AUDIT COMMITTEE
TERMS OF REFERENCE AND 2011/12 WORK PLAN

1. Introduction

This paper outlines the terms of reference for the Audit Committee (as contained within the NHS Tayside Code of Corporate Governance) and the Committee’s 2011/12 Work Plan.

2. Executive Lead Officer

The executive lead officer for this committee is Mr Dave Carson, Assistant Director of Finance – Governance and Modernisation.

3.Support Officer

Items for the agenda should be submitted to the Committee Support Officer,
Mrs June Ramsay, PA, Finance Directorate.  Mrs June Ramsay can be contacted at Finance Directorate, Maryfield House North, 30 Mains Loan, Dundee, DD4 7BT,
Tel 01382 424419 or extension 70419.

4. Purpose of Committee

The purpose of the Audit Committee is to assist the Board to deliver its responsibilities for the conduct of public business and the stewardship of funds under its control.  In particular, the Committee will seek to provide assurance to the Board that an appropriate system of internal control is in place to ensure that:

• Business is conducted in accordance with the law and proper standards.
• Public money is safeguarded and properly accounted for.
• Financial Statements are prepared timeously and give a true and fair view of the financial position of the Board for the period in question.
• Affairs are managed to secure economic, efficient and effective use of resources.
• Reasonable steps are taken to prevent and detect fraud and other irregularities.

5. Membership

Mrs A Scott – Chair             (To 30 June 2011)

Members

In order to preserve its independence from operational management, the Audit Committee does not have executive membership.  It is also the only Standing Committee for which the Chair of the Board does not have ex-officio status.

The under noted groups have a right of attendance at the meetings of the Committee as follows:

• The Public Partnership Groups shall be invited to send a maximum of two representatives.
• The Area Clinical Forum and Area Partnership Forum shall be invited to send a maximum of two representatives.

The Chair of the meeting will have the discretion to decide if the representatives will not be issued with reserved business and will be required to leave due to the nature of business to be discussed in Reserved Business.

Persons attending in this capacity shall be entitled to speak but not to propose or second any
motion or to vote.

Regular Attendees

6. Quorum

Meetings of the Committee will be quorate when at least three members are present.

7. Frequency of Meetings

The Committee shall meet no fewer that four times a year.

8. Remit

The main objectives of the Audit Committee are to ensure compliance with NHS Tayside’s Code of Corporate Governance and that an effective system of internal control is maintained.  The duties of the Audit Committee are in accordance with the NHS Audit Committee Handbook and are as detailed below.

Risk Reporting
The Committee has a duty

• To review the organisation's risk management arrangements, systems and processes;
• To review biannual reports from corporate risk owners with risks aligned to this Committee;
• To review and approve the risk management work plan;
• To approve the Terms of Reference and Committee Annual Report of the Strategic Risk Management Group;
• To receive the minutes from the Strategic Risk Management Group and Delivery Unit Risk/Health and Safety Management Group;
• To approve the mid year and annual risk management/health and safety reports on effectiveness, adequacy and robustness of the risk management systems.

Policy Endorsement

• Endorse Health & Safety/Risk Management (including Fire Safety) policies.

Internal Control and Corporate Governance
To review the framework of internal control and corporate governance comprising the following components:

• Control environment.
• Information and communication.
• Risk management.
• Control procedures.
• Monitoring and corrective action.

To review the system of internal financial control, which includes:

• The safeguarding of assets against unauthorised use and disposition.
• The maintenance of proper accounting records and the reliability of financial information used within the organisation or for publication.
• To ensure that the Board’s activities are within the law, regulations, Ministerial Direction and the Board’s Code of Corporate Governance.
• To present an annual Statement of Assurance on the above to the Board, in support of the Statement on Internal Control by the Chief Executive.

Internal Audit

• To review and approve the Internal Audit Strategic and Annual Plans.
• To receive and review Internal Audit reports in line with the Internal Audit Protocol.
• To receive and review management reports on action taken in response to audit recommendations in line with the agreed follow-up Protocol.
• To consider the Chief Internal Auditor’s annual report and Assurance Statement.
• To review the operational effectiveness of Internal Audit by considering the audit standards, resources, staffing, technical competency and performance measures.
• To ensure that there is direct contact between the Audit Committee and Internal Audit and to meet with the Chief Internal Auditor at least once per year and as required, without the presence of Executive Directors.

External Audit

To review the annual Audit Planning Memorandum including the Performance Audit programme;

• To review the terms of reference, appointment and remuneration of external auditors for the Board Endowment Funds.
• To review Audit Plan produced by the external auditors appointed in relation to the Board Endowment Funds.
• To consider all statutory audit material for the Board, in particular:-

• Audit reports (including Performance Audit studies and Best Value toolkits).
• Annual report.
• Chief Executive Letters.
• Matters relating to the certification of Annual Accounts (Exchequer Funds); Annual Patients’ Funds Accounts and Annual Endowment Funds Accounts.
• To monitor management action taken in response to all External Audit recommendations, including VFM studies.
• To hold meetings with the External Auditors at least once per year and as required, without the presence of the Executive Directors.
• To review the extent of co-operation between External and Internal Audit.
• Annually appraise the performance of the External Auditors.
• To note the appointment and remuneration of the External Auditors and to examine any reason for the resignation or dismissal of the Auditors.
• To appoint the External Auditors of Patients’ Funds and approve the remuneration.

