Standing financial instructions

Contents

Foreword

1. These standing financial instructions (SFI) provide the foundation trust with a business and financial framework. All executive directors, non-executive directors and members of staff should be aware of their existence and where necessary, they should be familiar with the detailed provisions. The documents fulfil the dual role of protecting the trust’s interests and assisting staff in fulfilling their roles.
2. The SFIs are further supported by the ‘reservation of powers to the board of directors and scheme of delegation’ and by financial procedures.
3. Once the board of directors has adopted the SFIs they become mandatory on all directors and employees of the trust.
4. For the sake of brevity the masculine pronoun is used throughout these standing financial instructions.

1 Introduction

1.1 General

These standing financial instructions (SFI) shall have effect as if incorporated in the board of director’s standing orders (SO) of the trust.

These SFIs detail the financial responsibilities, policies and procedures to be adopted by the trust. They are designed to ensure that its financial transactions are carried out in accordance with the law and the requirements of NHS England, in order to achieve probity, accuracy, economy, efficiency and effectiveness. They should be used in conjunction with the reservations of powers to the board of directors and scheme of delegation adopted by the trust.

These SFIs identify the financial responsibilities, which apply to everyone working for the trust. They do not provide detailed procedural advice. These statements should therefore be read in conjunction with the detailed departmental and financial procedure notes. The director of finance and estates must approve all financial procedures.

Should any difficulties arise regarding the interpretation or application of the SFIs then the advice of the director of finance and estates must be sought before acting.

Failure to comply with standing financial instructions is a disciplinary matter which could result in dismissal.

Overriding standing financial instructions, If for any reason these standing financial instructions are not complied with full details of the non-compliance and any justification for non-compliance and the circumstances around the non-compliance shall be reported to the next formal meeting of the Audit Committee for referring action or ratification. All members of the board and staff have a duty to disclose any non-compliance with these standing financial instructions to the director of finance and estates as soon as possible.

1.2 Terminology

Any expression to which a meaning is given in Health Service Acts, or in directions made under the acts, shall have the same meaning in these instructions:

Wherever the title chief executive, director of finance and estates or other nominated officer is used in these instructions, it shall be deemed to include such other director or employees who have been duly authorised to represent them.

Wherever the term “employee” is used and where the context permits it shall be deemed to include employees of third parties contracted to the trust when acting on behalf of the trust.

1.3 Responsibilities and delegation

The board of directors exercises financial supervision and control by:

• formulating the financial strategy
• requiring the submission and approval of budgets within approved allocations or overall income
• defining and approving essential features in respect of important procedures and financial systems (including the need to obtain value for money)
• defining specific responsibilities placed on members of the board and employees as indicated in the scheme of delegation document

The board has resolved that certain powers and decisions may only be exercised by the board in formal session. These are set out in the reservation of powers to the board document.

The board will delegate responsibility for the performance of its functions in accordance with the scheme of delegation document adopted by the trust.

Within the standing financial instructions, it is acknowledged that the chief executive is ultimately accountable to the board, and as accounting officer, to NHS England for ensuring that the board meets its obligation to perform its functions within the available financial resources. The chief executive has overall executive responsibility for the trust’s activities and is responsible to the chairman and the board for ensuring that its financial obligations and targets are met and has overall responsibility for the trust’s system of internal control.

The chief executive and director of finance and estates will, as far as possible, delegate their detailed responsibilities, but they remain accountable for financial control.

It is a duty of the chief executive to ensure that existing members of the board and employees and all new appointees are notified of and understand, their responsibilities within these instructions.

The director of finance and estates is responsible for:

• implementing the trust’s financial policies and for co-ordinating any corrective action necessary to further these policies
• maintaining an effective system of internal financial control including ensuring that detailed financial procedures and systems incorporating the principles of separation of duties and internal checks are prepared, documented and maintained to supplement these instructions
• ensuring that sufficient records are maintained to show and explain the trust’s transactions, in order to disclose, with reasonable accuracy, the financial position of the trust at any time

And, without prejudice to any other functions of directors and employees of the trust, the duties of the director of finance and estates include:

• the provision of financial advice to other members of the board and employees
• the design, implementation and supervision of systems of internal financial control
• the preparation and maintenance of such accounts, certificates, estimates, records and reports as the trust may require for the purpose of carrying out its statutory duties

The board of directors and all employees, severally and collectively, are responsible for:

• the security of the property of the trust
• avoiding loss
• exercising economy and efficiency in the use of resources
• conforming to the requirements of standing orders, standing financial instructions, financial procedures and the scheme of delegation
• maintaining effective risk management arrangements.

Any contractor or employee of a contractor who is empowered by the trust to commit the trust to expenditure or who is authorised to obtain income shall be covered by these instructions. It is the responsibility of the chief executive to ensure that such persons are made aware of this.

For the board of directors and employees who carry out a financial function, the form in which financial records are kept and the manner in which members of the board and employees discharge their duties must be to the satisfaction of the director of finance and estates.

2 Audit

2.1 Audit Committee

With reference to the audit code for NHS foundation trusts and the code of governance, issued by NHS England, the board of directors shall formally establish an Audit Committee, with clearly defined terms of reference.

The committee shall:

• review the establishment and maintenance of an effective system of integrated governance, risk management and internal control, across the whole of the organisation’s activities (both clinical and non-clinical) that supports the achievement of the organisation’s objectives. In particular, the committee will review the adequacy of:
  • all risk and control related disclosure statements (in particular the annual governance statement, together with any accompanying head of internal audit statement or other appropriate independent assurances
  • the underlying assurance processes that indicates the degree of the achievement of corporate objectives, the effectiveness of the management of principal risks and the appropriateness of the above disclosure statements
  • the policies and procedures for all work related to fraud, bribery and corruption as set out in service condition 24 of the NHS standard contract and as required by the NHS counter fraud authority
• ensure that there is an effective internal audit function established by management that meets mandatory NHS internal audit standards and provides appropriate independent assurance to the audit committee, chief executive and board
• review the work and findings of the external auditor and consider the implications and management’s responses to their work
• agree the accounting policies to be adopted for the preparation of the financial statements and receive the external auditor’s annual governance report prepared in accordance with ISAs 260, 265 and 450, the audit committee shall review the annual report and financial statements before submission to the board

The audit committee must assess the work of external audit on an annual basis to ensure that the work is of a sufficiently high standard. The audit committee shall make a recommendation to the council of governors with respect to the reappointment of the external auditors. The trust will undertake market testing for the appointment of external auditors at least once every five years.

Where the audit committee considers there is evidence of ultra vires transactions, evidence of improper acts, or if there are other important matters that the committee wish to raise, the chairman of the audit committee should raise the matter at a full meeting of the board of directors. Exceptionally, the matter may need to be referred to NHS England via the director of finance and estates.

It is the responsibility of the director of finance and estates to ensure an adequate internal audit service is provided, and the audit committee shall be involved in the selection process when or if an internal audit service provider is changed.

Further detail on the role, responsibility and powers of the audit committee are contained it its terms of reference.

2.2 Director of finance and estates

The director of finance and estates is responsible for:

• ensuring there are arrangements to review, evaluate and report on the effectiveness of internal financial control including the establishment of an effective internal audit function
• ensuring that the internal audit is adequate and meets the NHS mandatory audit standards
• deciding at what stage to involve the police in cases of misappropriation and other irregularities not involving fraud or corruption
• ensuring that an annual internal audit report is prepared for the consideration of the Audit Committee, the report must cover:
  • a clear opinion on the effectiveness of internal control
  • major internal financial control weaknesses discovered
  • progress on the implementation of internal audit recommendations
  • progress against plan over the previous year
  • strategic audit plan covering the coming three years
  • a detailed plan for the coming year

The director of finance and estates or designated auditors are entitled without necessarily giving prior notice to require and receive:

• access to all records, documents and correspondence relating to any financial or other relevant transactions, including documents of a confidential nature
• access at all reasonable times to any land, premises or members of the board of directors or employee of the trust
• the production of any cash, stores or other property of the trust under a member of the board of directors and employee’s control
• explanations concerning any matter under investigation.

2.3 Role of internal audit

Internal audit will review, appraise and report upon:

• the extent of compliance with, and the financial effect of, relevant established policies, plans and procedures
• the adequacy and application of financial and other related management controls
• the suitability of financial and other related management data
• the extent to which the trust’s assets and interests are accounted for and safeguarded against loss of any kind, arising from:
  • fraud and other offences
  • waste, extravagance, inefficient administration
  • poor value for money or other causes.

Whenever any matter arises which involves, or is thought to involve, irregularities concerning cash, stores, or other property or any suspected irregularity in the exercise of any function of a pecuniary nature, the director of finance and estates must be notified immediately.

The head of internal audit will normally attend Audit Committee meetings and has a right of access to all Audit Committee members, the chairman and chief executive of the trust.

