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© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015
The Audit Findings
for Northern Devon Healthcare NHS
Trust
Year ended 31 March 2015
Elizabeth Cave
Director
T 0117 975 7885
Mark Bartlett
Manager
T 0117 305 7896
Stephen Clarke
Executive
T 0117 305 7884
2 June 2015
Cover page
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS trust Audit Findings Report 2014/15 | June 2015 2
Private and Confidential
Chartered Accountants
Grant Thornton UK LLP is a limited liability partnership registered in England and Wales: No.OC307742. Registered office: Grant Thornton House, Melton Street, Euston Square, London NW1 2EP.
A list of members is available from our registered office. Grant Thornton UK LLP is authorised and regulated by the Financial Conduct Authority.
Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. Services are delivered by the member firms. GTIL and
its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. Please see grant-thornton.co.uk for further details.
Private and Confidential
This Audit Findings report highlights the significant findings arising from the audit for the benefit of those charged with governance, as required by International Standard
on Auditing (UK & Ireland) 260. Its contents have been discussed and agreed with management.
As auditors we are responsible for performing the audit, in accordance with International Standards on Auditing (UK & Ireland), which is directed towards forming and
expressing an opinion on the financial statements that have been prepared by management with the oversight of those charged with governance. The audit of the financial
statements does not relieve management or those charged with governance of their responsibilities for the preparation of the financial statements.
The contents of this report relate only to those matters which came to our attention during the conduct of our normal audit procedures which are designed primarily for the
purpose of expressing our opinion on the financial statements. Our audit is not designed to test all internal controls or identify all areas of control weakness. However,
where, as part of our testing, we identify any control weaknesses, we will report these to you. In consequence, our work cannot be relied upon to disclose defalcations or
other irregularities, or to include all possible improvements in internal control that a more extensive special examination might identify. We do not accept any responsibility
for any loss occasioned to any third party acting, or refraining from acting on the basis of the content of this report, as this report was not prepared for, nor intended for,
any other purpose.
We would like to take this opportunity to record our appreciation for the kind assistance provided by the finance team and other staff during our audit.
Yours faithfully
Elizabeth Cave, Director
Grant Thornton UK LLP
Hartwell House
55 – 61 Victoria Street
Bristol
BS16FT
www.grant-thornton.co.uk
2 June 2015
Dear Sirs
Audit Findings for Northern Devon Healthcare NHS Trust for the year ending 31 March 2015
Northern Devon Healthcare NHS Trust
North Devon District Hospital
Raleigh Park
Barnstaple
EX31 4JB
Guidance note
Red text is generic and should
be updated specifically for your
client.
Once updated, change text
colour back to black.
The disclaimer paragraph
should not be edited or
removed as this is there for
the auditor’s protection and
its absence could possibly
weaken our defence if a
complaint or claim is made.
Letter
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 3
Contents
Section Page
1. Executive summary 5
2. Audit findings 8
3. Value for Money 20
4. Fees, non audit services and independence 27
5. Communication of audit matters 29
Appendices
A Action plan
B Audit opinion
Contents
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015
Section 1: Executive summary
01. Executive summary
02. Audit findings
03. Value for Money
04. Fees, non-audit services and independence
05. Communication of audit matters
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 5
Executive summary
Executive summary
Overall review of
financial
statements
Purpose of this report
This report highlights the key issues affecting the results of Northern Devon
Healthcare NHS Trust (the Trust) and the preparation of the Trust's financial
statements for the year ended 31 March 2015. It is also used to report our audit
findings to management and those charged with governance in accordance with
the requirements of International Standard on Auditing (UK & Ireland) 260.
Under the Audit Commission's Code of Audit Practice (the Code) we are required
to report whether, in our opinion, the Trust's financial statements present a true
and fair view of the financial position. We are also required to reach a formal
conclusion on whether the Trust has put in place proper arrangements to secure
economy, efficiency and effectiveness in its use of resources (the Value for Money
Conclusion).
Introduction
In the conduct of our audit we have not had to alter or change our audit approach,
which we communicated to you in our Audit Plan dated 14 April 2015.
Our audit is substantially complete although we are finalising our procedures in the
following areas:
• review of the final version of the financial statements and the TRU
summarisation schedules and completion of the WGA testing
• obtaining and reviewing the management letter of representation
• review of revised versions of the Annual Governance Statement and Annual
Report and
• updating our post balance sheet events review, to the date of signing the
opinion
We received draft financial statements and accompanying working papers at the
commencement of our work, in accordance with the national deadline.
Key audit and financial reporting issues
Financial statements opinion
We have not identified adjustments affecting the Trust's retained surplus
position. We have made a number of adjustments to improve the presentation
of the financial statements.
The key messages arising from our audit of the Trust's financial statements are:
• the financial statements were produced to a good standard and were
generally supported by good working papers.
• we encountered difficulties in obtaining responses to some queries,
particularly around healthcare revenues testing in relation to the Trust's main
commissioner. This was due to key finance staff being committed to
competing deadlines, contract negotiations and the arbitration process. We
have commented further on this in the VfM section of the report.
Further details are set out in section two of this report.
We anticipate providing an unqualified audit opinion in respect of the financial
statements (see appendix B).
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 6
Executive summary
Overall review of
financial
statements
Value for money (VfM) conclusion
We are pleased to report that, based on our review of the Trust's arrangements to
secure economy, efficiency and effectiveness in its use of resources, we propose to
give an unqualified VfM conclusion.
Further detail of our work on Value for Money is set out in section three of this
report.
Agreement of Balances and Whole of Government Accounts (WGA)
Our audit work has identified the following variances in the NHS agreement of
balances (AoB) process:
• The income shown by the Trust from NEW Devon CCG is £1,631k higher
than the expenditure shown by the CCG
• The debtor balance shown by the Trust is £1,097k higher than the creditor
recognised by the CCG.
