Report to the NHS Somerset Clinical Commissioning Group on 18 June 2020 Title: Annual Report and Annual Accounts 2019/20 Enclosure D Version Number / Status: 1 Executive Lead Alison Henly, Director of Finance, Performance and Contracting Clinical Lead: Dr Ed Ford, CCG Chair Author: Jacqui Damant, Associate Director of Finance, Tony Marchione, Senior Financial Accountant and Tracey Tilsley, Associate Director of Corporate Business Summary and Purpose of Paper The report includes signed off versions of the Clinical Commissioning Group’s Annual Report and Annual Accounts for 2019/20, including the Governance Statement. The Annual Report is structured to meet the requirements of the Department of Health Group Accounting Manual 2019/20 and NHS England has provided checks to ensure that the report meets these requirements. In addition, included with the Annual Report, is the Head of Internal Audit Opinion, the External Audit – Audit Findings Report 2019/20 and the Letter of Representation. The Somerset CCG Governing Body is asked to approve the Annual Report and Annual Accounts 2019/20. Recommendations and next steps The Somerset CCG Governing Body is asked to approve the Annual Report and Annual Accounts 2019/20. The Governing Body are individually asked to state: that as far as he/she is aware there is no relevant audit information of which the Clinical Commissioning Group’s auditors are unaware that he/she has taken all the steps that he/she ought to have taken as a member of the Governing Body in order to make him/herself aware of any relevant audit information and to establish that the Clinical Commissioning Group’s auditors are aware of that information Working Together to Improve Health and Wellbeing Impact Assessments – key issues identified Equality Equality and diversity are at the heart of Somerset Clinical Commissioning Group’s work, giving due regard to eliminate discrimination, harassment and victimisation, to advance equality of opportunity, and to foster good relations between people who share a relevant protected characteristic (as cited in under the Equality Act 2010) and those who do not share it. The Annual Report includes a section on Equality and Diversity. Quality The Annual Report includes sections which illustrate the work that the CCG has undertaken to improve the quality of services in Somerset. Privacy The CCG Annual Report and Accounts are published on the NHS Somerset CCG website at : https://www.somersetccg.nhs.uk/publications/governing-body-papers Engagement No issues identified. The Annual Report and Accounts will be presented formally to the public at the AGM. A summary Annual Review document will also be produced to share with the public at the AGM. Financial / For the financial year 2019/20 (1 April 2019 to 31 March 2020), Somerset Resource Clinical Commissioning Group had a planned in year deficit position of £4.5m and was eligible to receive Commissioner Sustainability Funding (CSF) of £4.5m to enable delivery of a break even position for the financial year. The Clinical Commissioning Group did not deliver to plan for the financial year with a deterioration of £13.1m from the planned position. This resulted in the loss of the final two quarters of CSF for 2019/20, equating to £2.925m. This results in a total deficit of £16.025m for the 2019/20 financial year. As a result of the Clinical Commissioning Group’s breach of its duty to breakeven against revenue resource limit for the year ending 31 March 2020 a referral has been made under Section 30 of the Local Audit and Accountability Act 2014, by the CCG’s appointed auditors, to the Secretary of State and NHS England, to notify them of this breach. Governance Financial duties of Somerset Clinical Commissioning Group not to exceed its or Legal cash limit and comply with relevant accounting standards. Risk Description None. Consequence Likelihood RAG Rating GBAF Ref Risk Rating n/a n/a n/a n/a NHS SOMERSET CLINICAL COMMISSIONING GROUP Report to the Governing Body 18 June 2020 DIRECTOR OF FINANCE, PERFORMANCE AND CONTRACTING REPORT ON THE 2019/20 ANNUAL ACCOUNTS 1 INTRODUCTION 1.1 The Director of Finance, Performance and Contracting is statutorily obliged to comply with the determination and directions given by the Secretary of State for Health, in the preparation of the annual accounts. 1.2 NHS Bodies are within the remit of the Financial Reporting Advisory Board (FRAB) which provides independent accounting advice in respect of public sector bodies to HM Treasury and the equivalent bodies in Scotland and Northern Ireland. The advice of FRAB is reflected in the Government Financial Reporting Manual (FReM) which, alongside the Department of Health Group Accounting Manual 2019/20, NHS Bodies are required to follow except where a divergence has formally been agreed. For 2019/20 there are no departures from the FReM in preparing the annual accounts for Somerset Clinical Commissioning Group. 