The Audit Committee

Annual Report

Financial Year 1 April 2024 to 31 March 2025

1. Period covered by this report

This report covers the work of the Audit Committee (the Board of Directors’ primary governance committee) for the financial year 1 April 2024 to 31 March 2025.

2. Introduction

The Audit Committee (“The Committee”) provides an independent and objective review of our internal controls. It seeks high-level assurance on the effectiveness of the Trust’s governance (corporate and clinical); risk management; and systems of internal control. It reports to the Board of Directors on its level of assurance.

The Committee receives assurance from the executive team and other areas of the organisation through reports, both regular and bespoke. It validates the information it receives through the work of internal audit, external audit, and counter-fraud. Assurance is also brought to the Committee through the knowledge that Non-executive Directors’ gain from other areas of their work, not least their own specialist areas of expertise; attending Board and Council of Governors’ meetings; leadership visits; and talking to staff.

Further information about the work of the Committee can be found in Section 8 below.

Should our external auditors (KPMG) carry out any non-audit work, the Audit Committee has responsibility for ensuring that their independence is maintained. The Committee will do this by reviewing and approving the scope of the work and the fees charged prior to the work being undertaken.

The substantive membership of the Audit Committee is made up by three Non-executive Directors. The Chair of the Trust may not be a substantive member of the Committee but is invited to attend one meeting during the financial year. The other Non-executive Directors may be invited to attend on an ad-hoc basis, either when it is deemed appropriate for other Non-executive Directors to attend for a particular agenda item, or to ensure quoracy.

Further information about the membership of the Committee can be found in Section 6 below.

3. Terms of reference for the Audit Committee

In October 2024, the Committee reviewed its Terms of Reference (ToR) and noted that both Section 8 and Section 9 of the Committee’s ToR included duplicate instructions regarding the role and responsibility of the Committee’s Chair to conduct an annual committee effectiveness review. It was agreed that the ToR should be amended so that this provision was included in only in Section 9. These amendments to the ToR were agreed at the 22 October 2024 Audit Committee meeting and ratified by the Board of Directors at its meeting held on 28 November 2024. The Committee also discussed whether Section 6.1 of the Committee’s ToR regarding the Committee’s duty on delivering assurance on the health care provisions the Trust provided to service users should be expanded to include the health care provisions the Trust arranges through other organisations. It was agreed at the November 2024 Board of Director’s meeting that the wider interpretation of the word ‘provided’ used in this clause included services the Trust purchased as well as services within the Trust and as such no further changes were required.

4. Effectiveness of the Audit Committee

The Committee carried out a review of its effectiveness in June and July 2024 when members completed the Healthcare Financial Management Association (HFMA) Committee effectiveness questionnaire. The results were collated and then presented to the Committee at its July 2024 meeting. It was concluded that there was a high level of effectiveness of the Committee and that there were no areas of concern which it needed to bring to the attention of the Board of Directors.

The Chair of the Committee also completed the HFMA Committee Processes questionnaire which was also presented to the Committee at its July 2024 meeting. It was agreed that based on the responses that there were no areas of concern which it needed to bring to the attention of Board of Directors.

In October 2024, a representative from The Value Circle observed an Audit Committee meeting as part of an independent review of the Trust’s Well Led governance arrangements. It was reported that the Committee was well-chaired, with a healthy culture of mutual respect that permitted rigorous scrutiny of the agenda items without staying into criticism or overly robust challenge. It was also noted that the meeting allocated sufficient time for discussion and ensured all queries were answered satisfactorily, with a succinct summary of the agenda items provided by the Chair at the close of the meeting.

5. Meetings of the Audit Committee

In 2024/25 the Committee met formally on five occasions. All Committee meetings were held virtually. The dates on which the Committee met during year are as follows:

• 16 April 2024
• 18 June 2024 – Extraordinary meeting for the Annual Accounts
• 16 July 2024
• 22 October 2024
• 21 January 2025

6. Membership of the Audit Committee and attendance at meetings

Membership of the Audit Committee is made up by three Non-executive Directors. In order for a meeting to be considered quorate, at least two of the Non-executive Director members must be in attendance.

The 2024/25 meetings of the Audit Committee were attended on a regular basis by the Chief Financial Officer, the Associate Director for Corporate Governance, and the Head of Health and Safety. Internal audit and counter fraud representation was provided by NHS Audit Yorkshire. External audit representation was provided by the audit team from KPMG.

