Financial accounting and reporting updates

NHS providers should refer to this page for the latest updates on financial accounting and reporting. We also email updates to finance teams.

Follow @Ian_NHSI on Twitter for updates and discussion.

Quick links for 2019/20

International Financial Reporting Standard (IFRS) 16 Leases

Our IFRS 16 guidance now has its own webpage. The latest updates will listed on this page.

2020/21 M04 PFR form known issues – updated 11 August 2020

Status Reference Comment
Added 11 Aug: No intention to issue fixer unless further form errors are discovered. Validation error will be accepted Cell P12 of tab 10b. CCG MH exp analysis The validation formula in this cell will fail if the Retrospective Top-Up validated (INC1550) reported in Tab 08. Op inc (source) is negative. Validation errors resulting from this will be accepted.
No intention to issue fixer unless further form errors are discovered Cells AK117 to AK124 on tab 13. SoCI Other The cells in this range have been included as input cells in error, thus duplicating the input in column AH. Providers may choose to leave cells AK117 to AK124 blank.
No intention to issue fixer unless further form errors are discovered. Validation error will be accepted Cell AP396 of tab 15. Capital Analysis Schemes The validation formula in this cell is incorrectly linked to the YTD value in H396 when it should be linked to the forecast outturn. Validation errors resulting from this will be accepted.
Clarification to M4 Guidance document re doctors pay awards M4 Guidance Para 1.14 bullet 7 The guidance provided in both the e mail (5 May) and in the M4 guidance document states that providers should not accrue for the backdated element of pay award in M4. As a clarification to the guidance, this should only apply to that part of the backdated pay award that is in excess of the inflationary assumptions inherent in the planning model and being applied by providers in their pay costs.

Latest financial reporting updates

Updated year-end accounts timetable letter – 23 March 2020, updated 11 August 2020

A revised year-end timetable letter for 2019/20 was issued on 23 March 2020. This document was updated on 5 June 2020 to add dates for foundation trusts to submit annual reports and accounts for laying before Parliament, and add a deadline for 21 September for all providers to submit the final pdf document to us. There are no other changes. It was further updated on 11 August 2020 to confirm the ‘e-laying’ arrangements for NHS foundation trusts in August and September.

DHSC Group Accounting Manual 2020/21 – 1 May 2020

The DHSC GAM for 2020/21 has now been published and is available here.

Quality accounts deadline – updated 1 May 2020

Revisions to quality account deadlines for 2019/20 are now in force. While primary legislation continues to require providers of NHS services to prepare a quality account for each financial year, the amended regulations mean there is no fixed deadline by which providers must publish their 2019/20 quality account. We recommend for NHS providers that a revised deadline of 15 December 2020 would be appropriate, in light of pressures caused by COVID-19. Draft quality accounts should be provided to stakeholders (for ‘document assurance’ as required by the quality accounts regulations) in good time to allow scrutiny and comment. For finalising quality accounts by 15 December, a date of 15 October would be reasonable for this; each trust should agree this with their relevant stakeholders. This update has also been added to the Quality accounts requirements 2019/20 page.

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.

TAC Completion Instructions: month 12 2019/20 – 24 March 2020

The month 12 Provider Finance Return (PFR) form containing the Trust Accounts Consolidation (TAC) schedules is now available on trust portals. This document gives guidance on completing the TAC schedules.

Provider accounts templates were distributed by email on 6 March and are also available in ‘Additional documents’ on trust portals. The template will need to be re-linked to the final PFR form, following the guidance in the accounts documents.

Accounting for additional employer pension contributions 2019/20 – 28 January 2020

The employer contribution rate for the NHS Pension Scheme increased from 14.38% to 20.68% in 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. 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.

To facilitate year end arrangements and avoid a national data collection, for the purposes of accounts NHS England will 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 them into month 12 TAC schedules. Based on analysis of 2018/19 data, the impact of using an estimate in this way will be highly immaterial. We have discussed and agreed this approach with the audit community. 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. We have updated the guidance to include how to treat the additional contribution in the agreement of balances exercise.

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.

New accounting standards in 2018/19 – April 2019 (re-packaged December 2019)

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.

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.