The Framework Agreement sets out the governance and accountability arrangements between the Department of Health and Social Care (the Department) and NHS Counter Fraud Authority (NHSCFA). This Annex provides additional detail on the finance and accounting arrangements which complements the Framework Agreement itself.
This Annex is drafted as per section 8 of the Framework Agreement therefore references to NHSCFA should be read in accordance with that section.
NHSCFA’s objectives should be delivered through working collaboratively with the Department, NHS England/Improvement, NHS Business Services Authority and other Arms-Length Bodies and NHS organisations where appropriate.
Where other guidance or legislation is summarised in the document below, any changes in the underlying guidance or amendments to legislation will take precedence over this Framework Agreement.
Annual Expenditure Limits
The Secretary of State will issue NHSCFA with an operating budget in line with the prevailing business planning process and for the purposes of this Annex. As Accounting Officer, the Chief Executive must ensure that, in any financial year, NHSCFA’s spending in each of the following categories does not exceed the limit set by the Secretary of State for that year:
- revenue (non ring-fenced);
- revenue (ring-fenced);
- annually managed expenditure; and
- technical accounting/budgeting.
The Accounting Officer must also ensure that:
- the NHSCFA’s total spending on administration in any financial year does not exceed the admin control limit set by the Secretary of State as a subset of the total revenue resource limit; and
- in any given year the cash usage of NHSCFA does not exceed the cash limit (allotment) for NHSCFA plus any payments received which are used to offset expenditure that would have otherwise scored against this limit.
- Each of the controls referred to above must be met individually.
In accordance with the Framework Agreement NHSCFA has agreed to produce a business plan each year (see paragraph 3.6 of the Framework Agreement). The plan will be required to be costed: supporting guidance issued by the Department will provide the format and level of financial detail required. Indicative budgets for both administration and programme funded activity will be issued with planning guidance, incorporating any guidance on overall efficiencies relevant to the Department and its arm’s length bodies.
The business plan will need to identify detailed revenue, capital and cash forecasts for parliamentary funded activity, and equivalent expenditure associated with any other income sources. It will need to clearly identify the distinction between costs and income falling inside and outside the administration budget regime.
Paragraph 5.3 of the Framework Agreement sets out the expectation, arising from Secretary of State’s powers under the NHS Act 2006 (as amended), that the Department will routinely have full access to the NHSCFA’s information and files. In relation to financial reporting, the Department is required by HM Treasury to report inyear financial performance and forecasts for all its arm’s length bodies, by Estimate Line, and in a specified format, to a strict timetable. NHSCFA is required to comply with Departmental plans and schedules which enable the Department to meet HM Treasury deadlines, and the Department's overall financial planning to meet HM Treasury spending controls through the Shared Financial Planning Agreement.
NHSCFA must prepare annual accounts for each financial year ending 31 March, and interim accounts for shorter periods if required. In relation to these accounts, NHSCFA must:
- ensure that accounts are prepared according to the form, content, methods and principles prescribed by the Secretary of State in his annual group accounting instructions;
- submit these accounts (both unaudited and audited) to the Department by a date to be specified by the Secretary of State; and
- submit these accounts to the Comptroller and Auditor General (C&AG) for audit as soon as reasonably practicable after the year end, or, in the case of any interim account, as soon as reasonably practicable after the end of the interim period to which that interim account relates.
NHSCFA must publish an annual report of its activities together with the sets of audited accounts after the end of each financial year.
Information on performance against key financial targets is within the scope of the audit and should be included in the notes to the accounts. The report and accounts are to be signed by NHSCFA’s Accounting Officer and laid before Parliament by NHSCFA and made available on NHSCFA’s website, in accordance with the guidance in the Government Financial Reporting Manual (FReM). A draft of the report should be submitted to the Department in line with the published timetable.
