GRAMPIAN PRIMARY CARE NHS TRUST

Transcription

1 GRAMPIAN PRIMARY CARE NHS TRUST ACCOUNTS

2 Contents 1 Directors Report 8 Statement of NHS Trust Board Members Responsibilities 9 Statement of The Chief Executive s Responsibilities as The Accountable Officer of The Grampian Primary Care NHS Trust 10 Statement on Internal Control 12 Report of the Auditors 14 Operating Cost Statement Summary of Resource Outturn Statement of Recognised Gains and Losses Balance Sheet 17 Cash Flow Statement 18 Notes to the Accounts 40 Accounts Direction

3 Grampian Primary Care NHS Trust Directors Report These accounts have been prepared by the NHS Trust under section 86(1B) of the National Health Service (Scotland) Act 1978 in the form which the Scottish Ministers have directed. History of the Trust The Trust was formed on 1 April 1999 to provide community, primary care, learning disability and mental health services throughout the local authority areas of Aberdeen, Aberdeenshire and Moray. These services include:! community hospitals and care of the elderly;! community nursing and paramedical services;! mental health services in adolescent psychiatry, psychotherapy, substance misuse and rehabilitation, acute inpatient and outpatient services, forensic unit and rehabilitation services and community psychiatric teams;! old age psychiatry services;! services for people with learning difficulties; and! the responsibility for the local management of nationally agreed NHS contracts and general medical and dental practitioners, community pharmacists and opticians. Up to 31 March 2004, the organisation structure had eight devolved Local Healthcare Co-operatives (LHCCs), Mental Health and Learning Disabilities Services. The LHCCs were: Practice List No. of patients 000 Number of Health Centres/GP Practices Number of Hospitals Aberdeen Inner City Aberdeen & North Aberdeen West Banff & Buchan Central Aberdeenshire Deeside Kincardine Moray In addition there are Mental Health, Continuing Care and Learning Disabilities Services at Royal Cornhill, City, Woodend and Woodlands Hospitals in Aberdeen and at Dr Gray s Hospital in Elgin. Role of Trust Management Team Following the publication of the Scottish Health Plan by the Scottish Executive in December 2000, 15 single Unified NHS Boards were established in October 2001 to replace the separate structures of NHS Health Boards and Trusts. NHS Trusts remained as legal entities within the local NHS system and retained their existing operational autonomy with Trust Management Teams taking on the role of the Trust Board

4 Trust Dissolution In March 2003, the Scottish Health Department published Partnership for Care, Scotland s Health White Paper. This required NHS Boards to bring forward proposals by April 2004, at the latest, to dissolve NHS Trusts in Scotland. On 31 March 2004, Grampian Primary Care NHS Trust was formally dissolved when Grampian Health Board, commonly known as NHS Grampian, took over its activities and assets and liabilities. This change is in support of the development of integrated, decentralised healthcare services within NHS Grampian, as detailed in the White Paper. By removing unnecessary organisational and legal barriers, NHS Grampian staff will be empowered to plan and deliver improved healthcare services within a framework of clear strategic direction and rigorous performance management. Review of the Year 2003/04 saw the Trust continuing to provide high quality services to the people of Grampian in the face of a significant change agenda. Financial targets have been achieved through the careful targeting of resources on service priorities. The Trust received funding to take forward a number of initiatives in 2003/04 including:- Implementation of the low pay agreement in order to provide all NHS staff with an agreed minimum wage; Continued development of the electronic communications initiative; Increased investment in a number of health improvement schemes throughout Grampian; A range of initiatives around winter planning to prevent delayed discharges such as investment in equipment for use by patients at home; Modernisation of dental and other primary care premises; Making available a number of new and expensive drugs for treatment of disorders in Mental Health; Increased investment in children s services within a community setting; and Progress on taking forward the Joint Future agenda with all three local authorities in Grampian. A major piece of work was completed this year on preparing for the implementation of the new General Medical Services (GMS) contract, which came into effect on 1 April The contract completely overhauls the way in which GMS services are funded and will have a major impact on the way in which General Practitioners work in the future. The overall aims of the contract are to improve recruitment and retention of General Practitioners as well as rewarding for providing high quality services. The Trust has concentrated on ensuring that General Practitioners in Grampian will provide a full range of services under the new contract. This has involved planning for the implementation of enhanced services and revised out of hours care arrangements, in addition to continuing to invest in premises developments and IT within General Practice. The Learning Disabilities Service has successfully come through the latter stages of its re-design with the opening of new In-Patient and Day Patient facilities at Elmwood at the end of August 2003, increased investment in Community Teams Grampian wide and implementation of alternative services and facilities in the Community. Woodlands remained open to support three projects with a total of 20 patients. These projects, into which the remaining patients were discharged, were managed by Provider agencies from the private/voluntary sectors and registered with the Care Commission. As at 31 March 2004 one project remained. This project is anticipated to move in July To reflect commitment to the Joint Future agenda, it has been agreed the Moray service will be hosted in the Local Authority on an integrated basis with the proposed introduction of an Integrated Service Manager managing both NHS and Local Authority services. Integrated management teams are in place across the three Local Authority areas in Grampian

