Text removed from agenda item 6.4 of all copies of Minutes ... · 9/14/2017 · Craige Richardson...

Agenda item 10.1(i)

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Text removed from agenda item 6.4 of all copies of Minutes, draft and approved received in the public domain due to commercial sensitivity.

Audit Committee 14 September 2017

Draft Minutes

Present: Caroline Johnstone Non-Executive Director (Committee Chair) Carl Chambers Non-Executive Director In attendance: Chris Ayres Head of Facilities (SJUH site) (for agenda item 3.2) Jo Bray Trust Board Secretary Craig Brigg Director of Quality Hugh Cummings Deputy Head of Estates & Facilities

Business Unit (for agenda item 3.2) Tracy Gill Trust Board & Membership Administrator David Gregory Head of Internal Audit Robert Hakin Associate Director of Corporate Planning &

Business Development (for agenda item 4.4(iii)) David Hay Head of Financial Services Craige Richardson Associate Director of Estates & Facilities

(for agenda items 3.2 & 4.4(iii)) Dean Royles Director of Human Resources &

Organisational Learning (for agenda items 4.4(i) and 4.5))

Cath Senior Senior Training & Development, Estates & Facilities (for agenda item 4.4(iii))

Tim Spensley Head of Procurement & Supplies (for agenda item 6.2)

Mike Tunstall Corporate Planning & Business Development Manager (for agenda item 4.4(iii))

Phil Wood Clinical Director – Oncology & Consultant Immunologist (for David Berridge)

Observing: Steve Bush Clinical Director – Acute Medicine &

Urgent Care – Shadow Board Programme Mohammed Hussain Insight Programme Apologies: Steve Appleton Mazars, External Auditor David Berridge Deputy Chief Medical Officer/Medical Director

Operations Gareth Davies Mazars, External Auditor Allison Page Non-Executive Director Chris Slater Associate Director, Commercial & Procurement (for

agenda item 6.2)

PLEASE REFER TO THE NARRATIVE FOR THE ACTUAL AGENDA ITEM ORDER OF DISCUSSION

ALL Audit Committee and Trust Board Members to note that text at agenda item 6.4 is not to be provided to Mazars, or reported in the public domain as it relates to contractual confidentiality.

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0 Private Meetings:

0.1 With the Director of Finance

There was a private meeting between the Members and Director of Finance. Simon Worthington left the meeting

0.2 With Internal Audit

David Gregory joined the meeting There was a private meeting with the Head Internal Audit.

1 Standing Items

1.1 Welcome and Introductions; Apologies for Absence; and Declarations of Interest

Apologies for absence were received from Allison Page and David Berridge; and from Steve Appleton and Gareth Davies, Mazars. The meeting was quorate. Phil Wood attended for David Berridge. No representatives from Mazars attended the meeting which had twice been rescheduled from the original date, as they had their firms annual national conference and had agreed with Caroline Johnstone that their attendance was not required on this occasion. Caroline Johnstone welcomed Phil Wood who was attending for David Berridge, Mohammed Hussain, Insight Programme and Steve Bush, Shadow Board Programme, who would observe the meeting.

1.2(i) Patient and Clinical Focus: Quality Briefing

Craig Brigg provided an update on the refreshed requirements of the CQC regarding the new criteria of ‘Well-led Framework and Use of Resources’. He referenced the report that would be presented to public Board in September and the proposed discussion at the October Time-Out. He reported that CQC inspectors would be visiting the Trust with greater frequency to build up a profile of the organisation, rather than larger ‘one-off’ assessments. The Committee reflected on the new approach and the potential challenges of improving the Trust’s rating from good to outstanding, as assessments would take more time to build up a profile against an inspection cycle. Phil Wood and Craig Brigg provided an update on the CQC’s review of mortality data that was required to be presented to Boards.

1.3(i) Draft Minutes of Last Meeting held on 24 May 2017

The minutes of the meeting held on 24 May 2017 were agreed to be a correct record.

1.3(ii) BLUE BOX ITEM – Chair’s Summary Report presented to the 27 July 2017 Board meeting

The report was provided in the Blue Box for information and no further discussion took place at the meeting. The Committee received and noted the report.


