'--,+NHS Lot hian
LOTHIAN HEALTH BOARD
ANNUAL ACCOUNTS
for the
YEAR ENDED 31 MARCH 2004
LOTHIAN HEALTH BOARD
ANNUAL ACCOUNTS AND NOTES FOR YEAR ENDED 31 MARCH 2004
DIRECTORS' REPORT
I. 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 Resource Accounting Manual issued by HM Treasury.
2. Accounting policies
'The statement of the accounting policies, which have been adopted, is shown at Note 1.O.
From I April 2002, the NHS Board has complied with the Resource Accounting Manual (RAM issued by HM Treasury with the Operating Cost Statement replacing an Income and Expenditure Accol-lnt and the General Fund replacing capital and revenue reserves on the Balance Sheet.
Lothian Urliversity Hospitals NHS Trust was dissolved on 1 January 2004. The assets and liabilities of the Trust were transferred to Lothian NHS Board at that date. This transfer has been accounted for using merger accounting, as directed by the Resource Accounting Manual. The main effect of this is that the results and cash flows of the Trust for the period ended 31 March 2004 are brought into account from the start of the financial year as if the transfer had occurred on that date and the prior year comparatives have been restated as if the transfer had occurred at the start of that year.
Prior to the introduction of resource accounting, Health Boards accounted for early retirement costs which arose prior to 1 April 1995 in the years in which the costs arose and did not reflect the full lifetime liability arising from the decision to allow early retirement. With the introduction of resource accounting this long term liability requires to be shown. Accordingly a prior year adjustment has been shown in those. accounts in order to reflect the long term liability arising from 1 April 1995 early retirements.
Under Accounting Standards and the Resource Accounting Manual, NHS bodies are required to revalue their land and buildings at least every five years. A professional valuation should be carried out in accordance with the Appraisal and Valuation Manual produced jointly by the Royal Institution of Chartered Surveyors (RICS) and Incorporated Society of Valuers and Auctioneers (ISVA) and the Institute of Revenues Rating and Valuation (IRRV). The estate of NHS Scotland was last valued in 1999, and a national contract to revalue the estate as at 31 March 2004, was let to the Valuation Office Agency. The valuation of fixed assets for land and buildings is incorporated in the attached accounts in accord with the report received.
In accordance with Scottish Executive direction on the application of Best Value, NHS bodies have an ongoing and mandatory requirement to seek continuous in~provementin the use of resources. Consistent with the requirements of Generally Accepted Accounting practice (GAAP) and the Resource Accounting Manual, the valuation of fixed assets will be kept under review.
Principal activities and review of the year
The NHS Board was established in 1974 and is responsible for commissioning health care se~cesfor the residents of Edinburgh and .the Lothians, a total population of 783,600.
In December 2000, the Scottish Executive published "Our National Health: A Plan for Action, A Plan for Change" (the Scottish Health Plan), which recognised the need to simplify, improve and rationalise local decision making arrangements. As a result, from 30" September 2001, 15 single unified NHS boards were established. In the case of the 12 mainland board areas, these new unified NHS boards replaced the separate structures of NHS Boards and Trusts.
These new NHS boards form a local health system, with single .governing boards responsible for improving the health of their local populations and delivering the healthcare they require.
The overall purpose of the unified NHS Board is to ensure the efficient, effective and accountable governance of the local NHS system and to provide strategic leadership and direction for the system as a whole.
The role of the unified NHS Board is to:
- improve and protect the health of the local people; - improve health services for local people; - focus clearly on health outcomes and people's experience of their local NHS system; - promote integrated health and comm~~nityplanning by working closely with other local organisations; and - provide a single focus of accountability for the performance of the local NHS system. The functions of the unified NHS Board comprise:
- strategy development; - resource allocations; - implementation of the Local Health Plan; and - performance management.
-NHS Lotl-lian again met all its financial targets in 2003104 supported by a partnership approach both within NHS Lothian and elsewhere across NHS Scotland in respect of tertiary services. Other highlights of the year included:
The dissolution of Lothian University Hospitals NHS Trust on 1 January 2004 and its incorporation as an operating division of the Board
Exceeding the target set for delayed discharges
: Monitoring the progress made previously and demonstrating further progress towards achieving the attainment of the Outpatient Waiting Times national target by 2005
Achieving 100% compliance with the 48 hour access target by December 2003
In 2002103 the Board accounts were qualified in regard to a limitation in : the scope of audit work due to difficulties in.identifying the level of fraud for exemption claims made by patients. As a result, and following
. '. criticism that the process was not statistically robust, Counter Fraud Services reviewed the process of checking for fraud within these claims. Both statisticians and Audit Scotland have approved the revised
: process. As a result of these revised procedures no qualification is required for 2003104.
Through the work undertaken by Counter Fraud Services, a sample of claims for patient exemption within NHS Lothian has been tested for validity. Based on the level of fraud within the sample, a projected figure of f1,688k has been identified as being the potential total fraud committed against NHS Lothian in 2003104. Where fraud is known (and detected through the sampling process), recoveries are made wherever possible. For financial year 2003104, a total of £6,466 has been recovered.
The accounts disclose an underspend against the Revenue Resource Limit of £ 13,207k. 4. Financial targets The Scottish Executive set 3 budget limits at health board level on an annual basis. These limits are: + Revenue resource limit - a resource budget for ongoing operations; + Capital resource limit - a resource budget for new capital investment; and + Cash requirement - a financing requirement to fund the cash consequences of the ongoing operations and the new capital investment. Health boards are expected to stay witl- in these limits, and will report on any variation from the limits as set. 5. Performance against financial targets
As agreed Actual Variance with Outturn (0ver)lUnder Funding bodies roo0 f '000 f'000 (1) (2) (3)
1 Revenue Resource 923,381 910,174 13,207 limit
2 Capital Resource 9,912 9,912 - Lirr~it
3 Cash Requirement 838,904 827,650 11,254
This underspend which substantially reflects timing differences on a number of planned projects, but also reflects an improved operating ..performance by Lothian University Hospitals Operating Division in the final quarter of the year, is fully committed against activity in 2004105.
While the operati~gperforniance of Lothian University Hospitals Division showed a marked improvement in the final quarter of the year, the Division returned a deficit off8,727k for the full year.
As part of the Board's five year planning process it was identified in 2001102. that to enable a number of internal efficiency measures to be put in place to ensure that the Board achieved sustainable balance by 2007108 additional funding would be required up to 2006107. This was agreed with the Scottish Executive and in accordance with this agreement, brokerage off 13.8m was received in 2003104. 6. Payment policy The board endeavours to comply with the principles of the CBI prompt payment code by processing suppliers invoices for payment without unnecessary delay and by settling them in a timely manner. In 200312004 average credit taken was 33 days. In 2003104 the Board paid 76.9% by value and 81% by volume within 30 days.
7. Board membership
Under the terms of the Scottish Health Plan, the unified board is a board of governance whose membership will be conditioned by the functions of the board, as set out in paragraph 3 above. Members of unified boards are selected on the basis of their position - such as a trust chair or chief executive - or the particular expertise which enables them to contribute to the decision making process at a strategic level.
The unified board has collective responsibility for the performance of the local NHS system as a whole, and reflects the partnersl~ip approach, which is essential to improving health and health care.
Chair:
Mr Brian Cavanagh - to 31 July 2005
Non-Executive Directors:
'Mr Michael Walker, Vice Chair
Professor Patricia Peattie, Chair, Lothian University Hospitals NHS Trust - to 31 December 2003
Mr Garth Morrison, Chair, Lothian Primary Care NHS Trust
Mr Stuart Smith, Chair, West Lothian Healthcare NHS Trust
Mr Stuart Smith, Interim Chair, NHS Lothian - University Hospitals Division - 5 January 2004 - 31 March 2004
Mr Stuart Gray, Chief Executive, Lothian University Hospitals NHS Trust - to October 2003
Mr David Bolton, Acting Chief Executive;Lothian University Hospitals. NHS Trust from October to 2003 to December 2003
Mr David Bolton, Acting Chief Executive, Lothian University Hospitals Division from January 2004
Mr Murray Duncanson, Chief Executive, Lothian Primary Care NHS Trust Mr Peter Gabbitas, Chief Executive, West Lothian Healthcare NHS Trust
Mr Fernando Diniz, Non-Executive Director
Professor John Savill - Head of College, University of Edinburgh Medical School
Cllr Kingsley Thomas - City of Edinburgh Council
Cllr Ann McCarthy - East Lothian Council
Cllr Danny Molloy - Midlothian Council
Cllr Graeme Morrice - West Lothian Council
Dr Charles Swainson, Medical Director Representative, from 11 August 2003
Mr Eddie Egan, Employee Director
Dr Peter Shishodia, Chair, Area Clinical Forum - from 19 September 2003
Dr Ian McKay, LHCC - from II August 2003
Dr Jacqueline McDonald, Chair, Area Clinical Forum - to 17 July 2003
Executive Directors:
Professor James Barbour, Chief Executive
Mr John Matheson, Director of Finance
Professor Peter Donnelly, Director of Public Health - to February 2004
Dr Anne Maree Wallace, Acting Director of Public Health - from February 2004
Ms Jacqui Simpson, Director of Nursing
Dr Linda Pollock, Acting Director of Nursing -to ISeptember 2003 8. Corporate governance
The unified board meets regularly during the year to progress the business of the health board. The Scottish Health Plan established that the following standard committees should exist at board level: - Clinical governance; - Audit; - Staff Governance; - Ethics; and - Discipline (for primary care contractors).