5 In terms of the Joint Future strategy and its implementation, Mental Health services in Moray, including Local Authority components, will be hosted within NHS Grampian. To further reflect the Joint Future strategy and its impact on Mental Health, there are now Integrated Management Teams in Aberdeen City and Aberdeenshire. In addition, the intention to introduce Joint Management Teams for Substance Misuse Services across Grampian has moved forward considerably. The implementation of the Mental Health (Care and Treatment) (Scotland) Act 2003 has been planned jointly with Local Authority, NHS and User/Carer involvement. The Joint Implementation plan is with the Scottish Executive. The modernisation and re-design of services continues with the closure of one rehabilitation ward in May 2003 and the associated introduction of a community based rehabilitation hostel in partnership with the Local Authority and Scottish Association for Mental Health. Jointly with the Local Authority and Primary Care, the service has succeeded with a bid for substantial resources relating to the Doing Well by People With Depression initiative, most of which will impact on services in 2004/05. The Grampian service is taking a lead in discussions on a Managed Clinical Network for Eating Disorders for the North East of Scotland. On the pay modernisation front negotiations on the Consultant Contract have progressed to the stage where implementation is expected early in 2004/05 and compliance has been achieved with regard to the New Deal for Junior Doctors. Regarding service quality, an action plan has been developed to meet the standards required for Schizophrenia following recommendations from Quality Improvement Scotland. Financial targets The Scottish Executive requires NHS Trusts to achieve two financial targets on an annual basis. These are: To break even taking one year with another, i.e. net resource outturn should not exceed the Revenue Resource Limit; and To stay within the Capital Resource Limit Performance against financial targets Limit as set by NHS Board Actual Outturn Variance (Over)/Under Revenue Resource limit 237, ,424 - Capital Resource Limit (5,959) (5,959) - The Trust met both of the above targets in 2003/04. In 2003/04, the Practitioner Services Division performed work to give an indication of the possible level of Family Health Services income lost due to incorrect claims by patients for exemption from NHS charges. The extrapolation of the sample results for the Trust indicates that the level of income lost in prescription, dental and opthalmic charges in the year to 31 December 2003 could possibly amount to 0.766million. Fixed assets and capital expenditure The Trust invested 2.4million during the year on items of capital expenditure, of which 1.07 million was spent on the Learning Disabilities Unit at Elmwood, 500,000 on the Torry Neighbourhood Centre, and 437,000 on infrastructure, comprising 222,000 on medical equipment, 117,000 on vehicles and 98,000 on e-health

6 Payment policy The Trust is required by the Scottish Executive Health Department to report on compliance with the CBI prompt payment code. The code states that responsible organisations should:- - have a clear and consistent policy of paying bills in accordance with the contract; - ensure that finance and purchasing departments are aware of this policy and adhere to it; - agree payment terms at the outset of a deal and adhere to them; - not extend or alter payment terms without prior agreement; - provide suppliers with clear guidance on payment procedures; and - ensure that there is a system for dealing quickly with complaints and disputes and advise suppliers without delay when invoices or parts of invoices are contested. It is Trust policy to adhere to this code. In 2003/04, the average credit taken was 39.2 days (2002/03: 35 days). 37% of invoices by value and 47% by volume were paid within 30 days. Research and Development As a major teaching organisation, the Trust seeks to encourage research and development at all levels. Expenditure on research and development in 2003/04 was 583,000. Trust Board Under the terms of the Scottish Health Plan, NHS Trusts concentrated on delivering their operational responsibilities within the local NHS system: this was primarily the responsibility of the Trust s executive management. The full Trust Management Team comprised the Chair, two non-executives and five executive posts. References in the accounts to the Board refer to the Trust Management Team. The following served as members of the Trust Board during the year: Non-executive members Mr George Esson Mrs Barbara Bruce Mr David Sutherland Chairman Trustee Trustee Executive members Mr Ewan Robertson Dr Gordon Peterkin Mr Alan Gall Mrs Elinor Smith Mr Gordon Morrice Acting Chief Executive Medical Director Director of Finance Director of Nursing Human Resources & Organisational Learning Director Corporate Governance The Trust Board met regularly throughout the year to progress the business of the Trust. The Board had adopted a schedule of matters reserved for its decision and was supported by the work of subcommittees reporting to the Board. Membership of committees could be populated from across the whole local NHS system and could include members of the executive team and others with expertise relevant to the function of the committee. The main functions of the Committees, together with membership as at 31 March 2004, were as follows: - 4 -

