NOTTINGHAM UNIVERSITY HOSPITALS NHS TRUST CASH AND TREASURY MANAGEMENT POLICY. Documentation Control

Transcription

1 NOTTINGHAM UNIVERSITY HOSPITALS NHS TRUST CASH AND TREASURY MANAGEMENT POLICY Documentation Control Reference GG/FIN/009 Approving Body Director of Finance and Procurement Date Approved 14 Implementation Date 14 Summary of Changes from Previous Version Version 3 was Treasury Management Policy. Separation of procedures from policy and complete rewrite of policy Supersedes Version 3 (February 2014) Consultation Undertaken Date of Completion of Equality Impact Assessment Date of Completion of We Are Here for You Assessment Date of Environmental Impact Assessment Senior Project Accountant (Financial Accounts), Local Internal Audit Manager Lead Accountant-Financial Reporting Legal and/or Accreditation National Health Service Act 2006 and the Implications Secretary of State s guidance thereunder Target Audience All those responsible for dealing with financial transactions within the Trust Review Date March 2020 Lead Executive Author/Lead Manager Rupert Egginton Director of Finance, Information and Procurement Simon Linthwaite Assistant Director of Finance Further Guidance/Information Simon Linthwaite Assistant Director of Finance 1

2 CONTENTS Paragraph Title Page 1. Introduction 3 2. Executive Summary 3 3. Policy Statement 4 4. Definitions 4 5. Roles and Responsibilities 6 6. Policy Guidance 8 7. Training, Implementation and Resources Equality and Environmental Impact 11 Statements 9. Monitoring Matrix Relevant Legislation, National Guidance 14 and Associated NUH Documents Appendix A Equality Impact Assessment 15 Appendix B Environmental Impact Assessment 18 Appendix C We are Here for You Assessment 20 Appendix D Certificate of Employee Awareness 22 2

3 1.0 Introduction 1.1 This Policy identifies the approach that Nottingham University Hospitals NHS Trust ( The Trust ) is expected to follow in the management of its cash resources and establishes the relationship between the Trust and the Department of Health (DH), HM Treasury and the Government Banking Service (GBS), in relation to these matters. 1.2 The Trust is expected to operate in a climate of strong corporate governance and probity in conducting its treasury activities to ensure that public monies are used efficiently and effectively. This document sets out the Trust s approach to treasury management in order to minimise any Trust exposure to cash flow risk. Having sufficient cash resources available for at least 12 months is also essential for the Trust to be classified operationally as a going concern. 1.3 The key operational objective of the treasury management function is therefore to ensure that the Trust always has sufficient liquid resources available to it to meet its current and future outgoings on an ongoing basis. The Trust must also comply with its statutory, regulatory and performance management obligations in managing its cash position, including meeting its External Financing Limit (EFL) target. 1.4 The Trust is required to maintain a bank account with their appointed bankers, through GBS. The Trust may also borrow from the Government and deposit surplus funds with HM Treasury. 2.0 Executive Summary Treasury management represents the efficient and effective management of the Trust s cash resources, by achieving an appropriate balance between maximising investment income and always having cash is available when required to meet its expenditure commitments to its staff and suppliers. This Policy provides a clearly defined risk management framework and a reference point for those responsible for treasury operations. The Trust adopts a risk averse strategy to all of its treasury management operations and will only enter into financial transactions on an approved need basis, and not for speculative investment purposes. 3

4 In order to fully realise the benefits, it is essential that this Policy is kept up to date to reflect any future changes or developments. The Policy will therefore be subject to an annual review and formal revision every 3 years. 3.0 Policy Statement The Trust will ensure that it complies with all statutory, regulatory and performance management obligations. It will clearly define roles, responsibilities and maintain segregation of duties, regularly monitor the effectiveness of cash management and ensure that strict controls are enforced over authorisation limits. The Trust will obtain the best rate of return on any surplus cash and minimise the cost of borrowing to support capital investment and revenue liquidity. The Trust will subject its cash management policy and practices to periodic review by its internal and external auditors who will report to the Audit Committee and, where appropriate, to the Trust Board. 4.0 Definitions External Financing Limit (EFL) is a cash limit on net external financing and is a statutory financial duty which the Trust is required to meet. Its purpose is to control the cash expenditure of the NHS as a whole to the level agreed by Parliament. Government Banking Service (GBS) GBS is part of HM Revenue and Customs and is the banking shared service provider to government and the wider public sector. It is responsible for holding the working balances of Government Departments and other public bodies in high level accounts at the Bank of England. These working balances are made available overnight to the National Loans Fund to reduce the government s borrowing costs. National Loans Fund (NLF) Temporary Deposit Facility this is a facility operated by HM Treasury. Deposits under this facility are accepted by virtue of the fact that this is an approved investment under Pt 2 Ch5 s46(4) and Sch 5 para 9(1) of The National Health Service Act Deposits of over 1,000,000 may be accepted for any period from 7 days up to 6 months. 4

