Transcript NHS LA Finance - Presentation

NHS LA Finance
02 September 2014
Introductions




Tom Fothergill – Director of Finance & Corporate Planning
Jean McFarlane – Management Accountant
Steve Cain – Head of Financial Accounting
Catherine O’Sullivan – Business Support Manager
Objectives
By the end of the session, you will be able to:
 Understand NHSLA Funding sources - Tom
 Read and understand a Statement of Financial Position Tom
 Read and understand a budget statement - Jean
 Read and understand workforce reports - Jean
 Understand the importance of purchase orders & coding Steve
 Understand Contracting and procurement rules Catherine
Your Finance Team
Deputy Director of
Finance
Debbie England
Ext. 2783
Head of Financial
Accounting
Steven Cain
Ext. 2789
Payments Team
Anastasia & Kayleigh
Ext. 2845 & 2796
Income Team
Dorrett & Miran
Ext. 2885 & 2799
Management
Accountant
Jean McFarlane
Ext. 2798
Assistant Business
Accountant
Alex Malpass
Ext. 2881
Sources of Funding
D
e
p
a
r
t
m
e
n
t
o
f
H
e
a
l
t
h
F
u
n
d
i
n
g
£6m
P
r
i
v
a
t
e
£1.1m
NCAS
£111m
£0.65m
ELS/Ex RHA Funding
Equal Pay
CNST Membership
NHSLA
£1 bn
LTPS Membership
£55m
£1.2 bn
£0.99m
FHSAU
PES Membership
Overhead Departments
£0.39m
£11.6m
£5m
F
u
n
d
i
n
g
Financial Controls
Budgets
The Director of Finance has corporate responsibility for the financial governance of the NHS LA and assurance and
advice to the Board.
Financial Controls
The Board receive regular reports on the financial position of the NHS LA.
The Standing Orders, Standing Financial Instructions (SFIs) , Scheme of Delegation and Accounting procedures set out
how we manage our financial responsibilities and our business. They are designed to ensure the NHS LA financial
transactions are carried out in accordance with best practice.
Budget and Variance Reports
The budget for each directorate is set on an annual basis. The NHS LA produces Directorate Budget reports on a
monthly basis for distribution to budget holders. These are summarised for reporting to the Board.
Capital Programme
The Capital Programme sets out the NHS LA’s investment priorities. Funding for the capital programme is agreed with
the Department of Health each year as part of the business planning process.
Audit
The NHS LA internal auditors are the Health Group internal auditors who take any Audit Reports to the Audit Committee
throughout the year. The National Audit Office (NAO) are the NHS LA external auditors and review the NHS LA on an
annual basis.
Annual Statement of Accounts
The NHS LA’s financial year end is 31 March and the Annual report and Accounts are published in the summer
following audit and the public meeting.
Statement of Financial Position
The statement of financial position is one of the primary financial statements that the NHS LA publish. The
purpose of the balance sheet is to give users an idea of the NHS LA’s financial position along with
displaying what it owns and owes.
Example Statement of Financial Position
This is a copy of Guys & St Thomas’ statement of
financial
position
Guys & St Thomas
NHS Foundation Trust
Statement of Financial Position as at 31 March 2014
31 March
2014
£000
31 March
2013
£000
1,028,006
35,637
71
2,006
3,500
1,069,220
884,350
33,156
71
1,804
0
919,381
10,855
0
6,790
3,500
135,878
254,248
129,389
216,522
1,323,468
1,135,903
Current liabilities:
Trade and other payables
Tax Payable
Other Liabilities
Provisions
Borrowings
Total current liabilities
(126,997)
(14,278)
(21,180)
(3,437)
(2,953)
(168,845)
(133,784)
(13,972)
(15,962)
(3,503)
(625)
(167,846)
Non-current assets plus/less net current assets/liabilities
1,154,623
968,057
0
(147)
(329)
(772)
Non-current assets:
Property, plant & equipment
Intangible assets
Investments in associates
Trade and other receivables
Other Financial Assets
Total-non current assets
Long term assets that
the company will hold
for at least one year.