In addition to the officers that regularly attend the Committee, invitations were extended to members of the executive team and senior managers who attended meetings to present papers and make assurances as required. Additionally, the Chief Executive of the Trust and the Chair of the Trust are both invited to attend at least one meeting a year to ensure the effective functioning of the Committee. The Chief Executive attended the 18 June 2024 meeting. The Chair of the Trust was invited to attend the 22 October 2024 meeting.

The Trust also invites governors to observe Board sub-committee meetings.  This opportunity allows governors to observe the work of the Committee, rather than to be part of its work as they are not part of the formal membership of the Committee. Governors observe Board sub-committee meetings in order to get a better understanding of the work of the Trust and to observe non-executive directors appropriately challenging the executive directors for the operational performance of the Trust.

The tables below demonstrate the attendance of substantive members, formal attendees, and governors who observed meetings of the Committee for the period 1 April 2024 to 31 March 2025.

Attendance at Audit Committee meetings by substantive members

Attendance at Audit Committee meetings by formal attendees

Attendance at Audit Committee meetings by governors

To ensure that Committee members have the skills required to carry out their role on the Committee they have the opportunity to attend training courses. Some of these are provided by NHS Audit Yorkshire and they cover topics which are relevant specifically to members of the Audit Committee and also those which are relevant to the issues facing NHS organisations.

7. Reports made to the Board of Directors

The Chair of the Audit Committee makes an assurance, escalation, and advisory report regarding the most recent meeting of the Committee to the next available Board of Directors’ meeting. This report seeks to assure the Board on the main items discussed by the Committee, and, should it be necessary, to escalate to the Board any matters of concern or urgent business which the Committee is unable to conclude. The Board may then decide to give direction to the Committee as to how the matter should be taken forward or it may agree that the Board deals with the matter itself.

The below table outlines the dates that the assurance and escalation reports were presented by the Chair of the Audit Committee to the Board of Directors meetings.

In addition to the Assurance and Escalation Reports described above, the Audit Committee’s Annual Report is also received by the Board of Directors. The Committee’s Annual Report for 2023/24 was presented to the Board of Directors at its extraordinary meeting on 20 June 2024.

8. The work of the Audit Committee during 2024/25

For 2024/25 the Chair and members of the Audit Committee confirm that the Committee has fulfilled its role as the primary governance and assurance committee in accordance with its Terms of Reference, which are attached at Appendix 1 for information.

In 2024/25 the Committee approved the work plans for both the internal and external auditors and the counter-fraud service. It received and reviewed both regular progress reports and concluding annual reports for the work of internal and external audit and the counter-fraud team. This allowed the Committee to determine its level of assurance in respect of progress with various pieces of work and the findings. These reports have also provided assurance on the Trust’s internal controls. The Committee assessed the effectiveness of these functions by reviewing the periodic reports from the auditors and monitoring the pre-agreed key performance indicators.

As part of assessing its own effectiveness and setting its annual Cycle of Business, the Committee also has the opportunity of setting additional annual objectives which are not covered by its business-as-usual operations. At the October 2024 meeting, the Committee reflected on its previous annual objective to improve the succinctness of the papers received by the Committee at its meetings in order to improve its efficiency. It agreed that a number of steps had been taken to achieve this objective, including the decision to remove for information newsletter items included in one of the two versions of the collected papers circulated ahead of each meeting, and that it was satisfied that this objective had been achieved. The Committee then agreed on a new objective to improve the data it received through various reports by including more historical trend data and, where appropriate, benchmarking data, and noted that the degree to which this objective had been achieved would be assessed at its October 2025 meeting.

Areas of work on which the Committee received assurance during 2024/25 are set out below.

Quality Account:

• At its April 2024 meeting, the Committee reviewed the process by which the Quality Account for 2023/24 had been developed and the planned revisions to its content. The Committee was assured by this process. It reflected that the Quality Committee was responsible for seeking assurance on the content of the Quality Account and noted that there was no longer a requirement for the final Quality Account to be audited. The final Quality Account was approved by the Board of Directors at its 20 June 2024 extraordinary meeting.

