BOARD OF DIRECTORS MEETING BoD 25.05.11
27th May 2011 Item 10iii
TITLE OF PAPER Annual Report of the Audit & Assurance Committee to the Board
for the period 1 April 2010 to 31 March 2011
TO BE PRESENTED Martin Rosling, Non-Executive Director (Chair, Audit & Assurance Committee)
BY Mick Rodgers, Executive Director of Finance
ACTION REQUIRED The attached reported has been provided in order that the Audit & Assurance
Committee can give the necessary assurances to the Board of Directors that it has
satisfied its terms of reference. It seeks to provide the Board with evidence relevant to
its responsibilities for the Statements on Internal Control for the period 1 April 2010 to
31 March 2011.
The content has been kept at a summary level, rather than detail all the reports that the
Committee has received and reviewed during the year
OUTCOME The attached report is to be received and considered by the Audit & Assurance
Committee at its meeting on the 10 May 2011.
It should then be received by the Board of Directors as part of the Corporate
TIMETABLE FOR 2010/2011 Annual Report of the Committee to be presented to the May 2011
DECISION Board of Directors meeting.
LINKS TO OTHER KEY Statement on Internal Control for 2010/2011;
REPORTS/DECISIONS Committee’s self-assessment process;
Chair’s reports to the Board of Directors;
Work undertaken by External Audit (e.g. Annual Governance Report) and Internal
Audit Services (e.g. Head of Internal Audit Opinion) during the year 2010/2011.
LINKS TO OTHER The key link is the Committee’s terms of reference to objectively review and
RELEVANT monitor the delivery of the Board Assurance Framework (BAF) document which
FRAMEWORKS identifies where risks are managed effectively and provides a structure for the
BAF, RISK, OUTCOMES evidence to support the Statement on Internal Control.
NHS Constitution: Patients’ Rights Public Rights
Staff Rights Principles Values
IMPLICATIONS FOR As above.
AND FINANCIAL IMPACT
CONSIDERATION OF Not Applicable
Author of Report Martin Rosling, Non-Executive Director
Mick Rodgers, Executive Director of Finance
Date of Report May 2011
Audit and Assurance Committee
Annual Report of the Committee for the Period 1st April 2010 to 31st March 2011
1. Purpose of the Report
The Audit & Assurance Committee has prepared this report to the Board of Directors. It sets out how
the Committee satisfied its terms of reference and seeks to provide the Board with evidence relevant
to its responsibilities for the Statement on Internal Control for the period 1 stApril 2010 to 31st March
The existence of an independent Audit & Assurance Committee is the central means by which a Board
ensures effective control arrangements are in place. In addition the Audit & Assurance Committee
provides an independent check upon the executive arm of the Board of Directors.
The Committee’s Terms of Reference, which cover the main aspects of the Department of Health’s
Audit Committee Handbook 2005 were once again reviewed in year to ensure compliance with
Monitor requirements of a Foundation Trust and subsequently amended.
For 2010/2011, the Audit & Assurance Committee had a specific responsibility for ensuring effective
internal control and to provide the Trust Board with a means of independent and objective review and
The financial information used by the Trust;
Quality and clinical effectiveness of the services;
Compliance with law, guidance and codes of conduct;
The effectiveness of the systems in place for the management of risk;
The processes of governance and to facilitate and support the attainment of effective
Delivery of the Board Assurance Framework (BAF) document which identifies where risks are
managed effectively, which provides a structure for the evidence to support the Statement on
The Audit & Assurance Committee independently reviews, monitors and reports to the Board of
Directors on the attainment of effective control systems and financial reporting processes. In
particular, the Committee’s work during the year focused on the BAF and supporting frameworks of
risks and controls.
The BAF describes the evidence and assurances that underpin the delivery of the Trust’s objectives,
and the key risks to these objectives being achieved as outlined in the Annual Plan. The Committee
has closely monitored actions to close any gaps in controls and assurance described in the BAF. The
Committee asks the supporting Operational Governance Groups to report regularly to it regarding key
controls and assurances that can be evidenced as described in the BAF, for example Performance &
Information Group; HR & Workforce Group; Service & Business Development Group.
The Audit & Assurance Committee has also received and considered reports from both Internal and
External Auditors, and the Local Counter Fraud Specialist, and also the Committee recommends to
the Board of Directors to adopt the annual accounts and financial statements.