Current assets:
Inventories
Trade and other receivables
Other Financial Assets
Cash and cash equivalents
Total current assets
Total assets
Liquid assets that can
be readily converted
into cash.
All liabilities of the
business that are to be
settled in cash within
the fiscal year.
Non-current liabilities
Trade and other payables
Other Liabilities
Provisions
(9,273)
(8,720)
Borrowings
Total non-current liabilities
(96,448)
(106,050)
(29,405)
(39,044)
Assets less liabilities
1,048,573
929,013
A business's long-term
financial obligations
that are not due
within the present
accounting year.
Exercise: Statement of
Financial Position
Please take 5 minutes to review the NHS LA Statement of
financial position and note any comments/observations
NHS LA Statement of Financial Position
Statement of Financial Position as at 31 March 2014
31 March
2014
£000
31 March
2013
£000
Non-current assets:
Property, plant & equipment
Intangible assets
Total-non current assets
1,749
600
2,349
1,737
402
2,139
Current assets:
Trade and other receivables
Cash and cash equivalents
Total current assets
10,855
21,533
32,388
6,790
18,992
25,782
34,737
27,921
Current liabilities:
Trade and other payables
Provisions for liabilities and charges - known claims
Provisions for liabilities and charges - IBNR
Total current liabilities
(29,335)
(1,122,000)
(143,000)
(1,294,335)
(21,432)
(1,127,693)
(105,000)
(1,254,125)
Non-current assets plus/less net current assets/liabilities
(1,259,598)
(1,226,204)
Non-current liabilities
Provisions for liabilities and charges - known claims
Provisions for liabilities and charges - IBNR
Total non-current liabilities
(9,408,097)
(15,430,000)
(24,838,097)
(8,466,262)
(13,259,000)
(21,725,262)
Assets less liabilities
(26,097,695)
(22,951,466)
Total assets
Management Accounts
Debbie England
Jean McFarlane
02 September 2014
Management Accounting
Whilst there is no legal requirement to prepare management accounts, few
businesses could expect to survive or thrive without them. Management
accounts are prepared to meet the specific needs of the user and typically
include both financial and non financial information.
Management accounts have the following characteristics:
• Record, plan and control the activities of a business
• assist in the decision-making and decision-taking processes.
• Can be prepared for any period of time such as daily, weekly, monthly or
yearly.
• Reports can be both forward looking or historic or a mix of both.
What is a Budget?
A “Budget” is a plan expressed in financial terms for a defined
period of time usually showing expenditure and/or income
employed to attain a given objective.
In this capacity budgets are meant to serve several purposes. These are to:
- enable planning
- enable performance monitoring
- co-ordinate activity
- allow the implementation of the plan
- communicate
- motivate
- authorise action
Structure of Budget Reports
Budgets contain details of expenditure and income in all or part of the
following categories: Income
Department of Health Funding
Private Income
Expenditure
Pay (salaries of NHSLA employees, secondees and agency staff)
Non Pay (consumable items e.g. stationery, rent, travel etc…)
Manual Accounting Adjustments
• Accruals may be necessary for goods and services that have been
received in the period being reported but for which no invoice has yet been
received and registered on the payments system.
• Likewise prepayments made for goods and services that are in the future
(e.g. rent), will need to be removed from the current period accounts.
• These adjustments ensure that the correct expenditure is reflected in the
accounts for the period being reported.
Responsibilities of Budget Holders
The following are the responsibilities of Budget Holders:
• to contain expenditure within budget.
• to ensure that all expenditure attributed to the budget has been requisitioned
and authorised by an appropriate designated officer or the Budget Holder
using an official purchase order.
• to review budgetary information on a regular basis and undertake any
corrective action that may be required to bring it in line with the plan.
• to liaise with the Finance Department to assist in the setting of budgets on
an annual basis.
.
