HSE Audit and Risk Committee meeting minutes 1 November 2024

Members Present

Yvonne Traynor (Chair), Pat Kirwan, Éimear Fisher and John Moody

Apologies

Michelle O’Sullivan and Sharon Keogh

HSE Executive Attendance

Stephen Mulvany (Chief Financial Officer), Mairead Dolan (Asst Chief Financial Officer), Joseph Duggan (Chief Internal Auditor), Joe Ryan (ND Public Involvement, Culture and Risk Management/Chief Risk Officer), Kate Killen White (REO Dublin Midlands), Dara Purcell (Corporate Secretary), Patricia Perry (Office of the Board)

Joined the Meeting

Kevin Cleary (AND Compliance Unit)(Item 3.5), David Langton (Asst ND Central Compliance Function)(Item 4), Dr Colm Henry (Chief Clinical Officer)(Item 5), Patrick Lynch (ND Planning & Performance)(Item 7), Brian O’Connell (Interim ND Capital & Estates)(Item 7)

Minutes reflect the order in which items were considered and are numbered in accordance with the original agenda.  All performance/activity data used in this document refers to the latest information available at the time.

The Chairperson held a private session to consider the agenda, papers and the approach to conducting the meeting.

1.1 Brief of Board Meeting – 23 October 2024

The Chair provided the Committee with an update of discussions held at the HSE Board Meeting of 23 October 2024.

2.1 Conflicts of Interest

No conflicts of interest were declared.

2.2 Minutes

The Committee approved the minutes of 04 October 2024.

2.3 Action Log and Follow Up Items

The Chair advised that she had reviewed the ARC Action Log with the Board Office and all actions were being progressed as per the Update Report.

3.1 YTD Expenditure and projection to Year-end

The CFO provided a briefing to the Committee on the cash position as of 31 October 2024 and outlook to year-end. He advised that the 2-year financial agreement announced in the Governments June 2024 Summer Economic Statement [between HSE, Department of Health (DoH), and Department of Public Department of Public Expenditure, NDP Delivery and Reform] applies to DoH funded services only and is expressed in vote accounting terms (cash) rather than accrual accounting (income and expenditure – I&E). The Committee noted that the 2-year agreement of €1,702m + €47m = €1,749 was sought and received i.e. to mitigate €47m / c.40% of the potential €120m overrun, and which has now been granted by way of a 2024 Supplementary Estimate.

As regards Department of Children, Equality, Disability, Integration & Youth (DCEDIY) funded disability services the view as of 30 September was that a cash overrun of at least €151m was likely and DCEDIY have sought and received a €161m 2024 Supplementary Estimate.

The CFO outlined to the Committee the cash forecast, noting that it is updated on an ongoing basis. The current cash utilisation rates indicate a potential additional €56m in cash requirements to year-end, which is beyond what was indicated at the end of September, most of which is related to higher forecasts in relation to additional cash requests likely to be received from voluntary providers, including voluntary acute hospitals.

The Committee noted the need to see a real push, particularly in the six health regions, to get monthly costs, particularly non-pay costs, down to a level of spend by December 2024 that is consistent with the average monthly cost that the 2024 spend limit supports. However any tightening of controls within health regions will need to be pursued in parallel with extensive cash / working capital management measures to reduce cash utilised to 31 December 2024.

The Committee discussed the recommendations by the CFO of the immediate actions that need to be pursued in addition to ongoing efforts, noting the engagement with Section 38 voluntary providers via the Regional Executive Officers; ensuring that cash limits are adhered to by year-end, and pursuing all available working capital / cash management options available.

3.2 Health Budget Oversight Group (HBOG)

The Committee noted that there has been no meeting of the Health Budget Oversight Group since 23 July 2024 and were advised that a meeting will be held before the end of the year.

3.3 Update on financial element of Draft National Service Plan 2025 and Letters of Determination

The Committee were advised that the final Letters of Determination (LoD) have not been received from the DoH or the DCEDIY, but that they are expected. The CFO provided an update to the Committee in relation to the financial element of the National Service Plan (NSP).

3.4 Update on issues highlighted in the C&AG audit Cert (including high earners)

The Asst CFO referred to the C&AG’s certification of the HSE’s Annual Financial Statement (AFS) 2023, previously presented to the Committee at the July 2024 meeting and provided an update as to the current status of each of the issues highlighted by the C&AG, which were noted by the Committee.

