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

International Financial Reporting Standard (IFRS) 16 Leases

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

Current form and submission issues

Please refer to the ‘additional documents’ section of NHS Improvement portals for known template issues on the monthly PFR form. Contact the Sector Reporting team with any queries on in-year reporting forms.


Latest financial reporting updates

MHCLG-led consultation on local audit system leadership – 5 August 2021

In 2020 MHCLG sponsored the Redmond Review into local government accounts and audit. One of the recommendations from that review was to improve system leadership in local audit, as at present a number of different organisations are involved. Separately, BEIS is working on establishing the Audit Reporting and Governance Authority (ARGA), as a replacement for the Financial Reporting Council (FRC). MHCLG is proposing an additional function be given to ARGA as the established system leader for local audit. We and DHSC have worked with MHCLG and we are proposing that this system leadership role should also include English health bodies (NHS trusts, NHS foundation trusts and CCGs, and in future ICBs.)

Further information on the proposals for system leadership is set out in section 5 of the consultation and it closes on 22 September 2021. Questions 13 and 14 specifically relate to health bodies and we encourage NHS bodies to give their views on these in particular, as well as into other relevant questions.

Arrangements for laying annual reports and accounts after the summer recess – 5 August 2021

The earliest date available for laying is Monday 6 September, when the House returns from the summer recess. If a trust would like its annual report and accounts to be laid during that first week (w/c 6 September), please send your pdf for checking to the Parliamentary Clerk by Friday 27 August at the latest, with the final document sent to the Clerk’s office by Friday 3 September at the latest. This will continue to be via ‘e-laying’; hard copies will not be required. If a very large number of trusts seek this first week there will be a constraint on how many can be laid on each day. Please remember that the final annual report and accounts documents must contain a final audit certificate: see our email of 4 June for more information.

At this stage we are not setting a deadline for completing the laying process. After this initial week, trusts can continue to send their documents to the Parliamentary Clerk for checking and laying. In September we will seek updates from the relevant audit firms on their progress with their value for money reporting before setting deadlines for laying and uploading laid reports to NHS Improvement portals.

NHS foundation trusts are reminded that there are formal processes and formats for these documents: our timetable letter for 2020/21 provides more information and includes links to the relevant DHSC guidance.

Annual reports laid before Parliament must include the audit certificate – please refer to guidance below.

Impact of auditor value for money arrangements conclusions on audit certificates – 4 June 2021 (updated 27 August 2021)

NHS foundation trusts: laying of annual reports and accounts

From 2020/21, NHS local auditors will issue the ‘auditor’s annual report’, replacing the previous annual audit letter (not previously applicable to all NHS foundation trusts), which will include the auditor’s commentary on use of resources (value for money) arrangements. For NHS bodies this would usually be issued at the same time as the audit report containing the audit opinion on the accounts. For 2020/21, as part of the response to the coronavirus pandemic, the NAO has said that auditors at NHS trusts and NHS foundation trusts can issue the auditor’s annual report at a later point than the audit opinion on accounts, by 20 September.

When the auditor issues the audit report on the accounts (containing the audit opinion, and included within the annual report and accounts), this also includes a certificate that the auditor has completed their work. Where the auditor’s work on VFM arrangements is not complete at the time of issuing the opinion on the financial statements, or in some cases where the auditor is still drafting their auditor’s annual report, the audit certificate will not be issued at the same time as the audit opinion. This means that the audit report and certificate is not final, so the annual report and accounts (in which it is included) is also not final. Paragraph 1.10 of the FT ARM 2020/21 lists the required components of an FT’s annual report and accounts, and this incorporates the auditors’ report including certificate.

Therefore an NHS foundation trust cannot lay its annual report and accounts before Parliament until the auditor has issued the audit certificate. It is the Trust’s responsibility to ensure that its annual report and accounts document is complete. Paragraph 1.20 of the FT ARM explains that laying before Parliament must precede local publication.

For NHS foundation trusts able to lay their document before the summer Parliamentary recess, e-laying arrangements (i.e. no printed copies) are still in force. Arrangements for laying after the summer have not yet been communicated. We hope to set out the deadlines and arrangements for laying for FTs next week.