5 Interim Financing Arrangements - The DH has developed interim support financing facilities to support Trust revenue and capital requirements. They have been developed to provide medium term financial support within a clearly defined facility which can be serviced by an appropriate means: Interim Revolving Working Capital Support Facility an extendable revolving maturity loan provided pending the development of an agreed financial recovery plan. Interim Revenue Support Loan an extendable maturity loan provided pending the development of recovery Plan. Interim Revenue Support Public Dividend Capital (PDC) conditional PDC provided pending the development of a recovery plan. Interim Capital Support Loan a capital loan repayable by equal instalments of principal pending the development of recovery plan. Interim Capital Support PDC- Conditional capital PDC linked to essential works in advance of recovery. The use of Interim Capital Support PDC has been discontinued in all but the most exceptional circumstances and replaced with interest bearing amortising loans in the form of interim capital support loans. This includes all investments which can reasonably be considered to be part of a Trust s normal business commitments. Capital Financing Funds capital investment and specifically the purchase of assets (buildings and equipment) generally costing more than 5,000. Permanent discretionary capital PDC, while remaining available for some exceptional investment purposes is not available for the purposes set out above and may only be considered where there is an overriding central strategic imperative or there is a compelling value for money case from the perspective of the taxpayer. This includes an assessment of affordability through submission of business cases. Capital guidance issued by the DH, sets the delegated limits for capital investment and property transactions for which business case approval required from NHSI and DH. For all NHS trusts, a delegated limit of 15 5

6 million applies. The expectation is that an NHS body can generate sufficient internal funding (through depreciation and generation of surpluses) or through serviceable loan support to service its capital requirements. 5.0 Roles and Responsibilities 5.1 Board of Directors Approves the overall. Approves working capital and capital expenditure loan arrangements subject to the funding policy. Delegates detailed approval of NUH s Cash and Treasury Management procedures and controls to the Director of Finance and Procurement. 5.2 Internal and External Auditors The Trust s cash and treasury procedures will be subject to periodic review by the Auditors as part of their audit undertakings and any significant deviations from agreed policies and procedures will be reported to the Audit Committee and where appropriate to the main Board. 5.3 Audit Committee Agrees the content of this. Receives and reviews the reports of work undertaken by Internal and External Auditors in respect of Treasury Management operations. Ensures Trust Staff implement all recommendations made and implement appropriate measures to protect the Trust s resources. 5.4 Finance and Investment Committee Approves the Trust s investment and loan facilities and associated loan drawn down requests. 6

7 Reviews and monitors investment and borrowing practice and performance against the relevant benchmarks. 5.5 Investment Governance Committee Responsible for approval of all business cases within delegated limits and submission of business cases to NHSI, where delegated limits are exceeded. 5.6 Director of Finance and Procurement Has overall responsibility for cash flow management and the application of this and associated procedures. Approves all procedures operating under this Policy. Reviews audit and financial accounts reports and prepares summarised reports for the Board of Directors. 5.7 Assistant Director of Finance Responsible for: Defining NUH s detailed treasury management approach and developing relevant operating procedures. Managing cash, banking and treasury activities within the agreed policies and procedures. Maintaining separation of duties throughout to ensure that financial controls are maintained and no single officer is responsible for investing monies, authorising, placing, and reconciliation. Managing relationships with deposit takers and loan providers. Reconciliation of bank accounts and treasury deposits. Reporting of cash and treasury activities on a timely and accurate basis. 7

