NHS providers should refer to this page for the latest updates on financial accounting and reporting. We also email updates to finance teams.
- 2020/21 year end timetable letter
- DHSC Group Accounting Manual (GAM) 2020/21
- FT Annual Reporting Manual (ARM) 2019/20
- DHSC agreement of balances
- PFMS – Trust Portal Submission Guide
International Financial Reporting Standard (IFRS) 16 Leases
2020/21 M9 PFR form known issues – updated 22 January 2021
|Information||Month 9 PFR guidance||Month 9 PFR guidance (monitoring) is now available in the additional documents section of provider portals. This document does not yet provide guidance for the two new forms (gap & risk analysis, and independent sector spend). Guidance relating to these sheets will follow by 8 January.|
|Mandatory fixer issued – v1.20.09.1||n/a||A mandatory fixer was issued on 12 January and is available on NHS Improvement portals. Changes primarily relate to the activation of DHSC financing data validations in TAC schedules, updates to capital financing and limits data on monitoring sheets 18 and 16, and the addition of two new sheets as referenced above. Full details of the changes can be found in the accompanying email from Sector Reporting on 12 January. All providers must apply this fixer prior to submission on 26 January.|
|No fixer expected – validation fail will be accepted||Tab ’00. Self Cert’, cell K105 (count of validation errors)||Two hidden validation checks have been incorrectly activated at month 9. If triggered, these validations cannot be cleared. There is currently no intention to issue a fix for this. If triggered, these validation fails will be considered approved.|
|No fixer expected – validation fail will be accepted||Tab ’42. Data Validation’, cell I336 (validation 29)||Due to a formula error, validation check 29 will incorrectly fail. At present there is no intention to issue a fixer for this. Files will be accepted with this validation fail.|
|No fixer expected – validation fail will be accepted||Tab ’40. Variances’, cell J23 (maincode 40ACTREAN, subcode FLA0601)||The re-analysis cell relating to NHSE block income is locked in error. Providers unable to enter their figure in this cell will not be able to bring the re-analysis column to nil creating a fail on monitoring validation 84 (on tab 42). In these circumstances files will be accepted with this validation fail.|
|No fixer expected – validation fail will be accepted||Tab ’10c. Independent Sector spend’, cellI14 (subcode EXP1000)||Formula is incorrectly double counting M7 onwards in the YTD total. At present there is no intention to issue a fixer for this. Please ensure that the values in table 2 are completed correctly as these feed the reimbursement calculations. This may result in failing validation check 29, which as detailed above will be accepted as an approved validation fail. We will amend the calculation nationally to support the reimbursement validation process.|
Latest financial reporting updates
Accounting for additional employer pension contributions 2020/21 – 22 January 2021
The employer contribution rate for the NHS Pension Scheme increased from 14.38% to 20.68% from 2019/20, but NHS providers have continued to pay over at the old rate with the additional 6.3% being settled centrally on their behalf by NHS England. As was the case for 2019/20, in 2020/21, the full 20.38% needs to be reflected in local provider accounts, with notional income from NHS England being recognised for the 6.3% element.
For the purposes of accounts NHS England will again compute the full year 6.3% figure for each provider, extrapolating from data provided by NHS BSA at month 10. We will communicate this figure to providers and populate a validation in month 12 TAC schedules. Based on previous analysis, the impact of using an estimate in this way will be highly immaterial. In the rare circumstances that the estimate leads to a more significant difference for any particular provider, there is a process where entities can ask for the national figures to be updated. More details are available in the guidance document below.
A letter providing details of the 2020/21 year end reporting timetable for provider and commisioner bodies has been published. The letter below includes the detailed annex for NHS providers.
In assessing whether the ‘extended’ year end timetable is appropriate for your Trust, please discuss with your external auditors.
Update on FT Annual Reporting Manual (FT ARM) 2020/21 – 15 January 2021
We are preparing the FT ARM 2020/21 for issue. In the meantime, a list of the main updates to the document since last year was shared with foundation trusts:
- The relaxations for annual reports introduced late in 2019/20 in light of the pandemic (such as omitting the performance analysis) are available again for 2020/21
- Quality reports are not required to be included in annual reports, and there is no requirement to obtain quality reports assurance.
