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Financial reporting praised, but auditors say 1 in 4 NHS trusts under financial stress

25 July 2013

NHS bodies gave a strong performance on financial reporting for 2012/13; but the Audit Commission’s auditors voice concern about the financial resilience of a quarter of NHS trusts.

In Auditing the Accounts 2012/13: NHS bodies, the Commission shares the findings of its appointed auditors’ at NHS trusts (excluding foundation trusts), and both primary care trusts (PCTs) and strategic health authorities (SHAs) for their final year of existence. It reports on the timeliness and quality of accounts, arrangements to secure value for money (VFM) and the extent to which auditors utilised their statutory reporting powers.

To date, auditors have issued unqualified audit opinions to all NHS trusts, PCTs and SHAs for 2012/13. At one NHS trust and two PCTs, the auditor has not yet been able to issue an opinion.

The Commission’s Controller of Audit, Marcine Waterman said: “NHS bodies closed their accounts and reported their final position just ten weeks after the financial year. With no qualified audit opinions issued, and only three opinions outstanding, it’s commendable, especially during operational and structural change to the NHS. But, we are also aware of difficulties in identifying opening balances for the new Clinical Commissioning Groups, so there are challenges ahead for the 2013/14 accounts and audit process.”

Auditors issued a qualified VFM conclusion to 26 NHS trusts. In 25 of these cases, auditors reported concerns about the financial resilience of the trust.

Marcine continues: “This year our auditors are concerned about the financial resilience of more NHS trusts. This reflects the increased risks to the financial sustainability of individual bodies, pressured by the need to make financial savings, managing increased demand for services while improving patients’ quality of care.”

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Notes for editors

  1. At 31 March 2013, 100 NHS trusts remained in the Commission’s audit regime. Auditors issued non-standard VFM conclusions for 2012/13 at 26 of these NHS trusts (26 per cent). There were six adverse conclusions for 2012/13 (five for 2011/12) issued to:
  • Barking, Havering and Redbridge University Hospitals NHS Trust;
  • East Sussex Healthcare NHS Trust;
  • North Cumbria University Hospitals NHS Trust;
  • South London Healthcare NHS Trust;
  • University Hospital of North Staffordshire NHS Trust; and
  • Wye Valley NHS Trust.

Adverse conclusion: The auditor is not satisfied that the body made proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2013, as significant weaknesses were identified

2. There were 20 qualified ‘except for’ conclusions (14 for 2011/12) issued to

  • Barnet and Chase Farm Hospitals NHS Trust;
  • Bedford Hospital NHS Trust;
  • Croydon Health Services NHS Trust;
  • Epsom and St Helier University Hospitals NHS Trust;
  • George Eliot Hospital NHS Trust;
  • Ipswich Hospital NHS Trust;
  • Mid Essex Hospital Services NHS Trust;
  • Mid Yorkshire Hospitals NHS Trust;
  • North West London Hospitals NHS Trust;
  • Northampton General Hospital NHS Trust;
  • Plymouth Hospitals NHS Trust;
  • Portsmouth Hospitals NHS Trust;
  • Royal Cornwall Hospitals NHS Trust;
  • Shrewsbury and Telford Hospital NHS Trust;
  • Surrey and Sussex Healthcare NHS Trust;
  • The Princess Alexandra Hospital NHS Trust;
  • United Lincolnshire Hospitals NHS Trust;
  • West Middlesex University Hospital NHS Trust;
  • Weston Area Health NHS Trust; and
  • Worcestershire Acute Hospitals NHS Trust.

Qualified ‘except for’: The auditor is satisfied that the body made proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2013, in all significant respects, except for one or more specific weaknesses

3.  The main reasons for the financial resilience qualifications include:

  • NHS trusts failing to meet their statutory breakeven duty;
  • reliance on financial support;
  • NHS trusts setting deficit budgets; and
  • gaps in identifying how to deliver sustainable cost improvement plans (CIPs) for 2013/14.

4.  There were four referrals to the Secretary of State for Health for NHS trusts between October 2012 and July 2013 relating to the failure of the following NHS trusts to meet their statutory break-even duty:

  • East Sussex Hospitals NHS Trust;
  • George Eliot Hospitals NHS Trust;
  • South London Healthcare NHS Trust;
  • University Hospital of North Staffordshire NHS Trust; and
  • United Lincolnshire Hospitals NHS Trust.

5.  The equivalent report for local government bodies will be published in December 2013

For more information please contact: Nick Rigg, Communications manager

Direct line: 0303 444 8284
Mobile: 07970 906 112
Press office: 0303 444 8282
Email: n-rigg@audit-commission.gsi.gov.uk