8 5.8 Financial Accounts and Financial Services Sections Maintaining accurate and timely accounting records of all financial transactions. 6 Policy Guidance 6.1 Treasury Objectives The objectives of a treasury function are to support the Trust s operations by: Ensuring the availability of adequate working capital at all times to meet ongoing liabilities and commitments. Ensuring the best financial return is obtained on surplus cash balances. Identifying and managing the financial risks, including interest rate and foreign currency risks, arising from operational activities. Ensuring compliance with all banking mandates. These objectives are targeted towards ensuring that the Trust is continually able to develop in line with its strategic objectives and meet its statutory operational and financial targets, uninhibited by cash constraints. 6.2 Treasury Activities In line with the above treasury objectives, the Trust s treasury activities will be undertaken to achieve the following key outcomes: Cash flow management (Funding) - Accurate and timely reporting and forecasting of receipts and payments on a daily, weekly, monthly and rolling annual cycle, to ensure liquid funds are available to meet the Trust s current and future liabilities. Investing surplus cash balances (Investing) - Securing the most competitive deposit rates, commensurate with DH and Treasury guidance, to maximise interest receivable. 8

9 Foreign currency management - Minimise any exchange rate movement risk by covering known foreign exchange exposures. 6.3 Treasury Controls The treasury controls outlined in this Policy are designed to ensure the Trust s treasury activities are undertaken in a controlled and appropriately executed manner. The key components of the overall treasury operating environment shall include the following: Clearly defined roles and responsibilities for treasury activities for the Trust Board of Directors, the Finance and Investment Committee, the Director of Finance and Procurement and the Trust s Financial Services and Financial Accounts Sections. These are set out in Section 5. Regular reporting of treasury activities. Controls on who can operate bank accounts and authorisation limits. Segregation of duties between those who make investments, those who initiate payment and those who account for treasury activities. Strict limitations in accordance with DH and Treasury guidance on the types of investments and the circumstances in which they may be used by the Trust. 6.4 Attitude to Risk in Treasury Management Activities The Trust will generally adopt a prudent and risk adverse approach in carrying out its treasury activities. Under no circumstances will the Trust enter into trading positions or undertake trading for purely speculative investment reasons. 9

10 6.5 Funding The key funding objective is to ensure the availability of funding in perpetuity to meet the Trust s current and future revenue and capital expenditure requirements. Internally generated cash shall be used to fund capital investments wherever possible. It is prohibited to arrange long term debt for service developments without an approved business case, authorised in accordance with DH delegated limits and the Trust s Scheme of Delegation. Interim support financing facilities to support revenue and capital requirements are made available by DH. Applications for any form of loan or borrowing shall be referred to the Trust Board for approval, prior to submission for authorisation by NHS Improvement and DH. The guidance of the Secretary of Health issued under Section 42A of the National Health Service Act 2006 shall be followed together with the Interim Support Finance guidance issued by the Department of Health. 6.6 Investments All cash balances should remain in a liquid form and should be instantly accessible. Cash deposits may only to be placed in the National Loans Fund Temporary Deposit facility with HM Treasury and in accordance with their Terms and Conditions. 6.7 Foreign exchange management The Trust is not exposed to any exchange rate movements, as virtually all of its business is denominated in pounds sterling. In the few circumstances where any purchases are made for a small range of goods and services from overseas suppliers, the Trust purchases foreign currency at spot rate to settle these liabilities. 6.8 Performance Management Performance management is an important part of the control environment from a corporate governance perspective. A performance framework is a 10

11 mechanism for the Board to approve policy and monitor the effectiveness of that policy. Given the restriction on the investment instruments that the Trust can use, the scope to develop metrics is limited. At this stage, therefore, the objective of the Treasury function will be to achieve an overall performance equal or higher than the income plan for investment income. Significant over or under achievement against this benchmark should be closely scrutinised by Finance and Investment Committee and the Board as part of the monthly Finance reporting cycle. 7 Training, Implementation and Resources 7.1 Training There is no specific training requirement for this Policy. Managers and staff may seek advice from the Assistant Director of Finance Financial Services or the Lead Accountant for Financial Reporting in the case of a query. This Policy will be included in the Trust Policy Document Library for reference by staff as appropriate. 7.2 Implementation This Policy reflects current operational practice therefore there is no specific new implementation required, beyond ensuring compliance of this procedure is monitored in accordance with principles outlined in section Resources No additional resources are anticipated as being required to implement this Policy. 8 Equality and Environmental Impact Statements 8.1 Equality Impact Statement NUH is committed to ensuring all its policies, procedures, services, projects or functions do not discriminate unlawfully. All patients, employees and members of the public should be treated fairly and with respect, regardless of age, disability, gender, marital status, membership or non-membership of a trade union, race, religion, domestic circumstances, sexual orientation, ethnic or 11

