Beaumont Investment Advisor Fraud Claim

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					         UNCONFIRMED
                                HEALTH PROTECTION AGENCY
                             MINUTES OF THE AUDIT COMMITTEE
                           Held at Holborn Gate on 18 November 2008
         Present:          Mr Michael Beaumont       (Non-Executive Director, Chairman)
                           Dr Vanessa Mayatt         (Non-Executive Director)
                           Dr Barbara Bannister      (Non-Executive Director)
                           Mr Allan Robertson        (Independent Member)

         In Attendance:    Mr Michael Harker         Director of Corporate Affairs
                           Dr Tony Sannia            Director of Finance & Resources
                           Dr Christine McCartney    Director of the Regional Microbiology Network
                           Mr Tony Vickers           Director of Human Resources
                           Mr Geoff Barratt          Head of Finance
                           Mrs Helen Morris          Head of Internal Audit
                           Mr Dean Parker            NAO
                           Mr Steve Ecroyd           NAO
                           Ms Jennifer Dryden        KPMG
                           Mr Ian Bateman            Head of Health, Safety and Quality Management

         Minute Taker:     Mrs Irene Hills-Jones     Deputy Head of Internal Audit



1         APOLOGIES FOR ABSENCE & DECLARATIONS OF CONFLICTS OF INTEREST

08/178    Apologies were received from: Mr J McCracken (Chief Executive) and Mr N Thomas (KPMG).
          Mr Beaumont welcomed Mr Dean Parker from the NAO, who takes over from Mr Sid Sidhu as
          the NAO Director responsible for the external audit of the HPA accounts. Mr Beaumont was
          confident that the Audit Committee’s good relations with the NAO will continue with Mr Parker.

08/179    There were no interests to be declared.

08/180    The minutes of the last Audit Committee meeting were accepted.



2         MATTERS ARISING FROM PREVIOUS MEETINGS (ENCLOSURE AC08/45)

08/181    Item 08/056: Finance will liaise with the Information Systems Department (ISD) to review the
          process for monitoring unsuccessful log-ins. Mr Barratt agreed to report back to the next
          Audit Committee on the scale and frequency of such incidents.

                                                             Action: Mr Geoff Barratt, 31 March 2009

08/182    Item 08/124: Dr Mayatt pointed out that health and safety legislation places a legal
          requirement on HPA employees to attend the Occupational Health service if required. This
          legal requirement needs to be considered in updating contracts of employment.

                                                             Action: Mr Tony Vickers, 31 March 2009

08/183    Item 08/125: Telephone numbers for contacts have now been added to the Whistle-Blowing
          Policy on the Intranet. The update has been publicised via the Chief Executive’s Bulletin.



                                                                                               Page 1 of 9
08/184   Item 08/171: The Committee proposed that the Chief Executive should invite Dr Stephen
         Inglis to attend the Audit Committee as the next Executive Group representative. As the
         NIBSC accounts will be considered at the June 2009 meeting, it will be appropriate for both
         Dr McCartney (whose tenure ends in September 2009) and Dr Inglis to attend this meeting.

                                                        Action: Mr Justin McCracken, 12 June 2009

08/185   Mr Allan Robertson was appointed as Independent Member of the Audit Committee on 1 April
         2008 for a one-year term. The Members agreed that Mr Robertson should be asked to
         continue in this role for another year. The necessary arrangements will be formalised by Mr
         Harker, and the Board will need to be asked to endorse this appointment.

                                                          Action: Mr Michael Harker, 31 March 2009

08/186   Update on Clinical Governance and Audit
         Mrs Morris has agreed to scrutinise 2008/09 clinical governance reports and report back to
         the Clinical and Health Protection Governance Group in January 2009 on them. Members
         asked that any particular issues arising are brought to the Audit Committee in March 2009.