1.3 These accounts are certified by the Chief Executive, James Rimmer, as the Accountable Officer appointed by NHS England and NHS Improvement for NHS Somerset Clinical Commissioning Group. The financial monitoring and accounts forms will then be submitted to the Department of Health, and will be used in the consolidation of all accounts for health organisations. 1.4 These accounts are subject to external audit scrutiny and a statutory auditor will provide an opinion on the accounts, after adoption by the Governing Body. The internal systems of control in the Clinical Commissioning Group were subject to review by Internal Audit during the financial year with the substantial assurance report reported to the Audit Committee. 1.5 These accounts may be subject to update should this be deemed necessary by the issue of new guidance by the Department of Health/NHS England, up until the adoption by the Governing Body. 1.6 A summary of the key performance targets and disclosure notes included within the financial statements is provided below. 1.7 Somerset CCG planned to deliver a deficit of £4.5m for 2019/20 against the portfolio of services it commissions, as agreed with NHS England. The Clinical Commissioning Group was eligible to receive £4.5m Commissioner Sustainability Funding (CSF) in year, subject to a review by NHS England 1 against achievement of the financial plan and adherence to the conditions of the CSF. The Clinical Commissioning Group did not deliver to plan for the financial year with a deterioration of £13.1m from the planned position. This resulted in the loss of the final two quarters of CSF for 2019/20, equating to £2.925m. This resulted in a total deficit of £16.025m for the 2019/20 financial year. The required protocol for a deterioration from financial plans was adhered to and this position was discussed and approved with NHSE/I prior to the financial year end. 1.8 As a result of the Clinical Commissioning Group’s breach of its duty to breakeven against revenue resource limit for the year ending 31 March 2020 a referral has been made under section 30 of the Local Audit and Accountability Act 2014, by the CCG’s appointed auditors, to the Secretary of State and NHS England, to notify them of this breach. 2 PRIMARY STATEMENTS Statement of Comprehensive Net Expenditure for the year ended 31 March 2020 2.1 The Statement of Comprehensive Net Expenditure records the net operating costs incurred by the Clinical Commissioning Group for 2019/20. 2.2 This statement shows that for the financial year 2019/20 the Clinical Commissioning Group net expenditure was £893,051,000. 2.3 The statement also analyses the expenditure between staff costs, purchase of goods and services, depreciation and impairment charges, provision expense and other operating expenditure/income. Table 1 below shows a summary of this expenditure from the statement for the year ended 31 March 2020. Table 1: Statement of Comprehensive Net Expenditure for the year ended 31 March 2020 2019/20 2018/19 £’000 £’000 Staff costs 12,901 10,486 Purchase of goods and services 883,288 752,733 Depreciation and impairment charges 100 96 Provision expense (831) 1,541 Other Operating Expenditure 320 178 Operating Income (2,727) (3,247) Total Net Operating Costs for the Financial Year 893,051 761,787 2 Statement of Financial Position as at 31 March 2020 2.4 The Statement of Financial Position (SoFP) records the assets and liabilities of the Clinical Commissioning Group as at 31 March 2020, and is presented in two parts: total assets employed (the upper section) – the assets and liabilities of the Clinical Commissioning Group, including both short and long term commitments total taxpayers equity (the lower section) – the resources used to fund the total assets employed 2.5 At 31 March 2020, the Clinical Commissioning Group had net liabilities employed of £40,050,000 funded through a general fund. The net liabilities value has increased by £514,000 from £39,536,000 shown in the annual accounts as at 31 March 2019. This negative figure is not of concern due to the agreed on-going funding received from NHS England. 2.6 At 31 March 2020, the Clinical Commissioning Group Statement of Financial Position included: trade and other receivables of £5,657,000, of which £125,000 was due from other NHS organisations, £2,308,000 related to NHS prepayments, £633,000 related to NHS accrued income, £340,000 was due from Non-NHS organisations, £1,354,000 related to Non- NHS prepayments, £692,000 related to Non-NHS accrued income and £205,000 related to VAT. inventories of £2,000 cash with the Government Banking Service of £69,000 trade and other payables of £45,732,000 comprising of: NHS payables at £3,538,000 NHS accruals at £2,379,000 Non-NHS payables – revenue at £8,061,000 Non-NHS accruals at £26,991,000, which includes a GP Prescribing accrual of £14,465,000 other payables and accruals at £4,763,000 including: .