7 Audit Committee The Audit Committee met as a combined committee for NHS Grampian. Its main duties included: - the regular review of the role, function and performance of the Trust s Internal Audit Service; - the review of external audit arrangements; - the review and monitoring of adherence to the Trust s Standing Orders and Standing Financial Instructions; and - ensuring that effective internal control systems were maintained and corporate governance matters were observed. Membership: Mr David Sutherland (Chair), Councillor Edward Aldridge, Mrs Anne Campbell, Mr Angus Gordon and Professor Valerie Maehle. Remuneration Committee The Remuneration Committee continued to meet at Trust level. Its main duties were: - agreeing terms and conditions of employment for executive members of the Board; - regularly reviewing the Board s policy for remuneration of senior staff of the Trust; - monitoring and evaluating the performance of the Executive Directors and senior management; and - approving the award of discretionary points to senior management. No Executive Director took part in discussions on their own remuneration. Membership: Mr George Esson (Chair), Mrs Barbara Bruce, Mr David Sutherland. Endowment Committee: The Endowment Committee continued to meet at Trust level. Its main duties included: - determining/setting a transparent policy for Endowments; - determining investment objectives; - approving the Endowment Fund budgets; - approving the audited annual accounts of the Endowment Funds; and - ensuring probity of expenditure. Membership: Mr George Esson (Chair), Mr Ewan Robertson, Mr Alan Gall and Mr David Sutherland. Clinical Governance Committee The Clinical Governance Committee continued to meet at Trust level. It was required to check that appropriate structures were in place to undertake the activities that underpin Clinical Governance and regularly prepared and brought to the attention of the Trust Board reports on the operation of the system and specific reports on any problems that emerged. Membership: Mrs Barbara Bruce (Chair), Mr George Esson. Co-opted members - Dr David Kennedy, Mr Ronald Stark

8 Risk Management Risk Management responsibilities were devolved widely through the Trust with direction provided through the Risk Management Strategy. Monitoring of risks was maintained through the Trust s extensive performance management arrangements with the Trust s Risk Manager leading an assessment of key risks. A quarterly review of performance was carried out by the Executive Leadership Council. Staff Governance Committee The main responsibility of the Staff Governance Committee was to oversee the implementation of the five staff governance standards and achieve exemplar employer status in NHS Grampian. The five standards entitle staff to be: Well informed; Appropriately trained; Involved in decisions that affect them; Treated fairly and consistently; and Provided with an improved and safe working environment. Membership: Mrs Anne Campbell (Chair), Mrs Barbara Bruce, Mrs Margaret Burns, Councillor Kate Dean, Mr George Esson, Mr Angus Gordon, Professor Stephen Logan, Mrs Susan Robertson, Mr James Royan. Human Resources and Organisational Learning The Trust continued to make progress in terms of Human Resources (HR) strategy, people management, organisational development, and partnership working with staff. New strategies were developed for Learning and Development, Workforce Planning, Pay Modernisation and Risk Management. Investors in People re-recognition was achieved in 2003 and this positive standard will be sustained by Performance Appraisal, Personal Development Plans and Learning Plans linked to Service Plans. A major responsibility of HR is supporting organisational change which continued as NHS Grampian moved to a single system. Change is a constant and although staff respond extremely well to new organisational arrangements and changing roles and relationships, this does add to the existing workplace pressures. The Staff Governance Action Plan (based on the 5 Standards: being informed, appropriately trained, involved, treated fairly and consistently, and provided with an improved and safe work environment) has been audited with positive outcomes in most areas. A second Staff Survey was conducted in November 2003 and the results are being reflected in an updated Action Plan. Introduction and/or harmonisation of Staff Policies is an ongoing area of work. Pay Modernisation is a major new area of work. This involves new contracts for Consultants and GPs to be implemented around April 2004 and preparation for Agenda for Change, a new policy for all other staff. Register of Interests of Trust Board Members The register of interests of Trust Board members is held at Trust Headquarters, Summerfield House, 2 Eday Road, Aberdeen and can be inspected by members of the public by contacting the Trust Board Secretary. The Non Executive Trustees were free from any business or other relationship, which could interfere with the exercise of their judgement