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1.4 Matters Arising

1.4(i) 4 May 2017 – item 1.4(i) Review of Disposal of Medical Equipment & Devices Audit Committee to review high value items and provide comparison with other Trusts

David Gregory updated on the current position and reported that the Terms of Reference of the Internal Audit review would be extended to cover the issues raised within the discussion at the Audit Committee and the report was to be presented to the 7 December 2017 Committee meeting

David Gregory

1.4(ii) 4 May 2017 – item 1.4(iv) Review SFIs/Scheme of Delegation - Benchmark against other large teaching hospitals the defined staff

group set out in SFIs for authorising spend - Investigate if data available to support understanding value approved

under delegated authority at individual and across CSU levels

David Hay updated the Committee referencing with three trusts: Newcastle Hospitals NHS Foundation Trust (NFT); Central Manchester University Hospitals NHS Foundation Trust (CMUT); and, Guy’s and St Thomas’ NHS Foundation Trust (G&TFT). He reflected that NFT Standing Financial Instructions and Scheme of Delegation (SoD) was broadly similar to LTHT’s. G&TFT and CMUT were at a higher level, with each business unit having localised SoD and therefore it was difficult to draw comparisons. Simon Worthington reflected that there were a range of accounting systems within the NHS which set boundaries and thresholds for staff ordering and spending. LTHT used Oracle, which was a common system used in the NHS. Caroline Johnstone enquired of Steve Bush and Phil Wood whether they were able to summarise the number of staff in their CSUs who could authorise spending, and their respective structures and processes were explained. They were unable to cite a specific number and noted this would vary across CSUs depending on size and type of operation. They noted that slowing down the processes of supply was limiting to the Trust and Caroline Johnstone reflected on her own experience in non-NHS organisations of controlling spend. Simon Worthington explained in more detail about material management systems for stock control and the controls that were in place, and the stronger governance and accountability which was now set in the financial management systems. Caroline Johnstone and Carl Chambers noted the positive benefits of the Scan4Safety update and reflection of staff purchasing habits. Caroline Johnstone sought to clarify whether the Trust had the right ‘gatekeepers’ and Phil Wood reflected on the Oncology CSU and noted the cultural shift about savings which did need to be better understood. Steve Bush observed his experience of Waste Reduction meetings which were about challenging processes within the CSU. He noted that ‘waste walks’ were now part of the ‘language’ of CSUs.

1.4(iii) 4 May 2017 – item 5.1 Draft AGS – provide a report to clarify how the estimated £220 million savings over three years had been built up


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Simon Worthington noted that significant savings had been achieved across the Trust – moving forward, he would want the Trust to describe recurrent savings and he would not be referencing this specific number again. He reflected that a detailed reconciliation would not add value and explained more detail to the accounting processes.

1.5(i) Review of Action Tracker

The Action Tracker was reviewed and progress noted.

1.5(ii) Any items / Actions from Other Committees

There were no items or actions from other Committees discussed.

2 Briefings

2.1 Chair of the Audit Committee

Caroline Johnstone provided an update following her attendance at the Leeds Health & Social Care Board-to-Board meeting which had taken place on Tuesday 12 September. She noted the discussion on the Winter Plan and the drive to gain momentum in partnership working across the City. She reflected on a leadership walkround and a senior nurse who had provided an insight into her role of managing staff and budgets balanced with a passion for patient care.

3 Strategic Risk and Governance

3.1(i) Strategic Risk Area: Financial Improvement Plan; Observations from the new Director of Finance

The report was presented to seek the Committee’s approval for a comprehensive Finance Improvement Plan (FIP) which would support the attainment of the Trust goal of financial sustainability. The report included the following appendices: Appendix 1: FIP Performance Dashboard Appendix 2: FIP Programme Plan Appendix 3: Audit Local Evaluation assessment Appendix 4: Board Governance Assurance Framework assessment Appendix 5: Basic process assurance assessment

Appendix 2 identified individual projects which contributed to delivering a sustainable surplus. The report stated that a range of baseline financial governance assessments had been undertaken with Internal Audit using available good practice frameworks that had been used in the NHS:

Auditors Local Evaluation Framework (ALE);

Board Governance Assurance Framework (BGAF); and,

Basic Process Assurance Checklist.

The results of the reviews were set out at appendices 3 to 5. Simon Worthington reflected on the need to move from making in-year savings to longer term financial sustainability. He set out the programme plan with external scrutiny and outlined the Key Performance Indicators (KPIs) in the report and actions to deliver these. Noting the need for strong governance he explained the range of good practice guides in more detail and drew attention