12 national origin, social & employment status, HIV status, or gender reassignment. An equality impact assessment has been undertaken on this draft and has not indicated that any additional considerations are necessary. 8.2 Environmental Impact Assessment Statement An environmental impact assessment has been undertaken on this draft and has not indicated that any additional considerations are necessary. 8.3 Here for You Assessment A Here For You assessment has been undertaken on this document and has not indicated that any additional considerations are necessary. 12

13 9 Policy / Procedure Monitoring Matrix Minimum requirement to be monitored Part of Finance Department Risk Assessment Responsible individual/ group/ committee Lead Accountant Financial Reporting Process for monitoring e.g. audit The Lead Accountant for Financial Reporting will carry out annual review of The Policy to ensure it is compatible with current best practice guidance and undertake a bi-annual review of Treasury management reporting practices to ensure compliance with this Policy. Frequency of monitoring Bi-Annual Responsible individual/ group/ committee for review of results Assistant Director of Finance- Financial Services Responsible individual/ group/ committee for development of action plan Assistant Director of Finance- Financial Services Responsible individual/ group/ committee for monitoring of action plan Assistant Director of Finance- Financial Services 13

14 10 Relevant Legislation, National Guidance and Associated NUH Documents This procedure should be read in conjunction with: The Trust s Standing Financial Instructions The Trust s Cash and Treasury Management Procedure Department of Health Group Accounting Manual Department of Health National Loans Fund Temporary Deposit facility Terms and Conditions HM Treasury Secretary of State s Guidance under section 42A of the National Health Service Act 2006 Department of Health Interim Support Finance Department of Health 14

15 APPENDIX A Insert templates of relevant impact assessments (page break after each) Equality Impact Assessment (EQIA) Form (Please complete all sections) Q1. Date of Assessment: 1 Q2. For the policy and its implementation answer the questions a c below against each characteristic (if relevant consider breaking the policy or implementation down into areas) Protected Characteristic a) Using data and supporting information, what issues, needs or barriers could the protected characteristic groups experience? i.e. are there any known health inequality or access issues to consider? The area of policy or its implementation being assessed: b) What is already in place in the policy or its implementation to address any inequalities or barriers to access including under representation at clinics, screening c) Please state any barriers that still need to be addressed and any proposed actions to eliminate inequality Race and Ethnicity There are no barriers to access or inequalities in relation to this Policy Gender There are no barriers to access or inequalities in relation to this Policy Age There are no barriers to access or inequalities in relation to this Policy 15

16 Religion There are no barriers to access or inequalities in relation to this Policy Disability There are no barriers to access or inequalities in relation to this Policy Sexuality There are no barriers to access or inequalities in relation to this Policy Pregnancy and Maternity Gender Reassignment Marriage and Civil Partnership Socio-Economic Factors (i.e. living in a poorer neighbourhood / social deprivation) There are no barriers to access or inequalities in relation to this Policy There are no barriers to access or inequalities in relation to this Policy There are no barriers to access or inequalities in relation to this Policy There are no barriers to access or inequalities in relation to this Policy Area of service/strategy/function Q3. What consultation with protected characteristic groups inc. patient groups have you carried out? Not Relevant 16

17 Q4. What data or information did you use in support of this EQIA? Not Applicable Q.5 As far as you are aware are there any Human Rights issues be taken into account such as arising from surveys, questionnaires, comments, concerns, complaints or compliments? No Q.6 What future actions needed to be undertaken to meet the needs and overcome barriers of the groups identified or to create confidence that the policy and its implementation is not discriminating against any groups What By Whom By When Resources required No further action required Q7. Review date 17