9 Appointment of Auditor The Public Finance and Accountability (Scotland) Act 2000 places personal 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 2001/02 to 2003/04 the Auditor General appointed Peter Johnston, Chief Auditor in Audit Scotland s West Region to undertake the audit of Grampian Primary Care NHS Trust. 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. The internal auditors of the Trust were PricewaterhouseCoopers LLP. Post balance sheet events On 1 April 2004, the assets and liabilities and undertakings of the Grampian Primary Care NHS Trust transferred to Grampian Health Board. The Grampian Primary Care NHS Trust was dissolved on 31 March Following the transfers of assets and liabilities, all financial transactions for the Grampian Primary Care NHS Trust after 31 March 2004 were taken on by Grampian Health Board. The assets and liabilities of Grampian Primary Care NHS Trust reported in these accounts will be brought into account from the start of the financial year within the accounts of Grampian Health Board for the year ended 31 March Mr James Royan Chairman Grampian Health Board Date Mr Alexander Smith Interim Chief Executive Grampian Health Board Date - 7 -

10 STATEMENT OF NHS TRUST BOARD MEMBERS RESPONSIBILITIES The National Health Service (Scotland) Act 1978 requires Grampian Primary Care NHS Trust to prepare accounts for each financial year which give a true and fair view of the state of affairs of the NHS Trust and of its income and expenditure for that period. In preparing those accounts, the Trust board members are required to (a) select suitable accounting policies and then apply them consistently, (b) make judgements and estimates that are reasonable and prudent, (c) state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts, and (d) prepare the accounts on the going concern basis unless it is inappropriate to presume that Trusts will continue to operate. The Trust board members are responsible for ensuring proper accounting records are maintained which disclose with reasonable accuracy at any time the financial position of the Trust and enable them to ensure that the accounts comply with the National Health Service (Scotland) Act 1978 and the requirements of the Scottish Executive Health Department. They are also responsible for safeguarding the assets of the Trust and hence taking reasonable steps for the prevention and detection of fraud and other irregularities. The Grampian Primary Care NHS Trust ceased on 31 March 2004 and its operations, assets and liabilities were transferred to Grampian Health Board on 1 April As members of Grampian Health Board, we confirm that the above responsibilities have been discharged during the period 1 April 2003 to 31 March 2004 and in preparing the accounts.... Mr James Royan Chairman, Grampian Health Board... Mr Alan Gall Director of Finance, Grampian Health Board - 8 -

11 STATEMENT OF THE CHIEF EXECUTIVE S RESPONSIBILITIES AS THE ACCOUNTABLE OFFICER OF THE GRAMPIAN PRIMARY CARE NHS TRUST 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 Grampian Primary Care NHS Trust. This designation carries with it, responsibility for the propriety and regularity of financial transactions under my control, and for the economical, efficient and effective use of resources placed at the Trust s disposal. 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 25 th July Mr Ewan Robertson Acting Chief Executive Grampian Primary Care NHS Trust 31 March 2004 Date - 9 -

12 GRAMPIAN PRIMARY CARE NHS TRUST STATEMENT ON INTERNAL CONTROL 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. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is also based on an ongoing process designed to identify the principal risks to the achievement of the organisation s policies, aims and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically. As Accountable Officer, I have responsibility for reviewing the effectiveness of the system of internal control. The following processes have been established throughout the financial year: a management board which meets regularly to consider the plans and strategic direction of the organisation; periodic reports from the chairman of the organisation s audit committee, to the board, concerning internal control; regular reports by internal audit which include the Head of Internal Audit s independent opinion on the adequacy and effectiveness of the system of internal control together with recommendations for improvement; as part of the performance management arrangements, regular reports from managers on the steps they are taking to manage risks in their areas of responsibility including progress reports on key projects; establishment of key performance and risk indicators, including a risk register; and a continued programme of risk awareness training. The above processes are consistent with the Trust s Risk Management Strategy and have enabled risk management to become incorporated into the corporate planning and decision making processes of the organisation. These processes have been fully embedded throughout the year ended 31 March 2004 and accord with guidance from Scottish Executive Finance. My review of the effectiveness of the system of internal control is also informed by the work of the internal auditors and the executive managers within the organisation who have responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in their management letters and other reports

13 Practitioner Services Division The Practitioner Services Division (PSD) of NHS National Services Scotland has responsibility for calculating and making payments to Primary Care practitioners on behalf of Primary Care Trusts. In previous years, a number of deficiencies in the control processes operated by PSD were highlighted by the Service Auditor and by Audit Scotland, and these have been reported annually in our Statement on Internal Control. These weaknesses have been gradually addressed by PSD however, such that for the year to 31 st March 2004, there have been no significant weaknesses that require individual disclosure. While I note that the Service Auditor has continued to report a number of weaknesses in the control systems operated by PSD, I do not consider that these have a fundamental impact on the accuracy or control of Primary Care payments, and I am pleased to note the continued commitment of PSD management to address these areas. Work carried out at a national level by PSD for 2002/2003 indicated that a significant level of incorrect claims had been made for exemption from NHS prescription, dental and ophthalmic charges. As this exercise was not quantified at an individual Trust/Health Board level, further work was carried out during 2003/2004 and the results of this have been extrapolated to give an indication of the possible level of Family Health Services income lost due to incorrect claims by patients for exemption from NHS charges. The extrapolation of the sample results for Grampian indicates that the level of income lost in prescription, dental and ophthalmic charges in the year to 31 December 2003 could possibly amount to million. It should, however, be emphasised that we have been provided with no assurances as to the likely accuracy of this estimate. Mr Ewan Robertson Acting Chief Executive Grampian Primary Care NHS Trust 31 March 2004 Date