Responsibilities of the Finance Department
The following are the responsibilities of the Finance Department with respect to budgets:
•
to prepare budget reports in a timely, accurate and meaningful fashion.
•
to investigate, in conjunction with the Budget Holder, and report variances in the
financial, activity and manpower information contained within the budgets.
•
forecast income and expenditure outturn, in conjunction with the Budget Holder, based
on the most up-to-date information available
•
to support and maintain the system controlling and authorising expenditure
•
to advise Budget Holders on current and future financial issues and opportunities
•
to assist in the preparation on budgets
•
to produce additional information that may be required by the Budget Holder to enable
their effective management of resources.
Example Budget Statement
June 2014
2014/15 Ye ar to Date
Annual
Budge t (£)
Budge t (£)
Exp/Inc (£)
Cur r e nt M onth (WTE)
Var iance (£)
Budge t
In Pos t
Var iance
INCOME
Department of Health Funding
TOTAL INCOME
(702,585)
(175,646)
(175,646)
0
(702,585)
(175,646)
(175,646)
0
PAY EXPENDITURE
DEPT A
TOTAL PAY EXPENDITURE
403,662
100,916
94,328
(6,587)
9.50
9.00
(0.50)
403,662
100,916
94,328
(6,587)
9.50
9.00
(0.50)
NON PAY EXPENDITURE
Postage
375
94
298
204
Printing & Stationery
500
125
0
(125)
Photocopying
600
150
115
(35)
Archiving
500
125
638
513
Staf f Welf are
300
75
0
(75)
Hospitality
200
50
33
(17)
Courier Costs
400
100
0
(100)
2,875
719
1,084
365
6,700
1,675
1,013
(662)
Accommodation Costs
Travel & Subsistence
Prof essional Subscriptions/Education
300
75
0
(75)
111,356
27,839
24,658
(3,181)
IT
4,600
1,150
2,300
1,150
Communications
3,500
875
650
(225)
Rates
25,000
6,250
6,250
0
Rent
37,532
9,383
9,383
(1)
Pro Advice/Legal Services/Advert
Insurance
Facilities Expenses
Other Legal Costs
Other/Misc
15,000
3,750
3,000
(750)
81,032
20,258
19,283
(976)
92,060
23,015
25,056
2,041
0
0
0
0
TOTAL NON PAY EXPENDITURE
298,923
74,731
73,394
(1,337)
TOTAL EXPENDITURE
702,585
175,646
167,723
(7,924)
0
0
(7,924)
(7,924)
(UNDER)/OVER SPEND
-
-
-
Exercise: Budget Statement
Please spend 15 minutes reviewing the following budget
statement and answer the 5 questions
Budget Statement Exercise
Administration (Dept A)
Income and Expenditure Account
June 2014
2014/15 Year to Date
Annual
Budget (£)
Budget (£)
Exp/Inc (£)
Current Month (WTE)
Variance (£)
Budget
In Post
Variance
INCOME
Department of Health Funding
TOTAL INCOME
(702,585)
(175,646)
(175,646)
0
(702,585)
(175,646)
(175,646)
0
PAY EXPENDITURE
DEPT A
TOTAL PAY EXPENDITURE
403,662
100,916
147,653
46,737
9.50
7.00
(2.50)
403,662
100,916
147,653
46,737
9.50
7.00
(2.50)
(37)
-
-
NON PAY EXPENDITURE
Postage
375
94
57
Printing & Stationery
2,500
625
1,500
875
Photocopying
6,000
1,500
0
(1,500)
Archiving
500
125
150
25
Staff Welfare
300
75
38
(37)
Hospitality
200
50
33
(17)
Courier Costs
400
100
0
(100)
10,275
2,569
1,778
(791)
6,700
1,675
4,200
2,525
300
75
0
(75)
100,000
25,000
56,452
31,452
IT
4,600
1,150
1,150
0
Communications
3,500
875
650
(225)
Rates
25,000
6,250
0
(6,250)
Rent
37,532
9,383
0
(9,383)
Insurance
15,000
3,750
3,750
0
81,032
20,258
4,400
(15,858)
96,016
24,004
22,156
(1,848)
0
0
0
0
TOTAL NON PAY EXPENDITURE
298,923
74,731
90,136
15,405
TOTAL EXPENDITURE
702,585
175,646
237,789
62,142
(UNDER)/OVER SPEND
0
0
62,142
62,142
Accommodation Costs
Travel & Subsistence
Professional Subscriptions/Education
Pro Advice/Legal Services/Advert
Facilities Expenses
Other Legal Costs
Other/Misc
-
1. What is the anomaly with Pay
Expenditure?
