Notes to the accounts to support the primary statements

Transcription

1 NORTH EAST AMBULANCE SERVIVE NHS FOUNDATION TRUST BRIEFING ON THE ANNUAL ACCOUNTS REPORT BY Head of Financial Services 1. INTRODUCTION North East Ambulance Service NHS Foundation Trust has three statutory requirements in relation to its accounts, the detail of which is set out in paragraphs 24 and 25 of Schedule 7 to the National Health Services Act 2006: 1) to keep proper accounts and proper records in such form as the regulator may, with the approval of the Secretary of State, direct; 2) to prepare in respect of each financial year, annual accounts in such form as the regulator may, with the approval of the Secretary of State, direct; and, 3) to comply with any directions given by the regulator, with the approval of the Secretary of State as to: a. the methods and principles according to which the accounts are to be prepared; and b. the content and form to be given in the accounts. The format of the accounts is specified by Monitor s Annual Reporting Manual 2014/15 (ARM). The ARM provides guidance to Foundation Trusts on fulfilling their statutory duties with regard to preparing and completing their annual report and accounts, as detailed above, as well as for the Foundation Trust Consolidation forms (FTC s) used to consolidate the NHS accounts as a whole. The accounts comprise:- The Accounting Officers Statement of Responsibilities The Annual Governance Statement The auditor s opinion report The foreword to the accounts Four primary statements Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Taxpayers Equity Statement of Cash Flows Notes to the accounts to support the primary statements The Board of Directors is responsible for formally adopting the accounts once audited, though it delegates authority to the Audit Committee to provide Assurance that the accounts represent a true and fair view of the financial health of the organisation. In reaching their conclusion on the accounts, the Audit Committee is assisted by the Head of Internal Audit Opinion and External Audit s work in verifying the accounts, culminating in the ISA Annual Governance Report. Ultimate responsibility for the accounts however, rests with the Foundation Trust. 1

2 2. THE PRIMARY STATEMENTS 2.1 Statement of Comprehensive Income (SOCI) The SOCI for the Trust summarises the revenue (income) received from the Trust s activities for the year and the expenditure incurred as a result of this activity. Operating Income Income totalling 115,648K was higher than last year by 1m. Further details are provided in notes 3 and 4 below. Operating Expenditure Operating expenditure totalling 115,637K also increased from the previous year. Further details are provided in notes 5 below. The net result was an operating surplus of 11K Other income and expenditure that is also taken into account which is not related to the trading activities is as follows:- Finance Costs This is made up of four elements:- Finance income which relates solely to interest on bank accounts including the National Loans Fund. Finance expense o Interest element on the finance leases o Interest on vehicle insurance invoice Unwinding of discount on certain provisions PDC dividend, a charge by the Government on the value of the Trust s assets. This further decreased the Trusts position to a deficit of 908K, the final position recorded on the face of the SOCI. Other Comprehensive Income 1.7m revaluation gain shown under Other Comprehensive Income refers to an increase in the value of assets as a result of the District Valuer s revaluation of the Trusts estate, buildings and finance leases. The net effect is not shown through profit/loss rather through the revaluation reserve. 2.2 Statement of Financial Position (SOFP) The Statement of Financial Position represents the Assets and Liabilities of the Trust as at 31 st March, 2015 with the corresponding breakdown of Taxpayers Equity. Non-current assets Non-current assets relate solely to the Property, Plant and Equipment (PPE) and Intangible Assets held by the Trust and are valued at 38.4m. The increase in value of the assets is mainly due to a number of actions as follows Upward valuation of the Trusts land and buildings by the District Valuer ( 1.7M) the purchase of Emergency Care vehicles delayed from the previous year ( 1.3M) forward purchase of 10 chassis ( 400k) forward conversion of 5 PTS vehicles ( 132k) A breakdown of these assets can be seen by category in Note 13 and 14. Current Assets There has been a decrease in Current Assets of some 1.7m compared to last year. This is mainly due to a decrease in cash of 982K and a decrease in receivables of 669K. 2

3 Cash decreased as a result of increased capital spending, fulfilling the previous year s capital commitments. The full effect of this was offset by a movement in working balances, that being an increase in payables and decrease in receivables. Receivables decreased as a result of a high volume of EC year end invoices for over activity being included in 13/14 receivables balance but paid in 14/15. Current Liabilities Current liabilities have increased by 800K due to a number of factors. Credit notes to the value of 778K transferred from trade debtors to payables as a result of the year end settlement with Commissioners. There were also increases in accruals for third party expenditure. Other liabilities nearly doubled, this was as a result of deferring winter resilience funding. Non-Current Liabilities There has been little movement in this area and is made up of three items as follows:-. Borrowings, which refers to the Trusts finance lease liabilities (8) this value has reduced this year due to the purchase of Blutcher Ambulance Station. Trade and other payables solely comprises of capital accruals for reparation work at 4 sites, returning the remaining finance lease assets back to their original condition at the end of the lease. Provisions include employers liability claims, early retirement pensions, compensation pensions, restructures and banked annual leave. 2.3 Statement of Changes in Taxpayers Equity (SOCITE) The Statement of Changes in Taxpayers Equity shows the closing balance of Taxpayers Equity as well as in year movements of reserves. Overall the increase in equity was as a result of a combination of the operating deficit of 908K and an overall upward valuation of the Trust s assets of 1.7m. 2.4 Statement of Cash Flows The Statement of Cash Flows for the Trust summarises the cash flows both into and out of the organisation during the financial year and demonstrates how the change in actual cash balances are calculated note that the increase in cash detailed on the Cashflow statement equals the increase in cash at bank and in hand on the SOFP. The cash-flow takes the operating surplus from the SOCI, 11K and makes adjustments for items charged to the SOCI but for which there is not an equivalent movement in cash. Therefore adjustments must be made for in year movements of stocks, debtors, creditors and provisions, as well as depreciation/amortisation and impairments. This shows a net inflow of cash from operating activities of 8,832K. Adjustments for investing activities are then made, these are transactions that are not included within operating activities but for which there is a cash transaction. Therefore interest received is added and capital receipts and payments transactions are accounted. This resulted in a cash outflow of 8,515K before financing. Finally financing activities are accounted including capital and interest repayments on finance leases of 379K and 145K respectively are adjusted for PDC dividend payments giving an overall decrease in cash for the period of 982K. 3