Clinical governance committee
The clirrical governance corrrmittee of the health board has two key roles: - Systems assurance - to ensure that. clinical governance mechanisms are in place and effective throughout the local NHS system; and
-. Public health governance - to ensure that the principles and standards of clinical governance are applied to the health improvement activities of the NHS board.
The membership of the clinical governance committee cornprises those listed below and is chaired by Mrs Geraldine Gammell Dr Charles Swainson, Medical Director NHS Lothian - University Hospitals Division Dr Brian Montgomery, Medical Director West Lothian Healthcare NHS Trust Dr Dermot Gorrnan, Consultant in public Health Medicine Ms Isabel McCallum, Director of Nursing NHS Lothian - Ur~iversityHospitals Division Dr Linda Pollock, Director of Nursing & Quality NHS Lothian - Primary & Community Division Mrs Geraldine Gammell, Non-Executive Director NHS Lothian - University Hospitals Division - to December 2003
Dr Mike Winter, Medical Director NHS Lothian - Primary & Community Division
Professor P Donnelly, Director of Public Health & Health Policy Lothian NHS Board - up to February 2004
Ms J Sansbury, Acting Director of Healthcare Planning Lothian NHS Board - up to October 2003 Ms Libby Campbell, Director of Nursing West Lothian Healthcare NHS Trust
Mrs Pat Matthews, Non-Executive Director Lothian Primary Care Trust
Mrs Carol Stevenson, Non-Executive Director West Lothian Healthcare NHS Trust - chair from January 2004
Dr Anne-Maree Wallace, Acting Director of Public Health and Health Policy Lothian NHS Board - from February 2004
Mrs J Simpson, Nurse Director Lothian NHS Board - from October 2003
Audit committees
The Board has two audit committees:- - An NHS Lothian audit committee which comprises three non- executive directors of the Lothian NHS Board plus the chairman of each of the three NHS Lothian trust audit committees. This committee deals with strategic audit matters across NHS Lothian which could have a material impact on the overall performance of NHS Lothian. - A Lothian NHS Board audit committee which comprises three non- executive directors of the Lothian NHS Board. This committee deals with operational audit matters which relate only to Lothian NHS Board. The members of the NHS Lothian audit committees are:- Councillor G Morrice, Non-Executive Director, Lothian NHS Board (also Member of Lothian NHS Board Audit Committee) Mr E Egan, Employee Director, Lothian NHS Board (also member of Lothian NHS Board Audit Committee) Councillor K Thomas, Non-Executive Director, Lothian NHS Board (also member of Lothian NHS Board Audit Committee) Ms J Anderson, West Lothian Healthcare NHS Trust Audit Committee Mr W Stewart, NHS Lothian - University Hospitals Division audit committee up to December 2003. Mr S Singh, Lothian Primary Care NHS Trust Audit Committee The NHS Lothian strategic audit committee meets at least 4 times per year. The Lothian NHS Board operational audit committee meets at least 3 times per year. Both are chaired by Councillor G Morrice
Staff governance committee
The committee has an important role in ensuring consistency of policy and equity of treatment of staff across the local NHS system, including remuneration issues, where they are not already covered by existing arrangements at national level. The membership of the staff governance committee is as detailed below: Mr E Egan Mr B Cavanagh Mr G Morrison CBE Mr S Smith Ms R Kelly Professor P Peattie up to December 2003 Mr P Gabbitas Mr Ian Fulton Cllr D Molloy Ms L Falconer
The staff governance committee is chaired by Mr E Egan.
Ethics committee The principle function of the committee is to provide independent advice as to whether a given piece of research is ett-~ical,and whether the dignity, rights, safety and wellbeing of individual research subjects are adequately protected. The membership of the ethics committee is as listed below and is chaired by Dr Andrew Zealley:
Dr Andrew Zealley (Chairman) Mr Alistair Dunlop (Vice Chairman) Dr Nick Bateman Dr Agnes Wood Dr Mike Logan Professor Peter Hayes Professor David Webb up to December 2003 Dr Alison Richardson Dr Christine West Mr Simon Sikora up to June 2003 Dr Janet lronside Mrs Rosalind Caborn Mrs Diana Anderson Mr Nick Elliott-Cannon Dr Rachel Hardie Board members' and senior managers' interests The following interests were declared by Directors of Lothian Health for 200212003:
Brian Cavanagh, Chairman Director, Clifden Consultancy which specialises in social policy consultancy advice; organises conference and seminars. Member, Scottish Labour Party Member, TGWU, Voluntary Sector Branch
Michael Walker, Non-Executive Director IVice-Chairman Chairman, James Walker (Leith) Ltd Director, Subsidiary and Associated Companies (Ferryfield House Ltd and Ellen Glen's House Ltd are subsidiary companies of James Walker (Leith) Ltd) Chairman, Aberforth Split Level Investment Trust plc Trustee, High Blood Pressure Fo~~ndation
Fernando Almeida Diniz No interests to declare.
James J Barbour OBE, Chief Executive Honorary Professor, Queen Margaret University College Board Member, Capital City Homes Non-Executive Director, Common Services Agency Member, Institute of Healthcare Management Member, First Division Association
Peter D Donnelly, Director of Public Health and Health Policy (to February 2004) Honorary Professor, University of Edinburgh 'Vice-President, Faculty of Public Health Medicine Short paid consultancy for the Government of Malta taken during a period of annual leave in 2002.
John Matheson, Director of Finance and Central Services Member, Board of Management, Telford College, Edinburgh
Jacqui Simpson, Nurse Director No interests to declare.
Dr Anne Maree Wallace, Acting Director of Public Health No interests to declare. Dr Linda Pollock, Acting Nurse Director (from 1 October 2002 for a period not exceeding 9 October 2003) Part-Time Mental Welfare Commissioner for Scotland Honorary Lecturer and Research Fellow, Nursing Studies Department, University of Edinburgh Past Lecturer and External Examiner at Robert Gordon University, Dundee University and Queen Margaret University College Member, Soroptomists Merrrber, Royal College of Nursing
Jackie Sansbury, Acting Director of Healthcare Planning No interests to declare.
Margaret Wells, Director of Social Inclusion (to February 2004) Director, Capital City Partnership
Dr Ian McKay, Non-Executive Director No interests to declare.
Dr Peter Shishodia, Non-Executive Director No interests to declare.
David Bolton, Non-Executive Director Director of South Edinburgh Social Inclusion Partnership
Dr Charles Swainson, Non-Executive Director No interests to declare.
Stuart Smith, Non-Executive Director Chairman, West Lothian Healthcare NHS Trust Acting Chairman, Lothian University Hospitals Division (January 2004)
Garth Morrison CBE, Non-Executive Director Chairman, Lothian Primary Care NHS Trust Trustee of Lamp of Lotl-lian Collegiate Trust
Professor Patricia Peattie, Non-Executive Director Chairman, NHS Lothian - University Hospitals Trust (to December 2003) Assistant Principal, Napier University Member, Board of Management and Chair, Finance and General Purposes Committee, West Lothian College Member of Council and Education Committee, St George's School, Edinburgh Chairman, MREC (Committee B) for Scotland
Murray Duncanson, Non-Executive Director Trustee, Elizabeth Fitzroy Support
Peter Gabbitas, Non-Executive Director No interests to declare. Stuart Gray, Non-Executive Director (to November 2003) Lay Member, Specialist Training Authority of the Medical Royal Colleges Trustee, UK Med
Ann McCarthy, Non-Executive Director Member, East Lothian Council Vice-Convenor, Social Work and Housing Committee, East Lothian Council Director and Chair, Homes for Life Housing Partnership Member, Scottish Labour Party
Daniel Molloy, Non-Executive Director Elected Member, Midlothian Council Chair, Garvald Glenesk Limited Chair, Dalkeith Business Renewal Director, Jewel and Esk Valley College Board of Management Chair, Dalkeith Old People's Welfare Executive Committee - Scottish Housing and Planning Council Executive Committee - Scottish Federation for the Welfare of the Blind Executive Committee - Dalkeith Arts Guild Management Committee - Dalkeith Citizens Advice Bureau Member, Scottish Labour Party Member, Transport & General Workers Union
Graeme Morrice, Non-Executive Director Member of West Lothian Council Director of Broxbum Family and Community Development Centre (appointed by West Lothian Council) Director of West Lothian Housing Partnership (appointed by West Lothian Council) Member of the Scottish Labour Party Member of the Co-operative Party Member of the Transport and General Workers' Union
Kingsley Thomas, JP. Non-Executive Director Manager, Criminal Applications, Scottish Legal Aid Board Councillor, City of Edinburgh Council Board Member, Scotland Against Drugs Honorary Vice President, Edinburgh and Leith Age Concern Management Committee Member, Volunteer Development Edinburgh Governor, George Heriot's School Trust Trustee, Donaldsons' Trust Chair, GorgielDalry Citizens Advice Bureau Director, GorgielDalry Partnership Management Committee Member, Gorgie City Farm Member, GMB Trade U~iion Member, Scottish Labour Party Professor John Savill, Non-Executive Director Vice-Principal and Head of the College of Medicine and Veterinary Medicine, University of Edinburgh Governor of PPP Foundation Chair, Scientific Advisory Board (Infections and Immunity) Xenova plc, Cambridge Member, Medical Research Committee and Chairman of MRC Physiological Medicine and Infections Board Fellow, Royal College of Physicians of London Fellow, Royal College of Physicians of Edinburgh Member, UK Renal Association Member, American Society of Nephrology Member, Society for Leukocyte Biology Member, Medical Research Society Member, Association of Physicians Member, Wilson's Cricket Club, Nottingham Member, Westbridgeford Hockey Club, Nottingham
Edward M Egan, Employee Director Branch Secretary, UNISON West Lothian Health Branch Chair, Scottish Health Committee (UNISON) Member, Scottish Committee (UNISON) Member, Scottish Labour Party Member of the Co-operative Party
Dr Jacqueline McDonald, Non-Executive Director (left July 2003) No interests to declare.