The NAO has stated that where significant variances exist they may conduct
further detailed investigation.
Controls
Roles and responsibilities
The Trust's management is responsible for the identification, assessment,
management and monitoring of risk, and for developing, operating and monitoring
the system of internal control.
Our audit is not designed to test all internal controls or identify all areas of
control weakness. However, where, as part of our testing, we identify any
control weaknesses, we report these to the Trust.
Findings
We draw your attention in particular to control issues identified with
reconciliations. Several reconciliations between the general ledger and
subsidiary systems have unreconciled differences that the Trust has been unable
to resolve. We have included instances where the unreconciled difference is
below our normal reporting threshold to emphasise that our findings have a
theme that needs addressing by the Trust.
Further details are provided within section 2 of this report.
The way forward
Matters arising from the financial statements audit and review of the Trust's
arrangements for securing economy, efficiency and effectiveness in its use of
resources have been discussed with the Director of Finance.
We have made a number of recommendations, which are set out in the action
plan. Recommendations have been discussed and agreed with the Director of
Finance and the finance team.
Acknowledgement
We would like to take this opportunity to record our appreciation for the
assistance provided by the finance team and other staff during our audit.
Grant Thornton UK LLP
June 2015
Guidance note
The agreement of balances
wording applies to sampled
components only and will need
to be amended as necessary for
non sampled components, or
deleted if there are no issues to
report
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015
Section 2: Audit findings
01. Executive summary
02. Audit findings
03. Value for Money
04. Fess, non audit services and independence
05. Communication of audit matters
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 8
Audit findings against significant risks
Risks identified in our audit plan Work completed Assurance gained and issues arising
1. Improper revenue recognition
Under ISA (UK&I) 240 there is a presumed risk that
revenue may be misstated due to the improper
recognition of revenue
We have undertaken the following work in relation to
this risk:
review and testing of revenue recognition policies
testing of material revenue streams
review of unusual significant transactions
Our audit work has not identified any issues in respect
of revenue recognition.
2. Management override of controls
Under ISA (UK&I) 240 there is a presumed risk that
the risk of management over-ride of controls is
present in all entities.
Our audit work has not identified any evidence of
management override of controls. In particular the
findings of our review of journal controls and testing
of journal entries has not identified any significant
issues.
We set out later in this section of the report our work
and findings on key accounting estimates and
judgements.
We have undertaken the following work in relation to
this risk:
review of accounting estimates, judgements and
decisions made by management
testing of journals entries
review of accounting estimates, judgements and
decisions made by management
review of unusual significant transactions
Our audit work has not identified any evidence of
management override of controls. In particular the
findings of our review of journal controls and testing of
journal entries has not identified any significant
issues.
We set out later in this section of the report our work
and findings on key accounting estimates and
judgements.
Audit findings
Significant findings
"Significant risks often relate to significant non-routine transactions and judgmental matters. Non-routine transactions are transactions that are unusual, either due to size
or nature, and that therefore occur infrequently. Judgmental matters may include the development of accounting estimates for which there is significant measurement
uncertainty" (ISA (UK&I) 315).
In this section we detail our response to the significant risks of material misstatement which we identified in the Audit Plan. As we noted in our plan, there are two
presumed significant risks which are applicable to all audits under auditing standards.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 9
Audit findings against other risks
Transaction cycle Description of risk Work completed Assurance gained & issues arising
Healthcare revenues Accounting for contract
arrangements with
commissioning bodies not
consistent with terms
Contractual adjustments
with commissioning bodies
not adequate
We have undertaken the following work in relation to this risk:
Documentation of our understanding of processes and key
controls over the transaction cycle
Walkthrough of the key controls to confirm our understanding
Substantive testing of healthcare revenues including
Review of the agreement of contracts, particularly
with NEW Devon CCG
Review of the agreement of NHS balances
Review of significant contract adjustments
Our audit work has identified that there are the
following mismatches with NEW Devon CCG in the
agreement of balances exercise;
• The income shown by the Trust from NEW
Devon CCG is £1,631k higher than the
expenditure shown by the CCG
• The debtor balance shown by the Trust is
£1,097k higher than the creditor recognised by
the CCG.
The Trust has provided evidence to support its
accrual of £1,097k. The disagreement reflects the
difficulty in agreeing activity and contract outturn
with the CCG. While there is a disagreement there
is doubt over the validity of the income, although it
is not material and would not effect the Trust's
statutory break-even duty.
Employee
remuneration
Employee remuneration and
benefit obligations and
expenses understated
(Remuneration expenses
not correct)
We have undertaken the following work in relation to this risk:
Documentation of our understanding of processes and key
controls over the transaction cycle
Walkthrough of the key controls to confirm our understanding
Substantive testing of employee remuneration including
Analytical procedures over the payroll figures to
ensure that they are reasonable and complete
Agreeing transactions in the ledger to payroll details
such as contracts of employment
Review of the year end reconciliation of the payroll
system to the ledger and financial statements
Our audit work has not identified any significant
issues in relation to the risk identified.
Audit findings
Significant findings
(continued)
In this section we detail our response to the other risks of material misstatement which we identified in the Audit Plan.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 10
Audit findings against other risks
Transaction cycle Description of risk Work completed Assurance gained & issues arising
Operating expenses Creditors understated or not
recorded in the correct period
(Operating expenses
understated)
We have undertaken the following work in relation to
this risk:
Documentation of our understanding of processes
and key controls over the transaction cycle
Walkthrough of the key controls to confirm our
understanding
Substantive testing of operating expenses
including
Sample testing of expense transactions
and year end adjustments/reconciliations
Testing for unrecorded liabilities by
review of post year end payments and
review of good not received notes at year
end
Review of estimates, judgements and
decisions made by management for
unusual and large amounts
Our audit work identified that there are accruals shown as
outstanding on the system going back a number of years.
one dated from 2005/06. Further work by the Trust has
identified £266k of long outstanding creditors that could
be cleared, but has decided not to amend the accounts
for these. We have included this on the schedule of
unadjusted misstatements and included a
recommendation for regular reviews of long outstanding
accruals.
Audit findings
Significant findings
(continued)
In this section we detail our response to the other risks of material misstatement which we identified in the Audit Plan.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 11
Accounting policies, Estimates & Judgements
Accounting area Summary of policy Comments Assessment
Revenue recognition Revenue in respect of services provided is
recognised when, and to the extent that,
performance occurs, and is measured at
the fair value of the consideration
available. The main source of revenue for
the Trust is from commissioners for
healthcare services.
Where income is received for a specific
activity that is to be delivered in the
following year, that income is deferred.
The accounting policies are appropriate, adequately disclosed
and in accordance with the Manual for Accounts.
Green
Judgements and estimates Key estimates and judgements include:
Useful life of capital equipment
Revaluations
impairments
Provisions
Accruals.
We reviewed the accounting areas where the Trust has exercised
judgement and used estimates. We found that:
• Appropriate policies had been used
• Accounting policies had been adequately disclosed
• Areas where judgement had been used were supported by the
work of an expert or third party where appropriate
Green
Assessment
Marginal accounting policy which could potentially attract attention from regulators Accounting policy appropriate but scope for improved disclosure Accounting policy appropriate and disclosures sufficient
Audit findings
Significant findings
– accounting
policies#
In this section we report on our consideration of accounting policies, in particular revenue recognition policies, and key estimates and judgements made and included
with the Trust's financial statements.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 12
Accounting policies, Estimates & Judgements
Accounting area Summary of policy Comments Assessment
Going concern The Directors have a reasonable expectation
that the services provided by the Trust will
continue for the foreseeable future. For this
reason, they continue to adopt the going
concern basis in preparing the financial
statements.
We have reviewed the Directors' assessment and are satisfied with
management's assessment that the going concern basis is
appropriate for the 2014/15 financial statements.
Green
Other accounting policies The Trust has adopted the standard
accounting policies for the NHS as set out in
the manual for accounts.
We have reviewed the Trust's policies against the requirements of
the Manual for Accounts and do not have any comments to make.
Green
Assessment
Marginal accounting policy which could potentially attract attention from regulators Accounting policy appropriate but scope for improved disclosure Accounting policy appropriate and disclosures sufficient
Audit findings
Significant findings
– accounting
policies#
.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 13
Other communication requirements
Issue Commentary
1. Written representations A letter of representation has been requested from the Trust.
2. Confirmation requests from
third parties
We obtained direct confirmations from the National Audit Office for bank balances and loans.
3. Disclosures Our audit work identified no material omissions in the financial statements
4. Matters in relation to fraud We attend the Audit Committee meetings and we are aware of the reports from the Local Counter Fraud Specialists and the
discussions about fraud risks and the cases being investigated. We have not been made aware of any other incidents in the period
and no other issues have been identified during the course of our audit procedures.
5. Matters in relation to laws and
regulations
We are not aware of any significant incidences of non-compliance with relevant laws and regulations.
6. Matters in relation to related
parties
We are not aware of any related party transactions which have not been disclosed
Audit findings
Other
communication
requirements#
We set out below details of other matters which we, as auditors, are required by auditing standards to communicate to those charged with governance.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 14
Internal controls
The purpose of an audit is to express an opinion on the financial statements.
Our audit included consideration of internal control relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. We considered and walked through the internal controls
for Healthcare Revenues, Employee Remuneration and Operating Expenses as set out on pages 9 and 10 above.
The matters that we identified during the course of our audit are set out in the table below. These and other recommendations, together with management responses,
are included in the action plan attached at appendix A.
Assessment Issue and risk Recommendations
1.
Amber
The reconciliation of Non-NHS trade payables-Revenue shows a difference
of £293k, where the amount shown in creditors control is less than the
amount stated in aged creditors due to timing differences.
The aged creditor listing should be run at the same time as
producing the creditor control balances.
2.
Amber
The Trust has been using the ledger balance rather than the available
balance when producing the bank reconciliation. The ledger balance
includes uncleared items and GBS guidance stated that the available
balance figure should be used,
The bank reconciliation should be compiled using the available
balance figure in line with the GBS guidance.
3.
Amber
The reconciliation between the general ledger and the purchase ledger has
a difference of £62k. The difference has not changed since 2013/14. The
Trust states that this is due to historical differences and that it has had
software difficulties in resolving the issue.
• The Trust needs to work with its software supplier to resolve the
difference between the purchase ledger and the general ledger.
4.
Amber
The reconciliation between the manual accruals schedule and the accounts
shows a difference of £224k, with the manual accruals being higher than the
general ledger.
• The Trust should investigate and clear the difference between the
manual accruals schedule and the accounts.
5. Red
The reconciliation between the payroll gross to net figures and the general
ledger shows a difference of £236k, which the Trust have been unable to
resolve due to constraints with the ESR system.
• The Trust must carry out additional work to map where the payroll
figures are being allocated within the general ledger to enable the
systems to be reconciled.
Audit findings
Assessment
Significant deficiency – risk of significant misstatement
Deficiency – risk of inconsequential misstatement
Internal controls
Guidance note
Issue and risk must include a
description of the deficiency and
an explanation of its potential
effect. In explaining the potential
effect it is not necessary to
quantify.
Red text is generic and should
be updated specifically for your
client.
Once updated, change text
colour back to black.
The matters reported here are limited to those deficiencies that we have identified during the course of our audit and that we have concluded are of sufficient
importance to merit being reported to you in accordance with auditing standards.
© 2015 Grant Thornton UK LLP | Audit Findings Report 2014/15 | Date 15
Internal controls – review of issues raised in prior year
Assessment Issue and risk previously communicated Update on actions taken to address the issue
1.
X
In our 2013/14 Audit Findings Report we stated that:
• Our testing of PPE additions found that VAT on one of the
projects of £118k had not been reclaimed when it was
recoverable. Further investigations identified another
project with recoverable VAT that had not been reclaimed.
An estimated £183k of VAT had not been reclaimed.
• The Trust had not been reconciling the monthly report from
HMRC to its records of gross pay and employer NIC
contributions, and could not reconcile the year end payroll
to the P35 equivalent.
Our testing of PPE additions has not identified any instances of unclaimed VAT
The Trust is now reconciling the monthly report from HMRC to its records. However,
the reconciliation between gross to net figures and the general ledger has a difference
of £236k, which has been reported separately under internal controls.
2.
X
X
X
We identified opportunities to improve the IT control
environment regarding:
• Password confidentiality to be included in the next revision
of the Information Security Policy
• Enabling password complexity features on the Integra
application.
• Reviewing the policy over intruder lockout and the policy
covering login failures.
• Implementation of an automated password protected
screensaver timeout feature
• Conducting periodic vulnerability assessments of the
network, including internet security by an independent third
party
The Information Security Policy has not been updated since we raised this issue in
2013/14. The recommendation has been repeated in the action plan at Appendix A.
Although the Trust has reduced the forced password change from 100 to 90 days, best
practice is 60 days and the password settings are still weak with 6 characters and no
forced complexity. We have recommended that the Trust review Integra access
controls in line with best practice.
The policies covering intruder lockout and login failures have been reviewed. This
recommendation has been implemented.
We have not been provided with any evidence to suggest that automatic locking of
computers after a predetermined time has been improved. We have repeated this
recommendation in the action plan at Appendix A.
Periodic vulnerability assessments by an independent third party have now been
implemented.
Audit findings
Assessment
Action completed
X Not yet addressed
Internal controls -
review of issues
raised in prior year
Guidance note
Red text is generic and should
be updated specifically for your
client.
Once updated, change text
colour back to black.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 16
Adjusted misstatements
Audit findings
Guidance note
The table is available in the
‘Audit Findings template’ on the
Mercury tab in Excel.
Tab: Adjusted misstatements
Adjusted
misstatements
Detail Statement of
Comprehensive income
£'000
Statement of
Financial Position
£'000
Impact on
surplus/deficit
£000
1 Accumulated depreciation netted off following revaluation
was disclosed as upward revaluation in the cost and
depreciation sections of note 15.1. This should be separately
disclosed in both sections of the note.
7,481 Nil
2 The audit fees in the draft accounts included amounts not
related to the statutory external audit. This is reported as it is
considered as a sensitive item for our audit.
18 Nil
Overall impact 18 7,481 Nil
A number of adjustments to the draft accounts have been identified during the audit process. We are required to report all non trivial misstatements to those charged
with governance, whether or not the accounts have been adjusted by management. The table below summarises the adjustments arising from the audit which have
been processed by management.
Impact of adjusted misstatements
All adjusted misstatements are set out in detail below along with the impact on the key statements and the reported surplus.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 17
Unadjusted misstatements
Audit findings
Guidance note
The table is available in the
‘Audit Findings template’ on the
Mercury tab in Excel.
Tab: Adjusted misstatements
Adjusted
misstatements
Detail Statement of
Comprehensive
income £'000
Statement of
Financial Position
£'000
Reason for not adjusting
1 Our testing of creditor accruals identified that there are
accruals going back a number of years, one dated from
2005/06. The Trust carried out a review to establish the
level of long outstanding items which should be cleared but
have not amended the accounts.
266 (266) The amount is not material.
Overall impact 266 (266)
The table below provides details of adjustments identified during the audit but which management has decided not to process in the final set of financial statements.
The Audit Committee is required to approve management's proposed treatment of all items recorded within the table below:
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 18
Misclassifications & disclosure changes
Audit findings
Guidance note
The table is available in the
‘Audit Findings template’ on the
Mercury tab in Excel.
Tab: Adjusted misstatements
Adjusted
misstatements
Adjustment type Value
£'000
Account balance Impact on the financial statements
1 Disclosure N/A Note 15.3 Property,
plant & equipment
The economic lives for some fixed asset types were not consistent with
the lives shown on the TRU forms.
2 Disclosure
N/A General Several amendments have been made to the draft accounts to correct
minor disclosure errors or agreed changes that do not warrant being
individually reported to Those Charged with Governance.
The table below provides details of misclassification and disclosure changes identified during the audit which have been made in the final set of financial statements.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015
Section 3: Value for Money
01. Executive summary
02. Audit findings
03. Value for Money
04. Fees, non-audit services and independence
05. Communication of audit matters
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 20
Value for Money
Value for Money
Overall review of
financial
statements
Value for money conclusion
The Code of Audit Practice 2010 (the Code) describes the Trust's responsibilities
to put in place proper arrangements to:
• secure economy, efficiency and effectiveness in its use of resources;
• ensure proper stewardship and governance; and
• review regularly the adequacy and effectiveness of these arrangements.
We are required to give our VFM conclusion based on two criteria specified by the
Audit Commission which support our reporting responsibilities under the Code.
These criteria are:
The Trust has proper arrangements in place for securing financial
resilience.
The Trust has robust systems and processes to manage effectively financial risks
and opportunities, and to secure a stable financial position that enables it to
continue to operate for the foreseeable future.
The Trust has proper arrangements for challenging how it secures
economy, efficiency and effectiveness.
The Trust is prioritising its resources within tighter budgets, for example by
achieving cost reductions and by improving efficiency and productivity.