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to Appendix 1 of the report which set out the self-assessment against these frameworks. He stated that there was improvement required and the plan to March 2018 and beyond. The discussion explored the governance and achievement of signing off budgets for 2018/19 internally prior to the financial year-end aiming for the end of February 2018. Caroline Johnstone noted the NHSI visit which had been postponed from earlier in the year and Simon Worthington explained more on the recent discussions and information provided to NHSI. Their visit was now likely to take place during October 2017 and would include ‘testing out’ the information they had received. Caroline Johnstone enquired about the resources to achieve the FIP and Simon Worthington explained the processes that were in place, the Finance for Leeds Programme, which would begin in December 2017, to provide additional skills and support to staff. Referring to the financial team, he reported on the new organisational staff development programme, and reflected upon the finance team time-out session, with the ambition for the team to be the best to support the Trust and would define a strategy for the finance team to achieve this. He outlined the accreditation process for the finance team via external assessment and also the reporting processes each month with external scrutiny, and re-casting of the financial risk register against the financial plan. Referring to Appendix 2, FIP High Level Programme, Simon Worthington drew attention to row 1g; the Project Management Office (PMO) which was explored in further detail, noting that this would be comprised of internal and external staff. Craig Brigg reflected that the CCGs asked annually for an assessment on finance and quality and it was confirmed by Simon Worthington that this would be addressed via the PMO to re-design the Quality Impact Assessments (QIAs) for savings with Waste Reduction schemes and would also underpin the CQC requirements for the criteria ‘Use of Resources’. Caroline Johnstone requested QIAs be given more prominence in the action plans and in future update reports. This would be a standing agenda item at future Audit Committee meetings. The Committee received and noted the report and support the comprehensive Finance Improvement Plan.

Simon Worthington

Jo Bray (agenda)

3.1(ii) Delivery of the Financial Plan

The report advised the Committee of measures currently being taken to identify specific financial cost reductions from asset valuation, asset lives and other accounting opportunities; and provided assurance that these measures were viable, compliant with accounting standards applicable to the NHS and were being fully discussed with the Trust’s external auditors, Mazars. They were all measures already in place at many other Trusts he explained.


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The overall financial plan to achieve the current financial year’s revenue control total was set out in the report. Capital Charge improvements, set out in the report, for four specific schemes had been discussed with Mazars at a meeting on 29 August 2017. The Trust’s estate was valued at replacement cost using the Modern Equivalent Asset approach. The current valuation was based on an underlying assumption that re-provision of services would be multi-site. The report noted the plan was to seek a valuation based upon the assumption of alternative single site. The planned charge reduction of £2 million was an estimated figure which would incorporate reductions to both depreciation and Public Dividend Capital (PDC) dividend charges. The reductions would flow from an anticipated fall in the current £496.7 million book value of land with a valuation date of 1 April 2017. Section 2.2 of the report reflected that the useful economic lives applied to new equipment, IT and intangible assets for the purpose of calculating depreciation charges would be extended. The Trust currently applied lifespans of between five and 10 years to the assets in these classes and this needed to be reviewed. The work would be completed by mid-September and the results used to form a final judgement on the revised lives to be applied. The report indicated that an average extension of two years, yielding a saving of £4.6 million, was a reasonable estimate. The report set out the proposal for the re-evaluation of the estate that would be reported to Board in due course, exploring the potential for £2.7 million cost reduction. The report highlighted that currently the Trust started to depreciate assets in the quarter following acquisition or implementation. The Trust was to adopt the approach of commencing depreciation on new assets at the beginning of the following financial year. This would deliver a small reduction of £500,000 in 2016/17. Section 3 of the report set out Balance Sheet flexibility across five headings: Annual Leave Accrual – The Trust’s accrual for un-taken annual leave was currently £3.7 million and was based on a calculation of costs linked to actual records of carried forward leave. Recent work had shown that in each of the last three years actual payments for such leave had been approximately £300,000; Bad Debt Provision – Total bad debt provisions last year were £2.3 million (NHS and non-NHS). The Trust had never recorded a year in which its full provision had been utilised. This year there was good evidence to support the fact that aged debt was reducing as previously implemented measures gained traction;


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Commissioner Contract Risk – There was £1 million of Commissioner contract income risk in the Trust’s year-end accrual which had been received in 2017/18. The accrual would be available for ‘reversal unused’; Part Completed Spells – Partially completed spells was the accrual set at the end of the year to factor in estimated income from Commissioners to cover incomplete care episodes at 31 March. The report stated that currently it was not possible to put a high level of confidence on achieving the best-case increase in income but the information now available to the Trust would be reviewed during September; and Expenditure Accruals – Expenditure accruals against income received in 2016/17 were specific sums received for set purposes. The report stated that £500,000 of these could be reversed and other general year-end accruals would yield at least a further £300,000. David Hay provided a more detailed explanation of items within the report drawing attention to the recurrent reductions to depreciation and Public Dividend Capital (PDC) as a result of a lower valuation of the Trust’s estate. Caroline Johnstone commended the report observing that there was significant work required to achieve within the timescale. She was satisfied that the auditors were being engaged early and noted that there would be strong oversight of all these matters required at the Audit Committee. Simon Worthington outlined the requirement of a Board sign-off of ‘service rationale’ to support the processes set out in the report, which would be about setting out the Trust position if it were possible to redevelop the Trust on a single site. This did not conflict with Building the Leeds Way which sought to provide high quality, patient centric services within a reduced footprint of the current estate. David Hay reflected on the work required to financially model the provision of all services on a single site in order to determine a valuation. David Hay spoke briefly about the extension to asset lives and made reference to evidence that assets were being used beyond their defined asset lives, which would underpin the discussions with Mazars. The costs associated with the options to re-evaluate were explored further. Simon Worthington explained; should the Trust choose to pursue a Special Purpose Vehicle (SPV) model this would require support of the Board, NHSI and approval by the Secretary of State. The Committee received and noted the report.

