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Minutes of the Meeting of the CCG Audit Committee

Thursday 17th March 2016 10:00am – 1.30pm WNCCG Headquarters, King’s Court, Chapel Street, King’s Lynn

Present: Revd Hilary De Lyon (Meeting Chair)

Lay Governing Body Member (Governance & Audit)

(HDL)

Rob Bennett Lay Member (Finance) (RB) Cathy Gale Lay Member (PPI) (CG) In attendance: Sue Crossman Chief Officer (item 16.43) (SC)

John Ingham Chief Financial Officer (JI)

Chris Randall Chief Financial Officer Designate (CR) Emma Kriehn-Morris Finance Manager (EKM) Heather Farley Governance Manager (HF) Alison Riglar External Auditor, Ernst & Young (AR) Neil Abbott Internal Auditor, TIAA (NA) Paul Coker Deputy Head of Financial Administration, NELCSU

(item 16.38) (PC)

Irene Paquay Minute Taker, WNCCG (IP)

ACTION

Introductions: CR was welcomed to the meeting in advance of formally joining the CCG on 5th April 2016.

16.29 Declarations of Interest There were no new declarations.

16.30 Apologies for Absence Apologies were received from Lisa George, Kevin Limn and Dr Burgess.

16.31 Minutes of the Last Meeting held on 21st January 2016 The minutes were APPROVED with no amendments.

Matters arising: none

16.32 Confirmation of any part of the Minutes that is currently considered Freedom of Information Act (FOIA) exempt

There were none.

16.33 Action Points from Minutes An updated log is embedded into these Minutes to avoid duplication.

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Action Log 17th March 2016.docx

The Committee NOTED the action points.

FINANCIAL MANAGEMENT & AUDIT

16.34 Internal Audit An update was provided by NA.. a) Internal Audit Progress Report 2015 / 2016 Since the 21st January Audit Committee, 3 reports had been issued.

Key Financial Assurance

There were no recommendations, with substantial assurance overall. Within the area, there was only 1 other CCG that also received no recommendations.

Governing Body Assurance Framework Substantial assurance was reported. Progress levels are being raised, with a focus on closure points for risks and reporting trends. Discussions followed on the frequency of reporting the GBAF to the Governing Body, noting that any changes would require approval and sign off by the Chair of the CCG’s Governing Body. HF will discuss with Dr Mack.

Information Governance Toolkit Reasonable assurance was reported. Additional evidence is required ahead of the toolkit submission to support 7 out of the 10 requirements in the audit sample.

NA was pleased to report that the plan has been completed, with improvements seen with the outstanding actions. Reasonable assurance is expected overall. The Committee congratulated both the Finance Team and the Governance Team for their input and hard work into achieving the substantial levels of assurance, this was reinforced by JI. All performance targets have been met except for the following reports:

1) 2015 / 2016 Quality Review, Serious Incident Framework– this is being

taken forward by the Head of Clinical Quality & Patient Safety. HF will ask for an update.

2) 2015 / 2016 QIPP – there is now a comprehensive and clear process in place, being aligned to the CCG’s financial recovery process. NA will ask the CCG’s PMO for an update.

3) 2014 / 2015 Budget Policy – it will be challenging to complete before year end due to capacity in the team. This will be progressed by EKM.

4) 2015 / 2016 Health & Wellbeing & Better Care Fund Boards – the Terms of Reference will be updated as part of the 2016 / 2017 S75 agreement.

HF

HF

NA

EKM

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RB found Annex C very helpful in assessing performance, acknowledging that whilst progress on follow up had been an issue in the past, improvements are now being seen. RB asked for this to be advised to the Senior Management Team (SMT) – JI / CR will report this back. b) Draft Internal Audit Annual Plan 2016 / 2017

c) This was presented at the January 2016 Audit Committee meeting with NA reporting that changes in the plan reflect the changes from last year’s strategic plan for the second year. Comments are still pending from SMT before finalising. Following an Audit Chairs’ national meeting, HDL asked for clarification on co-commissioning and conflicts of interest as this will be an issue. All agreed that this will be a critical risk for the CCG. Under QIPP, NA will take forward an internal audit to cover the levels of prescribing by GP Practice. The 95% target was discussed – all agreed that this should be 100%.

47% of the work in the plan is allocated to Q3, which is the norm for all CCGs.

