Integration Joint Board
29^'^ August 2019
Agenda Item No.
Subject:
Deloitte LLP: 2018/19 Annual Audit Report
Purpose:
The Board is required to approve the audited annual accounts for
2018/19 for issue by 30 September 2019 and to consider the
report from External Audit.
Recommendation:
That the Board:
(a) Note that Deloitte LLP have completed their audit of the
annual accounts for 2018-19 and have Issued an
unqualified independent report auditor’s report;
(b) Approve the Audited Annual Accounts to be signed for
issue.
Glossary of Terms
NHS AA
NHS Ayrshire and Arran
HSCP
Health and Social Care Partnership
MTFP
Medium Term Financial Plan
1.
EXECUTIVE SUMMARY
1.1
The Integration Joint Board (IJB) were required to produce a set of annual accounts
for 2018-19. These accounts were produced within the statutory timescale and have
been subject to independent audit by the Integration Joint Board’s external auditors,
Deloitte LLP. The audit process has been completed and external audit have issued
an unqualified independent auditors report.
1.2
The annual accounts were submitted to Deloitte LLP for audit in accordance with the
agreed timetable. The external auditor is required to report on certain matters arising
to those charged with governance in sufficient time to enable appropriate action to
be taken before the financial statements are approved and certified.
1.3
The Audited Annual Accounts require to be approved by the IJB prior to 30
September 2019. As part of the independent audit there were some minor changes
required, these were mainly presentational and to provide additional information or
clarification and there are no changes to the financial position reported to the
Performance and Audit Committee in June. Deloitte LLP’s External Audit Annual
Audit Report includes the findings of the audit and there are no recommendations for
improvement arising from the financial statements audit. The interim report
submitted to the Performance and Audit Committee in June 2019 detailed the
recommendations arising from the work on the wider audit dimensions. These will be
followed up as part of the 2019-20 audit.
2 .
BACKGROUND
2.1 The Integration Joint Board is subject to the audit and accounts provisions of a body
under section 106 of the Local Authority Government (Scotland) Act 1973. This
requires annual accounts to be prepared with the reporting requirements specified in
the reievant iegislation and reguiations. The requirements are proportionate to the
number of transactions of the Integration Joint Board whilst complying with the
requirement for transparency and true and fair reporting in the pubiic sector.
2.2 The audited annuai accounts have been prepared in accordance with the Code of
Practice on Accounting for Locai Authorities in the United Kingdom 2018-19.
Additionai guidance was issued by the Scottish Government Integrated Resources
Advisory Group (IRAG) and CIPFA LASAAC and this guidance has been foiiowed to
produce the unaudited accounts. In addition support was provided by CIPFA and
Audit Scotiand to ensure a consistency of approach and shared best practice across
Integration Joint Boards.
2.3 The Audited Annuai Accounts for 2018-19 are inciuded as Appendix 1, these
incorporate the independent auditors report. Deioitte LLP are able to conclude that
the Integration Joint Board’s accounts present a true and fair view of the IJB.
2.4 Appendix 2 inciudes a covering ietter from Deioitte LLP which incorporates their
ISA260 ietter “report to those charged with governance” together with their proposed
Independent Auditor's Report and the letter of representation to be signed by the
Chief Finance Officer (NAHSCP) as responsibie officer for North Ayrshire Flealth and
Social Care Partnership. Deioitte LLP's External Audit Annuai Audit Report to
members, which summarises the findings of the audit is attached at Appendix 3.
2.5 Deioitte LLP have given an unquaiified opinion that the 2018-19 financiai statements
give a true and fair view of the financial position and expenditure and income of the
IJB for the year, concluding that the accounts have been properly prepared in
accordance with relevant legislation, applicable accounting standards and other
reporting requirements. No monetary adjustments have been identified and the
overall financial position remains as reported to the Performance and Audit
Committee in June 2019.
2.6 As part of their audit work, alongside the audit of the annual accounts, Deioitte LLP
assessed the key financial and strategic risks being faced by the IJB, reviewing the
IJB’s financial position and aspects of financial management, sustainability,
transparency, governance and vaiue for money.
Representatives from Deioitte LLP wiii provide an overview and further feedback on
the report at the meeting.
2.7 The Integration Joint Board are required to formaiiy approve the Audited Annuai
Accounts prior to 30 September 2019, the IJB are asked to approve the accounts for
signature and issue. Thereafter they wiii be published on the partnership website.
3.
PROPOSALS
3.1
The Board is invited to note that Deloitte LLP have completed their audit of the
annual accounts for 2018-19 and have issued an unqualified independent auditor’s
report. The IJB is also asked to approve the Audited Annual Accounts to be signed
for issue.
3.2
Anticipated Outcomes
The annual accounts are a key statutory reporting requirement and can be a useful
way to join up financial and service delivery performance information in a readily
available public document, the IJB has a statutory responsibility to approve the
Audited Accounts for issue by 30 September 2019.
3.3
Measurina Impact
Progress against the wider scope recommendations will be reviewed by the
Performance and Audit Committee during 2019/20.
4. IMPLICATIONS
Financial :
The IJB are required to consider and approved the
Audited Annual Accounts for 2018-19 by 30
September 2019.
Human Resources :
None
Legal:
None
Equality:
None
Environmental & Sustainability:
None
Key Priorities :
None
Risk Implications :
None
Direction Required to
Direction to :-
Councii, Heaith Board or
1. No Direction Required
X
Both
2. North Ayrshire Council
(where Directions are required
3. NHS Ayrshire & Arran
piease compiete Directions
Tempiate)
4. North Ayrshire Council and NHS Ayrshire & Arran
5.
CONSULTATION
5.1
The unaudited annual accounts were advertised and made publicly available for
inspection; the audited accounts will require to be published by 30 September 2019.
There were no objections noted from the public inspection.
The Chief Officer and other officers of the IJB have been consulted during the audit
process.
6. CONCLUSION
6.1 Deloitte LLP have issued an unqualified opinion on the 2018-19 annual accounts.
For more information piease contact:
Caroiine Whyte, Chief Finance & Transformation Officer on 01294 324954 or
caroiinewhvte@north-avrshire.qcsx.qov.uk
ANNUALACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2019
Integration Joint Boar
Delivering care
together
Contents
Management Commentary.1
Statement of Responsibilities.1
Annual Governance Statement.1
Remuneration Report.1
Financial Statements.1
- Comprehensive Income and Expenditure Statement
- Movement in Reserves Statement
- Balance Sheet
Notes to the Financial Statements.1
- Note 1: Significant Accounting Policies
- Note 2: Critical Judgements and Estimation Uncertainty
- Note 3: Events After the Reporting Period
- Note 4: Expenditure and Income Analysis by Nature
- Note 5: Taxation and Non-Specific Grant Income
- Note 6: Debtors
- Note 7: Creditors
- Note 8: Usable Reserve: General Fund
- Note 9: Agency Income and Expenditure
- Note 10: Related Party Transactions
- Note 11: VAT
- Note 12: Accounting Standards Issued Not Yet Adopted
Independent auditor’s report.35
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
1
Management commentary
This publication contains the Annual Accounts of North Ayrshire Integration Joint Board (IJB) for the
year ended 31 March 2019.
The Management Commentary outlines the key messages in relation to the IJB’s financial planning
and performance for the year 2018-19 and how this has supported delivery of the IJB’s strategic
priorities. This commentary also looks forward, outlining the future financial plans for the IJB and the
challenges and risks that we will face as we strive to meet the needs of the people of North Ayrshire.
North Ayrshire IJB
Each of the three Ayrshire health and social
care partnerships established their Integration
Joint Boards on 1 April 2015. The IJB’s
purpose is to improve the health and wellbeing
of local people, create support within our
communities and deliver joined-up care
pathways for people who use health and social
care services, particularly those who have
complex care needs.
North Ayrshire Health and Social Care
Partnership (NAHSCP/the Partnership) is the
name given to the service delivery
organisation for functions which have been
delegated to the IJB.
NAHSCP is facing significant challenges.
In 2018, NAHSCP launched a refreshed
strategic plan, Let’s Deliver Care Together,
outlining our ambitions for 2018-2021. The
plan sets the key strategic priorities that will
ensure that we deliver our vision. It seeks to
address the increasing health Inequalities in
North Ayrshire and focuses on improving the
efficiency and quality of the services being
provided, putting individuals, families and
communities at the heart of the plan.
North Ayrshire Health and Social Care
Partnership’s vision is:
‘All people who live in North Ayrshire are
able to have a safe, healthy and active iife’
This vision is supported by five strategic
priorities:
Tackling
inequalities
Engaging
communities
Prevention Bringing
and early services
intervention together
NAHSCP priorities
North Ayrshire Council and NHS Ayrshire &
Arran delegate responsibility for the planning
of services to the IJB. The IJB commissions
services from North Ayrshire Council and NHS
Ayrshire & Arran and is responsible for the
operational oversight of integrated services.
NAHSCPs Chief Officer is responsible for the
operational management of integrated
services.
The Chief Officer is supported by heads of
service for each service area and the
partnership management team. A dedicated
Chief Finance and Transformation Officer role
was Introduced during 2017-18, with the
position subsequently filled on a permanent
basis in July 2018.
Improving
mental health
and wellbeing
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
2
Health & Community
Care
n Head of Service
Children, Families &
Justice
ih Head of Service d
■ Mental Health & '
Learning Disability
I Chief Finance and i
Transformation
Officer
NAHSCP structure
The IJB Strategic Plan is supported by day to
day management plans and individual service
strategies. These plans operationalise and
provide greater detail on how the IJB will
deliver on its key priorities and identifies the
resources required for implementation.
Further, implementation of the strategic plan is
key for the Partnership to achieve the nine
National Health and Wellbeing Outcomes set
by the Scottish Government.
The Strategic Plan also complements North
Ayrshire Community Planning Partnership’s
Local Outcome Improvement Plan (LOIP), the
North Ayrshire Council plan and the NHS
Ayrshire & Arran Annual Operating Plan. This
is vital to ensure that our limited resources are
targeted in a way that makes a significant
contribution to our shared priorities.
North Ayrshire today
North Ayrshire is home to 136,000
people and covers an area of 340
square miles and includes the
islands of Arran, Great Cumbrae
and Little Cumbrae.
During 2017, it was estimated that
10,800 (24.4%) households in
North Ayrshire were workless.
Between October 2017-
September 2018, unemployment
was 5.8%, (Scottish average,
4.2%). The claimant count in
North Ayrshire (February 2019)
was 5.6%, again above the
Scotland average of 3%
We know that the population of
North Ayrshire is expected to fall
over the next 10 years, and we
expect that there will be fewer
people aged 65 and under,
reducing the number of working
age adults. We also expect that
the number of people aged 65+
will increase by 20%, with the
highest increase (38%) in those
aged 75 or over.
According to Scottish Index of Multiple Deprivation
(SIMD) 2016, 39% of North Ayrshire residents live
in areas identified as amongst the most deprived
in Scotland.
39% equates to almost 53,000 people
Levels of multi morbidity
(people with more than one chronic
medical condition) are higher in the
most deprived areas
North Coast locality has lower levels of deprivation
compared with other areas in North Ayrshire and
as such, have lower levels of people with multi¬
morbidities (11% for those 65 and older) compared
with areas with higher levels of deprivation, such
as Three Towns locality, where multi-morbidity
levels are much higher (36% for those 65 or older).
In 2018, Child Poverty Action Group published their
report on levels of child poverty across the UK. In
this report, it was estimated that 7,878 children in
North Ayrshire were living in poverty, this
equates to 29%> of all local children. While this is
slightly less than the 30.4% reported in 2016, North
Ayrshire still has the second highest rate of child
poverty in Scotland, after Glasgow City.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
3
A snapshot of achievements during 2018-19
do
%
We had 1,612 Conversations
in North Ayrshire on 6 June 2018 #WMTY18
Teams noted how many conversations they had, the benefits and challenges of taking part,
decided on one change that they would make as a team and agreed on a suggested
change for the overall service
what
matters
to you?
i.
i.
Our Community Link Worker team
increased from 7 to 12 by September 2018.
All 20 General Practices in North Ayrshire
now have a Community Link Worker in post.
The Ayrshire
MENTAL
HEALTH
Conversation
2018
People could respond as a service user,
someone who hadn’t accessed services
or as a carer or family member of
someone who has used services.
People had the opportunity to have their
say via local conversation events, paper-
based questionnaires (in local libraries
and within other local services) and an
online survey.
The Ayrshire Mental Health
Conversation received 777 responses,
creating a way forward for mental health
services across Ayrshire.
North Ayrshire Achieves winners included
Montrose House management team
(Promoting Wellbeing category) Care at
Home for Building Community Capacity
category.
across Ayrshire
Intermediate Care and Community
Rehabilitation Service went live on 19
November 2018. The service has a
common framework, ensuring a consistent
approach across Ayrshire. This is applied
locally to reflect the
differing needs,
ambitions and
operational
arrangements of the
different partnerships
in East, North and
South Ayrshire.
In consultation with people who use our
learning disability services, we are re¬
developing the property, gardens and
grounds at Trindlemoss (previously Red
Cross House, Irvine) to provide person-
centred, wraparound care focussing on
each person’s outcomes and people in the
heart of their community.
Our partners in the independent care
home sector continued to provide care
home services during a period of instability
in the sector.
Partnership Care at Home Services
graded as 5 by the Care Inspectorate.
The Veterans 1®' Point (VIP) Service
celebrated its 1®* birthday
Carers Week was celebrated with events
taking place in all six localities.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
4
Organisational performance
The planning and delivery of transformational
change within the Health and Social Care
Partnership requires our services to make a
difference to people’s lives within North
Ayrshire. To support service change the
Partnership continually monitors service
performance, and reviews this in various ways.
