1. health and fitness

NHS Board Meeting
23 June 2010 Paper 5
NHS Board meeting
Wednesday, 23 June 2010
Subject:
Statutory Annual Accounts 2009/10
Purpose:
Approval of statutory annual accounts
Recommendation:
To adopt the statutory annual accounts and
approve the chairman, chief executive and
director of finance to sign relevant forms on
their behalf.
1.
Background
1.1
Attached are the statutory annual accounts for 2009/10 which have been audited by
KPMG LLP. The Directors’ Report includes key performance indicators within
section 3 of the Operating and Financial Review.
2.
Operating cost statement
2.1
Net operating costs rose by around £23 million from £656.7 million in 2008/09 to
£679.6 million in 2009/10. The general allocation uplift for 2009/10 was £17 million
therefore this funded most of this spending increase, however in addition there was
an increase of £3.7 million in general dental services which are directly funded by
the Scottish Government Health Department (SGHD). Certain earmarked funding
also increased in 2009/10 with an increase of over £700,000 in funding to tackle
alcohol misuse and a new allocation of £500,000 for specialist children’s services.
2.2
Note 4 to the accounts shows the £532 million of hospital and community health
spend by provider grouping. Treatment in board area increased by around £12
million from last year. Resource transfer to local authorities increased by £1 million
to £23 million while support finance increased by £0.6 million from last year. This
reflects the fact that some £1.3 million of the funding given to Ayrshire & Arran
Health Board to address alcohol misuse is given to local authorities.
2.3
Expenditure on family health services increased by around £9 million from the
previous year. There was a £3 million increase in pharmaceutical services and
primary medical services costs increased by £1.8 million compared to 2008/09. The
cost increase for pharmaceutical services was limited because of a national
agreement on Category M drugs and the Pharmaceutical Pricing Regulatory
Scheme (PPRS) and as a result SGHD reduced the Board’s allocation by £6.7
million during 2008/09 for Category M savings and a further £1.6 million in 2009/10
Page 1 of 136
NHS Board Meeting
23 June 2010 Paper 5
for PPRS. General dental services expenditure has risen by £3.7 million which may
be due to free check ups.
3.
Balance sheet
3.1
Despite the completion of the £19 million Girvan Community Hospital, fixed assets
have reduced in value from £327 million at 31 March 2009 to £316.5 million at 31
March 2010. A revaluation of the whole estate at 31 March 2010 saw a significant
downward movement due to the current economic climate, mostly adjusted through
the revaluation reserve.
3.2
Payments due to primary care contractors for family health services and
prescriptions, which are paid around one month in arrears, result in a £17 million
creditor at the year end. Total creditors due within one year amount to £61 million,
which is about £6 million less than last year due to the Agenda for Change accrual
being much lower. Because no debtor is shown for SGHD funding to cover
payments due to primary care contractors etc there are negative net current
assets/liabilities shown on the balance sheet. In addition, creditors due after more
than one year include £27.5 million related to Private Finance Initiative (PFI)
hospitals.
3.3
Note 17 to the accounts shows provisions and there is an increase of over £1 million
related to injury benefits and the clinical negligence increase is over £8 million due
to a number of high value cases. The impact of the latter is largely offset through
recovery from Clinical Negligence and Other Risks Indemnity Scheme (CNORIS)
and there is a corresponding debtor of £14.4 million in Note 13 to the accounts.
3.4
Equal pay claims are shown as a contingent liability in Note 19 to the accounts as
any liability cannot be quantified.
4.
Signing of statements
4.1
The chief executive is required to sign the Directors’ Report, Statement of
Accountable Officer’s Responsibilities and Statement on Internal Control. The
director of finance and chairman would sign the Statement of Health Board
Members’ Responsibilities in respect of the accounts.
4.2
The signatures of the director of finance and chief executive are required on the
balance sheet and SFR 19.0 (patients’ private funds).
5.
Audit
5.1
KPMG LLP (our external auditor) has completed its audit of the annual accounts and
has reported to the Audit Committee that the accounts are true and fair and that they
will issue a “clean” audit certificate.
5.2
The audit fee for 2009/10 audit was £266,980. This is an increase of over 7% and
reflects additional audit work around implementation of International Financial
Reporting Standards (IFRS).
Page 2 of 136
NHS Board Meeting
23 June 2010 Paper 5
6.
Conclusion
6.1
The NHS Board has achieved all financial targets in 2009/10, whilst achieving
significant improvements in clinical areas such as waiting times. The Board is asked
to approve the signing of the statutory annual accounts for 2009/10.
Derek Lindsay, Executive Director of Finance
15 June 2010
Page 3 of 136
NHS Board Meeting
23 June 2010 Paper 5
Ayrshire and Arran Health Board
Annual Report and Accounts for the year to 31 March 2010
Page 4 of 136
NHS Board Meeting
23 June 2010 Paper 5
ANNUAL ACCOUNTS AND NOTES FOR YEAR ENDED 31 MARCH 2010
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The directors present their report and the audited financial statements for the year
ended 31 March 2010
1.
Naming Convention
Ayrshire and Arran NHS Board is the common name for Ayrshire and Arran
Health Board.
2.
Principal activities and review of the business and future developments
The information that fulfils the requirements of the business review, principal
activities and future developments can be found in the Operating and Financial
Review, which is incorporated in this report by reference.
3.
Date of Issue
Financial statements were approved and authorised for issue by the Health
Board on 23 June 2010
4.
International Financial Reporting Standards
These financial statements have been prepared, for the first time, under
International Financial Reporting Standards (IFRS) as adopted by the
European Union and as interpreted or adapted for the public sector context as
set out in Note 1 Accounting Policies. Financial Statements were previously
prepared under UK Generally Accepted Accounting Principles (UK GAAP).
The effect of the transition from UK GAAP to IFRS, with an effective date of 1
April 2008, is set out in Note 25 First Time Adoption of IFRS and Note 26
Restated Balance Sheet.
5.
Accounting convention
Annual Accounts and Notes have been prepared under the historical cost
convention modified by the revaluation of property, plant and equipment,
intangible assets, inventories, available-for-sale financial assets and financial
assets and liabilities at fair value through profit and loss. The accounts have
been prepared under a direction issued by Scottish Ministers, which is
reproduced as an appendix to these accounts
The statement of the accounting policies which have been adopted is shown at
Note 1.
6.
Appointment of auditors
The Public Finance and Accountability (Scotland) Act 2000 places personal
Page 5 of 136
NHS Board Meeting
23 June 2010 Paper 5
responsibility on the Auditor General for Scotland to decide who is to undertake
the audit of each health body in Scotland. For the financial years 2006/07 to
2010/11 the Auditor General appointed KPMG LLP to undertake the audit of
Ayrshire and Arran Health Board. The general duties of the auditors of health
bodies, including their statutory duties, are set out in the Code of Audit Practice
issued by Audit Scotland and approved by the Auditor General.
7.
Board membership
Under the terms of the Scottish Health Plan, the Health Board is a board of
governance whose membership will be conditioned by the functions of the
Health Board. Members of Health Boards are selected on the basis of their
position or the particular expertise which enables them to contribute to the
decision making process at a strategic level.
The Health Board has collective responsibility for the performance of the local
NHS system as a whole, and reflects the partnership approach, which is
essential to improving health and health care.
Professor W Stevely, Chairman
Mr J Callaghan, Non-Executive Director
Mr M Cheyne, Non- Executive Director
Mrs K Darwent, Non-Executive Director
Dr C Davidson, Director of Public Health
Mr J Dever, Non-Executive Director
Mr C Duncan, Non-Executive Director
Councillor D Filson, Non-Executive Director
Dr A Gunning, Director of Policy, Planning and Performance
Dr W Hatton, Chief Executive
Mr W S Hislop, Non-Executive Director
Councillor H Hunter, Non-Executive Director (w.e.f. 1 March 2010)
Mr D Lindsay, Director of Finance
Ms C Lisle, Director of Organisational and Human Resources Development
(until 19 April 2009)
Dr R Masterton, Medical Director
Dr H McCallum, Non-Executive Director
Mrs F McQueen, Director of Nursing
Mrs R Miller, Vice Chair
Ms E O’Connell, Non-Executive Director
Councillor D O’Neill, Non-Executive Director
Dr D Price, Non-Executive Director
Councillor R Reid, Non-Executive Director (until 28 February 2010)
Ms G Watson, Non-Executive Director
The board members’ responsibilities in relation to the accounts are set out in a
statement following this report
8.
Board Members’ and Senior Managers’ Interests
Details of any interests of board members, senior managers and other senior
staff in contracts or potential contractors with the Health Board as required by
IAS 24 are disclosed in note 29.