Health and Safety:

• At its October 2024 meeting the Committee received the Health and Safety Annual Report for 2023/24. It noted that there were no sanctions or enforcements raised against the Trust for this period and that the number of Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) reportable incidents had fallen compared with incidents reported in 2022/23. It agreed that the report should be shared with the Board of Directors at its November 2024 meeting for assurance purposes.
• The Committee also received quarterly updates in relation to health and safety at each meeting. The Committee acknowledged efforts to improve the format and content of the reports in this period and praised the progress which had been achieved throughout the year at its January 2025 meeting. In particular, it noted improvements in how different incidents were categorised so it was better able to differentiate between health and safety incidents and patient safety incidents and how this information would be disseminated through the Trust’s governance structure, while acknowledging that there was still room for further improvement in this area. The Committee agreed that the Health and Safety Team should conduct a review to assess how similar organisations reported Health and Safety updates internally with the aim to further improve the content and format of the quarterly updates going forward.
• It noted that the Health and Safety Team had changed over the course of the year, including the appointment of a new Head of Health and Safety and a new Acting Associate Director of Estates and Facilities in the period. It was reassured that despite these challenges the Health and Safety team had made significant progress on its Annual Work Plan.

Risk Management:

• The Director of Nursing and Professions attended the July 2024 Committee meeting to make assurances on the risk management system and the system for recording risks. The Committee noted that the report demonstrated continued improvement within the risk management systems and processes, in particular noting the rollout of the Patient Safety Incident Response Framework across the Trust. The Committee noted that while the majority of the report considered clinical risk management, it had been determined by the Executive Management Team that the Annual Risk Management Report was appropriately aligned to the Audit Committee for governance purposes and that the next report would include corporate and clinical risk in order to fulfil this requirement.

Board Assurance Framework (BAF):

• The Committee received the Board Assurance Framework at both its April 2024 and October 2024 meetings. It was assured on both the content and that it was fit for purpose. On both occasions the Committee made additional recommendations for amendments to the BAF ahead of it being presented to the Board of Directors. These included consideration for a strategic risk (SR) being added regarding the replacement of the Trust’s electronic patient management system, suggestions of additional controls for specific SRs, the suggestion that the risk scores for specific SRs to be reassessed, and questioning whether the target dates identified for some SRs were still applicable.

Annual Report and Accounts for 2023/24:

• The Annual Report and Accounts for 2023/24 were reviewed prior to being presented to the Board of Directors for adoption in June 2024.
• The ISA 260 (which is the report to those charged with governance on the annual accounts) was received and the findings from the audit of the annual accounts discussed. The recommendations from the report were noted and the Committee was assured there were no significant control issues identified in the report. The Committee was assured by the external audit team that the annual report met the requirements of the guidance issued and that there were no inconsistencies found in the information provided in the annual report.
• The Head of Internal Audit Opinion and the Annual Governance Statement were reviewed and found to be consistent.
• The Committee reviewed the Annual Governance Statement and agreed that it presented a correct view of the governance systems in place for the control of risk and was consistent with the views expressed by the internal and external auditors. It agreed that the statement should be incorporated in the Annual Report 2023/24 for ratification by the Board of Directors.
• The Committee reviewed and was assured that the Trust was compliant with NHS England’s Foundation Trust Code of Governance, or in the cases of non-compliance that the rationale for this was explained. It agreed to recommend to the Board that correct procedures were in place and that the ‘comply or explain’ elements had been correctly shown in the Annual Report.

Internal Audit:

• The Committee approved the Internal Audit Annual Plan for 2024/25, and the amended Internal Audit Charter included with the plan at its April 2024 meeting. It noted that the plan had been developed through engagement with the Trust’s Executive Management Team and its Board Sub-Committees and with reference to the BAF and the Trust’s key strategic and operational risks.
• The Internal Audit Annual Report was received by the Committee in June 2024 which brought together all the findings from across the previous year. This report included the Head of Internal Audit Opinion which expressed an overall opinion of significant assurance.
• The Committee received regular update reports from the Internal Audit Network.
• The Committee received internal audit progress reports at each of its regular meetings to update the Committee on the major findings of the internal audit team, with assurance being provided on the actions taken to address any weaknesses in the systems of control. In cases where limited or low assurance opinions were received, the Executive Director for that audit area was invited to present a verbal assurance item to the Committee. It noted that some audits had been deferred to a later date and that the Committee was assured for the reasoning behind these deferrals.
• The Committee noted a trend for more internal audit reports to be finalised with a limited or low assurance opinion over the period. It was reassured by Audit Yorkshire that this trend could be explained by the Internal Audit Plan identifying the correct areas to audit, improvements in the methodology employed by Audit Yorkshire in assessing risk in Mental Health Trusts, and that the Trust was open to having challenging areas assessed for improvement. It was also reassured that the management responses to these audits had been positive.