Performance information drives improvement
with an outcomes focus on improving how
services are provided, as well as the difference
that integrated health and social care services
should make to individuals. In our
performance monitoring and reporting, we
show trends over time, where we are against
target and where available, how we compare
with other geographical areas. We monitor
against all the agreed national indicators,
including Local Government Benchmarking
Framework (LGBF) indicators. Ministerial
Steering Group Indictors (MSG), the NHS’
Local Delivery Plan HEAT (Health
Improvement, Efficiency, Access and
Treatment) targets, HSCP National Health and
Wellbeing Outcome Indicators, as well as a
range of locally defined measures.
All reports comprise of a series of key
performance indicators and key actions, which
link directly back to our strategic plan.
Performance is reported at a number of levels
within the organisation including the
Integration Joint Board Performance and Audit
Committee (IJB PAG), the Integration Joint
Board (IJB), the Joint Review with North
Ayrshire Council and NHS Ayrshire & Arran
Chief Executives, and all service performance
reviews within each service area.
Where an indicator is off track, commentary
with proposed resolution and future mitigation
is provided on how to improve performance.
The number of performance indicators was
reviewed during 2018-19 and reduced from 45
to 24 key measures. The latest Performance
and Audit Committee Report (Q4 2018-19)
shows progress against the key measures and
this is represented in the chart below.
Progress of 24 performance indicators
Significantly
adrift, 8,
33% 1^
Slightly
adrift, 1, 4%
Data only,
1, 4%
On target,
14, 59%
■ On target ■ Slightly adrift ■ Significantly adrift ■ Data only
For some measures performance is exceeding
the targeted levels, however it is clear that the
challenges remain for others. These include
challenges around workforce gaps, service
demand pressures and the pace of
transformational change not happening fast
enough to ensure performance is achieved or
improved in all areas.
As part of our commitment to continuous
improvement, we recognise areas where we
could do more and by monitoring indicators
which present as significantly adrift enables us
identify and target plans to address
performance issues.
The key areas off target for 2018-19 are:
• Number of days people spend in hospital
when they are ready to be discharged
• Care at Home capacity lost due to
cancelled hospital discharges
• Number of people delayed, at point of
discharge from hospital to a care home,
after funding has been confirmed
• Number of adults in receipt of a Direct
Payment
• Number of Child and Adolescent Mental
Health Services (CAMHS) referrals
• Referral to Treatment Times for
Psychological Therapies
• Working days lost to sickness absence
per employee
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
5
The hospital activity outcome indicators have
shown improvement towards the end of the
year. The partnership now have a hospital
based team in Crosshouse Hospital with daily
huddles to improve the flow of patients through
the hospital and assist with the discharge
process. Further work is required to
understand the underlying data and
interdependencies with community services to
inform the future commissioning plans which
require to be developed to ensure the set aside
arrangements are fit for purpose and support
the IJB to plan across the whole of the
unplanned care pathway.
Further Information on performance is
contained in the Annual Performance Report
published in July 2019.
http://www.nahscp.orq/performance/
Annual accounts
The Annual Accounts set out the financial
statements of the IJB for the year ended 31
March 2019. The main purpose is to
demonstrate the stewardship of the public
funds that have been entrusted to the IJB for
the delivery of its vision and strategic priorities
as outlined in the Strategic Plan. The
requirements governing the format and
content of the Annual Accounts are contained
in The Code of Practice on Local Authority
Accounting in the United Kingdom (the Code),
the Annual Accounts for 2018-19 have been
prepared in accordance with this Code.
The financial plan
strong financial planning and management is
paramount to ensure our limited resources are
targeted to maximise the contribution to our
objectives. Delivery of services in the same
way is not financially sustainable. The updated
strategic plan approved for 2018-21 is
underpinned by the need to transform care
models to find new solutions as the partnership
may not always be the first source of support.
In 2018-19 the partnership agreed a one year
budget but did not identify all savings required
to fully balance the budget. With an overall
savings requirement of £6.6m, £1.7m of which
being historic NHS CRES savings which
remained outstanding at the year-end. The
financial position was monitored closely during
the financial year with a financial recovery plan
approved to ensure the partnership could
achieve financial balance in the short term.
This allowed for time to plan properly as part of
the 2019-20 budget process to develop plans
to fully address the budget gap on a recurring
basis.
The ability to plan based on the totality of
resources across the health and care system
to meet the needs of local people is one of the
hallmarks of integrated care. Medium term
financial planning is key to supporting this
process and identifying the transformation and
planned shift in resources to provide
sustainable services to the local community
over the medium term.
The Medium Term Financial Plan (MTFP) is
being refreshed and will be key to supporting
the delivery of the strategic plan. This plan will
set out the expectation to start to deliver a shift
in care from a hospital setting to a community
setting within the resources available.
Financial performance
Financial Information is part of the
performance management framework with
regular reporting of financial performance to
the IJB. This included an integrated approach
to financial monitoring, reporting on progress
with savings delivery, financial risks and any
variations and changes to the delegated
budget. There were significant financial
challenges during the year due to increasing
demand for social care services, the delivery of
the transformation programme and associated
savings. Despite this there was an improved
financial position compared to 2017-18.
Throughout the year there was a projected
overspend position, as a consequence a
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
6
financial recovery plan was put in place to
support the delivery of services from within the
delegated budget. The financial recovery plan
and progress was monitored throughout the
financial year.
The overall financial performance against
budget for the financial year 2018-19 was an
overall underspend of £0.945m (£0.389m in
social care services and £0.556m in heaith
services). This position includes the £1.486m
budget being heid on behaif of the IJB by the
Council for debt repayment, as this was
required to be transferred back to the IJB at the
financial year-end. This position is aiso before
earmarking £0.277m of resource for use in
future years.
65,543
64,714
(829)
Health and Community Care
65,900
65,952
52
71,761
72,772
1,011
Mental Health
73,308
72,982
(326)
33,504
35,965
2,461
Children, Families and Justice
35,591
35,705
114
49,637
49,518
(119)
Primary Care
48,916
48,839
(77)
0
0
0
Allied Health Professionals
4,636
4,588
(48)
4,266
5,798
1,532
Management and Support Costs
6,821
5,970
(851)
2,870
2,347
(523)
Change Programme
2,623
2,290
(333)
227,581
231,114
3,533
TOTAL EXPENDITURE
237,795
236,326
(1,469)
(227,581)
(228,552)
(971)
TOTAL INCOME
(237,795)
(237,795)
0
0
2,562
2,562
OUTTURN ON A MANAGED BASIS
0
(1,469)
(1,469)
0
0
0
Lead Partnership Allocations
0
524
524
0
2,562
2,562
OUTTURN ON AN IJB BASIS
0
(945)
(945)
0
0
0
Earmarking
0
277
277
0
2,562
2,562
FINAL OUTTURN POSITION
0
(668)
(668)
2018-19 2018-19 Variance
Budget Actual (Fav) / Adv
2017-18 2017-18 Variancel
Budget Actual (Fav) / A^
£000 £000 £ 000 |
The final adjusted year-end position was a
£0.668m underspend after earmarking, this
baiance wiil be used to commence repayment
of the historic debt carried forward from
previous years.
The IJB plans during 2018-19 were that prior
to the £1.486m set aside for debt repayment
being reallocated to the partnership that the
IJB would work towards delivering financiai
baiance in-year which would have allowed the
full amount set-aside to be aiiocated towards
the debt at the year-end. The fuii repayment
was not possible due to demand and costs for
social care services.
The table above summarises the financiai performance for 2018-19 and 2017-18. This notes the
budget outturn on a managed basis (including the full allocation for North HSCP lead partnership
services), adjusts this for the net impact of lead partnership allocations across North, South and
East Ayrshire and also for new earmarked balances. As the table reflects the budget managed by
the IJB during the year, it exciudes the iarge hospital Set Aside Budget of £30.114m which was
allocated at the end of the year to the IJB. The set aside budget is inciuded within the financiai
statements. During 2018/19 the Aiiied Heaith Professional budget transferred into the partnership
from the South HSCP foilowing a decision to end the iead partnership arrangement and
disaggregate the budget to East and North HSCP.
The main areas of variance during 2018-19 are noted beiow:
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
7
Health and Community Care - overspend of £0.052m mainly relates to an overspend in care
home placements and community packages (PD) partially offset by underspends in care at home,
adaptations and district nursing.
Mental Health - underspend of£0.326m which relates to an overspend in learning disability care
packages which is offset by underspends in community mental health and the Lead Partnership for
mental health (psychology, child and adolescent mental health services (CAMHS)) and unplanned
activities (UnPACs).
Children, Families and Justice - overspend of £0.114m is mainly related to an overspend in
residential and secure placements partially offset by an underspend within fostering.
In general, the areas above are overspent within the social care aspect of service provision which
is demand led and subject to fluctuations throughout the year. These are at times difficult to deliver
within budget as some can be low volume but very high cost.
Management and Support Costs - underspend of £0.851 m mainly relates to the allocation of the
£1.5m for the debt repayment offset by unachieved NHS GRES savings (cash releasing efficiency
saving).
Change Programme - underspend of £0.333m mainly relates to slippage on various projects
either through vacancies or alternative funding identified for the continuation of projects.
Challenge Fund
North Ayrshire Council, during the 2017-18 budget setting process, approved the development of
an innovative approach for the establishment of a £4m ‘Challenge Fund’. This ‘invest to change’
programme created an opportunity for services, using a change approach, to realise both required
North Ayrshire Council savings and additional savings which could be re-invested in their newly
designed service to support future sustainability. These projects included placing a team within a
secondary school to support the school and a feeder primary to prevent children being placed in a
residential placement resulting in no placements from these schools, employing additional
reablement staff within care at home resulting in a lower level of support moving forward, and
establishing a Learning Disability Review team to review existing care package provision.
The projects which commenced in 2017-18 have completed during 2018-19 and following
evaluation either ceased or continued to be funded on a recurring basis by the savings made from
the projects. Due to financial pressures in the partnership and North Ayrshire Council the £4m
originally available for investment was reduced to £2m and with projects nearing completion there
is now no separate funding out-with the baseline IJB budget to fund investment in transformational
change programmes.
Lead Partnership Services
The final outturn is adjusted to reflect the impact of Lead Partnership services. During 2018-19
agreement was reached with the other Ayrshire partnerships that in the absence of detailed service
activity information and alternative risk sharing arrangements that the outturn for all Lead
Partnership services would be shared across the 3 partnerships on an NRAC (NHS Resource
Allocation Committee) basis.
The outturn (including the impact of the AHP service being disaggregated) of the lead partnership
services for each IJB is provided below, the adjustment to the North IJB outturn reflects the impact
of reallocating a share of the North lead partnership services underspend to the other two areas and
an NRAC share of the outturn for the South and East partnerships. In addition, any allocations of
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
8
ring-fenced funding are returned to each IJB in line with allocations and expenditure to allow each
IJB to carry forward for future use.
IJB
North
(889)
Underspend
South
(72)
Underspend
East
270
Overspend
Set Aside Budget
The Integration Scheme establishes that pressures in respect of large hospital set aside budgets
will be managed In-year by NHS Ayrshire & Arran. The 2018-19 budget delegated by NHS Ayrshire
& Arran includes the acute set aside resource of £30.114m, this is based on Information Services
Division Scotland (ISD) data. The set aside allocation below highlights that North Ayrshire’s use of
the resource is above the NRAC ‘fair share’:
IJB
Set Aside
2018-19
£m
NRAC
%
NRAC Budget
Share
2018-19
£m
Over / (Under)
NRAC Fair
Share
£m
East Ayrshire
23.430
32.1%
25.019
(1.589)
North Ayrshire
30.114
37.2%
28.994
1.120
South Ayrshire
24.396
30.7%
23.927
0.469
Totai
77.940
100%
77.940
-
There is an expectation that each partnership will move towards it’s NRAC ‘fair share’ of resources.
It is essential that the IJB operates within the delegated budget and commissions services from the
Council and Health Board on that basis. Financial balance has not been delivered in previous years,
significant progress has been made during 2018-19 to ensure the ongoing financial sustainability of
the IJB. This work will continue and be built upon moving Into 2019-20. Key successes for 2018-
19 Include:
• Repayment of the outstanding debt to the Council has commenced, although less than the
£1.5m planned there remains a substantial contribution of £0.668m to the outstanding debt
• On an HSCP managed basis the partnership delivered a £1.5m underspend, this reflects the
impact of financial management arrangements and controls across all service directly
managed by the partnership
• 2018-19 is the first year where the year-end IJB position has been accounted for in a truly
integrated way with resource shifting from the NHS budget to offset Social Care pressures
• Overall reported surplus allows for the earmarking and protection or ring fenced funding for
Scottish Government priorities
• Savings totalling £4m were delivered in-year, against an approved plan of £4.9m and
delivering more than expected at the start of the year against savings viewed as high risk for
delivery
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
9
Progress with reducing the financial overspends for 2018-19 which will have an impact on
the financial plans and sustainability for future years.
Strong financial leadership wili continue to be required to ensure that future spend is contained
within the budget resources available, the IJB move into the 2019-20 with an approved baianced
budget.
Financial outlook, risks and plans for the future
The Heaith and Sociai Care Deiivery Pian
(pubiished December 2016) outiined the need to
shift the balance of where care and support is
deiivered, to outwith a hospitai setting when that
is the best thing to do. This provides a ciear
impetus to the wider goal of 50% of the health
budget being spent in the community by 2021.
During 2018-19 the Pan Ayrshire Intermediate
Care and Rehab Modei was impiemented which
is predicated on a shift from acute to community
care.
In October 2018, the Scottish Government
pubiished the Medium Term Health and Social
Care Financial Framework which sets out the
future shape of Health and Social Care Demand
and Expenditure. Within the report it outlined that the Institute of Fiscai Studies and Heaith
Foundation reported that UK spending on heaithcare wouid require to increase in reai terms by an
average of 3.3% per year over the next 15 years to maintain NHS provision at current levels, and
that social care funding wouid require to increase by 3.9% per year to meet the needs of a popuiation
iiving linger and an increasing number of younger adults living with disabilities. The report
recognised that despite additionai pianned investment in heaith and sociai care the system still
needs to adapt and change.
The focus of the financial framework is on the main heaith and social care expenditure commitments,
as set out beiow.