Page 6 of 136
NHS Board Meeting
23 June 2010 Paper 5
SUMMARY OF MEMBERS’ INTERESTS
JUNE 2010
NHS AYRSHIRE & ARRAN
Board Member
Declared Interest
Prof William
Stevely
(Chairman)
Mr John
Callaghan
(Non-Executive
Member)
Skills Development Scotland
Non-Executive Director
The Scottish Agricultural College
Non-Executive Director
The Open University
Member of Council
NHS Ayrshire & Arran
Lead Partnership Facilitator /
Chair of Staff Side
Member
Scottish Workforce & Governance
Committee
Health Professions Council
Member / Member of Employee
Relations Committee /
Convenor of Staff
Representatives / Member of
Scottish Forum
Registered Member
Scottish Partnership Forum
Member
Scottish Government
Non-Executive Director
Glasgow Caledonian University
Chair / Chair of Court / Member
of Court
Ayrshire Chamber of Commerce
and Industry
Chief Executive
Lloyds TSB Foundation
Vice Chair
Ayrshire Council on Alcohol
Chair / Member of Management
Board
Scottish Government
Chair of Health & Wellbeing
Portfolio Audit Committee /
Member of the Education &
Lifelong Learning Portfolio Audit
Committee
Glasgow Caledonian University
Rolling contract with NHS
Ayrshire Council on Alcohol
1 year rolling Service Level
Agreement with NHS
The Society of Chiropodists &
Podiatrists
Mr Martin Cheyne
(Non-Executive
Member)
Details
Page 7 of 136
NHS Board Meeting
23 June 2010 Paper 5
Mrs Kirsty
Darwent
(Non-Executive
Member)
Scottish Institute of Human
Relations
Course Co-ordinator for family
therapy project
The Family Consultation Centre
Owner of organisation
Service provided on own
premises
Breastfeeding Network
Breastfeeding trainer and
supporter
Worker within a local
Breastfeeding Support Group
Service Level Agreement with
NHS from 2008-2011
Midwifery Committee; Nursing &
Midwifery Committee
Member
Association of Family Therapy
Convenor of South and West
branch / Executive Member of
the AFT Scottish Affairs Task
Group
Scottish Institute of Human
Relations
Member of Family Therapy
Project (part of SIHR) and the
Scottish Institute of Human
Relations
Baby Milk Action
Member
Dr Carol Davidson
(Director of Public
Health)
British Medical Association
Mr John Dever
(Non-Executive
Member)
N/A
Mr Colin Duncan
(Non-Executive
Member)
Accounts Commission for
Scotland
Member
Member
Member
Ayr Choral Union
Vice-Chair
South Ayrshire Care and Repair
Convener
University of Aberdeen –
Business Committee of the
General Council
Cllr Drew Filson
(Non-Executive
Member)
Scottish National Party
Secretary, Ayr branch /
Secretary, South Ayrshire
Liaison Committee
East Ayrshire Council
Councillor
The Lochdoon (Public House)
Proprietor
Scottish National Party
Member
Page 8 of 136
NHS Board Meeting
23 June 2010 Paper 5
Dr Allan Gunning
(Executive
Director of Policy,
Planning &
Performance)
Dr Wai-yin Hatton
(Chief Executive)
Mr Stuart Hislop
(Chair – Area
Clinical Forum)
Cllr Hugh Hunter
(Non-Executive
Member)
Doon Valley Hill Walking Club
Chairman
Aspire 2gether
Director
British Swimming
Non-Executive Director
Ayrshire Sportsability (ASA)
Chair of Management
Committee
Ayrshire Chamber of Commerce
and Industry
Director on the Board
Kilmarnock College
Director on the Board
Chartered Institute of Personnel
and Development
Member of Psychology Faculty
Fischer’s Services
Ayrshire Sportsability
Cousin-in-law is Managing
Director
NHS Ayrshire and Arran is a
member of ASA Trust, hence
co-host of annual “Come and
Try” event
Health and Heritage
Management Consultancy/Alf
Hatton & Associates
My husband is the Director
Health and Heritage
Management consultancy could
bid for work within NHS
Ayrshire and Arran
Hislop Health Ltd
Director
NHS Ayrshire & Arran
Consultant - Oral &
Maxillofacial Surgeon
British Dental Association
Member
British Medical Association
Member
British Association of Oral &
Maxillofacial Surgery
Fellow
Royal Society of Medicine
Member
British Association of Head and
Neck Oncologists
South Ayrshire Council
Member
South Ayrshire Council
Election expenses as declared
to Returning Officer following
2007 Local Authority elections.
Elected Member
Page 9 of 136
NHS Board Meeting
23 June 2010 Paper 5
Mr Derek Lindsay
(Director of
Finance)
Ayrshire Medical Support Ltd
Lease of MRI Scanner until
2010 /
NHS A&A lease land to AMS
Hold shares in AMS on behalf
of NHS A&A Endowment
Trustees
Dr Robert
Masterton
(Executive
Medical Director)
Dr Huntly
McCallum
(Chair –
Community Health
Partnerships
Advisory
Committee)
Consultancy
Consultant
British Medical Association
Member
Ayrshire Medical Support Ltd
Stevenston Medical Practice
Lease of MRI scanner until
2010 /
NHS A&A lease land to AMS
Director and hold shares in
AMS on behalf of NHS A&A
Endowment Trustees
Principal and partner
Ayrshire Doctors on Call
GP
Ayrshire & Arran Community
Health Partnership
Clinical Lead
North Ayrshire Medical Society
Chair
Scottish General Practitioners
Committee
Member
Area Medical Committee
Member
GP Sub-Committee
Member
Local Medical Committee
Member
British Medical Association
Member
Royal College of General
Practitioners
Member
Medical and Dental Defence
Union of Scotland
Member
West Kilbride Golf Club
Member & Junior Support
Convenor
Seamill Ski Club
Seamill Leisure Club
Treasurer
Member
Adrossan Academicals Rugby
Club
Medical Services
Largs Sailing Club
3TFM
Member
‘Docslot’ presenter
Page 10 of 136
NHS Board Meeting
23 June 2010 Paper 5
Mrs Fiona
McQueen
(Executive Nurse
Director)
N/A
Mrs Rita Miller
(Vice Chair)
Scottish Labour Party – Ayr,
Carrick & Cumnock
Member / Constituency ViceChair / Member, Scottish Policy
Forum
Co-op Party member – Ayrshire
Branch
Member / Ayrshire Delegate to
Party Council / Member of
Scottish Council
Shelter
Supporter
Oxfam
Supporter
National Trust for Scotland
Member
T&G Unite
Member
South Ayrshire Women’s Aid
Director / Chair of Management
Committee
Keith J Tuck, Solicitors
Solicitor
North Ayrshire Council
Elected Member (Leader)
Trinity Church Trust
Trustee
Labour Party
Member
Co-op Party
Member
North Ayrshire Council
North Ayrshire Ventures Ltd /
North Ayrshire Ventures Trust
Ms Elaine
O’Connell
(Non-Executive
Member)
Cllr David O’Neill
(Non-Executive
Member)
Dr David Price
(Non-Executive
Member)
North Ayrshire Council
Paid by Irvine Labour Party for
North Ayrshire Council Election
in May 2007
David Price Consulting
Sole employee
North Ayrshire Council
Wife employed by Social
Services Dept.
Page 11 of 136
NHS Board Meeting
23 June 2010 Paper 5
Cllr Robin Reid
(Non-Executive
Member)
Ms Gillian Watson
(Non-Executive
Member)
R Reid & Co
Owner
South Ayrshire Council
Institute of Financial Accountants
Councillor
Fellow
Aberdeen & NE Scotland Family
History Society
Member
Scottish Conservative Party
Member
Giltech Ltd
Director
All Directors appointed by the Cabinet Secretary (shown in the remuneration report)
are also Trustees of the Ayrshire and Arran Endowments. The Register of Members’
Interests is maintained at Eglinton House, Ailsa Hospital, Ayr and is available for the
public to view on request.
9.
Pension liabilities
The accounting policy note for pensions is provided in Note 1 and disclosure of
the costs is shown within Note 26 and the remuneration report.
10.
Remuneration for non- audit work
No remuneration was paid to external auditors in respect of any non audit work
carried out on behalf of Ayrshire and Arran Health Board.
11.
Related party transactions
During the year, Ayrshire and Arran Health Board had transactions with other
NHS bodies which are shown in Note 4 to the Accounts
Dr McCallum, a non-executive director of Ayrshire and Arran Health Board, is a
general practitioner in an Ardrossan GP practice. Total amounts payable to
this practice during the year under the General Medical Services contract,
including quality outcome framework payments, were £586,766 of which
£36,908 is outstanding at the year end.
Ayrshire Medical Support Limited (AMS) is considered to be a related party as
defined by International Accounting Standards (IAS) 24 “related party
disclosures”. During the year ended 31 March 2010 the company sold MRI
imaging services and training facilities to Ayrshire and Arran Health Board with
a value of £532,115. The company also purchased services and facilities from
Ayrshire and Arran Health Board amounting to £20,000. At 31 March 2010
amounts due from AMS were £5,000 and £21,940 was due to AMS
Two executive directors of the Health Board are directors of AMS in their
capacity as endowment trustees, but neither they nor any party related to them
received or are due to receive any direct or indirect benefit or payments from
AMS in their capacity as directors of the company.
Mrs Kirsty Darwent is a worker within the local breastfeeding support group of
Page 12 of 136
NHS Board Meeting
23 June 2010 Paper 5
the Breastfeeding Network. During the year, the Breastfeeding Network
received income from Ayrshire and Arran Health Board of £166,320.
12.
Payment policy
Ayrshire and Arran Health Board is committed to supporting The Scottish
Government in helping businesses during the current economic situation by
paying bills more quickly. The intention is to achieve payment of all undisputed
invoices within 10 working days, across all public bodies.
The target has been communicated to all non-departmental public bodies, who
are working towards the accelerated payment target of 10 working days.
Prior to this, the Health Board did endeavour to comply with the principles of
The Better Payment Practice Code (http://www.payontime.co.uk/) by
processing suppliers’ invoices for payment without unnecessary delay and by
settling them in a timely manner.
In 2009/10 average credit taken was 15 days from date invoice received.
(2008/09 = 29 days from invoice date). In 2009/10 the Health Board paid 89%
by value and 89% by volume of non NHS suppliers within 30 days of the
invoice being received. Based on the date of invoices being received, 71% by
value and 70% by volume were paid within 10 days.
13.
Corporate governance
The Health Board meets regularly during the year to progress the business of
the Health Board. The following standing committees deal with more detailed
governance issues:
Clinical Governance Committee
The Clinical Governance Committee ensures that clinical governance
mechanisms are in place and effective throughout the local NHS system. The
committee met on seven occasions during 2009/10.
The membership of the Clinical Governance Committee comprises:Dr David Price (Chair)
Ms Elaine O’Connell
Mr Stuart Hislop (Chair, Area Clinical Forum)
Mrs Kirsty Darwent
Mr John Dever (until 1 October 2010)
Ms Gillian Watson (from 1 October 2010)
Councillor David O’Neill
Audit Committee
The committee met four times during 2009/10 to consider reports received from
internal audit (PricewaterhouseCoopers LLP) and external audit (KPMG LLP).
The committee monitors corporate governance, probity and issues around
internal control.
The membership of the Audit committee comprises:Mrs Kirsty Darwent (Chair)
Page 13 of 136
NHS Board Meeting
23 June 2010 Paper 5
Mr John Dever
Dr David Price
Councillor David O’Neill
Ms Elaine O’Connell
Staff Governance Committee
The committee (which meets at least quarterly) monitors compliance with staff
governance standards and a sub-committee is the Remuneration Committee.
