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Audit Committee

Terms of Reference & Operating Arrangements

Reviewed: January 2023.
Approved: July 2024.
Next Review Due: July 2025.

 

1. INTRODUCTION

1.1.      The Trust’s standing orders provide that “The Board may and, where directed by the Welsh Government must, appoint Committees of the Trust either to undertake specific functions on the Board’s behalf or to provide advice and assurance to the Board in the exercise of its functions. The Board’s commitment to openness and transparency in the conduct of all its business extends equally to the work carried out on its behalf by Committees”.

1.2.      In line with standing orders and the Trust’s scheme of delegation, the Board shall nominate annually a Committee to be known as the Audit Committee. The detailed terms of reference and operating arrangements set by the Board in respect of this Committee are set out below.

1.3.      These Terms of Reference and Operating Arrangements are based on the model Terms of Reference as detailed in the NHS Wales Audit Committee Handbook June 2012.

 

2. PURPOSE

2.1.      The purpose of the Audit Committee (“the Committee”) is to: • Advise and assure the Board and the Accountable Officer on whether effective arrangements are in place - through the design and operation of the Trust’s system of assurance - to support them in their decision taking and in discharging their accountabilities for securing the achievement of the Trust’s objectives, in accordance with the standards of good governance determined for the NHS in Wales.

2.2.      Where appropriate, the Committee will advise the Board and the Accountable Officer on where, and how, its system of assurance may be strengthened and developed further.

2.3.      A separate Audit Committee is in operation for the NHS Wales Shared Services Partnership (NWSSP) which has its own Terms of Reference.

 

3. DELEGATED POWERS AND AUTHORITY

3.1.      With regard to its role in providing advice to the Board, the Committee will comment specifically upon:

  • The adequacy of the Trust’s strategic governance and assurance arrangements and processes for the maintenance of an effective system of good governance, risk management and internal control across the whole of the organisation’s activities (both clinical and non-clinical) designed to support the public disclosure statements that flow from the assurance processes, including the Annual Governance Statement, providing reasonable assurance on:
    • the organisation’s ability to achieve its objectives,
    • compliance with relevant regulatory requirements, standards, quality and service delivery requirements and other directions and requirements set by the Welsh Government and others,
    • the reliability, integrity, safety and security of the information collected and used by the organisation,
    • the efficiency, effectiveness and economic use of resources, and
    • the extent to which the organisation safeguards and protects all its assets, including its people to ensure the provision of high quality, safe healthcare for its citizens;
  • The Board’s Standing Orders, and Standing Financial Instructions (including associated framework documents, as appropriate);
  • The accounting policies, the accounts, and the annual report of the organisation, including the process for review of the accounts prior to submission for audit, levels of error identified, the ISA 260 Report ‘Communication with those charged with Governance’ and managements’ letter of representation to the external auditors;
  • The Schedule of Losses, Compensation and Special Payments;
  • The planned activity and results of internal audit, external audit, clinical audit and the Local Counter Fraud Specialist (including strategies, annual work plans and annual reports);
  • The adequacy of executive and managements’ response to issues identified by audit, inspection and other assurance activity via monitoring of the Trust’s audit action plan;
  • Anti-fraud policies, whistle-blowing processes and arrangements for special investigations as appropriate; and
  • Any particular matter or issue upon which the Board or the Accountable Officer may seek advice from the Committee.

3.2.      The Committee will support the Board with regard to its responsibilities for governance (including risk and control) by reviewing:

  • All risk and control related disclosure statements (in particular the Annual Governance Statement together with any accompanying Head of Internal Audit statement, external audit opinion or other appropriate independent assurances), prior to endorsement by the Board;
  • The underlying assurance processes that indicate the degree of the achievement of corporate objectives, the effectiveness of the management of principal risks and the appropriateness of the above disclosure statements;
  • The policies for ensuring compliance with relevant regulatory, legal and code of conduct and accountability requirements; and
  • The policies and procedures for all work related to fraud and corruption as set out in Welsh Government Directions and as required by the NHS Counter Fraud Authority

3.3.      In carrying out this work the Committee will primarily utilise the work of Internal Audit, External Audit and other assurance functions, but will not be limited to these audit functions. It will also seek reports and assurances from other assurance providers, regulators, directors and managers as appropriate, concentrating on the overarching systems of good governance, risk management and internal control, together with indicators of their effectiveness.

3.4.      This will be evidenced through the Committee’s use of effective governance and assurance arrangements to guide its work and that of the audit and assurance functions that report to it, and enable the Committee to review and form an opinion on:

  • The comprehensiveness of assurances in meeting the Board and the Accountable Officer’s assurance needs across the whole of the Trust’s activities, both clinical and non-clinical; and
  • The reliability and integrity of these assurances.