Guidance for NHS trusts

While NHS trusts do not lay their annual report and accounts before Parliament, NHS trusts are advised that their annual report and accounts document is not complete until the audit report (opinion) is accompanied by the audit certificate, as explained for NHS foundation trusts above.

Inclusion of the audit certificate in annual reports

Where later completion of the auditor’s use of resources work means the audit certificate is finalised at a later date than the true and fair audit opinion, we understand that the audit certificate will be issued as a separate document at that later date and both should be included within the annual report. The annual report will include the audit report (with audit opinion) at the original date, and the audit certificate signed at the later date. Please do not attempt to merge the two.

Audited accounts and annual report submission checklist – 4 June 2021

We have prepared our annual year end checklist to aid providers with preparations for submitting the audited annual report and accounts. This checklist contains no new information but is available to download if useful.

DHSC Group Accounting Manual (GAM) 2021/22 – 13 May 2021

The DHSC GAM for 2021/22 has been published and can be accessed at:

Special payments – 22 April 2021

Organisations are reminded that proposed special payments that are either (i) above £95,000 and/or (ii) considered potentially novel, contentious or could cause repercussions elsewhere in the public sector, should be submitted for HM Treasury approval. Please contact with any queries over this process.

DHSC GAM 2020/21 additional guidance – 22 April 2021

The Department of Health and Social Care (DHSC) has updated the additional guidance to accompany the GAM 2020/21. Further updates were made on 19 April:

  • FAQ6 – clarification to PDC dividend policy that year end donated personal protective equipment inventory balances are excluded from relevant net assets
  • FAQ10 – improved clarity on off-payroll disclosure requirements (no change to FT ARM for NHS foundation trusts)
  • FAQ14 – confirmation of covid-19 related accounting treatments, as previously communicated in NHS England and NHS Improvement’s year end guidance document.

Organisations are reminded of a key update made on 1 April:

  • FAQ9 – important new guidance on going concern

NHS Pension Scheme disclosure for 2020/21 accounts – 7 April 2021

The NHS Pension Scheme 2020/21 accounts disclosure note provided by NHS BSA is attached below. If your trust is using the optional accounts templates provided by NHS Improvement, changes from the version included in those templates are highlighted in red text. Please note:

  • The wording reflects that the actuarial valuation is currently not finalised. We will advise if this changes before local accounts sign off.
  • The final paragraph refers to a report to Government anticipated during April 2021. The disclosure uses wording assuming this has happened, to avoid needing to issue an updated version of the disclosure in April.
  • 2020-21 NHS Pension Account Disclosure v1.1

Updated NHS foundation trust annual reporting manual (FT ARM) 2020/21 – 31 March 2021

The FT ARM 2020/21 has been reissued with updated guidance on going concern, and further changes to the off-payroll disclosure format.

Year end accounting guidance for 2020/21 items – updated 26 March 2021

A third version of guidance on accounting for 2020/21 items has been issued. The main update is adding the process for communicating details of testing equipment. The trusts to which this applies received a listing from Provider Accounts on 26 March.

Trust Accounts Consolidation (TAC) completion instructions month 12 – 23 March 2021

The TAC Completion Instructions accompany the TAC schedules included within the PFR forms for month 12 2020/21 issued on 23 March.

2020/21 optional accounts templates, example accounting policies and illustrative standalone M12 TAC forms – 9 March 2021

Optional linked accounts templates (group and single entity), example NHS provider accounting policies and illustrative standalone TAC forms with accompanying draft completion instructions are now available to download from provider portals.

NHS foundation trusts: FT Annual Reporting Manual (FT ARM) 2020/21 – 10 February 2021

The  FT ARM 2020/21 has now been published.

To facilitate copying, a Word document of the model Annual Governance Statement (AGS) and other certificates/statements needed for the annual report and accounts is also available below.

NHS trusts: 2020/21 annual governance statement and certificates for year end accounts – 10 February 2021

The following document provides guidance to NHS trusts preparing annual governance statements (AGS) for their annual reports. It also contains the required formats for other certificates/statements for year end accounts.  A Word document is also provided to facilitate copying. This does not apply to NHS foundation trusts who should follow the formats prescribed by the FT ARM.

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.

2020/21 year end timetable letter – 15 January 2021 – updated 17 June 2021

A letter providing details of the 2020/21 year end reporting timetable for provider and commissioner 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.

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.