The Accounting Officer must also ensure that NHSCFA participates fully in all agreement of balances exercises initiated by the Department, and in the form specified by the Department, and that it agrees income and expenditure and payables and receivables balances both with other organisations within the Department’s resource6 accounting boundary and, for the purposes of the Whole of Government Accounts, with other government bodies outside that boundary. In doing so, NHSCFA should seek to agree all outstanding balances but in any case should keep within any level of materiality set by the Department.
Section 7 of the Framework Agreement sets out the high level requirements for audit.
To meet the requirements for internal audit, NHSCFA must:
- ensure the Department is satisfied with the competence and qualifications of the Head of Internal Audit and the requirements for approving appointments in accordance with Public Sector Internal Audit Standards;
- prepare an audit strategy, taking into account the Department’s priorities, and forward the audit strategy, periodic audit plans and annual audit report, including NHSCFA’s Head of Internal Audit’s opinion on risk management, control and governance as soon as possible to the Department; and
- keep records of fraud and theft suffered by NHSCFA and notify the Department of any unusual or major incidents as soon as possible.
The Department is committed to a group assurance model for itself, and its arm’s length bodies. NHSCFA’s internal audit function is delivered through Cabinet Office shared service arrangements. Should NHSCFA wish to consider alternative internal audit provision it must consult with the Department.
The Department’s group internal audit service has a right of access to all documents prepared by NHSCFA’s internal auditor, including where the service is contracted out (until such time when the contract expires, after which Group Internal Audit will provide the audit service – including having access to all previous audit documentation).
For external audit, the C&AG audits both NHSCFA’s annual accounts. NHSCFA will lay its set of accounts before Parliament, together with C&AG’s reports.
- will consult the Department and NHSCFA on whether the National Audit Office or a commercial auditor will undertake the audit(s) on his behalf, though the final decision rests with the C&AG;
- has a statutory right of access to relevant documents including, by virtue of an Order made under section 25(8) of the Government Resources and Accounts Act 2000, those held by another party in receipt of payments from NHSCFA;
- will share with the Department information identified during the audit process and the audit report (together with any other outputs) at the end of the audit, in particular on issues impacting on the Department's responsibilities in relation to financial systems within NHSCFA; and
- will, where asked, provide the Department and other relevant bodies with regulatory compliance reports and other similar reports which the Department may request at the commencement of the audit and which are compatible with the independent auditor's role.
The C&AG may carry out examinations into the economy, efficiency and effectiveness with which NHSCFA has used its resources in discharging its functions. For the purpose of these examinations the C&AG has statutory access to documents as provided for under section 8 of the National Audit Act 1983. In addition, NHSCFA is to provide, in conditions to contracts, for the C&AG to exercise such access to documents held by contractors and sub-contractors as may be required for these examinations; and is to use its best endeavours to secure access for the C&AG to any other documents required by the C&AG which are held by other bodies.
Paragraph 8.5 of the Framework Agreement requires NHSCFA to abide by any relevant cross-Government efficiency controls.
Once the business plan has been approved by the Department, and subject to the Secretary of State’s instructions and any other processes set out in this document, NHSCFA has authority to incur expenditure approved in the budget without further reference to the Department, on condition that:
- NHSCFA will comply with its delegated which cannot be altered without the prior agreement of the Department, noting that authority to approve novel, contentious or repercussive proposals cannot be delegated from HM Treasury; and
- inclusion of any planned and approved expenditure in the budget will not remove the need to seek formal departmental approval where any proposed expenditure is outside the delegated limits or is for new schemes not previously agreed.
NHSCFA must obtain the Department’s prior written approval before entering into any undertaking to incur expenditure outside its delegations or not provided for in its business plan as approved by the Department. In addition, the Department’s prior written approval is required when:
- incurring expenditure for any purpose that is or might be considered novel or contentious, or which has or could have significant future cost implications;
- making any significant change in the scale of operation or funding of any initiative or particular scheme previously approved by the Department;
- making any change of policy or practice which has wider financial implications that might prove repercussive or which might significantly affect the future level of resources required; or
- carrying out policies that go against the principles, rules, guidance and advice in Managing Public Money.
For major projects, the NHSCFA will participate in the Department’s common assurance and approval process