9. Human resources As an equal opportunities employer, the health board welcomes applications for employment from disabled persons and actively seeks to provide an environment where they and any employees who become disabled can continue to contribute to the work of the board. The health board provides employees with information on matters of concern to them as employees and consults employees or their representatives so their views are taken into account in decisions affecting their interests. 10. 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. For the financial years 2001102 to 2005106 the Auditor General appointed KPMG LLP to undertake the audit of Lothian Health Board. 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.
By order of the board
J.. . ..%...... Chief Executive LOTHIAN HEALTH BOARD
ANNUAL ACCOUNTS 2003104
STATEMENT OF THE CHIEF EXECUTIVE'S RESPONSIBILITIES AS THE ACCOUNTABLE OFFICER OF THE HEALTH BOARD
Under Section 15 of the Public Finance and Accountability (Scotland) Act, 2000, The Principle Accountable Officer (PAO) of the Scottish Execl~tivehas appointed me as Accountable Officer of Lothian Health Board.
This designation canies 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 Board'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 29 August 2001. LOTHIAN HEALTH BOARD
ANNUAL ACCOUNTS 2003104
STATEMENT OF HEALTH BOARD MEMBERS' RESPONSIBILI'TIES IN RESPECT OF THE ACCOUNTS
Under the National Health Service (Scotland) Act 1978, the Health 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 bf the Health Board as at 31 March 2004 and of its operating costs for the year lhen ended. In preparing these accounts the Directors 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 have not been followed where the effect of the departure is material.
Prepare the accounts on the going concern basis unless it is inappropriate to presl,lme that the Board will continue to operate.
The 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 Executive Health Department. 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 Board members confirm they have discharged the above responsibilities during the financial year
Direct9' r of Finance Chairmane & Date 18/?1. Statement of Directors' Responsibility in respect of 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 the organisation's policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.
The system of internal control is based on an ongoing process designed to identify the principal risk 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. This process had been in place for the year ended 31 March.2004 and up to the date of approval of .the annual report and accounts and accords with guidance from Scottish Executive Finance.
As Accountable Officer I also have responsibility for reviewing the effectiveness of the system of intemal control. The following processes have been established.
= The Lothian NHS Board meets regularly to develop and monitor its plans and strategic direction. The Board comprises the Chair and Chief Executive of NHS Lothian, the Executive Directors of the organisation and individual Trust Chief Executives and twelve non- Executive Board Members, which include the chairpersons from each Trust.
In addition, the Executive Directors of the Board meet on a weekly basis to review progress at an operational level. The Chief Executive of NHS Lothian and the Chief Executives of the NHS Lothian Trusts and Operating Division also meet on a fortnightly basis.
= Lothian NHS Board has established a Finance and Performance Review Committee to enable detailed discussion to take place on delivering financial and other performance targets including review of business cases to assist in informing the decisions of the Board.
= The Board has established a Performance Management Review system with each Trust and Operating Division in the area. This enables the executive directors of the Board, Operating Division and Trusts to review performance against the requirements of the Local Health Plan and other targets. During the year a review was conducted of the Board's sub committee structure.
The Internal Audit function provides the Board with regular reports together with recommendations for improvement. In addition the Chief Internal Auditor provides an annual report which includes his independent opinion on the adequacy and effectiveness of the system of internal control.
An NHS Lothian Audit Committee dealing with strategic audit issues across NHS Lothian together with an Operational Audit Committee dealing with operational Lothian Health Board issues were created in December 2001. Prior to this an Audit Committee dedicated to Lothian Health Board was in existence.
The minutes from Audit Committee meetings are reviewed and approved by the Board .and the Chair of the Audit Committee will submit an annual Statement of Audit Assurance to-the Board.
The system of internal financial control is based on a framework of regular management information, administrative procedures and a system of delegation and accountability. In particular it includes:
- Comprehensive budgeting systems with an annual budget - Regular reviews by the Board and executive directors of periodic and annual financial reports which indicate financial performance against forecasts - Targets set to measure financial and other performance information - Clearly defined capital investment control guidelines - Formal capital project management disciplines - Regularly reviewed and updated standing orders, scheme of delegation and standing financial instructions; and - Procedures within the finance department that are documented and the operation of key financial controls which are reviewed by internal audit
Lothian Health Board has a Risk Management Strategy and execution of this strategy has been allocated to a Risk Management Group which works in close liaison with a range of other relevant groups and committees.
The Board has established a Clinical Governance Committee with representation from the Chairs of the Trust Clinical Governance Committees and the Medical and Nursing Directors of each Lothian Trust together with the Director of Public Health and the Director of Healthcare Planning to provide assurance to the Board regarding the effectiveness of Clinical Governance structures including risk management. The Clinical Governance Committee provides an annual report to the Board. The Chief lntemal Auditor has facilitated a high level self- assessment of where the Board is, compared to the Controls Assurance Standards suggested by Scottish Executive Health Department as a point of reference when determining controls adequacy. This has highlighted many areas where the Board exhibits a strong control environment and others where as expected further development of controls is required.
Highlighted in the Statement on lntemal Control for 2002103 were actions required to improve the control environment. Detailed below are updates on these actions.
The risk management system was implemented, populated with risks from our previous risk register and key user training undertaken.
The planned development of a system of key performance and risk indicators and annual review process will take place to reflect the draft combined Quality Scotland standards.
In addition the following key control developments are advanced and will be completed during 2004105.
The Public Interest Disclosure Act 1998 requires organisations to have a wl-~istleblowing policy. An NHS Lothian whistle blowing policy is currently being developed for implementation in 2004105.
The O'Brien Report on the Caleb Ness Inquiry (October 2003) made 35 recommendations for improvement in Child Protection procedures which were accepted by the City of Edinburgh Council and NHS Lothian. Work to fully implement the recommendations relevant to NHS Lothian has been taken forward on a pan-Lothian basis during 2003104 and will be completed during 2004105.
Following the creation of Operating Divisions commencing with Lothian.University Hospitals Division on 1 January 2004, a review of Single System Risk Management arrangements will take place.
.A programme of procurement improvement is underway following an internal audit review.
. A review is being undertaken to ensure the reliable availability of case notes. This review has not yet been completed.
Specific focus is being given to earlier identification of efficiency savings programmes and clearer commitment on delivery of efficiency targets. My review of the effectiveness of the system of internal control is 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.
The Practitioner Services Division (PSD) of NHS National Services Scotland has responsibility for calculating and making payments to Primary Care practitioners on behalf of NHS Boards.
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 however been gradually addressed by PSD, such that for the year to 31" 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.
Signed ...... Elixe&...... ,...... Date Independent auditors' report to the Members of Lothian NHS Board, the Scottish Parliament and the Auditor General for Scotland We have audited the financial statements on pages 24 to 69 under the National Health Service (Scotland) Act 1978. 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 28 to 34.
This report is made solely to Lothian NHS Board and to the Auditor General for Scotland, in accordance with sections 21 and 22 of the Public Finance and Accountability (Scotland) Act 2000. Our audit work has been undertaken so that we might state to those two parties those matters we are required to state to them in an auditor's report and for no other purpose. In accordance with the Statement of Responsibilities of Auditors and of Audited Bodies prepared by Audit Scotland, this report is also made to the Scottish Parliament, as a body. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Lothian NHS Board and the Auditor General for Scotland, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the Board Members, Accountable Officer and Auditors
As described on page 16 the Board and the Accountable Officer of Lothian NHS Board are 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 responsible for the preparation of the Directors' Report. Our responsibilities, as independent auditors, 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.
We report our 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. We also report if, in our opinion, Lothian NHS Board has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit.
We review whether the statement on page 17 complies with the guidance issued by the Scottish Executive Health Department 'Corporate governance: Statement on Internal Control'. We report if, in our opinion, the statement does not corr~plywith the guidance or if it is misleading or inconsistent with other information we are aware of from our audit. We are not required to consider whether the statement covers all risks and controls, or form an opinion on the effectiveness of Lothian NHS Board's corporate governance procedures or its risk and control procedures.
We read the other information published with the financial statements and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Independent auditors' report to the Members of Lothian NHS Board, the Scottish Parliament and the Auditor General for Scotland (continued)
Basis of audit opinions
We conducted our 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 Members of Lothian NHS Board and the Accountable Officer in the preparation of the financial statements and of whether the accounting policies are appropriate to Lothian NHS Board's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us 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 ol.lr opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinions
Financial statements
In our opinion the financial statements give a true and fair view of the state of affairs of the Lothian NHS Board as at 31 March 2004 and of its net operating cost, total 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 our 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.