• Over the course of this pariiament, baseiine aiiocations to frontline health boards will be
maintained in reai terms, with additional funding over and above infiation being allocated to
support the shift in the baiance of care.
• Over the next five years, hospital expenditure wiii account for iess than 50% of frontline NHS
expenditure. This relates to the policy commitment to ‘shift the baiance of care’, with a greater
proportion of care provided in a setting close to a person’s home rather than in a hospitai.
• Funding for primary care will increase to 11 % of the frontline NHS budget by 2021-22. This wiii
amount to increased spending of £500 million, and about haif of this growth wiii be invested
directly into GP services. The remainder wiii be invested in primary care services provided in
the community.
• The share of the frontiine NHS budget dedicated to mental health, and to primary, community,
and social care will increase in every year of the parliament. For adults, and in some cases for
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
10
children, these services, along with unscheduled hospital care, are now managed by Integration
Authorities.
The Ministerial Strategic Group (MSG) for Health and Community Care published a report following
the Review of Progress with Integration of Health and Social Care (February 2019). Within the
integrated finance and financial planning area the proposals include:
• Health Boards, Local Authorities and IJBs should have a joint understanding of their respective
financial positions as they relate to integration
• Delegated budgets for IJBs must be agreed timeously
• Delegated hospital budgets and set aside requirements must be fully implemented
• Each IJB must develop a transparent and prudent reserves policy
• Statutory partners must ensure appropriate support is provided to IJB Section 95 officers
• IJBs must be empowered to use the totality of resources at their disposal to better meet the
needs of their local populations.
The Partnership has a responsibility, with our local hospital services at University Hospital
Crosshouse and University Hospital Ayr, for planning services that are mostly used in an
unscheduled way. The aim is to ensure that we work across the health and care system to deliver
the best, most effective care and support. Service areas most commonly associated with unplanned
use are included in the ‘Set Aside’ budget. Set Aside budgets relate to the strategic planning role
of the Partnership. Key areas within this budget are:
• Accident and emergency
• Inpatient services for general medicine
• Geriatric medicine
• Rehabilitation
• Respiratory
• Learning disability, psychiatry and palliative care services provided in hospital
Acute Services within NHS Ayrshire & Arran continue to face particular budget pressures around
the costs of covering a high level of medical vacancies and the increasing needs of patients
requiring nursing support above funded levels. There have been a high number of unfunded beds
in use to meet demands and this pressure has been managed in-year by NHS Ayrshire & Arran in
line with the Integration Scheme. The ability to plan with the overall resource for defined populations
and user groups and to use budgets flexibly is one of the hallmarks of integrated care. A national
Finance Development Group has been established to support implementation of the financial
aspects of health and social care integration legislation and associated guidance. It is recognised
that there is a need to understand the progress that is being made towards planning across the full
pathway of care, including the acute hospital component and the way in which the statutory
guidance on the use of delegated hospital budgets is being applied in practice.
Set Aside resources, as well as Lead Partnership / hosted services were recognised as areas
requiring further development as part of the review of the Integration Scheme carried out in 2017
and in the Strategic Planning, Commissioning and Delivery of Health and Social Care Services
within NHS Ayrshire & Arran report to the IJB on 13 June 2018. This report sets out arrangements
for the next steps in respect of ‘fair share’ commissioning within the NHS Ayrshire & Arran health
and social care system. The report also outlines future developments in respect of Directions as
per the model provided by the Public Works (Joint Working) Scotland Act 2014 for IJBs to
commission services from Councils and NHS Boards. Pan-Ayrshire workshops have been held
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
11
with representatives from the Scottish Government to take forward a national pilot project on ‘fair
share’ commissioning through the use of Directions. This national pilot will ensure that delegated
hospital budgets and Set Aside budget requirements will be fully implemented. The Ministerial
Strategic Group for Health and Community Care Review of Progress with Integration of Health and
Social Care report published February 2019 set this out as a key proposal under integrated
finances and financial planning requirements
In March 2017, the IJB approved the first Medium Term Financial Plan covering the period 2017-
2020. This is being refreshed and will be presented to the IJB during 2019 and will cover the period
2020-23. The Partnership will continue to face high levels of demand for services, however, it is
fundamental that services are commissioned within the resources made available building on the
good progress during 2018-19, this will be a high priority during 2019-20.
Availability of funding for public services correlates with economic growth, which continues to be
weak with continuing uncertainty on the impact of Brexit. The partnership is supporting the
continuing work within the Council and NHS Ayrshire & Arran to minimise the impact of Brexit. An
area of risk to the partnership is the consequence of the funding pass through from the Council
and NHS and the availability of workforce. These risks are included in the Council and NHS
planning for Brexit as they are the employing bodies and funded by the Scottish Government. The
implementation of new policy initiatives and the lifting of the public sector pay cap also Impact on
the funding available for core services and the flexibility to use resource in line with local
requirements.
The most significant risks faced by the IJB over the medium to longer term, alongside mitigation,
are summarised below.
Impact of budgetary
pressures
‘Mitigation
•Medium Term Financial Plan
•Strategic Plan
•Change Programme
•Active Demand Management
Delivery of the Change
Programme
‘Mitigation
•Transformation Board
•Programme Leads
•Strategic Planning Officers
Group (SPOG)
•Change Team Project
Management Support
L. _ _ _ _ _ — j
Culture and
practice
‘Mitigation
•Thinking Different, Doing
Better HSCP experience
•Multi Disciplinary Team
Approach
•Strategic Workforce Plan
These risks emphasise the importance of effective planning and management of resources. It Is
therefore crucial that we focus on early Intervention, prevention and recovery if we are to work
within the total delegated partnership budget.
To achieve its vision, the Partnership recognises it cannot work in isolation. The Partnership will
continue to strengthen relationships with colleagues within the Community Planning Partnership to
ensure a joint approach to improving the lives of local people.
Most Importantly, the Partnership must work closer with local people and maximise the use of
existing assets within communities to improve the overall health and wellbeing of people in North
Ayrshire.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
12
The planned Thinking Different, Doing Better sessions will focus on thinking differently about how
we support people more appropriately, moving away from a deficit-based approach to assessment
and care provision. By supporting people to think about resources and support they have available
and allowing statutory services to prioritise resources to support people who need it the most,
ensuring our resources are used equitably across the population of North Ayrshire.
2019-20 Budget
When setting the 2019-20 budget the intention was to bring a refreshed 3 year Medium Term
Financial Plan to the IJB for approval, this was not possible due to the protracted negotiations over
funding for 2019-20. The MTFP will be refreshed and brought to the IJB for approval later in 2019.
The Scottish Government finance settlement set out a number of conditions and requirements for
Health Boards and Councils in relation to funding delegated to Integration Authorities. The
delegated funding from both North Ayrshire Council and NHS Ayrshire & Arran meets those
Scottish Government requirements. The requirements include:
• NHS payments to Integration Authorities for delegated health functions must deliver a real
terms uplift in baseline funding
• £120 million will be transferred from the Health Portfolio to the Local Authorities in-year for
investment in integration, including delivery of the Living Wage and uprating free personal
care, and school counselling services
• £40 million has been included directly In the Local Government settlement to support the
continued implementation of the Carers (Scotland) Act 2016 and extending free personal
care to under 65s
• Additional funding is to be an increase to 2018-19 recurrent spending and not substitutional,
and permitting further flexibility for Local Authorities to offset adult social care allocations by
up to £50m or 2.2% of adult social care allocations based on local need
• Mental Health Funding must be at least 1.8% higher than the recurring 2018-19, to be over
and above the new investment in Mental Health services to be distributed In-year
• The set aside arrangements support the Health and Social Care Medium Term Financial
Framework - reducing hospital utilisation variation
Moving into 2019-20, the Partnership is proactively working to provide safe and effective services
for the residents of North Ayrshire within the financial envelope. The IJB approved a one year
balanced budget for 2019-20 in March 2019, at that time there was a requirement to identify and
approve additional savings of £6.1 m, as noted in the budget gap summary below:
r
1
Sociai Care
(NAC)
£m
Heaith
(NHS A&A)
£m
Totai
£m
Funding Increase
1.389
2.319
3.708
Funded Pressures
(5.093)
(2.561)
(7.654)
Budget Gap
(3.704)
(0.242)
(3.946)
Add historic CRES
-
(2.188)
(2.188)
TOTAL Savings Required
(3.704)
(2.430)
(6.134)
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
13
The Integration Joint Board in common with most Public Sector bodies is facing a period of
significant financial challenge, with cost and demand pressures expected to outstrip any funding
uplifts.
There are a number of highlighted financial risk areas that may impact on the 2019-20 budget
during the year, these include:
• High risk areas of low volume / high cost services areas e.g. Learning Disability care
packages, children’s residential placements, complex care packages
• Progress with the work to develop set aside arrangements and the risk sharing
arrangements agreed as part of this
• Mitigating the costs and impact of specific unfunded pressures where there is uncertainty
over the value of the impact
• Implementation costs of the Scottish Government policy directives, for example Free
Personal Care for under 65’s
• Potential re-grading of posts due to erosion of grade differentials
• Lead / hosted service arrangements, including managing pressures and reporting this
across the 3 IJBs
• The impact on Lead partnership and acute services from decisions taken by other Ayrshire
areas.
These risks will be monitoring during 2019-20 and financial impact reported through the financial
monitoring report.
The Transformation Board meets monthly to oversee the change programme, the group is
solutions focussed with a view to identifying and implementing actions to get any off track plans
back on target. The planned 2019-20 transformation and savings plans have been reviewed and
the change team resource has been aligned to the delivery of these plans and these will be
monitored through the Transformation Board.
Moving forward the plan for 2019-20 is to ensure the following actions are implemented:
• Continuation of the Transformation Board to review and challenge progress with the
transformation programme
• All savings to be delivered per the agreed timetable to realise appropriate savings for
2019-20 and beyond - delivery of Transformation Programme
• Refresh of the Medium Term Financial Plan (MTFP)
• Work on directions, set aside, formalise commissioning arrangements etc
Conclusion
The fourth year as an integrated Health and Social Care Partnership has seen significant progress
towards achieving financial balance and overall service sustainability. The IJB has a deficit of
£5.139m (2017-18 reduced to £5.807m) as it moves into 2019-20. There is a repayment plan to
allow the deficit to be recovered over the medium term to support the financial sustainability of the
Partnership.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
14
The IJB recognises it must deliver services within its financial envelope for 2019-20 and our
transformation programme will continue with delivery of the savings plan and service redesign.
There is a focus on the integration of services to deliver real change to the way services are being
delivered, with a realism that continuing to deliver services in the same way is no longer sustainable
and changes need to be made in the way services are accessed and provided. The scale and
pace of change requires to be accelerated, the financial challenges drive the pace of change,
however the requirement to change and re-design services to improve outcomes for individuals
would exist despite the financial pressures.
There is an expectation that within North Ayrshire the pattern of spend will change and there will
be a shift in the balance of care from institutional to community settings. The integration of health
and social care provides a unique opportunity to change the way services are delivered, it is an
opportunity to put people at the heart of the process, focussing on the outcomes they want by
operating as a single health and social care service.
The IJB through the Strategic Plan outlines the belief that together we can transform health and
social care services to achieve the joint vision for the future “all people who live in North Ayrshire
are able to have a safe, healthy and active life”. Moving into 2019-20, we are working proactively
to address the financial challenges, while at the same time, providing high-quality and sustainable
health and social care services for the communities in North Ayrshire.
Where to find more information
If you would like more information on IJB strategies, plans and policies and our performance and
spending, please refer to the Partnership’s website www.nahscp.orq
Stephen Brown
Chief Officer
29 August 2019
Cllr Robert Foster
IJB Chair
29 August 2019
Caroline Whyte
Chief Finance Officer
29 August 2019
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
15
Statement of responsibilities
Responsibilities of the IJB
The IJB is required to:
• Make arrangements for the proper administration of its financial affairs and to secure that
the proper officer of the board has responsibility for the administration of those affairs
(section 95 of the Local Government (Scotland) Act 1973). In this authority, that officer is
the chief finance officer
• Manage its affairs to secure economic, efficient and effective use of resources and
safeguard its assets
• Ensure the annual financial statements are prepared in accordance with legislation (The
Local Authority Accounts (Scotland) Regulations 2014), and so far as is compatible with that
legislation, in accordance with proper accounting practices (section 12 of the Local
Government in Scotland act 2003)
• Approve the Annual Accounts for signature
I confirm that the audited annual financial statements were approved for signature at a meeting of
the IJB on 29 August 2019.
Robert Foster
IJB Chair
29 August
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
16
Responsibilities of the Chief Finance Officer
The Chief Finance Officer is responsible for the preparation of the IJB’s Annual Accounts in
accordance with proper practices as required by legislation and as set out in the CIPFA/LASAAC
Code of Practice on Local Authority Accounting in the United Kingdom (the Accounting Code).
In preparing the annual accounts, the Chief Finance Officer has:
• Selected suitable accounting policies and then applied them consistently
• Made judgements and estimates that were reasonable and prudent
• Complied with legislation
• Complied with the local authority Code (in so far as it is compatible with legislation)
The Chief Finance Officer is also required to:
• Keep proper accounting records which are up to date
• Take reasonable steps to ensure the propriety and regularity of the finances of the
Integration Joint Board
I certify that the financial statements give a true and fair view of the financial position of the North
Ayrshire Integration Joint Board as at 31 March 2019, and its income and expenditure for the year
then ended.
Caroline Whyte
Chief Finance Officer
29 August 2019
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
17
Annual governance statement
The Annual Governance Statement explains how North
Ayrshire IJB compiies with the Code of Corporate Governance
and meets the requirements of the CIPFA / SOLACE
Framework ‘Delivering Good Governance in Local Government
2016’ and the ‘Code of Practice for Local Authority Accounting
in the UK: A Statement of Recommended Practice’, in relation
to the Statement on the System of Internai Financiai Controi.