The NHS Foundation trust accounting officer memorandum provides that internal audit should accord with the objectives, standards and practices set out in the government internal audit standards, which states that internal audit is an independent and objective appraisal service within an organisation:

• internal audit primarily provides an independent and objective opinion to the accountable officer, the board of directors and the Audit Committee on risk management, control and governance, by measuring and evaluating their effectiveness in achieving the organisation’s agreed objectives. In addition, internal audit’s findings and recommendations are beneficial to line management in the audited areas. Risk management, control and governance comprise the policies, procedures and operations established to ensure the achievement of objectives, the appropriate assessment of risk, the reliability of internal and external reporting and accountability processes, compliance with applicable laws and regulations, and compliance with the behavioural and ethical standards set for the organisation
• internal audit also provides an independent and objective consultancy services specifically to help line management improve the organisation’s risk management, control and governance. The service applies the professional skills of internal audit through a systematic and disciplined evaluation of the policies, procedures and operations that management put in place to ensure the achievement of the organisation’s objectives, and through recommendations for improvement. Such consultancy work contributes to the opinion which internal audit provides on risk management, control and governance

The head of internal audit shall be accountable to the director of finance and estates. The reporting system for internal audit shall be agreed between the director of finance and estates, the Audit Committee and the head of internal audit. The agreement shall be in writing and shall comply with the guidance on reporting contained in the NHS internal audit manual. The reporting system shall be reviewed at least every 3 years.

2.4 Counter fraud, bribery and corruption and security management

The trust chief executive and director of finance and estates shall monitor and ensure compliance with best practice to counter fraud, bribery and corruption and the chief executive and director of finance and estates shall undertake the same role in respect of security management.

The trust shall nominate suitable persons to carry out the duties of the local counter fraud specialist and local security management specialist.

The local counter fraud specialist shall report to the director of finance and estates and where necessary, shall work with staff from the NHS counter fraud authority. The local counter fraud specialist will provide a written report, at least annually, to the trust on counter fraud work at the trust.

The local security management specialist shall report to the director of finance and estates (nominated security management director) and where necessary, shall work with staff from external agencies. The local security management specialist will provide a written report, at least annually, which will be reflected in the self review tool and security strategy on security management work at the trust.

The director of finance and estates is responsible for ensuring that action is taken to investigate all allegations of fraud through the local counter fraud specialist. The steps to be taken are incorporated in the trust’s counter fraud, bribery and corruption policy. The local counter fraud specialist shall be informed of all suspected or detected fraud so that they can consider the adequacy of the relevant controls and evaluate the implications of the fraud.

The director of finance and estates (SMD) is responsible for ensuring that action is taken to investigate all security incidents through the local security management specialist. The steps to be taken are incorporated in the trust’s security policy.

2.5 External audit

The external auditor is appointed by the council of governors following receipt of a recommendation from the Audit Committee and paid for by the trust. The trust must ensure that the external auditor appointed meets the criteria included in NHS England’s code of audit practice. The external audit manager will normally attend Audit Committee meetings.

If requested by the external auditor, during part of one Audit Committee meeting each financial year, executive directors and others normally in attendance will be excluded from the meeting in order to allow private discussions between the Audit Committee members and the external auditor.

3 Allocations, business planning, budgets, budgetary control, and monitoring

3.1 Preparation and approval of business plans and budgets

The chief executive will compile and submit to the board of directors an annual plan in line with the requirements set out by NHS England which takes into account financial targets and forecast limits of available resources. The annual plan will contain:

• a statement of the significant assumptions on which the annual plan is based
• details of major changes in workload, delivery of services or resources required to achieve the annual plan.

The annual plan must take into account the views of the council of governors in accordance with the trust constitution and be submitted to NHS England.

Prior to the start of the financial year the director of finance and estates will, on behalf of the chief executive, prepare and submit budgets for approval by the board. Such budgets will:

• be in accordance with the aims and objectives set out in the annual plan and will meet the financial requirements of NHS England’ financial regime
• be in accordance with workload and manpower plans
• be produced following discussion with appropriate budget holders
• be prepared within the limits of available funds
• identify potential risks

The director of finance and estates shall monitor financial performance against budget and business plan, periodically review them, and report to Finance, Digital Performance and Estates Committee and the board.

All budget holders must provide information as required by the director of finance and estates to enable budgets to be compiled.

All budget holders will be allocated their budgets at the commencement of the financial year. The director of finance and estates has a responsibility to ensure that adequate training is delivered on an ongoing basis to budget holders to help them manage budgets successfully.

3.2 Budgetary delegation

The chief executive may delegate the management of a budget to permit the performance of a defined range of activities, including pooled budget arrangements under s75 of the NHS Act 2006. This delegation must be in writing and be accompanied by a clear definition of:

• the amount of the budget
• the purpose(s) of each budget heading
• individual and group responsibilities
• authority to exercise virement
• achievement of planned levels of service
• the provision of regular reports

The chief executive and delegated budget holders must not exceed the budgetary total, virement limits or capital programme set by the board.

Please also refer to the procedure for budget virement held by the finance department.

Any budgeted funds not required for their designated purpose(s) revert to the immediate control of the chief executive, subject to any authorised use of virement.

Non-recurring budgets should not be used to finance recurring expenditure without the authority in writing of the chief executive and director of finance and estates.

3.3 Budgetary control and reporting

The director of finance and estates will devise and maintain systems of budgetary control. These will include bi-monthly financial reports to the Finance, Digital and Estates Committee and the board in a form approved by the board containing:

• trust wide and care group and directorate income and expenditure to date showing trends and forecast year end position
• monthly balance sheet position and appropriate key indicators
• movements in working capital
• movements in cash and capital and forecast year end position
• capital project spend and projected outturn against plan
• explanations of any material variances from plan
• details of any corrective action where necessary and the chief executive’s and director of finance and estates view of whether such actions are sufficient to correct the situation
• the issue of timely, accurate and comprehensible advice and financial reports to each budget holder, covering the areas for which they are responsible
• investigation and reporting of variances from financial, workload and manpower budgets
• monitoring of management action to correct variances
• arrangements for the authorisation of budget transfers.

Each budget holder is responsible for ensuring that:

• any likely overspend or reduction of income that cannot be met by virement is not incurred without the prior consent of the board
• the amount provided in the approved budget is not used in whole or in part for any purpose other than that specifically authorised subject to the rules of virement
• no permanent employees are appointed without the approval of the chief executive other than those provided for within the available resources and manpower establishment as approved by the board.

The delegated limits of directors, care group directors and budget holders are expected to be maintained under normal business arrangements. Where financial performance of a budget area significantly deteriorates, the chief executive has the authority to temporarily or permanently to adjust the delegated financial limits in respect of a budget holder in response and to determine the period where such additional control is deemed necessary. Any such decision should be reported to the board of directors.

The chief executive is responsible for identifying and implementing cost improvements and income generation initiatives in accordance with the requirements of the trust’s annual plan and a balanced budget.

3.4 Capital expenditure

The general rules applying to delegation and reporting shall also apply to capital expenditure. (The particular applications relating to capital are contained in SFI Section 11.) The capital programme and any amendments will be approved in advance by the board of directors.

3.5 Monitoring returns

The chief executive is responsible for ensuring that the appropriate monitoring forms are approved by the board of directors and submitted to NHS England and any requisite monitoring organisation.

4 Annual accounts and reports

The director of finance and estates, on behalf of the trust, will:

• prepare financial returns in accordance with the accounting policies and guidance given by NHS England, the trust’s accounting policies, and generally accepted accounting practice
• prepare and submit annual financial reports to NHS England and Parliament in accordance with current guidelines
• submit financial returns to NHS England and Parliament for each financial year in accordance with the prescribed timetable.

The trust’s audited annual accounts must be presented to the board of directors for approval and received at a public meeting of the council of governors. A copy should be forwarded to NHS England and made available to the public.

The trust will publish an annual report, in accordance with the constitution and present it at the council of governors general meeting. The document will comply with NHS England’s annual reporting manual.

5 Bank accounts

5.1 General

The director of finance and estates is responsible for managing the trust’s banking arrangements and for advising the trust on the provision of banking services and operation of accounts. This advice will take into account guidance and directions issued from time to time by NHS estates.

5.2 Bank accounts

The director of finance and estates is responsible for:

• bank accounts
• establishing separate bank accounts for the trust’s non-exchequer funds
• ensuring payments made from bank accounts do not exceed the amount credited to the account except where arrangements have been made
• reporting to the board all arrangements made with the trust’s bankers for accounts to be overdrawn.

5.3 Banking procedures

All funds shall be held in the name of the trust. No employee other than the director of finance and estates shall open any bank account in the trust’s name.

