Heart of England NHS Foundation Trust External Audit 2008/09 financial year
Our vision for external services Great assurance • Open and trusted relationship • Deep understanding • Our best people • Working in partnership • Independent assurance • Continuous communication Value beyond audit • Understanding you and the health market • Global perspective • Thought leadership • Insight The best of PwC – expertise, added value and agility in changing times
Your core external audit team Audit Team Responsibilities Engagement Leader As Engagement Leader, Mark is responsible for independently Mark Jones delivering the audit in line with the Code of Audit Practice, including agreeing the Audit Plan, the quality of outputs and signing of opinions and conclusions. Mark is also responsible for liaison with the Chief Executive and the Board. Senior Manager As the assignment Senior Manager, Catherine is responsible for Catherine Little overall control of the audit engagement, ensuring delivery to timetable, delivery and management of targeted work and the overall review of audit outputs. Team Leader As Team Leader, Ian is responsible for managing our accounts work Ian Ratcliffe including the audit of the statement of accounts, and ongoing liaison with key members of the finance team.
Role of External Audit • PwC appointment as external auditors • Monitor Audit Code for NHS Foundation Trusts • An audit opinion on the Trust’s accounts • Arrangements to secure economy, efficiency and effectiveness • Review of the Statement on Internal Control • Review of the Annual Report • Audit opinion on Charitable Funds accounts
Audit approach Risk-based approach based on our understanding of the Trust: Understanding the Understanding the Understanding how Considering the governance impact of issues in management structure and the healthcare & wider controls the work of internal audit ‘tone at the top’ environment organisation Assessment of: ASSURANCE RISKS FROM CONTROLS Compliance with FT SUBSTANTIVE TESTING Compliance with FReM for disclosures accounting • Detailed testing and presentation of standards • Analytical procedures accounts AUDIT OPINION
The Audit Process • Compliant with International Standards on Auditing (ISAs) • Risk based approach • Reporting to the Audit Committee at each stage • Continuous communication with key stakeholders
Audit Considerations – 2008/09 • Fixed asset accounting – revaluation reserves identified for each individual asset and consistently accounted for across all three sites • Payroll – mitigation of risks and follow-up from 2007/08 • Fixed asset valuations using Modern Equivalent Asset Valuation basis • Quality accounts • International Financial Reporting Standards (IFRS) – re- statement of the opening balance sheet
Outcomes from our audit – 2008/09 • Unqualified audit opinion on the Trust’s financial statements (Issued June ’09) • Unqualified audit opinion on the Charitable Fund’s financial statements (Issued September ’09) • No issues identified in relation to the Trust’s arrangements to secure VFM
Bringing added value • Fixed asset accounting – improved accounting performance • Timetable and project plan to support the production of the Annual Report • IFRS briefings • Healthcast 2020 • Procurement Capability Review (non-audit review)
Financial Standing 2008/09 Reported surplus of £19.8 million for the year • • Cash and short term investments £77.4 million at March 2009 • Plans to re-invest surpluses in capital programme Future outlook • Significant financial challenges over medium term • The Trust is formally in financial turnaround having failed to meet CIP targets • Target surplus of £5.8 million in 2009/10 • Some risks around achievement of remaining 2009/10 CIP targets • Significant decreases in levels of commissioning over the next 4 years • Circa £60 million of efficiency savings to be achieved from 2009 - 2013
Risks heat map – 2009/10 High Three site strategy Achieving – Good Hope? Budget and clinical targets Solihull services? finance pressures Impact of IFRS Estates strategy and Income and over- capital programme performance Impact Internal control New management units structure weaknesses Medium Engagement of clinicians HEFT Consulting – Quality organisational Communicating reporting status strategy at all levels Going concern risk Contract management Demand risk Relationships with key funders Low Low Medium High Likelihood
Considerations for 2009/10 and beyond • Achieving financial objectives and clinical targets • Restructure of management units • Phase 1 of estates strategy • Transformation agenda • First financial year reported under IFRS • Quality reporting • 2010/11 – consolidation of charitable funds • 2011 – introduction of corporation tax for Foundation trusts
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