NHS EDUCATION FOR SCOTLAND ANNUAL ACCOUNTS

Transcription

1 ANNUAL ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 Authorised for issue on 26 June

2 ANNUAL ACCOUNTS AND NOTES CONTENTS Page Strategic Report 3-10 Directors Report Remuneration Report Direction by the Scottish Ministers 26 Statement of the Chief Executive s Responsibilities as the Accountable Officer for NHS Education for 27 Scotland Statement of the Health Board Members Responsibilities in respect of the Accounts 28 Governance Statement Independent Auditor s Report Statement of Comprehensive Net Expenditure and Summary of Resource Outturn Statement of Financial Position 38 Statement of Cash Flows 39 Statement of Changes in Taxpayers Equity Notes to the Accounts

3 ANNUAL ACCOUNTS 2013/14 STRATEGIC REPORT 1. Strategy, Principal Activities and Review of Year NHS Education for Scotland (NES) was established as a Special Health Board on 1 April We are a national special health board working in partnership with our stakeholders to provide education, training and workforce development for those who work in and with NHS Scotland. Our vision is Quality Education for a Healthier Scotland and our mission is to provide education that enables excellence in health and care for the people of Scotland. The NES Board is responsible for agreeing the Strategic Framework which drives the production of the annual Corporate Plan and the Local Delivery Plan. During the course of 2013/14 the NES Board reviewed and refreshed its Strategic Framework. As part of this process we identified 5 broad themes: consistent evidence-based excellence in education for improved health and care; education for improving quality to enhance patient safety and people s experience of services; education for new models of care to support the 2020 Vision; innovative educational support infrastructure covering people, technology and content; and enhancing the capacity and capability of our staff to give their best and achieve their potential. This work was informed by consultation with our stakeholders and partners and the themes that emerged reflect a focus on supporting the Scottish Government 2020 Route Map and the 2020 Workforce Vision. A core and ongoing activity for NES is the delivery of postgraduate education for key professional groups across Scotland. In this respect NES has responsibility for trainees in medicine, dentistry, psychology, pharmacy, healthcare science, finance and general management. NES oversees the training programmes for these groups, provides their basic salaries and in the case of trainees in general practice, finance and general management also acts as Lead Employer. We also invest in continuing professional development activity for these staff groups and also for nurses, midwives, the allied health professions; optometrists, healthcare chaplains and administrative and clerical staff. During the year we have once again supported the recruitment of medical trainees to specialist training programmes across Scotland by providing the necessary information infrastructure to enable national recruitment. In this we are supported by individual NHS Boards which take responsibility for specific specialty groups, with NES managing all General Practice recruitment. During 2013/14 NES also continued to manage the One Year Job Guarantee Scheme for newly qualified nurses and midwives on behalf of Scottish Government. During 2013/14 we have continued to promote increased access to our knowledge services and e-library. We have also worked closely with the Scottish Social Services Council in developing educational interventions in areas where the interface between health and social care is critical, such as dementia. The NES budget for 2013/14 was subject to efficiency savings of 2.5 million and our revenue resource limit for 2014/15 has been reduced by a further 2.5 million. It has 3

4 ANNUAL ACCOUNTS 2013/14 STRATEGIC REPORT been challenging for us to manage our expenditure within these reduced limits. We have had to closely examine our business operations in order to enable us to deliver savings without impacting on the core funding supporting the salaries of trainees who directly deliver patient care, and other critical educational infrastructure. During 2013/14 we continued to implement our Property and Asset Management Strategy, aimed at providing our staff with access to an enhanced working environment; whilst at the same time reducing the overall space that we occupy through implementing a workplace strategy based on sharing space and allocating no owned offices. This approach has now been implemented in Edinburgh and Dundee and in 2013/14 we started work to consolidate our office holdings in Glasgow. This work will be completed during 2014/15. We consider that the key risks and uncertainties that the organisation faces relate to continuining budget reductions coupled with the pressure arising from increasing demand. During 2013/14 we have continued to focus on improving quality and efficiency across our organisation. We completed the implementation of our procurement transformation and the move to a single Scotland Deanery. We also launched a further voluntary severance scheme designed to assist us to reduce staff posts and thus achieve the savings that will enable us to continue to balance our budgets without impacting on front line services. 2. Financial Performance and Position The Scottish Government Health and Social Care Directorate (SGHSCD) set five budget limits at a Health Board level on an annual basis. These limits are: Revenue resource limit a resource budget for ongoing operations split between core and non-core; Capital resource limit a resource budget for net capital investment, split between core and non-core; and Cash requirement a financing requirement to fund the cash consequences of the ongoing operations and net capital investment. Health boards are expected to contain their net expenditure within these limits, and will report on any variation from the limits as set. 4

