South West London CCG Annual Report and Accounts 2020/21

Notes to the financial statements 1 Accounting Policies NHS England has directed that the financial statements of clinical commissioning groups shall meet the accounting requirements of the Group Accounting Manual issued by the Department of Health and Social Care. Consequently, the following financial statements have been prepared in accordance with the Group Accounting Manual 2020-21 issued by the Department of Health and Social Care. The accounting policies contained in the Group Accounting Manual follow International Financial Reporting Standards to the extent that they are meaningful and appropriate to clinical commissioning groups, as determined by HM Treasury, which is advised by the Financial Reporting Advisory Board. Where the Group Accounting Manual permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the clinical commissioning group for the purpose of giving a true and fair view has been selected. The particular policies adopted by the clinical commissioning group are described below. They have been applied consistently in dealing with items considered material in relation to the accounts. 1.1 Going Concern These accounts have been prepared on a going concern basis. Public sector bodies are assumed to be going concerns where the continuation of the provision of a service in the future is anticipated, as evidenced by inclusion of financial provision for that service in published documents. Where a clinical commissioning group ceases to exist, it considers whether or not its services will continue to be provided (using the same assets, by another public sector entity) in determining whether to use the concept of going concern for the final set of financial statements. If services will continue to be provided the financial statements are prepared on the going concern basis. 1.2 Accounting Convention These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, intangible assets, inventories and certain financial assets and financial liabilities. 1.3 CCG Merger NHS South West London CCG was approved by NHS England to operate from 1 April 2020 and was created from the merger of NHS Croydon, Kingston. Merton, Richmond, Sutton and Wandsworth CCGs. Closing balances from the 6 predecessor CCGs were transferred to NHS South West London CCG at 1 April 2020. The transfer of balances is detailed in Note 8 of these accounts. As a result of the merger, other than for the Statement of Financial Position and related notes, comparative figures for the previous financial year have not been provided as the CCG did not exist in 2019-20. Transfers as part of reorganisation fall to be accounted for by use of absorption accounting in line with the Government Financial Reporting Manual, issued by HM Treasury. The Government Financial Reporting Manual does not require retrospective adoption, so prior year transactions (which have been accounted for under merger accounting) have not been restated. Absorption accounting requires that entities account for their transactions in the period in which they took place, with no restatement of performance required when functions transfer within the public sector. Where assets and liabilities transfer, the gain or loss resulting is recognised in the Statement of Comprehensive Net Expenditure, and is disclosed separately from operating costs. Other transfers of assets and liabilities within the Department of Health and Social Care Group are accounted for in line with IAS 20 and similarly give rise to income and expenditure entries. 1.4 Charitable Funds From 2013-14, the divergence from Government Financial Report Manual that NHS Charitable Funds are not consolidated with bodies' own returns is removed. Under the provisions of IAS 27: Consolidated & Separate Financial Statements, those Charitable Funds fall under common control with NHS bodies are consolidated within entities' accounts. The Governing Body does not consider the activities of the charity to be material to NHS South West London CCG and accordingly has decided not to consolidate the Charitable Funds accounts with that of the CCG. On 13th January 2021, the Corporate Trustee of the Funds (the NHS SW London CCG Governing Body) determined that the charitable funds previously held by Kingston CCG are granted to the Kingston Hospital NHS Foundation Trust Charitable Funds and as a consequence the Kingston CCGs’ Charitable Fund closed on 31st March 2021 with the net assets distributed to the Kingston Hospital NHS Foundation Trust Charitable Fund. 1.5 Joint arrangements Arrangements over which the clinical commissioning group has joint control with one or more other entities are classified as joint arrangements. Joint control is the contractually agreed sharing of control of an arrangement. A joint arrangement is either a joint operation or a joint venture. The CCG has a joint operation which are activities undertaken in conjunction with one or more parties which are performed through a separate entity. The clinical commissioning group records its share of the income and expenditure, gains and losses, assets, liabilities and cash flows in its own accounts. 1.6 Pooled Budgets South West London CCG has entered into pooled budget arrangements under Section 75 of the National Health Service Act 2006 with 5 of the Local London Boroughs (Croydon, Kingston, Merton, Richmond, Sutton and Wandsworth), relating to the commissioning of health and social care services within the Better Care Fund. The clinical commissioning group accounts for its share of the assets, liabilities, income and expenditure arising from the activities of the pooled budget, identified in accordance with the pooled budget arrangement. The Section 75 agreements clearly sets out the accounting, risk share and governance arrangements. The accountable bodies for the Better Care Fund are the Local Authorities who hold the funds apart from Croydon where the CCG holds the fund. They are managed through a joint management committee. 180 | NHS South West London Clinical Commissioning Group