Consultation outcome

Group accounting manual 2023 to 2024: consultation exercise

Updated 12 June 2023

This was published under the 2022 to 2024 Sunak Conservative government

Applies to England

Overview

All bodies within the Department of Health and Social Care accounting boundary (DHSC group bodies) must publish annual reports and accounts. Clear and transparent reporting helps the entity, as well as the users of the entity’s annual report and accounts, understand and scrutinise the year’s operations and outcomes.

DHSC and NHSE have powers to direct the form in which the annual report and accounts should be prepared, the information that should be included, and the methods and principles that should be followed in their preparation.

In determining the form and content of the accounts we must, by statute, aim to ensure the accounts present a true and fair view.

In order to achieve this, the department issues a group wide annual report and accounting manual every year, the group accounting manual (GAM), containing the requirements DHSC group bodies need to follow when preparing their annual reports and accounts.

The NHS foundation trust annual reporting manual (FT ARM) establishes the annual reporting requirements for NHS foundation trusts. The FT ARM contains the formal accounts direction but foundation trusts will follow the GAM for accounts requirements.

The GAM requires DHSC group bodies to follow the requirements of International Financial Reporting Standards (IFRS), as adopted by the United Kingdom, interpreted and adapted by HM Treasury’s Financial Reporting Manual (FReM).

Therefore, the GAM only includes detailed accounting guidance where DHSC group bodies are:

• required to depart from IFRS or the FReM
• required to make specific disclosures in addition to IFRS and the FReM, or
• faced with particular circumstances that IFRS or the FReM do not address

Updates to the GAM follow the same principle and, on that basis, are required where IFRS or the FReM have changed, or when DHSC group bodies are required to make specific extra disclosures.

Some content for the 2023 to 2024 GAM is not yet available, such as HM Treasury discount rates. The draft GAM indicates where this is the case, and the manual will be revised later in the year once this content is known. An additional guidance document published alongside subsequent updates of the 2023 to 2024 GAM will signpost the changes made within the manual.

2023 to 2024 consultation

This consultation relates to the draft GAM for the 2023 to 2024 financial year. See the documents being consulted on the DHSC Group Accounting Manual collection page.

The consultation period will run from 9 February 2023 until 9 March 2023.

The 2023 to 2024 GAM will be published later in 2023, once we have considered consultation responses and further refined the guidance offered in the GAM.

Post consultation changes will be made in collaboration with the relevant sector finance leads. The publication of the GAM is subject to approval by the Financial Reporting Advisory Board (FRAB).

Principal changes proposed in the draft GAM

There is one significant change to the accounting requirements for the 2023 to 2024 financial year relating to the application of IFRS 16 liability measurement principles to public private partnership and private finance initiative liabilities. Changes to the GAM will therefore be focussed on providing clarity regarding the implementation of IFRS 16 in this respect.

Other changes to reporting requirements in the main stem from the implementation of the Health and Care Act, which have not already been incorporated into the current 2022 to 2023 GAM, but will be incorporated into current guidance after this consultation process.

This document summarises the principal changes introduced in the draft GAM.

Measurement of public private partnership (PPP) and private finance initiative (PFI) liabilities using IFRS 16

FRAB previously concluded that with the implementation of IFRS 16 across the public sector, the approach to measuring such liabilities as detailed in chapter 10 of the FReM was required to transition from an approach reflecting the previous leasing Standard IAS 17, to one reflecting the principles of IFRS 16. It remains the case that the accounting for PFI liabilities will be based on the guidance in the FReM (which is in turn based on the lease accounting standard principles) rather than a direct application of the standard itself. In particular, rather than accounting for contingent rent where cashflows have changed over the life of the arrangement, entities would be required to remeasure the PFI liability per the requirements of IFRS 16 when cashflows change due to a change in a variable payment dependent on an index or rate.

This update to the FReM was deferred from the 2022 to 2023 financial year to the 2023 to 2024 financial year as further guidance from HM Treasury on the transitional and subsequent requirements in respect of this change in approach is still to be finalised. However the 2023 to 2024 FReM published in December 2022 does contain the initial elements of guidance relating to the accounting requirements on transition and on subsequent measurement. Consequently the GAM is updated for this detail in chapter 4 and chapter 4 annex 5 of the GAM.

The FReM references yet to be published application guidance on the matter which will be contextualised and built upon in the GAM and in associated guidance which will include a reworked DHSC PFI model to incorporate the relevant measurement principles on an IFRS 16 basis for both transition and for subsequent measurement. This along with the HM Treasury guidance will be published later in 2023.

Consultation questions on the use of IFRS 16 to measure public private partnership liabilities

Do you have any further comments regarding the HM Treasury initial guidance relating to transition and subsequent measurement of PPP liabilities in the 2023 to 2024 FReM?

