Agenda and supporting papers - Plymouth Hospitals NHS Trust

Item 18, Annex 1
Five of the seven Non-Executive Directors present had been
appointed since the close of the previous financial year and in seeking
to develop a more informed understanding of the respective roles of
internal and external audit, including the processes and evidence
used by both audit functions to determine their respective end of year
opinions, a broad discussion developed. Non-Executive Directors
used this as an opportunity to triangulate their own knowledge and
observations of the Trust’s performance with the arguments presented
to them by internal and
D
external audit and to share their perspective,
as Board Directors with corporate responsibility, of audit’s findings. In
general terms the discussion covered:
• Understanding the roles of internal and external audit and their
respective focus on process/controls and on outcomes.
R
• The requirement of the Trust Board, via the Audit Committee,
to have earlier visibility of the inconsistent application of
controls when this could lead to serious risks, for example
controls around discretionary pay. Professor Lewis sought
clarification on the costs included within discretionary pay. Mr
Teape stated
A
that service lines had been asked to prepare
workforce plans which included substantive and discretionary
pay for the full year. Temporary and agency staff, overtime and
waiting list initiative payments all contributed to discretionary
pay costs. Professor Lewis highlighted the importance of
ensuring that workforce and activity were aligned.
F
• The longer term intention to devolve autonomy to service lines
within the current imperative to apply strict financial controls to
ensure that the Trust’s overall financial position did not
deteriorate further. After the last Audit Committee meeting
Non-Executive Directors had received copies of the Trust-
T
commissioned PWC report on financial controls. Mr Teape
placed PWC’s work into context for the Committee. Their
recommendations had been incorporated into an action plan,
the implementation of which would be overseen by FPIC.
• Understanding why the known problems of bed capacity had
not emerged as part of internal and external audits’ focus. Mr
Barber stated that this was covered in the review of resources
and his firm had commented on this. For the last three years
the focus of his firm’s Value for Money (VFM) conclusion had
shifted from generic to financial resilience. In 2010/11 his firm
qualified its conclusion. An improvement was noted in 2011/12
and the Trust delivered in a challenging environment and
therefore their opinion had not been qualified in 2011/12. The
position had deteriorated in 2012/13 in the area of financial
resilience and the evidence for this was set out in his firm’s
report.
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