KPMG LLP Saltire Court Chartered Accountants 20 Castle Terrace Registered Auditor Edinburgh EHI 2EG
28 July 2004 Independent auditors' report to the members of Lothian Health Council and Lothian NHS Board
We have audited the account of Lothian Health Council for the year ended 31 March 2004 as set out in note 8.
This report is made solely to Lotl-~ianHealth Council and Lothian NHS Board in accordance with sections 21 and 22 of the Public Finance and Accountability (Scotland) Act 2000. Our audit work has been undertaken so that we might state to those two parties those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Lothian Health Council and Lothian NHS Board for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the Local Health Council and Auditor
The Local Health Council is responsible for the preparation of the account in terms of Regulation 14(3) of the National Health Service (Local Health Councils) (Scotland) Regulations 1990. It is our responsibility, based on our audit, to form an independent opinion on the account and to report that opinion.
Basis of audit opinion
We conducted our audit in accordance with the guidance issued by Audit Scotland, which principally related to enquiries concerning the circumstances of the Council, the presentation of the account and examination, on a test basis, of selected evidence relevant to the amounts shown in the account. Opinion
In our opinion the account presents fairly the financial position of the Lothian Health Council as at 31 March 2004 and its income and expenditure for the year then ended.
KPMG LLP Saltire Court Chartered Accountants 20 Castle Terrace Registered Auditor Edinburgh EH1 2EG
28 July 2004 LOTHIAN NHS BOARD
OPERATING COST STATEMENT
FOR THE YEAR ENDED 31 MARCH 2004
Restated 2003 f '000 Note PO00 E'OOO
Clinical Services Costs 717.325 Hospital and Community 10,441 ~ess:Hospital and omm mu nit^ Income 706.884 218,285 Family Health 16,936 Less: Family Health Income 201,349
908,233 Total Clinical Services Costs
2,396 Administration Costs 0 Less: Administration Income 2,396 13,369 Other Non Clinical Services 17,427 Less: Other Operating Income (4,058)
177 Local Health Councils
906,748 Net Operating Costs
SLIMMARY OF REVENUE RESOURCE OUTTURN Restated 2003 E'000 906,748 Net Operating Costs (per above) 0 Less: Capital Grants to I(from) Public Bodies (82,077) Less: FHS Non Discretionary Allocation (177) Less: Local Health Council Allocation/Expenditure (6,613) Less: Other Allocations [Please specify]
Net Resource Outturn Revenue Resource Limit Savingl(excess) against Revenue Resource Limit
MEMORANDUM FOR IN YEAR OUTTURN
Brought foward deficit (surplus) from previous financial year Savingl(excess) against in year Revenue Resource Limit LOTHIAN NHS BOARD
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 MARCH 2004
Restated 2003 PO00 Note €'OOO
12,070 Net gain on revaluation of tangible fixed assets -12 53,027
(2,232) Net gainl(loss) on revaluation of intangible foced assets -11 0
279 Movement in Donated Asset Rese~edue to receipts I(disposals) -21 11
(833) Release from Donated Asset Reserve to Operating Costs -21 (840)
9,284 Total recognised gains and (losses) for the year 52,198 LOTHIAN NHS BOARD
BALANCE SHEET
AS AT 31 MARCH 2004
Restated 2003 f'000 Note f'000 PO00
FIXED ASSETS Intangible Fixed Assets Tangible fixed assets Total Fixed Assets
Debtors falling due after more than one year
CURRENT ASSETS Stocks Debtors Investments Cash at bank and in hand
CURRENT LIABILITIES Creditors due within one year
Net current assetsl(1iabilities)
Total assets less current liabilities
CREDITORS DUE AFTER MORE THAN 1 YEAR
PROVISIONS FOR LIABILITIES AND CHARGES
FINANCED BY: General Fund Revaluation Reserve Donated Asset Reserve
Adopted by the Board&SR2004 on ....,. ..
-,...... , ...... Director of Finance
...... A&...... Chief Executive
The Notes to the Accounts, numbered Ito 29, form an integral part of these Accounts. LOTHIAN NHS BOARD
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2004
Restated 2003 roo0 Note f'000 f'000 NET OPERATING CASHFLOW Net cash outflow from operating activities
CAPITAL EXPENDITURE Payment to acquire tangible fixed assets Receipts from sales of fixed assets
Net cash inflow I(outflow) for capital expenditure
Net cash inflow I(outflow) before Financing
FINANCING Funding Movement in general fund working capital
Cash drawn down Capital element of finance lease and PFI payments Net cash inflow from financing
Increasel(decrease) in cash in year
NOTES 1. Reconciliation of operating cost to operating cash flow Net Operating Cost for the year OCs Expenditure not involving payment of cash 3 - Net movement on working capital -19
Operating cash outflow
2. Reconciliation of net cash flow to movement in net debvcash Increasel(decrease) in cash in year Net debtlcash at IApril -16
Net debvcash at 31 March -16 Lothian Health Board Note 1.0
Accounting Policies
1. Authority
The Accounts have been prepared in accordance with the Resource Accounting Manual (RAM) issued by HM Treasury. The particular accounting policies adopted by the Health Board are described below. They have been applied consistently in dealing with items considered material in relation to the accounts.
Merger of Former NHS Trust Activities and Assets On 31 Decerrlber 2003 Lothian University Hospitals NHS Trust was dissolved. On that date the assets and liabilities of the former NHS Trust transferred to Lothian Health Board together with the functions of the former Trust. This has been accounted for using Merger Accounting, as described in FRS 6, as amended by section 8.8 of the RAM. The carrying values of assets and liabilities have not been adjusted to fair values and no goodwill has been recognised. The results and cash flows of the former Trust have been brought into account from the start of the financial year and prior year comparative figures have also been restated to reflect the merger.
2. 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.
3. Accounting Convention
The Acco~lntsare 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.
4. Funding
Most of the expenditure of the Health Board as Commissioner is met from funds advanced by the Scottish Executive Health Department within an approved revenue resource limit. If the Board underspends against the approved revenue resource limit, the balance may be carried forward to the following year, subject to restraints imposed by the Scottish Executive Health Department. Cash drawn down to fund expenditure within this approved revenue resource limit will be credited to the general fund.
Miscellaneous Income is income receivable by the board and should not be included as funding.
For non discretionary expenditure, a notional allocation is assumed, equal to actual expenditure. 2 8 Funding for the acquisition of fixed assets received from the Scottish Executive Health Department is credited to the general fund.
Fixed Assets
The treatment of fixed assets in the accounts (capitalisation, valuation, depreciation, particulars concerning donated assets) is in accordance with the Resource Accounting Manual. The fixed assets of any directly managed units are included in the balance sheet.
Title to properties included in the accounts is held by Scottish Ministers.
5.1 Capitalisation
All assets falling into the following categories are capitalised:
1) 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.
2) In cases where a new hospital would face an exceptional write off of items of equipment costing individually less than £5,000, the Board has the option to capitalise initial revenue equipment costs with a standard life of 10 years.
3) 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 f5,000.
4) Intangible assets which can be valued, are capable of being used in a Board's activities for more than one year and have a replacement cost equal to or greater than £ 5,000.
5.2 Valuation
Fixed assets are valued as follows:
Specialised NHS Land, buildings, installations and fittings are stated at depreciated replacement cost basis for their existing use, other than surplus land and buildings which are stated at open market value for their alternative use. Non specialised land and buildings, such as offices, are stated at the lower of their replacement cost or recoverable amount. Valuations of all land and building assets within NHSScotland are reassessed by valuers appointed by the Scottish Ministers at no more than 5 yearly intervals. Between these valuations an appropriate index is applied to arrive at 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 residentail building land values reported in the Property Market Report published by the Valuation Office.
The latest professional NHS estate reval~~ationtook place in the current year on 31 March 2004. 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 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. Where these relate to fluctuations in market prices, or where the reason for impairment is uncertain, these are first charged to the element of the revaluation reserve relating to the asset, and 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. 5.3 Depreciation
Depreciation is charged on each main class of tangible asset as follows:
1) Land and assets in the course of constn~ctionare not depreciated.
2) Buildings, installations and fittings are depreciated on their revalued amount over the assessed remaining life of the asset as advised by the valuer. The actual remaining lives of the building elements are assessed on the context of the maximum useful lives for building elements.
3) Equipment is depreciated over the estimated life of the asset.
The following asset lives have been used:
Asset Cateqon//Component Useful Life
Buildings - Structural Buildings - Struct~~ral Buildings - Structural Buildings - Structural Buildings - Structural Buildings - Structural Buildings - Structural Buildings - Structural Buildings - Structural Buildings - Engineering Buildings - Engineering Buildings - Engineering Buildings - Engineering Buildings - Engineering Vehicles Furniture Office & IT Equipment Office & IT Equipment
5.4 Donated Assets
Fixed assets that are donated or purchased using donated funds are included in the Balance Sheet initially at the full replacement cost of the asset. The value of donated assets is credited to the donation reserve, and the accounting treatment, including the method of valuation, follows the rules in the Capital Asset Accounting Manual. Where a donation covers only part of the total cost of the asset concerned, only that part element is included in the donation reserve. 5.5 Sale of Fixed Assets
Disposal of fixed assets is accounted for as a reduction to the value of fixed assets equal to the net book value of the assets disposed. When set against any sales proceeds, this is the gain or loss on disposal, which will be recorded in the Operating Cost Statement.