3.5.      To achieve this, the Committee’s programme of work will be designed to provide assurance that:

  • There is an effective internal audit function that meets the standards set for the provision of internal audit in the NHS in Wales and provides appropriate independent assurance to the Board and the Accountable Officer through the Committee;
  • There is an effective counter fraud service that meets the standards set for the provision of counter fraud in the NHS in Wales and provides appropriate assurance to the Board and the Accountable Officer through the Committee;
  • There is an effective clinical audit function that meets the standards set for the NHS in Wales and provides appropriate assurance to the Board and the Accountable Officer through the Committee;
  • There are effective arrangements in place to secure active, ongoing assurance from management with regard to their responsibilities and accountabilities, whether directly to the Board and the Accountable Officer or through the work of the Board’s Committees through the effective completion of Audit Recommendations and the Committee’s review of the development and drafting of the Trust’s Annual Governance;
  • The work carried out by key sources of external assurance, in particular, but not limited to the Trust’s external auditors, is appropriately planned and co-ordinated and that the results of external assurance activity complements and informs (but does not replace) internal assurance activity;
  • The work carried out by the whole range of external review bodies is brought to the attention of the Board, and that the organisation is aware of the need to comply with related standards and recommendations of these review bodies, and the risks of failing to comply;
  • The systems for financial reporting to the Board, including those of budgetary control, are effective; and that
  • The results of audit and assurance work specific to the Trust, and the implications of the findings of wider audit and assurance activity relevant to the Trust’s operations are appropriately considered and acted upon to secure the ongoing development and improvement of the organisation’s governance arrangements

In carrying out this work, the Committee will follow and implement the Audit Committee’s Annual Work plan and will be evidenced through meeting papers, formal minutes, and highlight reports to Board and annually via the Annual Governance Statement and Annual Report to the Board.

Authority

3.6.      The Committee is authorised by the Board to investigate or have investigated any activity (clinical and non-clinical) within its terms of reference. In doing so, the Committee shall have the right to inspect any books, records or documents of the Trust relevant to the Committee’s remit, and ensuring patient/client and staff confidentiality, as appropriate. It may seek relevant information from any:

  • Employee (and all employees are directed to cooperate with any reasonable request made by the Committee); and
  • Any other Committee, sub Committee or group set up by the Board to assist it in the delivery of its functions.

3.7.      The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers it necessary, in accordance with the Board’s procurement, budgetary and other requirements.

3.8.      The Committee is authorised by the Board to approve policies relevant to the business of the Committee as delegated by the Board.

Access

3.9.      The Head of Internal Audit and the Auditor General for Wales and his representatives shall have unrestricted and confidential access to the Chair of the Audit Committee at any time, and the Chair of the Audit Committee will seek to gain reciprocal access as necessary.

3.10.    The Committee will meet with Internal and External Auditors and the nominated Local Counter Fraud Specialist without the presence of officials on at least one occasion each year.

3.11.    The Chair of Audit Committee shall have reasonable access to Executive Directors and other relevant senior staff.

Sub Committees

3.12.    The Committee may, subject to the approval of the Trust Board, establish sub Committees or task and finish groups to carry out on its behalf specific aspects of Committee business. At this stage, no sub Committees/task and finish groups have been established.

 

4. MEMBERSHIP

Members

4.1.      A minimum of three (3) members, comprising:

Chair

Independent member of the Board (Non-Executive Director)

Two independent members of the Board (Non-Executive Directors) [one member should be a member of the Quality, Safety & Performance Committee]

The Committee may also co-opt additional independent ‘external’ members from outside the organisation to provide specialist skills, knowledge and expertise.

The Chair of the organisation shall not be a member of the Audit Committee. It is considered best practice that the Vice Chair of the Trust Board does not chair the Audit Committee.

(It is considered best practice that the Vice Chair of the Trust Board does not chair the Audit Committee.)

Attendees

4.2.

In attendance:

Chief Executive (who should be present when the Committee considers the Internal Audit Plan, the Annual Governance Statement, Annual Quality Statement and the Annual Accounts.)

Executive Director of Finance

Director of Corporate Governance and Chief of Staff

Head of Internal Audit

Head/individual responsible for Clinical Audit

Local Counter Fraud Specialist

Representative of the Auditor General for Wales

Other Executive Directors / Directors will attend as required by the Committee Chair and their attendance will be required when they are Lead for an Audit Report

By invitation

The Committee Chair may invite:

  • the Chair of the Trust
  • any other Trust officials; and/or
  • any others from within or outside the organisation

to attend all or part of a meeting to assist it with its discussions on any particular matter.

Secretariat

4.3.

Secretary – As determined by the Director of Corporate Governance and Chief of Staff

Member Appointments

4.4.      The membership of the Committee shall be determined by the Board, based on the recommendation of the Trust Chair - taking account of the balance of skills and expertise necessary to deliver the Committee’s remit and subject to any specific requirements or directions made by the Welsh Government.

