Feature / The Third Way

Nigel Davies sets out how NHS commissioners can get involved in influencing the form and content of charity reports and accounts

The provision of services and the undertaking of activities traditionally performed by the NHS by ‘third sector’ organisations, charities and other not-for-profit bodies, has become mainstream thinking as part of a  mixed economy of providers.

The Department of Health’s consultation, Strategic review of Department of Health funding of third sector organisations, closed in March. And in response the Department has developed the third sector investment programme to recruit strategic partners to act as advocates for the third sector.

It will also fund projects aimed at driving innovation, excellence and service development in the health and social care field. This initiative is one of many placing an emphasis on public bodies, including NHS commissioners, buying in services from or placing contracts with ‘third sector’ providers.

In assessing charities as potential partners or as service providers, NHS commissioners can request particular information as part of a tender process. The charity’s latest report and accounts offer an overview of what the charity does, what it has achieved, what it is planning to do and funds raised and spent. The accounts also present a snapshot of the financial sustainability of the charity with which an NHS commissioner might do business.

While the Treasury is now developing the international financial reporting standards (IFRS) compliant Financial reporting manual, which will influence NHS financial accounting and reporting, the Charity Commission and the Office of the Scottish Charity Regulator are planning a further update to the charities statement of recommended practice (SORP) on accounting and reporting by charities. The SORP sets the reporting and accounting framework for all UK charities, except registered social landlords and higher and further education institutions.

This updating involves asking all key stakeholders what they would like to see changed in charity reporting and accounting. To this end the Charity Commission and HFMA are co-hosting a seminar in central London to invite NHS commissioners to influence and shape this debate.

The areas for discussion are charity annual reports and accounts and will look at what commissioners want, what they currently get, and how things might be changed. In particular:

• What works well for you at the moment?
• What information currently required is of little help and could be removed?
• What information could usefully be disclosed?
• What needs amending in the SORP?
• What matters to you most in terms of the contents of the reports and accounts?
• Should the main focus of reporting look to the past (stewardship) or the future?
• Is the SORP a good thing or would you be better off with no SORP at all?

Detailed knowledge of the charities SORP is not needed. But it will be necessary to have a familiarity with the commissioning process and the information you require from potential bidders, including bidders from the third sector. Charity Commission staff will facilitate the discussion and the outcome will be reported back to the SORP committee, which advises on how the SORP might be changed.

The SORP is approved by the Accounting Standards Board (ASB) and the ASB view the defining class of stakeholder as funders and financial supporters. That means any NHS commissioner funding a charity for diagnostic, advisory, advocacy, care or other work is a primary stakeholder whose needs should be addressed by charity reports and accounts. Your views as commissioners count.

Nigel Davies is deputy head of accounting policy at the Charity Commission