The director of finance and estates will prepare detailed instructions on the operation of bank accounts that must include:

• the conditions under which each bank account is to be operated

Those authorised to sign cheques, make CHAPS payments, make faster payments or other orders drawn on the trust’s accounts.
The limit to be applied to any overdraft.

The director of finance and estates must advise the trust’s bankers in writing of the conditions under which each account will be operated.

5.4 Tendering review

The director of finance and estates will review the banking arrangements of the trust at regular intervals, and at least every five years, to ensure they reflect best practice and represent value for money. Following such reviews the director of finance and estates shall determine whether re-tendering for services is necessary.

6 Income, fees and charges and security of cash, cheques and other negotiable instruments

6.1 Income systems

The director of finance and estates is responsible for designing, maintaining and ensuring compliance with systems for the proper recording, invoicing, collection and coding of all monies due.

The director of finance and estates is also responsible for the prompt banking of all monies received.

6.2 Fees and charges

The director of finance and estates is responsible for approving and regularly reviewing the level of all fees and charges other than those determined by the department of health and social care or by statute. Independent professional advice on matters of valuation shall be taken as necessary.

All employees must inform the director of finance and estates promptly of money due arising from transactions which they initiate or deal with, including all contracts, leases, tenancy agreements, private patient undertakings and other transactions.

6.3 Debt recovery

The director of finance and estates is responsible for the appropriate recovery action on all outstanding debts.

Income not received should be dealt with in accordance with losses procedures. (See section 13.)

Overpayments should be detected (or preferably prevented) and recovery initiated.

6.4 Security of cash, cheques and other negotiable instruments

The director of finance and estates is responsible for:

• approving the form of all receipt books, agreement forms, or other means of officially acknowledging or recording monies received or receivable
• ordering and securely controlling any such stationery
• the provision of adequate facilities and systems for employees whose duties include collecting and holding cash, including the provision of safes or lockable cash boxes, the procedures for keys, and for coin operated machines

prescribing systems and procedures for handling cash and negotiable securities on behalf of the trust

Official trust cash shall not under any circumstances be used for the encashment of private cheques or IOUs.

The opening of post shall be undertaken by two employees together and all cash, cheques and other forms of payment shall be entered in an approved register before handing to the cashier.

All cheques, postal orders, cash etc., shall be banked intact. Disbursements shall not be made from cash received, except under arrangements approved by the director of finance and estates.

The holders of safe keys shall not accept unofficial funds for depositing in their safes unless such deposits are in special sealed envelopes or locked containers. It shall be made clear to the depositors that the trust is not to be held liable for any loss, and written indemnities must be obtained from the organisation or individuals absolving the trust from responsibility for any loss.

7 Agreements for provision of services

7.1 Legally binding agreements

The chief executive, as the accounting officer, is responsible for ensuring the trust enters into suitable legally binding agreements with service commissioners for the provision of NHS services. All agreements should aim to implement the agreed priorities contained within the relevant plans and wherever possible, be based upon integrated care pathways to reflect expected patient experience. In discharging this responsibility, the chief executive should take into account:

• the standards of service quality expected
• the relevant national service framework (if any)
• the provision of reliable information on cost and volume of services
• that agreements build where appropriate on existing partnership arrangements
• any model contracts issued by the department of health and social care for use by commissioners
• that contracts are based on integrated care pathways.

Where the trust makes arrangements for the provision of services by non-NHS providers it is the chief executive, as the accounting officer, who is responsible for ensuring that the agreements put in place have due regard to the quality and the cost-effectiveness of the services provided. Before making any agreement with non-NHS providers, the trust should explore fully the scope to make maximum cost-effective use of NHS facilities.

Where it is necessary for the trust to seek and utilise the specialist advice of brokers and advisors to ensure that the best cover and value is obtained, the chief executive will approve their appointment and agree with the respective lead, the terms and scope of the service to be received and any related fees. The arrangements in place must ensure that the broker or advisor undertakes their role in the best interest of the trust, ensuring that all market and supply options available are considered and where necessary ensuring appropriate competition processes are put in place.

7.2 Commissioning

The trust has responsibilities for commissioning adult eating disorder services (in patient) as the lead provider in South Yorkshire ICB. These responsibilities have been delegated by clinical commissioners or by NHS England. This will require the trust to work in partnership with NHS England, partner NHS trusts, Foundation trusts, local authority, independent sector, users, carers and the voluntary sector.

The chief executive, as the accounting officer, is responsible for ensuring adult eating disorder services (in patient) are commissioned in accordance with the priorities agreed. This will involve ensuring contracts are put in place with the relevant providers, based upon integrated care pathways.

Contracts will be the key means of delivering objectives and therefore they need to have a wider scope. The accountable officer will need to ensure that all contracts and service level agreements:

• meet the standards of service quality and safety expected, escalating any concerns as appropriate (for example, to the care quality commission, NHS England)
• fit the priorities and objectives of the long term plan
• enable the provision of reliable information on cost and volume of services
• fit the NHS oversight framework
• that contracts build where appropriate on existing joint investment plans
• that contracts are based upon cost effective services
• that contracts are based on integrated care pathways

The accountable officer, will need to ensure that regular reports are provided to the board of directors detailing actual and forecast expenditure, quality and activity for each contract.

Where the trust, as the commissioner, makes arrangements for the provision of services by non-NHS providers it is the accountable officer who is responsible for ensuring that the agreements put in place have due regard to the quality and cost-effectiveness of services provided. Before making any agreement with non-NHS providers, the trust should explore fully the scope to make maximum cost effective use of NHS facilities or services should they be available within South Yorkshire ICB area.

The director of finance and estates must maintain a system of financial monitoring to ensure the effective accounting of expenditure under the contract. This should provide a suitable audit trail for all payments made under the agreements but maintains patient confidentiality.

The director of finance and estates must account for out of area treatments or non contract activity financial adjustments in accordance with national guidelines.

8 Terms of service, allowances and payment of members of the board and employees

8.1 Remuneration Committee

The board of directors shall establish a Remuneration Committee, with clearly defined terms of reference, specifying which posts fall within its area of responsibility (currently the executive group (EG) (chief executive, executive directors and directors) and defined as ‘relevant staff’ in the terms of reference), its composition, and the arrangements for reporting.

The committee has:

• delegated authority to decide the appropriate remuneration and terms of service for the defined ‘relevant staff’ including the chief executive, executive directors and others as defined including:
  • all aspects of salary (including any performance related elements or bonuses)
  • provisions for other benefits, including pensions and cars
  • arrangements for termination of employment and other contractual terms
• delegated authority to decide the remuneration and terms of service of the defined ‘relevant staff’ to ensure they are fairly rewarded for their individual contribution to the trust having due regard to the trust’s circumstances and performance and to the provisions of any national arrangements for such members and staff where appropriate
• oversee appropriate contractual arrangements for defined ‘relevant staff’ including the proper calculation and scrutiny of termination payments taking account of such national guidance as is appropriate

The board of directors will after due consideration and amendment and if appropriate, approve proposals presented by the chief executive for setting of remuneration and conditions of service for those employees and officers not covered by the Committee.

8.2 Council of governors and Nomination Committee

The trust will pay allowances to the chairman and non-executive directors of the board of directors in accordance with instructions issued by the council of governors (following the receipt of recommendations from its Nominations Committee).

8.3 Funded establishment

The workforce plans incorporated within the annual plan will form the funded establishment.

The funded establishment of any department may not be varied without the approval of the chief executive and the chief operating officer.

8.4 Staff appointments

No executive director or employee may engage, re-engage, or re-grade employees, either on a permanent or temporary nature, or hire agency staff, or agree to changes in any aspect of remuneration:

• unless authorised to do so by the chief executive
• within the limit of his approved budget and funded establishment

The board of directors will approve procedures presented by the chief executive for the determination of commencing pay rates, condition of service, etc., for employees.

8.5 Processing payroll

The director of people and organisational development is responsible for:

• specifying timetables for submission of properly authorised time records and other notifications
• the final determination of pay and allowances
• making payment on agreed dates
• agreeing method of payment

The director of people and organisational development will issue instructions regarding:

• verification and documentation of data
• the timetable for receipt and preparation of payroll data and the payment of employees and allowances
• maintenance of subsidiary records for superannuation, income tax, social security and other authorised deductions from pay
• security and confidentiality of payroll information
• checks to be applied to completed payroll before and after payment
• authority to release payroll data under the provisions of the Data Protection Act 2018 (or successor legislation)
• methods of payment available to various categories of employee and officers
• procedures for payment by cheque, bank credit, or cash to employees and officers
• procedures for the recall of cheques and bank credits
• pay advances and their recovery
• maintenance of regular and independent reconciliation of pay control accounts
• separation of duties of preparing records and handling cash
• a system to ensure the recovery from leavers of sums of money and property due by them to the trust
• the payment of pay awards and arrears
• procedures for the change of bank account details by staff
• the secure operation of the system for payments by BACS and CHAPS

Appropriately nominated managers have delegated responsibility for:

• submitting time records and other notifications in accordance with agreed timetables
• completing time records and other notifications in accordance with the director of people and organisational development’s instructions and in the form prescribed by the director of people and organisational development
• submitting termination forms in the prescribed form immediately upon knowing the effective date of an employee’s or officer’s resignation, termination or retirement. Where an employee fails to report for duty or to fulfil obligations in circumstances that suggest they have left without notice, the Director of People and Organisational Development must be informed immediately

Regardless of the arrangements for providing the payroll service, the director of people and organisational development shall ensure that the chosen method is supported by appropriate (contracted) terms and conditions, adequate internal controls and audit review procedures and that suitable arrangements are made for the collection of payroll deductions and payment of these to appropriate bodies.