2. What could be the reason for the
variances on Printing & Stationery
and Photocopying?
3. Comment on the variances for
Rates and Rent.
4. Pro Adv/Legal Service/Advert is
heavily overspent. Give reasons
why this could be and what
corrective action can be taken.
5. Comment on the overall position
of the department.
Workforce Reports
•
These are produced to enable managers to confirm to us that the staff charged to their
budget statements are the correct ones.
•
The information comes from the payroll system (ESR).
•
Report shows:
•
Permanent staff with the actual gross cost (i.e. the full cost to the employer including
N.I. and pension) broken down by pay type and the WTE.
•
Details of agency staff including a calculated WTE based on an estimate of their hours
worked in the month
•
It is an audit requirement that workforce reports are verified by managers.
Example Workforce Report
Staff
Number
Dept
Payscale Description
Position
Title
First
Name
Last
Name
11111111
11111112
11111113
11111114
11111115
11111116
11111117
11111118
11111119
11111120
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 4
Non Review Body Band 4
Non Review Body Band 4
Non Review Body Band 4
Manager
Manager
Manager
Manager
Manager
Manager
Assistant
Assistant
Assistant
Assistant
Jackie
Jim
James
Jamie
Julie
Jack
Jill
Jane
Joan
Jordan
Smith
Smith
Smith
Smith
Smith
Smith
Smith
Smith
Smith
Smith
Grand Total
AfC WTE Ctr Hrs Assignment
Spinal
Category
Point
29
27
22
27
22
29
11
17
15
11
1.00
0.50
1.00
1.00
1.00
1.00
1.00
0.50
1.00
1.00
9.00
37.50
18.75
37.50
37.50
37.50
37.50
37.50
18.75
37.50
37.50
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Pay Type Description
Jun 14 Year To Date
Employee Basic Pay Local Non
Net Pay Employer's
Annual Gross Pay Actual
Variance WTE
WTE
Category
Agreed Consol Cost
Contributions
Pay
Budget Gross Pay
Budget Variance
Grp Pay Pay NP
Budget
Cost
Full Time
Part Time
Full Time
Full Time
Full Time
Full Time
Full Time
Part Time
Full Time
Full Time
8,633
4,010
6,706
7,942
7,756
8,633
4,735
2,752
5,316
4,735
0
0
0
0
0
25
0
0
0
0
86
0
0
0
0
86
0
28
0
0
8,719
61,216
25
201
60,919
4,010
6,502
7,623
7,756
8,744
4,735
2,780
5,316
4,735
1,890
754
1,389
1,679
1,667
1,900
379
460
1,072
926
42,516
39,164
33,452
39,873
33,452
42,516
24,243
12,962
25,952
24,243
10,629
9,791
8,363
9,968
8,363
10,629
6,061
3,240
6,488
6,061
10,609
4,765
7,891
9,302
9,423
10,644
5,113
3,239
6,388
5,661
(20)
(5,026)
(472)
(666)
1,060
16
(947)
(1)
(100)
(400)
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.50
1.00
1.00
0.00
(0.50)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
12,117 318,371
79,593
73,036
(6,557)
9.50
(0.50)
The funded establishment is set out in the Annual Business Plan, together with the
staff budget.
Produced to enable managers to confirm to us that the staff charged to their
budget statements are the correct ones and that they agree with the pay type
description their staff have been paid under.