6. Research and Development
Expenditure on Research and Development is written off to revenue as it is incurred, except insofar as it relates to a clearly defined project, the benefits from which can reasonably be regarded3asassured. Expenditure 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.
7. Debtors and Creditors
Debtors and Creditors have been assessed on the basis of goods and services supplied or received up to and including 31 March 2004 for which payment had not been received or made by that date.
8. Stocks
Taking into account the high turnover of NHS stocks, the use of average purchase price is deemed to represent the lower of cost and net realisable value. Work in progress is valued at the cost of the direct materials plus the conversion costs incurred to bring the goods LIP to their present degree of completion.
9. Bad Debts, 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.
10. Leasing
Assets held under finance leases are capitalised at the fair value of the asset with an equivalent liability categorised as appropriate under creditors due within or after more than one year. The asset is subject to indexation and revaluation and is depreciated on its current fair value over the shorter of the lease term and its useful economic life. Finance charges are allocated to accounting periods over the period of the lease so as to produce a constant periodic rate of charge on the remaining balance of the obligation for each accountirlg period, or a reasonable approximation thereto.
Rentals under operating leases are charged on a straight-line basis. 11. Pension Costs
The Board contributes to the NHS Superannuation Scheme for Scotland. Contributions to this Scheme and other schemes 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 NHS board.
12. Clinical and Medical Negligence Costs
Employing health bodies in Scotland are responsible for meeting medical negligence costs up to an annual limit based on the revenue allocation or expected income in the case of NHS Trusts. Costs above this limit are reimbursed to employing authorities from a central fund held by the Clinical Negligence and Other Risks Indemnity Scheme on behalf of the Scottish Executive Health Department. Clinical negligence costs may also be rein-~bursedin part by the SEHD.
13. Related Party Transactions
FRS 8 requires disclosure of material related party transactions. Transactions with other NHS bodies for the purchase of health care are summarised in note 3. Transactions with health bodies, eg sharing administration costs, or with individuals are disclosed if material.
14. 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.
15. Value Added Tax
Most of the activities of the Board 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 charged or input VAT is recoverable, the amounts are stated net of VAT. 16. 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 risks 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 Board 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 Board, the difference between the expected fair value of the residual on reversion and any agreed payment on revision is built up on the balance sheet over the life of the contract by capitalising part of the unitary charge each year.
Where the balance of risks and rewards of ownership of the PFI property are borne by the Board, it is recognised as a fixed asset along with the liability to pay for it which is accounted for as a finance lease. Contract payments are apportioned between an imputed finance lease and a service charge. LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
2. (a) STAFF NUMBERS AND COSTS
Executive Non Board Executive Other 2003 Members Members Staff Total f '000 f'000 f '000 f'000 f'000 Restated STAFF COSTS Salaries and wages Social security costs NHS scheme employers' costs Other employers' pension costs Agency staff
Compensation for loss of office Pensions to former board members
TOTAL
ANNUAL STAFF NUMBERS ANNUAL MEAN (EMPLOYEES BY WHOLE TIME EQUIVALENT) MEAN
133.7 Administration Costs 8,546.6 Hospital and Community Services 24.2 Non Clinical Services 6.0 Local Health Councils 6.6 Other, including recharge Trading Accounts
8,717.1 Board Total Average Staff
Note: Staff pension benefits are provided through the NHS Superannuation Scheme for Scotland. Details of the scheme mn be found in Note 27. LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
. . FOR THE YEAR ENDED 31 MARCH 2004
2. (b) BOARD MEMBERS AND SENIOR EMPLOYEES REMUNERATION - CURRENT YEAR
Real Cash Cash Emplow inaease in pension at ~quimknt ~a~ent mntu~ salary to Benefitsin zF a. 60 ',"Eer csa kind E5n000' (Bands d March (CETVI at 31 (CEN) at 31 E5.000) pensim (bands March 2003 March ZW4 amnt f5sM)O) E5.000)
Remuneration of: Executive Members The Chairman: Brian Cavanagh
Chief Exdve: James Barbour
Mredor of Public Health: Peter Wdly(to Feb M04) 115-120 0-5 0-5 40-45 55-60 5-10 0 plus plus 0-5 10-15 LumpSum Lumpb
Ading Diredor of PuMic Hedth. Anne - Maree WaPace (han 15-20 0-5 25-30 330-S5 385-390 30-35 0 Feb 2004) pl- plus 5-10 75-80 Lumpsum Lumpsum
Mreclor d Flnance: John Matheson
Director d Healthcare Ranning L Nursing: Jacgui Simpson (to 3110slo3) 0-0 0-0 0-0 0 0 0-0 0 0
Mredor d Nuning - Jacqui Simpson - from 01109m3
Non Executive Members Vm - Chair. Michael Walker 5-10 0-0 0-0 Chair - LUM. Professor Patrida Peak - to 31HM3 15-20 0-5 0-5 Plus PIS 5- 10 5-10 LumpSum Lump Sum Chair - WLHT (to 31 March 2004Y hterim Chair NHS Lothian - Univenity Hospitals Division (5 January to 31 March 2004) - Stuarl Smith 0-0 0-0 0-0 Chief Exalive - WLHT. Peter ~abbiLs 0-0 0-0 0-0 Chief Exearlive - LUM. Stuart Gray (lo Lo Od3) 70-75 45-50 45-50 plus Pb 140 - 145 140 - 145 Lump Sum Lump Sum Acting Chief Exme- LUMID. David Bdlon (frmn Lo 2003 lo 35 - 40 0-5 35-40 present) plus plus 5-10 110-115 W Sum Lump Sum Chair - LPCT. Garth Morrison (to 31 March 2004) Chief Executive - LPCT. Murray Duncanson Head of College University of Edinburgh Med. Schod -Prof. John Savill City of Edinburgh Council - Cournilla Kingsley Thomas East Lothian Council - Cournilla Ann McCarVly Midlothian Council -Councillor Danny Molloy Wesl Lothian Council - Graeme Morrice LoVIian partners hi^ Forum (Employee Director) - Eddie Egan Chair. Lothiin Area Clinical Forum - IX Jacqueline McDonald (to 17107103) . Chair. Lothian Area Clinical Forum - Dr Peler Shiihodii (fmm 1910903) 0-0 0-0 0-0 Acting Directw d Nursing - Dr Linda Pollodc (lo 01109103) 0-0 0-0 0-0 Non - Exearlive Member - Mr Fernando Dinii 5-10 0-0 0-0 NHS Lothian Medical firedor - Dr Charks Swainxn (from 99-95 0-5 50-55 1 1m8/03) plus plus 5-10 155 - 160 Lump Sum Lump Sum -LHCC Forum Representilive - Dr Ian McKay (from 11108/03) 0-5 0-0 0-0 LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
2. (b) BOARD MEMBERS AND SENIOR EMPLOYEES REMUNERATION -CURRENT YEAR (continued)
Real Cash Cash Employer imreasein Equivalent Equivalent . c~tribulion pension Al penmat Tansfer maease in to Benefits in (Bands of age 60 at 31 value CETV in year T:l'Aff kind age 60 (Bands of (Bands of (b,Md:d (CEW a131 (CEW at31 E5,WO) pe"skm March 2003 Mart3 2004 acmunl E5.000) E5.000)
Remuneration of:
Other Snr Employees Acting Direof Healthcare L Nursing - Jackie Sansbury (to 31108103) 20 - 25 0-0 0-0 0 0 Ading Diredor of HeahrePbnning - Jaqui Sanstwy (frun 35-40 0-5 15-20 175-180 215-220 01109103) plus plus 5-10 45-50 Lump Sum Lump Sum Director of Pamenhip Development - Margaret Wells (10 50-55 0-5 0-5 5-10 15-20 Ovorn) plus pi* 0-5 0-5 Lump Sum Lump Sum Acting Diredoc of PartnershipDevelopmt - Ray Flint (frcin 01X)rn) Depnv Diredoc of Parlnership Development - Ray Flint (to -4) Directa d Cwmwaiticns - Leigh McGmn
Diredor d Human Resarrces: Mr F Sharp
Direda d Winical Development: Mr M Grieve
Director of Nursing & Cuality. Miss I McCallum 70 - 75 5-10 25-30 315-320 410-415 Pb PhS 20-25 80-85 Lump Sum Lump Sum
Director d Finance: MnA Brown
Mr G Archibald UNIFIED NHS BOARD
NOTES TO THE ACCOUNTS
