1.2.2 Deloitte's - Item 7a 2005 Audit letter post client c–
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Great Ormond Street Hospital for Children NHS Trust Annual Audit Letter 2004/05 This report has been prepared on the basis of the limitations set out on page 19. Contents Page 1. Key points 4 2. Overall financial standing 12 3. Statement of accounts 13 4. Use of Resources 14 5. Financial aspects of corporate governance 16 6. Next year’s audit plan 18 7. Statement of responsibility 19 Appendix 1: Action Plan 20 Appendix 2: Follow up of action on our 2003/04 audit letter recommendations 23 St Mary’s NHS Trust The Directors Great Ormond Street Hospital for Children NHS Trust Great Ormond Street London WC1N 3JH October 2005 Ladies and Gentlemen We have pleasure in submitting our 2005 Audit Letter to you. The letter summarises the main results and conclusions from our audit work over the last year. As you will know, our audit work is performed in accordance with the Audit Commission’s Code of Audit Practice for Local Authorities and the National Health Service in England and Wales (“the Code of Practice”). Section 1 of this letter shows how we have covered the requirements of the Code of Practice and the key issues arising from our work that we consider the Trust Board needs to address as priorities over the coming months. It also gives an update to our audit risk assessment advised in our Audit Plan. The prioritised action plan in Appendix 1 pulls together all the recommendations within this letter. This should ...
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| Publié par | Erni |
| Nombre de lectures | 32 |
| Langue | English |
Extrait
Great Ormond Street Hospital for Children NHS Trust
Annual Audit Letter
2004/05
This report has been prepared on the basis of the limitations set out on page 19.
Contents
1. Key points 2. Overall financial standing 3. Statement of accounts 4. Use of Resources 5. Financial aspects of corporate governance 6. Next years audit plan 7. Statement of responsibility Appendix 1: Action Plan Appendix 2: Follow up of action on our 2003/04 audit letter recommendations
St Marys NHS Trust
Page
4 12 13 14 16 18 19 20 23
The Directors Great Ormond Street Hospital for Children NHS Trust Great Ormond Street London WC1N 3JH
October 2005
Ladies and Gentlemen We have pleasure in submitting our 2005 Audit Letter to you. The letter summarises the main results and conclusions from our audit work over the last year. As you will know, our audit work is performed in accordance with the Audit Commissions Code of Audit Practice for Local Authorities and the National Health Service in England and Wales (the Code of Practice). Section 1 of this letter shows how we have covered the requirements of the Code of Practice and the key issues arising from our work that we consider the Trust Board needs to address as priorities over the coming months. It also gives an update to our audit risk assessment advised in our Audit Plan. The prioritised action plan in Appendix 1 pulls together all the recommendations within this letter. This should assist you in monitoring the implementation of our recommendations. We would like to express our thanks to all those at the Trust who have assisted us during our work over the last year. Yours faithfully Deloitte & Touche LLP
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1.
Key points
1.1. Summary of audit findings and conclusions We summarise below our key audit findings and conclusions from our audit in each area of our audit responsibilities. Code of Audit Practice area Audit findings and conclusions Overall financial standing The Trust financial record up to 2003/04 has been good. However, the Trust experienced difficulty in balancing its income and expenditure in 2004/05 and the signs are that this pressure is continuing in 2005/06. In 2004/05, the Trust failed to meet its breakeven target, with a deficit position of £557k. This represented a significant improvement on the deficit of £1.7 million reported by the Trust in January and was achieved through the implementation of strict expenditure controls. Whilst these were effective they were accompanied by a greater than anticipated loss of income resulting in an overall deficit position. The Trust marginally overshot against the External Finance Limit although it did meet the Capital Resource Limit and achieved a return on net assets within the materiality range set by the Department of Health. The Trusts performance against the public sector payment target of settling invoices within 30 days remains an area of concern with performance at 49% by volume and 71% by value. This represents a marginal improvement on 2003/04. Budgets for 2005/06 indicate that the Trust will need to achieve significant savings if it is to break even and the trust management team need to commit to strict income and expenditure control for the rest of the year if break even is to be achieved. The Trust is applying for Foundation Trust status and faces challenges under the Payment by Results system due to its very specialist, high cost service. The Trust needs to develop its financial and activity forecasting capabilities so that it can establish a sound operating and financial strategy which can meet these new challenges. The Trusts very large capital programme has continued broadly to plan. We note that the Trust has prepared updated cash flow forecasts over the full programme life which showed some potential shortfalls. The Trust should continue to apply prudence to the next project phases ensuring that funding is assured or probable before committing to contract spend.