The membership of the Staff Governance Committee comprises:Mr Colin Duncan (Chair)
Ms Elaine O’Connell (Vice Chair)
Mr John Callaghan
Mr Martin Cheyne
Councillor Drew Filson
Councillor Robin Reid (until February 2010)
Ms Gillian Watson (until August 2009)
Mr John Dever (from September 2009)
Health and Performance Governance Committee
The committee met seven times during 2009/10. The committee monitors
health and performance against the HEAT targets and is sighted on other
performance indicators which may not be formally reported through this
mechanism.
The membership of the Health and Performance Governance Committee
comprises:Mr Martin Cheyne (Chair)
Mrs Kirsty Darwent
Mr John Callaghan
Mr Colin Duncan
Councillor Drew Filson
Councillor Robin Reid
14.
Disclosure of information to auditors
The directors who held office at the date of approval of this directors’ report
confirm that, so far as they are each aware, there is no relevant audit
information of which the Health Board’s auditors are unaware; and each
director has taken all the steps that he/she ought reasonably to have taken as
a director to make himself/herself aware of any relevant audit information and
to establish that the Health Board’s auditors are aware of that information.
15.
Human resources
As an equal opportunities employer, the Health Board welcomes applications
for employment from disabled persons and actively seeks to provide an
environment where they and any employees who become disabled can
continue to contribute to the work of the Health Board.
The Health Board provides employees with information on matters of concern
to them as employees through a two monthly Team Brief and more regular
Page 14 of 136
NHS Board Meeting
23 June 2010 Paper 5
Stop Press updates and consults employees or their representatives through
the Area Partnership Forum so their views are taken into account in decisions
affecting their interests.
16.
Events after the end of the reporting period
There have been no important events affecting the Health Board since the year
end.
17.
Financial instruments
Information in respect of the financial risk management objectives and policies
of the Health Board and it’s exposure to price risk, credit risk, liquidity risk and
cash flow risk is disclosed in Note 27.
Page 15 of 136
NHS Board Meeting
23 June 2010 Paper 5
OPERATING AND FINANCIAL REVIEW
The operating and financial review has been prepared in accordance with the
government Financial Reporting Manual and complies with best practice.
1.
Principal Activities and Review of the Year
The Board was established in 1974 under the National Health Service
(Scotland) Act, 1974 and is responsible for commissioning healthcare services
for the residents of Ayrshire and Arran, a total population of 368,000.
Health Boards form a local health system, with single governing boards
responsible for improving the health of their local populations and delivering the
healthcare they require. The overall purpose of the unified NHS Board is to
ensure the efficient, effective and accountable governance of the local NHS
system and to provide strategic leadership and direction for the system as a
whole
The role of the unified NHS Board is to:
- improve and protect the health of the local people;
- improve health services for local people;
- focus clearly on health outcomes and people’s experience of
their local NHS system;
- promote integrated health and community planning by working
closely with other local organisations; and
- provide a single focus of accountability for the performance of
the local NHS system
The functions of the unified NHS Board comprise:
- strategy development
- resource allocations
- implementation of the Local Delivery Plan
- performance management
Proposals for new Community Health Partnership (CHP) committees were
approved by the Health Board meeting on 25 June 2008. The new structure
includes a CHP Committee, CHP Forum and CHP Officer Locality Group for
each of the three council areas. The Board meeting on 7 February 2010
received a progress report on each of the three CHPs.
Acute services
At the Board meeting on 4 October 2006 the Board approved plans to
reconfigure acute services and these were submitted to the Scottish Executive
Health Department to seek approval for the plans. The Minister for Health and
Community Care wrote on 15 December 2006 approving the plans and making
some specific requirements of NHS Ayrshire and Arran. The Minister also
made provision in the NHS Scotland capital plan for an additional £30 million
above the normal capital allocation to NHS Ayrshire and Arran.
On 6 June 2007, following the election of an SNP government at the May 2007
elections, the Cabinet Secretary for Health and Wellbeing announced her
reversal of the previous administration’s decisions regarding accident and
Page 16 of 136
NHS Board Meeting
23 June 2010 Paper 5
emergency services at Ayr Hospital. The Cabinet Secretary required NHS
Ayrshire and Arran to produce revised proposals that would enable A&E
services to continue at both Ayr and Crosshouse Hospitals. These proposals
were to be subject to independent scrutiny from a Panel.
Costed options were submitted to the Independent Scrutiny Panel in
September 2007 and at the Board meeting on 23 January 2008 the Board
considered reports from the Independent Scrutiny Panel as well as other
evidence. A recommendation was submitted to the Cabinet Secretary which
met the requirement to retain A&E services at both Ayr and Crosshouse
Hospitals and this was approved by the Cabinet Secretary on 27 February
2008.
This will require significant capital spend on the accident and
emergency departments at both Ayr and Crosshouse Hospitals and the
creation of combined assessment units at both sites. During 2008/09 an Initial
Agreement for this capital spend was submitted to Scottish Government Health
Department and has been approved. The Outline Business Case will be
submitted to the October 2010 Board meeting.
Mental Health
In January 2008 the Board considered and approved planned community
investments in mental health services. An additional £2.8 million was invested
in 2008/09 in mental health services. A “Mind Your Health” option appraisal
was undertaken in 2008 around the future location of acute mental health inpatient services and a consultation exercise was undertaken. The outcome
from
this
was
reported
to
the
NHS
Board
meeting
on
19 November 2008 with the preferred option being the move of most adult inpatient services to a new build facility at the Ayrshire Central Hospital site at a
capital cost of around £50 million. This has been approved by the Cabinet
Secretary and an Initial Agreement for the capital spend was submitted with the
Outline Business Case due to come to the August 2010 Board meeting.
Capital Schemes
As planned, capital expenditure totalling £36.148 million has been incurred in
the year. The following are the main capital spend areas (over £0.5 million)
during 2009/10.
£000
Girvan Community Hospital
11,723
Ayrshire Central Hospital – kitchen
2,447
Ayrshire Central Hospital – outpatients etc
2,931
North Ayrshire Community Hospital
2,000
Ailsa Hospital - former laundry
861
Patna Clinic
1,912
Theatre Sterile Supplies Unit
620
Sexual Health at Ayrshire Central Hospital
1,479
The Ayr Hospital - endoscopy unit
951
Breast screening expansion
500
Electro medical equipment
3,630
Information management and technology
1,491
Furniture and equipment
1,507
Estates and maintenance
5,350
Page 17 of 136
NHS Board Meeting
23 June 2010 Paper 5
Activity
Month 12 - Interyear Comparison - 2009/2010 - Cumulative
MARCH
2008/09
2009/10
Inpatient
4,194
3,549
(645)
(15.4%)
Assessment/Intermediate Treatment
Assessment/Intermediate Treatment
Assessment/Intermediate Treatment
Inpatient
Day Case
Inpatient and Day Case
28,316
8,361
36,677
28,985
8,137
37,122
669
(224)
445
2.4%
(2.7%)
1.2%
Medical Specialties
Medical Specialties
Medical Specialties
Inpatient
Day Case
Inpatient and Day Case
3,489
2,713
6,202
4,078
2,261
6,339
589
(452)
137
16.9%
(16.7%)
2.2%
Care of the Elderly
Inpatient
4,794
4,670
(124)
(2.6%)
Improving Balance of Care/LTCM
Improving Balance of Care/LTCM
Improving Balance of Care/LTCM
Inpatient
Day Case
Inpatient and Day Case
1,873
600
2,473
1,759
164
1,923
(114)
(436)
(550)
(6.1%)
(72.7%)
(22.2%)
Ambulatory Care
Ambulatory Care
Ambulatory Care
Inpatient
Day Case
Inpatient and Day Case
3,087
7,023
10,110
3,063
7,821
10,884
(24)
798
774
(0.8%)
11.4%
7.7%
Planned C are
Planned C are
Planned C are
Inpatient
Day Case
Inpatient and Day Case
12,292
11,791
24,083
12,982
11,835
24,817
690
44
734
5.6%
0.4%
3.0%
Children's, Women's & Sexual H ealth Services
Children's, Women's & Sexual H ealth Services
Children's, Women's & Sexual H ealth Services
Inpatient
Day Case
Inpatient and Day Case
11,615
4,682
16,297
12,025
4,467
16,492
410
(215)
195
3.5%
(4.6%)
1.2%
Emergency/Urgent Care
OPD New
105,946
108,478
2,532
2.4%
Total
Total
Inpatient
Day Case
69,660
35,170
71,111
34,685
1,451
(485)
2.1%
(1.4%)
Emergency/Urgent Care
Increase/(Decrease)
Counter Fraud Service
The National Counter Fraud Service has calculated an estimated and potential
level of fraud for calendar year 2009 in relation to Ayrshire and Arran patients
wrongly claiming exemption from dental charges, ophthalmic charges or
prescription fee charges. These are based on extrapolation of a small sample
and are shown in the table below:
Estimated Fraud
Dental Fees
Ophthalmic Fees
Pharmacy Fees
£
573,317
95,250
506,989
Potential Fraud
£
954,576
85,900
316,506
Dental
The levels of fraud/error and potential fraud/error both show increases in 2009
compared to 2008. In the case of the level of fraud/error, the increase is due to
increases in the levels of fraud/error in all but one exception category.
Ophthalmic
The level of fraud/error in 2009 is almost double the level estimated from the
Page 18 of 136
NHS Board Meeting
23 June 2010 Paper 5
previous year’s exercise, however the level of potential fraud/error in 2009 is
less than half the level in 2008.
Pharmacy
The levels of fraud/error and potential fraud/error show a large reduction over
those estimated in the previous year’s exercise. This can be attributed to a
reduction in the rates across a majority of the exemption categories.
Page 19 of 136
NHS Board Meeting
23 June 2010 Paper 5
2.
Financial performance and position
Limit as
set by
SGHD
£’000
Actual
Outturn
Variance
(Over)/Under
£’000
£’000
1 Revenue Resource limit
635,043
627,948
7,095
2 Capital Resource Limit
36,148
36,147
1
692,000
691,065
935
3 Cash Requirement
MEMORANDUM FOR IN YEAR OUTTURN
Brought forward surplus from previous financial year
Excess against in year Revenue Resource Limit
Cumulative savings against revenue resource limit
*This figure is brought forward figure under UK GAAP.