8.6 Contracts of employment

The board shall delegate responsibility to the director of people and OD for:

• ensuring that all employees are issued with a contract of employment in a form approved by the board and which complies with employment legislation
• dealing with variations to, or termination of, contracts of employment

9 Non-pay expenditure

9.1 Delegation of authority

The board will approve the level of non-pay expenditure on an annual basis and the chief executive will determine the level of delegation to budget managers.

The chief executive will set out:

• the list of managers who are authorised to place requisitions for the supply of goods and services
• the maximum level of each requisition and the system for authorisation above that level

The chief executive shall set out procedures on the seeking of professional advice regarding the supply of goods and services.

9.2 Choice, requisitioning, ordering, receipt and payment for goods and services

The requisitioner, in choosing the item to be supplied (or the service to be performed) shall always obtain the best value for money for the trust. In so doing, the advice of the trust’s procurement department on supply shall be sought. Where this advice is not acceptable to the requisitioner, the director of finance and estates (or the chief executive) shall be consulted.

The director of finance and performance shall be responsible for the prompt payment of accounts and claims. Payment of contract invoices shall be in accordance with contract terms, or otherwise, in accordance with national guidance.

The director of finance and estates will:

• advise the board of directors regarding the setting of thresholds above which quotations (competitive or otherwise) or formal tenders must be obtained; and, once approved, the thresholds should be incorporated in procedures and regularly reviewed
• prepare procedural instructions (where not already provided in the scheme of delegation or procedure notes for budget holders) on the obtaining of goods, works and services incorporating the thresholds
• be responsible for the prompt payment of all properly authorised accounts and claims
• be responsible for designing and maintaining a system of verification, recording and payment of all amounts payable. The system shall provide for:
  • a list of directors or employees (including specimens of their signatures) authorised to certify invoices
  • certification that:
    • goods have been duly received, examined and are in accordance with specification and the prices are correct
    • work done or services rendered have been satisfactorily carried out in accordance with the order, and, where applicable, the materials used are of the requisite standard and the charges are correct
    • in the case of contracts based on the measurement of time, materials or expenses, the time charged is in accordance with the time sheets, the rates of labour are in accordance with the appropriate rates, the materials have been checked as regards quantity, quality, and price and the charges for the use of vehicles, plant and machinery have been examined
    • where appropriate, the expenditure is in accordance with regulations and all necessary authorisations have been obtained
    • the account is arithmetically correct
    • the account is in order for payment.
  • a timetable and system for submission to the director of finance and estates of accounts for payment; provision shall be made for the early submission of accounts subject to cash discounts or otherwise requiring early payment
  • instructions to employees regarding the handling and payment of accounts within the finance department
• be responsible for ensuring that payment for goods and services is only made once the goods and services are received, (except as below)

Prepayments are only permitted where exceptional circumstances apply. In such instances:

• prepayments are only permitted where the financial advantages outweigh the disadvantages
• the appropriate director must provide, in the form of a written report, a case setting out all relevant circumstances of the purchase. The report must set out the effects on the trust if the supplier is at some time during the course of the prepayment agreement unable to meet his commitments
• the director of finance and estates will need to be satisfied with the proposed arrangements before contractual arrangements proceed (taking into account public procurement rules where the contract is above a stipulated financial threshold)
• the budget holder is responsible for ensuring that all items due under a prepayment contract are received and he must immediately inform the appropriate director or chief executive if problems are encountered

Official orders must:

• be consecutively numbered
• be in a form approved by the director of finance and estates
• state the trust’s terms and conditions of trade
• only be issued to, and used by, those duly authorised by the chief executive

Managers and officers must ensure that they comply fully with the guidance and limits specified by the director of finance and estates and that:

• all contracts, other than for a simple purchase permitted within the scheme of delegation or delegated budget, leases, tenancy agreements and other commitments which may result in a liability are notified to the director of finance and estates in advance of any commitment being made
• contracts above specified thresholds are advertised and awarded in accordance with all legislation in relation to public procurement enforced from time to time
• where consultancy advice is being obtained, the procurement of such advice must be in accordance with guidance issued by the department of health and social care
• no order shall be issued for any item or items to any firm which has made an offer of gifts, reward or benefit to directors or employees, other than:
  • isolated gifts of a trivial character or inexpensive seasonal gifts, such as calendars
  • conventional hospitality, such as lunches in the course of working visits
• no requisition or order is placed for any item or items for which there is no budget provision unless authorised by the director of finance and estates on behalf of the chief executive
• all goods, services, or works are ordered on an official order except works and services executed in accordance with a contract, purchases from petty cash or on purchase cards
• verbal orders, should only be used in exceptional circumstance, for example out of normal working hours, if within working hours, contact the purchasing department for assistance, if not a requisition number or call off order number or contact details must be provided, so the invoice for these goods or services can be directed to the correct budget holder
• orders are not split or otherwise placed in a manner devised to avoid the financial thresholds
• goods are not taken on trial or loan in circumstances that could commit the trust to a future uncompetitive purchase
• changes to the list of directors, employees and officers authorised to certify invoices are notified to the director of finance and estates
• purchases from petty cash are restricted in value and by type of purchase in accordance with instructions issued by the director of finance and estates
• petty cash records are maintained in a form as determined by the director of finance and estates

The chief executive and director of finance and estates shall ensure that the arrangements for financial control and financial audit of estates related contracts and property transactions comply with the guidance contained within health building note 00 to 08 and other relevant guidance. The technical audit of these contracts shall be the responsibility of the relevant director.

9.3 Grants and joint finance arrangements with local authorities and voluntary bodies

Payments to local authorities and voluntary organisations shall comply with procedures laid down by the director of finance and estates which shall be in accordance with relevant legislation.

10 Financial framework

10.1 External borrowing

The director of finance and estates will advise the board concerning the ability of the trust to pay interest and make repayments on any proposed new borrowing, within the limits set by the prudential borrowing limit guidance from NHS England. The director of finance and estates is also responsible for reporting periodically to the board concerning the public dividend capital (PDC) and overdrafts.

Any application for PDC or overdraft will only be made by the director of finance and estates and the chief executive or by an employee so delegated.

The director of finance and estates must prepare detailed procedural instructions concerning applications for PDC and overdrafts.

All short term borrowing should be kept to a minimum period of time possible, consistent with the cash flow position. Any short term borrowing requirement in excess of one month must be authorised by the director of finance and estates and chief executive or an employee so delegated.

All long term borrowing must be consistent with the plans outlined in the annual plan.

10.2 Investments

Temporary cash surpluses must be held only in such public or private sector investments as authorised by the board of directors and in line with NHS England’s guidance, “managing operating cash in NHS foundation trusts”.

The director of finance and estates is responsible for advising the board of directors on investments and shall therefore report annually to the board of directors concerning the performance of investments held.

The director of finance and estates will prepare detailed procedural instructions on the operation of investment accounts and on the records to be maintained.

The trust must comply with all relevant guidance published on investments from time to time in force.

10.3 Working capital facility

The board will ensure that funds are available for short-term cash flow management which may involve the negotiation of a working capital facility.

11 Capital investment, private financing, fixed asset registers and security of assets

11.1 Capital investment

The chief executive:

• shall ensure that there is an adequate appraisal and approval process in place for determining capital expenditure priorities and the effect of each proposal upon the annual plan
• is responsible for the management of all stages of capital schemes and for ensuring that schemes are delivered on time and to cost
• shall ensure that the capital investment is not undertaken without confirmation of purchaser(s) support and the availability of resources to finance all revenue consequences, including capital charges

For every capital expenditure proposal the chief executive shall ensure:

• that a business case (in line with the guidance issued by NHS England) is produced setting out:
  • an option appraisal of potential benefits compared with known costs to determine the option with the highest ratio of benefits to costs
  • appropriate project management and control arrangements
  • the involvement of appropriate trust personnel and external agencies
• that the director of finance and estates has certified professionally the costs and revenue consequences detailed in the business case

For capital schemes where the contracts stipulate stage payments, the chief executive will issue procedures for their management, incorporating the recommendations of NHS guidance and relevant capital investment guidance.