14 INDEPENDENT AUDITOR S REPORT To the members of Grampian NHS Board, the Scottish Parliament and the Auditor General for Scotland I have audited the financial statements on pages 14 to 39 under the National Health Service (Scotland) Act The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain fixed assets, and in accordance with the accounting policies set out on pages 18 to 22. This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and the Code of Audit Practice approved by the Auditor General for Scotland and for no other purpose, as set out in paragraph 43 of the Statement of Responsibilities of Auditors and of Audited Bodies prepared by Audit Scotland, dated July Respective responsibilities of the Board Members, Accountable Officer and Auditor As described on pages 8 and 9 the Board and the Accountable Officer of the NHS Trust are normally responsible for the preparation of the financial statements in accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder. The Accountable Officer is also responsible for ensuring the regularity of expenditure and income. The Board and Accountable Officer are also normally responsible for the preparation of the Directors Report. The members of Grampian NHS Board have confirmed that the aforementioned responsibilities have been discharged during the period from 1 April 2003 to 31 March 2004 and in preparing the accounts. My responsibilities, as independent auditor, are established by the Public Finance and Accountability (Scotland) Act 2000 and the Code of Audit Practice approved by the Auditor General for Scotland, and guided by the auditing profession s ethical guidance. I report my opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder and 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. I also report if, in my opinion, the NHS Trust has not kept proper accounting records, or if I have not received all the information and explanations I require for my audit. I review whether the statement on pages 10 and 11 complies with the guidance issued by the Scottish Executive Health Department Corporate governance: Statement on Internal Control. I report if, in my opinion, the statement does not comply with the guidance or if it is misleading or inconsistent with other information I am aware of from my audit. I am not required to consider whether the statement covers all risks and controls, or form an opinion on the effectiveness of the NHS Trust s corporate governance procedures or its risk and control procedures. I read the Directors Report published with the financial statements and consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements

15 Basis of audit opinions I conducted my audit in accordance with the Public Finance and Accountability (Scotland) Act 2000 and the Code of Audit Practice, which requires compliance with relevant United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of expenditure and income shown in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Board of the NHS Trust and the Accountable Officer in the preparation of the financial statements and of whether the accounting policies are appropriate to the NHS Trust s circumstances, consistently applied and adequately disclosed. I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity 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 my opinion, I also evaluated the overall adequacy of the presentation of information in the financial statements. The Trust was dissolved on 31 March 2004 and on 1 April 2004, the assets and liabilities and undertakings of the Trust transferred to Grampian Health Board. The assets, liabilities, results and cash flows of the Trust reported in these financial statements will be brought into account within the financial statements of Grampian Health Board from the start of the financial year ending 31 March Opinions Financial statements In my opinion the financial statements give a true and fair view of the state of affairs of Grampian Primary Care NHS Trust as at 31 March 2004 and of its net operating cost, recognised gains and losses and cash flows for the year then ended and have been properly prepared in accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder. Regularity In my 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. Peter Johnston CA CPFA Chief Auditor Audit Scotland Ballantyne House 84 Academy Street INVERNESS 6 July 2004 IV1 1LU

16 OPERATING COST STATEMENT FOR THE YEAR ENDED 31 MARCH Note Clinical Services Costs Hospital and Community Health Services 2,3 94,056 88,664 Family Health Services 2,3 156, ,495 Total Clinical Services Costs 250, ,159 Non Clinical Costs 2,3 76,005 80,985 Effect of Revaluation of Property (Profit) on disposal of fixed assets 5 (1,827) (1,401) GROSS OPERATING COSTS 325, ,743 Less: Miscellaneous Income 6 (34,634) (33,792) Less: Interest Receivable 7 (124) (267) NET OPERATING COSTS 290, ,684 SUMMARY OF RESOURCE OUTTURN FOR THE YEAR ENDED 31 MARCH 2004 Net Operating Costs (as above) 290, ,684 FHS Non Discretionary Allocation (53,414) (50,927) Brought forward Income and Expenditure Balance - (3,897) Net Resource Outturn 237, ,860 Revenue Resource Limit 237, ,860 Saving against Revenue Resource Limit