Exercise: Workforce Report
Please spend 15 minutes reviewing the following workforce
report and answer the 4 questions
Workforce Report Exercise
Staff
Number
Dept
Payscale Description
Position
Title
First
Name
Last
Name
11111111
11111112
11111113
11111114
11111115
11111116
11111117
11111118
11111119
11111120
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Dept A
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 6
Non Review Body Band 4
Non Review Body Band 4
Non Review Body Band 4
Non Review Body Band 4
Agency staff
Manager
Manager
Manager
Manager
Manager
Manager
Assistant
Assistant
Assistant
Assistant
Jackie
Jim
James
Jamie
Julie
Jack
Jill
Jane
Joan
Jordan
Smith
Smith
Smith
Smith
Smith
Smith
Smith
Smith
Smith
Smith
Temp
Grand Total
1.
2.
3.
4.
AfC WTE Ctr Hrs Assignment
Spinal
Category
Point
29
27
22
27
22
29
11
17
15
11
1.00
0.50
1.00
1.00
1.00
1.00
1.00
0.50
1.00
1.00
1.00
9.00
37.50
18.75
37.50
37.50
37.50
37.50
37.50
18.75
37.50
37.50
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Jun 14 Year To Date
Employee Basic Pay Local Non
Agency Net Pay Employer's
Annual Gross Pay Actual
Variance WTE WTE
Category
Agreed Consol Pay
Cost
Contributions
Pay
Budget Gross Pay
Budget Variance
Grp Pay Pay NP
Budget
Cost
Full Time
Part Time
Full Time
Full Time
Full Time
Full Time
Full Time
Part Time
Full Time
Full Time
8,633
4,010
6,706
7,942
7,756
8,633
4,735
2,752
5,316
4,735
0
0
0
0
0
0
25
0
0
0
0
0
86
0
0
0
0
86
0
28
0
0
0
61,216
25
201
0
0
0
0
0
0
0
0
0
0
3,725
8,719
4,010
6,706
7,942
7,756
8,744
4,735
2,780
5,316
4,735
3,725
3,725 65,167
1,890
754
1,389
1,679
1,667
1,900
379
460
1,072
926
0
42,516
39,164
33,452
39,873
33,452
42,516
24,243
12,962
0
24,243
0
10,629
9,791
8,363
9,968
8,363
10,629
6,061
3,240
0
6,061
0
10,609
4,765
8,095
9,621
9,423
10,644
5,113
3,239
6,388
5,661
3,725
(20)
(5,026)
(268)
(347)
1,060
16
(947)
(1)
6,388
(400)
3,725
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.50
0.00
1.00
0.00
0.00
(0.50)
0.00
0.00
0.00
0.00
0.00
0.00
1.00
0.00
1.00
12,117 292,420
73,105
77,284
4,179
8.50
1.50
Give an explanation for Jim Smith's underspend.
Give an explanation for Julie Smith's overspend.
Give an explanation for Joan Smith's overspend.
Comment on the overall position of the department and what action needs to
be taken if any.
The Importance of Purchase
Orders
Steve Cain
02 September 2014
What is a Purchase Order?
A purchase order is a document that is sent by a buying organisation to a
supplier of goods or services detailing;
• Quantity of goods / details of services
• Price per unit / service provided
• Delivery address
• Billing address
Why use a Purchase Order?
• Enables an organisation to keep track of committed expenditure.
• Enables an organisation to forecast expenditure in relation to goods/services
ordered not delivered / invoiced.
• Ensure that goods / services are purchased according to an organisations
agreed authority levels.
• Ensure accurate accounting of expenditure in term of which budgets
expenditure is charged to.
• Match goods received against original order.
Coding
The financial codes used at the Authority are 7 or 9 digit codes, which are
broken down into 2 elements as follows:
Cost code – this is a four digit
alphanumeric element. It identifies the
department to which the income or
expenditure relates.
