Physical Verification of Fixed Assets - NHS Wales

1 Attachment 11i Physical Verification of Fixed Assets FINAL internal AUDIT REPORT 2015/16 Hywel Dda University Health Board Private and Confidential NHS Wales Shared Services Partnership Audit and Assurance Services Assurance Rating REASONABLE Assurance Previous Rating: REASONABLE Assurance Physical Verification of Fixed Assets Report Contents Hywel Dda University Health Board NHS Wales Audit & Assurance Services Page | 2 CONTENTS Page 1. Introduction and Background 3 2. Scope and Objectives 4 3. Associated Risks 4 Opinion and key findings 4. Overall Assurance Opinion 5 5. Assurance Summary 5 6. Summary of Audit Findings 7 Conclusion and Recommendations 7. Summary of Recommendations 13 Review reference: HDUHB 1515 Report status: Final Fieldwork commencement: 1st February 2016 Fieldwork completion: 11th April 2016 Draft report issued: 20th April 2016 Management response received: 4th May 2016 Final report issued: 5th May 2016 Auditor: Ceri-Ann Corcoran, Arthur Burke.

2 Executive sign off Director of Finance, Planning & Performance Distribution Karen Miles; Eldeg Rosser; Peter Evans Committee Audit & Risk Assurance Committee ACKNOWLEDGEMENT NHS Wales Audit and Assurance Services would like to acknowledge the time and co-operation given by management and staff during the course of this review. Please note: This audit report has been prepared for internal use only. Audit and Assurance Services reports are prepared, in accordance with the Service Strategy and Terms of Reference, approved by the Audit & Risk Assurance Committee. Audit reports are prepared by the staff of the NHS Wales Shared Services Partnership Audit and Assurance Services, and addressed to Independent Members or officers including those designated as Accountable Officer. They are prepared for the sole use of the Hywel Dda University Health Board and no responsibility is taken by the Audit and Assurance Services internal Auditors to any director or officer in their individual capacity, or to any third party.

3 Appendix A Appendix B Appendix C Management Action Plan Complete Sample List of Assets Verified Assurance opinion and action plan risk rating Physical Verification of Fixed Assets internal Audit Report Hywel Dda University Health Board NHS Wales Audit & Assurance Services Page | 3 1. Introduction and Background internal Audit conducted a Physical Verification of Fixed Assets across the three counties of Hywel Dda University Health Board (HDUHB). internal Audit has previously discussed the coverage of Fixed Assets with Wales Audit Office (WAO), and it was agreed that internal Audit would only physically verify Fixed Assets , with WAO reviewing all other aspects. In addition to this, the Health Board has a three year cyclical Verification programme in place, as agreed by the Audit & Risk Assurance Committee. All Pembrokeshire county sites were covered during the financial year 2015/16.

4 To help contextualise the Health Board s holdings; as at 31 December 2015 the net book value of the Health Board s tangible Assets stood at approximately million. The table below shows how this is made up: The importance of notifying the Finance department, upon the disposal or transfer of an asset , has been reiterated to Health Board staff on a quarterly basis, via global e-mails. The latest reminder via global e-mail was sent out on 4 February 2016. Discussions with the Service Modernisation Team highlighted that whilst significant steps have been taken to improve system compliance, the team remains reliant on departmental/ward managers keeping them informed of asset movements. The overall objective is to ensure that the Fixed Assets of the Health Board exist and are located in the locations stated on the asset list. Category of asset Net Book Valuation 31/12/15 ( m) % Land, buildings, dwellings & Assets under construction Plant & machinery IM&T Furniture & fittings Transport Total 100 Physical Verification of Fixed Assets internal Audit Report Hywel Dda University Health Board NHS Wales Audit & Assurance Services Page | 4 2.

