Feature / Introduction to...annual accounts

As the 2011/12 financial year-ends, NHS bodies will be gearing up for the production of their annual report and accounts. These accounts are statutory and are the principal means by which the NHS accounts for its use of public funds, to taxpayers and to service users.

Since 2009, NHS accounts must be prepared to comply with international financial reporting standards (IFRS), though the government has a say in how these are interpreted by public sector bodies. The Treasury has produced a Financial reporting manual on this.

The Department of Health also produces a Manual for accounts based on the Treasury’s manual (similar manuals are produced by the administrations in Wales, Northern Ireland and Scotland), which strategic health authorities, NHS trusts and primary care trusts must follow. Foundation trusts use Monitor’s Annual reporting manual.

The format and timing of the annual accounts is set out in the Department and Monitor manuals. The format varies slightly according to the type of NHS body, but in general includes a foreword to the accounts; four primary statements (comprehensive income or operating costs, financial position, changes in taxpayers’ equity and cash flows); notes to the accounts; and statements and certificates. The latter include statements of responsibilities and internal control and the auditor’s report.

Once prepared the accounts are audited and, if necessary, amended. The board must adopt the accounts and sign the certificates before the auditor signs off the accounts.

In addition, NHS trusts, SHAs and PCTs must submit financial monitoring and accounts forms to the Department, which are used to prepare summarised accounts for each type of organisation and the Department’s resource account. Foundations prepare consolidation schedules for Monitor to produce summary FT accounts. Both are used in the preparation of whole of government accounts.

The annual report and accounts must be published as one document and presented at a public meeting. NHS bodies can produce a report and summary financial statements, but these are not a substitute for the full annual report and accounts. The annual report is largely a narrative document, giving an account of the body’s performance and activities over the financial year.

The 2011/12 accounts are due at the end of May and early June.