CR

NA

16.35 External Audit a) Audit Committee Briefing and Verbal Update on progress

AR highlighted the Value for Money guidance which has been taken into account in the audit plan. The Better Care Fund has been added as requested last month. The Committee acknowledged that the briefing which covers issues impacting on the CCGs is a very helpful paper. Digital proposals for the NHS QEHKL still has no Wi-Fi site wide. However, this is in the process of being rolled out. HDL will escalate this concern at the next Governors’ Council. The Committee discussed the challenges of digital projects in West Norfolk. Better Care Fund: 6 months on A paper will come to this Committee after year end. Diversity in the NHS Whilst there are no apparent concerns in this area HF was keen to see further work take place. HF will speak to Dr Mark Funnell to ensure that the systems are robust with a paper for the September 2016 Governing Body covering the organisation’s policy.

HDL

HF

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Cancer Drugs Fund consultation The CCG has not responded to this as this falls under the remit of NHSE (as commissioners of cancer drugs).

b) b) Audit Plan 2015 / 2016 AR talked through the key risks identified in the audit:

Risk of fraud in revenue recognition Due to the current financial pressures, EY has not refuted this against expenditure, recognising the risk in meeting year end targets.

Risk of management override

This risk is present in every audit.

Better Care Fund This scheme is new for 2015 / 2016, and is material to the CCG’s income and expenditure. The CCG has entered into a S75 agreement which underpins the pooled budget with Norfolk County Council. RB is aware that this is a major concern.

Value for money risks A risk has been identified from the current financial plans and the impact moving into 2016 / 2017, especially with the pressure on the delivery of the QIPP plans. RB reported that the financial position was discussed on 16th March at the Finance & Performance meeting, noting that there is a great deal of work ongoing with the financial recovery. The CCG is not expecting to achieve the 1% surplus.

Materiality This will be reviewed once the draft accounts have been received.

Audit fee

There is a reduction in the audit fee from last year. The Committee thanked AR for the paper which was very clear and helpful.

16.36 Counter-Fraud a) Progress Report

NA gave a verbal update reporting that the 2016 / 2017 work plan has now been drafted. Training sessions have been delivered covering fraud and bribery with the policy being reviewed. An enquiry has been received from the Interim Head of QIPP regarding a potential CHC overpayment, seeking legal advice from Capsticks Law Firm. NA was pleased to report that no new

investigations or allegations have been brought to their attention.

b) Review and approve the annual work plan for counter fraud

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NA presented the proposed plan, noting that there will be a focus on the inherent fraud and bribery risks and on identifying specific areas deemed most susceptible to fraud or bribery at the CCG. The Committee felt that the new template was unclear, asking for an assessment as to where the CCG is in relation to certain standards, with outcome targets to be advised. NA will now request a breakdown on how the plan will be delivered in 16 days and how it will support the outcome targets.

HDL asked for a review to be progressed with CHC Personal Health Budgets (PHBs) – NA will ask Lisa George to take forward a review on the WNCCG cases (around 13). Discussions followed on this high risk / high growth area, reporting that all PHBs are clinically managed by NELCSU as an alternative to CHC services, but there is an issue on how monies are monitored and managed as confirmation of support to care plans. All agreed that there should be a comprehensive process for manging these sums.

NA

NA

16.37 Financial Control Environment Assessment

JI provided the update, confirming for item 15, that the finance team are all fully qualified and are compliant with Continuing Professional (CPD) requirements, asking for the RAG to be amended from good to excellent. RB expressed a concern that the current finance team is not adequately resourced, all acknowledged that this will be discussed when the Chief Officer of the CCG is present (agenda item 16.43).

16.38 NELCSU Interim Service Auditor Report (SAR)

PC talked through the report which gave an overview of the first 6 months of 2015 / 2016 looking at HR, payroll and finance system controls and processes. The results compared to 2014 / 2015 reflect an improvement, but further progress is anticipated. There has been a review of the control descriptions to ensure that they are accurate and NELCSU are ensuring that the supporting evidence will be available for Deloittes to review. The detailed report was a very lengthy document and includes all the controls and findings from the sample testing, no major issues were found with a lower exception rate for NELAnglia. That statement was supported by NA. One concern raised by NA is that the account receivables for Anglia CCGs are not included in the assurance work carried out by Deloittes; therefore a gap has been identified in debt management as this is not within the remit of NELAnglia. There are debtor reports produced but the results are not actively followed up. PC reported that for WNCCG the level of debtors is very low.

The Director of Finance for NELCSU will write to WNCCG with the results of the SAR for October 2015 to February 2016 and will provide a “bridging letter” for March 2016 controls, to ensure the full financial year is covered.

