in the accounts. The Audit Committee agreed that the annual accounts and annual report, including the Annual Governance Statement, had not highlighted any issues of which the Audit Committee had not been aware. Roger Powell proposed, Judith Newman seconded and the Audit Committee agreed that it was content with the accounting treatment and judgements made in respect of the misstatements and agreed to recommend that the Board approved the 2014/15 annual accounts. 2014/15 Annual Report Phil Brice presented the 2014/15 annual report and advised that the format and content of the report was prescribed and the Trust’s compliance with the required disclosures had been checked by external auditors. A summary and public facing version of the report will be produced for the Annual Members’ meeting to be held in September 2015. It was noted that page references will be checked in the final version. The Audit Committee discussed the annual report. Barbara Clift proposed, Judith Newman seconded and the Audit Committee agreed to recommend that the Board approved the 2014/15 annual report. Audit Committee 2014/15 Annual Report Judith Newman advised that the report set out the work of the Audit Committee during 2014/15 which enabled the Audit Committee to confirm that: the draft Annual Governance Statement was consistent with

the view of the Committee on the organisation’s systems of internal control and that it supported the Board’s approval of the Statement;

the integrated governance, risk management and internal control systems across the organisation supported the achievement of the organisation’s objectives;

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the Committee reviewed and updated the Assurance Framework and believed that the revised assurance framework provided adequate assurance.

The Audit Committee discussed its annual report. Roger Powell proposed, Judith Newman seconded and the Audit Committee supported the above confirmations.

5. QUALITY ACCOUNTS AND EXTERNAL AUDIT REPORT ON THE QUALITY ACCOUNTS External Audit Report on the 2014/15 Quality Report Lynn Pamment presented the external audit opinion on the Quality Accounts and advised that the report provided unqualified limited assurance in respect of the content of the Quality Accounts and in respect of the mandated performance indicators. It was noted that this was the highest level of assurance available. Lynn Pamment highlighted the key findings from the audit report: Programme Approach (CPA) patients receive follow up

contact within seven days of discharge from hospital – substantive testing had not identified any issues;

minimising delayed transfers of care – a difference had been identified between the figures reported by the Trust and the figures reported by the Health and Social Care Information Centre (HSCIC) in June 2014. A total of 110 delay days were omitted from the figures reported by the HSCIC and the data has been amended. The figures reported by the Trust fully reconciled for all remaining months;

the indicator selected by Governors was “safety incidents involving severe harm or death” - substantive testing had not identified any issues.

The Audit Committee discussed and noted the external audit report and the unqualified limited assurance opinion. 2014/15 Quality Report Phil Brice presented the Quality Report and advised that feedback from Healthwatch and Somerset Clinical Commissioning Group had now been received and tabled a copy of the letters received. It was noted that the feedback was positive about the quality of the care provided. The Quality Report will need to be updated to include the letters from Healthwatch and the CCG and in addition, the patient experience section will need to be updated to include information

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from the 2014/15 annual complaints, compliments and PALS enquiries report presented to the May 2015 Board meeting. The Audit Committee discussed the report and commented/noted that: the report was in an easily readable format;

page six/seven – the number of avoidable pressure ulcers

on page six was inconsistent with the number of avoidable pressure ulcers in the graph on page seven;

the data reflecting the number of falls did not highlight that there had been a reduction in the level of harm caused by the falls and it was queried whether further data could be included. Phil Brice advised that due to the timescale, it will be difficult to include this information in the 2014/15 Quality Report but agreed to include this in the 2015/16 Quality Report;

the heading “OFSTED inspection of Somerset County Council’s arrangements to safeguard and protect children” on page 30 should be moved to the top of page 31;

Healthwatch feedback included a suggestion to label the axis in all graphs and Phil Brice agreed to action this.

Phil Brice agreed to amend the Quality Report to take account of the Audit Committee’s comments. Judith Newman proposed, Roger Powell seconded and the Audit Committee agreed to recommend that the Board approved the 2014/15 Quality Report.

The Audit Committee thanked the finance and corporate governance teams for the excellent reports. Judith Newman advised that this was Lynne Pamment’s last meeting as the external audit contract had been awarded to KPMG. The Audit Committee thanked PricewaterhouseCoopers staff for their hard work and excellent relationship with Trust’s staff.

8. RISKS IDENTIFIED AND LESSONS LEARNED

The Audit Committee discussed whether the “going concern” position was a longer term risk in view of changes in commissioning arrangements. However, it was agreed that this was not a high risk which would impact on the “going concern” position for the next 12 months.

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Phil Brice advised that the 2015/16 Board Assurance Framework will be presented to the June 2015 Integrated Governance Committee and will include a risk in relation to the Cobic arrangements. No lesson learned have been identified.

9. DATE AND TIME OF NEXT MEETING The dates for 2015 were confirmed as follows: Wednesday 1 July 2015 (Room 4, BCH) Wednesday 14 October 2015 (Room 2, BCH) Wednesday 13 January 2016 (Room 2, BCH) Wednesday 20 April 2016 (Room 2, BCH) It was noted that all future Audit Committee meetings will be held in Bridgwater Community Hospital.

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Ratified minutes of the Audit Committee meetings held on 15 April 2015 and 27 May 2015 July 2015 Public Board

Links to Strategic Themes:

Identify to which of the Somerset Partnership NHS Foundation Trust strategic themes this report relates by including a cross behind the relevant theme(s)

Quality and Safety X Innovation X

Viability and Growth X Integration X

Service Delivery X Culture and People

X

Links to the Assurance Framework:

Identify to which risks of the Assurance Framework this report relates

strong governance processes support all the areas of the Assurance Framework.

Links to the NHS Constitution and Trust Values:

Identify the Values to which the issues raised in this report relate by including a cross behind the relevant value(s)

Working together for patients

X Compassion X

Respect and dignity X Improving lives X

Commitment to quality of care X

Everyone counts

X

Links to CQC Domains:

Identify which of the CQC domains are covered by this report by including a cross behind the relevant domain(s)

Is it safe? X Is it caring? X

Is it well-led? X Is it effective? X

Is it responsive to people’s needs? X

Legal or statutory implications/

requirements:

under its terms of authorisation and Monitor’s compliance framework the Trust is required to ensure the existence of appropriate arrangements to provide representative and comprehensive governance in accordance with the Act.

Public/Staff Involvement History:

not applicable.

Previous Consideration:

the minutes of the Audit Committee meetings are presented to the Board after every Audit Committee meeting.

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