The director of finance and estates shall assess on an annual basis the requirement for the operation of the construction industry tax deduction scheme in accordance with HMRC guidance.

The director of finance and estates shall issue procedures for the regular reporting of expenditure and commitment against authorised expenditure.

The approval of a capital programme shall not constitute approval for the initiation of expenditure on any scheme.

The chief executive shall issue to the manager responsible for any scheme:

• specific authority to commit expenditure
• authority to proceed to tender
• approval to accept a successful tender.

The chief executive will issue a scheme of delegation for capital investment management in accordance with NHS guidance and the trust’s standing orders.

The director of finance and estates shall issue procedures governing the financial management, including variations to contract, of capital investment projects and valuation for accounting purposes.

11.2 Private finance

When the trust proposes to use finance that is to be provided other than through its internally generated funds, the following procedures shall apply:

• the director of finance and estates shall demonstrate that the use of private finance represents value for money and genuinely transfers significant risk to the private sector
• the proposal must be specifically agreed by the board of directors
• the proposal shall comply with guidance issued by NHS England, DoH or the Treasury

11.3 Asset registers

The chief executive is responsible for the maintenance of registers of assets, taking account of the advice of the director of finance and estates concerning the form of any register and the method of updating, and arranging for a physical check of assets against the asset register to be conducted once a year.

The trust shall maintain an asset register recording fixed assets. The minimum data set to be held within these registers shall be as specified in the capital accounting manual as issued by the department of health and social care.

Additions to the fixed asset register must be clearly identified to an appropriate budget holder and be validated by reference to:

• properly authorised and approved agreements, architect’s certificates, supplier’s invoices and other documentary evidence in respect of purchases from third parties
• stores, requisitions and wages records for own materials and labour including appropriate overheads
• lease agreements in respect of assets held under a finance lease and capitalised

Where capital assets are sold, scrapped, lost or otherwise disposed of, their value must be removed from the accounting records and each disposal must be validated by reference to authorisation documents and invoices (where appropriate).

The director of finance and estates shall approve procedures for reconciling balances on fixed assets accounts in ledgers against balances on fixed asset registers.

The value of each asset shall be indexed to current values in accordance with methods specified in the annual reporting manual issued by NHS England.

The value of each asset shall be depreciated using methods and rates as specified in the annual reporting manual issued by NHS England.

The director of finance and estates of the trust shall calculate and pay capital charges as specified in the annual reporting manual issued by NHS England.

11.4 Assets used for commissioner requested services

A register of assets used for the provision of commissioner requested services is required to be maintained in accordance with requirements issued by NHS England.

The trust, as licensee, shall not dispose of or relinquish control over, any relevant assets except with the consent in writing of NHS England and in accordance with the provisions of the licence.

An annual plan will be produced which will include proposed changes in the treatment of such assets and proposed disposals and acquisitions.

11.5 Security of assets

The overall control of fixed assets is the responsibility of the chief executive.

Asset control procedures (including fixed assets, cash, cheques and negotiable instruments, and also including donated assets) must be approved by the director of finance and estates. This procedure shall make provision for:

• recording managerial responsibility for each asset
• identification of additions and disposals
• identification of all repairs and maintenance expenses
• physical security of assets
• periodic verification of the existence of, condition of, and title to, assets recorded
• identification and reporting of all costs associated with the retention of an asset
• reporting, recording and safekeeping of cash, cheques, and negotiable instruments.

All discrepancies revealed by verification of physical assets to fixed asset register shall be notified to the director of finance and estates.

Whilst each employee and officer has a responsibility for the security of property of the trust, it is the responsibility of the board of directors and senior employees to apply such appropriate routine security practices in relation to NHS property as may be determined by the board of directors. Any breach of agreed security practices must be reported in accordance with instructions.

Any damage to the trust’s premises, vehicles and equipment, or any loss of equipment, stores or supplies must be reported by the board of directors and employees in accordance with the procedure for reporting losses.

Where practical, assets should be marked as trust property.

12 Stores and receipt of goods

Stores, defined in terms of controlled stores and departmental stores (for immediate use) should be:

• kept to a minimum
• subjected to annual stock take
• valued at the lower of cost and net realisable value

Subject to the responsibility of the director of finance and estates for the systems of control, overall responsibility for the control of stores shall be delegated to an employee by the chief executive. The day-to-day responsibility may be delegated by him to departmental employees and stores managers or keepers, subject to such delegation being entered in a record available to the director of finance and estates. The control of any pharmaceutical stocks shall be the responsibility of a designated pharmaceutical officer; the control of any fuel oil is the responsibility of a designated estates manager.

The responsibility for security arrangements and the custody of keys for any stores and locations shall be clearly defined in writing by the designated manager, pharmaceutical officer or estates manager. Wherever practicable, stocks should be marked as trust property.

The director of finance and estates shall set out procedures and systems to regulate the stores including records for receipt of goods, issues, and returns to stores, and losses.

Stocktaking arrangements shall be agreed with the director of finance and estates and there shall be a physical check covering all items in store at least once a year.

Where a complete system of stores control is not justified, alternative arrangements shall require the approval of the director of finance and estates.

The designated manager, pharmaceutical officer or estates manager shall be responsible for a system approved by the director of finance and estates for a review of slow moving and obsolete items and for condemnation, disposal, and replacement of all unserviceable articles. The designated officer shall report to the director of finance and estates any evidence of significant overstocking and of any negligence or malpractice (see also 13, disposals and condemnations, losses and special payments). Procedures for the disposal of obsolete stock shall follow the procedures set out for disposal of all surplus and obsolete goods.

For goods supplied via the NHS supply chain, the chief executive shall identify those authorised to requisition and accept goods from the store. The authorised person shall check receipt against the delivery note and shall satisfy himself that the goods have been received.

13 Disposals and condemnations, losses and special payments

13.1 Disposals and condemnations

The director of finance and estates must prepare detailed procedures for the disposal of assets including condemnations, and ensure that these are notified to managers.

When it is decided to dispose of a trust asset, the head of department or authorised deputy will determine and advise the director of finance and estates of the estimated market value of the item, taking account of professional advice where appropriate.

All unserviceable articles shall be:

• condemned or otherwise disposed of by an employee authorised for that purpose by the director of finance and estates
• recorded by the condemning officer in a form approved by the director of finance and estates that will indicate whether the articles are to be converted, destroyed or otherwise disposed of. All entries shall be confirmed by the countersignature of a second employee authorised for the purpose by the director of finance and estates

The condemning officer shall satisfy himself whether there is evidence of negligence in use and shall report any such evidence to the director of finance and estates who will take the appropriate action.

13.2 Losses and special payments

The director of finance and estates must prepare procedural instructions on the recording of and accounting for condemnations, losses, and special payments.

Losses are:

• losses of cash
• fruitless payments, including abandoned capital schemes, bad debts and abandoned claims
• damage to buildings, their fittings, furniture and equipment and loss of equipment and property in stores and in use

Special payments are:

• compensation payments made under legal obligation
• extra contractual payments to contractors
• ex-gratia payments
• extra statutory and extra regulatory payments

Any employee or officer discovering or suspecting a loss of any kind must either immediately inform their head of department, who must immediately inform the chief executive and the director of finance and estates or inform an officer charged with responsibility for responding to concerns involving loss confidentially. This officer will then appropriately inform the director of finance and estates and chief executive.

Where a criminal offence is suspected, the director of finance and estates must immediately inform the police if theft or arson is involved. In cases of fraud, bribery and corruption or of anomalies that may indicate fraud, bribery or corruption, the director of finance and estates must invoke the counter fraud, bribery and corruption policy.

The director of finance and estates must notify the counter fraud specialist and a report will be received by the Audit Committee of all frauds.

For losses apparently caused by theft, arson, neglect of duty or gross carelessness, except if trivial, the director of finance and estates must immediately notify:

• the board of directors
• the external auditor

The board shall approve the writing-off of losses. The levels of delegation are set out in the reservation of powers to the board and delegation of powers.

The director of finance and estates shall be authorised to take any necessary steps to safeguard the trust’s interests in bankruptcies and company liquidations and administrations.

For any loss, the director of finance and estates should consider whether any insurance claim could be made.

The director of finance and estates shall maintain a losses and special payments register in which write-off action is recorded. Summary details of all losses and special payments will be reported to the Audit Committee in a formal meeting.