PC

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PC provided an update on the National Fraud Initiative exercise undertaken on the merger / closure of duplicate supplier accounts, adding that this exercise will be revisited on a rolling basis. PC confirmed that no duplicate payments had been made from the supplier accounts identified. EKM would like to take forward a similar exercise on the Accounts Payable ledger when capacity in the team allows. HDL questioned the robustness of the corporate governance of NELCSU as there appeared to be no independent members of the Audit Committee to oversee the reporting processes. However, NHSE would ultimately be responsible albeit being very remote from day to day reporting. The Committee all agreed that there were no concerns to note. Also it was agreed that CR/EKM would bring a summary of the SAR for SBS will be to the May meeting.

CR/EKM

16.39 Year-end planning and progress EKM presented the report which provided assurance that the CCG will meet the deadlines required for the 2015 / 2016 statutory accounts. Consideration was given for the year end timetable, looking at key cut off dates through to the submission of the accounts to NHSE by 27th May 2016. Key tasks have been set in order to meet the deadlines, with the responsibilities acknowledged by all parties. All changes to the remuneration report will be clearly noted.

Better Care Fund Accounting: The Committee is aware that this is a concern for the CCG in terms of auditing. The report has been reviewed by Ernst & Young and has been discussed by NELCSU and by the CCGs’ Chief Financial Officers. PC will be discussing the report with Tony Poynton of Ernst & Young and JI. JI added that WNCCG is not planning to account the BCF as a pooled fund. More information is now required on the day to day operation of the BCF (as described in S75 Agreement) to determine the best way of accounting and to ensure that both the CCG and the NCC have the same view in order to meet the objectives set. RB said that this is a key area of concern and that the arrangements need to be clarified – PC will forward the report to RB for consideration. Agreement of balances will be on the agenda for the May meeting, there is support in the team at NELCSU to provide accurate and timely returns. There have been changes in the remuneration report, in particular to the interim and agency staff in post at the CCG. 22nd April 2016 is the final date for submission of the draft annual report and accounts to NHSE. A copy will be available to Ernst & Young, this Committee

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for comments at the 25th May meeting, together with a copy to the Council of Members for sign off.

GOVERNANCE AND RISK

16.40 Audit Committee Terms of Reference

HF talked through the proposed changes, highlighting that Reporting Committees has been added. The Committee APPROVED the changes – a final version will be e-mailed out to the Committee.

HF

16.41 a) Governing Body Assurance Framework (GBAF) The GBAF is reviewed by both the Governing Body and Patient Safety & Clinical Quality meeting on a monthly basis. RB asked for Capacity and Recruitment to be added as this has now been identified as a significant risk to the organisation, owner to be WNCCG’s Chief Officer. HF will review the inherent risk ratings against the current risk ratings, all agreed that the scorings must align.

The Committee NOTED the GBAF.

HF

HF

b) Corporate Risk Register

The CRR has been updated with no amendments to risk ratings. RB asked for a review on the risk description for strategic objective (3), looking at the risk around the BCF. One addition is the lack of a licence agreement with NELCSU for their office space at WNCCG.

The Committee NOTED the Corporate Risk Register.

HF

16.42 Conflicts of Interest Committee Chair’s Report, to include Conflict of Interest Committee Minutes (a) 17th February 2016 (draft)

RB was not present for this item. HDL asked for comments to the Minutes:

16:09 – Mitigation of the Joint Chairing Role. The Conflicts of Interest Committee had reviewed the potential conflict of interest of the CCG Chair being Chair of the Council of Members. The Committee were confident that there are sufficient mitigations in place. RB will share the paper he has written. Following on from the above, a better understanding is required on the chairmanship of all groups and where there could be a conflict. HF will provide a table reflecting the chairing of Governing Body and other Lay Members.

RB

HF

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16.43 Capacity and Recruitment