3.2 Strategic Risk Area: Governance

Update on the Use of Taxis

Craige Richardson, Chris Ayres and Hugh Cummings joined the meeting The report provided an update on the use of taxis and included an action plan to reduce spend. Supporting information included CSU summary reports as at July 2017. Internal Audit had completed an initial review of taxi expenditure in 2014 with follow-up reviews in 2015, May and December 2016. Report No.2015/5


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Contract Taxis – Follow-up. Overall taxi spend across the Trust had been a cause for focus and attention, increasing annually since 2012/13. Controls and measures to reduce spending had been largely ineffective. The expenditure for 2016/17 on the centrally managed contract was £607,849. Spend on the centrally managed contract had reduced by £200,000 in the last two years and remained stable looking at the 2017/18 forecast. Analysis of the first quarter financials of the same contract suggested that taxi spend was forecast at £560,000 for 2017/18. The cost of taxis could be split into three distinct areas: staff movement; goods movement; and, patient movement, which were explained in more detail in the report. Amber Cars, the current Trust taxi contractor had been re-awarded the contract which commenced on 1 July 2017. The new contract provided an opportunity for the Trust to cleanse the taxi ordering and usage processes and software booking system. Subsequent to the award of the new contract, the facilities team had attempted to cleanse the e-booker system, reducing the active users from 2,252 to 684 by removing users who had not been active for over six months. An additional 372 users that had not used their account for the last three months had been suspended. All current 684 ‘live’ users were being verified by the General Manager of each CSU. Expenditure on booking centrally managed taxis had reduced by over £200,000 in the last few years and had stabilised recently. The trend in category use of taxis appeared to demonstrate an increase in patient use, however, this should be considered alongside savings of over £336,000 on the patient transport contract in 2016/17. Craige Richardson provided context to the report noting the audits that had taken place. He reflected that three years previously the Trust spend on taxis had amounted to almost £900,000 and he outlined the savings to date. He drew attention to the analysis and improved quality of data which was now provided for the re-tendered service and the reduction in overall number of authorised users as set out in the report. Monthly reporting was provided to each CSU on spend by category. He reflected on the increased spend on taxis for patients and noted the corresponding reduction in the Patient Transport Service (PTS) contract. He spoke of the move towards using volunteers for patient transport which had benefits to patient experience as well as greater flexibility for timing. Craige Richardson noted that future reporting to the Audit Committee would be in the form of a dashboard which was supported and would also include a table summary of total transport spend highlighting key points to note. Responding to a question from Simon Worthington, Craige Richardson confirmed that CSUs were responsible for their own taxi spend. Simon

Craige Richardson


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Worthington explained more about the CCG spend versus the LTHT PTS and sought to understand that costs of, for example, patient discharge, were being paid by the appropriate organisation. Steve Bush provided insight to the Acute Medicine & Urgent Care CSU, which had been reviewed. Taxis were often the most cost effective and cheapest method of transport and he reflected that this was a feature of the discussion in the CSUs waste reduction meetings. Caroline Johnstone sought assurances that taxis were an appropriate and effective cost and Craige Richardson noted the cultural issues which needed to be addressed. There was a wider issue regarding eligibility for patient transport and LTHT was part of the Yorkshire Ambulance Service working group but he stressed the service needed to work for both LTHT and CCGs and was responsive. Responding to a question from Carl Chambers, Craige Richardson confirmed that non-bed holding CSUs were addressing taxi spend. Caroline Johnstone suggested that re-authorisation of e-bookers to the system after 90-days might be too onerous and Craige Richardson confirmed the feasibility of the time period would be reviewed. Caroline Johnstone also suggested that there was still a need to show an overview of all transport spend over three years and to reconcile the reported costs to those reported by procurement (by supplier/contract). The Audit Committee supported the recommendations in the report which were:

- Performance management of all CSUs to ensure that the local taxi procedures and ‘no jobs’ reports were provided on a quarterly basis;

- All Trust use of taxis to be booked through the e-booker to improve understanding and knowledge of the usage;

- All CSUs to consult with their high value taxi booked within their CSU to target reduction in taxi spend; and,

- Performance management of all CSUs to ensure that they were complying with the current embargo on staff and patient movement in line with the Trust taxi procedure; and,

- Reporting to each audit committee to follow taxi processes and costs closely.