FOR THEYEAR ENDED 31 MARCH 2004
2. (c) BOARD MEMBERS AND SENIOR EMPLOYEES REMUNERATION - PRIOR YEAR COO0 f000
Real Cash Cash Employer increase in Equivdlent Equivalenl amlrhlkm Sabr~ -?Ail (WSof pe""A' age M) a131 CEW in year Benefitsin Tfatker Trzeer partnership kind =.OW (&TdPof Mar& (ban& of (CFN) at 31 KEN) at 31 (gz T5,oOO) s,oOO) March2002 March2003 acmunl Remuneration of: ExecuUve Members The Chairman:BMn Cavanagh
Chief Exeanivekmes Barbour
Director d Public Hea1h:Peter Connelly 115-120 5-10 20-25 40-45 0 3 Ph pkrs 15-20 65-70 Lump Sum Lump Sum
50-55 0-5 10-15 pkrs plus 0-5 40-45 LumpSurn LumpSum Non Executive Members Vice - Chair Michael Walker 0-0 Chair - LUHT: F'rofessor Patricia Peattie 0-0 Chair - WHT. James Findlay 0-0 Chair - WLHT. Stuart Smith (hwn 011021V3) 0-0 Chief Exeatlive - WHT. Peter Gabbii 0-0 Chief Execulive - LUHT. Allister Stewart ((0 30/06/02) 21 -25 plus 65 - 70 Lwnp Sum Ctief Executive - LUHT. Stuart Gray (frcm 01110102) 65 - 70 0-5 0-5 plus plus 5-10 5- 10 Lump sum Lump Sum Chair - LPCT. Garth Monism Chief Executive - LPCT. Murray Duncanson Dean. Univenhyof Edinburgh Medical Schwl. Cdin Bird Head of College, University of Edinburgh Medical Schwl. Pmlsvx John Savill (fm01110102 City of Edinburgh Coundl - CMlndllor Kngsley Thomas East Lomian Council - Counaior Arm McCarUly MidlothianCovndl - CMlndllor Damy Mdby West Lothiin Council - Coundllw Graeme Monice Lothian Partnership FMum - Eddie Egan Chaw. Lomwn Area Clinical Forum -Or Jaqueline Md)onald Mr Fernando Diniz (from 20109.32) Acting Director of Nursing - Dr Linda Pollock (from 01/10/02 lo. not exceeding. 09110103) UNIFIED NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
2. (c) BOARD MEMBERS AND SENIOR EMPLOYEES REMUNERATION - PRIOR YEAR (continued) f000 fooo
Real Cash Cash ErWo~er inaeasein pension at Equhalenl Equivalent imreasein am(rim lo Beoefds in (Bands d age €€I at 31 Tzyr TrazCElVin year kind rs.wo) (bmjsof (CETV)~~OI(CEIV) atdl (gg perrsion =.OM)) Mar& ZOO2 Mar& 2003 aaramt E5.m) Remunerationof: f000 roo0 fOOO fOOO
Other Snr Employees Ading Direda d Healthcare Planning 6 Nursing - Jacqui 50-55 0-5 10- 15 Sansbufy (Iran OlHOfl2) PIS plus 5- 10 40 - 45 Lump Sum Lump Sum Director d PaMpDevelopment - Margaret Wdls (from lnformalion irlfmlion 1Y07102) not yet l-mt yet 35-40 avaibMe awibble 5-10 Direda cd Ccmmunicalw - Leigh Man(from 22/07/02) Information hfonnation not yet not yet 35-40 avaibble available 5-10 oeplty Wedoc d Partne&i~ Development - Ray Flint Consent to diioswe withheld
Medii Ma:Mr C Swain- 0-0 0 -0 0-0 825-830
Wedor d Finance: MnA Brm
Director of Nursing 8 Qudity: Miss IMcCalkrm 55-€4 0-5 21-25 plus plus 5-10 65-70 Lump Sum Lump Sum
Diredm d Human Resources: Mr F Sharp 70-75 0-5 0-5 PUS plus 5-10 5-10 Lump Sum Lump Sum
Director of Clinical Development: Mr M Giieve 0-5 21-25 Pb plus 5-10 65-70 65- 70 Lump Sum LumpSwn 360-365 0-0
Information not available from S.P.PA. for publication. Individual did not withhold their consent to disclose this information. LOTHlAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR 'THE YEAR ENDED 31 MARCH 2004
2. (d) HIGHER PAID EMPLOYEES REMUNERATION
Restated 2003 Number Number Other employees whose remuneration fell within the following ranges: Clinicians E 50,000 to E 60.000 E 60,001 to E 70,000 E 70,001 to f 80,000 E 80,001 to E 90,000 £90,001 to £100,000 El00,001 to EllO.OOO £110,001 to £120,000 £120,001 to £130,000 E130,001 to E 140,000 £140,001 to £150,000 E 150,001 and above
Other E 50,000 to E 60.000 E 60,001 to E 70,000 E 70,001 to E 80,000 E 80,001 to f 90,000 f 90,001 to E 100,000 ElOO.OO1 to £110,000 El 10.001 to £120,000 E120,OOl to £130,000 E130.001 to £140,000 E 140,001 to £150,000 E 150.001 and above LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
3. OTHER OPERATING COSTS
Restated 2003 f'000 Note Expenditure Not Paid In Cash
13,898 Depreciation 8,772 Cost of Capital 0 Impairments (2,232) Revaluation loss on fixed assets charged to OCS 0 Lossl(Profit) on disposal of intangible fixed assets (140) Loss/(Profit) on disposal of purchased fixed assets (25,752) Other non cash costs (5,4541 Total Expenditure Not Paid In Cash
0 Research and Development Written Off
. . 1,252 Travel, Subsistence and Hospitality
lnterest Payable 0 Interest on late payment of commercial debt 0 Bank and other interest payable 0 Finance lease charges allocated in the year 2 Other Interest 2 Total
Operating Lease Rentals: 3,729 ire of equipment (including vehicles) 438 Other o~eratinn- leases 4,167 Total
Aggregate Rentals Receivable in the year 0 Total of finance & operating leases
Statutory Audit 21 0 External auditor's remuneration and expenses
PFllPPP and Similar Contracts lnterest charge relating to on-balance-sheet PFllPPP 13,365 contracts Other charges relating to on-balance-sheet PFIIPFP 6,929 contracts Service charge relating to off-balance-sheet PFIIPPP 7,506 contracts 27,800 Total LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FORTHEYEAR ENDED 31 MARCH 2004
4. HOSPITAL AND COMMUNITY HEALTH SERVICES
Restated 2003 f '000 BY PROVIDER 666,761 Treatment in Board area of NHSScotland Patients 5,201 Other NHSScotland Bodies 857 Health Bodies outside Scotland 0 Primary care bodies 2,804 Private sector Community Care Support Finance Resource Transfer
0 Donations to Voluntary Bodies 1 1,937 Other Health Care, including Charities
715,911 Total NHSScotland Patients
1,414 Treatment of CIK residents based outside Scotland
717,325 Total Hospital & Community Health Service
BY SERVICE CATEGORY Acute services Maternity services Geriatric Assessment Mental health services - Learning Disability Geriatric Long Stay Young Physically Disabled Other community services Other services
671,678 Total Care Expenditure
0 Other Funding 24,147 Additional Costs of Teaching 8,768 Research & Development 1,414 UK Residents based outside Scotland 11,318 Other
717,325 Total as Above LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
5. FAMILY HEALTH SERVICE EXPENDITURE
Non Unified discretion - Budget arY TOTAL Note E'000 E'000 E'000
69,368 General Medical Services
113,286 Pharmaceutical Services
31,351 General Dental Services
4,280 General Ophthalmic Services
21 8.285 Total LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
6. ADMINISTRATION COSTS
Restated 2003 PO00
452 Board members' remuneration 315 Administration of Board Meetings and Committees 409 Corporate Governance and Statutory Reporting 1,284 Health Planning, Commissioning and Performance Reporting 332 Treasury Management and Financial Planning 255 Public Relations (651) Other
2,396 Total administration costs LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
7. OTHER NON CLINICAL SERVICES
Restated 2003 f'000
Nurse Teaching Occupational Health Closed hospital charges Compensation payments - Clinical Compensation payments - Other Pension enhancement & redundancy Patients' Travel Attending Hospitals Patients' Travel Highlands and Islands scheme Clinical Audit Health Promotion Public Health Public Health Medicine Trainees Emergency Planning Post Graduate Medical Education Shared Services Loss on disposal of fixed assets Other
13.369 Total Other Non Clinical Services LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
8. LOCAL HEALTH COUNCILS
Restated 2003 roo0
Salaries &Wages Administrative Staff Travel & Subsistence Council Members-Travel Council Members-Loss of Earning Staff-Travel Staff-Course Fees & Expenses
ACCOMMODATION EXPENSES Property Maintenance Cleaning Furniture, Fittings & Equipment. Heat, Light & Power Rent & Rates
RUNNING EXPENSES 3 Advertising & Publicity 0 Fund Raising 6 Posts, Telephone & Carriage 10 Printing & Stationery 0 Subscriptions - Nat. Assoc. 6 Other 25 INCOME 0 From other than host NHS board
177 Total Expenditure
Icertify that the in accordance with the Books of Account.
NHS Board Director of Finance Date
-. i 7- -. I The Account was submitted Jt the Council Meeting on ...... ,- ,. .-..j; ,,'; >..LLL~k2?.and duly approved.