                                                           Action: Mrs Helen Morris, 31 March 2009

08/187   Syntaxin annual report and accounts, 2007/08
         The Members read the report but noted the limited information it provides. Dr Sannia
         confirmed that Syntaxin is not part of the Agency but it is an investment. Dr Chatfield
         provides a management link with the Company and receives more detailed information about
         performance. Any significant issues are notified to the Chief Executive and the Director of
         Finance and Resources. The Finance Committee receives summary financial information.



3        INTERNAL AUDIT OUTCOMES & OUTTURN REPORT (ENCLOSURE AC08/46)

08/188   Mrs Morris explained the amended format for reporting to the Committee. The purpose of this
         change was to move away from reporting on inputs and outputs and focus instead on the
         outcomes of Internal Audit work in terms of assurances available against key strategic risks.
         Mr Ecroyd suggested that the table of assurance outcomes could include another column to
         link the findings to the Head of Internal Audit’s annual opinion, which would also enable easy
         identification of where the Agency’s residual risks lie. Mr Robertson suggested it would also
         be useful to have an indication of whether areas audited on a regular basis had improved or
         declined. Dr Bannister added that it would be useful for the report to include management
         comments on which areas they recognise still need to improve. Mrs Morris will take account
         of this feedback and a further refinement of the report will be brought to the next meeting.

                                                           Action: Mrs Helen Morris, 31 March 2009

08/189   Once the Strategic Risk Register has been updated, it is expected that this will be presented
         to the Audit Committee on a regular basis, as set out in the Committee’s terms of reference.
         This will be included as part of the governance updates, currently submitted by Mrs Frances
         Knight.

08/190   Audit report - Procurement, 2007/08
         In relation to the Expenditure Management Programme, the Committee suggested that a
         corporate assessment of competitive outsourcing arrangements should be included in the
         next procurement audit.

                                               Action: Mrs Helen Morris, 2009/10 audit programme




                                                                                              Page 2 of 9
08/191   The Committee noted the role of AP02’s in allowing staff to by-pass the procurement process.
         Mr Barratt confirmed that the use of AP02s will be phased out by the end of June 2009.

                                                               Action: Mr Geoff Barratt, 30 June 2009

08/192   In addition to this system change, it was noted that there also needs to be a cultural change in
         staff attitudes to the procurement process. A new Head of Strategic Procurement is starting
         work in February 2009 and will take this forward. The Members expressed their full support in
         addressing this issue.

08/193   Dr Mayatt stressed the importance of addressing the procurement issues at CEPR given the
         significant expenditure that will be incurred in the course of the site redevelopment project.

08/194   Dr Sannia confirmed that when IT equipment is purchased on FARM it is automatically
         directed to the Head of ISD for authorisation. This also includes the purchase of software
         packages. If items are deliberately miscoded to avoid this route, this constitutes mis-conduct
         and appropriate action will be taken against the relevant staff.

08/195   Mr Barratt agreed to report back to the Committee on progress made with procurement
         activities following completion of the ‘procure to pay’ project. Mr Beaumont requested that
         this report should include categorisation of inventory and should also focus on the practical
         aspects of preventing procurement fraud.

                                 Action: Mr Geoff Barratt, (with Ms Lis Birrane) 29 September 2009

08/196   Ref 2.4: The due date for ensuring adequate segregation of duties within the Purchasing
         team should be extended to December 2008.

                                                      Action: Mr Leighton Balby, 31 December 2008

08/197   Ref 2.7: A Single Tender justification form has now been produced and reference is made to
         the requirement to complete this form in the Finance and Procurement handbooks.

08/198   Ref 2.9: The Committee asked how the Agency ensures that adequate background and pre-
         appointment checks are carried out for temporary staff. The new Head of Recruitment has
         identified this as an area of concern which will be addressed by the update of recruitment
         processes. Concern was also expressed over the lack of provision of Occupational Health
         services and training to temporary staff, particularly those with a long period of service.