SC gave a verbal update reporting that this is a rolling issue due to the organisational challenge and the capacity of the teams within the CCG, especially with the recent changes in the executive team as well as with the changes in middle management. In addition, the QEHKL has been in special measures notwithstanding the CCG’s financial recovery plan following the Contingency Planning Team process, all of which have put extreme pressure on the CCG’s ability to manage performance, to build up the organisation and to have a transformation plan for the next 5 years. The implications for co-commissioning are not yet known. SC strongly emphasised that no assurance could be given to meet the challenges facing the CCG at this time. The CCG’s strategic objectives are known, but with the interims in post it is not possible at the moment to provide a capacity and recruitment plan until the final substantive structure has been finalised. A decision will be made with the Heads of teams and will be confirmed when both the new Director of Operations (Chris Humphris) and the Chief Financial Officer (CR) have reviewed the plan to ensure that all roles are covered effectively. A completion date for roll out is not yet known. It remains that the CCG is an organisation at risk and no assurance can be given that the current demands can be met within the constraints of the current financial status. Unfortunately, due to its own challenges NELCSU has not been able to support the CCG as expected which has significantly impacted on progress of contracting and financial planning for not only 2015 / 2016 but also for 2016 / 2017. As at today’s date NELCSU is fully recruited to (albeit with some interims) with local leadership and a good senior management structure in place. A new Contract is in place with NELCSU to deliver services; this Contract will be managed effectively with KPIs and performance reviewed by the Finance & Performance Committee. With the new skill mix an improvement is expected. The Wisbech opportunity for merging their Local Commissioning Group with WNCCG is not imminent for the 2016 / 2017 financial year, despite Wisbech GPs being keen to pursue. SC warned that the CCG is at risk in terms of sustainability and that the integration of organisations would be a sustainable way of working. The 5-year Forward View proposes clinically led models which look favourable for an integrated sustainable way of working in West Norfolk. The rebuilding and reconfiguration of services would be longer term and would require central investment, however, once agreement is reached by all parties this could be progressed at pace. Two groups are already progressing through various forums (Urgent Care and Frailty) with co-location of teams in process. RB recognised the pressure that the CCG is facing and that this is an organisation at risk, asking that any envisaged complications are identified with an action plan to cover to ensure that there is a clear view on what is required.

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HDL supported SC, recapping that it is not possible to give assurance considering the constraints and pressures on NHS organisations A significant number of acute hospital trusts and CCGs are in financial difficulties, and according to the Chief Finance Officer of NHSE that the picture is getting worse. Trusts and CCGs are being held responsible to deliver services as directed within the financial envelope which is very challenging. Co-commissioning will undoubtedly add another pressure, with the increased role in the commissioning of GP services, the impact of this is not yet known. HDL advised that a capacity and recruitment plan for the CCG will not be provided until the structures have been finalised and signed off. RB did comment regarding the responsibility that the CCG has for investment. Following discussions, it was agreed that the Governing Body should be taking a lead as they have a responsibility for setting the strategic direction and the priorities of the organisation. HDL will discuss taking this topic to the Governing Body Development Session in April 2016 with the CCG’s Chair. JI added that all the above is being monitored by the CCG’s Senior Management Team on a weekly basis.

HDL

16.43a Clinical Academic Reserve (CAR) SC advised that there is a meeting arranged with the CCGs with the University of Cambridge, and the Director of Commissioning and Operations (Andrew Pike) chaired by the Regional Director (Paul Watson) to discuss the CCGs’ contribution. HDL felt that Paul Watson may have a Conflict of Interest by chairing this meeting, SC aware that this was a delegation from Richard Barker but will ask for confirmation. Referring to the Clinical Academic Reserve HDL had stated that she was willing to attend but was not allowed to. Three Norfolk CCGs are not currently contributing to the CAR (North Norfolk, Norwich and West Norfolk), as directed by their Governing Bodies. Both Luton and Bedfordshire CCGs may also take this stand. However, NHSE are keen that the CCG make the contribution. JI provided the background of the CAR advising that these are payments from the CCGs in the East of England to Cambridge University to allow them to take forward research on behalf of the NHS. This has been a long standing arrangement, which the CCG inherited and made contributions as made previously by the old PCT (£250K pa). However, the Governing Body agreed from looking at the evidence and legal advice, that there was no benefit or legal obligation in continuing with the contribution. Legal advice was taken collectively from 10 CCGs across the East of England, which confirmed that there is no contractual obligation to continue with the payments. NHSE has taken a different view, strongly encouraging the CCGs to make the payments. A subsequent email has been received from the Regional Director of NHSE (Paul Watson) noting that a meeting will be arranged to discuss the above matter and that full payment is expected by the

SC

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end of this financial year for the outstanding payment for 2014 / 2015 as well as for 2015 / 2016 (£500K), this has also been advised by Andrew Pike to SC. The Governing Body will make a decision on 31st March 2016; this will be discussed during the public section. JI will email this Committee a copy of the legal advice, asking whether any payment would be ultra vires and for all comments to be sent to HDL ahead of the Governing Body meeting next week. JI reported that this has not been raised as part of the audit process. RB left the meeting (1:00pm).