15,.+, ' L.., &.,< T ,
NOTES TO THE ACCOUNTS
FOR 'THE YEAR ENDED 31 MARCH 2004
9. OPERATING INCOME
Restated 2003 E'000 HCH lncome NHSScotland Bodies 504 - SEHD 0 - Boards 6,117 - Trusts
0 Non NHS 1,794 Private Patients 539 RTA Income 1.487 Other HCH income
Total HCH lncome
FHS lncome Discretionary (Pharmaceutical Services)
Non Discretionary General Medical Services General Dental Services General Ophthalmic Services
Total FHS lncome
Administration lncome
Other Operating lncome contributions in respect of ClinicaVmedical negligence claims Profit on disposal of fixed assets Transfer from Donated Asset Reserve in respect of Transfer from Donated Asset Reserve in respect of Transfer from Donated Asset Reserve in respect of Interest Received Other
Total Other Operating lncome
44,804 Total Income
6,996 Of the above, the amount derived from NHS bodies is LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
10. ANALYSIS OF CAPITAL EXPENDITURE
Restated 2003 f'000 Note
EXPENDITURE 0 Acquisition of Intangible Fixed Assets 137,635 Acquisition of Tangible Fixed Assets 0 Capital Grants to I(from) Public Bodies
137,635 Gross Capital Expenditure
INCOME 0 Net book value of disposal of Intangible Fixed Assets 0 Net book value of disposal of Tangible Fixed Assets
0 Capital Income
137,635 Net Capital Expenditure
SUMMARY OF CAPITAL RESOURCE OUTTURN
137,635 Net capital expenditure as above 1,329 137.110 Capital Resource Limit 1,329
(525) Savingl(excess) against Capital Resource Limit 0
The above CRL relates to Lothian NHS Board including the University Hospitals Division. The CRL for NHS Lothian is f9,912k and includes f5,570k for Lothian Primary Care Trust and E3,013k for West Lothian Healthcare Trust. LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
11. INTANGIBLE FIXED ASSETS Software Other Licences Intangible Total roo0 f'000 f'000
Cost or Valuation:
As at 1st April 2003 Additions Donations Transfers Disposals Indexation Revaluation Impairment
At 31st March 2004
Amortisation At 1st April 2003 Provided during the year Transfers Disposals Indexation Revaluation Impairment
At 31st March 2004
Net Book Value at 1st April
Net Book Value at 31 March LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
12. (a) TANGIBLE FIXED ASSETS (Purchased Assets)
Land & Buildings Assets (excluding Transport Plant & Information Furniture & Under dwellings) Dwellings Equipment Machinery Technology Fittings Construction Total f '000 f'000 f '000 f'000 f'000 f'000 f '000 f'000 Cost or valuation At 1 April 2003 (restated) Additions Completions Transfers lndexation Revaluation Impairment Disposals
At 31 March 2004
Depreciation At 1 April 2003 (restated) Provided during the year Transfers lndexation Revaluation Impairment Disposals
At 31 March 2004
Net book value at I April 2003 (restated) Net book value at 31 March 2004
Net Book Value of Land Included Above LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
12. (b) TANGIBLE FIXED ASSETS (Donated Assets)
Buildings Assets (excluding Transport Plant & Information Furniture & Under dwellings) Dwellings Equipment Machinery Technology Fittings Construction Total e'ooo f '000 f'000 f '000 f'000 f '000 f'000 f '000 Cost or valuation At 1 April 2003 (restated) Additions Completions Transfers lndexation Revaluation Impairment Disposals
At 31 March 2004
Depreciation At 1 April 2003 (restated) Provided during the year Transfers lndexation Revaluation Impairment Disposals
At 31 March 2004
At start of year (restated) At end of year
Net Book Value of Land Included Above LOTHIAN NHS BOARD
NOTES TO THE ACCOLINTS
FOR THE YEAR ENDED 31 MARCH 2004
12. (c) FIXED ASSET DISCLOSURES
Restated 2003 f'000 Net book value of tangible fixed assets at 31 March 417,932 Purchased 15,618 Donated
433.550 Total
0 Net book value related to land valued at open market value at 31 March 0
0 Net book value related to buildings valued at open market value at 31 March 0
Total value of assets held under: 0 Finance Leases and Hire Purchase Contracts 184,072 PFIIPPP contracts
Total depreciation charged in respect of assets held under: 0 Finance leases and hire purchase contracts 1,690 PFI and PPP contracts
Land and buildings due to be valued in the year were valued by the Valuation Office Agency at 31 March on the basis of existing use or market value, where no longer in use. Other tangible fixed assets were revalued on the basis of indices at 31 March.
The net impact was an reduction in value of £21.lm, of which f18.2111 was charged to the revaluation reserve and f2.91-ncharged to the operating cost statement. LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
13. STOCK AS AT 31 MARCH 2004
Restated 2003 E'000.
8,940 Raw Materials and Consumables 0 Work in Progress 0 Finished Goods
8,940 Total Stock LOTHIAN NHS BOARD
NOTES TO THE ACCOLINTS
FOR THE YEAR ENDED 31 MARCH 2004
14. DEBTORS AT 31 MARCH 2004
Restated 2003 roo0 Note Debtors due within one year NHSScotland 20 - SEHD 185 - Boards 4,440 - Trusts
4,645 Total NHSScotland Debtors
0 General Fund Debtor 1,655 VAT recoverable 12,900 Prepayments and accrued income 6,739 Other Debtors 3,515 Reimbursement of provisions
29,454 Total Debtors due within one year
Debtors due after more than one year NHSScotland 0 - SEHD 0 - Boards 0 - Trusts 10,303 Prepayments and accrued income 0 Other Debtors 5,512 Reimbursement of Provisions
15,815 Total Debtors due after more than one year
45,269 TOTAL DEBTORS
1,493 The total debtors figure above includes a provision for bad debts of : LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
15. INVESTMENTS AT 31 MARCH 2004
Restated 2003 E'000 FOOO
0 Government securities 0 Bank Deposits 0 Other
0 TOTAL LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
16. CASH AT BANK AND IN HAND Restated Note At Cash At 01/04/03 Flow 31/03/04 f '000 E'000 f'ooo
PGO account balance Cash at bank and in hand
Total cash - balance sheet Overdrafts
Total cash - cash flow statement LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
17. CREDITORS AT 31 MARCH 2004
Restated 2003 f '000 Note Creditors due within one year NHSScotland 16 - SEHD 60 - Boards 4,513 - Trusts
4,589 Total NHSScotland Creditors
General Fund Creditor FHS Practitioners Trade Creditors Accruals Payments received on account Interest payable Net obligations under Finance Leases Net obligations under PFI Contracts Bank overdrafts Income tax and social security ClinicallMedical negligence claims VAT Other creditors
85,649 Total Creditors due within one year
Creditors due after more than one year NHSScotland - SEHD - Boards - Trusts Net obligations under Finance Leases due within 5 years 25 Net obligations under Finance Leases due after 5 years -25 Net obligations under PFI Contracts due within 5 years -26 Net obligations under PFI Contracts due after 5 years 26 Other
189.619 Total Creditors due after more than one year
275,268 TOTAL CREDITORS LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
18. PROVISIONS FOR LIABILITIES AND CHARGES
Clinical 8 Pensions Medical Other Total E'OOO f'000 f'000 f'000
At 1 April 2003 (restated) Arising during the year Utilised during the year Reversed unutilised
At 31 March 2004 LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
19. MOVEMENT ON WORKING CAPITAL BALANCES Restated Note Opening Closing Net Balances Balances Movement PO00 f '000 f'000 STOCK Balance Sheet Net lncrease
INVESTMENTS Balance Sheet Net Decreasel(lncrease)
DEBTORS Due within one year Due after more than one year
Less: Capital included in above Less: General Fund Debtor included in above
Net Decrease
CREDITORS Due within one year -17 85,649 87,132 Due after more than one year 189,619 188,976 Less: Capital included in above 788 15 Less: Bank Overdraft -17 0 0 Less: General Fund Creditor included in above -17 893 1,115
273,587 274,978 Net Increase 1,391
PROVISIONS Balance Sheet Less: Capital Movement included in above
Net lncrease
NET MOVEMENT lncrease LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
20. GENERAL FUND
Restated 2003 Note PO00 PO00 E'OOO
151,126 General Fund at 1 April 2003
798 Opening General Fund Creditor 918,137 Add: Cash Drawn Down (893) Less: Closing General Fund Creditor 91 8.042 Net Fundinn (906i748) Net operating Cost for the Year OCS (995,737) 8,772 Cost of Capital -3 5,172 0 Transfer of Realised Element of Revaluation Resenre a 2,037 0 Proceeds of Sale of Donated Assets U 0 0 Prior Year Adjustments 0 (24,918) Other adjustments (16,607)
(4,852) Decrease in General Fund
146,274 ~eneralFund at 31 March 2004
LOTHIAN NHS BOARD
MEMORANDUM
FOR THE YEAR ENDED 31 MARCH 2004 . - . .. Reconciliation of Advances notified by SEHD to Cash Drawn E'OOO . . Cumulative Advances to 31 March Cumulative Payments on Behalf to 31 March RRL Funding paid by NHS Boards
Total Cash Drawn - General Fund LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
21. MOVEMENT ON RESERVES
Restated 2003 f'000 Revaluation Reserve Note 10,356 Balance at 1 April (restated) 11,283 lndexationlRevaluation of fixed assets -12 (2,232) Transfer of realised element to general fund
19,407 Balance at 31 March 2004
Donated Asset Reserve 15,385 Balance at 1 April (restated) 787 lndexationlRevaluation of fixed assets 279 Additions of donated assets (833) Release to the Operating Cost Statement 0 Transfer of realised element to general fund
15,618 Balance at 31 March 2004 LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
22. CONTINGENT LIABILITIES
The following contingent liabilities have not been provided for in the Accounts:
Nature Value E'OOO Clinical and medical compensation payments
Clinical and medical Negligence 20,651
Health and Safety 606
Employers liability
Contingent assets
'Third party liability
Doubtful debts
Other
TOTAL CONTINGENT LIABILITIES LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
23. POST BALANCE SHEET EVENTS
Post Balance Sheet events having a material effect on the accounts are:
On 1 April 2004 Lothian Primary Care Trust and West Lothian Healthcare Trust were dissolved. The assets and liabilities of these Trusts were transferred to Lothian NHS Board at that Date under merger accounting. The net assets transferred at that date were f270m. LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR'THE YEAR ENDED 31 MARCH 2004
24. COMMITMENTS
Capital Commitments
The Board has the following Capital Commitments which have not been provided for in the accounts Restated 2003 roo0 Contracted 1,426 0 0 1,426 Total
Authorised but not Contracted 0 0 0 0 Total
Other financial commitments
0 Expiry within 1 year 0 Expiry within 2 to 5 years 0 Expiry after 5 years
0 Total LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
25. COMMITMENTS UNDER LEASES
Operating Leases Commitments under operating leases to pay rentals during the year following the year of these accounts are given in the table below, analysed according to the period in which the leases expire. Restated 2003 roo0
Obligations under operating leases comprise:
Land and Buildings W~thinone year Between two and five years (inclusive) After five years
Other W~thinone year Between two and five years (inclusive) After five years
Finance Leases
Commitments under finance leases to pay rentals in years following the year of these accounts are given in the table below.