Code of Corporate Governance

• To review the Code of Corporate Governance which includes Standing Orders, Schemes of Reservation and Delegation, Standing Financial Instructions and recommend amendments to the Board.
• To examine the circumstances associated with each occasion when Standing Orders have been waived or suspended.
• To monitor compliance with the Members' Code of Conduct.

Annual Report and Accounts

• To review the Annual Report for the Board.
• To review and recommend for approval the Annual Accounts for Exchequer Funds.
• To review and recommend for approval the Annual Accounts for Endowment Funds to the Endowment Trustees of the Board.
• To review and recommend for approval the Annual Accounts for Patients’ Funds.
• To review at least annually the accounting policies and approve any changes thereto;
• To review schedules of losses and compensation payments.

Other Matters

• The Committee has a duty to review its own performance and effectiveness, including its running costs, and terms of reference on an annual basis;
• It also has a duty to keep up to date by having a mechanism to ensure topical legal and regulatory requirements are brought to Members’ attention;
• The Committee shall monitor how the Board controls risk and possible litigation;
• The Committee shall agree the level of detail it wishes to receive from the Internal and External Auditors.

Best Value

The Committee is responsible for reviewing those aspects of the Best Value work plan which are delegated to it from Tayside NHS Board.  The Committee will put in place arrangements which will provide assurance to the Chief Executive as Accountable Officer, that NHS Tayside has systems and processes in place to secure best value for these delegated areas.

9.         Authority

In order to fulfil its remit, the Audit Committee may obtain whatever professional advice it requires, and require Directors or other officers of the Board to attend meetings.

10.       Reporting Arrangements

• The Audit Committee reports to Tayside NHS Board;
• Following a meeting of the Audit Committee, the minutes of that meeting should be presented at the next Tayside NHS Board meeting;
• The Audit Committee should annually and within three months of the start of the financial year, provide a work plan detailing the work to be taken forward by the Audit Committee;
• The Audit Committee will produce an Annual Report for presentation to Tayside NHS Board.  The Annual Report will describe the outcomes from the Committee during the year and provide an assurance to the Board that the Committee has met its remit during the year.
• The Annual Report must be presented to a Board meeting prior to the Audit Committee considering the Annual Accounts.

11.       Work Plan

At each meeting of the Committee, the following business shall be transacted:

• Minutes, action plans and any matters arising from the previous meeting of the Committee.
• Minutes, action plans for the Delivery Unit Risk/Health & Safety Management Group and Strategic Risk/Health and Safety Management Group.
• Minutes for the Governance Review Group.
• Reports from the Chief Internal Auditor against the Annual Internal Audit Plan.
• Progress reports from the appointed External Auditor together with consideration of specific reports.
• Consideration of specific Internal and External Audit Reports and Action Plans.
• Review of audit publications relevant to economy, efficiency and effectiveness of services.

On a quarterly basis, the Committee shall consider progress reports on:

• Audit follow up – full progress reports to 2 meetings and mid-cycle update reports to 2 other meetings.
• Minutes from the Integrated Good Governance Group and Good Governance Group.
• Consideration of detailed Payment Verification reports and updates on Primary Care Contractors and considered actions taken by management under Reserved Business.
• Update reports on all Counter Fraud Service investigations and consideration of their potential impact on NHS Tayside taken by management under Reserved Business.
• Consider progress reports around National Fraud Initiative work.

Every six months, the Committee shall consider progress and exception reports on:

• Risk Management/Health and Safety.
• Litigation monitoring.

Annually, the Committee shall consider and make recommendations to the Board where necessary, with regard to:

• Approval of terms of reference and a work plan for all Committee meetings for the forthcoming year.
• Review with the appointed External Auditor, the Audit Planning Memorandum including fees and reporting arrangements.
• Review of Annual Accounts for Exchequer, Endowments and Patients Funds.
• Review previous year Report to Members on the audit of NHS Tayside.
• Review of NHS Tayside Losses and Compensation payments.
• Review the effectiveness of co-operation between Internal and External Audit.
• Annual Report from the Chief Internal Auditor relating to the previous year and interim report from the External Audit.
• Annual Report for the Strategic Risk Management Group and Strategic Risk/Health and Safety.
• Annual Report for the Integrated Good Governance Group.
• Review of mid-year and annual Internal Audit SIC report.
• Review of the changes to the Code of Corporate Governance.
• Approval of Annual report of the Audit Committee.
• Approval of Internal Audit Plan.
• Review compliance with Property Transaction Monitoring requirements for onward submission to SGHD.

The last item included on the Reserved Business Agenda for each Audit Committee Meeting is entitled ‘Private Discussion’, this provides the members of the Committee and the Internal/External auditors an opportunity for private discussion without other regular attendees being present.

Timetable for submitting agenda items and papers

The Audit Committee meetings are held on a Thursday, at 9.30 a.m., usually in the Board Room, King’s Cross.

The dates of the Committee meetings for 2011/12 are set out below.  Final papers must be submitted, electronically, to Mrs June Ramsay (juneramsay@nhs.net), PA, Finance Directorate, Maryfield, by the due date noted in column four below: