1. Effective Board Governance & role of the Audit Committee Presentation by Cluster Audit Committee – July / August 2012

2. Purpose of this presentation To give CCGs a practical framework to enable them to establish an effective Audit Committee that supports the Board to discharge its governance responsibilities.

3. The Board’s role on Governance  Set the Corporate Objectives and ensure that the organisation operates effectively in the delivery of these objectives  Approve the annual accounts and annual return  Set up an Audit Committee and agree its terms of reference – this delegates the detail but not the overall responsibility for governance

4. Establishing an Audit Committee  Set the terms of reference – templates exist on the Commissioning Board web site  Get the terms of reference adopted by the Board  Appoint a lay member, with appropriate financial and governance experience to chair the committee

5.  Lay Chair  Additional lay representation - Quorate only with minimum of two lay members  Also in attendance are:  Chief Finance Officer  Governance Lead  Head of External Audit  Internal Audit Lead  Others officers (by request) Membership

6. Audit Committee – Key Responsibilities The Audit Committee supports the Board by critically reviewing the governance and assurance processes on which the Board places its reliance. This covers: The effectiveness of the Assurance Framework The quality of the Disclosure Statements The Audit Committee provides formal reports to each public board meeting and an annual report covering its activities

7. A.C. Responsibilities – The Assurance Framework This is the key source of evidence that links strategic objectives to risks, controls and assurances and is the main tool the organisation should use to discharge its responsibility for sound governance. It considers: Appropriateness of the corporate objectives That the committee structures cover all of the key activities of the organisation and report effectively to the board Whether the internal controls are sound and work in practice Effectiveness of policies and procedures Risk is identified and effectively managed Performance management system is robust Data is reliable to underpin assurance Reliance from key third parties is sound

8. A.C. Responsibilities – Disclosure Statements The Audit Committee will review the following in detail, ahead of seeking Board approval: The Statement on Internal Control from the Head of Internal Audit’s opinion The annual accounts and financial statements External Audit Annual Letter Annual Report Fitness to register with the CQC (possibly?) These represent the output of the effectiveness of the organisation’s assurance framework

9. Work plan of the Audit Committee to discharge its responsibilities:  Meets approximately six times per year  Approve the external and internal audit programmes and counter fraud work plan  Monitor BAF on delivery of the corporate objectives  Ensure that the risk management and performance management systems are effective  Review audit reports and ensure that management responses are appropriate  Monitor progress on action plans  Approve all losses, write-offs and waivers  Review the annual accounts, financial statements and disclosure statements ahead of board approval

10. How to ensure that you operate sound governance:  Annual Audit Opinions are positive and not qualified and the VFM rating is strong  Annual self assessment checklist is completed and performance is reviewed  Terms of reference are reviewed annually, for on going suitability  Audit Chair has private meetings with Head of External and Internal Audit for feedback  Speed at which audit recommendations are implemented  Follow-up audits confirm action has been taken and continuous improvement is evident  Ensure that all the key players remain informed

11. Support Materials:  NHS Audit Committee Handbook  Template for Audit Committee terms of reference  Board Assurance Framework methodology

12. Next Steps:  Cluster Audit Committee sub group will contact CCGs to arrange meetings with COO/CFO and Audit Chair to assist the set up of their committee and transitional arrangements for the transfer of governance