5 ANNUAL ACCOUNTS 2013/14 STRATEGIC REPORT The performance of NES against each of these budget limits is set out in the table below: Limit as set by SGHSCD Actual outurn Variance (over) /under Revenue resource limit core 423, ,537 1,341 Revenue resource limit non-core 1,489 1,488 1 Capital resource limit core 2,212 2,212 0 Capital resource limit non-core Cash requirement 429, , MEMORANDUM FOR IN YEAR OUTTURN 000 Brought forward surplus from previous financial year 575 Decrease against in year revenue resource limit 767 Total 1,342 The carry forward at the year end is made up as follows: Carry forward in 2013/ Movement in year 000 Carry forward to 2014/ Property Strategy 0 1,124 1,124 General under spend 575 (357) 218 Total ,342 The value of carry forward into 2014/15 is agreed with Scottish Government Health and Social Care Directorates (SGHSCD) during the year. 5

6 ANNUAL ACCOUNTS 2013/14 STRATEGIC REPORT 3. Performance Against Key Non Financial Targets NES has a Local Delivery Plan agreed with SGHSCD. This contains a number of targets structured under four key Ministerial Objectives which are common across NHSScotland. Performance against the targets contained in the Local Delivery Plan was monitored by the NES Finance and Performance Management Committee and by the SGHSCD sponsor group during the year to 31 March The targets are monitored using a standard performance management methodology involving a traffic light system. Colours denote the performance against target as follows: Red progress against this project or other target has not been satisfactory. Amber progress against this project or other target has not been fully satisfactory. Green progress against this project or other target has been satisfactory. Ministerial Objective 1: Health improvement of the people of Scotland improving life expectancy and health life expectancy The NES Local Delivery Plan for 2013/14 included eight Performance Targets which related to this NHSScotland Objective. These included targets covering the clinical psychology and general practitioner workforce; training staff to deliver psychological interventions; training of extended duty dental nurses and dental health support workers involved in delivering the Childsmile Programme; and education to support the Refreshed Framework for Maternity Care in Scotland. Performance against all eight targets was satisfactory (Green) at year end. Ministerial Objective 2: Efficiency and governance improvements continually improve the efficiency and effectiveness of the NHS NES agreed six targets with the SGHSCD under this objective. As with all NHS Boards, NES was required to operate within its revenue, capital and cash limits and was also required to meet its cash efficiency target. We also set ourselves a target of continuing to implement our property strategy in a sustainable manner. In addition we set further targets in relation to supporting the leadership and capability elements of the 20:20 Workforce Vision; maximising the use of resources for staff in administrative and non-clinical support services; developing a modern apprenticeship service and providing advice on leadership development to align with national policy, particularly the Quality Strategy. Performance against all targets was satisfactory (Green) at year end. 6

7 ANNUAL ACCOUNTS 2013/14 STRATEGIC REPORT Ministerial Objective 3: Access to services recognising patients needs for quicker and easier use of NHS services NES agreed seventeen targets related to this objective. These covered maintaining target numbers of training posts for hospital doctors, dentists and dental nurses, and healthcare scientists; supporting dental outreach centres; performance management in relation to Medical and Dental ACT (Additional Costs of Training); supporting pre registration nursing midwifery and allied health professional training; education and training for Healthcare Support Workers; leading delivery of the Scottish Government One Year Guarantee Scheme for newly qualified nurses and midwives; and providing education in support of national priorities; such as the National Delivery Plan for Children and Young People, maternity and neonatal services; sexual health and blood borne viruses, person-centred care, and mental health services. Under this objective we also devised targets relating to education to support the workforce in integrating health and social care. At the end of the year, performance against all of these targets was satisfactory (Green). Ministerial Objective 4: Treatment appropriate to individuals ensuring patients receive high quality services that meet their needs The NES Local Delivery Plan for 2013/14 contained thirteen targets under this heading. These were concerned with role development for non medical practitioners to support service redesign; providing training and development in areas such as quality improvement, clinical skills and patient safety training; independent prescribing; dementia;healthcare Associated Infections (HAI), and for staff working in remote and rural environments. This area also included targets relating to the provision of continuing professional development for pharmacists & optometrists and the provision of the Knowledge Network. At the year end progress was satisfactory (Green) against all of these targets. 4. Sustainability and Environmental Reporting NES is committed to sustainable development. During 2013/14 we developed a Sustainable Development Action Plan which covers procurement, travel, facilities management, workforce, community engagement and buildings. We have welcomed the opportunities which the implementation of our property strategy have brought us to improve the efficiency and sustainability of our buildings and our approaches to facilities management. 7