3.3 Corporate Risk Management

3.3(i) Board Assurance Framework

3.3(ii) Assurance on Corporate Risk Register

Committee to discuss how do these inform future agenda items – areas for strategic risk review

The report provided an overview of developments with the Trust’s Board Assurance Framework and Corporate Risk Register since the beginning of the 2017/18 financial year.


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The Audit Committee were to use this information to set future agenda of the Audit Committee for items for strategic risk review and scrutiny by the Committee regarding process and management. Craig Brigg set out the progress that had been made to-date. Operational risks were set out in the Corporate Risk Register (CRR) and the longer-term, strategic risks set out in the Board Assurance Framework (BAF). There was a wider discussion on the risks that were City-wide and were largely out with LTHT control. Caroline Johnstone requested inclusion of a summary sheet for the BAF. Craig Brigg provided assurance that there was a process in place to maintain the CRR and BAF and it was suggested that the discussions at the Risk Management Committee could be re-focussed to monitor progress. Caroline Johnstone noted the Committee should reflect on the risks which should be presented for its scrutiny and suggested the power station and infrastructure for assurance that processes were in place should be presented to the 7 December meeting. There was a need to set a programme of risks to be reviewed by the Committee for the year ahead. The Committee received and noted the new Board Assurance Framework and supported its adoption by the Trust Board and noted the review and updates to the Corporate Risk Register in 2017/18.

Craig Brigg

Craig Brigg/ Julian Hartley

Jo Bray Caroline

Johnstone / Carl

Chambers / Jo Bray

4 External Audit, Internal Audit and Anti-Fraud

4.1 External Audit: No items to report

As noted at agenda item 1.1 no representatives from Mazars attended the meeting which had twice been rescheduled from the original date. Discussion continued at agenda item 4.4(iii)

4.2 Internal Audit: Implementation of Audit Recommendations (1 Appendix – Summary of Outstanding High-Level Recommendations)

Discussion continued from agenda item 4.4(iii) The report provided an update to the Committee on the work that had been undertaken by Internal Audit regarding the implementation of audit recommendations. The report set out a summary of 123 active recommendations:

- 95 (77%) recommendations had been implemented; - 26 (21%) would be fully implemented:

o Within one month (1); o Within three months (10); o In more than three months (15);

- 2 (1%) recommendations were considered to be no longer appropriate. David Gregory reported assurance on the outstanding action from a 3 triangle report which would be implemented by the end of September 2017.


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Caroline Johnstone sought clarity that recommendations were realistic with appropriate timescales. This would be reported to the 7 December meeting along with an update on other IT issues also deferred. Referring to the recommendations which were categorised as ‘no longer appropriate’ she sought to understand there was appropriate justification for the categorisation and it was confirmed by David Gregory that justifications would have been received. The Committee received and noted the Implementation of Audit Recommendations (Summer 2017) Internal Audit Report.

David Gregory

4.3 Internal Audit: Progress Report

The report provided an update including assurances, key issues and progress against the Internal Audit plan during 2017/18; specifically from 14 April to 31 August 2017. The following reports had been finalised: Limited Assurance (3 Triangles): ID Medical Agency Staff Employment Checks (2017/01) [N.B. Refer to Audit Committee agenda item 4.4(i); Significant Assurance (2 Triangles): Consultant Job Planning (2016/29); Charitable Foundation – Charitable Funds (2016/32); Healthcare Income (2016/35) Deteriorating Patient (2016/37); Volunteers (2017/03); Estate Purchasing and Stores (2017/04); Clinical Governance: Trauma & Related Services CSU (2017/05); Full Assurance (1 Triangle): Medicines Supply Chain: Leeds Pharmaceutical Store Moor House (2016/34); Accounts Receivable (2016/36); Onboarding (2017/02); and, Adult End of Life Care (2017/07). It was confirmed that all outstanding cyber security reports had been formally issued. Responding to a question from Simon Worthington, full assurance reports were explored further to understand the definitions. Caroline Johnstone reflected on the previous debates on the terminology used and the positive descriptions used within the NHS. The Committee received the Internal Audit Progress Report and noted the levels of assurance provided. Discussion continued at agenda item 4.6

4.4 Limited Assurance Internal Audit Reports (3 Triangle Reports)

Discussion continued at agenda item 4.4(iii)


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4.4(i) BLUE BOX ITEM – Internal Audit Report No. 2017/01 ‘ID Medical Agency Staff Employment Checks’