Do you have any comments regarding the content of the guidance currently in the GAM relating to the measurement of PPP liabilities?

Do you have any comments regarding the proposed updates DHSC is planning to make to the DHSC PFI model to incorporate IFRS 16 measurement principles?

Reporting updates for the group accounting manual

As was noted in the overview section, a number of performance reporting requirements stemming from the implementation of the Health and Care Act have been incorporated into the 2022 to 2023 GAM. Nevertheless, this consultation presents an opportunity for preparers to both provide feedback on those requirements already featured in the GAM and to provide any comment on those requirements preparers or auditors may expect further guidance regarding in the GAM.

Integrated care boards (ICBs) are subject to financial duties as outlined in the Health Service Act 2006 as amended by the Health and Care Act 2022. These duties are listed in the NHS financial framework: ICB and system finance business rules document published on the NHS England website on 27 January 2023. Chapter 2 ICB appendix 1 will be therefore be removed in its current format from the 2023 to 2024 GAM.

New governance disclosures for NHS trusts are being introduced from 2023 to 2024 which will align with reporting for NHS foundation trusts in relevant respects. In October 2022 NHS England published a new code of governance for NHS provider trusts. This applies to NHS trusts and NHS foundation trusts for the first time and is applicable from 1 April 2023.

The applicable disclosure requirements are listed in schedule A of the document, from page 38. These requirements (excluding those that only relate to NHS foundation trusts) will be added to the 2023 to 2024 GAM, to apply to NHS trusts only.

Consultation questions relating to reporting updates for the group accounting manual

Do you have any comments regarding the reporting updates included in the January 2023 update to the 2022 to 2023 GAM?

Do you have any comments regarding the further reporting requirements preparers or auditors may expect further guidance regarding in the GAM?

Do you have any comments regarding the additional reporting requirements for NHS trusts to reflect NHS England’s code of governance for NHS provider trusts?

Other changes to the GAM

There are no other planned material updates to the GAM. Minor changes have been included in the 2023 to 2024 GAM include updating the expected date of IFRS 17 implementation per the FReM as agreed previously by FRAB.

As is referenced in the overview section certain elements of guidance such as HM Treasury discount rates will be provided by HM Treasury later in 2023 so will form an additional guidance update as will any further relevant update to the 2023 to 2024 FReM.

There are no standards updates effective for the 2023 to 2024 financial year that require further contextualisation in the GAM.

Consultation questions on other changes made to the GAM

Do you have any other general comments on the draft group accounting manual?

Summary of consultation questions

Do you have any further comments regarding the HM Treasury initial guidance relating to transition and subsequent measurement of PPP liabilities in the 2023 to 2024 FReM?

Do you have any comments regarding the content of the guidance currently in the GAM relating to the measurement of PPP liabilities?

Do you have any comments regarding the proposed updates DHSC is planning to make to the DHSC PFI model to incorporate IFRS 16 measurement principles?

Do you have any comments regarding the reporting updates included in the January 2023 update to the 2022 to 2023 GAM?

Do you have any comments regarding the further reporting requirements preparers or auditors may expect further guidance regarding in the GAM?

Do you have any comments regarding the additional reporting requirements for NHS trusts to reflect NHS England’s code of governance for NHS provider trusts?

Do you have any other general comments on the draft group accounting manual?

Responding to the consultation

The easiest way to participate in the consultation is by completing the public survey.

Consultation responses must be submitted by 11:45pm on 9 March 2023.

If you have any questions regarding the consultation or its contents, please liaise with your sector leads in the first instance. The sector lead can be contacted via the appropriate link below:

• NHS Providers: email [email protected]

• ICBs: email [email protected]

• other ALBs: email [email protected]

• audit firms: email [email protected]

Privacy notice

Summary of initiative

The consultation on the group accounting manual 2023 to 2024 provides an opportunity for practitioners utilising the GAM within the health sector to comment on the proposed guidance for the 2023 to 2024 financial year.

Data controller

Department of Health and Social Care is the data controller.

What personal data we collect

Questions about you at the end of the consultation are asked but are predominantly optional.

How we use your data (purposes)

The consultation confirms in what instances you may be contacted via your email address.

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Under Article 6 of the United Kingdom General Data Protection Regulation (UK GDPR), the lawful bases we rely on for processing this information are:

• (a) your consent

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No information is shared with third parties.

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The information provided is stored securely by the department.

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Per DHSC policies, corporate information regarding consultations is retained for 8 years and then deleted.

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Access to data is limited to those who run the consultation and shared no wider. Responses are referred to in a summarised manner in the consultation response.

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• the right to get copies of information - individuals have the right to ask for a copy of any information about them that is used

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Changes to this policy

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