Scope of responsibility
North Ayrshire IJB is responsibie for ensuring
that its business is conducted in accordance
with the iaw and proper standards, and that
public money is safeguarded and properiy
accounted for and used economicaiiy,
efficiently and effectively.
The IJB is also responsible for putting in place
proper arrangements for the governance of its
affairs and facilitating the effective exercise of
its functions, which includes arrangements for
the management of risk.
Purpose of the governance
framework
The governance framework comprises the
systems and processes, and culture and
values by which the IJB is directed and
controlled and the activities through which it
accounts to and engages with the community.
It enables the IJB to monitor the achievement
of its strategic priorities and to consider
whether those priorities have led to the
delivery of appropriate, cost-effective services.
In discharging this responsibiiity, the Chief
Officer has put in piace arrangements for
governance which includes the system of
internal control. Reliance is piaced on these
controls which are designed to manage risk to
a reasonable level but cannot eliminate the
risk of faiiure to achieve policies, aims and
objectives. It can therefore only provide
reasonabie but not absoiute assurance of
effectiveness.
The system of internai control is a significant
part of that framework and is designed to
manage risk to a reasonabie ievel. The system
of internal control is based on an ongoing
process designed to identify and prioritise the
risks to the achievement of North Ayrshire
IJB’s poiicies, aims and objectives, to evaiuate
the iikeiihood of those risks being reaiised and
the impact should they be realised, and to
manage them efficiently, effectively and
economically.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
18
Governance framework
The main features of the governance
framework that was in place during 2018-19
are summarised below:
• The IJB, comprising all IJB Board
members, was the key decision-making
body. The Performance and Audit
Committee considered all matters in
relation to Internal and External Audit,
Risk Management and Performance
• Strategic decision-making is governed by
the IJB’s key constitutional documents
including the Integration Scheme,
standing orders, scheme of
administration, scheme of delegation to
officers and financial regulations
• The Integration Scheme sets out the
process to determine financial
contributions by partners to Integration
Joint Boards. This has been
supplemented by directives from the
Scottish Government in relation to
additional resources for Health and Social
Care Integration
• The IJB’s purpose and vision are outlined
in the IJB Strategic Plan which links
closely to the vision of the North Ayrshire
Community Planning Partnership and the
Local Outcome Improvement Plan (LOIP)
and is underpinned by an annual action
plan and performance indicators. Work
was carried out to refresh the Strategic
Plan and this was approved by the IJB in
April 2018. Regular progress reports on
the delivery of the Strategic Plan were
provided to the Performance and Audit
Committee and the IJB
• The Performance Management Strategy
focuses very firmly on embedding a
performance management culture
throughout the IJB. Regular reporting to
Board Members takes place
• A risk management strategy and strategic
risk register is in place for the IJB.
• A Health and Care Governance Framework
was agreed by the IJB on 9 March 2017.
This covers governance arrangements in
relation to complaints and customer
feedback, risk management, health and
safety, Internal Audit, workforce planning
and public protection. Regular updates are
provided to the IJB by the Health and Care
Governance Group.
• The IJB has adopted a ‘Code of Conduct’
for all of its Board Members and employees,
a register of interests is in place for all Board
members and senior officers
• The IJB has in place a development
programme for all Board Members, the
Partnership Senior Management Team and
senior managers across the Partnership.
Performance and Personal Development
(PPD) schemes are in place for all staff, the
aim of which is to focus all staff on their
performance and development that
contributes towards achieving service
objectives
• The IJB has established six locality
planning forums, reflecting the previously
agreed local planning areas. These provide
Board Members, health and social care
staff and local community representatives
with the opportunity to be involved in
considering and influencing priorities for
each area
• A Transformation programme is in place,
covering four main themes of building
teams around children, developing a wider
range of primary care services, supporting
older people and people with complex care
needs and creating mental health and
learning disability services to better support
people to stay well. A Transformation Board
has oversight of the programme.
The governance framework was in place
during the year ended 31 March 2019.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
19
System of internal financial
control
The governance framework described
operates on the foundation of internal controls.
The system of internal financial control is
based on a framework of regular management
information, financial regulations,
administrative procedures (including
segregation of duties), management
supervision, and a system of delegation and
accountability. Development and maintenance
of these systems is supported by NHS
Ayrshire & Arran and North Ayrshire Council in
relation to the operational delivery of health
and social care services. In particular, these
systems include:
• Financial regulations and codes of
financial practice
• Comprehensive budgeting systems
• Regular reviews of periodic and annual
financial reports that indicate financial
performance against the forecasts
• Setting targets to measure financial and
other performance
• Formal project management disciplines
• The establishment of a Transformation
Board to provide further scrutiny of
service re-design and financial delivery
• An effective Internal Audit function
The IJB’s financial management
arrangements conform to the governance
requirements of the CIPFA statement: ‘The
Role of the Chief Finance Officer in Local
Government (2014)’.
Membership of IJB
The following new appointments were made:
• Chair, Kilwinning Locality Forum
• Vice Chair, Performance and Audit
Committee
• Section 95 Officer
Review of effectiveness
North Ayrshire IJB has responsibility for
conducting, at least annually, a review of the
effectiveness of its governance framework
including the system of internal control. The
review of the effectiveness of the framework is
informed by the work of the Partnership Senior
Management Team who have responsibility
for development and maintenance of the
governance environment, the annual report by
the Chief Internal Auditor and reports from
Audit Scotland and other review agencies.
The Chief Internal Auditor reports directly to
the IJB Performance and Audit Committee on
all audit matters, with the right of access to the
Chief Officer, Chief Finance Officer and Chair
of the Performance and Audit Committee on
any matter. In accordance with the principles
of the code of corporate governance, regular
reports were made to the IJB’s Performance
and Audit Committee during 2018-19.
The internal audit function has independent
responsibility for examining, evaluating and
reporting on the adequacy of internal control.
During 2018-19, the partnership operated in
accordance with relevant professional audit
standards and the Public Sector Internal Audit
Standards.
The Chief Internal Auditor is responsible for
forming an annual opinion on the adequacy
and effectiveness of the systems of internal
control.
It is the opinion of the Chief Internal Auditor
that the systems of internal control relied upon
by the IJB continue to provide reasonable
assurance against loss.
New reporting responsibilities were placed
on IJBs by the Public Bodies (Joint Working)
(Scotland) Act 2014, during 2018:
• Model Publication Scheme
Freedom of Information (Scotland) Act
2002 (FOISA) requires Scottish public
authorities to produce and maintain a
publication scheme. The Scottish
Information Commissioner wrote to all
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
20
IJBs (Nov 2018) asking for key changes to
be included in their updated schemes.
This was updated in 2018.
• Records Management Plan
Public Records (Scotland) Act 2011
requires named authorities to prepare a
Records Management Plan (RMP). North
Ayrshire IJB is a named authority under
the Act. The Records Management Plan
for North Ayrshire IJB was agreed by the
IJB in February 2019.
Annual Performance Report
The IJB endorsed the Annual Performance
Report at the meeting in November 2018. This
report, highlighted IJB’s operations in 2017-
18, outlined the good performance of the
Health and Social Care Partnership and how it
delivered against the strategic priorities and
the national outcomes. The 2018-19 report
was published in July 2019.
Carer’s (Scotland) Act 2016
Integration Schemes were amended in 2018
to reflect requirements of Carers (Scotland)
Act 2016. The revised Integration Schemes for
East Ayrshire, North Ayrshire and South
Ayrshire IJBs were submitted to Scottish
Government in March 2018 and approved by
the Cabinet Secretary on 3 April.
Terms of Reference
Terms of Reference were reviewed and
amended for the undernoted governance
groups of the IJB during 2018-19:
• Locality Partnership Forums
• Strategic Planning Group
• Performance and Audit Committee
Transformation Board
Last year’s Governance Statement stated that
the Change Programme Board should
establish more robust arrangements to secure
change and transformation at scale and pace.
A review in 2018 led to the creation of a
Transformation Board with a smaller, more
strategic membership, a focussed Terms of
Reference and streamlined governance
arrangements. The first meeting was held in
August 2018.
Review of Progress with Integration of
Heaith and Social Care
The Ministerial Strategic Group’s (MSG) final
report relating to the review of progress with
integration of health and social care was
submitted to IJB on 14 February 2019. North
Ayrshire HSCP will benchmark and evaluate
their position against the 25 proposals outlined
in the report and the Audit Scotland report, and
produce an action plan to be presented to the
IJB during 2019. To ensure compatibility with
other self-evaluations, the Scottish
Government issued a template for completion,
following IJB approval this has been submitted
to the Scottish Government and progress with
the identified actions will be reported through
the Performance and Audit Committee and
IJB.
Chief Finance and Transformation Officer
During 2017-18, a new full-time post of
Chief Finance and Transformation Officer was
created to assist with the monitoring of
financial performance and to drive
transformational change in support of the
future financial challenge. This post was
recruited to on a permanent basis in
2018-19.
The elements noted above incorporate
progress with the further actions or
developments identified in the 2017-18 Annual
Accounts, all of those actions were delivered
as planned during 2018-19.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
21
Further actions
The IJB has identified the following actions for 2019-20 that will assist with the further strengthening
of corporate governance arrangements:
• Implement the actions identified through the self-evaluation in relation to the review of
progress with integration
• Develop a framework through which the IJB can demonstrate compliance with its statutory
duty to secure Best Value
• Support the Pan-Ayrshire work on developing Directions for Lead Partnership services
• Develop commissioning plans and Directions in relation to the acute set-aside resources
• Develop Risk Management arrangements, including an agreed risk appetite statement
• Put in place a plan to review, on a rolling basis, IJB key governance documents, including for
example Standing Orders, Scheme of Delegation and Financial Regulations.
• Further develop the capacity and support Locality Planning Forums to establish and
implement locality plans
Assurance
Subject to the above, and on the basis of the assurances provided, we consider the governance
and internal control environment operating during 2018-19 to provide reasonable and objective
assurance that any significant risks impacting on the achievement of our actions will be identified
and actions taken to avoid or mitigate their impact.
Systems are in place to continually review and improve the governance and internal control
environment and action plans are in place to address identified areas for improvement.
The Annual Governance Statement explains how North Ayrshire IJB complies with the Code of
Corporate Governance and meets the requirements of the CIPFA / SOLACE Framework ‘Delivering
Good Governance in Local Government 2016’ and the ‘Code of Practice for Local Authority
Accounting in the UK: A Statement of Recommended Practice’, in relation to the Statement on the
System of Internal Financial Control.
Stephen Brown
Chief Officer
29 August 2019
Cllr Robert Foster
IJB Chair
29 August 2019
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
22
Remuneration report
This remuneration report is provided in accordance with the
Local Authority Accounts (Scotland) Regulations 2014. It
discloses information relating to the remuneration and
pension benefits of specified IJB members and staff.
The information in the tables below is subject to external
audit. The explanatory text in the Remuneration Report is
reviewed by the external auditor to ensure it is consistent
with the financial statements.
Remuneration: IJB Chair and Vice Chair
The IJB comprises eight voting members appointed through nomination in equal numbers by NHS
Ayrshire & Arran and North Ayrshire Council. A Chair and Vice Chair are appointed in accordance
with the Integration Scheme and the Public Bodies (Joint Working) (Integration Joint Boards)
(Scotland) Order 2014. As required in Article 4 of the Order the nomination of the IJB Chair and
Vice Chair post holders alternates between a Council and Health Board representative, with the
Vice Chair appointment by the constituent authority who did not appoint the Chair.
The IJB does not provide any additional remuneration to the Chair, Vice Chair or any other board
members relating to their role on the IJB. The IJB does not reimburse the relevant partner
organisations for any voting board member costs borne by the partner. There were no taxable
expenses paid by the IJB. Therefore no remuneration disclosures are provided for the Chair or Vice
Chair.
The IJB does not have responsibilities, either in the current year or in future years, for funding any
pension entitlements of voting IJB members. Therefore no pension rights disclosures are provided
for the Chair or Vice Chair.
Remuneration: Senior Officers of the IJB
The IJB does not directly employ any staff in its own right, however specific post-holding officers are
non-voting members of the Integration Joint Board.
Chief Officer
The appointment of an Integration Joint Board Chief Officer is required by section 10 of the Public
Bodies (Joint Working) (Scotland) Act 2014 which includes the statement “an Integration Joint Board
is to appoint, as a member of staff, a chief officer”. The Chief Officer for the IJB has to be appointed
and the employing partner has to formally second the officer to the IJB. The employment contract
for the Chief Officer adheres to the legislative and regulatory framework of the employing partner
organisation. The remuneration terms of the Chief Officer’s employment are approved by the IJB.
Other Officers
No other staff are appointed by the IJB under a similar legal regime. Other non-voting board
members who meet the criteria for disclosure are included in the disclosures below.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
23
Total
remuneration
2017-18
Name and post title
Salary, fees
and
allowances
Taxable
expenses
Total
remuneration
2018-19
£
£
£
£
106,906
Stephen Brown,
Chief Officer
108,506
0
108,506
0
Caroline Whyte,
59,336
0
59,336
Chief Finance Officer
3,479*
Margaret Hogg,
Chief Finance Officer
0
0
0
* This relates solely to the post of Chief Finance Officer. Margaret Hogg was remunerated separately by North
Ayrshire Council for the post of Head of Finance.
In respect of officers’ pension benefits the statutory liability for any future contributions to be made
rests with the reievant empioying partner organisation. On this basis there is no pensions liability
reflected on the IJB balance sheet for the Chief Officer or any other officers.
The IJB however has responsibility for funding the employer contributions for the current year in
respect of the officer time spent on fuifiiling the responsibilities of their roie on the IJB. The following
tabie shows the IJB’s funding during the year to support officers’ pension benefits. The tabie aiso
shows the total value of accrued pension benefits which may include benefits earned in other
empioyment positions and from each officer’s own contributions.
r
In Year pension
contributions
Accrued
pension benefits
“ 1
Year to
31/3/18
£
Year to
31/3/19
£
Difference
from
31/3/18
as at
31/3/19
Stephen Brown,
0
0
Pension
0
0
Chief Officer from April 2017 to March
Lump Sum
0
0
2019
Caroline Whyte, Chief Finance Officer
0
11,412
Pension
n/a
1,207
from July 2018 to March 2019
Lump Sum
n/a
0
Margaret Hogg, Chief Finance Officer
0
0
Pension
n/a
n/a
from April 2016 to December 2017
Lump Sum
n/a
n/a
Disclosure by pay bands
As required by the reguiations, the foiiowing tabie shows the number of persons whose
remuneration for the year was £50,000 or above, in bands of £5,000.
