The Committee considered a report of University Hospitals of Leicester NHS Trust (UHL) which explained the events and background to the UHL Trust Board’s decision not to agree the 2019/20 annual accounts as ‘true and fair’ and set out the actions being taken to address the issue. A copy of the report, marked ‘Agenda Item 10’, is filed with these minutes.
The Committee welcomed to the meeting for this item Rebecca Brown, Acting Chief Executive, UHL, Mark Wightman, Director of Strategy and Communications, UHL and Simon Lazarus, Chief Financial Officer, UHL.
Arising from discussions the following points were noted:
(i) Members expressed disappointment that no Non-Executive members of the UHL Trust Board were present at the meeting to explain how the errors in the accounts had occurred and why action had not been taken earlier. Some members suggested that all the Non-Executive Directors on the UHL Trust Board that were in post at the time the errors in the accounts were made should consider resigning, not just the ones that had stepped down from the Board so far. In response it was explained that those Non-Executive Directors that had stepped down were the ones that had oversight of finance. The other Non-Executive Directors led on overseeing other areas of the Trust where performance had been better. It was important to strike the right balance between making Board members accountable for failing to identify that errors were occurring, and retaining some continuity on the Board. The errors in the accounts were very technical therefore any Board members without financial expertise would have found it difficult to identify the problems. To prevent this being an issue in the future the Board now had much more financial expertise and two additional associate Finance Directors had been added to the Board who were both qualified accountants. The new Chair of the Audit Committee was also very experienced in financial matters.
(ii) UHL submitted that the errors in the accounts were the result of the actions of a few individuals and this should not affect the reputation of UHL as a whole as some excellent work was taking place across the Trust. UHL provided reassurance that the errors in the accounts could not occur again because the policies and control procedures at UHL had now been changed and strengthened, a training programme for the finance team had been put in place, and an external Finance Improvement Director was now holding UHL to account. Whilst it was hoped that UHL would be taken out of special measures after 12 months, the emphasis was on instigating a real culture change with regard to finance at UHL rather than coming out of special measures as soon as possible, therefore UHL was prepared to remain in special measures for 18 months if that was what it took to make meaningful changes. UHL were confident that by September 2021 an accurate set of accounts would be reported.
(iii) Members asked that UHL Board members be given training not just to enable them to understand the finances but on how to properly scrutinise the accounts and ask relevant probing questions. Board members should be encouraged to raise any concerns they might have.
(iv) In response to a concern raised by a member that even when UHL’s external auditors had raised concerns regarding the accounts no action had been taken by UHL management to address the problem, it was explained that at the time faith had initially been placed in the finance team to address the issues raised by the internal auditors, however once it became apparent that the finance team had not taken the appropriate action to address the auditor’s concerns further action was taken by management.
(v) Every hospital Trust was required to have a local counter fraud specialist in place and PricewaterhouseCoopers (PwC) carried out this function for UHL. The Deputy Director of Finance at UHL was the nominated point of contact for PwC with regards to fraud matters. The errors in the UHL accounts had been referred to the NHS Counter Fraud Authority and they had concluded that no fraud had taken place as there had been no loss to the public purse.
(vi) Concern was raised by a member that as the Governance system regarding UHL finances had been found to be inadequate then the Governance of other aspects of UHL’s work could also be ineffective. In response reassurance was given that as part of the current review the Governance across the whole of UHL was being evaluated not just with regards to finance.
(vii) A member raised concerns that the Scrutiny Committee had been given insufficient information and documentation to enable it to scrutinise the matter properly, for example the covering report submitted to the Committee was short and the minutes of the Audit Committee meeting on 27 January 2021 had been redacted. In response it was explained that the minutes were only redacted where a matter was commercially confidential or related to a specific individual. In doing this UHL was following the regulations and not trying to hide anything from the public to avoid scrutiny. Members asked UHL to give consideration to whether private meetings could be arranged with Scrutiny Committee members to enable them to view the confidential information and documents and satisfy themselves that they had been made aware of all the important facts. In response it was agreed that UHL would share with Scrutiny Committee members the private sections of minutes if at all possible. UHL would be presenting it’s 6 month FSM review to senior NHS regulators at an upcoming meeting and it was agreed that this document would be shared with the Committee.
(viii) UHL was not aware that the errors in their accounts would have any impact on the £450 million grant from the Government and the UHL Acute and Maternity reconfiguration plans.
(a) That the events and background which led to the UHL’s Trust Board decision not to agree the 2019/20 annual accounts as ‘true and fair’ be noted with concern;
(b) That the actions being taken to address the issues regarding the UHL annual accounts be noted and that UHL be requested to provide future updates to the Committee regarding those actions.