Comment / Get in training for accounts success

25 October 2013 David Bacon

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Writing this the day after England qualified for next year’s football World Cup finals, I am struck by the similarities of the types of tasks facing England manager Roy Hodgson and NHS directors of finance over the next few months. In both cases, planning will be essential to ensuring the right result next year.

Both should be planning now for a good performance for the main event next year (World Cup finals 12 June to 13 July; annual accounts production 31 March to end of May/early June). Both will want to ensure they have the best work environment for the team (hotel/office), that the facilities meet the necessary standards (gyms, training grounds, IT systems), and that the best squad is available (who will be in England’s World Cup squad? Has the finance team got enough of the right people in the right roles?). Warm-up events will be key to preparation and refining tactics (England have three international friendlies; the NHS has agreement of balance exercises at months seven and nine).

As well as planning for the known factors, there are unknown (new) factors to be grappled with. While Mr Hodgson will have to wait until 6 December for the World Cup draw before he can finalise research on his opponents, finance directors across the NHS already know that, after years of delay and deferment, the requirements to consolidate charitable funds under IAS27 come into force in 2013/14.

But have all directors completed the local work to assess the need to consolidate? There is an assessment against the IAS 27 requirements for consolidation and a materiality consideration to be made. Have they reviewed the internal processes needed to ensure the relevant charitable funds information, at an auditable standard, is available for consolidation into the draft accounts by late April? Have arrangements been made to produce a consolidated set of accounts, with appropriate disclosures, as well as the NHS body’s summarisation schedules for the regulator, excluding the impact of the NHS consolidated charities?

There is also a wider issue for NHS bodies associated with funds that are not going to be consolidated. While NHS charities will only be consolidated by the local NHS body where the IAS 27 tests are met, the Office for National Statistics has determined that all NHS charities are central government bodies and so have to be consolidated at a national level into Department of Health accounts. The Department will need to use local NHS bodies to gather the information they need from charitable funds managed by independent trustees for the national consolidation requirement.

Another new factor is the organisational make-up across the NHS. While trusts and foundation trusts are well established, there are new kids on the block. NHS England (including local area teams), the NHS Trust Development Authority, clinical commissioning groups and commissioning support units are all in their first full year of operational activity and hopefully all planning for their first full year-end.

But planning in isolation is not all that is needed. Those who have been through the year-end process before know that activities such as the agreement of balances work well when there is joint working across individual health economies. So have finance directors established the working relationships with their new neighbours/partners? Are CCGs and CSUs clear about the division of responsibilities between them during the accounts preparation and audit process? Have new organisations worked through the year-end timetable with NHS Shared Business Services to clarify their respective responsibilities?

The end of the financial year (31 March 2014) may seem a long way off, but there is plenty of planning that finance directors and their teams can be getting on with to ensure they deliver during April, May and early June. Once they have steered their departments through a successful campaign, they can sit back and, hopefully, enjoy the results of Mr Hodgson’s planning.


David Bacon is chairman of the HFMA Accounting and Standards Committee