Number of employees in band
Remuneration band
Number of employees in band
2017-18
2018-19
1
£105,000-£109,999
1
-
£55,000 - £59,999
1
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
24
Exit packages
There were no exit packages during 2017—18 or 2018-19.
Stephen Brown
Chief Officer
Cllr Robert Foster
IJB Chair
29 August 2019
29 August 2019
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
25
Financial statements
The Comprehensive Income and Expenditure Statement shows the cost of providing services
for the year according to accepted accounting practices.
2017-18
Net
Expenditure
£000
Gross
Expenditure
£000
2018-19
Gross
Income
£000
Net
Expenditure
£000
63,268
Community Care and Health
65,751
-
65,751
26,730
Mental Health
27,816
-
27,816
35,535
Children’s Services and Criminal Justice
35,300
-
35,300
49,518
Primary Care
48,839
-
48,839
5,566
Management and Support Costs
6,306
-
6,306
3,430
Change Programme
2,156
-
2,156
-
Allied Health Professionals
4,588
-
4,588
76,665
Lead Partnership and Set Aside
77,455
-
77,455
260,712
Cost of Services
268,211
-
268,211
(89,346)
North Ayrshire Council Funding
-
(95,169)
(95,169)
(168,804)
NHS Ayrshire & Arran Funding
-
(173,987)
(173,987)
(258,150)
Totai Taxation And Non-Specific Grant
Income (note 5)
(269,156)
(269,156)
2,562
(Surplus) or Deficit on Provision of
Services
268,211
(269,156)
(945)
There are no statutory or presentation adjustments which affect the IJB’s application of the funding
received from partners. The movement in the General Fund balance Is therefore solely due to the
transactions shown in the Comprehensive Income and Expenditure Statement. Consequently an
Expenditure and Funding Analysis is not provided in these annual financial statements.
The Movement in Reserves Statement shows the movement in the year on the reserves held by
the IJB. The movements which arise due to statutory adjustments which affect the General Fund
balance are separately identified from the movements due to accounting practices. In 2018-19 there
were no statutory adjustments.
Total
Reserves
2017-18
Movement in reserves
General
Fund
Balance
2018-19
Unusable
Reserves
2018-19
Total
Reserves
2018-19
(3,245)
Opening balance as at 1 April
(5,807)
0
(5,807)
(2,562)
Total Comprehensive Income and Expenditure
945
0
945
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
26
0
Adjustments between accounting basis and funding
basis under regulations
0
0
0
(2,562)
Increase or (decrease) in year
945
0
945
(5,807)
Closing Balance as at 31 March
(4,862)
0
(4,862)
The Balance Sheet shows the value of the IJB’s assets and liabilities as at the balance sheet date.
The net assets of the IJB (assets less liabilities) are matched by the reserves held by the IJB.
31 March 2018
£000
Notes
31 March 2019
£000
0
Short Term Debtors
6
277
(5,807)
Long Term Creditors
7
(5,139)
(5,807)
Net Assets
(4,862)
(5,807)
Usable Reserve: General Fund
8
(4,862)
(5,807)
Total Reserves
(4,862)
The Statement of Accounts present a true and fair view of the financial position of the Integration
Joint Board as at 31 March 2019 and its income and expenditure for the year then ended.
The unaudited financial statements were authorised for issue on 27 June 2019 and the audited
financial statements will be authorised for issue on 29 August 2019.
Caroline Whyte
Chief Finance Officer
29 August 2019
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
27
Notes to the financial statements
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
General principles
The Financial Statements summarise the authority’s transactions for the 2018-19 financial year and
its position at the year-end as at 31 March 2019.
The North Ayrshire IJB was established under the requirements of the Public Bodies (Joint Working)
(Scotland) Act 2014 and is a Section 106 body as defined in the Local Government (Scotland) Act
1973.
The Financial Statements are therefore prepared in compliance with the Code of Practice on Local
Authority Accounting in the United Kingdom 2018-19, supported by International Financial
Reporting Standards (IFRS), unless legislation or statutory guidance requires different treatment.
The annual accounts are prepared on a going concern basis, which assumes that the IJB will
continue In operational existence for the foreseeable future. Whilst the financial statements show
an overall negative balance sheet position the Integration Scheme outlines the partnership
arrangement between the Council and Health Board and the requirements for those organisations
to underwrite the financial position of the IJB.
The historical cost convention has been adopted.
Accruals of expenditure and Income
Activity is accounted for in the year that it takes place, not simply when cash payments are made or
received. In particular:
• Expenditure is recognised when goods or services are received and their benefits are used by
the IJB.
• Income Is recognised when the IJB has a right to the income, for instance by meeting any
terms and conditions required to earn the income, and receipt of the income is probable.
• Where income and expenditure have been recognised but settlement In cash has not taken
place, a debtor or creditor is recorded in the Balance Sheet.
• Where debts may not be received, the balance of debtors is written down.
For the Integration Joint Board financial statements a debtor and/or creditor will be recorded where
the partner contributions differ from the actual net expenditure in year, this allows any surplus or
deficit on the provision of services to be transferred to the reserves held by the Integration Joint
Board.
Funding
The IJB Is primarily funded through contributions from the statutory funding partners. North Ayrshire
Council and NHS Ayrshire & Arran. Expenditure is incurred as the IJB commissions specified health
and social care services from the funding partners for the benefit of service recipients in North
Ayrshire.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
28
Cash and cash equivalents
The IJB does not operate a bank account or hold cash. Transactions are settled on behalf of the IJB
by the funding partners. Consequently the IJB does not present a ‘Cash and Cash Equivalent’ figure
on the balance sheet. The funding balance due to or from each funding partner as at 31 March is
represented as a debtor or creditor on the IJB’s Balance Sheet.
Employee benefits
The IJB does not directly employ staff. Staff are employed by the funding partners who retain the
liability for pension benefits payable in the future. The IJB therefore does not present a Pensions
Liability on its Balance Sheet.
The IJB has a legal responsibility to appoint a Chief Officer. More details on the arrangements are
provided in the Remuneration Report. The charges from the employing partner are treated as
employee costs. Where material the Chief Officer’s absence entitlement at 31 March is accrued,
for example in relation to annual leave earned but not yet taken.
Reserves
The Integration Joint Board’s reserves are classified as either Usable or Unusable Reserves. The
IJB’s only Usable Reserve is the General Fund. The balance of the General Fund as at 31 March
shows the extent of resources which the IJB can use in later years to support service provision.
The IJB’s only Unusable Reserve is the Employee Statutory Adjustment Account. This is required
by legislation. It defers the charge to the General Fund for the Chief Officer’s absence entitlement
as at 31 March, for example any annual leave earned but not yet taken. The General Fund is only
charged for this when the leave is taken, normally during the next financial year.
Indemnity insurance
The IJB has indemnity insurance for costs relating primarily to potential claim liabilities regarding
Board member and officer responsibilities. NHS Ayrshire & Arran and North Ayrshire Council have
responsibility for claims in respect of the services that they are statutorily responsible for and that
they provide.
Unlike NHS Ayrshire & Arran, the IJB does not have any ‘shared risk’ exposure from participation in
CNORIS (Clinical Negligence and Other Risks Indemnity Scheme). The IJB participation in the
CNORIS scheme is therefore equivalent to normal insurance arrangements.
Known claims are assessed as to the value and probability of settlement. Where it is material the
overall expected value of known claims taking probability of settlement into consideration, is
provided for in the IJB’s Balance Sheet.
The likelihood of receipt of an insurance settlement to cover any claims is separately assessed and,
where material, presented as either a debtor or disclosed as a contingent asset.
VAT Status
The IJB is a non-taxable body and does not charge or recover VAT on its functions.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
29
NOTE 2 - CRITICAL JUDGEMENTS AND ESTIMATION UNCERTAINTY
The critical judgements made in the Financial Statements relating to complex transactions are:
• On behalf of all IJBs within the NHS Ayrshire & Arran area, the IJB acts as the lead partner for
Mental Health Services. It commissions services on behalf of the three Ayrshire IJBs and
reclaims the costs involved. This arrangement is treated as an agency arrangement. In the
absence of an alternative agreement or approach being outlined in the Integration Scheme,
the recharges across the partnerships for lead services are based on an NRAC share of costs,
this may not reflect the actual cost of delivering services to the population in the three areas.
• In applying the accounting policies, the IJB has had to make a critical judgement relating to the
values included for Set Aside services. The Set Aside figure included in the IJB accounts is
based upon Information Services Division Scotland (ISD) 2017-18 activity data at 2016-17
prices with a 1% uplift applied. As such, the Set Aside sum included in the accounts will not
reflect actual hospital usage in 2018-19.
• There are no material estimation uncertainties included within the Financial Statements.
NOTE 3 - EVENTS AFTER THE REPORTING PERIOD
The audited annual financial statements will be authorised for issue by the Chief Finance Officer on
29 August 2019. Events taking place after this date are not reflected in the financial statements or
notes.
Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur
between the end of the reporting period and the date when the Annual Accounts are authorised for
issue. Two types of events can be identified:
• Those that provide evidence of conditions that existed at the end of the reporting period - the
financial statements are adjusted to reflect such events
• Those that are indicative of conditions that arose after the reporting period - the financial
statements are not adjusted to reflect for such events, but where a category of events would
have a material impact disclosure is made in the notes of the nature of the events and their
estimated financial effect.
There are no events to report after the reporting period end.
NOTE 4 - EXPENDITURE AND INCOME ANALYSIS BY NATURE
2018-19
£000’s
114,099
Services commissioned from North Ayrshire Council
117,023
146,589
Services commissioned from NHS Ayrshire & Arran
151,163
24
Auditor Fee: External Audit Work
25
(258,150)
Partners Funding Contributions and Non-Specific Grant Income
(269,156)
(2,562)
(Deficit) / Surpius on the Provision of Services
945
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
30
NOTE 5 - TAXATION AND NON-SPECIFIC GRANT INCOME
2017-18
2018 - 19
(89,346) Funding Contribution from North Ayrshire Council
£000’s
(95,169)
(168,804) Funding Contribution from NHS Ayrshire & Arran
(173,987)
(258,150) Taxation and Non-specific Grant Income
(269,156)
The funding contributions from the partners shown above exclude any funding which is ring-fenced
for the provision of specific services. Such ring-fenced funding is presented as income in the Cost
of Services in the Comprehensive Income and Expenditure Statement. There was no ring-fenced
funding in 2017-18 or 2018-19.
The funding contribution from NHS Ayrshire & Arran shown above includes £30.114m (2017-18
£28.055m) in respect of ‘set aside’ resources reiating to acute hospital and other resources. These
are provided by the NHS which retains responsibiiity for managing the costs of providing the
services. The IJB however has responsibility for the consumption of, and ievel of demand piaced
on, these resources.
NOTE 6 - DEBTORS
North Ayrshire Council
0
NHS Ayrshire & Arran
146
0
Total Debtors
277
Amounts owed to the funding partners are stated on a net basis. Debtor and Creditor baiances
recognised by the funding partners but not yet settled in cash terms are offset against the funds they
are hoiding on behaif of the Integration Joint Board.
NOTE 7 - CREDITORS
31 March 2018
31 March 2019
£000’s
£000’s
(5,807)
North Ayrshire Council
(5,139)
0
NHS Ayrshire & Arran
0
(5,807)
Total Creditors
(5,139)
Amounts owed to the funding partners are stated on a net basis. Debtor and Creditor baiances
recognised by the funding partners but not yet settied in cash terms are offset against the funds they
are hoiding on behaif of the Integration Joint Board.
The Debtor baiances recognised on the Baiance Sheet represent the vaiue of reserves held by
partners supporting the earmarked element of the General Fund balance. The remaining balance
of the surplus on the provision of services is offset against the Creditor in reiation to the outstanding
debt to North Ayrshire Councii. This is in line with the amounts owed to funding partners being
stated on a net basis irrespective of settlement in cash terms.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
31
This position is summarised below:
Funding Partner
Surplus on provision
of services
£000’s
Earmarked Balance
£000’s
Uncommitted Surplus
£000’s
North Ayrshire Council
389
(131)
258
NHS Ayrshire & Arran
556
(146)
410
Total
945
(277)
668
NOTE 8 - USABLE RESERVE: GENERAL FUND
The IJB holds a balance on the General Fund which will normally comprise one of three elements:
• As a working balance to help cushion the impact of uneven cash flows.
• As a contingency to manage the impact of unexpected events or emergencies.
• As a means of building up funds, often referred to as earmarked reserve, to meet known or
predicted liabilities.
The table below shows the movements on the General Fund balance, analysed between those
elements earmarked for specific planned expenditure and the amount held in unallocated reserves.
Action 15 and the Primary Care Improvement Fund (PCIF) are Scottish Government allocations
which require to be carried forward for use in future years.
The IJB has an overall negative reserves position with the unallocated balance representing the
balance of payment due to North Ayrshire to repay the debt due for previous year deficits, the
movement in this balance represents the repayment made during 2018-19.
2017-18
2018-19
Transfers
Out
2017-18
Transfers
In 2017-18
Balance at
31 March
2018
Transfers
Out
2018-19
Transfers
In 2018-19
Balance at
31 March
2019
Earmarked
Funds
0
0
0
: Alcohol & Drug
Partnership
0
131
131
0
0
0
: Action 15
0
116
116
0
0
0
: PCIF
0
30
30
0
0
0
Total Earmarked
0
277
277
0
(2,562)
(5,807)
Unallocated
General Fund
0
668
(5,139)
0
(2,562)
(5,807)
General Fund
0
945
4,862
NOTE 9 - AGENCY INCOME AND EXPENDITURE
On behalf of all IJBs within the NFIS Ayrshire & Arran area, the IJB acts as the lead manager for
Mental Health Services and Children’s Services. It commissions services on behalf of the other IJBs
and reclaims the costs involved. The payments that are made on behalf of the other IJBs, and the
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
32
consequential reimbursement, are not included in the Comprehensive Income and Expenditure
Statement (CIES) since the IJB is not acting as principal in these transactions.
