Magazine article Public Finance

Auditor Slams 'Unacceptable' Hospital Accounts

Magazine article Public Finance

Auditor Slams 'Unacceptable' Hospital Accounts

Article excerpt

A Yorkshire-based NHS trust repeatedly ignored Audit Commission warnings not to inflate its asset values in order to hide deficits totalling £4.5m, it emerged this week.

The district auditor who scrutinised annual accounts at the troubled Scarborough and North East Yorkshire NHS Trust has accused the organisation's finance team, including finance director Bernard Flynn, of having compromised the integrity' of the NHS accounting process by misreporting its financial health.

Following the publication of a public interest report on the trust on November 14, district auditor Mark Kirkham said: 'Financial balance was reported to the [trust] board and [local] strategic health authority in the knowledge that the accounts would not be acceptable for audit.'

He added that he had 'not been given a credible explanation of why that had happened.

However, sources close to discussions between commission officials and the trust said that Scarborough had indicated it was considering seeking foundation trust status. Until recently, that would have required a three-star rating from the Department of Health - it is currently a two-star trust.

A spokeswoman for Scarborough told Public Finance: 'We have recently started the foundation trust diagnostic analysis'

Kirkham this week published figures correcting 'serious mis-statements and errors' in Scarborough's 2004/05 accounts and unearthed a £4.5m deficit at the trust, which officials had attempted to show had met the statutory duty to break even.

The deficit emerged despite a £10m medium-term loan from the North Lincolnshire Strategic Health Authority.

Kirkham's report reveals that he warned the trust's finance team several times against covering up large overspends by reclassifying medical instruments such as scalpels and forceps, purchased over the previous 15 years, as stock and fixed assets. …

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