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Financial report

Finance Director’s report

Barts and The London recorded a surplus on its income and expenditure account of £16.4 million in 2007/08.  This means that we met the key financial duty of achieving break-even (or better) for the eighth successive year.  The surplus was in line with the target agreed with NHS London and has helped the NHS as a whole to achieve its financial targets.  It will also be extremely important when our application to become a foundation trust is considered by the Department of Health and Monitor.  In addition, the surplus will be available to assist Barts and The London to meet future plans and targets.

Achieving this surplus required an enormous amount of work from staff throughout the Trust to meet the best value and cost improvement targets set while continuing to deliver high quality care to patients.  In overall terms, the Trust had to bridge a funding gap of £26.8 million, either by reducing its costs or by generating additional income.  The challenge will continue into 2008/09 and beyond as the Trust needs to be prepared to meet changing policy directives and income flows that require us to continue to deliver best value and efficiency gains of a similar level to 2007/08 over the next two years.  If the current trends in prices and inflation continue, we may face further challenges meeting cost increases above the increases in our payment by results tariff and other income.

One key aspect of our best value programme has been to seek and deliver procurement savings.  In 2007/08, £6.5 million was achieved, including the full year effect of contracts let during 2006/07, taking the cumulative total to £24.1 million since 2002/03. The Trust also led the medical and surgical workstream under the London procurement programme and delivered £7 million of savings for participating trusts in London.

Our investment in capital assets (including donated assets) was £37.5 million (excluding Private Finance Initiative transactions).  This included numerous projects to improve the environment in existing buildings until we move into the new hospitals, as well as replacing medical equipment.

I would like to highlight the following achievements of the finance and investment directorate:

  • Introduction of service line reporting, which details total income and expenditure at specialty level to allow clinical directorates to fully understand their financial positions and cost drivers.  Service line reports are now being produced quarterly.  The Trust will continue to develop service line reporting to support greater devolved decision making and to engage clinical staff and others in the financial issues of the Trust.
  • Achieving the planned savings and efficiencies.
  • Establishment of a finance and investment committee, which meets at least quarterly, to further increase non-executive scrutiny of the Trust’s finances and investment decision making.
  • Significant workload in payroll and other departments in relation to the successful implementation of the electronic staff record (the new NHS-wide HR and pay system) in August 2007.
  • Achieved process efficiency gains enabling the reduction of monthly reporting cycle from seven to five days – a reduction of 28 per cent.

 

Andrew Holden
Director of Finance

 

Independent auditors’ statement to the directors of the board of Barts and The London NHS Trust

We have audited the financial statements of Barts and The London NHS Trust for the year ended 31 March 2008 under the Audit Commission Act 1998.  These comprise the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement, the Statement of Total Recognised Gains and Losses and the related notes.  These financial statements have been prepared under the accounting policies relevant to the National Health Service set out within them.

This report is made solely to the Board of Barts and The London NHS Trust, as a body, in accordance with Section Two of the Audit Commission Act 1998.  Our audit work has been undertaken so that we might state to the Board of Barts and The London NHS Trust 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 Barts and The London NHS Trust and the Board of Barts and The London NHS Trust, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditors

The directors’ responsibilities for preparing the financial statements in accordance with directions made by the Secretary of State are set out in the Statement of Directors’ Responsibilities.  Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and whether the part of the Remuneration Report to be audited has been properly prepared in accordance with the accounting policies directed by the Secretary of State as being relevant to the National Health Service in England.

We review whether the directors' statement on internal control reflects compliance with the Department of Health's requirements ‘The Statement on Internal Control 2003/2004’ issued on 15 September 2003, and further guidance issued on 5 April 2005. We report if it does not meet the requirements specified by the Department of Health or if the statement is misleading or inconsistent with other information we are aware of from our audit of the financial statements.  We are not required to consider, nor have we considered, whether the directors' statement on internal control covers all risks and controls.  We are also not required to form an opinion on the effectiveness of the Trust’s corporate governance procedures or its risk and control procedures

We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements.  This other information comprises only the unaudited part of the Remuneration Report and the Operating and Financial Review.  We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.  Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with the Audit Commission Act 1998, the Code of Audit Practice issued by the Audit Commission and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.  An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the Remuneration Report to be audited.  It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Trust’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 and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error.  In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Remuneration Report to be audited.

Opinion

In our opinion:

  • the financial statements give a true and fair view, in accordance with the accounting policies directed by the Secretary of State as being relevant to the National Health Service in England, of the state of the Trust’s affairs as at 31 March 2008 and of its income and expenditure for the year then ended; and
  • the part of the Remuneration Report to be audited has been properly prepared in accordance with the accounting policies directed by the Secretary of State as being relevant to the National Health Service in England.

The maintenance and integrity of Barts and The London NHS Trust website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.

KPMG LLP
London
28 May 2008