Expense code – this is a 3 to 5 digit
numeric element. It describes the type of
income or expenditure.
e.g. travel expenses, photocopying
01-10
260- / 260-04
The NHSLA has a policy of 'source coding’ that gives the responsibility of
coding to the person generating the cost or income. It is the responsibility of
the budget holder, therefore, to ensure that accurate coding takes place at all
times.
Procedure for raising a purchase order
1) Raise a Purchase Requisition
•
A PR is a document that details the
PO, the PR would normally be raised
after a discussion and would, if
available, include a quote /
documentation of agreed price,
quantity etc.
2) Requisition is approved converted
to PO.
3) Requisition approved and PO
sent to supplier.
•
•
•
•
Individuals with the appropriate
authority would review.
If ok would approve the PR- converts
PR to PO.
If not ok- reject back to requisitioner
– review and resubmit.
•
•
Post
Email
In some cases not required.
4) Goods received
Closed (fully matched)
Left open (part matched)
Closed
Invoice Received
Issue preventing invoice
from being matched to
Invoice, referred back to RO
Invoice matched and Paid.
Yes
No
Exceptions to Purchase without a PO

Non staff expenses (Secondees)

Season tickets

Payroll costs PAYE / NI / Childcare voucher

Cycle to work invoices

Agreed list of expenditure to be purchased or corporate credit card.
Procurement and Contracting
Catherine O’Sullivan
02 September 2014
Government and Procurement- Background
•
Francis Maude, Minister for the Cabinet Office, set up the Efficiency and
Reform Group (ERG) in 2010. Its aim is to make sure departments work
together to reduce waste and improve accountability across a range of
areas, including information and communications technology (ICT),
procurement, projects, HR and property.
•
The Efficiency and Reform Group (ERG) works in partnership with HM
Treasury and government departments to deliver efficiencies, savings and
reforms on behalf of UK taxpayers. ERG aims to save money, transform the
way public services are delivered, improve user experience and support UK
growth
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As an ALB NHS LA works with DH procurement to ensure we too deliver the
agenda of the ERG.
Procurement and Contracting
The NHS LA is committed to the efficient management of non-pay costs and
supports an approach for the purchase of goods and services in a way which
is:
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Appropriate to and fully aligned with the organisations business objectives
and service delivery requirement;
Fully compliant with Government and European Union public sector
procurement principles and rules;
Supports the Cabinet Office agenda for working with Small and Medium
Sized Enterprises (SME’s)
Best able to deliver value for money (VFM), that being the optimum
combination of whole life cost, quality and fitness for purpose to meet
requirements; and
Compliant with the Standing Financial Instructions (SFI’s) to the
organisation.
Sourcing Goods and Services with
estimated value of between £3,000 - £10,000
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Is there an existing NHS LA contract through which the requirement can be
fulfilled. The corporate governance team can advise on this.
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If there is no existing NHS LA arrangement, if the good or service required is
part of an Efficiency and Reform Group (ERG)common goods and services
then you must procure the required good or service through the Department
of Health mandated arrangement (which may be a CCS framework).
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If the required good or service is not ERG, then you must purchase the good
or service through the Crown Commercial Service (CCS)
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If the good or service cannot be procured through any of the above routes
then you must obtain and retain a minimum of three written quotations
Sourcing Goods and Services with
estimated value between £10,000 and OJEU limit
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Is there an existing NHS LA contract through which the requirement can be
fulfilled. The corporate governance team can advise on this.
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If there is no existing NHS LA arrangement, if the good or service required is part
of an Efficiency and Reform Group (ERG)common goods and services then you
must procure the required good or service through the Department of Health
mandated arrangement (which may be a CCS framework).
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If the required good or service is not ERG, then you must purchase the good or
service through any other available Crown Commercial Service (CCS)
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If the good or service cannot be procured through any of the above routes then
you must conduct either a request for quotation or tender process as advised by
the procurement lead depending on the value and complexity of the purchase. In
any event that opportunity must be advertised on the public sector Contracts
Finder website.
Questions?