Draft Agenda Next Audit Committee

Appendix A NORTHERN IRELAND HEALTH AND SOCIAL CARE

BUSINESS SERVICES ORGANISATION

GOVERNANCE AND AUDIT COMMITTEE

Minutes of the Governance and Audit Committee (GAC) which took place on Tuesday, 14 January 2014 at 11:00am in the Boardroom, BSO, 2 Franklin Street, Belfast.

Presen Brian McMurray (Chair) In Paddy Anderson (Director of Finance) t: Geraldine Fahy Attendance Catherine McKeown (Head of Internal Audit) : Robin McClelland Dorinnia Carville (Director, NIAO) Hilary McCartan Catherine O’Hagan (NIAO) Clare Dornan (NIAO) Arthur O’Brien (KPMG) Emma Murray (PWC) Hugh McPoland (Director of Human Resources and Corporate Services) (Item 8(a)i only) Janine Watterson (Committee Secretary)

Audit Report Tracker At the outset of the meeting Janine Watterson gave a presentation on the Audit Reporting Tracker (ART) database. The presentation provided members with a high-level overview of the ART database which is currently used within BSO for managing audit recommendations and enabling reports for both BSO’s Senior Management Team and the Governance and Audit Committee (GAC). The Committee welcomed this innovative project and acknowledged the excellent work undertaken by Janine Watterson and Damien Gibson (ITS) in achieving this positive outcome.

1. Apologies

There were no apologies for absence.

2. Conflicts of Interest Declaration

There were no conflicts of interest declared.

3. Minutes of Governance and Audit Committee Meeting held on 8 October 2013 – GAC 1/2014

The minutes of the meetings held on 8 October 2013 were approved and signed.

4. Action Points arising out of Minutes of 8 October 2013 – GAC 2/2014

The Committee noted that all of the action points listed had been completed.

Mrs Fahy, referring to the HSC Pensions internal audit report - minute 7(a)(v), enquired whether confirmation had been sought as to the monitoring arrangements in place for reviewing external contractors accessing the Altair System and also what informed the prioritisation of a priority one weakness that three senior Pensions Staff had system administrator access. The Head of Internal Audit responded that as yet this had not been undertaken and agreed to report back to the next meeting. 5. Chair’s Business

(a) Proposed Dates for Future GAC Meetings – GAC 3/2014

The Chair reminded the Committee of the proposed dates for future GAC meetings. The Committee noted that the timetable for the production of the 2013/14 Annual Report and Accounts had still to be issued and therefore the proposed dates may be subject to change.

6. External Audit – NIAO to Report

(a) 2012-13 Report to those Charged with Governance – GAC 4/2014

Ms O’Hagan tabled the 2012/13 Report to those Charged with Governance. She advised that the report presented was in final form and no changes had been made since the previous draft was presented to the Committee in October 2013.

The Committee noted the Report presented.

(a) BSO Audit Strategy for the Audit of the 2013/14 Financial Statements – GAC 5/2014

The BSO Audit Strategy for the 2013/14 Financial Statements was presented by Arthur O’Brien, KPMG. Mr O’Brien, provided an overview of the 2013/14 Financial Statements external audit strategy. He took the Committee through the key aspects of the report highlighting the audit approach to be taken in respect of five significant risks which had been identified within the Strategy. The Committee noted the 2013/14 Audit Strategy for the BSO Financial Statements.

Ms Claire Dornan, Audit Manager from the NIAO Value for Money Division then drew the Committee’s attention to Annex 2 of the Audit Strategy. Annex 2 identified the relevant Value for Money reports issued over the last five years and also other on-going studies with relevance, or interest, to the HSC.

The Committee noted the report provided and expressed their appreciation of the work undertaken by the VFM Division within the NIAO.

(b) BSO Audit Strategy for the Audit of 2013/14 Information Technology Controls – GAC 6/2014

The BSO Audit Strategy for the audit of the 2013/14 Information Technology Controls was presented by Emma Murray.

Ms Murray, provided an overview of the 2013/14 Information Technology Controls external audit strategy. She took the Committee through the key aspects of the report highlighting the audit approach to be taken in respect of seven significant risks which had been identified within the Strategy. The Committee noted the 2013/14 Audit Strategy for Information Technology Controls.

