Corporate report

UKHSA Advisory Board: Audit and Risk committee minutes

Updated 22 May 2023

Date: Wednesday 24 May 2023

Sponsor: Ian Peters and Cindy Rampersaud

Recommendation

The Advisory Board is asked to note the minutes of 19 January 2023 meeting of the UK Health Security Agency (UKHSA) Audit and Risk Committee. The minutes were agreed on 28 March 2023.

Minutes (unconfirmed), UKHSA Audit and Risk Committee, Thursday 19 January 2023

Present at the meeting were:

• Ian Peters – chair of UKHSA Advisory Board (Chair)
• Sir Gordon Messenger – non-executive member

In attendance were:

• Deputy Director Finance, Department of Health and Social Care (DHSC)
• Finance Sponsorship team, DHSC
• Andy Brittain – Director General, Finance, DHSC
• [Title redacted]
• [Title redacted]
• Jenny Harries – Chief Executive
• [Title redacted], National Audit Office
• National Audit Office
• Lead Assurance Advisor
• Gerry Murphy – Non-Executive Member, DHSC Board and Chair DHSC Audit and Risk Committee
• [Title redacted], DHSC
• [Title redacted], Government Internal Audit Agency
• Emma Reed – Director, Emergency Response and Health Protection
• [Title redacted], Government Internal Audit Agency
• Andrew Sanderson – Director General, Finance, Commercial and Corporate Services
• [Title redacted], Governance, Risk and Assurance
• Donald Shepherd – Director of Finance
• Alex Sienkiewicz – Director of Corporate Services
• [Title redacted], National Audit Office

Apologies from:

• Simon Blagden – Non-Executive Member

Introductions and apologies

23/001 The Chair welcomed all attendees to the additional meeting of the Audit and Risk Committee.

Minutes of the previous meeting

23/002 The minutes from the last meeting on 24 November 2022 (enclosure ARC/23/001) were agreed with a minor amendment.

Matters arising

23/003 The action list (enclosure ARC/23/002) was noted.

Update from the National Audit Office

23/004 The Director General, Finance, Commercial and Corporate Services and representatives from the National Audit Office (NAO) provided an overview of the factors – many unprecedented – that had led to the disclaimed opinion on the 2021/22 Annual Report and Accounts.

23/005 Colleagues from the National Audit Office emphasised that a disclaimed opinion was a rare step that they had not taken lightly. NAO’s sampling activity indicated a lack of evidence to substantiate their opinion on UKHSA’s accounts. Issues were identified around inventory, bank reconciliations, control mechanisms and corporate governance. The NAO considered seriously an extension to the audit process but concluded that taking more time was unlikely to affect the audit opinion.

23/006 The NAO had agreed to a lessons identified discussion to talk through previous findings and incorporate into UKHSA’s action plan.

NAO Audit Certificate and Report of the Comptroller and Auditor General and completion report

23/007 The Audit and Risk Committee noted the draft audit certificate and report of the Comptroller and Auditor General (enclosure ARC/23/004a); and the draft audit completion report (enclosure ARC/23/004b) which set out the risks with UKHSA’s accounts and the rationale for the disclaimed opinion.

UKHSA Annual Report and Accounts 2021 to 2022

Disclaimed Audit opinion on UKHSA accounts 2021 to 2022

23/008 The Director General, Finance, Commercial and Corporate Service expressed disappointment on the outcome, and responsibility and focus for resolving issues going forward. UKHSA would focus on systematically identifying areas of concern to resolve through a thorough action plan. Implementing the full functionality of MaPS and ensuring that the new system was working as it should was a top priority for the organisation.

23/009 The Audit and Risk Committee noted the position and the underlying factors and agreed that UKHSA should accept the disclaimed audit opinion.

23/010 Discussion noted the challenge of workforce stability. UKHSA should consider the risks associated with further churn as a result of contracts due to end in March 2023. Other issues also included a restructuring process in the Finance Directorate and staff being unfamiliar with the MaPS system as it was implemented. DHSC and HMT were discussing additional resource for management and oversight of the action plan.

23/011 The proposed approach was to start the 2022 to 2023 audit earlier. An NAO technical panel would discuss the scope of the 2022 to 2023 audit before agreeing the audit plan with UKHSA. Discussion would continue with DHSC and UKHSA colleagues on testing within this audit and include understanding the requirement of new ISA315 auditing standard.

UKHSA draft action plan

23/012 The Director General, Finance, Commercial and Corporate Services presented the draft action plan to make significant improvements from the disclaimed opinion (enclosure ARC/23/003a). The action plan would focus on the highest impact areas and ensure necessary resourcing is in place. The plan would test every part of business as usual accounting to understand broken linkages in the process.

23/013 The Audit and Risk Committee noted the summary details of the draft action plan as presented. The action plan would be underpinned by full project principles, milestones and monitoring of progress reported regularly through EXCO, ARC and notified to Board.

23/014 The Audit and Risk Committee agreed that the priority should be to chart the fastest possible path away from the disclaimed opinion to a clean audit, recognising the NAO’s view that this was likely to be a multi-year journey.

23/015 The Audit and Risk Committee agreed that because of the seriousness of the issue, assuring progress on the plan would be a high priority for the Committee over coming months.

23/016 The appointment of new Audit and Risk Committee Chair should feature in the action plan. The final action plan was expected for discussion at the Executive Committee before returning to the Audit and Risk Committee in March.

Remuneration report disclosures

23/017 The Director General, Finance, Commercial and Corporate Services set out the paper on the remuneration disclosure in the Annual Report and Accounts (enclosure ARC/23/003b). There was insufficient accuracy on pieces of information relating to small numbers of individuals for the remuneration report in the Annual Report and Accounts, leading the NAO to extend their disclaimed opinion to cover the remuneration report. No fault was attributable to individual senior executives whose information was unavailable or inaccurate. Complexity in preparing the information included factors such as a significant number of non-permanent workers, missing paperwork to support loans and secondments, and the date of migration to UKHSA payroll.

23/018 The Audit and Risk Committee noted the position and the underlying factors, and agreed that UKHSA should accept the disclaimed audit opinion in respect of the Remuneration Report.

Finalising the report

23/019 The Audit and Risk Committee noted the draft Annual Report (enclosure ARC/23/003c) and delegated final sign-off to the Chief Executive, Committee Chair and Director General, Finance, Commercial and Corporate Services. Minor updates were expected before the final sign-off.

23/020 It was noted that the timeline for publishing on 26 January was to align with other annual reports in the health sector, including the NHS and DHSC.

23/021 Despite the disappointing outcome, thanks were noted to all teams for their hard work on the Annual Report and Accounts and for the support of the NAO and DHSC.

Audit and Risk Committee forward look

23/022 The Audit and Risk Committee noted the forward look with future meetings to focus on the action plan.

Any other business

23/023 The Chair, UKHSA and DHSC colleagues thanked all attendees for a constructive discussion.

23/024 There being no further business the meeting closed at 10:36am.

[Name redacted]
[Title redacted]
January 2023