Key findings
Securing financial resilience
We have undertaken a review which considered the Trust's arrangements against
the three expected characteristics of proper arrangements as defined by the Audit
Commission:
• Financial governance;
• Financial planning; and
• Financial control
Overall our work highlighted that the Trust has adequate plans in place for
delivering its key financial targets, however the trend of increasing reliance on
agency and bank staff continued in 2014/15.
The Trust met its targets in 2014/15, although £1.1m of income is disputed by
NEW Devon CCG, which would impact on the Trust's financial performance if
not resolved in its favour.
The Trust's relationship with its main commissioner, NEW Devon CCG,
continues to be a concern with the 2015/16 budget process being delayed due
to formal arbitration between the parties. The NHS England 5 year forward
view focusses on organisations working together to provide effective healthcare.
This includes commissioners and providers, together with other partners such
as local authorities and the voluntary sector.
The financial challenges facing the Trust cannot be solved by the Trust in
isolation. The Trust, in conjunction with its key stakeholders, needs to
fundamentally review and challenge the services that are required in the health
economy and how these should be delivered within the available financial
envelope.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 21
Value for Money (continued)
Value for Money
Overall review of
financial
statements
The Trust has not formally refreshed its Long Term Financial Model (LTFM) and
Integrated Business Plan (IBP) since 2012/13. This process was underway at the
time of our audit. The Trust needs to ensure that this includes detailed scenario
planning and reporting of the financial impact of the potential loss of the Eastern
Community Contract.
Challenging economy, efficiency and effectiveness
We have reviewed whether the Trust has prioritised its resources to take account
of the tighter constraints it is required to operate within and whether it has
achieved cost reductions and improved productivity and efficiencies.
The Trust delivered its cost improvement plan (CIP) for 2014/15 with only the
Trust's share of the joint community slippage of £850k being delivered non-
recurrently. The Trust has identified £10.9m of its schemes for 2015/16 with plans
well progressed for the balance.
While most of the Trust's performance indicators are positive, the Trust did not
achieve the target for the majority of its national cancer targets.
Overall VFM conclusion
On the basis of our work, and having regard to the guidance on the specified
criteria published by the Audit Commission, we are satisfied that in all significant
respects the Trust put in place proper arrangements to secure economy, efficiency
and effectiveness in its use of resources for the year ending 31 March 2015.
Quality Accounts
Our work in respect of the Trust's Quality Account is still in
progress.
We will provide a separate report on the outcome of our work on
the Quality Account.
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 22
Value for Money
Theme Summary findings RAG rating
Key indicators of performance The Trust has delivered a retained surplus of £2.337million in 2015/15. The Trust met its other statutory financial
requirements in terms of capital resource limit and external financing limit.
Its year end financial risk rating is 3 with the Continuity of Service Risk Rating being 4, indicating a robust financial
position at 31 March 2015.
However, the Trust's expenditure on bank and agency staff continued to increase in 2014/15.
Green
Strategic financial planning The Trust has not carried out a full refresh of its LTFM and IBP since 2012/13. A refresh of the LTFM was submitted
to the TDA in June 2014, but this was not formally reviewed by the Board. While assumptions made by the Trust are
generally sound, there has been no detailed scenario planning or reporting of the financial impact of the potential loss
of the Eastern Community contract.
Amber
Financial governance Financial Governance was assessed as a low risk area for our VfM work, so no detailed work was carried out on this
theme.
Green
Financial control The Trust has processes in place to produce timely and reliable budgets that are monitored monthly and reported to
each Board meeting. The CIP programme has proven to be effective in recent years and the plan for 2015/16 is
further progressed than in 2014/15 with £2.3m of £13.2m red rated for delivery but with detailed plans in development
for this gap.
Green
Prioritising resources Prioritising resources was assessed as a low risk area for our VfM work, so no detailed work was carried out on this
theme.
Green
The table below summarises our overall rating for each of the themes reviewed:
Green Adequate arrangements
Amber Adequate arrangements, with areas for development
Red Inadequate arrangements
We set out below our detailed findings against six risk areas which have been used to assess the Trust's performance against the Audit Commission's criteria. We
summarise our assessment of each risk area using a red, amber or green (RAG) rating, based on the following definitions:
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 23
Value for Money
Theme Summary findings RAG rating
Improving efficiency & productivity The Trust has had a good record of identifying and delivering savings to achieve its financial plans. The monitoring of
the cost improvement programme provides a risk rating to the delivery of each scheme.
The Trust has joined the NHS benchmarking club which is delivering useful output.
Although most indicators are fairly positive, the Trust did not achieve the target for the majority of its national cancer
targets.
Green
The table below summarises our overall rating for each of the themes reviewed:
Green Adequate arrangements
Amber Adequate arrangements, with areas for development
Red Inadequate arrangements
We set out below our detailed findings against six risk areas which have been used to assess the Trust's performance against the Audit Commission's criteria. We
summarise our assessment of each risk area using a red, amber or green (RAG) rating, based on the following definitions:
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 24
Value for Money
Residual risk identified Summary findings RAG rating
Workforce issues The trend for expenditure on agency/bank/temporary workers has continued to increase.
The Trust's expenditure on agency, bank and temporary workers has increased in the last three years:
• 2012/13 - £10.9m (7.4%)
• 2013/14 - £12.8m (8.4%)
• 2014/15 - £15.9m (10.1%)
The Trust developed a Workforce Supply and Demand Action Plan which has actions in the short, medium and long
term to address these issues.
Amber
Focus of the MTFS The Trust hasn't fully updated its IBP and LTFM since 2012/13. However there was a refresh of the LTFM submitted to
TDA on 20 June 2014. The IBP and LTFM are being fully refreshed currently in line with the TDA's timeline for FT
status.