                                                             Action: Mr Tony Vickers, 31 March 2009

08/199   Advisory Work: EU FP6 audit work
         Mrs Morris commented on the adjustments that had been required to an FP6 claim at one
         specific site, in order to correct the systematic errors that had occurred in previous years and
         that the EU had identified and warned the Agency about. Mr Barratt explained that this was a
         historical issue that was identified several years ago. The issue has been rectified for all new
         contracts, and the management accountants at this site, who are responsible for preparing
         the claims, have been working on amending the existing contracts, however this claim has
         slipped through the net. It is unfortunate that this happens to be the first claim following the
         EU’s warning letter over this issue. Mrs Morris confirmed that the claim was corrected as
         necessary before being submitted to the EU. She agreed to re-circulate the FP6 checklist
         produced by Internal Audit to local Finance Managers so that this can be signed off by them
         to confirm that appropriate checks have been carried out before presenting the claim for audit.

                                                        Action: Mrs Helen Morris, 31 December 2008




                                                                                                Page 3 of 9
08/200   Advisory Work: Potential Deemed Employees
         Mrs Morris reported her concern that there may be contractors working for the Agency who
         could be considered deemed employees and outlined the outcome if this were the case.
         Expert advice will be taken on this once the evidence has been gathered. Any cases
         identified will be referred to Mr Barratt for action to be taken. Dr Mayatt pointed out that in
         addition to the tax implications, this also impacts on the Agency’s duty of care obligations
         under health and safety legislation. Mrs Morris agreed to explore this further with Mr Ian
         Bateman.

                                     Action: Mrs Helen Morris and Mr Ian Bateman, 31 March 2009

08/201   Advisory Work: Pensions & Lessons Learnt
         Dr Mayatt pointed out that Dr McCartney is looking into lessons learnt in the context of
         laboratory exposures, which may be useful to take into account for the Lessons Learnt audit.

08/202   The Committee noted with pleasure that Internal Audit had received two additional requests
         for work from the Executive Group. The improved sickness absence level was also noted.



4        INTEGRATED GOVERNANCE UPDATE, INCLUDING DRAFT SIC (ENCLOSURE AC08/47)

08/203   Mr Bateman presented the Integrated Governance Update on behalf of Mrs Knight, who was
         unable to attend the meeting.

08/204   Health & Safety
         The Committee asked to be informed when the MOU with the HSE was in place.

                                                             Action: Mr Ian Bateman, 31 March 2009

08/205   Dr Mayatt asked if any analysis of HSE recommendations is carried out to identify trends, so
         the Agency is aware of any wider issues. Mr Bateman stated that so far this has been carried
         out by the Safety Advisor Group. However it has been agreed that HSE recommendations
         will also be reported to the HSSG so that operational advisors also have this information.

08/206   The Committee noted the increased penalties under the Health and Safety Offences Act
         2008, and suggested that guidance should be produced for individual members of staff in the
         event they find themselves subject to a corporate manslaughter charge.

                                                             Action: Mr Ian Bateman, 31 March 2009

08/207   Risk Management
         Mr Harker confirmed that he is comfortable with the process for assessing and escalating
         risks. The cascade from departmental risk registers has been improved.

08/208   Information Governance
         Dr Sannia confirmed that the Agency had arrangements in place to dispose of computers
         securely. However, he would check with Mr Steve Maddison, Head of Information Systems on
         the details of the arrangements. Mrs Morris noted that this will be audited as part of the
         upcoming information governance audit.

08/209   The Head of Information Governance post is being re-advertised following a disappointing
         response. The Committee emphasised the importance of filling this post and asked Mr
         Bateman to report back why it was thought this post had not been filled.

                                                             Action: Mr Ian Bateman, 31 March 2009




                                                                                               Page 4 of 9
08/210   Other Matters
         The arrangements for NIBSC after the merger next year were confirmed with respect to the
         research and development function. Assurance was also given that NIBSC is being included
         in HPA initiatives such as the task force group reviewing potential exposures to infectious
         agents which includes representation from the Health & Safety function and also from NIBSC.

08/211   The Committee expressed their concern about the HPA’s outstanding review of the revised
         EMEA pharmacovigilance guidance document. Mr Bateman stated that he had attended the
         pharmacovigilance conference to obtain more detail about what needs to be done, and has
         met with the interim Head of Quality at CEPR to take this forward.