£’000
10,012*
(2,917)
7,095
The revenue resource underspend of £7 million is fully committed for use in
2010/11. The most significant users are shown below:-
Decontamination/HAI
18 Week RTT Programme
Oral Health Strategy
Coronary Heart Disease/Stroke
Falls Programme Manager
Long Term Conditions Collaborative
Local Alcohol Plan
Drugs Misuse
Smoking Cessation
Sexual Health
Human Papillomavirus (HPV)
Hepatitis C
Child Health Weight Initiative
Nutrition of Pregnant Women
Keep Well
Dental Priority Groups
Integrated Resource Framework
e-health
Healthcare Environmental Inspection
Total
£000
635
500
118
200
100
91
530
130
280
173
108
500
177
269
530
200
128
135
245
5,049
Page 20 of 136
NHS Board Meeting
23 June 2010 Paper 5
Balance sheet
Under the government accounting arrangements, Health Boards must show
liabilities for future years in their accounts without showing funding anticipated
from the Scottish Government Health Directorate (SGHD). This has resulted in
net current liabilities on the balance sheet. The balance sheet reflects liabilities
falling due in future years that are expected to be met by the receipt of funding
from the SGHD. Accordingly the accounts have been prepared on the going
concern basis.
Public Finance Initiative/Public Private Partnerships
Ayrshire Maternity Unit (AMU)
The AMU is situated within the grounds of Crosshouse Hospital, Kilmarnock
and provides obstetric in-patient, neonatal, day case and specialist out-patient
facilities for women and babies of Ayrshire and Arran. In previous years this
has been treated as an off balance sheet item under UK GAPP. The capital
value of the project was £19.5 million, which is now on balance sheet under
IFRS. The contract with Ayrshire Hospitals Limited (AHL) commenced on 1
July 2006 and runs for 30 years to 30 June 2036. At the end of the contract
period the building will transfer free of charge to the NHS Board from the PFI
Project Company.
East Ayrshire Community Hospital (EACH)
EACH is situated in Cumnock and provides in-patient service to frail elderly,
elderly with mental illness and GP acute, day facilities to frail elderly and elderly
mentally ill and out-patient services to the local area. The assets have a net
book value of £12.764 million on the balance sheet as at 31 March 2010. The
contract with HBG Construction Scotland Limited commenced in August 2000
and runs for 25 years to August 2025. At the end of the contract term the
NHS Board has the option to acquire the building at a market valuation price
from the PFI Project Company.
Page 21 of 136
NHS Board Meeting
23 June 2010 Paper 5
3.
Performance against Key Non Financial Targets
Ayrshire and Arran Health Board is monitored by the Scottish Government
against a number of national targets known as the ‘HEAT Targets’. Each Health
Board routinely reports performance against trajectories set in a Local Delivery
Plan (LDP). The LDP is effectively a contract between the Scottish Government
and the Health Board. Trajectories were set against the key targets in the LDP
for financial year 2009/10. Outcomes are discussed at an Annual Review
meeting held between the Scottish Government and NHS Ayrshire and Arran
Health Board.
Performance Summary
HEAT 2009/10 has 40 key performance indicators in total. The performance
has been summarised in the table below, detailing a description of:
•
•
•
•
•
Indicator;
Unit;
Baseline performance;
Latest performance and performance score; and
Target performance.
A number of the indicators under the Health Improvement section are only
measured every few years, therefore the latest performance figure may be out
of date.
It should be noted that the following indicators have been updated to reflect
performance using more up to date local, but unvalidated data and therefore
may be subject to change.
These are indicated with a “*” in the table below.
• H3.1: Child healthy weight interventions
• H4.1: Alcohol Brief Interventions
• H5.1: Suicide Prevention
• H6.1: Smoking Cessation
• H7.1: Breastfeeding at 6-8 weeks
• H8.1: Inequalities Targeted Cardiovascular Health Checks
• A10a-d: 18 week RTT
• T4.1: Psychiatric readmissions
• T12.1: Reduction in emergency bed days (65+)
Performance scores are shown in the table below. The key is as follows:
GREEN
AMBER
RED
Currently better than trajectory (plan)
Currently within 5% of trajectory (plan)
Currently outwith the acceptable control limit (5% from plan)
Page 22 of 136
NHS Board Meeting
23 June 2010 Paper 5
HEAT indicators 2009/10
Baseline
ID
Indicator
Units
H2.1
Dental Registrations
% of 3-5 year olds
H3.1
Child healthy weight
interventions*
Number of interventions
H4.1
Alcohol Brief Interventions*
H5.1
Date
Value
Date
Latest Performance
Actual
Planned
Mar-07
70.87%
Sep-09
89.99%
Mar-09
17
Mar-10
Number of interventions
Dec-08
349
Suicide Prevention*
% frontline staff trained
Dec-08
H6.1
Smoking Cessation*
Cumulative number of
cessations
H7.1
Breastfeeding at 6-8
weeks*
H8.1
Score
Target Performance
Date
Target
83.5%
GREEN
Jun-10
85.0%
119
117
GREEN
Mar-11
420
Mar-10
4990
4500
GREEN
Mar-11
6,197
12.11%
Mar-10
35.00%
39.00%
RED
Dec-10
50%
Mar-07
239
Feb-10
2,903
4834
RED
Dec-10
6201
% babies exclusive
breastfed at 6-8 weeks
Mar-07
21.68%
Dec-09
18.00%
19.8%
RED
Mar-11
23.0%
Inequalities Targeted
Cardiovascular Health
Checks*
Cumulative number of
health checks delivered
April-09
366
Mar-10
2953
2060
GREEN
Mar-10
2060
E4.1
Day case rates
% of Procedures
Dec-06
72.26%
Aug-09
79.49%
80.28%
AMBER
Mar-11
82%
E4.2
Emergency Inpatient ALOS
Days
Mar-07
4.11
Sep-09
3.92
4.0
GREEN
Mar-11
3.84
E4.3
Review to New Outpatient
Attendances
Ratio
Mar-07
2.51
Sep-09
2.3
2.4
GREEN
Mar-11
2.3
E4.4
New Outpatient DNAs
% of Outpatients
Mar-07
10.91%
Sep-09
10.78%
10%
RED
Mar-11
9.80%
E5.1
Financial Performance
£000s
Mar-10
7,075
7,000
GREEN
Mar-10
7,000
E6.1
Cash Efficiencies
£000s
Mar-10
22,218
22,078
GREEN
Mar-11
33,612
E7.1
Online Triage
% of referrals
Mar-10
35.54%
65%
RED
Mar-10
65%
Sep-08
0
Page 23 of 136
NHS Board Meeting
23 June 2010 Paper 5
Baseline
ID
Indicator
Units
Date
Value
Date
Latest Performance
Actual
Planned
Score
Target Performance
Date
Target
E8.1
Energy Consumption
GJ
Mar-08
285352
Mar-09
289073
n/a
n/a
Mar-10
274052
E9.1
CHI Utilisation
% of radiology requests
Apr-09
97.35%
Mar-10
99.65%
97%
GREEN
Apr-10
97%
E10.1
eKSF
% of AfC Staff
Apr-09
0.19%
Mar-10
11.26%
30%
RED
Mar-11
80%
A8.1
48 Hour Access – GP
Practice Team
% of patients
Mar-09
90.23%
Mar-09
90.2%
90%
GREEN
Mar-11
100%
A8.2
Advance Booking – GP
% of patients
Mar-09
74.1%
Mar-09
74.1%
90%
RED
Mar-11
100%
A9.1
Suspicion of Cancer
Referrals (62 days)
% of suspicious
referrals
Jun-08
91.3%
Sep-09
95.1%
95%
GREEN
Mar-10
95%
A9.2
All Cancer Treatment (31
days)
% of cancer referrals
Jun-09
76.0%
Sep-09
75.9%
76.9%
AMBER
Mar-10
80%
A10a
18 week RTT: Admitted
Performance*
% of patients
Apr-09
51.25%
Mar-10
71.04%
80%
RED
Dec-10
90%
A10b
18 week RTT: Admitted
Completeness*
% of clock stops
Apr-09
43.02%
Mar-10
74.74%
70%
GREEN
Dec-10
100%
A10c
18 week RTT: Nonadmitted Performance*
% of patients
Apr-09
90.25%
Mar-10
66.70%
85%
RED
Dec-10
95%
A10d
18 week RTT: Nonadmitted Completeness*
% of clock stops
Apr-09
46.81%
Mar-10
39.76%
70%
RED
Dec-10
100%
A10.2
New Outpatients: Max 12
weeks
Patients Waiting over
12 weeks
Apr-09
0
Mar-10
0
0
GREEN
Mar-10
0
A10.3
Inpatient/Daycase : Max 12
weeks
Patients Waiting over
12 weeks
Apr-09
396
Mar-10
20
0
RED
Mar-10
0
A11.1
Faster Access to Treatment
for Drug Misusers
Not available
Page 24 of 136
NHS Board Meeting
23 June 2010 Paper 5
Baseline
Units
Date
Value
Date
Latest Performance
Actual
Planned
Score
Target Performance
Date
Target
ID
Indicator
A12.1
Faster Access to Specialist
CAMHS
Not available
T2.1
CGRM standards
Score
Mar-07
6
Mar-07
6
n/a
n/a
Mar-11
12
T3.1
Anti-depressant prescribing
DDDs per capita
Jun-06
33.47
Dec-09
41.7
38.9
RED
Mar-10
38.5
T4.1
Psychiatric readmissions*
Readmissions/year
Dec-04
344
Dec-08
262
282
GREEN
Dec-09
282
T6.1
Long Term Conditions
Rate per 100k pop/yr
Mar-07
2004.64
Mar-09
2187.15
1978
RED
Mar-11
1828
T7.1
Healthcare experience
Not available
T8.1
Older people cared for at
home
% of 65+ with care
needs
Mar-03
31.65%
Mar-08
40.12%
37.00%
GREEN
Mar-10
38%
T9.1
Dementia
Patients on register
Mar-07
2190
Mar-09
2246
2420
RED
Mar-11
3091
T10.1
Rate of Attendance at A&E
Rate per 100k pop/yr
Mar-08
2615.4
Mar-10
2691.63
2519
RED
Mar-11
2478
T11.1
MRSA/MSSA Reduction
Infections per year
Mar-06
154
Dec-09
132
115
RED
Mar-10
107.1
T11.2
C.Diff Reduction
Infections per occupied
bed days (65+)/yr
Mar-08
1.32
Dec-09
1.15
1.2
GREEN
Mar-11
0.93
T12.1
Reduction in emergency
bed days (65+)*
Rate per 1,000 pop
(65+)/yr
Mar-05
3480.6
Dec-09
3018.5
3132.53
GREEN
Mar-11
3132.53
Page 25 of 136
NHS Board Meeting
23 June 2010 Paper 5
HEAT 2009/10 had 40 key performance indicators in total. Of the 40 key
indicators, 16 were showing as Red, 2 Amber and the remaining 17 were
Green. The performance has been summarised in the table below.