Counter-fraud:

• The Committee approved the Local Counter Fraud Annual Work Plan for 2024/25 at its July 2024 meeting.
• The Committee received and was assured by the contents of the Annual Counter Fraud Report for 2023/24 at its July 2024 meeting. It noted that the Trust had overall been rated green in its Counter Fraud Functional Standard Return.
• The Committee received Local Counter-Fraud Progress Reports at each of its regularly scheduled meetings throughout the year. These updated the Committee on the major findings and any lessons learnt from individual cases on counter-fraud.
• Assurances were received about the processes in place to tackle fraud and bribery.

Action tracking:

• The Committee received regular reports in respect of progress with the implementation by managers of agreed audit recommendations and sought assurance on progress of outstanding actions. The Committee also received specific assurance on the process for dealing with and monitoring outstanding actions, with particular reference to the role of the Executive Risk Management Group (ERMG) which has oversight of the actions. In this period the format of the report was amended to list all overdue actions within a revised target date.
• It noted at its October 2024 meeting that all actions which were from pre-2024 internal audit reports or had their target dates extended two or more times were undergoing a review in collaboration with the action owners to either provide an updated target date or present a rationale for closing the action if it was no longer relevant.
• The Chair of the Audit Committee observed the 15 May 2024 ERMG for additional assurance that the Executive Team were correctly following up on and providing oversight of audit actions.

External audit:

• At its April 2024 meeting the Committee agreed to recommend that the Council of Governors (CoG) support the reappointment of KPMG as the Trust’s external auditors for an additional three years, with the option to extend this by up to two additional years as a direct award under the procurement framework. This was ratified by the CoG at its 30 April 2024 meeting.
• The Committee approved the 2023/24 External Audit Plan, including the fees incurred by the Trust for the delivery of this Plan at its April 2024 meeting.
• At its January 2025 meeting, the Committee received an update on the significant audit risks that had been identified so far by KPMG for 2024/25. The Committee noted that the External Audit Plan for 2024/25, the fee, and the Value for Money Risk Assessment would all be finalised and presented at the April 2025 Audit Committee meeting for approval and assurance.
• Regular update reports were received about the work of the auditors and also information about changes within the accounting regime and the health sector which would impact on the Trust.
• The Committee received details of relevant sector updates along with assurances on how the executive directors had implemented or taken account of the guidance contained in these reports.

Registers and Declarations of Interest process:

• The Committee reviewed: the Hospitality Register; the Gifts Register; the Sponsorship Register; the Register for the use of Management Consultants; and the Losses and Special Payments Register and was assured on the appropriateness and completeness of the content.
• The Committee was reassured that the Trust’s Hospitality, Sponsorship, and Gifts Policy and Procedure was compliant with guidance issued by NHS England.
• The Committee received the Annual Declarations of Interest Process Progress Update and was assured that all declarations for 2024/25 had been made by the identified decision makers able to do so, and that these declarations were publicly available in accordance with the Department of Health and Social Care directive. The Committee was also assured that staff members with outstanding declarations due to being on leave from the Trust would be monitored through a locally managed system to ensure that their declaration was made upon their return to work.

Tender and Quotation Exception reports:

Assurance was received on the reasons for the Tender and Quotation procedures being waived during 2024/25.

9. Conclusion

As the primary governance committee of the Board of Directors the Audit Committee preserved its independence from operational management by not having executive membership (although executive directors support the Committee by providing information and context only).

It added value by maintaining an open and professional relationship with internal and external audit and counter-fraud. It carried out its work diligently, discussed issues openly and robustly, and kept the Board of Directors apprised of any possible issues or risks. The Audit Committee fulfilled its work programme for 2024/25 and provided assurances to the Board for any issues referred to it. It took assurances from the internal and external auditors on key matters.

The Chair of the Audit Committee considers that the Committee has fulfilled its role as the Board of Directors’ senior governance committee and provided assurance to the Board on the adequacy and effective operation of the organisation’s internal control systems.

Members of the Audit Committee would like to thank all those who have responded to its requests during the year and who have supported it in carrying out its duties.

Martin Wright

Non-exectuive Director, Deputy Chair of the Trust

Chair of the Audit Committee

April 2025

Kieran Betts

Corporate Governance Officer

April 2025

Appendix 1 – Terms of Reference

A link to the current Terms of Reference of the Audit Committee can be found here.