Amber
Adequacy of planning
assumptions
While the Trust's planning assumptions have been generally sound, the key risk currently is the potential loss of the
Eastern Community contract which has a value of circa £50m. Work is on-going to clarify the financial risks of this but
no detailed modelling of the potential impact of alternative scenarios has been done.
Amber
Process for reviewing the MTFS Although a refresh of the LTFM was submitted to the TDA in June 2014, the LTFM has not been formally reviewed by
the Trust.
Amber
Responsiveness of the MTFS A full refresh of the LTFM and the main IBP, with the associated detailed financial modelling, has not been carried out
since 2012/13. The Trust is preparing the full analysis to support a full refresh with downside scenario planning. The
Trust has a meeting with the TDA on 7 July 2015 to review the assumptions within the LTFM.
Amber
CIP Programme Setting and
monitoring
The Trust has a CIP plan of £13.2m for 2015/16, £2.3m of this is red rated for delivery. The Trust has identified potential
schemes to bridge the gap, but these have not yet been finalised.
Amber
Finance department resourcing The Finance team have struggled to get key audit evidence to the audit team on a timely basis. This is partly due to
competing TDA deadlines and the 2015/16 budget arbitration process but may also suggest capacity issues longer term
as the Trust moves forward in its plan to become a Foundation Trust.
Amber
To support our VFM conclusion against the specified criteria we performed a risk assessment against VFM risk indicators specified by the Audit Commission. and
additional indicators identified by ourselves. Following completion of our work we noted the following residual risks to our VFM conclusion:
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 25
Value for Money
Residual risk identified Summary findings RAG rating
Effectiveness of key services Performance against national cancer targets has deteriorated in 2014/15 with the majority of target not having been
met. There is evidence that the Trust has taken actions in response to the reports and that performance has improved in
April 2015, with all targets being met.
Amber
Management of natural
resources
There is no evidence that Board reporting considers the Trust's use of natural resources and therefore whether it affects
decision making. The Trust has entered into an Energy Performance Contract in 2014/15 which should lead to greater
consideration of these issues.
Amber
To support our VFM conclusion against the specified criteria we performed a risk assessment against VFM risk indicators specified by the Audit Commission. and
additional indicators identified by ourselves. Following completion of our work we noted the following residual risks to our VFM conclusion:
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015
Section 4: Fees, non audit services and independence
01. Executive summary
02. Audit findings
03. Value for Money
04. Fees, non audit services and independence
05. Communication of audit matters
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 27
Fees
Per Audit plan
£
Actual fees
£
Trust audit 63,270 63,270
Charitable funds
(Independent examination)
tbc tbc
Total audit fees 63,270 63,270
Fees, non-audit services and independence
We confirm below our final fees charged for the audit and notify you of the proposed fee for the provision of non-audit services.
Independence and ethics
We confirm that there are no significant facts or matters that impact on our independence as auditors
that we are required or wish to draw to your attention. We have complied with the Auditing Practices
Board's Ethical Standards and therefore we confirm that we are independent and are able to express an
objective opinion on the financial statements.
We confirm that we have implemented policies and procedures to meet the requirements of the
Auditing Practices Board's Ethical Standards.
Fees for other services
Service Fees £
The Trust has asked us to undertake external assurance on its Quality
Accounts in 2014/15
10,000
Guidance note
'Fees for other services' is to be
used where we need to
communicate agreed fees in
advance of the audit. At the
time of preparation of the Audit
Plan it is unlikely that full
information as to all fees
charged by GTI network firms
will be available. Disclosure of
these fees, threats to
independence and safeguards
will therefore be included in the
Audit Findings report.
Red text is generic and should
be updated specifically for your
client.
Once updated, change text
colour back to black.
We plan to complete our work on your Quality
Accounts and Charitable Funds by 30 June 2015.
We will advise the Audit Committee of the fees for the
Charitable Funds independent examination.
Fees, non audit services and independence
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015
Section 5: Communication of audit matters
01. Executive summary
02. Audit findings
03. Value for Money
04. Fees, non audit services and independence
05. Communication of audit matters
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 29
Communication of audit matters to those charged with governance
Our communication plan
Audit
Plan
Audit
Findings
Respective responsibilities of auditor and management/those
charged with governance
Overview of the planned scope and timing of the audit. Form, timing
and expected general content of communications
Views about the qualitative aspects of the entity's accounting and
financial reporting practices, significant matters and issues arising
during the audit and written representations that have been sought
Confirmation of independence and objectivity
A statement that we have complied with relevant ethical
requirements regarding independence, relationships and other
matters which might be thought to bear on independence.
Details of non-audit work performed by Grant Thornton UK LLP and
network firms, together with fees charged
Details of safeguards applied to threats to independence
Material weaknesses in internal control identified during the audit
Identification or suspicion of fraud involving management and/or
others which results in material misstatement of the financial
statements
Compliance with laws and regulations
Expected unmodified auditor's report
Uncorrected misstatements
Significant matters arising in connection with related parties
Significant matters in relation to going concern
International Standards on Auditing ISA (UK&I) 260, as well as other ISAs, prescribe
matters which we are required to communicate with those charged with governance, and
which we set out in the table opposite.
The Audit Plan outlined our audit strategy and plan to deliver the audit, while this Audit
Findings report presents the key issues and other matters arising from the audit, together
with an explanation as to how these have been resolved.
Respective responsibilities
The Audit Findings Report has been prepared in the context of the Statement of
Responsibilities of Auditors and Audited Bodies issued by the Audit Commission
(www.audit-commission.gov.uk).
We have been appointed as the Trust's independent external auditors by the Audit
Commission, the body responsible for appointing external auditors to local public bodies
in England. As external auditors, we have a broad remit covering finance and
governance matters.