08/212   Mr Bateman reported that the issue of wholesale dealer licences has been discussed at
         HSSG, who have agreed that this needs to be escalated. Mr Bateman will contact Jonathon
         Stopes-Row to provide an update on the current position.

                                                              Action: Mr Ian Bateman, 31 March 2009

08/213   The Medicines Management group is writing a paper with DH on the HPA becoming a
         medicines prescribing body. Dr Mayatt asked Mr Bateman to ensure his considerations
         included the potential use of unlicensed medicines by the HPA.

08/214   Draft Statement of Internal Control
         The Committee concurred that the additions to the Statement of Internal Control were
         sensible. Mr Ecroyd confirmed he was happy with the draft and Mr Parker noted the inclusion
         of disclosures on data security.



5        ANNUAL HEALTH & SAFETY ASSURANCE 2007/08 (ENCLOSURE AC08/48)

08/215   A revised report was circulated to the Committee as the original paper omitted the figures for
         CRCE in appendix 2 and this has had a minor impact on the conclusion. This is the first time
         such a report had been presented to the Audit Committee. Mr Bateman explained the
         purpose of the report is to provide assurance to support the Statement of Internal Control.
         This initial report had been produced retrospectively for 2007/08 to provide a baseline
         position. In future, information will be collated in April to coincide with the deadline for the
         Statement of Internal Control.        There were no significant areas of concern where
         Centres/Divisions reported non-compliance.

08/216   The results of the self-assessments will be reviewed as part of the bi-annual health and safety
         audits carried out by the Health & Safety function, as well as other more regular visits.
         Progress will be reported to the HSSG and to the Executive Group as part of the quarterly
         health and safety updates, and reported to the Board every 6 months. This process will also
         be reviewed as part of the health and safety audits carried out by Internal Audit.

08/217   With respect to the levels of compliance, the Committee felt that the use of the term
         ‘enforcement action’ was inappropriate as it is the regulator, and not the HPA, who has
         control over whether such action is taken. Mr Bateman agreed to revise the wording used
         and to consider modifying the assurance statements in line with new Internal Audit protocols.

                                                              Action: Mr Ian Bateman, 31 March 2009

08/218   Concerns were expressed about the occurrence of RIDDORS in laboratories as evidence of
         standards of health and safety practice. Mr Bateman also acknowledged that the sharing of
         health and safety best practice could be improved: HSSG will provide the focus for this. In
         particular, the Members asked for the four “limited” assessments at CfI to be minuted: that
         50% of laboratory acquired exposures arose at this site was a matter for concern which the
         Members did not expect given that it was a well established laboratory site.


                                                                                                Page 5 of 9
6        HEALTHCARE STANDARDS ACTION PLAN UPDATE (ENCLOSURE AC08/49)

08/219   Mr Harker presented the action plan, explaining that the Agency expects to achieve
         compliance with a further 6 elements by 31 March 2009, provided the actions set out in the
         action plan are completed by the agreed delivery dates. The Healthcare Standards were
         written primarily for NHS bodies and the HPA is having to interpret some of the requirements
         to reflect its activities.

08/220   Mr Harker confirmed that Mrs Knight is receiving full co-operation from Directors in
         implementing the Standards. He stressed the importance of ensuring the provisions set out in
         the Standards are embedded and not seen as bolt-on activities in order to ‘tick boxes’.

08/221   Standard C4d (ability of HPA to issue Patient Group Directives and to prescribe): The
         Committee noted that the Agency will not be able to declare compliance with this Standard for
         the whole year.

08/222   Standard C11a (Workforce information reports): Mr Vickers informed the Committee that the
         Agency’s first Workforce Strategy has been developed, with the involvement of a range of
         stakeholders, and will be presented to the HR Committee on 9 December 2008. A formal
         report, including projections, will be presented to the EG and to the HR Committee in March
         2009.