8 ANNUAL ACCOUNTS 2013/14 STRATEGIC REPORT Our focus on sustainability is also clearly demonstrated through our outreach and other activities in support of remote and rural communities. During 2013/14 we continued to support the mobile clinical skills unit which successfully delivered clinical skills training to a range of remote and rural areas including island Health Boards; we have continued the expansion of our dental outreach activities; and have continued our support of remote and rural fellows. 5. Social, Community and Human Rights All NES operations are based in Scotland and operate within the framework of UK legislation. NES is an equal opportunities and family friendly employer and we have a range of policies designed to ensure that we support and benefit from a diverse workforce. We hold the gold standard healthy working lives award. As an equal opportunities employer, the Board welcomes applications for employment from individuals irrespective of sex, marital status, race, disability, age, sexual orientation, language or social origin. As a symbol user (Positive About Disabled People), NES also actively seeks to provide an environment where any disabled applicant or those employees who become disabled can continue to contribute to the work of the organisation. In its Equality and Diversity Strategic Action Plan NES set out how it aims to mainstream and build equality and diversity and its wider aspects into all of its functions. The report showed how it will meet the three aims of the General Duty: eliminating discrimination, harassment, victimisation and any other prohibited conduct; advancing equality of opportunity; and fostering good relations. The development of equality outcomes provides assurance that the NES meets the equality and diversity needs of people with the nine relevant protected characteristics (race, disability, age, sex, sexual orientation, gender reassignment, pregnancy and maternity, marriage and civil partnership, religion or belief), whether they are patients, public, carers or staff. The NES Equality Impact Assessment policy ensures that the impact of equality, human rights and health inequalities is embedded and integrated into the decisions and actions of the Board. The systems of training, education and appraisal of staff also include the requirements of knowledge and understanding of equality, diversity and discrimination. The organisation provides employees with information on matters of concern to them as employees by staff briefings, newsletters and information on the HR section of the NES Intranet. In addition NES ensures employees views are taken into account in decisions affecting their interests by consultation with union representatives and the organisations Partnership Forum. 8

9 ANNUAL ACCOUNTS 2013/14 STRATEGIC REPORT As at 31 st March 2014 the breakdown of staff by gender was as follows: Gender Male Female Directors/Senior Managers* 5 6 Staff * Defined as members of the Executive Team. 6. Accounting Convention The Annual Accounts and Notes have been prepared under the historical cost convention modified to reflect changes in the value of fixed assets and in accordance with the Financial Reporting Manual (FReM). The Accounts have been prepared under a direction issued by Scottish Ministers, which is reproduced at Page 26 to these accounts. The statement of the accounting policies, which have been adopted by the organisation, is shown at Note Going Concern Basis Under these accounting arrangements Health Boards must show liabilities for future years in their accounts without showing funding anticipated from the SGHSCD. This has resulted in net liabilities on the Statement of Financial Position. The Statement of Financial Position reflects liabilities falling due in future years that are expected to be met by the receipt of funding from the SGHSCD. Accordingly the accounts have been prepared on the going concern basis. 8. Outstanding Liabilities NES has recognised a dilapidation liability for leased premises. This provision is based on the outcome of condition surveys, where these have been completed, and on a best estimate of costs for other premises. The provision in 2012/13, related to vacated premises in Edinburgh and occupied premises in Glasgow. For 2013/14 the provision now covers occupied premises in Glasgow, Edinburgh, Aberdeen and Inverness. Dilapidations agreed to date has resulted in a revised provision of 1,098k (2012/13 768k). 9. Significant Changes in non-current assets: a) Property, Plant & Equipment In 2013/14 NES commenced a significant project to consolidate its Glasgow Offices by taking on additional space in 2 Central Quay and refurbishing both the new space acquired and the existing space occupied by NES. 9

10 ANNUAL ACCOUNTS 2013/14 STRATEGIC REPORT This development will enable NES to exit from its lease in Clifton House in Glasgow in 2014/15. The cost capitalised in the accounts resulting from this development to date is 1,842k. b) Intangible assets NES has continued its investment in digital e-learning resources at a cost of 54k; has developed a Integrated Planning and Performance System (IPPS) at a cost of 56k; and has developed a polypharmacy tool and a quality improvement module costing 33k and 21k respectively. 10. Principal Risks and Uncertainties The NES Board keeps its Corporate Risk register under review at each Board meeting. During the year the risks with the highest residual risk rating were those relating to the budget reductions described above, together with those reflecting the increasing demand and expectations for NES to deliver across a very wide range of activity. Further detail on our approach to the assessment and management of risk is contained on pages 32 and 33. As we move into 2014/15 we anticipate that we will need to continue to identify efficiencies in the delivery of our core business; and that we will continue to meet challenges to deliver more of the training and education that is vital to the delivery of the 2020 Vision. Our principal uncertainty relates to the level of funding that will be available to us to deliver on our objectives in 2015/16 and beyond. Chief Executive 26 th June

11 ANNUAL ACCOUNTS 2013/14 DIRECTORS REPORT 1. Date of Issue Audited financial statements were approved and authorised for issue by the Board on 26 June Appointment of Auditors 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. The Auditor General appointed Deloitte LLP to undertake the audit of NHS Education for Scotland (NES) for the financial years 2011/12 to 2015/16. 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 for Scotland. 3. Board Membership Under the terms of the Scottish Health Plan, the Board of NES is a Board of governance whose membership will be conditioned by the functions of the 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 Board has collective responsibility for the performance of the organisation as a whole, and reflects the partnership approach, which is essential to achievement of the organisation s objectives. Non-Executive Board Members Name Dr Lindsay Burley CBE Mr Murray Duncanson Ms Elizabeth Ford Professor Alice Belcher Ms Susan Douglas-Scott Professor Fiona Mackenzie (Retired 31 st August 2013) Dr Elizabeth Robertson Dr Doreen Steele (Appointed 1 st May 2013) Dr Andrew Tannahill (Appointed 1 st May 2013) Ms Carole Wilkinson Position on Board Chair Deputy Chair Employee Director 11