Obligations under Finance leases comprise:
Rentals due within one year Rentals due between two and five years (inclusive) Rentals due after five years
Less interest element
This total net obligation under finance leases is analysed in Note 17 (Creditors) LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
26. COMMITMENTS UNDER PFI CONTRACTS
The Board has entered into the following PFI contracts.
OFF BALANCE SHEET None
ON BALANCE SHEET Royal Infirmary Edinburgh (Little France) Finance Lease for the Building
The contract end date is 16/02/2028
The balance of the risks and rewards of ownership of on balance sheet PFIIPPP property are borne by the Board and included in the Board's accounts as a fixed asset. The liability to pay for the property is in substance a finance lease obligation. Contractual payments therefore comprise two elements; imputed finance lease charges and service charges. The imputed finance lease obligation is as follows:
Restated 2003 2003-2004 f'000 f'000 Imputed finance lease obligation under on-balance-sheet PFllPPP contracts comprises: Rentals due within 1 year 26,381 Rentals due within 2 to 5 years 105,525 Rentals due thereafter 630,573 762,479 Less Interest element (576,713)
186,544 Total 185,766
Future Commitments The payments to which the Board is committed during 2004-2005 in respect of PFllPPP transactions, analysed by the period during which the commitment expires, are as follows:
876 Expiry within 1 year 0 Expiry within 2 to 5 years 79 1 Expiry within 6 to 10 years 0 Expiry within 11 to 15 years . 0 Expiry within 16 to 20 years 36,371 Expiry within 21 to 25 years 0 Expiry within 26 to 30 years
38,038 Total 38,889 LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
27. PENSION COSTS
The NHS board participates in the National Health Service Superannuation Scheme for Scotland which is a notional defined benefit scheme where contributions are credited to the Exchequer and the balance in the account is deemed to be invested in a portfolio of Government securities. The pension cost is assessed every five years by the Government Actuary; details of the most recent actuarial valuation can be found in the separate statement of the Scottish Public Pensions Agency (SPPA).
The National Health Service Superannuation Scheme for Scotland is a multi-employer scheme where the share of the assets and liabilities applicable to each employer is not identified. The NHS board will therefore account for its pension costs on a defined contribution basis as permitted by Financial Reporting Standard 17. For 2003-04, normal employer contributions of £10,663,000 were payable to the SPPA (prior year £9,883,000)at the rate of 5.5% of total pensionable salaries. In addition, during the accounting period the NHS board incurred additional costs of £ 119,000(prior year £263,000)arising from the early retirement of staff. 'The .most recent actuarial valuation discloses a balance of £934 million to be met by future contributions from employing authorities. As a consequence of the valuation, employers' superannuation contributions will increase to 7% on 1st April, 2005.
ProvisionslPre-payments amounting to £15,189,000are included in the Balance Sheet and reflect the difference between the amounts charged to the Operating Cost Statement and the amounts paid directly.
The scheme provides benefits on a 'final salary' basis at a normal retirement age of 60. Annual benefits are normally based on 1180th of the best of the last three years pensionable pay for each year of service. In addition, a lump sum equivalent to three years' pension is payable on retirement. Members pay contributions of 6% (5% for manual staff) of pensionable earnings. Pensions are increased in line with Retail Prices Index.
On death, pensions are payable to the surviving spouse at a rate of half the member's pension. On death in service, the scheme pays a lump-sum benefit of twice pensionable pay and also provides a service enhancement on computing the spouse's pension. The enhancement depends on length of service and cannot exceed 10 years. Child allowances are payable according to the number of dependant children and whether there is a surviving parent who will get a scheme widowlwidower's pension. Medical retirement is possible in the event of serious ill health. In this case, pensions are brought into payment immediately where the member has more than 2 years service. Where service exceeds 5 years, the pension is calculated using specially enhanced service, with a maximum enhancement of 10 years.
Members aged 50 or above may take voluntary early retirement and receive a reduced pension. Alternatively, if the employer agrees to this the member will be able to retire on the full pension and lump sum which they have earned.
Restated 2003-04 2002-03 roo0 roo0 Pension cost charge for the year 10,663 9,883 Additional Costs arising from early retirement 119 263 ProvisionslPre-paymentsincluded in the Balance Sheet 15,189 15,884 LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2004
28. EXCEPTIONAL ITEMS AND PRIOR-YEAR ADJUSTMENTS
General Exceptional ltems and Prior-Year Adjustments, which have been recognised in these Accounts are:
Exceptional ltems
None
Prior Year Adjustments,
Setting up of pre 1 April 1995 early retirement provision.
Presentation
(restated) Previous These Accounts Adjustment Accounts Form No Description of Balance f'000 PO00 f '000
Note 6 Administration costs (restated) 2,972 (576) 2,396 2
Other (restated) (75) (576) (651)
Note 7 Other Non clinical Costs (restated) 13,676 (307) 13,369 1
Pension enhancement & redundancy 4.552 (307) 4,245
Operating cost statement Net operating costs 907.631 (883) 906,748 '
Note 18 Provisions for liabilities & charges 3
Pensions at 1 April 2003 (6,281) (9,603) (15,884)
Note 20 General Fund
General Fund at 1 April 2002 161,036 (9,910) 151,126 Net operating cost (907,631) 883 (906,748)
Cost of Capital 9,348 (576) 8,772
1 Pre 1April 1995 early retirement costs originally charged to OCS now charged against provisions
2 Effect on cost of capital of establishing provision
3 Long term liability for pre 1 April 1995 early retirments established.
68 LOTHIAN NHS BOARD
NOTES TO THE ACCOUNTS
AS AT 1 APRIL 2003
29. RESTATED BALANCE SHEET
31-Mar-03 Adjustment 1-Apr-03
f'000 f'ooo f'000 FIXED ASSETS Intangible fixed assets 7,049 426,501 433,550 Tangible fixed assets 0 0 0
7,049 . 426,501 433,550
DEBTORS FALLING DUE AFTER MORE THAN ONE YEAR 0 15,815 15,815
CURRENT ASSETS Stocks Debtors Investments Cash at bank and in hand
CURRENT LIABILITIES Creditors due within one year
Net current assetsl(liabilities) (36,318) (8,733) (45,051)
Total assets less current liabilities (29,269) 433,583 404,314
CREDITORS DUE AFTER MORE THAN 1YEAR 9,243 181,687 190,930
PROVISIONS FOR LIABII-ITIES AND CHARGES 7,154 24,931 32,085
FINANCED BY: General Fund Revaluation Reserve Donated Asset Reserve HEALTH B-OOARDS& COMMON SERVICES AGENCY ..-
DIRECTION BY THE SCOITISH MZNTSTERS
1. The Scottish Ministers, in exercise of the powers conferred upon them by sections 86(l), (1~)and (3) of the National Health Services (Scotland) Act 1978, and all powers enabling them in that behalf, hereby give the following direction. .
,- . . 2. The accounts for the financial year ended 31 March 2003 and subsequent financial . . yeais, yhich each Health Board and the Common Service Agency is required to prepare shall . . comprise:
2.1 a foreword. *; __-._ . : 2.2 . an operating cost statement; . C ... 2.3 a statement of total reco'gnised gains and losses; 2.4 a bslance shebt; : 2.5' a ~h flow stakment; - 2.6 a statement of accountable officer's responsibilities; and
2.7 ' a statement on the system of internal control.
including such notes as may be necessary for the hosesreferred to in paragraphs 3,4 and 5. ' below. -
3; The accounts sw comply wit& the.amunting p&ciples and disclosure requirements of the edition of the Resource Accowting Manual 0which is in force for the year for whichthe accounts are prepared..
4. The accounts shall give a true and fair view of the operating co&, total recognised gains and losses, balance sheet and cash flows for the financial yeax dnd of the state of &airs as at the end of each financial year.
! 5. Subject to the foregoing requirements, the accounts shall also comply. with any accounts fbrmat, disclosure and accounting requirements issued by the Scottish Ministers from time to time.
6. This direction sball be reproduced as an appendix to the accounts. This direction supersedes the one given on 19 December 2000.
Signed by the a thority of the Scottish Ministers
: 4.9,#%+#
a TkDirectors report in :he Accounis is tahn to be thit foreword