4 3. NOTES TO THE ACCOUNTS In addition to supporting the Primary Statements as described above, the notes to the accounts also set out the accounting rules and policies followed by the Trust which incorporate the accounting principles as identified in the Annual Reporting Manual (ARM). Notes 3 and 4 Revenue The majority of the Trust s income is derived from the provision of Emergency Care Services and PTS contacted and paid for by the CCG s. Overall income increased from 114.7m to 115.6m. This 1m movement is as a direct result of resilience (winter) funding from the Department of Health. In 13/14 the Trust received 1m in winter funding and in 14/15 this increased to 2m. However, the CCG s applied penalties of 2.3m this year but committed to reinvested 2m of this back into the Trust. In addition Sunderland CCG invested a further 300K to support the advanced practice paramedic pilot. Note 5 Operating expenses This note details the categories of expenditure incurred to run the organisation. Salaries and wages costs equate to 66% of the Trusts overall expenditure with depreciation, purchase of healthcare from third parties and transport costs making up another 19% and the balance comprising a myriad of other items as per the note. Some of the larger movements include:- Pay these have generally increased due to overtime in Emergency care to cover for vacancies and agency staff in the Contact Centre. In addition meal-break payments, previously included within establishment costs are now recorded against this heading. Purchase of Healthcare from Non NHS bodies this is made up of two main elements, Northern Doctors Urgent Care (NDUC) fee and third party provider support. Both of these areas have seen an increase though the comparison to 13/14 is skewed as in this year the NDUC fee was previously included in premises costs. Transport costs have increased as a result of the increased maintenance costs associated with the delay in the purchase of the new front line ambulances. Note 24 Provisions This note details the different categories of provisions the Trust has recognised in the accounts. A provision is a charge to expenditure for which there is no corresponding cash transaction/entry. Expenditure is recognised in this manner when the commitment to making that provision/charge to the SOCI is more probable than not and an estimate of the value can be made. For example the Trust recognises a number of different types of provision as follows:- Early Retirements Injury Benefits Employer Liability Claims Banked annual leave Restructures Some provisions are calculated on a fixed amount payable within a year on a given percentage of success e.g. Employer Liability Claims, others are calculated over a longer period such as Early Retirements and Injury Benefits. In the latter instance the provision is calculated as the annual payment to the individual multiplied by their life expectancy. These are then discounted (reduced) to take account of the time value of money. Each year payments are made to the Pensions Agency which reduces the provision. However the discounting is also reversed but this is charged directly to the SOCI so that there is sufficient value in the provision to meet the Pensions Agency payments each year until the provision eventually reduces to zero. This year Treasury changed the discount rate applicable from 1.8% to 1.3%. The effect of this was to increase the value of the provision by 123K, and the charge taken directly expenditure. 4

5 Note 26 Capital Commitments The capital commitments of 1.5m related mainly to vehicles including Emergency Care vehicle chassis Rapid Response cars and a training vehicle. 4. AUDITED ACCOUNTS The Trust accounts are subject to independent scrutiny by the Trust s external auditors, PwC, who are required to explain the role that they undertake and give an opinion as to whether the Trust accounts represent a true and fair view of the financial standing of the Trust. This review culminates in an Annual Governance Report which is presented to the Audit Committee, members and the Board of Directors and an Audit Opinion presented to the Board of Governors. 5. ANNUAL REPORT The Annual Report presents both the Trusts accounts and a look back at the period just ended. It describes the activities of all of the Trust s directorates, highlights operational performance for the year and contains a forward look at the opportunities and threats in the environment in which the Trust operates. The annual report also contains governance information and further financial information not presented in the accounts themselves such as the Directors remuneration disclosure. 6. CONCLUSION On the basis of the Head of Internal Audit Opinion, the external auditors review of the accounts, culminating in the Annual Governance Report (ISA 260) and assurances provided by the Audit Committee it is recommended that the Board of Directors approve the appended accounts for submission to Monitor and formal publication in due course. Judith Hurrell Head of Financial Services 20 th May,