The amount of expenditure and income relating to the agency arrangement is shown below.
2017-18
2018 - 19
29,685
Expenditure on Agency Service
29,018
(29,685)
Reimbursement for Agency Services
(29,018)
Net Agency Expenditure Excluded from the CIES
NOTE 10 - RELATED PARTY TRANSACTIONS
The IJB has related party relationships with NHS Ayrshire & Arran and North Ayrshire Council. In
particular the nature of the partnership means that the IJB may influence, and be influenced by, its
partners. The following transactions and balances included in the IJB’s financial statements are
presented to provide additional information on the relationships.
2017-18
£000
Transactions with NHS Ayrshire & Arran
2018-19
£000
(168,804)
Funding Contributions received from NHS Board
(173,987)
0
Service Income received from NHS Board
0
146,548
Expenditure on Services Provided by NHS Board
151,121
53
Key Management Personnel: Non-Voting Board Members
54
0
Support Services
0
(22,203)
Net Transactions with NHS Board
(22,812)
31 March 2018
£000
Balances with NHS Ayrshire & Arran
31 March 2019
£000
0
Debtor Balances: Amounts due from NHS Board
146
0
Creditor Balances: Amounts due to NHS Board
0
0
Net Balances with NHS Board
146
2017-18
£000
Transactions with North Ayrshire Council
2018-19
£000
(89,346)
Funding Contributions received from the Council
(95,169)
0
Service Income received from the Council
0
114,058
Expenditure on Services Provided by the Council
116,981
53
Key Management Personnel: Non-Voting Board Members
55
0
Support Services
0
24,765
Net Transactions with the Council
21,867
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
33
31 March 2018
£000
Balances with North Ayrshire Councii
31 March 2019
£000
0
Debtor Balances: Amounts due from the Council
131
(5,807)
Creditor Balances: Amounts due to the Council
(5,139)
(5,807)
Net Balances with the Council
(5,008)
There are key management personnel employed by NHS Ayrshire & Arran and North Ayrshire
Council, these costs are included in the expenditure on services provided. The non-voting Board
members employed by the Council and Health Board include the Chief Officer, Chief Finance
Officer, Chief Social Work Officer, representatives of primary care, nursing and non-primary care
services; and a staff representative. Details of the remuneration for some specific post-holders is
provided in the Remuneration Report.
Support services were not delegated to the Integration Joint Board through the Integration Scheme
and are instead provided by NHS Ayrshire & Arran and North Ayrshire Council free of charge as
‘services in kind’. These include services such as financial management, human resources, legal
services, committee services, ICT, payroll, internal audit and accommodation.
NOTE 11 - VAT
VAT payable is included as an expense only to the extent that it is not recoverable from Her
Majesty’s Revenue and Customs. VAT receivable is excluded from income.
The VAT treatment of expenditure in the IJB’s financial statements depends on which of the partner
agencies is providing the service as these agencies are treated differently for VAT purposes.
Where the Council is the provider, income and expenditure excludes any amounts related to VAT,
as all VAT collected is payable to H.M. Revenue and Customs and all VAT paid is recoverable from
it. The Council is not entitled to fully recover VAT paid on a very limited number of items of
expenditure and for these items the cost of VAT paid is included within service expenditure to the
extent that it is irrecoverable from H.M. Revenue and Customs.
Where the NHS is the provider, expenditure incurred will include irrecoverable VAT as generally the
NHS cannot recover VAT paid as input tax and will seek to recover its full cost as income from the
Commissioning IJB.
NOTE 12 - ACCOUNTING STANDARDS ISSUED NOT YET ADOPTED
The Code requires the disclosure of information about accounting changes that will be required by
new accounting standards that has been issued but not yet adopted. The IJB considers that there
are no such standards which would have an impact on the 2018-19 financial statements.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
34
Independent auditor’s report
Independent auditor’s report to the members of North Ayrshire Integration Joint Board and the
Accounts Commission
Report on the audit of the financial statements
Opinion on financiai statements
We certify that we have audited the financial statements in the annual accounts of North Ayrshire
Integration Joint Board for the year ended 31 March 2019 under Part VII of the Local Government
(Scotland) Act 1973. The financial statements comprise the Comprehensive Income and Expenditure
Statement, Movement in Reserves Statement, Balance Sheet and notes to the financial statements,
including a summary of significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union, and as interpreted and adapted by the Code of Practice on Local
Authority Accounting in the United Kingdom 2018/19 (the 2018/19 Code).
In our opinion the accompanying financial statements:
• give a true and fair view in accordance with applicable law and the 2018/19 Code of the state of
affairs of the North Ayrshire Integration Joint Board as at 31 March 2019 and of its income and
expenditure for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union, as
interpreted and adapted by the 2018/19 Code; and
• have been prepared in accordance with the requirements of the Local Government (Scotland) Act
1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in
Scotland Act 2003.
Basis for opinion
We conducted our audit in accordance with applicable law and International Standards on Auditing
(UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for
Scotland. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report. We were appointed by the
Accounts Commission on 31 May 2016. The period of total uninterrupted appointment is three years.
We are independent of the North Ayrshire Integration Joint Board in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK including the Financial
Reporting Council’s Ethical Standard, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not
provided to the North Ayrshire Integration Joint Board. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern basis of accounting
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require
us to report to you where:
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
35
• the use of the going concern basis of accounting in the preparation of the financial statements is
not appropriate; or
the Chief Finance Officer has not disclosed in the financial statements any identified material
uncertainties that may cast significant doubt about North Ayrshire Integration Joint Board’s ability to
continue to adopt the going concern basis of accounting for a period of at least twelve months from
the date when the financial statements are authorised for issue.
Risks of material misstatement
We have reported in a separate Annual Audit Report, which is available from the Audit Scotland
website , the most significant assessed risks of material misstatement that we identified and our
conclusions thereon.
Responsibilities of the Chief Finance Officer and North Ayrshire Integration Joint Board for the
financial statements
As explained more fully in the Statement of Responsibilities, the Chief Finance Officer is responsible
for the preparation of financial statements that give a true and fair view in accordance with the financial
reporting framework, and for such internal control as the Chief Finance Officer determines is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Chief Finance Officer is responsible for assessing the North
Ayrshire Integration Joint Board's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless deemed
inappropriate.
The North Ayrshire Integration Joint Board is responsible for overseeing the financial reporting
process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, intentional omissions, misrepresentations, or the override of
internal control. The capability of the audit to detect fraud and other irregularities depends on factors
such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of
collusion involved, the relative size of individual amounts manipulated, and the seniority of those
individuals involved. We therefore design and perform audit procedures which respond to the
assessed risks of material misstatement due to fraud.
A further description of the auditor’s responsibilities for the audit of the financial statements is located
on the Financial Reporting Council’s website www.frc.ora.uk/auditorsresponsibilities . This description
forms part of our auditor’s report.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
36
Other information in the annuai accounts
The Chief Finance Officer is responsible for the other information in the annual accounts. The other
information comprises the information other than the financial statements, the audited part of the
Remuneration Report, and our auditor’s report thereon. Our opinion on the financial statements does
not cover the other information and we do not express any form of assurance conclusion thereon
except on matters prescribed by the Accounts Commission to the extent explicitly stated later in this
report.
In connection with our audit of the financial statements, our responsibility is to read all the other
information in the annual accounts and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Report on other requirements
Opinions on matters prescribed by the Accounts Commission
In our opinion, the audited part of the Remuneration Report has been properly prepared in accordance
with The Local Authority Accounts (Scotland) Regulations 2014.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Management Commentary for the financial year for which the financial
statements are prepared is consistent with the financial statements and that report has been
prepared in accordance with statutory guidance issued under the Local Government in Scotland
Act 2003; and
• the information given in the Annual Governance Statement for the financial year for which the
financial statements are prepared is consistent with the financial statements and that report has
been prepared in accordance with the Delivering Good Governance in Local Government:
Framework (2016).
Matters on which we are required to report by exception
We are required by the Accounts Commission to report to you if, in our opinion:
• adequate accounting records have not been kept; or
• the financial statements and the audited part of the Remuneration Report are not in agreement with
the accounting records; or
• we have not received all the information and explanations we require for our audit; or
• there has been a failure to achieve a prescribed financial objective.
We have nothing to report in respect of these matters.
Conclusions on wider scope responsibilities
In addition to our responsibilities for the annual accounts, our conclusions on the wider scope
responsibilities specified in the Code of Audit Practice, including those in respect of Best Value, are set
out in our Annual Audit Report.
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
37
Use of our report
This report is made solely to the parties to whom it is addressed in accordance with Part VII of the
Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 120 of
the Code of Audit Practice, we do not undertake to have responsibilities to members or officers, in their
individual capacities, or to third parties.
Pat Kenny, CPFA (for and on behalf of Deloitte LLP)
110 Queen Street
Glasgow
G1 3BX
United Kingdom
29 August 2019
North Ayrshire Integration Joint Board Annual Accounts to 31 March 2019
38
This document is available in other formats such as audio tape, CDF, braille and
in large print. It can also be made available in other languages on request.
All of our publications are available in different languages, larger print, braille
(English only), audio tape or another format of your choice.
Comments or questions about this document, including request for support
information or documentation, should be made to:
North Ayrshire Health and Social Care Partnership,
Cunninghame House, Friars Croft, Irvine KA12 SEE
Follow us on Twitter (S)NAHSCP
For more information go to www.NAHSCP.org
Delivering care
together
North Ayrshire
Health and Social Care Partnership
Delivering care
together
DIRECTOR (North Ayrshire Health & Social Care Partnership): Stephen Brown
5'^ Floor West Wing, Cunninghame House, Friarscroft, Irvine KA12 SEE
Our Ref: PK/NAIJ B/2019
29 August 2019
Deloitte LLP
110 Queen Street
Glasgow
G1 3BX
Our Ref: PK/NAIJB/2019
Dear Sirs
This representation letter is provided in connection with your audit of the financial
statements of the North Ayrshire Integration Joint Board for the year ended 31 March
2019 for the purpose of expressing an opinion as to whether the financial statements
give a true and fair view of the financial position of the North Ayrshire Integration
Joint Board as of 31 March 2019 and of the results of its operations, other
comprehensive net expenditure and its cash flows for the year then ended in
accordance with the Code of Practice on Local Authority Accounting in the United
Kingdom (the Code).
In addition to the above, this representation letter is provided in connection with your
audit of the Management Commentary, Remuneration Report and Annual
Governance Statement for the following purposes:
• Expressing an opinion on the auditable part of the Remuneration Report as to
whether it has been properly prepared in accordance with The Local Authority
Accounts (Scotland) Regulations 2014;
• Expressing an opinion as to whether the information given in the Management
Commentary is consistent with the financial statements and that report has
been prepared in accordance with statutory guidance issued under the Local
Government in Scotland Act 2003; and
• Expressing an opinion as to whether the information given in the Annual
Governance Statement is consistent with the financial statements and that the
report has been prepared in accordance with the Delivering Good
Governance in Local Government Framework (2016).
I am aware that it is an offence to mislead an external auditor.
As Chief Finance and Transformation Officer and on behalf of the North Ayrshire
Integration Joint Board, I confirm, to the best of my knowledge and belief, the
following representations.
Financial statements
1 . I understand and have fulfilled my responsibilities for the preparation of the
financial statements in accordance with proper practices as set out in the
Code, which give a true and fair view, as set out in the terms of the audit
engagement letter.
2 . We have provided you with all relevant information and access as agreed in
the terms of the audit engagement letter with Audit Scotland. We
acknowledge our responsibilities for the design, implementation and operation
of internal control to prevent and detect fraud and error.
3. Significant assumptions used by us in making accounting estimates, including
those measured at fair value, are reasonable.
4. Related party relationships and transactions have been appropriately
accounted for and disclosed in accordance with the requirements of IAS24
“Related party disclosures”.
5. All events subsequent to the date of the financial statements and for which the
applicable financial reporting framework requires adjustment of or disclosure
have been adjusted or disclosed.
6. The effects of uncorrected misstatements and disclosure deficiencies are
immaterial, both individually and in aggregate, to the financial statements as a
whole.
7. We confirm that the financial statements have been prepared on the going
concern basis. We do not intend to liquidate the Board or cease trading as
we consider we have realistic alternatives to doing so. We are not aware of
any material uncertainties related to events or conditions that may cast
significant doubt upon the Board’s ability to continue as a going concern. We
confirm the completeness of the information provided regarding events and
conditions relating to going concern at the date of approval of the financial
statements, including our plans for future actions.
8. We confirm that all of the disclosures within the Management Commentary,
Remuneration Report and the Annual Governance Statement have been
prepared in accordance with the relevant legislation and guidance.
Information provided
9. We have provided you with all relevant information and access.
10 . All transactions have been recorded and are reflected in the financial
statements and the underlying accounting records.
11 . We acknowledge our responsibilities for the design, implementation and
maintenance of internal control to prevent and detect fraud and error.
12 . We have disclosed to you the results of our assessment of the risk that the
financial statements may be materially misstated as a result of fraud.
13. We are not aware of any fraud or suspected fraud that affects the entity and
involves:
(i) management;
(ii) employees who have significant roles in internal control; or
(iii) others where the fraud could have a material effect on the financial
statements.
14. We have disclosed to you all information in relation to allegations of fraud, or
suspected fraud, affecting the entity’s financial statements communicated by
employees, former employees, analysts, regulators or others.
15. We are not aware of any instances of non-compliance, or suspected non-
compliance, with laws, regulations, and contractual agreements whose effects
should be considered when preparing financial statements
16 . We have disclosed to you the identity of the entity’s related parties and all the
related party relationships and transactions of which we are aware.
