Comment / Supporting the expanding role of the audit committee

The agenda currently facing NHS bodies is massive. Like many international health systems, the NHS has recognised the need to integrate care around the needs of patients. This means NHS commissioners, providers and local authorities working closely together to improve the health of, and deliver care to, the populations they serve operating as systems.

They need to do this in a financial climate that both makes the changes essential – without such a transformation, healthcare in its current format will rapidly become unsustainable – and adds to the challenge of delivering reform.

All of this presents major governance challenges – ensuring decisions are taken that support collaboration, while also recognising the continuing statutory responsibilities of the individual organisations. And in an environment where every penny matters, all decisions need to be taken appropriately and in the context of delivering maximum value for money.

All parts of the NHS face these challenges. Clinical pathways will change and along with this will come new roles for staff. Boards are tasked with delivering this future vision at pace – while still delivering the service and financial standards demanded right now on a day-by-day, week-by week basis. And all this means that the agenda for the audit committee has become even bigger.

A lot has changed since the HFMA’s NHS audit committee handbook was last published in 2014. And a new version brings this useful guide right up to date for committee members and anyone else with an interest – particularly those on governing bodies.

The core role of this statutory committee remains unchanged. It should help NHS governing bodies as they review and continually re-assess their system of governance, risk management and control, to ensure that it remains effective and fit for purpose.

But the context has changed radically and the new handbook captures this and explores the specific impacts for audit committees, while also including a glossary and two updated self-assessment checklists.

Partnership working at scale, for example, merits a new chapter all of its own. This adds a third dimension to the governance between organisations and often involves organisations outside the NHS. The handbook explores the most common new arrangements – alliances of providers working together, clinical commissioning group committees in common and shared back office arrangements – and looks at how audit committees should approach them and their associated risks.

Sustainability and transformation partnerships (STPs) and accountable care systems (ACSs) are not statutory bodies and individual organisations need to be part of the governance arrangements for population-based integrated health systems. The audit committee will need to fully understand these complex arrangements and consider the implications for the organisation – including accounting arrangements, risk management procedures, potential conflicts of interest and information flows.

The audit committee also has a key role in reviewing any mergers and acquisitions and the arrangements to comply with the integrated support and assurance process (ISAP) for novel contracts. With substantial time, money and other resources involved, the audit committee – while not responsible for operational matters – will need to seek assurance on processes and identify any significant risks. The handbook includes guidance in these areas.

The increasing incidence and profile of cyber incidents pose an increasing risk for NHS bodies. Audit committees have a crucial role in providing assurance to the board that the organisation is properly managing these risks and the handbook considers the areas for audit committees to explore.

Perhaps the other major addition of note is guidance on working with regulators. The role of the audit committee is to oversee, be aware of and ensure action plans relating to the regulatory requirements are monitored and delivered. The handbook explores the STP progress dashboard, NHS England’s improvement and assessment framework, NHS Improvement’s single oversight framework and the methodology for assessing how providers use their resources, as developed by the Care Quality Commission and NHS Improvement.

I hope that the handbook is useful, not just for the members of the audit committee, but all those who support it and those who are involved in the governance of NHS organisations.

You can now order the latest NHS audit committee handbook 

HFMA audit committee conference 2018 (November)