17 STATEMENT OF RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH Net Gain on revaluation of fixed assets 4,364 6,514 Increases in the Donated Asset Reserve due to receipt of donated assets Reduction in the Donated Asset Reserve due to the depreciation of fixed assets (36) (27) Total gains and losses recognised in the financial year 4,561 6,

18 BALANCE SHEET AS AT 31 MARCH 2004 As at As at 31/3/ /3/2003 Note FIXED ASSETS Tangible assets , ,681 CURRENT ASSETS Stocks and work in progress 11 1,652 1,453 Debtors 12 8,584 7,132 Cash at bank and in hand 1,104 4,964 11,340 13,549 CREDITORS: Amounts falling due within one year 13 (37,570) (38,487) NET CURRENT (LIABILITIES) (26,230) (24,938) TOTAL ASSETS LESS CURRENT LIABILITIES 88,319 96,743 PROVISIONS FOR LIABILITIES AND CHARGES 14 (765) (471) 87,554 96,272 FINANCED BY: CAPITAL AND RESERVES General Fund 19 69,882 78,363 Revaluation reserve 16 17,192 17,610 Donated Asset Reserve ,554 96,272 Signed on behalf of the board on 6 July 2004 Mr Alexander Smith Interim Chief Executive Grampian Health Board Mr Alan Gall Director of Finance Grampian Health Board

19 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH Note Net cash (outflow) from operating activities 17.1 (290,755) (270,610) Capital Expenditure Payments to acquire tangible fixed assets (2,410) (4,403) Receipts from sale of fixed assets 10,523 1,471 Net cash inflow/(outflow) from capital expenditure 8,113 (2,932) Net cash (outflow) before Financing (282,642) (273,542) Financing: Funding 282, ,242 Movement in general fund working capital (3,860) 4,964 Cash drawn down 278, ,206 Net cash inflow from financing 278, ,206 (Decrease)/Increase in cash (3,860) 1,

20 NOTES TO THE ACCOUNTS 1. ACCOUNTING POLICIES These accounts have been prepared in accordance with the Resource Accounting Manual issued by HM Treasury. The particular accounting policies adopted by the NHS Trust are described below. They have been applied consistently in dealing with items considered material in relation to the accounts. a. 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. Grampian Primary Care NHS Trust was formally dissolved on 31 March 2004 when Grampian Health Board, commonly known as NHS Grampian, took over its activities and assets and liabilities. The Going Concern Concept has been applied to the provision of patient care services formerly carried out by Grampian Primary Care NHS Trust following guidance on the application of FRS 18 contained in the Resource Accounting Manual. Assets and liabilities of the Trust were transferred to NHS Grampian on 1 April 2004 at the values recorded in the accounts of the Trust for the year ended 31 March b. Accounting Convention The accounts are prepared on a historical cost basis modified to reflect changes in the value of fixed assets at their value to the business by reference to their current costs. c. Funding Most of the expenditure of the Trust is met from funds advanced by Scottish Health Boards within approved revenue and capital resource limits. Cash drawn down to fund expenditure within these limits will be credited to the general fund. Miscellaneous Income represents all other income receivable by the Trust. d. Fixed Assets i. Capitalisation All assets falling into the following categories are capitalised: intangible assets which can be valued, are capable of being used in a Trust s activities for more than one year and have a replacement cost equal to or greater than 5,000; ii. tangible 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; assets of lesser value may be capitalised where they form part of a networked computer system purchased at approximately the same time, and cost over 5,000 in total, or where they are part of the initial costs of equipping a new development and total over 5,000. Valuation Fixed assets are valued as follows: Operational land, buildings and their installations and fittings, and external works are assessed within existing use on the basis that the occupation will continue for the foreseeable future, unless otherwise stated. For non-specialised properties, where there is direct market evidence, the value is assessed at open market value for the existing use