12 ANNUAL ACCOUNTS 2013/14 DIRECTORS REPORT Executive Board Members Name Mr Malcolm Wright OBE Ms Caroline Lamb Professor Stewart Irvine Dr Colette Ferguson Dr RoseMarie Parr Professor Brian Durward (Retired 31 st March 2014) Executive Position Chief Executive Deputy Chief Executive / Director of Finance and Corporate Resources Director of Medicine Director of Nursing & Midwifery Director of Pharmacy Director of Educational Development The Board members responsibilities in relation to the accounts are set out in a statement following this report. 4. Board Members and Senior Managers Interests Details of any material interests of board members, senior managers and other senior staff in contracts or potential contracts with the organisation, as required by IAS 24 are disclosed in Note 19. A register of interests is maintained and can be viewed at 5. Pension Liabilities The accounting policy note for pensions is provided in Note 1 and disclosure of the costs is shown within Note 17 and the remuneration report. 6. Remuneration for Non-audit Work Details of any remuneration paid to external auditor in respect of non audit work carried out on behalf of the Board is disclosed in Note 3. There was no such work performed in the year. 7. Public Services Reform (Scotland) Act 2010 The information which requires to be published under this Act can be accessed at from 31 October Sickness Absence Data The Board has a pro-active policy on the management of sickness absence and the absence rate for 2013/14 was 2.36% (2012/ %) 12

13 ANNUAL ACCOUNTS 2013/14 DIRECTORS REPORT 9. Personal Data Related Incidents There were no personal data incidents during 2013/ Payment Policy The Board is committed to working with the Scottish Government to support businesses in the current economic climate 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 Boards did endeavour to comply with the principles of The Better Payment Practice Code ( by processing suppliers invoices for payment without unnecessary delay and by settling them in a timely manner. Non NHS suppliers 2012/ /14 Average credit taken 14 days 11 days % of invoices (by value) paid within 30 days 92% 91% % of invoices (by volume) paid within 30 days 92% 93% % of invoices (by value) paid within 10 days 86% 80% % of invoices (by volume) paid within 10 days 81% 83% 13

14 ANNUAL ACCOUNTS 2013/14 DIRECTORS REPORT 11. Corporate Governance The Board meets regularly during the year to progress the business of the Special Health Board. There have been 8 meetings and workshops during 2013/14. Attendance by members at these meetings is detailed below. Apr 2013 Jun 2013 Aug 2013 Sep 2013 Oct 2013 Dec 2013 Jan 2014 Mar 2014 Total no. of Board meetings & Workshops attended Dr L. Burley 8 Prof. A. Belcher 8 Ms S. Douglas- 8 Scott Mr M. Duncanson x x 6 Prof. B. Durward x 7 Dr C. Ferguson x 7 Ms L. Ford x 7 Prof.S.Irvine x x 6 Ms. C. Lamb x x 6 Prof. F. x Mackenzie* 2 Dr R. M. Parr x x 6 Dr E. Robertson x x 6 Dr D. Steele* x x 5 Dr A. Tannahill* 7 Ms C. Wilkinson x 7 Mr M. Wright x 7 *Prof. F. Mackenzie retired from the Board on 31 st August Dr A Tannahill and Dr D Steele were appointed to the Board from 1 st May The Scottish Health Plan established that the following standard committees should exist which are relevant to the organisation: Audit Staff Governance Patient Focus Public Involvement (PFPI) Clinical Governance (NES equivalent is Educational Research and Governance Committee) The Board also has a Finance and Performance Management Committee. 14

15 ANNUAL ACCOUNTS 2013/14 DIRECTORS REPORT Audit Committee The Audit Committee meets four times per year to consider internal control; risk management and corporate governance issues; financial accounting matters; and to receive reports from the internal and external auditors. The membership of the Audit Committee during 2013/14 was as follows: Professor Alice Belcher, Non-Executive Board Member, Chair Ms Carole Wilkinson, Non-Executive Board Member Dr E Robertson, Non-Executive Board Member Dr D Steele, Non-Executive Board Member (with effect from 1 st May 2013) Mr M Duncanson, Non-Executive Board Member (until 30 th April 2013) Members of the Audit Committee attended the following meetings during 2013/14: Member Apr Jun Oct Jan Meetings attended Prof. A. Belcher 4 Dr E. Robertson 3 Dr D. Steele 3 Ms. C. Wilkinson 4 Mr M. Duncanson 1 Staff Governance Committee The committee has an important role in ensuring consistency of policy and equity of treatment of staff across the organisation, in line with the National Staff Governance Standard. It meets four times per year. The membership of the staff governance committee during 2013/14 was as follows: Mr M Duncanson, Non-Executive Board Member (Chair) Ms Elizabeth Ford, Employee Director and Non-Executive Board Member Ms Susan Douglas-Scott, Non-Executive Board Member Dr Doreen Steele, Non-Executive Board Member (with effect from 1 st May 2013) Dr Ann Cadzow, Staff Side Representative 15