The Committee discussed the update on High Earners, noting that the issue has been raised by the C&AG in the past three years, the controls that are being applied, their concern regarding possible Working Time Directive issues, and the recruitment challenges. The Asst CFO advised the Committee of the changes made to the rota which related to the highest earner in 2023, called out by the C&AG, and outlined the current view of High Earners 2024 to date, noting that the high earner in 2023 was no longer on the list of the top 10. The Committee noted that an update on high earners was provided to the PAC in October 2024.

It was agreed that a further update in relation to High Earners be brought back to the Committee and that Mike Corbett Assistant National Director, Acute Operations would attend.

3.5 Agencies Oversight Agreements – Service Arrangements

Kevin Cleary, AND Compliance Unit joined the meeting

The AND Compliance Unit presented to the Committee an update in relation to Agencies Oversight Agreements – Service Arrangements (SA), which are a key control in terms of the funding released to Agencies funded pursuant to Section 38 and Section 39 of the Health Act, 2004, which legally underpin the provision of services by Agencies on behalf of the HSE (Section 38), or the provision of services similar or ancillary to a service that the HSE may provide (Section 39).

He advised that the HSE currently funds in excess of 1,800 Agencies and in 2023 these Agencies received circa €6.8 billion. Of these Agencies, 669 are funded through a SA which accounts for 99% of the funding released in this manner.

As previously outlined by the AND Compliance Unit at the Committee meeting in April 2024 with regard to changes to the SA documentation for 2024, he advised that a further review of the SA documentation is currently taking place for use in 2025. The Committee noted that the review is focusing on matters that are raised through the Dialogue Forum Working Group in relation to specific Clauses in the SA; streamlining the SA documentation; reflecting the Health Regions and in particular the Integrated Healthcare Areas in the SA documentation; and matters that have been identified by managers at corporate or operational level across the HSE that require updating of the SA.

The AND Compliance Unit outlined to the Committee that in accordance with the Accountability Framework, the REOs, IHA Managers and some National offices are responsible to ensure that the necessary documentation is in place to underpin the release of funding to Agencies for the provision of health and personal social services, and outlined the process to ensure that SAs and Grant Aid Agreements are in place in respect of all funding for which they have specific responsibility.

The Committee discussed the ongoing issue of the increasing reluctance of some Agencies to sign-up to a SA, noting that the year-on-year percentage of completion at year’s end continues at sub-optimum levels, and is an ongoing concern, particularly in relation to some of the higher-funded Agencies. The Committee noted the reports of the 10 highest-funded SAs that remain unsigned at this stage in 2024 in each Health Region.

The Committee noted the various matters that prevent some agencies from signing SAs, and highlighted the terms and conditions that underpin how the HSE engages with these Agencies which are set out in the standard SAs, and are based on the principles of contract law and have been developed over the years primarily by the HSE’s solicitors.

The Committee stressed that it was unacceptable for Agencies to decline to sign the SA, which needs to be urgently addressed, and discussed incentives and measures for Agencies to sign SAs, and queried the combined value of the deficits being held by the agencies.

The Committee noted the ongoing focus in Health Regions where SAs remain unsigned, which is the subject of an ongoing focus at performance meetings, and welcomed the work each year by service managers in terms of attempting to get all SAs completed, the work of the Dialogue Forum, and the Contract Management Support Units.

AND Compliance Unit left the meeting.

David Langton, AND Central Compliance Function joined the meeting

4.1 Q3 2024 Corporate Risk Register (CRR)

The Chief Risk Officer (CRO) presented to the Committee the Q3 2024 Corporate Risk Register (CRR) Report. The Committee noted the 10 Open risks and 7 Watched risks on the Register, of which 3 Open risks were rated High, and 7 Open risks rated Medium. The Committee noted the CRR Metric Report covering both Open and Watched Risks, and that these metrics will continue to be reviewed in alignment with the 2024 Board Strategic Scorecard and other relevant reports.

The Committee held a discussion relating to risks R004 Health Care Acquired Infections and Anti-microbial Resistance and R005 Financial Management. In relation to R004, the Committee discussed the contributory causes relating to gaps in compliance to Infection Prevention and Control (IPC) guidance, and it was agreed that the CRO would liaise with the ND Planning & Performance and ND Access & Integration.

The Committee discussed the due dates for some key actions including those with a red status against residual risks and if those actions that are listed for closure by end of year reach the target, and if not an update should be provided in the next quarterly review. The Committee asked for clarity on what further action or support is required.

The CRO advised the Committee that consideration of the ownership of each risk by Board Committee, particularly in relation to risks currently assigned to the former Board Committees, Safety and Quality Committee and the People and Culture Committee is required. The Chair agreed to discuss with the Board Chair and will report back to the Committee.