Our annual work programme is set in accordance with the Code of Audit Practice ('the
Code') issued by the Audit Commission and includes nationally prescribed and locally
determined work. Our work considers the Trust's key risks when reaching our
conclusions under the Code.
It is the responsibility of the Trust to ensure that proper arrangements are in place for the
conduct of its business, and that public money is safeguarded and properly accounted
for. We have considered how the Trust is fulfilling these responsibilities.
Communication of audit matters
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 30
Appendices
Appendices
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 31
Appendix A: Action plan
Priority Significant deficiency – risk of significant misstatement Deficiency - risk of inconsequential misstatement
Rec
No. Recommendation Priority Management response
Implementation date &
responsibility
1 The Trust should regularly review long
outstanding creditor accruals to ensure
that they remain appropriate.
Deficiency A review of the appropriateness of long outstanding
creditor accruals will be undertaken. The review will be
on-going throughout the financial year.
Commence 1 June 2015
Finish 31 March 2016
Karen Sandwell
Nina Phillips
2 The aged creditor listing should be run at
the same time as producing the creditor
control balances to aid the reconciliation of
Non-NHS trade payables.
Deficiency Year end closure timetable will be updated to ensure
report is run to ensure consistency with the GL.
Actioned and complete.
Karen Sandwell
3 The bank reconciliation should be
compiled using the available balance
figure in line with the GBS guidance.
Deficiency The Trust will continue to reconcile its ledger balance to
the statement balance.
Actioned and complete.
Karen Sandwell
4 The Trust needs to work with its software
supplier to resolve the difference between
the purchase ledger and the general
ledger.
Deficiency Disagree. The issue is over 5 years old and this will sit
as an opening reconciliation difference.
No action required
Karen Sandwell
5 The Trust should investigate and clear the
difference between the manual accruals
schedule and the general ledger.
Deficiency Disagree. The issue is over 5 years old and this will sit
as an opening reconciliation difference
No action required
Karen Sandwell
Appendices
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 32
Appendix A: Action plan
Priority Significant deficiency – risk of significant misstatement Deficiency - risk of inconsequential misstatement
Rec
No. Recommendation Priority Management response
Implementation date &
responsibility
6 The Trust must carry out additional work to
map where the payroll figures are being
allocated within the general ledger to
enable the systems to be reconciled.
Significant
deficiency
HMRC P35 and Gross to net reconciliations were
undertaken monthly by payroll throughout the year.
McKesson are working on a fix to the reconciliation of
RTI submissions.
The issue to be resolved is the tracking of payroll
information through the ESR hub in the GL.
Additional finance resource is now in place will allow the
detailed mapping of data feeds to inform additional
reconciliation.
Consultancy support has been provided to write some
reports to help with the reconciliation. Areas of
difference between the gross to net report have been
identified. A full reconciliation is being undertaken for
2014/15 and will continue on a monthly basis in
2015/16.
Commenced 29 May 2015
Karen Sandwell
7 The Trust should include key user information on the importance of maintaining the confidentiality of passwords within the next revision of the Information Security Policy and consider providing guidance across all applications on the strength of password policies.
Deficiency Noted and will be updated on next Revision
Tony Blake - 31 March 2016
Appendices
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 33
Appendix A: Action plan
Priority Significant deficiency – risk of significant misstatement Deficiency - risk of inconsequential misstatement
Rec
No. Recommendation Priority Management response
Implementation date &
responsibility
8 We recommend that management reviews access controls over the Integra application with consideration given to introducing the following settings in line with best practice: • 8 character • complex • 60 day renewal
Deficiency This has been reviewed and actioned. The password
requirement has been set at 8 characters with a need to
have at least 1 numeric character. It is considered by
management that 90 days follows the policy for such
applications as NHS Mail and therefore will not be
changed.
Action complete.
Tony Blake
9 The Trust should consider implementing an automated password protected screensaver time out feature.
Deficiency Attempt to role out, however considered not acceptable
for clinical areas. So implementation and role out
ceased
N/A - Tony Blake
10 The Trust needs monitor and report on
progress against its Workforce Supply and
Demand Action Plan to ensure that it
addresses the trend of increasing spend
on agency, bank and other temporary
workers.
Deficiency There is an internal assurance process monitoring the
delivery of the action plan.
On-going
Darryn Allcorn
Robert Sainsbury
11 The Trust needs to update its medium term financial strategy (LTFM) as soon as possible. This should include detailed modelling of the potential impact of alternative scenarios around the Eastern Community contract.
Deficiency LTFM work commencing 1 June 2015.
The finance team is meeting with the TDA in July 2015.
On-going review of SLR information based on 2014/15
activities that will inform the impact of the decision on
the Eastern Community Contract.
October 2015
Colin Dart
Appendices
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 34
Appendix A: Action plan
Priority Significant deficiency – risk of significant misstatement Deficiency - risk of inconsequential misstatement
Rec
No. Recommendation Priority Management response
Implementation date &
responsibility
12 The Trust needs to finalise the CIP schemes to bridge the £2.3m gap in the 2015/16 CIP plans.
Deficiency Initial proposals have been submitted to NEW Devon
CCG and will be updated through Finance Committee
and Board
July 2015
Executive Team
13 The Trust should consider whether the Finance team have adequate capacity in key roles to deal with peaks in demand, such as budget setting, contract negotiations, FT preparatory work and external audits.
Deficiency Management believes that the capacity constraint was
the consequence of the delay in issuing the 2015/16
national tariff. Resources are now in place that
supports the LTFM and planning process. This
capacity will need review should Eastern Community
services transfer.
On-going
Colin Dart
14 The Trust must continue to monitor its performance against national cancer targets closely so that it can respond to any deterioration in performance.
Deficiency Action plans in place with operational ownership and
visibility.
On-going
Robert Sainsbury
15 The Trust should produce reports on how it
uses natural resources to enable these
factors to be considered in decision making.