The indicators A11.1: ‘Faster Access for Drug Misusers’, A12.1: ‘Faster
Access to Specialist CAMHS’ and T7.1: ‘Healthcare Experience’ have no data
available for reporting purposes. Furthermore, the indicator T2.1: ‘CGRM
Standards’ is not shown below as no data update is yet available. Similarly
E8.1: ‘Energy Consumption’ is not included in the list below as a planned level
for 2009/10 was not available for comparison purposes.
The following indicators scored as RED (outwith 5% of target)
H5.1
Suicide Prevention Training
H6.1
Smoking Cessation
H7.1
Breastfeeding at 6-8 weeks
E4.4
New Outpatient DNAs
E7.1
Online Triage
E10.1
eKSF
A8.2
Advance Booking - GP
A10a
18 weeks RTT: Admitted Performance
A10c
18 weeks RTT: Non-admitted Performance
A10d
18 weeks RTT: Non-admitted Completeness
A10.3
Inpatient/Daycase : Max 12 weeks
T3.1
Anti-depressant Prescribing
T6.1
Long Term Conditions
T9.1
Dementia
T10.1
Rate of Attendance at A&E
T11.1
MRSA/MSSA Reduction
The following indicators scored as AMBER (within 5% of target)
E4.1
Day Case Rates
A9.2
All Cancer Treatment (31 days)
The following indicators scored as GREEN (achieved or exceeding
target)
H2.1
Dental Registrations
H3.1
Child Healthy Weight Interventions
H4.1
Alcohol Brief Interventions
H8.1
Inequalities Targeted Cardiovascular Health Checks
E4.2
Emergency Inpatient ALOS
E4.3
Review to New Outpatient Attendances
E5.1
Financial Performance
E6.1
Cash Efficiencies
E9.1
CHI Utilisation
A8.1
48 Hour Access – GP Practice Team
A9.1
Suspicion of Cancer Referrals (62 days)
A10b
18 weeks RTT: Admitted Completeness
A10.2
New Outpatients: Max 12 weeks
T4.1
Psychiatric readmissions
T8.1
Older people cared for at home
T11.2
C.Diff Reduction
T12.1
Reduction in emergency bed days (65+)
Page 26 of 136
NHS Board Meeting
23 June 2010 Paper 5
The Board has a Health and Performance Governance committee whose remit
includes providing assurance to the Board that systems and procedures are in place
to monitor, manage and improve overall performance.
A10.KPM3 : Inpatients & Day Cases: Max 12 weeks
Latest data are showing a ‘Red’ with 20 patients waiting more than 12 weeks in
March 2010 against a plan of zero people waiting over 12 weeks. These were twenty
orthopaedic patients who waited more than 12 weeks.
The orthopaedic service has continued to experience significant challenges. A
significant shortfall in orthopaedic medical staffing occurred over a two week period
in March and despite all efforts to address this through movement of other staff,
engaging locums etc., staffing levels fell below that which was considered to be a
safe level of ward staffing and elective inpatient surgery was suspended. This
resulted in the cancellation of patients some of whom could not be re-accommodated
in Ayrshire or the private sector prior to the end of March. All efforts were being
made to redress this situation in April.
T3.1: Antidepressant Prescribing
The Guideline for treatment of depression in primary care is being reviewed and
expected to be re-launched later this year.
A further internal review of primary care mental health teams (PCMHTs) is underway,
which aims to provide a rapid access high volume service for people with
mild/moderate depression, through more efficient screening and the use of new Self
Help Support workers, together with the safe transfer of people with more complex
needs to CMHTs where high intensity psychological therapies will be made available.
T6.1: Long Term Conditions and T10.1: Rate of Attendance at A&E
General practices in Ayrshire & Arran continue to identify patients at risk of
emergency hospital admission and as multidisciplinary/organisational teams are
developing anticipatory care plans and self management plans through an enhanced
service. Recent analysis of all patients demonstrated that over a 2 year period there
has been almost a 40% reduction in the number of admissions for SPARRA (Scottish
patients at risk of readmission and admission) patients and a 41% reduction in the
total number of bed days.
From June 2010 we will commence development of anticipatory care planning with
nursing homes. Evidence from the national Long Term Conditions Collaborative has
shown some board areas achieving 40% reductions in emergency admissions from
nursing homes.
Three tele-healthcare projects with respective local authorities, community hospitals
and primary/community care teams are proposed which will focus on chronic
obstructive pulmonary disease (COPD), Heart Failure and complex high risk patients
awaiting discharge from hospital.
T9.KPM1: Dementia
Page 27 of 136
NHS Board Meeting
23 June 2010 Paper 5
An intensive period of data checking and case searching is planned for all GP
practices in Ayrshire. Positive results have been demonstrated from a review of pilot
practices in Arran. All GPs have been communicated with about this work and a
more detailed report on overall findings will be made available by July 2010. The
anticipated outcome of the workplan being taken forward over the course of the next
year, which itself is based on careful planning and preparation to maximise effort, is
reflected in the revised trajectory set for the period April 2010 to March 2011.
T11.KPM1 : MRSA/MSSA bacterium: 30% Reduction
A new Staphylococcus aureus Bacteraemia (SAB) HEAT Target has been introduced
for 2010/11. An Action Plan detailing the measures being taken by NHS Ayrshire and
Arran to reduce the numbers of SABs was submitted to the SGHD Healthcare
Acquired Infection (HAI) Policy Team on the 31 March 2010. Actions contained in
the Plan include a spread plan for HAI related care bundles; detailed specific renal
action plan; implementation of revised surveillance methodology; and Peripheral
Vascular Catheter audit. It should be noted that the SGHD HAI Policy Unit request
unverified SAB data from the Infection Control Team on a monthly basis.
Page 28 of 136
NHS Board Meeting
23 June 2010 Paper 5
REMUNERATION REPORT
BOARD MEMBERS’ AND SENIOR EMPLOYEES’ REMUNERATION
The Health Board has a Remuneration Committee which is a sub-committee of the
Staff Governance Committee. Membership is wholly non-executive as follows:Professor W Stevely
Councillor D O’ Neill
Mrs R Miller
Mr J Callaghan
The committee met four times during 2009/10. The committee is responsible for
determining and regularly reviewing the Health Board’s pay policy, subject to
constraints imposed by national conditions and guidance. The committee also
agrees the individual in-year objectives of the Board’s executive directors. The
Remuneration Committee is required to approve the annual performance
assessment of executive directors in June each year.
Remuneration
Remuneration of board members and senior employees is determined in line with
directions issued by the Scottish Government. All posts at this level are subject to
rigorous job evaluation arrangements and the pay scales applied reflect the
outcomes of these processes. All extant policy guidance issued by the SGHD has
been appropriately applied and agreed by the Remuneration Committee.
Performance Appraisal
Performance appraisals for executive members are carried out in line with the
guidance from the Scottish Government and overseen by the Remuneration
Committee. Annual pay rises for executive directors are dependent on achieving
specified levels of performance.
Payments to past senior managers
No payments were made to past senior managers during 2009/10.
The following tables provide a breakdown of executive and non-executive directors’
remuneration in 2008/09 and 2009/10 and have been audited.
Page 29 of 136
NHS Board Meeting
23 June 2010 Paper 5
Ayrshire and Arran Health Board
Remuneration Report
FOR THE YEAR ENDED 31 MARCH 2009
Real
Increases
in pension
Salary at age 60
(Bands of (Bands of
£5,000) £2,500)
Remuneration of:
Executive Members
Chief Executive: W Hatton
Director of Public Health: C Davidson
Director of Finance: D Lindsay
Director of Policy,Planning and Performance: A Gunning
Medical Director: R Masterton
Nurse Director: F McQueen
Director of Organisational & HR Development: C Lisle
Non Executive Members
Chair: W Stevely
M Cheyne
D O'Neill
R Miller
C Duncan
E O'Connell
D Price
K Darwent
Dr H McCallum(from 1 March 2009)
W Hislop
AG McHattie(until 28 February 2009)
D Filson
R Reid
G Watson
J Dever
J Callaghan
Total
Pension
Cash
Cash
Accrued Equivalent Equivalent
at age 60 Transfer Transfer
at 31
Value
Value
Real
March (CETV) at (CETV) at increase
(Bands of
March
March in CETV in Benefits in
£5,000)
2008
2009
year
Kind
£'000
£'000
£'000
£'000
£'000
£'000
£'000
145-150
165-170
110-115
125-130
235-240
100-105
90-95
*
0-2.5
0-2.5
0-2.5
2.5-5.0
2.5-5.0
0-2.5
*
35-40
15-20
35-40
45-50
25-30
20-25
*
576
219
567
714
385
282
*
753
296
766
1019
525
397
*
45
31
56
127
82
77
0.0
0.0
2.8
0.0
1.9
2.8
0.0
25-30
10-15
5-10
10-15
10-15
5-10
10-15
10-15
***
5-10
***
5-10
5-10
5-10
5-10
5-10
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2,743
3,756
418
7.5
*consent to disclosure withheld
***Remuneration Waived
Page 30 of 136
NHS Board Meeting
23 June 2010 Paper 5
Ayrshire and Arran Health Board
Remuneration Report
FOR THE YEAR ENDED 31 MARCH 2010
Real
Increases
in pension
Salary at age 60
(Bands of (Bands of
£5,000) £2,500)
Remuneration of:
Executive Members
Chief Executive: W Hatton
Director of Public Health: C Davidson
Director of Finance: D Lindsay
Director of Policy,Planning and Performance: A Gunning
Medical Director: R Masterton
Nurse Director: F McQueen
Director of Organisational & HR Development: C Lisle (until 190410)
Non Executive Members
Chair: W Stevely
M Cheyne
D O'Neill
R Miller
C Duncan
E O'Connell
D Price
K Darwent
Dr H McCallum
W Hislop
D Filson
R Reid (until 28 February 2010)
G Watson
J Dever
J Callaghan (employee director)
H Hunter (from 1 March 2010)
Total
Pension
Cash
Cash
Accrued Equivalent Equivalent
at age 60 Transfer Transfer
at 31
Value
Value
Real
March (CETV) at (CETV) at increase
(Bands of
March
March in CETV in Benefits in
£5,000)
2009
2010
year
Kind
£'000
£'000
£'000
£'000
£'000
£'000
£'000
150-155
175-180
115-120
130-135
255-260
105-110
0
*
2.5-5
0-2.5
0-2.5
0-2.5
0-2.5
0
*
40-45
20-25
40-45
45-50
30-35
0
*
774
305
788
1046
540
0
*
875
346
856
1134
590
0
*
55
22
28
32
18
0
0.0
0.0
0.0
0.0
1.9
2.7
0.0
30-35
15-20
5-10
15-20
10-15
5-10
20-25
10-15
5-10
5-10
5-10
5-10
5-10
5-10
50-55
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2.2
0.0
3,453
3,801
155
6.8
*consent to disclosure withheld
NOTE:
The opening CETV for March 2009 is different from the closing balance in the accounts for 31 March 2009. This is because the CETV calculator is obtained from the
civil service pensions and is updated for the NHS pension scheme for factors advised by the Government Actuary's Department (GAD)
The employee directors salary includes £40,000 - £45,000 in respect of non Board duties.