18 APPENDIX B Environmental Impact Assessment The purpose of an environmental impact assessment is to identify the environmental impact of policies, assess the significance of the consequences and, if required, reduce and mitigate the effect by either, a) amend the policy b) implement mitigating actions. Area of impact Waste and materials Soil/Land Water Air Environmental Risk/Impacts to consider Is the policy encouraging using more materials/supplies? Is the policy likely to increase the waste produced? Does the policy fail to utilise opportunities for introduction/replacement of materials that can be recycled? Is the policy likely to promote the use of substances dangerous to the land if released (e.g. lubricants, liquid chemicals) Does the policy fail to consider the need to provide adequate containment for these substances? (e.g. bonded containers, etc.) Is the policy likely to result in an increase of water usage? (estimate quantities) Is the policy likely to result in water being polluted? (e.g. dangerous chemicals being introduced in the water) Does the policy fail to include a mitigating procedure? (e.g. modify procedure to prevent water from being polluted; polluted water containment for adequate disposal) Is the policy likely to result in the introduction of procedures and equipment with resulting emissions to air? (e.g. use of a Action Taken (where necessary) NO NO NO NO 18

19 Energy Nuisances furnaces; combustion of fuels, emission or particles to the atmosphere, etc.) Does the policy fail to include a procedure to mitigate the effects? Does the policy fail to require compliance with the limits of emission imposed by the relevant regulations? Does the policy result in an increase in energy consumption levels in the Trust? (estimate quantities) Would the policy result in the creation of nuisances such as noise or odour (for staff, patients, visitors, neighbours and other relevant stakeholders)? NO NO 19

20 APPENDIX C We Are Here For You Policy and Trust-wide Procedure Compliance Toolkit The We Are Here For You service standards have been developed together with more than 1,000 staff and patients. They can help us to be more consistent in what we do and say to help people to feel cared for, safe and confident in their treatment. The standards apply to how we behave not only with patients and visitors, but with all of our colleagues too. They apply to all of us, every day, in everything that we do. Therefore, their inclusion in Policies and Trust-wide Procedures is essential to embed them in our organization. Please rate each value from 1 3 (1 being not at all, 2 being affected and 3 being very affected) Value Score (1-3) 1. Polite and Respectful Whatever our role we are polite, welcoming and positive in the face of adversity, and are always 1 respectful of people s individuality, privacy and dignity. 2. Communicate and Listen We take the time to listen, asking open questions, to hear what people say; and keep people 1 informed of what s happening; providing smooth handovers. 3. Helpful and Kind All of us keep our eyes open for (and don t avoid ) people who need help; we take ownership of 1 delivering the help and can be relied on. 4. Vigilant (patients are safe) Every one of us is vigilant across all aspects of safety, practices hand hygiene & demonstrates 1 attention to detail for a clean and tidy environment everywhere. 5. On Stage (patients feel safe) We imagine anywhere that patients could see or hear us as a stage. Whenever we are on 1 20

21 stage we look and behave professionally, acting as an ambassador for the Trust, so patients, families and carers feel safe, and are never unduly worried. 6. Speak Up (patients stay safe) We are confident to speak up if colleagues don t meet these standards, we are appreciative 1 when they do, and are open to positive challenge by colleagues 7. Informative We involve people as partners in their own care, helping them to be clear about their condition, 1 choices, care plan and how they might feel. We answer their questions without jargon. We do the same when delivering services to colleagues. 8. Timely We appreciate that other people s time is valuable, and offer a responsive service, to keep 1 waiting to a minimum, with convenient appointments, helping patients get better quicker and spend only appropriate time in hospital. 9. Compassionate We understand the important role that patients and family s feelings play in helping them feel 1 better. We are considerate of patients pain, and compassionate, gentle and reassuring with patients and colleagues. 10. Accountable Take responsibility for our own actions and results Best Use of Time and Resources Simplify processes and eliminate waste, while improving quality Improve Our best gets better. Working in teams to innovate and to solve patient frustrations 1 TOTAL 14 21

22 CERTIFICATION OF EMPLOYEE AWARENESS APPENDIX D Document Title Version (number) 4 Version (date) 14 I hereby certify that I have: Identified (by reference to the document control sheet of the above policy/ procedure) the staff groups within my area of responsibility to whom this policy / procedure applies. Made arrangements to ensure that such members of staff have the opportunity to be aware of the existence of this document and have the means to access, read and understand it. Signature Print name Date Directorate/ Division The manager completing this certification should retain it for audit and/or other purposes for a period of six years (even if subsequent versions of the document are implemented). The suggested level of certification is; Clinical Divisions Divisional General Manager or nominated deputy Corporate Directorates - deputy director or equivalent. The manager may, at their discretion, also require that subordinate levels of their directorate / department utilize this form in a similar way, but this would always be an additional (not replacement) action. 22