16 ANNUAL ACCOUNTS 2013/14 DIRECTORS REPORT Members attended the following meetings during 2013/14: Member Apr Jul Oct Jan Meetings attended Ms S. Douglas-Scott x 3 Mr M. Duncanson 4 Ms L. Ford 4 Dr D. Steele 3 Dr A. Cadzow x x x 1 Educational and Research Governance Committee The main purpose of the Educational and Research Governance Committee is to advise the Board on matters relating to educational research and the management of educational quality. The Committee advises the Board on the strategic planning of relevant aspects of educational research and educational quality and maintains oversight of the implementation of approved programmes. It meets four times per year. The membership of the Educational and Research Governance committee during 2013/14 was as follows: Dr Elizabeth Robertson, Non-Executive Board Member, Chair Professor Alice Belcher, Non-Executive Board Member Ms Carole Wilkinson, Non-Executive Board Member Dr Andrew Tannahill, Non-Executive Board Member (with effect from 1 st May 2013) Members attended the following meetings during 2013/14: Member Apr Aug Oct Feb Meetings attended Prof. A. Belcher x 3 Dr E. Robertson x 3 Dr A. Tannahill 3 Ms C. Wilkinson 4 Finance and Performance Management Committee The Finance and Performance Management Committee meets four times per year to provide additional scrutiny of financial reports, including annual budgets and the 3 year financial plan, proposals for significant new expenditure; management accounts and efficiency programmes. The membership of the Finance and Performance Management Committee during 2013/14 was as follows: 16

17 ANNUAL ACCOUNTS 2013/14 DIRECTORS REPORT Dr L Burley, Non-Executive Board Member, Chair Mr Murray Duncanson, Non-Executive Board Member Ms Elizabeth Ford, Non-Executive Board Member Mr Malcolm Wright, Executive Board Member (to 13 th March 2014) Ms Caroline Lamb, Executive Board Member (to 13 th March 2014) In a review of the remit of the Committee in March 2013 it was agreed by the Board that two Executive Directors should join the Committee as members. However, following an internal audit review of internal governance the Committee and the Board agreed that this might lead to confusion as to the status of the Committee and it was agreed in March 2014 that the membership would be restricted to Non- Executive Members. Members attended the following meetings during 2013/14: Member May Aug Nov Feb Meetings attended Dr. L. Burley 4 Mr M. Duncanson 4 Ms L. Ford 4 Mr Malcolm Wright x 3 Ms Caroline Lamb 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 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 board s auditors are aware of that information. 13. Financial Instruments Information in respect of the financial risk management objectives and policies of the Board and the exposure of the Board to price risk, credit risk, liquidity risk and cash flow risk is disclosed in Note 18. Chief Executive 26 th June

18 REMUNERATION REPORT 1. Determination of Senior Employees Remuneration Senior employees remuneration is determined by the Scottish Government. For senior staff on Executive or Senior Managers pay arrangements, pay and conditions are determined by ministerial direction and are mandatory. It is the responsibility of the Remuneration Committee to ensure that the performance of staff in this cohort is formally assessed at the end of the performance year and to submit its recommendations to the National Performance Management Committee for approval. 2. Employment Contracts and Business Interests The notice period for the Chief Executive is six months with all other senior managers required to give three months notice of termination of contract. No contract contains any provision for compensation for early termination. Any business interests required to be disclosed are noted in Section 4, Board Members and Senior Managers Interests of the Directors Report on page Membership and Remit of the Remuneration Committee The remit of the Remuneration Committee is as follows: to agree all terms and conditions of employment for Senior Managers of the Board, including job description, job evaluation, terms of employment, basic pay, performance pay and bonuses and benefits; to agree objectives for Senior Managers of NES, normally before the start of the year in which performance is assessed; to monitor the performance of Senior Managers of NES, in accordance with their performance plans; to conduct regular reviews of NES policy for the remuneration and performance management of Senior Managers, in the light of any guidance issued by NHSScotland; to delegate responsibility to a sub-group of the committee to act as the Appeals body for Senior Managers and Directors of NES who have a grievance concerning their terms and conditions of service; and together with the Chief Executive of NES, make recommendations regarding the citation of doctors and dentists to the Scottish Advisory Committee on Distinction Awards. 18