14 Information technology

The director of finance and estates, who is responsible for the accuracy and security of the computerised financial data of the trust, shall:

• devise and implement any necessary procedures to ensure adequate (reasonable) protection of the trust’s data, programs and computer hardware for which he is responsible from accidental or intentional disclosure to unauthorised persons, deletion or modification, theft or damage, having due regard for the Data Protection Act 2018 (or successor legislation)
• ensure that adequate (reasonable) controls exist over data entry, processing, storage, transmission and output to ensure security, privacy, accuracy, completeness, and timeliness of the data, as well as the efficient and effective operation of the system
• ensure that adequate controls exist such that the computer operation is separated from development, maintenance and amendment
• ensure that an adequate management (audit) trail exists through the computerised system and that such computer audit reviews as he may consider necessary are being carried out.

The director of finance and estates shall satisfy himself that new financial systems and amendments to current financial systems are developed in a controlled manner and thoroughly tested prior to implementation. Where this is undertaken by another organisation, assurances of adequacy must be obtained from them prior to implementation.

The director of health informatics shall publish and maintain a freedom of information (FOI) publication scheme, or adopt a model publication scheme approved by the information commissioner. A publication scheme is a complete guide to the information routinely published by a public authority. It describes the classes of information about the trust that is made publicly available.

In the case of computer systems which are proposed general applications (for example, including those applications which the majority of NHS bodies in the Region wish to sponsor jointly) all responsible directors and employees will send to the director of finance and estates:

• details of the outline design of the system
• in the case of packages acquired either from a commercial organisation, from the NHS, or from another public sector organisation, the operational requirement

The director of finance and estates shall ensure that contracts for computer services for financial applications with another health organisation or any other agency shall clearly define the responsibility of all parties for the security, privacy, accuracy, completeness, and timeliness of data during processing, transmission and storage. The contract should also ensure rights of access for audit purposes.

Where another health organisation or any other agency provides a computer service for financial applications, the director of finance and estates shall periodically seek assurances that adequate controls are in operation.

The director of Health Informatics shall ensure that risks to the trust arising from the use of IT are effectively identified and considered and appropriate action taken to mitigate or control risk. This shall include the preparation and testing of appropriate disaster recovery plans.

Where computer systems have an impact on corporate financial systems the director of finance and estates shall satisfy himself that:

• systems acquisition, development and maintenance are in line with corporate policies such as an information technology strategy
• data assembled for processing by financial systems is adequate, accurate, complete and timely, and that a management (audit) trail exists
• staff have access to such data
• such computer audit reviews are being carried out as are considered necessary
• appropriate cybersecurity measures are in place

15 Patient’s property

The trust has a responsibility to provide safe custody for money and other personal property (hereafter referred to as “property”) handed in by patients, in the possession of unconscious, confused or disorientated patients, or found in the possession of patients dying in hospital or dead on arrival.

The chief operating officer is responsible for ensuring that patients or their guardians, as appropriate, are informed before or at admission by:

• notices and information booklets
• hospital admission documentation and property records
• the oral advice of administrative and nursing staff responsible for admissions

That the trust will not accept responsibility or liability for patients’ property brought into trust premises, unless it is handed in for safe custody and a copy of an official patients’ property record is obtained as a receipt.

The director of finance and estates must provide detailed written instructions on the collection, custody, investment, recording, safekeeping, and disposal of patients’ property (including instructions on the disposal of the property of deceased patients and of patients transferred to other premises) for all staff whose duty is to administer, in any way, the property of patients. Due care should be exercised in the management of a patient’s money in order to maximise the benefits to the patient.

Where instructions require the opening of separate accounts for patients’ moneys, these shall be opened and operated under arrangements agreed by the director of finance and estates.

In all cases where property of a deceased patient is of a total value in excess of £5,000 (or such other amount as may be prescribed by any amendment to the Administration of Estates (Small Payments) Act 1965), the production of probate or letters of administration shall be required before any of the property is released. Where the total value of property is £5,000 or less, forms of indemnity shall be obtained.

Where a deceased patient is intestate and there is no lawful next of kin, details of any monies or valuables held should be notified to the treasury solicitor.

Any funeral expenses necessarily borne by the trust in respect of a deceased patient shall be reimbursed from any of the patient’s monies held by the trust.

Staff should be informed, on appointment, by the appropriate departmental or senior manager of their responsibilities and duties for the administration of the property of patients.

Where patients’ property or income is received for specific purposes and held for safekeeping the property or income shall be used only for that purpose, unless any variation is approved by the donor or patient in writing.

16 Funds held on trust

These policies and procedures should be consistent with the NHS charities guidance as appropriate and as a minimum should cover the following:

• receipting and accounting for income donations
• investment management (including banking and pooling arrangements)
• management of the number of funds and their balances.

The reserved powers of the board and the scheme of delegation make clear where decisions regarding the exercise of dispositive discretion are to be taken and by whom. Directors and officers must take account of that guidance before taking action and ensure that commitments against individual funds are consistent with their specific objects. SFI are intended to provide guidance to persons who have been delegated to act on behalf of the corporate trustee.

As management processes overlap most of the sections of these standing financial instructions will apply to the management of funds held on trust.

The overriding principle is that the integrity of each trust must be maintained and statutory and trust obligations met. Materiality must be assessed separately from exchequer activities and funds.

16.1 Income

All gifts, donations and proceeds of fund raising activities which are intended for the trust’s use shall be handed immediately to the director of finance and estates or manager or employee nominated by him, to be banked directly.

All gifts and donations accepted shall be received and held in the name of the trust and administered in accordance with the trust’s policy, subject to the terms of specific charitable funds. As the trust can accept gifts or donations only for purposes relating to the NHS, managers and employees shall, in cases of doubt, consult the director of finance and estates before accepting any gifts or donations.

Where it becomes necessary for the trust to obtain a grant of representation in order to obtain a legacy due to the trust under the terms of a will, the director of finance and estates shall be the trust’s nominee for this purpose. Where appropriate the director of finance and estates shall seek legal advice upon the liabilities and other implications for the trust of obtaining any such grant of representation.

All managers and employees who receive enquiries regarding legacies shall keep the director of finance and estates, or person nominated by him, informed and shall keep an appropriate record. After the death of a benefactor all correspondence concerning a legacy shall be dealt with on behalf of the trust by the director of finance and estates who alone will be empowered to legally acknowledge receipt of the legacy on behalf of the trust.

The director of finance and estates shall advise the board of directors on the financial implications of any proposal for fund raising activities which the trust may initiate, sponsor or approve.

16.2 Expenditure

All expenditure from charitable funds, except legitimate expenses of administering and managing those funds and expenditure for research purposes, must be for the benefit of patients or staff.

Expenditure of any charitable funds shall be conditional upon the goods and services being within the terms of the appropriate charitable fund and upon the proviso that the expenditure does not result in further payments by the trust which have not been agreed and funded.

For expenditure up to £1,000 the payment shall be authorised by the nominated fund holder.

For expenditure above £1,000 but below £5,000 the authorising signatory will be the director of finance and estates.

For expenditure above £5,000 but below £10,000 the authorising signatory will be the chief executive.

On expenditure over £10,000 the request will require Charitable Funds Committee approval.

16.3 Investments

Charitable funds shall be invested by the director of finance and estates in accordance with the trust’s policy and statutory requirements.

In managing the investments the trust shall take due account of the written advice received from its duly appointed investment advisors.

All title deeds to investments and property shall either be deposited with the trust’s nominated bankers or investment advisors or held securely in a safe with suitably restricted access. A record shall be kept of all physical movements of title deeds.

The director of finance and estates shall be responsible for the maintenance of written instructions covering all aspects of transactions involving charitable funds.

The director of finance and estates shall maintain such accounts and records as are necessary to record and protect all transactions and funds of the trust as corporate trustee of charitable funds, including an investments register. These accounts and records shall be maintained in accordance with the requirements of the charity commission and other legislative requirements, including any directions of the Secretary of State.

New charitable funds will only be opened where the wishes of benefactors cannot be accommodated within existing funds and in all cases must comply with the requirements of the charity commission.

17 Tendering and contract procedure

The procedure for making all contracts by or on behalf of the trust shall comply with these standing financial instructions.

Directives by the Council of the European Union promulgated by the Department of Health and Social Care (DoH) prescribing procedures for awarding all forms of contracts shall have effect as if incorporated in these standing financial instructions.

The trust should have policies and procedures in place for the control of all tendering activity carried out through the e-tendering system.

The trust shall comply as far as is practicable with the requirements of the Department of Health and Social Care and NHSI current guidance related to capital investment and “Health Building Note 00-08” in respect of estate and property transactions. In the case of management consultancy contracts the trust shall comply as far as is practicable with Department of Health and Social Care guidance “The Procurement and Management of Consultants within the NHS”.

17.1 Formal competitive tendering

The trust shall ensure that competitive tenders are invited for:

• the supply of goods, materials and manufactured articles
• for the rendering of services including all forms of management consultancy services (other than specialised services sought from or provided by the DoH)
• for the design, construction and maintenance of building and engineering works (including construction and maintenance of grounds and gardens)
• for disposals.