Discussion continued from agenda item 5.1 The report was provided in the Blue Box for information following downgrading from 3 Triangles (Limited Assurance) to 2 Triangles (Significant Assurance). Dean Royles set the context to staff employed through agencies. Medical, allied health professionals and nurses were all employed through framework agencies which met national standards. He explained the oversight to nursing agencies was with the Chief Nurse’s team and medical with HR. He reminded the Committee of a commitment from an earlier meeting to carry out a spot check on nursing agency staff which had yielded a 3 Triangle, limited assurance, report as the audit had not been able to verify the information supplied by the agency. Dean Royles summarised that a subsequent audit had been carried out and the latest audit report, in draft, was 2 Triangles, significant assurance. The agency had not been able to provide full data relating to the quality of references and the Trust was to write to the agency requesting an appropriate response to be received by the end of October 2017. Failure to provide an appropriate response would result in the Trust raising concerns with the national framework which, ultimately, could result in the agency’s removal. There would be a further update to the 7 December meeting and the latest report would be circulated to the Committee once finalised. Discussion continued at agenda item 4.5

David Gregory

4.4(ii) Item Withdrawn

This item was withdrawn following production of the final agenda with subsequent item numbering retained.

4.4(iii) Patient & visitor Hotel (Review August 2016 – one year on – progress report)

Discussion continued from agenda item 4.3 Robert Hakin, Cath Senior and Mike Tunstall joined the meeting The report provided an update on the Patient and Visitor Hotel. Commissioners had continued to fund the Patient Hotel in 2017/18; Estates & Facilities (E&F) had made significant improvements to the management of the Patient Hotel; a weekend and Bank Holiday welfare room check was proposed from October 2017; and, an update on the situation in Children’s Services was also included as it was highlighted in the original Internal Audit report. On 24 August 2016, the Committee discussed the progress that had been made towards implementing the recommendations of Internal Audit Report No. 2015/25. The Committee had requested a further update after one year.


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The Commissioners have continued to support the Patient Hotel and in 2017/18 the contract contains a payment of £401,000; the total cost of the facility including overheads being circa £420,000. A recommendation of the Internal Audit report was to consider moving the management of the hotel from the Oncology CSU to E&F. This was completed in September 2016. The hotel remained a cost pressure for the Trust and for E&F which did not meet its budgetary income target of £32,000. Mike Tunstall drew attention to Commissioners who were now paying £401,000 towards the running costs of this facility within the contract and confirmed the internal change of governance to E&F as noted in the report. He noted the income at the end of Month 5 was £5,624 and extrapolated that to estimate the full year’s income at circa £13,000 as a contribution to the outstanding running costs. He reflected the income at Month 5 was slightly less than the same period last year, but noted that the Trust was seeing more patients. Caroline Johnstone sought to understand the current challenges with this facility and Cath Senior drew attention to the need for refurbishment as set out in the report which could now be funded via charitable donations received for this purpose. Carl Chambers sought confirmation that the priority would be accommodation for NHS patients and that a charge would be made for private patients using the hotel. The patient experience benefits were outlined by Phil Wood. Caroline Johnstone commended the changes implemented by the team and encouraged further thought as part of waste reduction to think boldly and to consider options to improve the demand for Friday and Saturday nights. She suggested this could be explored with, for example, staff rates, noting the current occupancy of 55%. Phil Wood spoke of the possibility to offer weekend accommodation for attendances at conferences which would be explored further outside of the meeting. Caroline Johnstone requested a further update to the Committee be provided in a year’s time. Robert Hakin, Cath Senior and Mike Tunstall left the meeting Discussion continued at agenda item 4.4(i)

Chris Slater

Phil Wood / Chris Slater

Jo Bray (forward

plan)

4.5 Control Issue Relating to ESR

Discussion continued from agenda item 4.4(i) The report provided information on a controls process for pay affecting changes and to seek feedback from the Committee.


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The report set out the controls for pay affecting changes for existing Trust staff. As notified to the Committee by the Director of Finance, a planned audit of controls on managing pay affecting changes had been postponed with the agreement of the Head of Internal Audit whilst a new procedure was implemented. The subsequent audit would then be used to review how the new procedure was working. Authorisation processes were set out in the report along with a plan for communication and implementation of the process. Dean Royles explained the current practice and devolved management with CSUs. He set out the proposals and timetable which were in the report. David Gregory provided context to the planned improvements in control. Caroline Johnstone enquired about consistency which was explained in more detail and should be defined at CSU level under generic guidance. Dean Royles updated on the roll out of ESR2 and the improved functionality that this would provide to the organisation. The Committee noted the proposed process and actions and approved the changed timetable for the internal audit to take place. Dean Royles left the meeting Discussion continued at agenda item 6.1