17. No claims in connection with litigation have been or are expected to be
received.
We confirm that the above representations are made on the basis of adequate
enquiries of management and staff (and where appropriate, inspection of evidence)
sufficient to satisfy ourselves that we can properly make each of the above
representations to you.
Yours faithfully
Signed as Chief Finance and Transformation Officer, and on behalf of the
Board
Deloitte
NORTH AYRSHIRE
Health and Social Care
Partnership
North Ayrshire Integration Joint Board
Report to the Members of the IJB and the Controller of Audit
on the 2018/19 audit
Issued 6 August 2019 for the meeting on 29 August 2019
Contents
01 Our final report
Introduction 3
Our audit explained 6
Financial statements audit 7
Significant risks 8
Our audit report 11
Your annual report 12
Audit dimensions 14
Purpose of our report and
responsibility statement
19
Audit adjustments
20
Action plan
21
Fraud responsibilities and
representations
22
Independence and fees
23
2
Introduction
The key messages in this report
Audit quality is our
number one priority.
We plan our audit to
focus on audit quality
and have set the
following audit quality
objectives for this
audit:
• A robust challenge
of the key
judgements taken
in the preparation
of the financial
statements.
• A strong
understanding of
your internal
control
environment.
• A well planned and
delivered audit that
raises findings early
with those charged
with governance.
I have pleasure in presenting our final report to the Members of North Ayrshire Integration Joint Board
('the IJB' 'the Board') for the 2019 audit. The scope of our audit was set out within our planning report
presented to the Performance and Audit Committee ('the Committee') in March 2019.
This report summarises our findings and conclusions in relation to:
• The audit of the financial statements; and
• Consideration of the four audit dimensions that frame the wider scope of public sector audit
requirements as illustrated in the following diagram. This includes our consideration of the Board's
duty to secure best value.
Financial
sustainability
Value
for money
Introduction (continued)
The key messages in this report (continued)
I would like to draw your attention to the key messages of this paper:
Conclusions from our testing
Based on our audit work completed to date we expect to issue an
unmodified audit opinion.
The management commentary and annual governance statement
comply with the statutory guidance and proper practice and are
consistent with the financial statements and our knowledge of the
Boa rd.
The auditable parts of the remuneration report have been prepared in
accordance with the relevant regulation.
A summary of our work on the significant risks is provided in the
dashboard on page 8.
No misstatements in excess of our reporting threshold of £187k or
disclosure deficiencies have been identified up to the date of this
report.
Status of the financial statements audit
Outstanding matters to conclude the audit include:
• Journal entry testing;
• Finalisation of internal quality control procedures;
• Receipt of final financial statements;
• Receipt of signed management representation letter; and
• Our review of events since 31 March 2019.
Conclusions on audit dimensions
As set out on page 3, our audit work covered the four audit dimensions.
This incorporated the specific risks highlighted by Audit Scotland, in
particular, the impact of EU withdrawal, the changing landscape for
public financial management, dependency on key suppliers and
increased focus on openness and transparency.
Our detailed interim report, presented to the Board in June 2019, set
out our findings and conclusions on each dimension. We have updated
this for any significant changes since that report and our overall
conclusion on each dimension is summarised on pages 16-17.
4
Introduction (continued)
The key messages in this report (continued)
Conclusions on audit dimensions (continued)
Financial sustainability
The IJB achieved short-term financial balance in 2018/19 and a
balanced budget has been set for 2019/20; however, this includes
significant efficiencies and service transformation programmes to be
delivered.
It is positive that the IJB has started to repay the debt due to North
Ayrshire Council arising from previous year overspends, albeit less than
initially planned, with the remainder being repaid in future years.
In the medium term, the IJB is faced with a challenging financial
position as the current level of service provision is not financially
sustainable. In response to this, the Medium Term Financial Plan
(MTFP) is due to be updated in 2019/20, with the Transformation Board
driving the delivery of transformational change.
Financial management
Improvements have been made to the quality and frequency of
financial monitoring reports and there is now an effective integrated
budget monitoring arrangement in place. We have also noted that the
financial management arrangements have strengthened during the
year, including the reliability and accuracy of financial projections and
financial processes.
There were variations between the financial projections and the year-
end position resulting in less being repaid to North Ayrshire Council
than was planned. The IJB has identified discrete areas of focus to
improve financial projections in future years to ensure this situation
does not re-cur.
Governance and transparency
The IJB has a good attitude to openness and transparency and there is
a supportive culture that underpins this.
It is positive to note that the Board, along with its NHS and Council
partners, are reviewing and updating the governance arrangements for
the IJBs to take cognisance of the experience from early integration.
Value for money
The IJB has a performance management framework in place, with
performance regularly considered by management, and the Performance
and Audit Committee. It clearly reports on its contribution towards the
national outcomes through its quarterly and annual performance reports.
While there are some areas reporting a decline in performance, the
Partnership Performance Reports set out how the IJB intends to address
each area of under performance. In particular, there is a focus on trying to
shift the balance of care from a hospital to a community setting.
Our conclusions are included on pages 8 to 17 of this report and also
included in our interim report to the Board in June 2019.
We will consider progress with the agreed actions as part of our 2019/20
audit.
Added value
Our aim is to add value to the IJB by providing insight into, and offering
foresight on, financial sustainability, risk and performance by identifying
areas for improvement and recommending and encouraging good practice.
In so doing, we aim to help the IJB promote improved standards of
governance, better management and decision making, and more effective
use of resources.
This is provided throughout this report and our separate interim report. In
particular, our separate "Sector Developments" report, presented along
with our interim report shared our research, informed perspective and best
practice from our work across the wider public sector that are specifically
relevant to the IJB.
Pat Kenny
Audit Director
5
Our audit explained
Area dimensions
In accordance with the 2016 Code
of Audit Practice, we have
considered how you are
addressing the four audit
dimensions:
• Financial sustainability
• Financial management
• Governance and transparency
• Value for money
Significant risks
Our risk assessment
process is a continuous
cycie throughout the year.
Page 8 provides a summary
of our risk assessment of
your significant risks.
i
Our audit
report
Conclude ^
on significant
risk areas
and other
findings
Identify
changes in
your
business and
environment
Determine
materiality
Significant
risk
assessment
Scoping
Materiality
Materiality of £3,754k
(2017/18 £3,649k) and
performance materiality of
£3,003k (2017/18 £2,736k)
has been based on the
benchmark of gross
expenditure and is a slight
increase from what we
reported in our planning
paper due to updated final
figures.
We have used these as the
basis for our scoping
exercise and initial risk
assessment. We have
reported to you all
uncorrected misstatements
greater than £187k
(2017/18 £182k).
Quality and Independence
We confirm we are independent of North
Ayrshire IJB. We take our independence
and the quaiity of the audit work we
perform very seriously. Audit quality is
our number one priority.
Scope of the audit
We have audited the financial statements for the year ended 31
March 2019 of North Ayrshire IJB.
Tinneline
2018/19
t
6
Financial statements audit
Significant risks
Dashboard
Risk
Completeness and accuracy of
income
Management override of controls
Material
Fraud
risk
Planned
approach to
controls
testing
0 0
0 0
Overly prudent, likely Overly optimistic, likely
to lead to future credit Gv Gv to lead to future debit.
Controls
testing
conclusion
Consistency of
judgements with
Deloitte's
expectations
Comments
Page no.
Satisfactory
Satisfactory
9
Satisfactory
Satisfactory
10
D+I: Testing of the design and implementation of key controls
8
Significant risks (continued)
Risk 1 - Completeness and accuracy of income
Risk identified
ISA 240 states that when identifying and assessing the risks of material misstatement due to fraud, the auditor shall, based on a presumption
that there are risks of fraud in income recognition, evaluate which types of income, income transactions or assertions give rise to such risks. The
main components of income for the IJB are contributions from its funding partners, namely North Ayrshire Council (NAC) and NHS Ayrshire and
Arran (NHS A&A). The significant risk is pinpointed to the recognition of this income, being completeness and accuracy of contributions received
from North Ayrshire Council and NHS Ayrshire & Arran.
@
Key judgements and our challenge of them
Given the year end deficit projected by the IJB, there is a risk that overspends
could be funded by funding partners in the year following their approval, and
therefore contributions could differ from the approved budget.
Deloitte response
We have performed the following:
• tested the income to ensure that the correct contributions have been input
and received in accordance with that agreed as part of budget process and
that any reductions have been appropriately applied;
• tested the reconciliations performed by the IJB at 31 March 2019 to confirm
all income is correctly recorded in the ledger;
• confirmed that the reconciliations performed during 2018/19 have been
reviewed on a regular basis; and
• assessed management's controls around recognition of income.
Funding Analysis
180,000
160,000
140,000
120,000
g 100,000
t 4 j 80,000
60,000
40,000
20,000
0
Funding Contribution Funding Contribution
NAC NHS A&A
■ 2017/18 ■ 2018/19
Deloitte view
We have concluded that income has been correctly recognised in accordance with the requirements of the Code of Practice on Local Authority
Accounting.
9
Significant risks (continued)
Risk 2 - Management override of controls
Risk identified
In accordance with ISA 240 (UK) management override
is a significant risk. This risk area includes the potential
for management to use their judgement to influence the
financial statements as well as the potential to override
the Board's controls for specific transactions.
©
Key judgements
The key judgments in the financial statements are those
which we have selected to be the significant audit risks
around the completeness and accuracy of income (page
9). This is inherently the area in which management
has the potential to use their judgement to influence
the financial statements.
Deloitte response
We have considered the overall sensitivity of
judgements made in preparation of the financial
statements, and note that:
• The Board's results throughout the year were
projecting overspends in operational areas. This was
closely monitored and whilst projecting overspends,
the underlying reasons were well understood; and
• Senior management's remuneration is not tied to
particular financial results.
We have considered these factors and other potential
sensitivities in evaluating the judgements made in the
preparation of the financial statements.
Significant and unusuai transactions
We did not identify any significant
transactions outside the normal course of
business or any transactions where the
business rationale was not clear.
Journals
We have performed design and
implementation testing of the controls in
place for journal approval.
We have used data analytics to risk assess
journals and select items for detailed follow
up testing. The journal entries were selected
using computer-assisted profiling based on
areas which we consider to be of increased
interest.
We have tested the appropriateness of
journal entries recorded in the general ledger,
and other adjustments made in the
preparation of financial reporting. No issues
were noted based upon the work performed
thus far.
Accounting estimates
We reviewed the financial statements for
accounting estimates which could include
biases that could result in material
misstatements due to fraud. No accounting
estimates have been recognised in the
financial statements.
We considered any adjustments required for
the transition to the new standards (IFRS 15
Revenues from contracts with customers and
IFRS 9 Financial Instruments), focusing on
the areas of greatest judgement and value.
No issues have been identified from our
testing.
Deloitte view
We have not identified any significant bias in the key judgements made by
management based on work performed.
We have not identified any instances of management override of controls in relation to
the specific transactions tested based on work performed to date.
We agree with management's position that the new accounting standards do not have
a material impact for the Board.
10
Our audit report
Other matters relating to the form and content of our report
Here we discuss how the results of the audit impact on other significant sections of our audit report.
Our opinion on the financial
statements
Based on our audit work
completed to date, we
anticipate issuing an
unmodified opinion on the
financial statements.
Material uncertainty related
to going concern
We have not identified a
material uncertainty related to
going concern and will report
by exception regarding the
appropriateness of the use of
the going concern basis of
accounting.
Whilst the IJB is faced with
financial sustainability issues
(discussed on page 16), the
Code of Practice on Local
Authority Accounting requires
authorities to prepare its
financial statements on a going
concern basis unless there is
an intention by government
that the services provided by
the authority will no longer be
required.
Emphasis of matter and
other matter paragraphs
There are no matters we judge
to be of fundamental
importance in the financial
statements that we consider it
necessary to draw attention to
in an emphasis of matter
paragraph.
There are no matters relevant
to users' understanding of the
audit that we consider
necessary to communicate in
an other matter paragraph.
Other reporting
responsibilities
The Annual Report is reviewed
in its entirety for material
consistency with the financial
statements and the audit work
performance and to ensure that
they are fair, balanced and
reasonable.
Our opinion on matters
prescribed by the Controller of
Audit are discussed further on
pages 12-13.
11
Your annual report
We are required to provide an opinion on the auditable parts of the remuneration report, the annual governance statement and whether
the management commentary has been prepared in accordance with the statutory guidance..
Requirement
Deloitte response
Management
Commentary
The Management Commentary comments on
financial performance, strategy and
performance review and targets. The
commentary included both financial and non
financial KPIs and made good use of graphs
and diagrams. The Board also focusses on
the strategic planning context.
We have assessed whether the Management Commentary has been
prepared in accordance with the statutory guidance.
We have also read the Management Commentary and confirmed that the
information contained within is materially correct and consistent with our
knowledge acquired during the course of performing the audit, and is not
otherwise misleading.
Our review identified a number of areas of good practice with the inclusion
of graphics and tables to aid the user's understanding of the annual report
and accounts.
Our review identified a number of areas where the annual accounts needed
revising in order to comply with statutory guidance and to ensure that they
were fair, balanced and understandable. We are pleased to note that these
changes have been made.
We have made a number of recommendations for changes to the annual
accounts in line with good practice. We have included elements of good
practice for your consideration at page 13.
Remuneration The remuneration report has been prepared We have audited the disclosures of remuneration and pension benefits, pay
Report in accordance with the 2014 Regulations, bands and exit packages and confirmed that they have been properly
disclosing the remuneration and pension prepared in accordance with the regulations,
benefits of the Chief Officer and Chief
Finance Officer.
Annual
Governance
Statement
The Annual Governance Statement reports We have assessed whether the information given in the Annual Governance
that the IJB's governance arrangements Statement is consistent with the financial statements and has been
provide assurance, are adequate and are prepared in accordance with the accounts direction. No exceptions noted,
operating effectively.