Signed……………………………….................................... Date..................................
Chief Executive as Accountable Officer
Page 31 of 136
NHS Board Meeting
23 June 2010 Paper 5
AYRSHIRE & ARRAN HEALTH BOARD
ANNUAL ACCOUNTS 2009/10
STATEMENT OF THE CHIEF EXECUTIVE’S RESPONSIBILITIES AS THE
ACCOUNTABLE OFFICER OF THE HEALTH BOARD
Under Section 15 of the Public Finance and Accountability (Scotland) Act, 2000,
The Principal Accountable Officer (PAO) of the Scottish Executive has
appointed me as Accountable Officer of Ayrshire & Arran Health Board.
This designation carries with it, responsibility for:
•
the propriety and regularity of financial transactions under my control;
•
for the economical, efficient and effective use of resources placed at the
Board’s disposal; and
•
safeguarding the assets of the board.
In preparing the accounts I am required to comply with the requirements of the
government’s Financial Reporting Manual and in particular to:
•
observe the accounts direction issued by Scottish Ministers including the
relevant accounting and disclosure requirements and apply suitable
accounting policies on a consistent basis;
•
make judgements and estimates on a reasonable basis;
•
state whether applicable accounting standards as set out in the
government Financial Reporting Manual have been followed and disclose
and explain any material departures; and
•
prepare the accounts on a going concern basis
I am responsible for ensuring proper records are maintained and that the
Accounts are prepared under the principles and in the format directed by
Scottish Ministers. To the best of my knowledge and belief, I have properly
discharged my responsibilities as accountable officer as intimated in the
Departmental Accountable Officers letter to me of the 25th July 2000.
Signed ……………………………… Date ………………………………
Chief Executive
AYRSHIRE & ARRAN HEALTH BOARD
Page 32 of 136
NHS Board Meeting
23 June 2010 Paper 5
ANNUAL ACCOUNTS 2009/10
STATEMENT OF HEALTH BOARD MEMBERS’ RESPONSIBILITIES IN RESPECT
OF THE ACCOUNTS
Under the National Health Service (Scotland) Act 1978, the Health Board is required
to prepare accounts in accordance with the directions of Scottish Ministers which
require that those accounts give a true and fair view of the state of affairs of the
Health Board as at 31 March 2010 and of its operating costs for the year then ended.
In preparing these accounts the Directors are required to:
•
Apply on a consistent basis the accounting policies and standards approved
for the NHSScotland by Scottish Ministers.
•
Make judgements and estimates that are reasonable and prudent.
•
State where applicable accounting standards have not been followed where
the effect of the departure is material.
•
Prepare the accounts on the going concern basis unless it is inappropriate to
presume that the Board will continue to operate.
The Health Board members are responsible for ensuring that proper accounting
records are maintained which disclose with reasonable accuracy at any time the
financial position of the Board and enable them to ensure that the accounts comply
with the National Health Service (Scotland) Act 1978 and the requirements of the
Scottish Government Health Department. They are also responsible for safeguarding
the assets of the Board and hence taking reasonable steps for the prevention of
fraud and other irregularities.
The NHS Board members confirm they have discharged the above responsibilities
during the financial year and in preparing the accounts.
Director of Finance
Chairman
Date
Page 33 of 136
NHS Board Meeting
23 June 2010 Paper 5
STATEMENT ON INTERNAL CONTROL
Scope of Responsibility
As Accountable Officer, I have responsibility for maintaining a sound system of
internal control that supports the achievement of the organisation’s policies, aims and
objectives, set by Scottish Ministers, whilst safeguarding the public funds and assets
for which I am personally responsible, in accordance with the responsibilities
assigned to me.
Each of the Board’s four governance committees own corporate risks relevant to their
remit and receive biannual reports on these. Eight risks were scored as high risk on
the Corporate Risk Register at March 2010, however following review by the
Directors’ Team, the following four are most significant:•
•
•
•
Failure to implement NHS QIS clinical governance and risk management
standards
Not achieving current waiting times guarantees within orthopaedics
Unsafe staffing levels in accident & emergency departments
Achieving the HEAT sickness absence target of 4%
In autumn 2009 NHS Ayrshire and Arran submitted written evidence to NHS QIS
against their clinical governance and risk management standards. This was followed
in January 2010 by a two day visit by the inspection team. The outcome is that NHS
Ayrshire and Arran has moved from an assessment of 6 to an improved level of 8.
Section 3 of the Operating and Financial Review shows the performance against key
non-financial targets. HEAT target A10a shows “red” because at 31 March 2010,
NHS Ayrshire and Arran had 20 orthopaedic patients waiting over 12 weeks for
inpatient/day case treatment. In 2009/10 over £2.5 million was spent on the private
sector to treat orthopaedic patients as well as £581,000 on internal waiting list
initiatives. A Lean review of orthopaedic processes has identified significant
productivity improvement opportunities and it is proposed to increase internal
capacity in 2010/11. An option appraisal will also be completed since both elective
and emergency orthopaedics are currently provided on both Ayr and Crosshouse
sites.
When the SNP government came into office in May 2007, they reversed the approval
of the previous administration to move from two to one full accident & emergency site
for Ayrshire and Arran. As a result over £500,000 has been invested in additional
medical staffing, however levels of consultant staffing in the accident & emergency
departments has been a problem despite considerable expenditure on medical
locums each year.
Monitoring of sickness absence is done by senior management on a monthly basis
and many staff have attended “Promoting Attendance” training.
Significant
improvement in sickness absence rates were seen during 2009/10 with the rate
reducing from 5.47% in 2008/09 to 4.93% in 2009/10. This still is above the standard
aimed for of 4%.
Page 34 of 136
NHS Board Meeting
23 June 2010 Paper 5
The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to
provide guidance to the Scottish Government and other relevant bodies on the
proper handling and reporting of public funds. It sets out the relevant statutory,
parliamentary and administrative requirements, emphasises the need for economy,
efficiency and effectiveness, and promotes good practice and high standards or
propriety.
Purpose of the System of Internal Control
The system of internal control is designed to manage rather than eliminate the risk of
failure to achieve the organisation’s aims and objectives; it can therefore only provide
reasonable and not absolute assurance of effectiveness.
The system of internal control is based on an ongoing process designed to identify
and prioritise the principal risks to the achievement of the organisation’s aims and
objectives, to evaluate the nature and extent of those risks and to manage them
efficiently, effectively and economically.
The process within the organisation accords with guidance from the Scottish
Ministers in the SPFM and supplementary NHS guidance and has been in place for
the year up to the date of approval of the annual report and accounts.
Risk and Control Framework
All NHS Scotland bodies are subject to the requirements of the Scottish Public
Finance Manual (SPFM) and must operate a risk management strategy in
accordance with relevant guidance issued by Scottish Ministers. The general
principles for a successful risk management strategy are set out in the SPFM.
An updated risk management strategy was approved at the October 2009 Board
meeting. During the year a new risk register information system, (Datix) was
implemented and supported by training for staff and the risk management annual
report for 2009/10 was considered by Board members at their meeting on 9 June
2010.
More generally, the organisation is committed to a process of continuous
development and improvement: developing systems in response to any relevant
reviews and developments in best practice in this area. In particular, in the period
covering the year to 31 March 2010 and up to the signing of the accounts the
organisation has:
•
•
•
led a financial services Consortium and host six other Boards (which required
a SAS 70 report to be produced)
completed our review of primary care services
continued implementation of our mental health strategy
Review of Effectiveness
As Accountable Officer, I also have responsibility for reviewing the effectiveness of
the system of internal control.
Page 35 of 136
NHS Board Meeting
23 June 2010 Paper 5
My review of the effectiveness of the system of internal control is informed by:
• the executive directors within the organisation who have responsibility for the
development and maintenance of the internal control framework;
• the work of the internal auditors , who submit to the organisation's Audit
Committee regular reports which include their independent and objective
opinion on the adequacy and effectiveness of the organisation's systems of
internal control together with recommendations for improvement;
• and comments made by the external auditors in their management letters and
other reports.
The Audit Committee meets regularly and receives reports from both internal and
external auditors. Recommendations receive appropriate management responses.
Internal Audit (PricewaterhouseCoopers LLP) and external audit (KPMG LLP) report
regularly to the Audit Committee and the minutes are presented to the NHS Board by
the chair of the Audit Committee. Relevant governance committees receive reports
on actions agreed to progress external reports such as those produced by Audit
Scotland.