- New mandatory disclosure in the performance report to provide a summary of how equality of service delivery to different groups has been promoted. (FT ARM then gives examples of what might be included in a disclosure)
- New mandatory disclosure in the staff report to provide information on diversity and inclusion policies, initiatives and longer term ambitions. Many trusts are doing this already.
- Better guidance to explain the coverage of risk in the performance report versus the accountability report disclosures. Not a new requirement.
DHSC Group Accounting Manual 2020/21 Q3 updates – 6 January 2021
The Department of Health and Social Care (DHSC) has published a Q3 ‘Additional guidance’ document to accompany the 2020/21 Group Accounting Manual (GAM)
Injury cost recovery, updated recoverability percentage – 11 November 2020
The Compensation Recovery Unit (CRU) advises a percentage probability of entities not receiving ICR income. The CRU advises the percentage for 2020/21 is 22.43%. For 2019/20 the percentage was 21.79%. Updated guidance has been published.
DHSC Group Accounting Manual 2020/21 – 1 May 2020
The DHSC GAM for 2020/21 has now been published and is available here.
NHS pension scheme disclosure 2019/20 – 27 March 2020
NHS Business Services Authority has provided the NHS pension scheme disclosure note for 2019/20. If you are using the optional accounts templates provided by us, changes from the version included in those templates are highlighted in red. This was circulated to providers by email on 27 March.
IFRS 17 Insurance Contracts – 8 August 2019
IFRS 17 on insurance contracts (replacing IFRS 4) is expected to apply to the public sector from 2022. An insurance contract is defined as “a contract under which one party (the issuer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specific uncertain future event (the insured event) adversely affects the policyholder”.
IFRS 17 brings a number of changes to accounting compared to IFRS 4; a useful summary is available here. But the first step for HM Treasury and DHSC is to identify what contracts might be held that would fall under IFRS 17. It’s possible that there may be items currently considered as provisions or contingent liabilities which are in reality insurance contracts. There are a number of important parts of the definition (this list is not complete):
- The compensation from the issuer to the policyholder could be in money or in-kind: for example fixing a broken machine
- The future event is uncertain – which means at least one of the probability of the event occurring, when it will occur, or how much would be paid if it occurs.
- The future event is specific to the insured party (e.g. flood damage to a building owned or used by the policyholder is specific to that party).
- The risk around the future event existed for the policyholder before the agreement was made, and it is not financial risk such as a future change in an index.
- Warranties provided in connection with the sale of goods and services are specifically excluded by the standard as they fall under IFRS 15. So for example we would see readmissions in the NHS as affecting IFRS 15 measurement, and not considered the provision of insurance. Employer pensions and insurance contracts where the entity is the policyholder are also excluded from IFRS 17.
We request that all NHS providers think about whether they are likely to have contracts which are likely to fall under IFRS 17, with the provider as the issuer (rather than the policyholder). If you do have, or have matters that you’re unsure about and would like to discuss further, please get in touch with us.
The TAC Completion Instructions in 2018/19 contained additional annexes explaining how the disclosure requirements in IFRS 7 (upon adoption of IFRS 9) and IFRS 15 had been addressed in the TAC schedules, with additional guidance on considerations for local accounts. These are now (from December 2019) retained separately as a future reference for providers.
- Addressing disclosure requirements of IFRS 7 under IFRS 9 – This document was prepared to accompany TAC schedules in 2018/19
- Addressing disclosure requirements of IFRS 15 – This document was prepared to accompany TAC schedules in 2018/19
Central review of NHS standard contract for IFRS 15 – 29 January 2019
The Department of Health and Social Care has led on a project to provide a review of the main features of the NHS standard contract and how IFRS 15 thinking should be applied. Chapter 5 will be the most useful part of this, explaining key elements of the NHS standard contract. Please note that chapter 7 on disclosure requirements is very focused on the requirements of the standard, rather than considering materiality for the NHS. The disclosures in our TAC schedules are designed to meet the most relevant disclosure requirements of IFRS 15, as explained in the TAC Completion Instructions.
NHS England centralised inventory procurement – 26 February 2018
NHS England operates a national centralised system for purchasing high-cost medical devices and implants used in specialised services. These items are paid for by NHS England but physically held by providers until they are used. This stock is seen as being owned by NHS England and so is reflected in its Statement of Financial Position. NHS providers are reminded to ensure that they exclude this consignment stock from their inventory counts and it should not be included within providers’ balance sheets.