Deficiency An Energy Performance business case has been
approved by the Board and is progressing through
NHS TDA that significantly reduces the Trust’s use of
natural resources. Reporting mechanisms will be
implemented during 2015/16.
On-going
Iain Roy
Appendices
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 35
Appendix A: Action plan
Priority Significant deficiency – risk of significant misstatement Deficiency - risk of inconsequential misstatement
Rec
No. Recommendation Priority Management response
Implementation date &
responsibility
16 The Trust should aim to reach agreement
with its main commissioner on activity and
income for the year in advance of preparing
the accounts.
Significant
deficiency
The lessons learned from 2014/15 will be used to
inform the timely resolution of disputes to reduce the
impact in preparing the 2015/16 accounts.
On-going
Colin Dart
17 The Trust, in conjunction with its key
stakeholders, need to fundamentally review
and challenge the services that are required
in the health economy and how these should
be delivered within the available financial
envelope.
Significant
deficiency
The Trust is engaged with key stakeholders and will
maintain visibility of progress through Board briefings.
On-going
Executive Team
Appendices
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 36
Appendix B: Audit opinion
We anticipate we will provide the Trust with an unmodified audit report
Guidance note
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Audit opinion –
option 1
INDEPENDENT AUDITOR'S REPORT TO THE DIRECTORS OF NORTHERN DEVON
HEALTHCARE NHS TRUST
We have audited the financial statements of Northern Devon Healthcare NHS Trust for the year ended 31
March 2015 under the Audit Commission Act 1998. The financial statements comprise the Statement of
Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Taxpayers’
Equity, the Statement of Cash Flows and the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and the accounting policies directed by the Secretary of State
with the consent of the Treasury as relevant to the National Health Service in England.
We have also audited the information in the Remuneration Report that is subject to audit, being:
• the table of salaries and allowances of senior managers and related narrative notes
• the table of pension benefits of senior managers and related narrative notes
• the table of pay multiples and related narrative notes.
This report is made solely to the Board of Directors of Northern Devon Healthcare NHS Trust in
accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph
44 of the Statement of Responsibilities of Auditors and Audited Bodies published by the Audit Commission
in March 2014. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Trust's directors and the Trust as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Statement of Directors’ Responsibilities in respect of the accounts, the
Directors are responsible for the preparation of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
also require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to
the Trust’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial information in the annual report which
comprises the Strategic Report, Annual Governance Statement and Remuneration Report, to identify
material inconsistencies with the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the
course of performing the audit. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
• give a true and fair view of the financial position of Northern Devon Healthcare NHS Trust as at 31
March 2015 and of its expenditure and income for the year then ended; and
• have been prepared properly in accordance with the accounting policies directed by the Secretary of
State with the consent of the Treasury as relevant to the National Health Service in England.
Opinion on other matters
In our opinion:
• the part of the Remuneration Report subject to audit has been prepared properly in accordance with the
requirements directed by the Secretary of State with the consent of the Treasury as relevant to the
National Health Service in England; and
• the information given in the annual report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Appendices
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015 37
Guidance note
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be updated specifically for your
client.
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Audit opinion –
option 1
Matters on which we report by exception
We report to you if:
• in our opinion the governance statement does not reflect compliance with the NHS Trust Development
Authority's Guidance
• we refer the matter to the Secretary of State under section 19 of the Audit Commission Act 1998
because we have reason to believe that the Trust, or an officer of the Trust, is about to make, or has
made, a decision involving unlawful expenditure, or is about to take, or has taken, unlawful action likely
to cause a loss or deficiency; or
• we issue a report in the public interest under section 8 of the Audit Commission Act 1998.
We have nothing to report in these respects.
Conclusion on the Trust’s arrangements for securing economy, efficiency and effectiveness in the
use of resources
Respective responsibilities of the Trust and auditor
The Trust is responsible for putting in place proper arrangements to secure economy, efficiency and
effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly
the adequacy and effectiveness of these arrangements.
We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Trust has
made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The
Code of Audit Practice issued by the Audit Commission requires us to report to you our conclusion relating
to proper arrangements, having regard to relevant criteria specified by the Audit Commission in October
2014.
We report if significant matters have come to our attention which prevent us from concluding that the Trust
has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of
resources. We are not required to consider, nor have we considered, whether all aspects of the Trust’s
arrangements for securing economy, efficiency and effectiveness in its use of resources are operating
effectively.
Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of
resources
We have undertaken our review in accordance with the Code of Audit Practice, having regard to the
guidance on the specified criteria, published by the Audit Commission in October 2014, as to whether the
Trust has proper arrangements for:
• securing financial resilience
• challenging how it secures economy, efficiency and effectiveness.
The Audit Commission has determined these two criteria as those necessary for us to consider under the
Code of Audit Practice in satisfying ourselves whether the Trust put in place proper arrangements for
securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2015.
We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we
undertook such work as we considered necessary to form a view on whether, in all significant respects, the
Trust had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of
resources.
Conclusion
On the basis of our work, having regard to the guidance on the specified criteria published by the Audit
Commission in October 2014, we are satisfied that in all significant respects Northern Devon Healthcare
NHS Trust put in place proper arrangements to secure economy, efficiency and effectiveness in its use of
resources for the year ending 31 March 2015.
Certificate
We certify that we have completed the audit of the accounts of Northern Devon Healthcare NHS Trust in
accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued
by the Audit Commission.
Elizabeth Cave
for and on behalf of Grant Thornton UK LLP, Appointed Auditor
Grant Thornton
Hartwell House
55-61 Victoria Street
Bristol
BS1 6FT
Appendices
© 2015 Grant Thornton UK LLP | Northern Devon Healthcare NHS Trust Audit Findings Report 2014/15 | June 2015
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