19 REMUNERATION REPORT (continued) The membership of the Remuneration Committee during 2013/14 was as follows: Dr Lindsay Burley, CBE (Chair) Mr Murray Duncanson Professor Alice Belcher Ms Elizabeth Ford, Employee Director Dr Elizabeth Robertson All of the above are Non-Executive Board Members. 4. Policy, Assessment and Performance Appraisal in relation to the Remuneration of Senior Managers Senior managers are remunerated in accordance with the Felt Fair Panel s recommendations. Additionally performance related pay may be awarded in accordance with the appraisal arrangements for staff on executive pay ranges. Further information can be obtained from HDL (2002) 64 dated 23 August 2002 which should be read in conjunction with HDL (2007) 1. Assessment and Performance Appraisal is carried out in accordance with the guidance set out in the above circulars. 5. Amounts Payable to Third Parties for Services of a Senior Employee Where the costs of a Board Member or of a senior employee for part or full year is paid by a third party. This has been identified by a % on the Board and Senior Employees Remuneration analysis below. Total costs, including on-costs e.g. employer s national insurance and pension contributions, for Executive Board Members who are employed by third parties and Non-executive Members are disclosed in Note 2(a) under Inward Secondees. 6. Explanation of Any Significant Awards Made to Past Senior Employees There were none during 2013/14. 19

20 REMUNERATION REPORT (continued) 7. Cash Equivalent Transfer Values (CETV) The Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member s accrued benefits and any contingent spouse s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the pension benefits they have accrued in their former scheme. The pension figures shown relate to the benefits that the individuals have accrued as a consequence of their total membership of the scheme, not just their service in a senior capacity to which disclosure applies. The figures include the value of any pension benefit in another scheme or arrangement which the individual has transferred to the NHS scheme. They also include any additional pension benefit accrued to the member as a result of their purchasing additional pension benefits at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are drawn. The real increase in the value of CETV This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period. The opening figure is recalculated each year, based on the new market factors, therefore it does not agree to the closing balance in the previous year. 20

21 REMUNERATION REPORT (continued) CURRENT YEAR (AUDITED INFORMATION) In accordance with the Financial Reporting Manual (FReM) and the Companies Act, is the first year that the publication of pension benefits has been required. This calculation aims to bring public bodies in line with other industries in disclosing an assessed cumulative pension benefit for a standard 20 year period, which is the estimated life span following retirement. The total earnings in year column shows the remuneration relating to actual earnings payable in Single Total Figure of Remuneration ( 000) Executive Members Salary (bands of 5,000) Performance - related Bonus (bands of 5,000) Benefits in kind Total Earnings in year (bands of 5,000) Pension Benefits 000 s Total Remuneration (bands of 5,000) Chief Executive: Mr M Wright OBE , Deputy Chief Executive / Director of Finance & Corporate Resources: Ms C Lamb Director of Medicine: Prof S Irvine Director of Nursing & Midwifery: Dr C Ferguson Director of Educational Development: Prof B Durward Director of Pharmacy: Dr R Parr Non-executive Members Dr L. Burley, CBE (Chair) n/a Ms S Douglas-Scott n/a 5-10 Prof A Belcher n/a 5-10 Mr M Duncanson (Deputy Chair) n/a 5-10 Dr D Steele n/a 5-10 Dr A Tannahill n/a 5-10 Prof F MacKenzie 2, % n/a 0-5 Ms C Wilkinson n/a 5-10 Dr E Robertston % n/a 5-10 Ms E Ford, Employee Director Other Senior Employees Postgraduate Dental Dean: Dr D Felix Director of Human Resources: Ms D Wright Director of Allied Health Professionals: Ms S Lam Director of Training for Psychology Services:Ms J Thomson Deputy Director of Medicine: Dr R Parks 3, % n/a Notes: 1- Ms E Ford s total NES salary, and associated pension benefits have been disclosed above. The Employee Directors salary includes 35-40k in respect of non-board duties. 2- Prof F Mackenzie retired from the Board on 31 August Dr Parks increased the number of sessions he works for NES in 2013/14. % - The amount payable part or full year to a third party for the services of a Board member or Senior employee. n/a- The individual is not a member of the NHS pension scheme. The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increases exclude increases due to inflation or any increase or decrease due to a transfer of pension rights. 21