08/223   Standard C20a (shared workplace agreements): Dr McCartney stated that she is confident
         the outstanding actions required to comply with this Standard will be completed by 31 March
         2009.

08/224   Given the assurances provided to the Audit Committee on the progress of actions contained
         in the Action Plan, the Members asked that a minute be included to record their expectation
         that the Agency will, by 31 March 2009, have achieved compliance with all the elements of all
         the Standards to which it is subject: if all the actions are completed, then there will no areas of
         non-compliance identified by 31 March 2009 and, therefore, from 2009/10 onwards.



7        CONFLICTS OF INTEREST (ENCLOSURE AC08/50)

08/225   This paper was withdrawn as it has yet to be presented to the OSDG for approval.

08/226   The Committee noted that the Chief Executive has commented on the importance of having a
         separate policy on Conflicts of Interest. However, it was agreed that this policy needs to be
         properly integrated with the Agency’s ‘Code of Conduct’ and ‘Disciplinary Rules’. The Conflict
         of Interest policy for NIBSC should also be considered before finalising the HPA document,
         and a process for escalating issues should be added.

                                                           Action: Mrs Frances Knight, 31 March 2009



8        ANNUAL ACCOUNTS & REPORT PLANNING 2008/09 (ENCLOSURE AC08/51)

08/227   Mr Barratt presented his paper, setting out the annual accounts and report planning for the
         year end. The format of the report has been changed to provide better clarity of information.

08/228   Dr Sannia took the Committee through the Strategic Map set out in appendix 2. At the
         Members’ request he agreed to change the term ‘corporate values’ to ‘strategic goals’.




                                                                                                   Page 6 of 9
08/229   The Agency is on target with the reporting timetables and is gearing up for the deadline of 12
         June 2009. The change to IFRS has had some presentational impact on the accounts, but
         very little financial impact. Mrs Morris agreed to circulate the IFRS restatement report by the
         NAO once it is issued in December 2008.

                                                       Action: Mrs Helen Morris, 31 December 2008

08/230   The Committee acknowledged the amount of work that had gone into preparing the paper and
         thanked Mr Barratt for his presentation.



9        NAO/KPMG CUSTOMER SATISFACTION REVIEW 2007/08 (ENCLOSURE AC08/52)

08/231   Following the Committee’s endorsement of the completed questionnaire, Mrs Morris will
         formally submit this document to the NAO.

                                                       Action: Mrs Helen Morris, 31 December 2008



10       RISK MANAGEMENT PRESENTATION: MR MICHAEL HARKER, CAD (ENCLOSURE
         AC08/53)

08/232   Mr Harker gave a high level presentation on risk management to the Committee. He noted
         that the public sector is often perceived as being risk averse. This is most likely due to the
         fact that there is little reward for taking risks, when compared to other sectors. Mr Harker
         indicated that risk management can be counter-productive if it becomes too bureaucratic. It is
         more sensible to set out an over-arching framework to enable actions to be taken safely,
         without being overly prescriptive. It would be impossible (and unmanageable) to list all the
         risks to the Agency. A better approach is to enable staff by providing them with the generic
         tools they need to manage risks. This is what the Agency has set out to achieve in its
         Strategic Risk Register.



11       AGREED AUDIT ACTIONS REGISTER (ENCLOSURE AC08/54)

08/233   Mrs Morris explained that where action owners had not provided updates, these were
         indicated in the report as ‘not given’.

08/234   Planning 2006/07 item 2.1 (page 9): the revised date for this action should be 31 March 2009.

                                                          Action: Mr Michael Harker, 31 March 2009

08/235   Research & Development 2007/08 item 2.2 (page 11): The revised date for this action should
         be updated to 30 June 2009.

                                                         Action: Dr John Stephenson, 12 June 2009

08/236   Risk Management 2007/08 item 2.4 (page 12): The Committee asked why there was an
         action to introduce a procedure for project managers to assess whether a project requires a
         risk register, as all projects should have a register. Mrs Morris agreed to clarify this issue.