Anti-Fraud

4.6 Anti-Fraud: Progress Report

Discussion continued from agenda item 4.3 The report provided an update with information regarding anti-fraud, bribery and corruption activities during 2017/18; specifically 1 April to 31 August 2017. Changes to the NHS Protect and NHS Counter Fraud Authority were set out. The NHS Counter Fraud Authority (NHSCFA) had existed in shadow form from 1 April 2017 and would be established as an independent special health authority in the autumn. From 1 April 2017, NHS Protect would not be offering any advice on how to progress individual investigations but would act as a gate-way for initial file submissions to the Crown Prosecution Service (CPS) in relation to Local Counter Fraud Specialist (LCFS) investigations to ensure that they met the requirements of the National File Standard. An update on the Work Plan 2017/18 was received. During the period 1 April to 31 August 2017, the Trust received a number of pieces of information concerning potential frauds. Initial enquiries were made into all of these. As a result, one was currently being pursued as a criminal investigation; one had been referred to Human Resources (HR); no or insufficient evidence of fraud was found for two information reports; and, enquiries were continuing for the remainder.


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An investigation was reported and the Committee received an update on processes noting the member of staff had subsequently resigned. The Committee received the Anti-Fraud, Bribery and Corruption Progress Report.

Anti-Fraud: Annual Report (to include follow-up action from 4 May 2017 – item 4.7 – Explore benchmarking against other Trusts)

There was a discussion on fraud awareness and the expected number of cases per organisation to be investigated at any one time. David Gregory reference the annual survey and potential benchmarking with other trusts. Dean Royles joined the meeting

4.7 Anti-Fraud, Bribery and Corruption Policy

The report provided an update on the Trust Anti-Fraud, Bribery and Corruption Policy recommended by NHS Protect. The Trust had an Anti-Fraud, Bribery and Corruption Policy in place which was due for review and renewal. David Gregory noted the technical updates, examples being, changing references from NHS Protect and Whistleblowing to NHS Counter Fraud Authority and Freedom to Speak Up but noted the changes to the refreshed policy were not material. Jo Bray suggested inclusion of a paragraph to draw attention to declarations in compliance with the Standards of Business Conduct Policy as an aid to protection against fraud, bribery and corruption. She would provide a suitable statement for inclusion to Lina Anderson, Local Counter Fraud Specialist. Caroline Johnstone reflected that the policy could be improved with a simpler summary introduction. Dean Royles summarised the HR communication to support policies for better understanding. Responding to a question from Simon Worthington on measuring compliance and Key Performance Indicators, David Gregory would work on incorporating questions in the annual survey to provide assurance. The Committee reviewed and approved the updated policy subject to inclusion of reference to the Standard of Business Conduct Policy as noted above.

Jo Bray / Lina

Anderson

David Gregory

David Gregory

5 Corporate Governance Reports

5.1 BLUE BOX ITEM – Review of Policies

The report was provided in the Blue Box for information and no further discussion took place at the meeting. The Committee received and noted the report. Discussion continued at agenda item 4.4(i)

6 Matters for the Audit Committee

6.1 Standing Item – Debt Recovery Quarter 1 2017/18 (including Overseas, Private Patients)


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(including – follow-up action from 4 May 2017 – item 6.1 – actions to ensure private patients are not treated before full payment received and report solutions implemented)

The report provided the Committee with a position statement on aged debt at the end of the first quarter 2017/18 and updated on work to recover Overseas Visitors’ and Private Patients’ charges. Total debt greater than 90 days old increased by £542,000 in the first quarter of the financial year with a £649,000 increase in NHS debt offset by a reduction of £107,000 in non-NHS debt. Compared to the first quarter end of 2016/17 the total debt in excess of 90 days had reduced by £1.7 million with reductions of £0.5 million against NHS and £1.2 million on non-NHS debt. An increase in aged NHS debt following the year-end had been expected. The graphs at Appendix 1 showed this to be consistent with the previous year. NHS organisations traditionally cleared down balances as part of a year-end close. The underlying trend had been a reduction. Overseas Visitors’ debt in excess of 90 days remained flat at the end of Quarter 1 but that relating to Private Patient activity increase by £162,000 and was almost £200,000 up on the same point last year. Of the £198,000 Overseas Visitors’ debt at 30 June, £99,000 related to one patient. With effect from 23 October all non-reciprocal Overseas Visitors must, by law, be charged for non-urgent treatment before it could proceed. For the second consecutive quarter there had been a deterioration in aged debt relating to Private Patients. Private Patient income in 2016/17 was £5.6 million and total debt outstanding at the year-end was £431,000 of 8%. Total income for Private Patients at the end of Quarter 1 was £1.5 million. The Private Patient office was in the process of reviewing contracts with a view to their re-negotiation on better payment terms. David Hay provided context and reflected that, overall, the trend was positive. Simon Worthington explained the processes set out in the Financial Improvement Plan (FIP) and the overall management of the cash position that recovery of debt would be essential to support moving forward. The ambition would be defined and used to improve debt recovery and drive down overdue debt. David Hay noted the visit from the Department of Health overseas visitors team and their positive feedback to the work that had already taken place. The visit had identified further areas of focus and an action plan had been defined to address these. David Hay reflected on the work to understand the composition of private patient debt and Simon Worthington noted this was one aspect of an over-arching strategy for cash management.