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Code of Audit Practice area Statement of accounts
Use of resources
Great Ormond Street Hospital for Children NHS Trust
Audit findings and conclusions We were able to issue an unqualified audit opinion on the Trusts financial statements. However, we note that the Trusts draft accounts reported a small surplus as this erroneously took some income into account which in fact had to be treated as deferred due to the need to match the income against the relevant expenditure in 2005/06. Hence audit adjustments were processed which led to a deficit in the year of £557k. We also note that there were several areas of the draft accounts where adjustments had to be made, particularly relating to fixed assets and debtors. The finance team are aware of the causes of them and are implementing steps to prevent a recurrence in 2005/06. We have also reviewed the Summary Financial Statements (SFS) included in the Trust annual report and have issued a separate, unqualified opinion on the Summary Financial Statements. Overall we were able to satisfy ourselves as to the Trusts overall arrangements for achieving value for money for the purposes of our audit. We also note that the Trust maintained its 3 star status under the Healthcare Commissions 2004/05 assessment. During the audit year, we have issued three reports from our work completed as part of the mandatory use of resources programme - the Portfolio Phase 5 study, a Data Quality study and Spot Check on waiting lists. The results of the studies were generally positive for the Trust although issues were identified around the arrangements for the quality of data held in ward records and the accuracy of waiting lists and waiting list information. The Trust has developed action plans for addressing the recommendations made from our use of resources reviews and we will continue to monitor progress against this plan. No Red Risks were identified as requiring additional work at the Trust in 2004/05 although some Red Risks work is planned for 2005/06 in priority areas for the Trust.
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Code of Audit Practice area Internal control and risk management
Standards of conduct and fraud and corruption Legality
Great Ormond Street Hospital for Children NHS Trust
Audit findings and conclusions In line with the results for the sector as a whole, the Trust was able to report that an assurance framework was in place throughout the 2004/05 financial year. We concurred with the statement on internal control made by the directors in the annual accounts and understand that action plans have been agreed where gaps in control or assurance have been identified. We have relied on the work of the Trusts internal auditors, Thames Audit, under the managed audit concept and will work with them to ensure that we are able to place an adequate level of reliance on the work they plan to undertake in 2005/06. The Trust will need to update its risk management data and arrangements to reflect new risks arising from the Patient Choice and Payment by Results regime and from Foundation Trust status. Based on our work, there are no matters we wish to bring to the attention of the Audit Committee or Board. Based on our work, there are no matters we wish to bring to the attention of the Audit Committee or Board.
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1.2. Update on risk assessment We set out below an update to the risk assessment contained in our audit plan focusing on areas identified as high risk. Assessment in plan Update Performance Measures The Trust achieved a 3 star rating in the results published in July 2004. We have reviewed the Trusts performance as part of our use of resources work during the year. We note the Trust retained its 3 star status in the July 2005 star cAocnhtiienvueesm teon tb eo af n piemrfpoorrtmaannt cper iomrieas fuorre st hee stTarbulsits. hed under the NHS Plan ratings. ty Financial Performance The Trust faces increasing financial pressures. Performance suggests The Trust did not achieve its statutory target to break even although a technical 2004/05 will again be a challenging year for the Trust to achieve financial break even was achieved as the deficit was less than 0.5% of turnover and an overall balance. The Trusts high reference costs reflect its specialist work but may surplus has been made on the I&E over the last 3 years. The Trust put extensive result in problems under the new Payments by Results regime. The Trust cost cutting measures in place in the latter part of the year and these are continuing also notes problems in terms of high procurement and staffing costs. into 2005/06 with the effect of performance in line with budget at present. The trust will be required to recover the deficit made in 2004/05 in the 2005/06 financial year. Foundation Trust Status The Trust is considering applying for Foundation Trust status as part of the The Trust has deferred its application for Foundation Trust status until late 2006. second wave with a view of taking on this status in 2005/06. We have discussed issues likely to arise in becoming a Foundation Trust with the Chief Executive and Director of Finance and made suggestions in relation to preparing for the application process. Recruitment and Retention of Staff The Trust continues to experience difficulties in recruiting and retaining Recruitment and retention continues to be an issue at the Trust although the level of staff, particularly nurses and administrative staff. vacancies and staff turnover has decreased in recent months to 16%. Whilst at the end of March 2004 staff turnover was at a historically low level it continues to be in excess of 18% and significant levels of vacancies exist across the Trust. Great Ormond Street Hospital for Children NHS Trust7
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Assessment in plan Update Hospital Redevelopment The Trust is currently undertaking an extensive redevelopment programme The cost of the redevelopment is expected to be £224 million with £75 million financed largely by the Special Trustees. coming from the Department of Health and the remainder being raised in the future the S ec At present the redevelopment is progressing in line with the budget and by p ial Trustees. timescale although it is noted that the Special Trustees will need to raise The redevelopment is currently progressing broadly in line with plan, but recent significant additional funds over the next few years in order to ensure that cash flow ctions s the redevelopment can be fully funded at each stage. flow issuesp raorjee not to arhisoew. this project phasing will need to be reconsidered if cash Payment by results The introduction of payment by results creates considerable uncertainty The Trust has been involved in the Childrens Alliance in making representations to for the Trust and for its commissioners. Work needs to be completed now to the Department of Health in relation to the application of Payment by Results to ensure that when a significant number of tariffs are introduced in 2004/05, specialist trusts. The Trust must ensure that the agreed tariffs and uplifts are fully the effects on funding are fully understood and built into financial plans understood and incorporated into the Trusts financial plans. appropriately. Partnership Working Recently the Trust has become part of a number of initiatives involving the Partnerships, developed recently include the Children and Young Peoples development of partnerships in the local health economy including Partnership for Health, which commenced formally in April 2004. The Trust involvement in the Strategic Health Authority work on Healthy Starts, continues to develop to deliver a managed childrens clinical network across Central Healthy Futures and collaboration meetings with UCLH and Barts. London. os tal s Further development is envisaged concentrating on the design and redesign of dFeropamr tmAepnrti l wi2ll0 0m5o vteh te o tNhoer tThr usMt.i Children piddlesex University H service delivery supported by an organisational development programme.