The Committee has reviewed progress on the Clinical Audit plan during the year and will receive the
Annual Clinical Audit Plan for 2011/2012 at its May 2011 meeting.
The Terms of Reference for the Audit & Assurance Committee
The Audit & Assurance Committee membership in respect of the financial year 2010/2011 was:
Mr. Anthony Clayton, Non-Executive Director
Ms. Susan Rogers, Non-Executive Director
Mr Martin Rosling, Non-Executive Director (Chair)
Cllr Mick Rooney, Non-Executive Director
Mr. Mervyn Thomas, Non-Executive Director
The Committee has met on 7 occasions during the year. Attendance at the Committee is as follows:
Name Position Meetings Attended
Anthony Clayton Non-Executive Director 7/7
Susan Rogers Non-Executive Director 3/7
Mick Rooney Non-Executive Director 7/7
Martin Rosling Non-Executive Director 6/7
Mervyn Thomas Non-Executive Director 7/7
5. Compliance with Terms of Reference
The Audit & Assurance Committee membership is composed entirely of Non-Executive Directors.
All meetings in 2010/2011 were quorate.
The Audit & Assurance Committee members held private discussions with the Internal and External
Auditors on one occasion during the year and have ensured that the Auditors can contact the Chair on
any issues about which they have concern.
A schedule has been agreed by the Committee on the areas of work to be completed. This schedule
is reviewed as part of the self assessment process which members complete annually and this acts as
an aide memoire to ensure all areas of work, including financial management, governance, risk and
audit is completed. The schedule is updated on an annual basis.
At its March 2011 meeting, the Committee was reminded that members needed to complete the self-
assessment checklist on the issues and agenda items it should cover throughout the year. Overall,
the checklist provided evidence that the role and responsibilities were fully covered.
These checklists have been reviewed and as a result it is noted that:
There was a need to find a way of understanding the benefit analysis of the Audit & Assurance
Committee costs compared to potential risks and benefits.
Members require a mechanism to keep up to date on topical issues, e.g. legal or regulatory,
which is undertaken in the annual work cycle.
Seven meetings of the Audit & Assurance Committee were held during the 2010/2011:
12th April 2010
10th May 2010
1st June 2010
13th September 2010
13th December 2010
14th February 2011
14th March 2011
7. Audit Provision
Internal Audit is provided by the South Yorkshire & North Derbyshire Audit Service (SYNDAS) and
External Audit by the Audit Commission. Both Internal and External Audit have been represented at
all Audit & Assurance meetings in 2010/2011.
The auditors submitted annual audit plans which were agreed and monitored by the Audit &
Assurance Committee. Regular updates on the progress and outcomes of these were presented to
the Committee during the year.
Counter Fraud Services are provided by the Local Counter Fraud Specialist, employed by the South
Yorkshire & North Derbyshire Audit Service which has operational responsibility for ensuring all
instances of suspected fraud and corruption within the NHS are properly investigated. The Local
Counter Fraud Specialist provides regular progress reports to the Audit & Assurance Committee
meetings and normally attends.
8. Duties and Findings
The Audit & Assurance Committee’s Terms of Reference requires the Committee to review the
establishment and maintenance of an effective system of integrated governance, risk management
and internal controls across the whole of the organisations activities (clinical and non-clinical), that
support the achievements of the Trust’s objectives.
The Chair of the Audit & Assurance Committee regularly reports key issues and findings to the
monthly Board meeting through the provision of a verbal and written report.
The Committee will receive and review the External Audit Management Letter as part of the year-end
The Audit & Assurance Committee received quarterly reports to gain assurance of effective controls
and risk mitigation outlined in the BAF from the following Trust’s Operating Governance Groups:
Service and Business Development Group
Performance and Information Group
Quality and Risk Group
Human Resources and Workforce Group
Regular attendees at the Audit & Assurance Committee are the Executive Director of Finance and the
Executive Director with responsibility for Governance who both represent the Executive Director Group
The Board of Directors has decided that it requires an update for its quality and risk governance
arrangements in order to ensure that the appropriate attention is paid to these areas. As a result of
this decision, it was agreed that there should be a further sub-committee of the Board, namely a
Quality Assurance Committee, which would mirror the Audit & Assurance Committee. The new
Committee and the revised terms of reference were agreed by the Board at its February 2011
The implications are that from the 1st April 2011 the Audit & Assurance Committee will no longer be
responsible for monitoring and reviewing:
Quality and clinical effectiveness of the services
The effectiveness of the systems in place for the management of risk
In addition, the Committee will work with the Quality Assurance Committee to provide the relevant
assurance to this Committee’s own scope of work and with regard to clinical governance and risk. It
has been agreed that all Non Executive Directors will be members of both committees, which will
ensure all governance and risk issues (service quality or financial) will be appropriately covered.