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Debt recovery would continue to be discussed at each Audit Committee meeting as a wider agenda item of cash management. The Committee received and noted the report.

Jo Bray (agenda)

6.2 Single Tender Actions

Tim Spensley joined the meeting Three applications to waive Standing Orders Single Tender Actions (STAs) were received and supported by the Committee. Caroline Johnstone observed that the list of STAs was noticeably shorter and Tim Spensley outlined the communication and challenge back to the CSUs. Simon Worthington sought assurance that this was an accurate reflection, which was explained by Tim Spensley who provided more details both at first point of contact and the end point of payment of invoices. Caroline Johnstone complemented the team on great progress and also sought assurance that the reduction in STAs had not resulted in creation of processes to avoid them and Tim Spensley reflected that the tendering processes were being used appropriately. Phil Wood provided an example from the Oncology CSU to suggest that CSUs were rising to the challenge from the procurement team to bid out almost all contracts. Tim Spensley left the meeting

6.3 Annual Report on Standards of Business Conduct

Jo Bray tabled a revised report which had been circulated electronically to the Committee the previous day. The report provided a summary of the number of declarations received aligned to the 2016/17 financial year against:

Gifts, Hospitality and Sponsorship; and,

Business Interests. The report provided an overview of the compliance against the Trust Policy, Standard of Business Conduct. There had been a slight improvement in all areas of reporting, with the exception of 6% deterioration in reporting by consultants and senior personnel against Gifts, Hospitality and Sponsorship. Declarations for Gifts, Hospitality and Sponsorship for 2016/17 were: Staff Band 7 and above 80%; and, Consultant staff 55%. Internal communication with all staff and specific groups during the year were set out in the report. Declarations for Business Interests for 2016/17 were: Staff band 7 and above 48%; and, Consultant and senior personnel 35%.


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The new requirement relating to Managing Conflicts of Interest by NHS England was explained and would be implemented in the autumn with an upgrade to the system which was outlined in the report. Jo Bray referenced the revised report which had been tabled. She explained the new policy from NHS England which had been due for implementation in June 2017 had been deferred to autumn. She reflected on the electronic system implemented at LTHT and the link which was to be added to the Trust appraisal system for Quarter 1 2018/19 to ensure compliance before appraisal completion, for compliance against the financial year 2017/18. She noted that consultants did not use the Trust appraisal system and the question they were required to answer around professional probity. There was a discussion on increasing compliance and Steve Bush explained the potential confusion across the consultant body as to when a declaration might be appropriate, and the need for declaring private practice or indeed a nil declaration for those that carried out no work in the private sector Jo Bray explained the need for local CSU oversight and scrutiny to ensure compliance and reminded the Committee that declarations were available externally via the Trust’s website. Caroline Johnstone, noting the great progress made by the Trust in establishing processes, also noted that the level of declarations were not where they needed to be and would raise the issue with the Board and reflected on the need for support from CSUs to derive a plan and practical means to ensure full compliance. The Committee received the report and noted the progress made during 2016/17 of reporting positive and nil declarations against the Code of Business Conduct Policy.

Caroline Johnstone

Jo Bray

6.4 Assessment & Appointment Process of External Auditors

Mazars did not attend the meeting Text removed from all copies of Minutes, draft and approved received in the public domain due to commercial sensitivity.

6.5 Standards of Business Conduct

7 Standing Concluding Items

7.1(i) Any Other Business

No items of Any Other Business were discussed.

7.2 Round up of the matters to be drawn to the Board’s attention by the Chair

Caroline Johnstone reported she would provide a written Chair’s summary for the 28 September 2017 Board meeting and she would draw attention to the Standards of Business Conduct as noted at agenda item 6.3 above.

7.3 BLUE BOX ITEM – Work Plan and Calendar of Key Events 2017/18

The Work Plan and Calendar of Key Events 2017/18 were presented for information.

7.4 Dates of future meetings

7 December 2017 (a.m.)

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