21 For specialised properties, where there is no market evidence within existing use, the value is assessed by using a depreciated replacement cost approach. Non-operational properties which are surplus to requirements are assessed at open market value for alternative use. All land and building assets within the NHS in Scotland are revalued at not more than 5 yearly intervals. Between valuations an appropriate index is applied to arrive at a current cost. The buildings index is based on the All in Tender Price Index published by the Building Cost Information Service (BCIS). The land index is based on the residential building land values reported in the Property Market Report published by the Valuation Office. The last professional revaluation took place as at 31 st March 2004 and is reflected in these accounts. The valuations are carried out in accordance with the Royal Institute of Chartered Surveyors (RICS) Appraisal and Valuation Manual insofar as these terms are consistent with the agreed requirements of the Scottish Executive Health Department. Equipment is valued at estimated net replacement cost or the recoverable amount. The estimated net replacement cost is the replacement value of the asset as new, less the accumulated depreciation. The recoverable amount will only be used when the decision has been made to dispose of the asset. Assets in the course of construction are valued at current cost. This is calculated as the level of expenditure incurred to which an appropriate index is applied to arrive at a current value. To meet the underlying objectives established by the Scottish Executive Health Department the following accepted variations of the RICS Appraisal and Valuation Manual have been required: Specialised operational assets have been valued on a replacement rather than a modern substitute basis; No adjustment has been made to the cost figures of operational assets in respect of dilapidations; and Additional alternative Open Market Value figures have only been supplied for operational assets scheduled for imminent closure and subsequent disposal. Impairment Losses in value reflected in valuations are described as impairments. These are accounted for in accordance with Financial Reporting Standard 11. Where these relate to the consumption of economic benefits, they are charged to the operating cost statement. Reductions in value that relate to fluctuations in market prices, or other reasons not involving loss of economic benefit, are first charged to the revaluation reserve insofar as it is represented by those assets, and that part of the loss is recognised in the Statement of Recognised Gains and Losses. Further losses, beyond the level of the revaluation reserve relating to that asset, are charged to the operating cost statement, except where it can be demonstrated that the recoverable amount is greater than the revalued amount, in which case the fall in value below recoverable amount is recognised in the Statement of Recognised Gains and Losses, and ultimately in the Revaluation Reserve. iii. Depreciation and Amortisation Depreciation is charged on each main class of tangible asset as follows: Freehold land and assets in the course of construction are not depreciated. Buildings, installations, and fittings are depreciated on their current value over the estimated remaining life of the asset as advised by the appointed valuer. The actual remaining lives of the building elements are assessed in the context of the maximum useful lives for building elements. Equipment is depreciated on current cost over the estimated life of the asset. Depreciation is charged on a straight-line basis

22 The following asset lives have been used: Years Moveable engineering plant and equipment and long life medical equipment 15 Furniture and medium life medical equipment 10 Mainframe information technology installations 8 Vehicles and soft furnishings 7 Office, information technology, short life medical and other equipment 5 Intangible assets are amortised over the estimated lives of the assets. iv. Donated Assets Donated assets are capitalised at their valuation on receipt and are valued and depreciated as described above. The value of donated assets and the donated element of part donated assets is reflected in a Donated Asset Reserve which is credited with the value of the original donation and debited/credited following any subsequent revaluation; an amount equal to the depreciation charge is released from this reserve each year to the operating cost statement. v. Leasing Rentals under operating leases are charged on a straight-line basis. vi. Intangible Assets Intangible assets, such as software licenses, are capitalised when they are capable of being used in the Trust s activities for more than one year, they can be valued and they have a cost of at least 5,000. Intangible fixed assets held for operational use are valued at historical cost and are depreciated over the estimated life of the asset on a straight-line basis. The carrying value of intangible assets is reviewed for impairments at the end of the first full year following acquisition and in other periods if events or changes in circumstances indicate the carrying value may not be recoverable. Purchased computer software licences are capitalised as intangible fixed assets where expenditure of at least 5,000 is incurred. They are amortised over the shorter term of the licence and their useful economic lives. e. Stocks and Work in Progress Stocks and work in progress are valued at the lower of cost and net realisable value. This is considered to be a reasonable approximation to current cost due to the high turnover of stocks. Work in progress comprises goods in intermediate stages of production. Partially completed contracts for patient services are not accounted for as work in progress

23 f. Debtors and Creditors Debtors and Creditors have been assessed on the basis of goods and services supplied or received up to and including 31 st March 2004 for which payment had not been received or made by that date. g. Research and Development Research and development expenditure is charged against income in the year in which it is incurred, except insofar as it relates to a clearly defined project, the benefits from which can reasonably be regarded as assured. Expenditure so deferred is limited to the value of future benefits and is amortised through the operating cost statement on a systematic basis over the period expected to benefit from the project. h. Medical and Clinical Negligence Costs Both medical and clinical negligence costs are treated as operating expenses, to the extent that they are payable by the Trust. Where a settlement is likely it is provided for within the accounts. Where the prospect of settlement is uncertain, the amount should be estimated and disclosed as a contingent liability. i. Pensions The Trust contributes to the NHS Superannuation Scheme for Scotland. Contributions are determined on the basis of recommendations made by the Government Actuary. The pension cost charged to the operating cost statement is based on an actuarial assessment of the cost to be borne by the Trust. j. Related Party Transactions FRS 8 requires disclosure of material related party transactions. As the majority of NHS income derives from related party transactions each transaction will not therefore be disclosed separately. Note 6 Miscellaneous Income however shows income received from each category of Health Body and Note 2 identifies total expenditure with other NHS bodies. k. Liquid Resources Deposits and other investments that are readily convertible into known amounts of cash at or close to their carrying amounts are treated as liquid resources in the cashflow statement. Investments which are not accessible within 24 hours without loss of interest but which do not mature in a period greater than one year are classified as current asset investments in the balance sheet and as liquid resources in the cashflow statement. l. Value Added Tax Most of the activities of the Trust are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is chargeable or input VAT is recoverable, the amounts are stated net of VAT