12
Your annual report (continued)
Good practice note - improving quality of annual accounts
Audit Scotland have issued a series of Good Practice notes to highlight
where Annual Reports can be improved. One specifically directed at
Integration Joint Boards was published in April 2018. We have highlighted
below some of the key messages from this guidance note and pleased to
note that a number of areas have been considered in drafting the 2018/19
annual accounts and would encourage the Board to consider further areas
of good practice in future annual accounts.
We have also benchmarked the length of the draft 2018/19 annual report
against other IJBs. North Ayrshire Council sits around the average length,
however, minor improvements could be made in the content including the
removal of all zero balances and the inclusion of an action plan outlining
how the prior year's significant risks were addressed during the year.
Length of narrative benchmarking
Annual Governance Statement
Remuneration Report
Statement of Responsibilities
Management Commentary
0 5 10 15
■ Max BMin aAverage ■ North Ayrshire
20
Key messages
A single story
• The narrative in the management commentary and annual governance statement should be consistent with the
accounting information in the financial statements.
• Significant points in the financial statements should be explained in the management commentary.
o
How funding
was used
• The management commentary should give a clear and balanced account of how funding was used.
• Explanations of the IJB's business model should be provided.
• The salient features of the IJB's performance and position should be explained in a balanced way.
o
What worries
board
members
• The risks and uncertainties described in the management commentary should genuinely be the principal risks and
uncertainties that the board members are concerned about.
• The descriptions should be sufficiently specific that users can understand why they are important to the board
members.
• The management commentary and annual governance statement should describe the mitigating actions to manage
the impact of the principal risks and uncertainties and significant governance weaknesses. The links to accounting
estimates and judgements should be clear.
o
Consistency
• Highlighted or adjusted figures, key performance indicators and other measures referred to in the management
commentary should be clearly reconciled to the relevant amounts in the financial statements.
• Any adjustments to the figures in the management commentary should be clearly explained, together with the
reasons why they are being made.
o
Cut the clutter
• Important messages, policies and transactions should be highlighted and supported with relevant context and not
obscured by immaterial detail.
• Cross-referencing and signposting should be used effectively, and repetition avoided.
o
Summarise
• Items should be reported at an appropriate level of aggregation.
• Tables should be supported by, and consistent with, the accompanying narrative.
o
Explain change
• Significant changes from the prior period, whether matters of policy or presentation, should be properly explained
o
True and fair
• The spirit as well as the letter of proper accounting practices should be followed.
o
e No issues noted Requires improvement
Audit dimensions
Audit dimensions
Overview
Public audit in Scotland is wider in scope than financial audit. This section of our report sets out our conclusions on our audit work covering the
following area, with our detailed findings and conclusions reported to the Board in June 2019 as part of our Interim Report . Our report is structured
in accordance with the four audit dimensions, but also covers our specific audit requirements on best value and specific risks as summarised below.
r
Financial
sustainability
Financial
management
✓
Audit Dimensions
Best Vaiue (BV)
It is the duty of the IJB to secure BV as prescribed in the Local
Government (Scotland) Act 1973.
We have considered the Board's duty to secure BV as part of
the governance arrangements considered as part of the audit
dimensions work.
Specific risks
As set out in our Annual Audit Plan, Audit Scotland had identified a
number of specific risks faced by the public sector which we have
considered as part of our work on the four audit dimensions.
• EU Withdrawal
• Changing landscape for public financial management
• Dependency on key suppliers
• Openness and transparency
• Our conclusions on the above were reported in our Interim
Report to the Board in June.
15
Audit dimensions (continued)
Financial sustainability and financial management
Financial sustainability looks forward to the medium and longer term to ■ Financial management is concerned with financial capacity,
consider whether the body is planning effectively to continue to deliver its I sound budgetary processes and whether the control environment
services or the way in which they should be delivered. I and internal controls are operating effectively.
Key facts:
2018/19 financial position
• £945k underspend against budget after £l,486k being transferred
back from North Ayrshire Council which was held on the IJB's behalf.
• £668k repayment to North Ayrshire Council during 2018/19 with
outstanding debt of £5,139k as at 31 March 2019.
2019/20 financial position
• £6,134k savings required.
Overall conclusions
The IJB achieved short-term financial balance in 2018/19 and commenced
repayment of the historic debt outstanding to North Ayrshire Council. A
balanced budget has been set for 2019/20; however, this includes
significant efficiencies and service transformation programmes that need
to be achieved in order for a balanced budget to be maintained.
In the medium term, the IJB is faced with an extremely challenging
financial position as the current level of service provision is not financially
sustainable. The Transformation Board has been established to drive the
delivery of transformational change at the required scale and pace to set
the direction for the Strategic Plan 2018-21. A Medium Term Financial Plan
is in place covering the period 2017/18 to 2019/20, which sets out the key
demand pressures and funding assumptions over the five year period. This
is due to be updated in 2019/20 and should to take account of issues set
out in the Scottish Government's five-year Medium Term Financial
Strategy, its Health and Social Care Medium Term Financial Framework
and the work of the Transformation Board.
As part of the 2019/20 transformation programme, the IJB are launching a
"Thinking Different, Doing Better" programme aimed at educating staff and
the wider public on the role of the partnership and of the case for change.
This is a significant commitment but should be highlighted as a good
practice example of engaging with key stakeholders to inform future
decision making and drive towards shifting the balance of care from a
hospital to a community setting.
Key facts:
2018/19 budget
• Final budgeted expenditure of £267,909k, against actual
expenditure of £268,211k.
• Savings of £4,043k achieved, against a savings requirement of
£6,615k.
• Overspends reported during the year.
• Regular reporting to senior management and board members.
Overall conclusions
The IJB achieved an underspend of £945k in 2018/19, after
£l,486k is transferred back from North Ayrshire Council which was
held on behalf of the IJB. The IJB repaid a sum of £668k towards
the outstanding debt to the Council. It was envisaged that during
the year the first instalment of the repayment would be £l,500k;
however, a surplus of that value was not generated due to
variations between projections and actual costs at the financial
year-end. The IJB has identified discrete areas of focus to improve
financial projections in future years to ensure this situation does not
re-cur.
The final outturn position is a significant improvement on the
overspend position that was expected earlier in the year,
particularly given historical overspends in previous years.
Improvements have been made to the quality and frequency of
financial monitoring reports and there is now an effective integrated
budget monitoring arrangement in place. The appointment of the
Chief Finance and Transformation Officer has been pivotal in the
significant improvement of the IJB's financial position.
It is positive to note that work is ongoing nationally, with Ayrshire
and Arran acting as the test area for further work to be on
Directions/ Set Aside resources as part of the national Review of
Progress of Integration of Health and Social Care.
Audit dimensions (continued)
Governance and transparency and value for money
Governance and transparency is concerned with the effectiveness
of scrutiny and governance arrangements, leadership and decision Value for money is concerned with using resources effectively and
making, and transparent reporting of financial and performance continually improving services.
information.
Key facts:
• Strategic Plan 2018-2021 approved in April 2018.
Overall conclusions
In general, the IJB has a good attitude to openness and transparency
and there is a supportive culture that underpins this. This could be
further enhanced by publishing the papers and minutes of the
Performance and Audit Committee online.
There are a number of key governing documents which have not
been reviewed or refreshed by the Board since 2015. A schedule of
key governance documents including review timescales and
responsible officers were submitted to the Performance and Audit
committee in June 2019. Thereafter progress with document reviews
will be monitored through the Performance and Audit Committee.
It is positive to note that the Board, along with its NHS and Council
partners, are reviewing and updating the governance arrangements
for the IJBs to take cognisance of the experience from early
integration.
Key facts:
• Between April 2018 and December 2018 overall performance
has declined. There has been an Increase In the number of
'red' Indicators reported from 5 to 10.
Overall conclusions
Best Value duties apply to accountable officers across the public
sector. One of the key principles of the IJB integration scheme is
making best use of public money by providing services that are
efficient, effective and sustainable, and best value is a visible theme
throughout IJB reports. One mechanism for the IJB ensuring Best
Value is through the preparation of the annual performance report;
the report assesses performance in relation to best value.
The IJB has a performance management framework in place, with
performance regularly considered by management and the
Performance and Audit Committee. It clearly reports on its
contribution towards the national outcomes through its quarterly and
annual performance reports.
While there is a decline in performance in some areas, the
Partnership Performance Reports set out how the IJB intends to
address each area of underperformance. In particular, there is a
focus on trying to shift the balance of care from a hospital to a
community setting.
The budget also recognises the need to link expenditure to outcomes,
but there is still a need to improve the links between budget and
niil-rnmpc:
17
Purpose of our report and responsibility statement
Our report is designed to help you meet your governance duties
What we report
Our report is designed to help
the Board discharge their
governance duties. It also
represents one way in which we
fulfil our obligations under ISA
260 (UK) to communicate with
you regarding your oversight of
the financiai reporting process
and your governance
requirements. Our report
includes:
• Results of our work on key
audit judgements and our
observations on the quality
of your Annual Report.
• Our internal control
observations.
• Other insights we have
identified from our audit.
What we don't report
As you will be aware, our audit
was not designed to identify all
matters that may be relevant to
the Board.
Also, there will be further
information you need to
discharge your governance
responsibilities, such as matters
reported on by management or
by other specialist advisers.
The scope of our work
Our observations are developed
in the context of our audit of
the financial statements. We
described the scope of our work
in our audit plan and again in
this report.
This report has been prepared
for the Board, as a body, and
we therefore accept
responsibility to you alone for
its contents. We accept no
duty, responsibility or liability
to any other parties, since this
report has not been prepared,
and is not intended, for any
other purpose.
Finally, our views on internal
controls and business risk
assessment should not be
taken as comprehensive or as
an opinion on effectiveness
since they have been based
solely on the audit procedures
performed in the audit of the
financial statements and the
other procedures performed in
fulfilling our audit plan.
We welcome the opportunity
to discuss our report with
you and receive your
feedback.
19
Audit adjustments
Summary of corrected and uncorrected misstatements and
disclosure deficiencies
No other corrected misstatements have been identified from our audit work performed to date.
No uncorrected misstatements have been identified from our audit work performed to date.
Auditing standards require us to highlight significant disclosure misstatements to enable audit committees to evaluate
the impact of those matters on the financial statements. We have noted no material disclosure deficiencies in the
course of our audit work to date.
20
Action plan
Recommendations for improvement
We have not made any recommendations for improvement arising from our financial statements audit. Our interim report submitted to the Board in
June 2019 reported our detailed recommendations arising from our work on the wider audit dimensions. In this report, we made seven
recommendations, as follows:
Wider audit dimension
Recommendations made
Financial sustainability
3
Financial management
1
Governance and transparency
3
We will follow up these recommendations and report to the Committee on progress as part of our 2019/20 audit.
In our interim report, we followed up on recommendations for improvement made in 2017/18. A summary of progress against 2017/18 actions has
been included below. Of the three recommendations outstanding, all have an updated recommendation included above. Consequently, there are
seven total recommendations which we will follow up in our 2019/20 audit.
Area
Recommendations made
Recommendations impiemented
Financial statements
-
-
Financial sustainability
3
1
Financial management
1
1
Governance and transparency
3
2
21
Fraud responsibilities and representations
Responsibilities explained
Responsibilities:
The primary responsibility for the prevention and detection of
fraud rests with management and those charged with
governance, including establishing and maintaining internal
controls over the reliability of financial reporting, effectiveness
and efficiency of operations and compliance with applicable laws
and regulations. As auditors, we obtain reasonable, but not
absolute, assurance that the financial statements as a whole are
free from material misstatement, whether caused by fraud or
error.
Required representations:
We have asked the Board to confirm in writing that you have
disclosed to us the results of your own assessment of the risk
that the financial statements may be materially misstated as a
result of fraud and that you are not aware of any fraud or
suspected fraud that affects the entity.
We have also asked the Board to confirm in writing their
responsibility for the design, implementation and maintenance
of internal control to prevent and detect fraud and error.
Audit work performed:
In our planning we identified the compieteness and accuracy of
income and management override of controls as key audit risks
for your organisation.
During course of our audit, we have had discussions with
management and those charged with governance.
In addition, we have reviewed management's own documented
procedures regarding fraud and error in the financial statements.
We have reviewed the paper prepared by management for the
Performance and Audit Committee on the process for identifying,
evaluating and managing the system of internal financial control.
Concerns:
No concerns have been identified regarding fraud.
22
Independence and fees
As part of our obligations under International Standards on Auditing (UK), we are required to report to you on the matters listed
below:
Independence We confirm that we comply with APB Ethical Standards for Auditors and that, in our professional
confirmation judgement, we and, where applicable, all Deloitte network firms are independent and our objectivity is not
compromised.
Fees The audit fee for 2018/19, in line with the fee range provided by Audit Scotland, is £25,000 as broken
down below:
£
Auditor remuneration
17,200
Audit Scotland fixed charges:
Pooled costs
1,670
Contribution to PABV
5,050
Audit support costs
1,080
Total agreed fee
25,000
No non-audit fees have been charged by Deloitte in the period.
Non-audit services In our opinion there are no inconsistencies between APB Ethical Standards for Auditors and the company's
policy for the supply of non-audit services or any apparent breach of that policy. We continue to review
our independence and ensure that appropriate safeguards are in place including, but not limited to, the
rotation of senior partners and professional staff and the involvement of additional partners and
professional staff to carry out reviews of the work performed and to otherwise advise as necessary.
Relationships We are required to provide written details of all relationships (including the provision of non-audit
services) between us and the organisation, its board and senior management and its affiliates, including all
services provided by us and the DTTL network to the audited entity, its board and senior management and
its affiliates, and other services provided to other known connected parties that we consider may
reasonably be thought to bear on our objectivity and independence.
We are not aware of any relationships which are required to be disclosed.
23
Deloitte
Deloitte LLP does not accept any liability for use of or reliance on the contents of this document by any person save by the intended
recipient(s) to the extent agreed in a Deloitte LLP engagement contract.
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Deloitte LLP is the United Kingdom affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company
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