Appropriate action is in place to address weaknesses identified and to ensure the
continuous improvement of the system. This includes actions to identify efficiency
savings in all areas and production of an Efficiency & Productivity plan.
Other than those set out above, there were no significant control weaknesses. nor
failure to achieve the standards set out in the guidance on the Statement on Internal
Control.
Signed ………………………………………….Chief Executive
Date ……………….
Page 36 of 136
NHS Board Meeting
23 June 2010 Paper 5
Independent auditors’ report to the members of Ayrshire and Arran Health Board, the Auditor General for
Scotland and the Scottish Parliament
We have audited the financial statements of Ayrshire and Arran Health Board for the year ended 31 March 2010
under the National Health Service (Scotland) Act 1978. These comprise the Operating Cost Statement, the
Balance Sheet, the Cash Flow Statement, the Statement of Changes in Taxpayers’ Equity, and the related notes.
These financial statements have been prepared under the accounting policies set out within them. We have also
audited the information in the Remuneration Report that is described in that report as having been audited.
This report is made solely to Ayrshire and Arran Health Board and to the Auditor General for Scotland in
accordance with sections 21 and 22 of the Public Finance and Accountability (Scotland) Act 2000. Our audit work
has been undertaken so that we might state to those two parties those matters we are required to state to them in
an auditors’ report and for no other purpose. In accordance with the Code of Audit Practice approved by the
Auditor General for Scotland, this report is also made to the Scottish Parliament, as a body. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than Ayrshire and Arran Health
Board and the Auditor General for Scotland, for this report, or the opinions we have formed.
Respective responsibilities of the board, Chief Executive and auditor
The board and Chief Executive are responsible for preparing the Annual Report, which includes the
Remuneration Report, and the financial statements in accordance with the National Health Service (Scotland) Act
1978 and directions made thereunder by the Scottish Ministers. The Chief Executive is also responsible for
ensuring the regularity of expenditure and income. These responsibilities are set out in the Statement of the Chief
Executive’s Responsibilities as the Accountable Officer of the Health Board.
Our responsibility is to audit the financial statements and the part of the Remuneration Report to be audited in
accordance with relevant legal and regulatory requirements and with International Standards on Auditing (UK and
Ireland) as required by the Code of Audit Practice approved by the Auditor General for Scotland.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the
financial statements and the part of the Remuneration Report to be audited have been properly prepared in
accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder by the Scottish
Ministers. We report to you whether, in our opinion, the information which comprises the Operating and Financial
Review and Directors’ Report, included in the Annual Report, is consistent with the financial statements. We also
report whether in all material respects the expenditure and income shown in the financial statements were
incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.
In addition, we report to you if, in our opinion, the body has not kept proper accounting records, if we have not
received all the information and explanations we require for our audit, or if information specified by relevant
authorities regarding remuneration and other transactions is not disclosed.
We review whether the Statement on Internal Control reflects the Board’s compliance with the Scottish
Government Health Directorate’s guidance, and we report if, in our opinion, it does not. We are not required to
consider whether this statement covers all risks and controls, or form an opinion on the effectiveness of the
body’s corporate governance procedures or its risk and control procedures.
We read the other information contained in the Annual Report and consider whether it is consistent with the
audited financial statements. This other information comprises only the part of the Remuneration Report that is
not audited. We consider the implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with the Public Finance and Accountability (Scotland) Act 2000 and
International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board as required by the
Code of Audit Practice approved by the Auditor General for Scotland. An audit includes examination, on a test
basis, of evidence relevant to the amounts, disclosures and regularity of expenditure and income included in the
financial statements and the part of the Remuneration Report to be audited. It also includes an assessment of the
significant estimates and judgements made by the board and Chief Executive in the preparation of the financial
statements, and of whether the accounting policies are most appropriate to the body’s circumstances, consistently
applied and adequately disclosed.
Page 37 of 136
NHS Board Meeting
23 June 2010 Paper 5
Independent auditors’ report to the members of Ayrshire and Arran Health Board, the Auditor General for
Scotland and the Scottish Parliament (continued)
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial
statements and the part of the Remuneration Report to be audited are free from material misstatement, whether
caused by fraud or error, and that in all material respects the expenditure and income shown in the financial
statements were incurred or applied in accordance with any applicable enactments and guidance issued by the
Scottish Ministers. In forming our opinion we also evaluated the overall adequacy of the presentation of
information in the financial statements and the part of the Remuneration Report to be audited.
Opinions
Financial statements
In our opinion
•
the financial statements give a true and fair view, in accordance with the National Health Service (Scotland)
Act 1978 and directions made thereunder by the Scottish Ministers, of the state of affairs of the Board as at
31 March 2010 and of its net operating cost position, changes in taxpayers’ equity and cash flows for the year
then ended;
•
the financial statements and the part of the Remuneration Report to be audited have been properly prepared
in accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder by the
Scottish Ministers; and
•
information which comprises the Operating and Financial Review and Directors’ Report, included in the
Annual Report, is consistent with the financial statements.
Regularity
In our opinion in all material respects the expenditure and income shown in the financial statements were incurred
or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.
DJ Watt
For and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
191 West George Street
Glasgow
G2 2LJ
[date]
Page 38 of 136
NHS Board Meeting
23 June 2010 Paper 5
Page 39 of 136
NHS Board Meeting
23 June 2010 Paper 5
Page 40 of 136
NHS Board Meeting
23 June 2010 Paper 5
Page 41 of 136
NHS Board Meeting
23 June 2010 Paper 5
Page 42 of 136
NHS Board Meeting
23 June 2010 Paper 5
Page 43 of 136
NHS Board Meeting
23 June 2010 Paper 5
Note 1
NHS AYRSHIRE AND ARRAN
ACCOUNTING POLICIES
1.
Authority
In accordance with the accounts direction issued by Scottish Ministers under
section 19(4) of the Public Finance and Accountability (Scotland) Act 2000
appended, these Accounts have been prepared in accordance with the
Government Financial Reporting Manual (FReM) issued by HM Treasury,
which follows International Financial Reporting Standards as adopted by the
European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the
Companies Act 2006 to the extent that they are meaningful and appropriate to
the public sector. They have been applied consistently in dealing with items
considered material in relation to the accounts.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are
disclosed in section 29 below.
2.
First time adoption of International Financial Reporting Standards
These financial statements have been prepared under International Financial
Reporting Standards for the first time and the comparatives have been
restated from UK Generally Accepted Accounting Policy (UK GAAP) where
required. The reconciliation to IFRS from the previous UK GAAP accounts is
summarised at Note 30.
New Financial Instruments Standards FRS 25, FRS 26 and FRS 29 as
interpreted and adapted by the Government Financial Reporting Manual
(FReM) were adopted under UK GAAP in 2008-09. Prior year comparatives
for 2007-08 were restated to reflect these standards. These standards are
identical to their equivalent IFRS standards, IAS 32, IAS 39 and IFRS 7.
3.
Going Concern
The accounts are prepared on the going concern basis, which provides that
the entity will continue in operational existence for the foreseeable future.
4.
Accounting Convention
The Accounts are prepared on a historical cost basis, as modified by the
revaluation of property, plant and equipment, intangible assets, inventories,
available-for-sale financial assets and financial assets and liabilities at fair
value.
5.
Funding
Most of the expenditure of the Health Board as Commissioner is met from
funds advanced by the Scottish Government within an approved revenue
resource limit. Cash drawn down to fund expenditure within this approved
revenue resource limit is credited to the general fund.
Page 44 of 136
NHS Board Meeting
23 June 2010 Paper 5
All other income receivable by the Board that is not classed as funding is
recognised in the year in which it is receivable.
Where income is received for a specific activity which is to be delivered in the
following financial year, that income is deferred.
Income from the sale of non-current assets is recognised only when all
material conditions of sale have been met, and is measured as the sums due
under the sale contract.
Non discretionary funding outwith the RRL is allocated to match actual
expenditure incurred for the provision of specific pharmaceutical, dental or
ophthalmic services identified by the Scottish Government. Non discretionary
expenditure is disclosed in the accounts and deducted from operating costs,
charged against the RRL in the Statement of Resource Outturn.
Funding for the acquisition of fixed assets received from the Scottish
Government is credited to the general fund when cash is drawn down.
Expenditure on goods and services is recognised when and to the extent that
they have been received, and is measured at the fair value of those goods and
services. Expenditure is recognised in the operating cost statement except
where it results in the creation of a non-current asset such as property, plant
and equipment.
6.
Property, plant and equipment
The treatment of fixed assets in the accounts (capitalisation, valuation,
depreciation, particulars concerning donated assets) is in accordance with the
NHS Capital Accounting Manual.
Title to properties included in the accounts is held by Scottish Ministers.
6.1
Recognition
Property, Plant and Equipment is capitalised where: it is held for use in
delivering services or for administrative purposes; it is probable that future
economic benefits will flow to, or service potential be provided to, the Board; it
is expected to be used for more than one financial year; and the cost of the
item can be measured reliably.
All assets falling into the following categories are capitalised:
1)
2)
3)
Property, plant and equipment assets which are capable of being
used for a period which could exceed one year, and have a cost
equal to or greater than £5,000.
In cases where a new hospital would face an exceptional write off of
items of equipment costing individually less than £5,000, the Board
has the option to capitalise initial revenue equipment costs with a
standard life of 10 years.
Assets of lesser value may be capitalised where they form part of a
group of similar assets purchased at approximately the same time
Page 45 of 136
NHS Board Meeting
23 June 2010 Paper 5
and cost over £20,000 in total, or where they are part of the initial
costs of equipping a new development and total over £20,000.
Where a large asset, for example a building, includes a number of
components with significantly different asset lives e.g. plant and equipment,
then these components are treated as separate assets and depreciated over
their own useful economic lives.
6.2
Measurement
Valuation:
All property, plant and equipment assets are measured initially at cost, representing
the costs directly attributable to acquiring or constructing the asset and bringing it to
the location and condition necessary for it to be capable of operating in the manner
intended by management.
All assets are measured subsequently at fair value as follows:
Specialised NHS Land, buildings, equipment, installations and fittings are stated at
depreciated replacement cost, as a proxy for fair value as specified in the FReM.