All other risks were assessed as normal in our audit plan.
Recommendation
In light of the deficit position of 2004/05 the finance department and Trust Board need to ensure a more thorough understanding of the relationship between activity, income and costs to ensure that if more stringent measures are required in the latter part of the 2005/06 financial year the effect on the income and expenditure account of changes in activity are understood. It is also vital that the Trust develops adequate financial and activity forecasting along with a sound operational and financial strategy with the introduction of Payment by Results.
Recommendation
The Trust needs to ensure that it recovers the deficit made in the 2004/05 financial year in 2005/06 and that budget holders have this built into their budgets and are aware of the need to recover any deficit in the year following the period of deficit. Tight expenditure controls will be required in the 2005/06 financial year if a break even position is to be achieved.
Recommendation
The Trust Board needs to ensure that a thorough understanding is obtained around the requirements to obtain Foundation Trust status and additional information and resource needs to meet the demands of Monitor. Action plans must be developed to ensure that adequate resources and skills exist at the Trust to ensure smooth running of the application process.
Recommendation
The finance team needs to ensure that all balance sheet accounts are reconciled on a monthly basis in order to ensure that budget holders are provided with accurate information on which to make purchasing and activity decisions and avoid the posting of audit adjustments which alter the results reported to the Department of Health and Strategic Health Authority. The Trust also needs to ensure focus is placed on all statutory financial targets including the public sector payment policy, external financing limit and capital resource limit to ensure all statutory targets are met.
Recommendation
The Trust Board before contract commitments are entered into should ensure that the fundraising programme of the Special Trustees is progressing in line with that planned to ensure that funds are available for the redevelopment project. Great Ormond Street Hospital for Children NHS Trust9
We considered the Red Risks identified by the Audit Commissions as generic risks across NHS bodies and considered whether any additional work was required around these risks. Our conclusions are noted below.
Red risk and its eneral relevance to Audit response Trusts Core financial management - accounts for the year ended 31 March 2005 as a result of a larger Trust made a deficit of £0.6 million in its TheFinancial management reduction in income than anticipated following the cost cutting measures and closure of beds in the latter part of the financial year. The reduction in income was greater than anticipated whilst the cost cutting measures were largely effective. The Trust will need to recover this loss in the 2005/06 financial year.
Preparing for new funding flows - Impact of payment by results and patienthas been no effect in the 2004/05 by results is operational for elective work from April 2005. Payment There choice financial year of this and patient choice. Due to the specialist nature of the Trust it is anticipated that patient choice will have a limited impact as many of the patients attending the Trust have limited options as to where the treatment can be obtained due to their severity or unusual nature. Managing resources for improvement - Managing resources for improvement Our use of resources work has identified areas of good and poor performance at the Trust in terms of managing (including mental health) resources and action plans have been drawn up to address areas of poor performance. No specific issues have been identified in contracting with Foundation Trusts and Treatment Centres as Great Ormond Street has limited activities - Contracting with Foundation Trusts and such organisations at present. with Treatment Centres Workforce contracts - specific issues have been identified in the implementation of consultant contracts with all consultants who hadImplementing No consultant contract and Agenda for Change arrangements expressed an interest in signing up to the new contract having agreed terms and been paid with the exception of some of those under joint contracts. The Trust is continuing to match and assimilate staff to their new bands and pay rates under Agenda for Change with a view to completing by the end of 2005. No significant differences have been noted to date between expected amounts and actual amounts paid to staff. This however is a significant area of cost pressure to the Trust and will require careful management over the forthcoming months.
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Red risk and its eneral relevance to Audit response Trusts IM&T - IM&T governanceyear as part of their annual assessment Our computer audit team has undertaken governance and controls testing this of adequacy of procedures. We have also undertaken mandatory studies in relation to data quality and spot checks on waiting list data. No significant issues were identified during the course of testing. Key results of the mandatory studies are included in section 4.
Projects within National Programme for IT - internal audit in reviewing the Trusts progress in relation to the National computer audit team has liaised with OurImplementing e-booking Programme for IT (NPfIT).
Recommendation
The Trust needs to continue with the Agenda for Change matching and assimilation process to ensure that all staff are matched and assimilated by the end of 2005 and that all back pay is paid as required by the Department of Health and in order to avoid the loss of staff goodwill and aid the level of retention of staff at the Trust.
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