Audit and risk committee terms of reference

Authority

The audit and risk committee is a formal committee of the board and is authorised to provide assurance to the board and carry out delegated functions on its behalf.

The committee is empowered to initiate investigations and other reviews as it considers necessary to provide necessary assurance.

These terms of reference have been approved by the board and are subject to annual review.

Purpose

The purpose of the committee is to review the effectiveness of the trust’s corporate governance and internalcontrol systems, and report to the board on its findings.

Details of its responsibilities are set out below:

• external and internal audit arrangements,
• the annual report and accounts,
• financial and IT systems and processes,
• robustness and reliability of financial and other information,
• risk management and other controls,
• counter-fraud prevention and detection.

Membership

The members of the committee will be appointed by the board, as follows;

• Three non-executive directors (including the chair of the quality and safety committee), one of whom shall be nominated as chair.

Quorum

The quorum will be two members

Attendees

The following will also regularly attend the committee;

• Chief financial officer
• Financial controller
• Company secretary
• External auditor
• Internal auditor
• Local counter-fraud specialist

Others may attend as agreed by the committee chair as necessary.

The chief executive will be invited to attend the committee on an annual basis in order to provide assurance in relation to his responsibilities as the Accounting Officer. This should be the same meeting during which the review of the annual accounts and report takes place.

The committee shall meet at least once a year separately with internal audit and external audit with no trust officers present.

Frequency of meetings

The committee will meet at least four times per year and members are expected to attend at least 75% of meetings in any year.

Duties

The committee can only carry out functions authorised by the board, as referenced in these terms of reference.

Delegated functions

The committee will carry out the following on behalf of the board:

• Review waivers to the standing financial instructions (including single tenders), to ensure they are reasonable and do not represent a significant weakening of internal control.
• Review write offs to ensure they represent value for money and do not represent a significant weakening of internal control.
• Review and approve the internal audit plan.
• Carry out ‘deep dives’ as appropriate.

Assurance functions

The committee will carry out the following functions to provide assurance to the board:

Financial reporting

• Through meetings with management and the external auditors, ensure the annual report (including the annual governance statement) and financial statements of the trust:
  • Are complete.
  • Consistent with the information known to the committee and the external auditors.
  • Reflect current accounting policies and principles.
  • Comply with statutory and legal requirements and accounting standards.
• Review the extent to which financial, performance and other information for decision making is effective, robust, comprehensive, timely and up to date.

Internal control and risk management

• Assess the effectiveness of the trust’s internal control systems.
• Including financial, operational and risk management controls.
• Review the effectiveness of the work of the quality and safety committee in ensuring an independent review of the annual quality report (quality account).
• Review on a regular basis the trust’s risk management framework and the management controls and procedures in place to manage risk.
• Undertake an annual assessment of risk management before submission to the trust board, in the context of the annual report and financial statements.
• Review on a regular basis the board assurance framework and interrogate specific risks as requested by the board or as identified by the committee.
• Oversee the operation of the trust’s declaration of interests, gifts and hospitality policy.
• Oversee the local security management service.

Internal auditors and counter fraud

• Ensure that the trust has appropriate and effective internal audit arrangements that meet the requirements of NHS internal audit standards and are suitably independent.
• Monitor the implementation of the audit plan, reviewing internal audit recommendations, management responses and monitor the implementation of actions.
• Evaluate the performance of the internal auditors and value for money.
• Monitor and review the findings of the local counter-fraud specialist function including an annual report of counter-fraud work undertaken.

External auditors

• Ensure that the trust has appropriate and effective external audit arrangements that meet the requirements of NHS external audit standards and are suitably independent.
• Make recommendations to the membership council in relation to the appointment, reappointment and removal of the external auditor.
• Oversee the tendering process for new external auditors.
• Approve the external audit plan.
• Review the performance of the external auditors and evaluate their performance and value or money.
• Meet formally with the external auditors, review the annual management letter and management’s responses and report matters of significance to the board.

Other duties as agreed by the board

• Exceptional items explicitly requested by the board that fall outside the terms of reference.

Reporting and review

Following each meeting of the committee, an update will be provided to the board, in a standard format, showing progress made and highlighting any issues for escalation or dissemination.

Minutes of meetings will be available for any board member on request.

The committee will carry out an annual review of its effectiveness against these terms of reference and this willbe reported to the board, at the first available meeting after 1 September of each year.

Sub-committees

There are no sub-committees of the audit and risk committee.

Meeting administration

The executive lead for the committee will be the chief financial officer. The secretary for the committee will be the company secretary.

The secretary’s role will be to:

• Agree the agenda with the chair.
• Ensure the agenda and papers are despatched five clear days before the meeting, in line with the board’s standing orders.
• Maintain a forward plan of items for the committee.
• Be responsible for the production and quality of the minutes (even if taken by a separate minute taker).
• Ensure minutes are issued to the chair for review within one week of the meeting, and to committee members within two weeks of the meeting.
• Ensure actions are captured, notified to relevant staff and followed up.

Any other administrative arrangements not listed here will be as shown in the standing orders of the board of directors.

Date approved 2022