Where the trust elects to invite tenders for the supply of healthcare these standing financial instructions shall apply as far as they are applicable to the tendering procedure.

Formal tendering procedures need not be applied by officers to whom powers have been delegated by the chief executive, without reference to the chief executive where:

• the estimated expenditure or income does not, or is not reasonably expected to, exceed £50,000
• where the supply is proposed under special arrangements negotiated by the DoH in which event the said special arrangements must be complied with
• regarding disposals as set out in standing financial instruction 18

Formal tendering may be waived in the following circumstances:

• in very exceptional circumstances where the chief executive and the director of finance and estates decide that formal tendering procedures would not be practicable or the estimated expenditure or income would not warrant formal tendering procedures
• the director of finance and estates will approve the waiver up to the limit of £250,000
• the chief executive will approve the waiver over £250,000 but up to the limit of £500,000
• the Finance, Digital and Estates Committee (FDE) will approve the waiver over £500,000 but up to the limit of £1,250,000
• in excess of £1,250,000, approval of the board of directors will be required following the receipt of a report from the director of finance and estates
• where the requirement is covered by an existing contract
• where NHS Supply Chain agreements are in place and have been approved by the board
• where a consortium arrangement is in place and a lead organisation has been appointed to carry out tendering activity on behalf of the consortium members
• the timescale genuinely precludes competitive tendering. Failure to plan the work properly is not a justification for single tender
• specialist expertise is required and is available from only one source
• the task is essential to complete the project, and arises as a consequence of a recently completed assignment and engaging different consultants for the new task would be inappropriate
• there is a clear benefit to be gained from maintaining continuity with an earlier project. However, in such cases the benefits of such continuity must outweigh any potential financial advantage to be gained by competitive tendering
• where provided for in the capital investment manual
• for the provision of legal advice and services providing that any legal firm or partnership commissioned by the trust is regulated by the solicitors regulation authority for the conduct of their business (or by the bar council for England and Wales in relation to the obtaining of counsel’s opinion) and are generally recognised as having sufficient expertise in the area of work for which they are commissioned. The director of finance and estates will ensure that any fees paid are reasonable and within commonly accepted rates for the costing of such work.

The limited application of the single tender rules should not be used to avoid competition or for administrative convenience or to award further work to a consultant originally appointed through a competitive procedure. Requests for single tender will be approved by the director and will be submitted to the chief executive and director of finance and estates for consideration.

Where it is decided that competitive tendering is not applicable and should be waived by virtue of 17.5.3 or 17.5.4 above the fact of the waiver and the reasons should be documented and reported to the Audit Committee in a formal meeting.

Except where standing financial instructions 17.1 and 17.6 apply, the trust shall ensure that invitations to tender are sent to a sufficient number of firms or individuals to provide fair and adequate competition as appropriate, and in no case less than three firms or individuals, having regard to their capacity to supply the goods or materials or to undertake the services or works required.

Items estimated to be below the limits set in this standing financial instruction for which formal tendering procedures are not used which subsequently prove to have a value above such limits shall be documented and reported by the chief executive to the board of directors in a formal meeting.

17.2 Invitation to tender

Every tender for goods, materials, manufactured articles supplied as part of a works contract and services shall embody such of the main contract conditions as may be appropriate in accordance with the contract forms described below.

Every tender for estates related works, shall embody or be in the terms of the current edition of the appropriate joint contracts tribunal (JCT) or new engineering contracts (NEC series) standard forms of contract amended to comply with any specific NHS recommendations or the reasonable requirements of the trust as approved by the director of finance and estates. When the content of the works is primarily engineering, tenders shall embody or be in the terms of the general conditions of contract recommended by the institution of engineering and technology (IET). The standard documents should be amended to comply with any specific NHS recommendations, in minor respects, to cover special features of individual projects. The advice of architects or quantity surveyors and specialist consultants should be sought where appropriate.

Every tender for goods, materials, services (including consultancy services) or disposals shall embody such of the NHS standard contract conditions as are applicable. Every tenderer must have given or give a written undertaking not to engage in collusive tendering or other restrictive practice, must not use “cover” prices and must maintain confidentiality.

17.3 Receipt, safe custody and record of formal tenders

Formal competitive tenders with a value of £50,000 or more shall be received via the e-tendering system.

All tender returns are electronically audited and date stamped. The director of finance and estates should nominate a director to electronically unseal tenders, until such time as they are ‘unsealed’, the tenders remain secure and cannot be viewed.

17.4 Opening formal tenders

Directors designated by the chief executive ‘unseal’ the tender bids received, utilising their individual log-in details.

17.5 Admissibility and acceptance of formal tenders

If for any reason the designated officers are of the opinion that the tenders received are not strictly competitive (for example, because their numbers are insufficient or any are amended, incomplete or qualified) no contract shall be awarded without the approval of the chief executive.

17.6 Late tenders

Tenders received after the due time and date, but prior to the unsealing of the other tenders, may be considered only if the chief executive or his nominated officer and the director of finance and estates decide that there are exceptional circumstances.

Only in the most exceptional circumstances will a tender be considered which is received after the opening of the other tenders and only then if the process of evaluation and adjudication has not started.

While decisions as to the admissibility of late, incomplete or amended tenders are under consideration, the tender documents shall be kept strictly confidential, recorded, and held in safe custody by the chief

Incomplete tenders (for example, those from which information necessary for the adjudication of the tender is missing) and amended tenders (for example, those amended by the tenderer upon his own initiative either orally or in writing after the due time for receipt) should be dealt with in the same way as late tenders under SFI 17.10.

Where examination of tenders reveals errors, which would affect the tender figure, the tenderer is to be given details of such errors and afforded the opportunity of confirming or withdrawing his offer.

Necessary discussions with a tenderer of the contents of his tender, in order to elucidate technical points etc., before the award of a contract, need not disqualify the tender.

While decisions as to the admissibility of late, incomplete, or amended tenders are under consideration and while retender are being obtained, the tender documents shall remain strictly confidential and retained on the e-tendering portal.

Where only one tender or quotation is received the trust shall, as far as practicable, ensure that the price to be paid is fair and reasonable and will ensure value for money for the trust.

17.7 Acceptance of formal tenders

The lowest tender, if payment is to be made by the trust, or the highest, if payment is to be received by the trust, shall be accepted unless there are good and sufficient reasons to the contrary. Such reasons shall be set out in the contract file and reported by the chief executive to the Audit Committee in a formal meeting for approval.

It is accepted that for professional services such as management consultancy, the lowest price does not always represent the best value for money. Other factors affecting the success of a project include:

• experience and qualifications of team members
• understanding of client’s needs
• feasibility and credibility of proposed approach
• ability to complete the project on time.

Where other factors are taken into account in selecting a tenderer, these must be clearly recorded and documented in the contract file, and the reason(s) for not accepting the lowest tender clearly stated.

No tender shall be accepted which will commit expenditure in excess of that which has been allocated by the trust and which is not in accordance with these Instructions except with the authorisation of the chief executive.

The use of these procedures must demonstrate that the award of the contract was:

• not in excess of the going market rate or price current at the time the contract was awarded
• that best value for money was achieved.

Where the form of contract includes a fluctuation clause all applications for price variations must be submitted in writing by the tenderer and shall be approved by the chief executive or nominated officer.

All tenders should be treated as confidential and should be retained for inspection.

Where a tenderer alleges an error has been made in a tender submitted if the seal has not yet removed he may ask for the original tender to be withdrawn and may submit a revised tender within the original tender period.

A tenderer seeking to amend his tender, after the date of opening of tenders, will be advised that the original tender must stand unless he wishes to withdraw it.

A tenderer may withdraw his tender at any time before acceptance.

At any time prior to acceptance of a tender by the trust the chief executive, or any officer authorised by him, may authorise post tender clarification if it appears that a marked financial advantage may accrue to the trust or if subsequently there has been a bona fide change in specification which is not so significant as to warrant abandonment of the procedure and the invitation of further tenders. This should be undertaken with equality for all tenderers.

The time during which all clarifications shall be completed by receipt of written confirmation of any amendments shall be specified in the invitation and may be extended by notice in writing from the trust to tenderers at any time.

After the responsible officer has examined all tenders received he will prepare a schedule of tenders and prices for submission to the chief executive, who will authorise acceptance of the lowest tender if payment is to be made by The trust or highest if payment is to be received by the trust, unless there are sufficient reasons to the contrary.

17.8 Verification of supplier, contract, consultant capacity, technical capability and competence prior to placing an order

Prior to placing an order with consultants or contractors the chief executive or the nominated officer should ensure that appropriate checks are carried out as to the capacity, technical capability and competence of consultants and contractors and that the director of finance and estates is satisfied that their financial standing is adequate (to be verified immediately prior to a contract being let).

