Technical / Technical review

The Department of Health issued three FAQs at the end of March to make minor changes to the Group accounting manual. These changes relate to:

• Calculation of the real increase in cash equivalent transfer values (CETV) and the treatment of severance payments, golden hellos and payments for loss of office when calculating salary

• Disclosure of the expected timing of cash payments relating to provisions

• Accounting for reversals of impairments

It also issued guidance on the 2016/17 summarisation forms and agreement of balances for the final quarter of the year. The outcome of the Q3 exercise was positive, but deferred income was an issue. NHS bodies are reminded to follow existing guidance on deferred income. As Healthcare Finance went to press, guidance on accounting for the sustainability and transformation fund at the year end was still outstanding.

NHS organisations are entering into a range of joint working arrangements, from the relatively straightforward wholly owned subsidiary to the more complex vanguard schemes. But new working arrangements mean accounting practices must be reviewed to ensure organisations remain compliant. A draft briefing from the HFMA on accounting for joint working arrangements looks at the relevant accounting standards, VAT, legality and governance. It outlines the key considerations to examine during the planning process. 
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The HFMA has also published a briefing on the changes to off-payroll rules for public sector employers, due to take effect on 6 April. Also known as IR35 rules, they apply where payment is made via an intermediary, such as a personal service company. Meanwhile, HMRC launched its online Employment Status Service to determine whether a worker should be classified as employed or self-employed for tax purposes.

NHS bodies must open up public procurement, be transparent about expenditure and share expenditure data, under updated Department of Health guidance. Key changes include: a requirement to supply monthly PO data to support the national purchase price benchmarking and index tool; an extension of routine submissions of data beyond orthopaedics where registers exist; and a requirement to publish award notices for contracts over £25,000 while removing the default to higher threshold determined by standing orders.

The Department of Health has confirmed £1.2bn was transferred from its capital budget to its resource budget in 2016/17. In a memorandum on its supplementary estimate to the Commons Health Committee, it said the £1.2bn would be used to mitigate running cost pressures in the provider sector. The committee said this was the third year running there has been a capital to revenue transfer – £640m in 2014/15, £950m in 2015/16.

Two new HFMA briefings highlight how resources are allocated to the Department of Health and down to clinical commissioning groups. Part of a new How it works series, one guide starts with the overall budget-setting process as part of the spending review, and examines how this is passed on to NHS England and how spending limits work. The other follows the allocation process down to local commissioners, covering the needs-weighted allocation formula and issues such as the use of surpluses through the drawdown process.