4.2 Risk Appetite Statement (RAS)

The CRO referred to previous discussions at the October 2024 Committee meeting in relation to the Risk Appetite Statement (RAS) and thanked the Committee members for the further feedback received after the meeting. He advised that the former Committee Chair considered the feedback with the AND Enterprise Risk Management and proposed that a comprehensive review of the RAS be undertaken in 2025. Subject to SLT and Committee engagement, the RAS would be brought to the Board for approval in Q1 2025, to which the Committee agreed.

4.3 Compliance Obligations Register and associated procedure

The AND CCF provided the Committee with an update on the Compliance Obligations Register (COR) for the HSE, which addresses one of the 47 recommendations arising from the KPMG Report on Compliance Activities 2022. The Committee were presented with the HSE COR – Q3 2024 and associated Compliance Obligations Register Review and Update Procedure.

The Committee noted that the draft COR had been shared with the SLT members and discussed the response rate of 43%, and how improvements to this rate could be made going forward. The Committee noted that the draft COR contained approximately 350 external obligations and 800 internal obligations. During the consultation process 66 new internal obligations and 57 external obligations were added and 47 obsolete internal obligations were removed, with validation checks made on both the inclusion and removal of obligations. The Committee discussed the management and adherence to the considerable amount of obligations and the availability of adequate resources (staffing, budget, technology) to manage and adhere to these new requirements.

The AND CCF advised that the COR and associated update procedures were formally approved by the SLT on 15 October 2024, and outlined the plans for the inclusion on the HSE staff procedures and guidelines webpage. Engagement with the SLT in relation to the identification of the Principal Compliance Obligations for the organisation with the desired aim of enhanced monitoring and reporting of these key obligations will also take place. The Committee noted that a survey is in progress to identify key obligations that should be included on a Principal Compliance Obligations Register (PCOR), and an update on the PCOR will be provided to the Committee at a future meeting.

4.4 Maturity assessment of HSE compliance function

At the Committee meeting in September 2024, it was requested that an overview of all compliance related functions and activities, coupled with a maturity assessment of these functions be completed and presented to the Committee.

The AND CCF presented a paper, Maturity Assessment of HSE Compliance Functions, to the Committee which provided a detailed overview of the compliance functions identified and analysed, and outlined a high level overview of the key observations.

The Committee discussed the adequate resourcing of the CCF, which continues to be an identified risk at present, and were advised that the resourcing of the National Office of Protected Disclosures is being progressed to mitigate the risk, with one resource due to transition back to the CCF in November 2024.

The Committee noted that the completion of this discovery piece is a valuable step along the Compliance Project journey, and that a more joined up approach to reporting will enhance visibility, improve assurance and embed a greater compliance culture across the organisation.

AND Central Compliance Function left the meeting

Dr Colm Henry, Chief Clinical Officer joined the meeting

5.1 Optimising assurance through clinical audit; integration of healthcare audit with the National Centre for Clinical Audit and Regional Quality and Patient Safety

The Chief Clinical Officer (CCO) provided an update to the Committee in relation to the proposed Clinical Audit Model, approved by the CEO, which includes the reconfiguration of Healthcare Audit resources from Internal Audit to enhance the capacity to deliver clinical audit in an integrated and comprehensive manner at regional and national level.

The Committee noted that the re-assignment of the HCA team resources will support improved local governance for clinical audit in the regional health areas, and will provide for a coordinated, standardised, local clinical audit, support for local participation in National Clinical Audits, links to Quality Improvement (QI) within a robust regional Quality & Patient Safety (QPS) governance and will be aligned to the National team.

The CCO advised that clinical audit is a critical element of clinical governance and provides for both assurance and continuous improvement in the delivery of clinical care. The approach to clinical audit by the National Centre for Clinical Audit (NCCA) in the office of the CCO will include the types of audits undertaken by the HCA in Internal Audit. The Committee noted that the term healthcare audit and clinical audit are used interchangeably to describe the same activity.

The CCO advised that a suite of local audits will be agreed based on statutory obligations risks and clinical priorities. The new enhanced clinical audit function will cover areas already covered by the HCA function but address areas of clinical practice as well as process of healthcare.

He advised that the benefits of the model now being implemented, will be a coordinated, standardised, local clinical audit programme, with support for local participation in National Clinical Audits, links to QI within a robust regional QPS governance structures and aligned to the NCCA and QI teams.

It was noted that there is agreement that the HCA team will complete their current work programme to year-end under the oversight of the Internal Audit function. The Chief Internal Auditor (CIA) advised that a meeting with unions and relevant staff will take place in the following week with regard to the transition.