As part of the overall revised governance arrangements review, a review has been undertaken of the
Trust’s Operational Groups, which have been amended as follows:
The Service & Business Development Group has been replaced by a Business Planning Group
which is a working group of the Executive Directors’ Group. This is to ensure all business
cases are reviewed by all Executive Directors prior to submission to the Finance & Investment
Committee and Board of Directors or agreed in accordance with the Delegation of Authority.
The Performance & Information Group’s work will be managed via the Quality Assurance
Committee, with the current Information Governance Steering Group being used as part of the
sub working group structure, similarly for the former Quality and Risk Group.
The Human Resources & Workforce Group still remains.
In addition to reports from the Operational Governance Groups, the Audit & Assurance Committee
received regular exception reports from the Executive where appropriate.
The Local Counter Fraud Specialist (LCFS) formally reports to the Audit & Assurance Committee. The
Committee also discussed the results of the 2009/2010 Compound Indicator Assessment, published in
2010/2011. The Committee are satisfied that adequate arrangements are in place to counter fraud
within the Trust.
The Audit & Assurance Committee will scrutinise and approve the Trust’s Statement on Internal
Control for 2010/2011 and confirm that the statement is consistent with its views on the Trust’s system
of internal control and that it will support the Board’s approval of the statement. The Chief Executive,
as Accounting Officer, will sign the statement.
At regular intervals the Audit & Assurance Committee received details of recent internal audit work
together with a schedule of management’s progress in implementing agreed action plans following
recommendations by Auditors.
The Committee has overseen and supported the work of Internal Audit through:
agreeing the Audit Plan including the adequacy of coverage;
considering the results of internal audit reviews;
The Committee will also receive and review the Head of Internal Audit Opinion for the year 2010/2011
and this will form part of the wider assurance process.
The Committee is satisfied that the delivery of the Internal Audit Plan for 2010/2011 has given it
assurance that controls are effective and action plans are developed for improvement.
The Executive Director of Finance reviews progress on all Audits given ‘C’ and ‘D’ ratings and this is
followed up as appropriate by an independent progress report to the Committee.
The Internal Audit Service is overseen and monitored by the Audit Management Board who oversees
the Agency. The outcomes of which include quarterly monitoring of performance and delivery of the
As part of the NHS Foundation Trust Code of Governance, produced by Monitor, the Council of
Governors is responsible, amongst other things, in agreeing/approving the appointment of the Trust’s
External Auditors. The Auditors present the Annual Governance Report to the Council of Governors
as part of the assurance process. In addition, this report is also received by the Audit & Assurance
The Audit & Assurance Committee will receive the Head of Internal Audit Opinion Statement on the
effectiveness of the system of internal control at the Trust for the year ended 31st March 2011. The
opinion will be based on the Trust’s Assurance Framework and Internal Audit’s own work.
The Audit & Assurance Committee will review the draft Annual Report and draft Unaudited Annual
Financial Accounts for 2010/2011 prior to consideration by the Board.
The Audit & Assurance Committee remain confident that the financial position of the Trust is reported
The Audit & Assurance Committee have further developed during 2010/2011, during which time there
has been measurable further embedding of the overarching Governance Framework of the Trust,
together with the Board Assurance Framework.
This Committee has been enhanced by the membership of all Non-Executive Directors.
The Committee are satisfied that the evidence it has received and reviewed and as summarised in this
Annual Report has ensured that the Committee complied with its Terms of Reference and
responsibilities for Statement on Internal Control for the period 1st April 2010 to 31st March 2011.
This report was considered and approved at the Audit & Assurance Committee meeting held on the
10th May 2011.
Mr. Martin Rosling
Chair of Audit & Assurance Committee