Group accounting manual firms up expectations in the run-up to year-end

It’s the time of year that guidance is issued thick and fast as we run up to the year-end. This year, the Department of Health and Social Care’s Christmas present of the updated Group accounting manual was late and arrived in time for Hogmanay instead, writes Debbie Paterson.

There are seven FAQs – the usual update on discounts and the injury cost recovery rate, as well as some tidying up of terminology and reflecting the updates to the Treasury’s Financial reporting manual (FReM). The more substantial changes are:

• An update to the public dividend capital (PDC) dividend policy that removes terminology relating to grant accounting that is no longer relevant. It also adds instruction on what should happen when a provider demises or is involved in a merger or acquisition

• Guidance on how transfers of property from NHS Property Services to NHS providers should be accounted for
• An initial indication of the accounting treatment for the element of the employers’ pension contribution that is being paid for by NHS England. The FAQ makes it clear that NHS bodies will be required to account for the full employer contribution of 20.68%, with an offsetting entry to reflect the funding for the part of the contribution being paid by NHS England. Further guidance on how this will work in practice, including how the amounts being paid by NHS England will be calculated, will be provided before the year-end.

The NHS foundation trust Annual reporting manual 2019/20 has also been published. There are very few amendments this year, so they were not subject to consultation. Most of the changes reflect changes to other guidance:

• The UK corporate governance code means changes to the disclosure of key issues and risks in the performance report and disclosure of policies on diversity and inclusion in the staff report
• UK auditing standards have required changes to the wording used in relation to ‘going concern’
• Guidance issued by the Tax Centre of Excellence in relation to highly paid off-payroll workers
• The new name of the NHS oversight framework has required changes to references to framework disclosures
• To reflect the FReM, disclosures around information to auditors has now been moved to the statement of accounting officer’s responsibility.

Further changes – not related to other guidance – have been made. These help foundation trusts to explain the single total figure of remuneration table; require a link to be
included to the gender pay gap report; and require disclosure on the FT’s compliance with guidance on managing conflicts of interest in the NHS.

The NHS Business Services Authority has also issued its Greenbury guidance. There are few changes – the deadline for submissions for information is 28 February; there is now a reference to the General Data Protection Regulation (GDPR); there has been a change to the method used to calculate cash equivalent transfer values (CETVs) to remove the adjustment for guaranteed minimum pension; and a change in the inflation rate to 2.4% (3.0% last year).

The December pensions newsletter makes it clear that the NHS Business Services Authority will not be able to provide revised calculations once final pay figures are known.

Finally, the Agreement of balances guidance has been issued for 2019/20. It has been revised to make it easier to read and to ensure that it is internally consistent. It is worth noting that the word ‘variance’ has been replaced with ‘mismatch’ to better reflect differences highlighted by the agreement of balances exercise.

The guidance has been substantially amended to reflect the changes made to NHS England’s structure – notably, paragraph 7.1 and Appendices 1 and 3 of the NHS England appendices. Other changes reflect the revised approach to the Provider Sustainability Fund, Financial Recovery Fund and the marginal rate emergency tariff.

Debbie Paterson is HFMA policy and technical manager