JI

16.43b Lay Members - Governing Body HDL advised that there will be an issue with the number of Lay Members on the Governing Body (2) when co-commissioning progresses. The governance structure will need to be reviewed to ensure the CCG can meet the requirements. HF will now review the guidance and circulate a paper to this committee outlining the implications.

HF

16.44 Policies for Review (a) Risk Management Strategy and Policy Framework

3.1.2. - add other lay members 4.1.9. - change ‘ensure’ to ‘enable’ 5.1. - Governing Body: change ‘ensure’ to ‘enable’

(b) Information Risk Policy

There were no comments / changes to be made.

HF

16.45 Information Governance Chair’s Report

(a) Information Governance Terms of Reference

The Committee APPROVED the Terms of Reference.

(b) 26th January 2016 – final

The Committee NOTED the Minutes.

(c) 23rd February 2016 – draft

The Committee NOTED the Minutes.

JI reported that work in ongoing with the Information Governance Toolkit and are on track to deliver for the 31st March 2016 deadline.

16.46 Annual Work Plan Review

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Following on from the January 2016 meeting, HF has reviewed the plan as requested. Revisions were all agreed with agreement to consider the Committee’s Annual Report at the May 2016 meeting.

16.47 Delegated Functions – Self Certification Q3 These have been signed off by the Accountable Officer and the Audit Chair and are for information only.

16.48 Tender Waivers None to report.

16.49 Losses and Compensations (a) Tax reimbursement for CCG Chair

This has been approved by the Remuneration Committee and is for information only. JI left the meeting (1:15pm)

ITEMS FOR INFORMATION

16.50 Internal Audit Reports (a) Key Financial Assurance (b) GBAF (c) IG Toolkit

(d) Head of Internal Audit Interim Opinion Statement

All for the above reports were for information only.

16.51 Finance & Performance Committee Minutes (a) 13th January 2016 – final (b) 17th February 2016 – draft

The Committee NOTED the Minutes.

16.52 Patient Safety & Clinical Quality Committee Minutes (a) 19th January 2016 – final (b) 16th February 2016 - draft

The Committee NOTED the Minutes.

16.53 TIAA Digest (a) CCG Audit Committee Survey Results

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(b) Developments in Risk Management and Defining Risk Appetite at NHS Organisations

The Committee NOTED the Reports.

16.54 SIRO Update The report provided assurance to the Committee, confirming that the CFO will continue to have executive responsibility for information risk and information assets.

OTHER ITEMS

16.55 Reflection on the meeting The meeting had again overrun the 3 hours, with both RB and JI leaving for other appointments during the meeting. All agenda items are relevant, with the members agreeing that it would be more proficient to read larger documents and items for information online. For future meetings, papers for these lines will not be printed unless specifically asked for. The action log will review the reds and ambers on the action log i.e. no longer reviewing every green RAG. This is JI’s last meeting with WNCCG before moving to Norwich CCG as CFO. All members thanked JI for his support and his commitment to WNCCG.

16.56 Dates for 2016 meetings and AGM date

25th May 2016 21st July 2016 28th September 2016 17th November 2016

AGM has been agreed for 28th July 2016

INTERNAL AUDIT

16.57 Annual Review of the effectiveness of Internal Audit NA left the meeting for this item. Following discussions it was agreed for the internal auditors to self-assess themselves and provide the CCG with the evidence which this Committee would then evaluate.

HDL

EXTERNAL AUDIT

16.58 External Audit Procurement External Audit colleagues all left the meeting for this item.

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A plan is now required for the tendering process for external audit. The Auditor Panel would include the members of the Audit Committee excluding RB (due to a Conflict of interest) RB does not know who are bidding for the external audit as yet. Working with other CCGs on these arrangements is a possibility but it is the responsibility of the CCG to make a final decision. Timeframe for completion is 31st December 2016. CR aware that the Government’s procurement service (Crown Commercial Services) has a framework agreement in place for external audit. CR will check and report back to this Committee before appraising the Governing Body. EKM added that Ernst & Young provides consistency across the CCGs with the same Director looking at their specialist area. Therefore, there could be a cost from NELCSU on repeating their processes if the CCG stands alone on the external audits rather than opting for a joint procurement with other local

CCGs.

Date of Next Meeting: Wednesday 25th May 2016

10.00am to 1.00pm WNCCG Offices

Apologies to be sent to Heather Farley

2016 meeting dates:

May 25th 10:00 – 1:00

July 21st 10:00 – 1:00

September 28th 10:00 – 1:00

November 17th 10:00 – 1:00 AGM date:

28th July (venue to be advised)