News / IFRS prompts polyclinic rethink

Guidance that the bulk of NHS local improvement finance trust (Lift) schemes should be on-balance sheet under international financial reporting standards could affect plans to build the new wave of polyclinics, claim audit sources.

The Audit Commission advised auditors last month that most Lifts would be on-balance sheet. One audit expert told Healthcare Finance this was not unexpected, but since some primary care trusts were relying on polyclinics being off-balance sheet, it could lead them to rethink their plans. The Darzi report outlined proposals for more than 150 GP-led health centres.

The expert predicted that auditors would rigorously challenge any PCT that proposed off-balance sheet accounting for their Lift scheme, whether it involved a polyclinic or not. Some PCTs would attempt to restructure schemes to make them more like commercial leases than service concessions.

There are two types of Lift scheme: land retained and leaseplus agreements. There is consensus that the former model, which is used for large schemes, is on-balance sheet.

The commission concluded that PCTs controlled the services to be provided through leaseplus contracts. And because the Department of Health’s standard leaseplus contract gives the NHS the right to buy the asset at the end of the contract, the PCTs also controlled any significant residual interest in the asset.

As a result, most leaseplus schemes were service concessions, bringing assets and liabilities onto PCTs’ balance sheets.