4.5.      Members shall be appointed for a maximum of 3 consecutive years before formally reviewing their role on the Committee. During this time a member may resign or be removed by the Board.

Support to Committee Members

4.6.      The Director of Corporate Governance and Chief of Staff, on behalf of the Committee Chair, shall:

  • Arrange the provision of advice and support to Committee members on any aspect related to the conduct of their role; and
  • Ensure the provision of a programme of organisational development for Committee members as part of the Trust’s overall Organisational Development programme developed by the Executive Director of Workforce & Organisational Development.

 

5. COMMITTEE MEETINGS

Quorum

5.1.      At least two members must be present to ensure the quorum of the Committee. Frequency of Meetings

5.2.      Meetings shall be held no less than 4 times per year, and otherwise as the Chair of the Committee deems necessary – consistent with the Trust’s annual plan of Board Business. The External Auditor or Head of Internal Audit may request a meeting if they consider that one is necessary.

Withdrawal of individuals in attendance

5.3.      The Committee may ask any or all of those who normally attend but who are not members to withdraw to facilitate open and frank discussion of particular matters.

 

6. RELATIONSHIP & ACCOUNTABILITIES WITH THE BOARD AND ITS COMMITTEES / GROUPS

6.1.      Although the Board has delegated authority to the Committee for the exercise of certain functions as set out within these terms of reference, the Board retains overall responsibility and accountability for ensuring the quality and safety of healthcare for its citizens through the effective governance of the organisation.

6.2.      The Committee is directly accountable to the Board for its performance in exercising the functions set out in these terms of reference.

6.3.      The Committee, through its Chair and members, shall work closely with the Board’s other Committees to provide advice and assurance to the Board by taking into account:

  • Joint planning and co-ordination of Board and Committee business; and
  • Sharing of information

in doing so, contributing to the integration of good governance across the organisation, ensuring that all sources of assurance are incorporated into the Board’s overall risk and assurance arrangements.

6.4.      The Committee will consider the assurance provided through the work of the Board’s other Committees and sub Committees to meet its responsibilities for advising the Board on the adequacy of the Trust’s overall system of assurance by receipt of their annual work plans.

6.5.      The Committee shall embed the duty of quality through the Heath and Care Quality Standards through the conduct of its business.

 

7. REPORTING AND ASSURANCE ARRANGEMENTS

7.1.      The Committee Chair shall:

  • Report formally, regularly and on a timely basis to the Board and the Accountable Officer on the Committee’s activities. This includes verbal updates on activity and the submission of written highlight reports throughout the year;
  • Bring to the Board and the Accountable Officer’s specific attention any significant matters under consideration by the Committee;
  • Ensure appropriate escalation arrangements are in place to alert the Trust Chair, Chief Executive (and Accountable Officer) or Chairs of other relevant Committees of any urgent/critical matters that may affect the operation and/or reputation of the Trust.

7.2.      The Committee shall provide a written, annual report to the Board and the Accountable Officer on its work in support of the Annual Governance Statements, specifically commenting on the adequacy of the assurance arrangements, the extent to which risk management is comprehensively embedded throughout the organisation, the integration of governance arrangements and the appropriateness of self-assessment activity against relevant standards. The report will also record the results of the Committee’s self-assessment and evaluation.

7.3.      The Director of Corporate Governance and Chief of Staff, on behalf of the Board, shall oversee a process of regular and rigorous self-assessment and evaluation of the Committee’s performance and operation including that of any sub Committees established. In doing so, account will be taken of the requirements set out in the NHS Wales Audit Committee Handbook.

 

8. APPLICABILITY OF STANDING ORDERS TO COMMITTEE BUSINESS

8.1.      The requirements for the conduct of business as set out in the Trust’s Standing Orders are equally applicable to the operation of the Committee, except in the following areas:

  • • Quorum [as per section on Committee meetings]

Cross reference with the Trust Standing Orders

 

9. REVIEW

9.1.      These terms of reference and operating arrangements shall be reviewed annually by the Committee with reference to the Board.

 

10. CHAIR’S ACTION ON URGENT MATTERS

10.1.    There may, occasionally, be circumstances where decisions which normally be made by the Committee need to be taken between scheduled meetings. In these circumstances, the Committee Chair, supported by the Director of Corporate Governance and Chief of Staff as appropriate, may deal with the matter on behalf of the Committee, after first consulting with two other Independent Members of the Committee. The Director of Corporate Governance and Chief of Staff must ensure that any such action is formally recorded and reported to the next meeting of the Committee for consideration and ratification.

10.2.    Chair’s urgent action may not be taken where the Chair has a personal or business interest in the urgent matter requiring decision.