• In the case of the supply of goods and materials the chief executive or the nominated officer is satisfied as to their capacity and capability etc, and that the director of finance and estates is satisfied that their financial standing is adequate (to be verified immediately prior to a contract being let).
• In the case of the provision of healthcare services to the trust by a private sector provider, the director of finance and estates is satisfied as to their financial standing and the chief nurse is satisfied as to their technical and medical competence.
• Suppliers, contractors and consultant shall conform at least with the requirements of the Health and Safety at Work Act 1974, and any amending and or other related legislation concerned with the health, safety and welfare of workers and other persons, and to any relevant British Standard Code of Practice issued by the British Standard Institution or their trading agreement equivalents. Firms must provide to the appropriate manager a copy of its safety policy and evidence of the safety of plant and equipment, when requested.
• Firms shall conform to all relevant trust policies.

17.9 Quotations

Are required where formal tendering procedures are not adopted and where the intended expenditure or income exceeds, or is reasonably expected to exceed £5,000 but not exceed £50,000.

Where quotations are required they should be obtained from:

• two firms or individuals based on specifications or terms of reference prepared by, or on behalf of, the trust for intended expenditure to be between £5,000 and £15,000
• at least three firms or individuals based on specifications or terms of reference prepared by, or on behalf of, the trust for intended expenditure to be between £15,000 and £50,000

Quotations should be in writing or in electronic form, unless the chief executive or his nominated officer determines that it is impractical to do so, in which case quotations may be obtained by phone. Confirmation of phone quotation should be obtained as soon as possible and the reasons why the phone quotation was obtained should be set out in a permanent record.

Quotations with an estimated value of £15,000 and £50,000 will be returned to the deputy director of finance.

The date and time of receipt shall be endorsed over the flap of the envelope, if received by post, and be given a reference number, which information, together with the contract reference number will be entered in the finance control of quotation and tenders register. Electronic submissions will be electronically referenced and recorded.

Opening of quotations, quotations shall be opened jointly by two of the three officers; deputy director of finance, head of financial management (MH), head of financial planning and reporting, head of financial management (children’s and communities) or their nominated deputies.

The value of the quotation will be recorded in the quotations and tenders register. Electronic submissions will be electronically referenced and recorded. The two officers opening the quotations shall sign all entries in the register. When all quotations have been recorded the documentation will be passed to the head of estates or purchasing manager as appropriate.

The chief executive or his nominated officer should evaluate the quotations and select the one which gives the best value for money. If this is not the lowest then this fact and the reasons why the lowest quotation was not chosen should be in a permanent record.

All quotations should be treated as confidential and should be retained for inspection for 3 years.

Quotations may be sought without a competitive process may be obtained for the following purposes:

• the supply of goods and services of a special character for which it is not, in the opinion of the chief executive and director of finance and estates, possible or desirable to obtain competitive quotations
• the goods and services are required urgently.

Where tendering or competitive quotation is not required trusts should adopt one of the following alternatives:

The trust shall use the NHS supply chain for procurement of all goods and services, if demonstrates value for money, unless the chief executive and director of finance and estates deem it inappropriate. The decision to use alternative sources must be documented.

If the trust does not use the NHS supply chain, Where tenders or quotations are not required, because expenditure is below £2,000, the trust shall procure goods and services in accordance with procurement procedures approved by the trust.

The chief executive shall be responsible for ensuring that best value for money can be demonstrated for all services provided under contract or in-house. The trust may also determine from time to time that in-house services should be market tested by competitive tendering.

17.10 Contracts

The board of directors may only enter into contracts on behalf of the trust and shall comply with:

• these standing financial instructions
• trade agreement directives and other statutory provisions
• any relevant directions including the capital investment manual, estate code and guidance on the procurement and management of consultants
• such of the NHS standard contract conditions as are applicable.

Where appropriate contracts shall be in or embody the same terms and conditions of contract, as was the basis on which tenders or quotations were invited.

In all contracts made by the trust, the board of directors shall endeavour to obtain the best value for money. The chief executive shall nominate an officer who shall oversee and manage each contract on behalf of the trust.

Personnel and agency or temporary staff contracts, The chief executive shall nominate officers with delegated authority to enter into contracts of employment, regarding staff, agency staff or temporary staff service contracts.

17.10.1 Healthcare services contract

Healthcare service contracts made between two NHS organisations, for example, with health organisations for the supply of healthcare services, must be contracts based on model contracts issued by the department of health and social care.

Cancellation of contracts, except where specific provision is made in model forms of contracts or standard schedules of conditions approved for use within the NHS there shall be inserted in every written contract a clause empowering the trust to cancel the contract and to recover from the contractor the amount of any loss resulting from such cancellation, if the contractor shall have offered, or given or agreed to give, any person any gift or consideration of any kind as an inducement or reward for doing or forbearing to do or for having done or forborne to do any action in relation to the obtaining or execution of the contract or any other contract with the trust, or for showing or forbearing to show favour or disfavour to any person in relation to the contracts or any other contract with the trust, or if the like acts shall have been done by any person employed by him or acting on his behalf (whether with or without the knowledge of the contractor), or if in relation to any contract with the trust the contractor or any person employed by him or acting on his behalf shall have committed any offence under the Fraud Act 2006 and other appropriate legislation including the Bribery Act 2010.

17.10.2 Determination of contracts for failure to deliver goods or material

There shall be inserted in every written contract for the supply of goods or materials a clause to secure that, should the contractor fail to deliver the goods or materials or any portion thereof within the time or times specified in the contract, the trust may without prejudice determine the contract either wholly or to the extent of such default and purchase other goods, or material of similar description to make good (a) such default, or (b) in the event of the contract being wholly determined the goods or materials remaining to be delivered. The clause shall further secure that the amount by which the cost of so purchasing other goods or materials exceeds the amount which would have been payable to the contractor in respect of the goods or materials shall be recoverable from the contractor.

Contracts involving funds held on trust shall do so individually to a specific named fund. Such contracts involving charitable funds shall comply with the requirements of the Charities Act.

18 Disposals

Competitive tendering or quotation procedures shall not apply to the disposal of:

• any matter in respect of which a fair price can be obtained only by negotiation or sale by auction as determined (or pre-determined in a reserve) by the director of finance and estates or his nominated officer
• obsolete or condemned articles and stores, which may be disposed of in accordance with the supplies policy of the trust
• items to be disposed of with an estimated sale value of less than £5,000, this figure to be reviewed annually
• items arising from works of construction, demolition or site clearance, which should be dealt with in accordance with the relevant contract
• land or buildings concerning which guidance has been issued by NHS England, but subject to compliance with such guidance

19 Acceptance of gifts by staff

The chief executive through the director of corporate assurance shall ensure that all staff are made aware of the conflicts of interest policy which refers to the acceptance of gifts and other benefits in kind by staff and that the required registers are in place and maintained. This policy should follow the guidance contained in the department of health and social care standards of business conduct for NHS staff.

20 Retention of documents

The chief executive shall be responsible for the management of all NHS records by the trust, regardless of the media on which they are held.

The chief executive shall ensure that the trust adopts information governance arrangements which comply with the principles and guidelines contained in the department of health and social care’s “Records management: NHS code of practice parts 1 and 2 (part 1: 5 April 2006; and part 2: 8 January 2009) as may be varied from time to time (the “Records management code”).

The records held in archives shall be capable of retrieval by authorised persons in accordance with the provisions of the records management code.

Records held by the trust under the records management code shall only be destroyed at the express instigation of the chief executive. The chief executive shall ensure that records are maintained of documents so destroyed in accordance with the trust’s policy.

21 Risk management

The chief executive shall ensure that the trust has a programme of risk management, which must be approved and monitored by the board of directors.

The programme of risk management shall include:

• a process for identifying, quantifying and prioritising risks and potential liabilities
• engendering among all levels of staff a positive attitude towards the control of risk
• management processes to ensure all significant risks and potential liabilities are addressed including effective systems of internal control, cost effective insurance cover, and decisions on the acceptable level of retained risk
• contingency plans to offset the impact of adverse events
• audit arrangements including; internal audit, clinical audit, health and safety review
• decision on which risks shall be insured
• arrangements to review the risk management programme

The existence, integration and evaluation of the above elements will assist in providing a basis to make an annual governance statement within the annual report and accounts.

The director of finance and estates shall ensure that insurance arrangements exist in accordance with the risk management programme.

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Document control

• Version: 7.
• Unique reference number: 113.
• Date ratified: 25 January 2024.
• Name of originator or author: Director of corporate assurance and board secretary.
• Name of responsible individual or committee: Board of directors.
• Date issued: 8 February 2024.
• Review date: 28 February 2027.
• Target audience: All staff.

Page last reviewed: December 16, 2024
Next review due: December 16, 2025

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