5 Scope and Objectives 120 Fixed Assets were randomly selected from the asset Register for Physical Verification , the sample covering the four main hospitals of the Health Board. Full details can be seen in Appendix B of this report, with only the exceptions being noted in the main body of the report. 3. Associated Risks Failure to accurately record and identify Assets could lead to capital Assets recorded in the financial accounts to be mis-stated. Physical Verification of Fixed Assets internal Audit Report Hywel Dda University Health Board NHS Wales Audit & Assurance Services Page | 5 OPINION AND KEY FINDINGS 4. Overall Assurance Opinion We are required to provide an opinion as to the adequacy and effectiveness of the system of internal control under review. The opinion is based on the work performed as set out in the scope and objectives within this report.

6 An overall assurance rating is provided describing the effectiveness of the system of internal control in place to manage the identified risks associated with the objectives covered in this review. The level of assurance given as to the effectiveness of the system of internal control in place to manage the risks associated with the Fixed Assets system is Reasonable Assurance. The overall level of assurance that can be assigned to a review is dependent on the severity of the findings as applied against the specific review objectives and should therefore be considered in that context. 5. Assurance Summary The summary of assurance given against the individual areas tested is outlined in the table below: RATING INDICATOR DEFINITION Reasonable Assurance The Board can take reasonable assurance that arrangements to secure governance, risk management and internal control, within those areas under review, are suitably designed and applied effectively.

7 Some matters require management attention in control design or compliance with low to moderate impact on residual risk exposure until resolved. ASSURANCE SUMMARY Audit Scope 1 Follow up of Previous Audit Report (HDUHB1422) 2 BGH Physical Verification 3 GGH Physical Verification Physical Verification of Fixed Assets internal Audit Report Hywel Dda University Health Board NHS Wales Audit & Assurance Services Page | 6 * The above ratings are not necessarily given equal weighting when generating the audit opinion. Design of Systems/Controls (D) No findings were identified that are classified as a weakness in the system / control design for the management of Fixed Assets . These would be identified in the Management Action Plan as (D). Operation of System/Controls (O) All the findings from the review are classified as a weakness in the operation of the designed system / control for the management of Fixed Assets .

8 These are identified in the Management Action Plan as (O). 4 PPH Physical Verification 5 WGH Physical Verification Physical Verification of Fixed Assets internal Audit Report Hywel Dda University Health Board NHS Wales Audit & Assurance Services Page | 7 6. Summary of Audit Findings The key findings by the individual locations tested are reported in the section below: Follow up The following areas of good practice were noted: The asset Register has been significantly updated to show all departments/wards and progress has been made in updating asset details such as serial number/make/model. One County is reviewed annually on a cyclical basis by Finance, this has helped to improve the accuracy of the asset Register. Quarterly global email messages are sent out to remind departments/wards of their responsibilities to inform Finance of any disposals made.

9 Stronger communications have been developed with EBME and IT. They have their own registers and Finance have access to these. It is not considered necessary to include the Finance register numbers in the EBME database. The anomalies in last year s report have been investigated and the asset Register amended accordingly. Physical Verification A total of 40 Assets of the 120 sampled, could not be physically verified at the location listed. It should be noted that 7 of the 40 exceptions (as highlighted in the following tables) were either verified at different locations to that recorded in the asset Register, or have subsequently been confirmed by the department as still being in use. Details of each exception are listed in the tables below: Physical Verification of Fixed Assets internal Audit Report Hywel Dda University Health Board NHS Wales Audit & Assurance Services Page | 8 Location: Bronglais General Hospital Department asset No.

10 asset Description Net Book Value (NBV) Findings Management Response HOTEL SERVICES 3065 Franking Machine This franking machine has been disposed of, a new one has been purchased. Finance were not informed that this asset had been disposed of. asset has now been removed from the register. ENDOSCOPY 5384 Colonoscope (Variable) Dept has had a new colonoscope - this one went back to Fuji. As above. RADIOLOGY 5795 Ultrasound Scanner Model 'Aplio 80 XV' is not present, but 'Aplio 80 XG' is. The Dept. Coordinator Radiology stated that they disposed of one scanner in 2013 and bought a new one. So it is assumed that the XV model was the one disposed of and it was replaced by the XG. As above. BIOCHEMISTRY 7623 Osmometer The dept has a new osmometer (serial no. 05111224A) it was swapped for this one.