24 m. PFI Schemes The NHS follows HM Treasury s Technical Note 1 (Revised) How to Account for PFI Transactions which provides practical guidance for the application of the FRS 5 amendment. Where the balance of the risk and rewards of ownership of the PFI property are borne by the PFI Operator, the PFI payments are recorded as an operating expense. Where the Trust has contributed assets, a prepayment for their fair value is recognised and amortised over the life of the PFI contract by charge to the Operating Cost Statement. Where, at the end of the PFI contract, a property reverts to the Trust, the difference between the expected fair value of the residue on reversion and any agreed payment on reversion is built up over the life of the contract by capitalising part of the unitary charge each year, as tangible assets. n. Losses and Special Payments Operating expenditure includes certain losses which would have been made good through insurance cover had the NHS not been bearing its own risks. Had the NHS provided insurance cover, the insurance premiums would have been included as normal revenue expenditure

25 2. OPERATING EXPENSES 2.1 Operating expenses comprise the following elements: Clinical Services HCH 94,056 88,664 - FHS 156, ,495 Total Clinical Services 250, ,159 Non Clinical Costs Hotel Services 6,735 6,255 Other Services 40,902 43,079 Transport, Travel & Subsistence 4,530 4,943 Premises 13,006 13,088 Depreciation and Amortisation 5,119 5,234 Cost of Capital 3,137 5,757 Clinical/Medical Negligence Research & Development Other 1,881 2,051 Total Non Clinical Costs 76,005 80,985 TOTAL 326, ,144 Other expenses include 68,000 ( ,000) payable to Audit Scotland to secure the external audit of the Trust. Total operating expenses include 6,938,000 ( ,722,000) payable to other NHS bodies. 2.2 Analysis of FHS Expenditure Unified Budget Non Discretionary General Medical Services 21,132 17,826 31,136 28,916 Pharmaceutical Services 77,127 71,395 9,434 8,845 General Dental Services ,646 15,463 General Opthalmic Services - - 2,758 2,722 Total FHS Expenditure 98,825 89,549 57,974 55,

26 2.3a PFI/PPP Contracts Operating expenses inlude the following amounts in respect of PFI/PPP transactions : Service elements of off-balance-sheet contracts 1,731 1,685 TOTAL 1,731 1,685 Further details on PFI/PPP contracts are provided in Note b Operating expenses include the following amounts in respect of hire and operating lease rentals : Hire of plant & machinery Other operating leases At 31 March 2004, the Trust amounts due in the next year under operating leases were as follows: Land and Buildings Other Leases 31 March March March March Operating leases which expire: - Within 1 year Between 1 and 5 years After 5 years TOTAL Senior Employees' Remuneration Trustees Remuneration Non-Executive Members Executive Members Salaries Other emoluments Total of taxable benefits to board members

27 Remuneration of Directors: 2003/04 Remuneration of: Salary (Bands of 5,000) Real increase in pension at age 60 (bands of 5,000) Total accrued pension at age 60 at 31/3/04 (bands of 5,000) Cash Equivalent Transfer Value (CETV) at 31 March Cash Equivalent Transfer Value (CETV) at 31 March Real Increase in CETV in year (bands of 5,000) Superannuation Service at 31 March 2004 No. of Years Benefits in kind 000 G Esson Chairman (see Note 1) E Robertson - Acting Chief Executive (see Note 1) G Peterkin Medical Director * * * 12 1 A Gall Director of Finance See Note E Smith Nursing Director G Morrice Human Resources & Organisational Learning Director Non-Executive Trustees: B Bruce D Sutherland Note: Staff pension benefits are provided through the NHS Superannuation Scheme for Scotland. Details of the scheme can be found in Note 18. Note 1: Mr A Gall, Director of Finance, is also Director of Finance for Grampian University Hospitals NHS Trust and his remuneration and pension entitlement are disclosed in the accounts of that body. Mr G Esson also holds a post as a Non Executive Director of Grampian Health Board. Mr E Robertson also holds a post as an Executive Director of Grampian Health Board. * Information not currently available from the Scottish Public Pensions Agency