22 REMUNERATION REPORT (continued) CURRENT YEAR (AUDITED INFORMATION) Pension Benefits ( 000) Total accrued pension and related lump sum at pensionable age at 31 March 2014 Real increase in pension and related lump sum at pensionable age at 31 March 2014 Cash Equivalent Transfer Value (CETV) at 31 March 2013 Cash Equivalent Transfer Value (CETV) at 31 March 2014 Real increase / (decrease)in CETV in year (bands of 5,000) (bands of 2,500) Executive Members Chief Executive: Mr M Wright OBE Deputy Chief Executive / Director of Finance & Corporate Resources: Ms C Lamb Director of Medicine: Prof S Irvine Director of Nursing & Midwifery: Dr C Ferguson Director of Educational Development: Prof B Durward Director of Pharmacy: Dr R Parr plus lump sum plus lump sum plus lump sum plus lump sum 5-10 No lump sum plus lump sum plus lump sum 1,201 1, plus lump sum plus lump sum plus lump sum No lump sum plus lump sum Non-executive Members Dr L. Burley, CBE (Chair) n/a n/a n/a n/a n/a Ms S Douglas-Scott n/a n/a n/a n/a n/a Prof A Belcher n/a n/a n/a n/a n/a Mr M Duncanson (Deputy Chair) n/a n/a n/a n/a n/a Dr D Steele n/a n/a n/a n/a n/a Dr A Tannahill n/a n/a n/a n/a n/a Prof F MacKenzie n/a n/a n/a n/a n/a Ms C Wilkinson n/a n/a n/a n/a n/a Dr E Robertston n/a n/a n/a n/a n/a Ms E Ford, Employee Director 0-5 plus lump sum plus lump sum Other Senior Employees Postgraduate Dental Dean: Dr D Felix Director of Human Resources: Ms D Wright Director of Allied Health Professionals: Ms S Lam Director of Training for Psychology Services: Ms J Thomson Deputy Director of Medicine: Dr R Parks plus lump sum 5-10 No lump sum plus lump sum plus lump sum plus lump sum 1,227 1, No lump sum plus lump sum (0-2.5) plus (2.5-5) lump sum n/a n/a n/a n/a n/a Notes: n/a - Not a member of the NHS pension scheme 22

23 REMUNERATION REPORT (continued) FOR THE YEAR ENDED 31 MARCH 2013 PRIOR YEAR (AUDITED INFORMATION) (Restated) In accordance with the Financial Reporting Manual (FReM) and the Companies Act, is the first year that the publication of pension benefits has been required. This calculation aims to bring public bodies in line with other industries in disclosing an assessed cumulative pension benefit for a standard 20 year period, which is the estimated life span following retirement. Data for 2013 has been restated in line with these new disclosure requirements. The total earnings in year column shows the remuneration relating to actual earnings payable in Single Total Figure of Remuneration ( 000) Salary (bands of 5,000) Performance - related Bonus (bands of 5,000) Benefits in kind Total Earnings in year (bands of 5,000) Pension Benefits 000 s Total Remuneration (bands of 5,000) Executive Members Chief Executive: Mr M Wright OBE , nil Deputy Chief Executive / Director of Finance & Corporate Resources: Ms C Lamb Director of Medicine: Prof S Irvine Director of Nursing & Midwifery: Dr C Ferguson Director of Educational Development: Prof B Durward Director of Pharmacy: Dr R Parr Non-executive Members Dr L. Burley, CBE (Chair) n/a Ms S Douglas-Scott n/a 5-10 Prof A Belcher n/a 5-10 Mr M Duncanson (Deputy Chair) n/a 5-10 Ms T Houston n/a 5-10 Prof V Maehle n/a 5-10 Prof F MacKenzie % n/a 5-10 Ms C Wilkinson n/a 5-10 Dr E Robertston % n/a 5-10 Ms E Ford, Employee Director Other Senior Employees Postgraduate Dental Dean: Dr D Felix Director of Human Resources: Ms D Wright Director of Allied Health Professionals: Ms S Lam Director of Training for Psychology Services: Ms J Thomson Deputy Director of Medicine: Dr R Parks % n/a Notes: 1- The pension benefits for Dr Irvine and Dr Felix reflect the fact that both were part-time staff in NES during 2011/12, whilst holding other posts within the NHS, and then became full time staff in NES in 2012/ Ms E Ford s, total NES salary, and associated pension benefits have been disclosed above, this includes 30-35k in respect of nonboard duties. % - Amounts payable part or full year to a third party for the services of a Board member or Senior Employee. n/a -Not a member of the NHS Pension scheme at 31 March

24 REMUNERATION REPORT (continued) FOR THE YEAR ENDED 31 MARCH 2013 PRIOR YEAR (AUDITED INFORMATION) (Restated) Pension Benefits ( 000) Total accrued Real increase in Cash Cash pension and related pension and related Equivalent Equivalent lump sum at lump sum at Transfer Value Transfer Value pensionable age at pensionable age at (CETV) at 31 (CETV) at March March 2013 March 2012 March 2013 Real increase / (decrease)in CETV in year (bands of 5,000) (bands of 2,500) Executive Members Chief Executive: Mr M Wright OBE Deputy Chief Executive / Director of Finance & Corporate Resources: Ms C Lamb Director of Medicine: Prof S Irvine 1 Director of Nursing & Midwifery: Dr C Ferguson Director of Educational Development: Prof B Durward Director of Pharmacy: Dr R Parr plus lump sum plus lump sum plus lump sum plus lump sum 5-10 No lump sum plus lump sum (0-2.5) plus (0-2.5) lump sum (19) plus lump sum plus lump sum plus lump sum No lump sum plus lump sum Non-executive Members Dr L. Burley, CBE (Chair) n/a n/a n/a n/a n/a Ms S Douglas-Scott n/a n/a n/a n/a n/a Prof A Belcher n/a n/a n/a n/a n/a Mr M Duncanson (Deputy Chair) n/a n/a n/a n/a n/a Ms T Houston n/a n/a n/a n/a n/a Prof V Maehle n/a n/a n/a n/a n/a Prof F MacKenzie n/a n/a n/a n/a n/a Ms C Wilkinson n/a n/a n/a n/a n/a Dr E Robertston n/a n/a n/a n/a n/a Ms E Ford, Employee Director plus plus 5-10 lump sum lump sum Other Senior Employees Postgraduate Dental Dean: Dr D Felix 1,2 Director of Human Resources: Ms D Wright Director of Allied Health Professionals: Ms S Lam Director of Training for Psychology Services: Ms J Thomson Deputy Director of Medicine: Dr R Parks plus lump sum 0-5 No lump sum plus lump sum plus lump sum plus lump sum No lump sum plus lump sum plus lump sum n/a n/a n/a n/a n/a Notes: 1- The pension benefits for Dr Irvine and Dr Felix reflect the fact that both were part-time staff in NES during 2011/12, whilst holding other posts within the NHS, and then became full time staff in NES in 2012/ The data for Dr Felix has been restated to remove the impact of EPAs which are not subject to superannuation payments. 3- The pension benefits disclosed for Ms E Ford, Employee Director, relate only to non-board duties. n/a - Not a member of the NHS pension scheme. 24