The Committee discussed the reporting by the CCO to the Committee on the results of Healthcare Audits and the Committee’s responsibility and ability to provide the appropriate oversight. It was agreed that the Chair would discuss this issue with the Board.

Chief Clinical Officer left the meeting

6.1 Internal Audit Monthly Report

The Chief Internal Auditor (CIA) provided the monthly report update to the Committee in relation to the Internal Audit Industrial Relations issue, Children’s Health Ireland (CHI) Audit and Audit Recommendations.

The CIA advised the Committee in relation to the Industrial Relations matter, that since the Committee’s meeting in October, a meeting with Fórsa and staff representatives took place, and the non co-operation notice was lifted. The decision to undertake national audits was agreed, and transitional arrangements relating to travel to the end of the year also agreed. The CIA advised the Committee that five audits from the IA Plan have been assigned under the transitional arrangements, and that he will assess progress at year-end with an expectation that the transitional agreement is completed by February 2025.

The Committee welcomed the outcome and the CIA thanked the Committee and former Chair Brendan Whelan for the input into this issue.

The CIA provided the Committee with an update in relation to the CHI Audit and the Review on the Implementation of Scoliosis and Spina Bifida Action Plans 2022 & 2023, which had been circulated to the Committee out of session. He advised that it had been issued to the principals, CHI; DoH, National Orthopaedic Hospital Cappagh and the HSE.

The CIA advised the Committee that the Internal Audit Q3 2024 Activity Report is due to be tabled at the December meeting. He highlighted that the KPI on the implementation of audit recommendations is 90%, but that for Q3 the KPI is at 28% compared to 36% at Q2. The Committee noted that it had raised previously the possibility of requesting management’s attendance at a Committee meeting to explain and respond in relation to the delay in the implementation of the audit recommendations.

The Committee agreed that the CIA would set out to the Chair some categories relating to overdue audit recommendations and a decision will be made of what categories to be included and what management to attend a future Committee meeting.

Patrick Lynch, National Director Planning & Performance and Brian O’Connell, Interim ND Capital & Estates joined the meeting

7.1 Capital Pan 2025

The ND Planning & Performance and Interim ND Capital & Estates provided an update to the Committee in relation to the first draft of the HSE’s Capital Plan 2025, noting as previously advised that the LoD had not been received.

The Committee were advised that the expectation is that the total Capital funding for 2025 will be €1,277.00m for infrastructure and equipment (this includes funding from DOH and DCEDIY), and if confirmed this will be above the €1,159.28m provided in 2024. In addition to this, €80.00m is expected to be provided from the HSE’s income account (proceeds from insurance claims, project contributions, sale of assets, etc), which were outlined to the Committee.

The ND Planning & Performance advised the Committee of all considerations in preparing for the Capital Plan, and that the first draft incorporates input from operational services, supported by strategic input at corporate level, and in consultation with the DoH and DCEDIY.

The Committee noted the total capital investment available for 2025, (including total funding from DOH, DCEIDY and the HSEs’ income account) is expected to be €1,357.00m, and following the allocation of funding to meet all contractual commitments, an outline of priority projects was noted.

The Committee welcomed the update and noted that once the LoD is received, the next draft of the Capital Plan 2025 will come before the Committee at a Special Meeting for consideration and endorsement to the Board.

7.2 Quarterly Report on delegated authority for property transactions under market value

The Interim ND Capital & Estates provided a summary report on transactions approved between €2m & €10m and low value/nominal CAT 3a transactions for the period of 01 July – 3 September 2024, which was noted by the Committee.

The Committee requested that where an asset is transferred that the value of the asset is included in future reports for the Committee.

7.2 Building Contracts and Properties

The ND P&P and Interim ND Capital & Estates presented the following proposed contracts to the Committee, who considered with close scrutiny the detail, and agreed to recommend to the Board for approval.

The Interim ND Capital & Estates referred to a paper brought to the Committee in May 2024 in relation to the periodic update on final account for completed construction projects where Contract Awards were approved by the HSE Board. He advised of an error with reference to a figure presented in the paper relating to a contract relating to Heather House Community Nursing Unit, Co Cork stating that the figure presented reported the final total project cost including VAT rather than the total value excluding VAT, which was noted by the Committee.

Committee members discussed the possibility of appointing a member to the Committee with expertise in construction and estate management, and the Chair agreed to discuss with the Board Chair.

There was no further business.

The Chair thanked the Committee and SLT members. The meeting ended at 1pm.

Terms of Reference: Audit and Risk Committee