Ms O’Hagan alerted the Committee to a potential delay in commencing the Information Technology Controls audit due to competing demands eg. imminent Go-Live dates for new systems and also internal audits which were due to take place. The Director of Finance

2 advised that he had not been made aware of any issues surrounding the timetable for this audit but requested that PWC advise him directly of any difficulties encountered. Ms Murray undertook to report back to the Director of Finance.

The Committee noted the Report presented. 7. Financial Statements

(a) BSO Action Plan to manage Risks identified in the Audit Strategy for the Financial Statements for the year ended 31 March 2014 - GAC 7/2014

The Director of Finance presented the BSO Action Plan to manage risks identified in the Audit Strategy for the Financial Statements for the year ended 31 March 2014. He advised the Committee that a final DHSSPS timetable had yet to be issued however he anticipated that draft accounts would be required to be completed by 6th May 2014. He also confirmed that presently he anticipated that BSO would meet DHSSPS deadlines.

(b) BSO Action Plan to manage Risks identified in the Audit Strategy for Information Technology Controls for the year ended 31 March 2014 - GAC 8/2014

The Director of Finance advised that further clarification was being sought on the IT strategy and therefore no formal response was available. He advised that the Action Plan would be forwarded to the Committee in due course.

The Chair thanked the Director of Finance for the reports provided.

The Director of Finance advised the Committee that the 2012/13 Annual Report and Accounts had been laid before the NI Assembly and would now be published in due course.

8. Internal Audit

(a) Progress report - GAC 9/2014

At the commencement of her progress report the Head of Internal Audit (HIA) highlighted to the Committee a number of short audit assignments which had been commissioned by other Organisations which involved BSO services. These reports related to Shared Services Pre-Go Live Reviews of Readiness for the Western Trust and also a review on a specific recruitment exercise conducted by BSO for RQIA. She explained that this audit work was largely resourced by the commissioning organisations however, as the reports included recommendations for BSO they were being presented to the Committee for noting.

HIA also sought the Committee’s approval to merge two audit assignments relating to the Business Services Team into one audit which would take place in this financial year. She explained that she had been unable to agree a commencement date with the Shared Services Assistant Director for the two audit assignments, due to competing priorities and it seemed unlikely these would now be conducted in the current year. The Committee approved this amendment to the BSO Internal Audit Strategy and Plan.

3 HIA gave a progress report on internal audit work undertaken since the last meeting. She informed the Committee that she was presenting five reports for consideration: Management of BSO Corporate Contracts, PalS Logistics and Stock Ordering, High Level Review of Shared Services Design Documents, Risk Management and Communisis Overpayment Review. A quarterly review of PaLs Single Tender Actions and Contract Renewal Monitoring was also being presented.

The Committee noted each of the Reports presented and raised the following issues: i. Management of BSO Contracts

The Director of Human Resources and Corporate Services was present during this item.

HIA reported an overall satisfactory level of assurance with a limited assurance in respect of the Single Tender Actions Administration Process.

Mrs Fahy responded advising that she believed the satisfactory assurance provided was too high based on the findings contained in the report. In particular, Ms Fahy referred to lack of written procedures and cautioned that others issues raised in this report should be addressed quickly based on lessons learned from the 2012/13 Management of Contract internal audit. HIA responded that she had taken account of all the issues raised and was comfortable with the assurance provided.

Mrs McCartan enquired as to why BSO are using non contract recruitment agencies. The Director of Human Resources and Corporate Services explained that the current contract for recruitment provides for recruitment of junior staff. However, as BSO continues to expand a requirement for specialist posts is emerging which currently cannot be fulfilled under the present contract arrangements. However, he advised that a new recruitment contract would shortly be in place which would bridge this gap.

The Committee noted the report presented. ii. PaLs Logistics and Stock Ordering

HIA reported a satisfactory level of assurance.

