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In a report to Parliament today, head of the National Audit Office Sir John Bourn gave the results of his annual examination of the 19 summarised accounts which cover the financial activities of the NHS in England.

Sir John’s opinion on each of the 19 summarised accounts was unqualified. The report drew attention, however, to several issues, as well as to progress made in accounting developments and internal control during 1999-2000. The key findings are set out below.

The overall financial performance of health authorities and NHS Trusts in 1999-2000:

  • 59 of the 99 health authorities reported a deficit for the 1999-2000 year, an increase from 48 out of 100 in 1998-99. The health authorities in aggregate reported a deficit of £52 million (compared with a restated deficit of £25 million in 1998-99) but Sir John also noted that by the end of the second quarter of 2000-2001 the forecast in-year position was a surplus of £45 million.
  • 150 of the 377 Trusts reported a deficit for the 1999-2000 year, compared with 98 of 402 in 1998-99. In aggregate NHS Trusts reported a net deficit for the year of £77 million (compared with a deficit of £36 million in 1998-99). Sir John noted however that by the end of the second quarter of 2000-2001 the forecast in-year deficit for NHS Trusts had reduced to £8 million.
  • Sir John noted that the 1999-2000 financial performance reported by NHS Trusts reflected the completion of the first three year rolling period over which they all met the statutory break-even financial target “taking one financial year with another”, although 41 Trusts were granted an extension from the three year to a five year target. All health authorities achieved their statutory duty for net payments not to exceed their cash limits.

Progress in countering fraud in the NHS:

  • Sir John welcomed the range of initiatives being pursued by the Directorate of Counter Fraud Services to tackle fraud in the NHS, including the appointment of trained specialists in each organisation and establishing a hotline for reporting fraud.
  • At the end of March 2001 NHS organisations were investigating 484 cases of suspected frauds with a total estimated value of some £18 million (compared with 239 cases with an estimated value of £14 million at the end of March 2000).
  • Sir John noted that work was ongoing to measure accurately the level of fraud and “incorrectness” across all main services in the NHS, and welcomed progress in achieving 22 successful prosecutions and 34 successful disciplinary cases during 1999-2000.

Clinical negligence:

  • Sir John noted that the reported liability for clinical negligence continued to increase within the NHS, with the net present value of known and anticipated claims at the end of March 2000 of £3.9 billion, an increase of £0.7 billion from the previous year. This included an estimate for the first time of £1.3 billion for incidents incurred but not reported, and Sir John welcomed this improvement in measurement and disclosure of these significant costs.
  • Sir John’s separate report on the management of clinical negligence claims by the NHS in May 2001 covered this subject in more detail. (HC 403, 2000-2001)

Developments in accounting and internal control:

  • Sir John welcomed the progress achieved by the NHS in implementing three new financial reporting standards during the year. It has helped to bring NHS accounts into line with generally accepted accounting practice.
  • Sir John noted that the appointed auditors of the underlying accounts were required to express an opinion on the regularity of the activities of Health Authorities and Special Health Authorities for the first time in 1999-2000; and in all but three cases they gave unqualified regularity opinions.

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