                                                            Action: Mrs Helen Morris, 31 March 2009

08/237   Health & Safety 2007/08, item 2.1 (page 17): Mr Bateman clarified that the health and safety
         audit plan will be presented to the Executive Group in December 2008.


                                                                                               Page 7 of 9
08/238   Mr Bateman referred to a previously raised action, which highlighted the lack of co-ordination
         between health and safety training and the Human Resources department. Standard health
         and safety courses are included on HR’s learning and development webpage. He accepted
         that although it is Centre/Divisional Directors’ responsibility to ensure that staff attend the
         required training, actual attendance on these courses could be monitored as part of the health
         and safety audits, and also through KPIs which is currently being discussed by the HSSG.

                                                               Action: Mr Ian Bateman, 31 March 2009



12       COUNTER-FRAUD ARRANGEMENTS: UPDATE (ENCLOSURE AC08/55)

08/239   Mrs Morris outlined the revised structure for counter-fraud and anti-theft arrangements that
         has been approved by the OSDG. Policies and procedures which contain relevant links to
         counter-fraud are also being updated to ensure consistency. There is a new counter-fraud
         strategy and a revised counter-fraud policy and fraud response plan. The strategy and policy
         will be updated further to include anti-theft elements, and a separate theft response plan will
         be drafted. Fraud investigation procedures will also be produced and a counter-fraud
         assurance programme introduced. Initially, greater staff awareness is being promoted
         through the Finance road-shows. The new corporate induction programme, which is due to
         be introduced in January 2009, will include a slot on counter-fraud and counter-fraud
         responsibilities will be brought to the attention of staff through the appraisal process. Mr
         Robertson suggested that a summary might be considered to preface the counter-fraud
         documentation when disseminating it to staff, to make it easier to understand.

                                                             Action: Mrs Helen Morris, 31 March 2009

08/240   Counter-fraud policy, Section 4.5: There was some discussion about whether the guidance for
         Centre/Divisional Directors to consult with HR, Internal Audit, Legal and Finance should be
         strengthened. It was decided that Centre/Divisional Directors would consult with these
         functions anyway before making a decision, and that the wording should remain unchanged.

08/241   The Members asked that the full range of potential conflicts that might arise for non-
         executives be brought to the attention of the Board (including political and personal interests).

                                                            Action: Mr Michael Harker, 31 March 2009



13       UPDATE OF THE AGENCY’S STANDING FINANCIAL INSTRUCTIONS AND STANDING
         ORDERS (ENCLOSURE AC08/56)

08/242   The Members requested that the update of Standing Orders and Standing Financial
         Instructions be presented at the next Audit Committee meeting for review, as set out under
         the Committee’s Terms of Reference. The update can then be brought to the attention of the
         Board through the Audit Committee minute from the update.

                                                            Action: Mr Michael Harker, 31 March 2009



14       REVIEW OF AGENDA AND USE OF RESOURCES, AND DATE OF NEXT MEETING

08/243   Mr Beaumont asked the Members whether they felt they had adequate opportunities to raise
         questions during the meeting and whether they had any issues for the next Audit Committee.
         None were raised.



                                                                                                  Page 8 of 9
08/244   The next meeting will be held on 31 March 2009 at Holborn Gate.



15       ANY OTHER BUSINESS

08/245   There being no other business, the Chairman declared the meeting closed and the Executive
         Officers withdrew.



         MEETING OF THE NON-EXECUTIVES WITH THE AUDITORS

08/246   Following their withdrawal, the Non-Executives held their annual meeting with the Internal and
         External Auditors without the presence of the Executive Officers.

08/247   The discussion covered development of the assurance framework for the Agency. Mrs Morris
         was asked to bring a paper to the next meeting of the Committee covering the assurance map
         prepared for NIBSC, and addressing the need for the HPA Board to identify its assurance
         needs in order for the Audit Committee, on behalf of the Board, to determine what assurances
         it requires from Internal Audit and other assurance providers in the future.

                                                           Action: Mrs Helen Morris, 31 March 2009




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