Comment / Accounting standards paramount, says HFMA

Last month the Commons Public Accounts Committee published a letter from a foundation trust finance director, who expressed concerns that finance staff are under pressure to play down financial problems in 2015/16 forecasts and 2016/17 plans. NHS Improvement has urged providers to implement a number of measures, such as local capital to revenue transfers, to improve the sector’s overall financial position.

HFMA policy and technical director Paul Briddock said: ‘Things are undoubtedly difficult financially in the NHS and we are in unprecedented times, particularly for providers. It is important therefore that all parts of the NHS work effectively together in these tough times to minimise deficits and to try to balance NHS finances.

‘However, directors of finance and chief financial officers need to work within their professional boundaries and guidelines, and use accounting standards appropriately when making financial judgements and estimates. In reporting the financial position, finance directors and their boards need to be completely transparent about any non-recurrent measures and work closely with auditors in the preparation of accounts.’

The letter was sent to the PAC to inform its current inquiry into the sustainability and financial performance of acute trusts. It said the finance director had concerns that trusts’
short-term actions to reduce headcount could compromise patient safety.

It added that potential 2016/17 cost savings could be exaggerated and finance directors could be tempted to make ‘questionable adjustments’ to their 2015/16 accounts.

At an inquiry hearing in January, NHS Improvement chief executive designate Jim Mackey (above) insisted the accounting adjustments being asked of trusts and changes in accounting treatment were ‘entirely legitimate’.