25 REMUNERATION REPORT (continued) MEDIAN PAY CALCULATION 2013/ /13 Highest Earning Director s Total Remuneration 185, ,000 Highest Earning Director s Total Remuneration 180, ,000 Median Total Remuneration 44,032 Median Total Remuneration 43,077 Ratio (Based on mid point of Directors Ratio (Based on mid point of Directors 4.26 pay-band) pay-band) 4.24 Commentary Remuneration for staff includes salary and contracted allowances including overtime payments. Individuals contracted for less than 2 hours per week have been excluded. The calculation includes all other employees paid during the year and has been adjusted to reflect annualised FTE for each individual. This removes the effect of part-year costs for those joining or leaving payroll during the year, and includes equivalent full-time costs for part-time staff. The increase in the ratio is primarily related to the disclosure of the highest paid directors salary in bandings of 5,000. Chief Executive as Accountable Officer 26 June

26 ANNUAL ACCOUNTS 2013/14 DIRECTION BY THE SCOTTISH MINISTERS 26

27 ANNUAL ACCOUNTS 2013/14 STATEMENT OF THE CHIEF EXECUTIVE S RESPONSIBILITIES AS THE ACCOUNTABLE OFFICER OF NHS EDUCATION FOR SCOTLAND 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 NHS Education for Scotland. This designation carries with it, responsibility for: the propriety and regularity of financial transactions under my control; 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 governments Financial Reporting Manual FReM and in particular to: observe the accounts direction issued by the 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 FReM 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 19 March Chief Executive 26 June

28 ANNUAL ACCOUNTS 2013/14 STATEMENT OF HEALTH BOARD MEMBERS RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS Under the National Health Service (Scotland) Act 1978, the 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 Board as at 31 March 2014 and of its operating costs for the year then ended. In preparing these accounts the Members 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 as set out in the FReM have not been followed where the effect of the departure is material; and Prepare the accounts on the going concern basis unless it is inappropriate to presume that the Board will continue to operate. The Special 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 Ministers. 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 Special Health Board members confirm they have discharged the above responsibilities during the financial year and in preparing the accounts. Director of Finance and Corporate Resources 26 June 2014 Chair 26 June

29 ANNUAL ACCOUNTS 2013/14 GOVERNANCE STATEMENT Scope of Responsibility As Accountable Officer, I am responsible for maintaining an adequate and effective system of internal control that supports compliance with the organisation s policies and promotes achievement of the organisation s aims and objectives, including those set by Scottish Ministers. Also, I am responsible for safeguarding the public funds and assets assigned to the organisation. Purpose of Internal Control The system of internal control is based on an ongoing process designed to identify, prioritise and manage the principal risks facing the organisation. The system aims to evaluate the nature and extent of risks, and manage risks efficiently, effectively and economically. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve the organisation s aims and objectives. As such, it can only provide reasonable and not absolute assurance. The process within the organisation accords with guidance from Scottish Ministers in the Scottish Public Finance Manual (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. The SPFM is issued by Scottish Ministers to provide guidance to the Scottish Government and other relevant bodies on the proper handling and reporting of public funds. The SPFM sets out the relevant statutory, parliamentary and administrative requirements, emphasises the need for efficiency, effectiveness and economy, and promotes good practice and high standards of propriety. Governance Framework NHS Education for Scotland has in place a comprehensive governance framework, which includes the following elements: A clearly articulated strategic framework which sets and communicates the Board s vision and intended outcomes covering the period ; supplemented by detailed annual corporate plans all of which are made available to our stakeholders. The Strategic Framework has been reviewed during the course of 2013/14 and the new Strategic Framework for was launched in March A performance management framework which records progress against key performance indicators for each planned objective and which is used to produce regular reports to the Board and the Finance and Performance Management Committee; 29