Those buildings which qualify as specialist operational assets, and therefore fall to be
assessed using the Depreciated Replacement Cost, (DRC) approach, have been
valued on a replacement basis; ie the valuation approach assumes that the existing
asset will be replaced by an asset of similar design to the original and constructed
using similar materials, except those hospitals built circa 1900, which in accordance
with the Board’s instructions have been valued on a modern equivalent asset basis
(as allowed under RICS standards covering “The Depreciated Replacement Cost
Method of Valuation for Financial Reporting”.
Non specialised land and buildings, such as offices, are stated at fair
value.Valuations of all land and building assets are reassessed by valuers under a 5year programme of annual professional valuations including valuer’s views on value
adding / non value adding elements in the annual capital programme. The valuations
are carried out in accordance with the Royal Institution of Chartered Surveyors
(RICS) Appraisal and Valuation Manual insofar as these terms are consistent with
the agreed requirements of the Scottish Government.
Non specialised equipment, installations and fittings are valued at fair value. Boards
value such assets using the most appropriate valuation methodology available (for
example, appropriate indices). A depreciated historical cost basis is used as a proxy
for fair value in respect of such assets which have short useful lives or low values (or
both).
Assets under construction are valued at current cost. This is calculated by the
expenditure incurred to which an appropriate index is applied to arrive at current
value. These are also subject to impairment review.
To meet the underlying objectives established by the Scottish Government the
following accepted variations of the RICS Appraisal and Valuation Manual have been
required:
Page 46 of 136
NHS Board Meeting
23 June 2010 Paper 5
Specialised operational assets are valued on a modified replacement cost basis to
take account of modern substitute building materials and locality factors only.
Subsequent expenditure:
Subsequent expenditure is capitalised into an asset’s carrying value when it is
probable the future economic benefits associated with the item will flow to the Board
and the cost can be measured reliably. Where subsequent expenditure does not
meet these criteria the expenditure is charged to the operating cost statement. If part
of an asset is replaced, then the part it replaces is de-recognised, regardless of
whether or not it has been depreciated separately.
Revaluations and Impairment:
Increases in asset values arising from revaluations are recognised in the revaluation
reserve, except where, and to the extent that, they reverse an impairment previously
recognised in the operating cost statement, in which case they are recognised as
income. Movements on revaluation are considered for individual assets rather than
groups or land/buildings together.
Decreases in asset values and impairments are charged to the revaluation reserve to
the extent that there is an available balance for the asset concerned, and thereafter
are charged to the operating cost statement.
6.3
Depreciation
Items of Property, Plant and Equipment are depreciated to their estimated residual
value over their remaining useful economic lives in a manner consistent with the
consumption of economic or service delivery benefits.
Depreciation is charged on each main class of tangible asset as follows:
1)
Freehold land is considered to have an infinite life and is not depreciated.
2)
Assets in the course of construction are not depreciated until the asset is
brought into use or reverts to the Board, respectively.
3)
Property, Plant and Equipment which has been reclassified as ‘Held for Sale’
ceases to be depreciated upon the reclassification.
4)
Buildings, installations and fittings are depreciated on current value over the
estimated remaining life of the asset, as advised by the appointed valuer.
They are assessed in the context of the maximum useful lives for building
elements.
5)
Equipment is depreciated over the estimated life of the asset.
6)
Property, plant and equipment held under finance leases is depreciated
over the shorter of the lease term and the estimated useful life.
Depreciation is charged on a straight line basis.
The following asset lives have been used:
Asset Category/Component
Buildings
Moveable Engineering Plant/Long Life Medical
Equipment
Furniture and Medium Life Medical Equipment
Information Technology
Useful Life
(years)
24-45
15
10
5
Page 47 of 136
NHS Board Meeting
23 June 2010 Paper 5
Vehicles and Soft Furnishings
Office, Short Life Medical and Other Equipment
7.
5
5
Intangible Assets
7.1
Recognition
Intangible assets are non-monetary assets without physical substance which are
capable of being sold separately from the rest of the Board’s business or which arise
from contractual or other legal rights. They are recognised only where it is probable
that future economic benefits will flow to, or service potential be provided to, the
Board and where the cost of the asset can be measured reliably.
Intangible assets that meet the recognition criteria are capitalised when they are
capable of being used in a Board’s activities for more than one year and they have a
cost of at least £5,000. The main classes of intangible assets recognised are:
Carbon Emissions (Intangible Assets):
A cap and trade scheme gives rise to an asset for allowances held, a government
grant and a liability for the obligation to deliver allowances equal to emissions that
have been made.
Intangible Assets, such as EU Greenhouse Gas Emission Allowances intended to be
held for use on a continuing basis whether allocated by government or purchased are
classified as intangible assets. Allowances that are issued for less than their fair
value are measured initially at their fair value.
When allowances are issued for less than their fair value, the difference between the
amount paid and fair value is revaluation and charged to the government grant
reserve. The government grant reserve is charged with the same proportion of the
amount of the revaluation, which the amount of the grant bears to the acquisition cost
of the asset.
A provision is recognised for the obligation to deliver allowances equal to emissions
that have been made. It is measured at the best estimate of the expenditure required
to settle the present obligation at the balance sheet date. This will usually be the
present market price of the number of allowances required to cover emissions made
up to the balance sheet date.
7.2 Measurement
Valuation:
Intangible assets are recognised initially at cost, comprising all directly attributable
costs needed to create, produce and prepare the asset to the point that it is capable
of operating in the manner intended by management.
Subsequently intangible assets are measured at fair value. Where an active
(homogeneous) market exists, intangible assets are carried at fair value. Where no
active market exists, the intangible asset is revalued, using indices or some suitable
model, to the lower of depreciated replacement cost or value in use where the asset
is income generating. Where there is no value in use, the intangible asset is valued
using depreciated replacement cost. These measures are a proxy for fair value.
Page 48 of 136
NHS Board Meeting
23 June 2010 Paper 5
Revaluation and impairment:
Increases in asset values arising from revaluations are recognised in the revaluation
reserve, except where, and to the extent that, they reverse an impairment previously
recognised in the operating cost statement, in which case they are recognised in
income.
Decreases in asset values and impairments are charged to the revaluation reserve to
the extent that there is an available balance for the asset concerned, and thereafter
are charged to the operating cost statement.
Intangible assets held for sale are reclassified to ‘non-current assets held for sale’
measured at the lower of their carrying amount or ‘fair value less costs to sell’.
7.3 Amortisation
Intangible assets are amortised to their estimated residual value over their remaining
useful economic lives in a manner consistent with the consumption of economic or
service delivery benefits.
Amortisation is charged to the operating cost statement on each main class of
intangible assets as follows:
Internally generated intangible assets. Amortised on a systematic basis over
the
period expected to benefit from the project. Software. Amortised over their expected
useful life. Software licences. Amortised over the shorter term of the licence and
their useful economic lives. Other intangible assets. Amortised over their expected
useful life. Intangible assets which has been reclassified as ‘Held for Sale’ ceases to
be
amortised upon the reclassification.
Amortisation is charged on a straight line basis.
The following asset lives have been used:
Asset Category/Component
Buildings
Moveable Engineering Plant/Long Life Medical
Equipment
Furniture and Medium Life Medical Equipment
Information Technology
Vehicles and Soft Furnishings
Office, Short Life Medical and Other Equipment
Useful Life
(years)
24-45
15
10
5
5
5
8.
Non-current assets held for sale
Non-current assets intended for disposal are reclassified as ‘Held for Sale’ once all of
the following criteria are met:
•
the asset is available for immediate sale in its present condition subject
only to terms which are usual and customary for such sales;
• the sale must be highly probable i.e.:
ƒ management are committed to a plan to sell the asset;
Page 49 of 136
NHS Board Meeting
23 June 2010 Paper 5
ƒ
an active programme has begun to find a buyer and complete the
sale;
ƒ the asset is being actively marketed at a reasonable price;
ƒ the sale is expected to be completed within 12 months of the date of
classification as ‘Held for Sale’; and
the actions needed to complete the plan indicate it is unlikely that the plan will be
dropped
or
significant
changes
made
to
it.
Following reclassification, the assets are measured at the lower of their existing
carrying amount and their ‘fair value less costs to sell’. Depreciation ceases to be
charged and the assets are not revalued, except where the ‘fair value less costs to
sell’ falls below the carrying amount. Assets are de-recognised when all material sale
contract conditions have been met.
Property, plant and equipment which is to be scrapped or demolished does not
qualify for recognition as ‘Held for Sale’ and instead is retained as an operational
asset and the asset’s economic life is adjusted. The asset is de-recognised when
scrapping or demolition occurs.
9.
Donated Assets
Non-current assets that are donated or purchased using donated funds are included
in the Balance Sheet initially at the current full replacement cost of the asset. The
value of donated assets is credited to the Donated Asset Reserve. Where a donation
covers only part of the total cost of the asset concerned, only that part element is
included in the Donated Asset Reserve.
The accounting treatment, including the method of valuation, follows the rules in the
NHS Capital Accounting Manual. Gains and losses on revaluations are also taken to
the donated asset reserve and, each year, an amount equal to the depreciation
charge on the asset is released from the donated asset reserve to the operating cost
statement. Similarly, any impairment on donated assets charged to the operating
cost statement is matched by a transfer from the donated asset reserve. On sale of
donated assets, the net book value of the donated asset is transferred from the
donated asset reserve to the General Fund.
10.
Sale of Property, plant and equipment, intangible assets and non-current
assets held for sale
Disposal of non-current assets is accounted for as a reduction to the value of assets
equal to the net book value of the assets disposed. When set against any sales
proceeds, the resulting gain or loss on disposal will be recorded in the Operating
Cost Statement. Non-current assets held for sale will include assets transferred from
other categories and will reflect any resultant changes in valuation.
11.
Leasing
Finance leases
Where substantially all risks and rewards of ownership of a leased asset are borne
by the Board, the asset is recorded as Property, Plant and Equipment and a
corresponding liability is recorded. The value at which both are recognised is the
lower of the fair value of the asset or the present value of the minimum lease
payments, discounted using the interest rate implicit in the lease. The implicit interest
rate is that which produces a constant periodic rate of interest on the outstanding
Page 50 of 136