Mrs McCartan, referring to recommendation 1.1 System Issues enquired when the outstanding issues would be completed. The Director of Finance advised that responsibility for these systems issue are outside the control of BSO. However, BSO are engaging with suppliers to seek a resolution as soon as possible. The Committee noted that PaLs had anticipated that these issues would be resolved by the end of April 2014.

Mr O’Brien referred to recommendation 2.3 Reconciliation between Red Prairie and e Financials and enquired if the differences in systems would be addressed by year end. The Director of Finance responded advising that a huge amount of progress had made been in investigating and reconciling systems all of which was on target for completion by year end.

The Committee was pleased to note the satisfactory assurance received with this report given the issues with new systems throughout the 2013/14 year. iii. High Level Review of Shared Services Design Documents

4 HIA presented the High Level Review of Shared Services Design Document. There was no assurance provided with this report.

The Committee note report presented. iv. Risk Management

HIA reported a satisfactory level of assurance.

In noting the report the Committee requested that future reports should contain population and sample sizes for reference purposes. HIA agreed to take this forward. v. Communisis Overpayment Review

HIA presented the Communisis Overpayment Review. There was no assurance provided with this report. HIA reported that she had been requested by BSO to conduct a review of an overcharge by Communisis, a secure printing company, who provided a range of prescription products to prescribers on behalf of BSO. The total overcharge related to £83,000.

In response to a question from Mr O’Brien, the Director of Finance advised that all monies had now been recovered.

A discussion arose as to the implication and practicalities of the controls in place for receipt of prescription products. The Director of Finance advised that he had discussed these issues with FPS and he was content that the responses provided in the report would ensure that processes would be strengthened.

In noting the report, the Committee requested that a paper be appended to provide further detail as to how the overpayment was discovered. HIA agreed to take this forward. vi. Quarterly Review of Single Tender Actions (STA)

HIA presented her Quarterly Review of STAs to the Committee. She explained that the BSO Board had requested that Internal Audit provide an independent assurance on the approval of STAs approved by the Assistant Director of PaLs. In addition, Internal Audit had also performed an early review of the Tendering Monitoring Tool to ensure, through sample testing that contracts due to expire have been recorded on the monitoring tool where applicable.

The Committee noted that from the STAs examined approval was deemed reasonable by internal audit. In respect on the early review of the Tender Monitoring Tool, a sample of 60 contracts was selected from which one exception was noted. This was subsequently corrected and investigated.

The Committee noted the report presented.

(b) Update on DHSSPS External Quality Review on Internal Audit – GAC 10/2014

The Committee noted the Update on the External Quality Review on Internal Audit as at January 2014.

5 9. Business Matters

(a) Progress report on 2013/14 Controls Assurances Action Plans – GAC 11/2014

The Director of Finance presented the Progress Report on Controls Assurance Standards as at 31 December 2013.

(b) Progress on 2013/14 Service Risk Action Plans – GAC 12/2014

The Committee noted the progress report on Risk Action Plans as at 31 December 2013.

10. Director of Finance Updates

(a) Monitoring of Audit Recommendations and Progress reports as at 31 December 2013 – GAC 13/2014

The Director of Finance presented a progress report on BSO’s internal and external audit recommendations received during the 2011/12, 2012/13 and 2013/14 years.

The Committee noted the report provided

(b) NFI Update - GAC 14/2014

The Secretary presented a progress report on the National Fraud Initiative in Northern Ireland: Data Matching 2012/13.

The Committee noted that of the 532 recommended matches, 700 had been investigated. The Committee also noted that to date investigations had detected that twelve overpayments totalling £58,265 had been made. The pension had been suspended in all cases and work was underway to recover these amounts although there was no guarantee of a full recovery.

The Committee noted the report provided.

(b) Fraud Report to 31 December 2013 – GAC 15/2014

The Secretary presented the 2013/14 and 2012/13 Fraud/Theft Register and provided updates in respect of ongoing cases.

The Committee noted the position.

(c) Register of Departmental Finance Circulars - GAC 16/2014

The Committee noted the Register of Circulars which provided members with an overview of Financial Circulars received from the Department during the 2013/14 year.

11. Date of Next Meeting

The date of the next meeting was confirmed as Tuesday, 15 April 2014.

6 ______Chair

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