Northern Ireland news

Auditors express concern at how £135m was recorded in health spending

 Auditors have expressed concern at how the Department of Health has accounted for £135 million of spend in its annual budget.
David Young, PA

Auditors have expressed concern at how the Department of Health has accounted for £135 million of spend in its annual budget.

Auditor general Kieran Donnelly said he disagreed with how the department chose to record the spend in its accounts.

He said the accounting practices in relation to the £135 million was not in line with Finance Department guidelines or international accounting standards.

Mr Donnelly said the effect of the approach taken by the department meant the funds had been retained within the health and social care sector when they would otherwise have been redistributed to other Stormont departments or returned to Treasury.

The issues relate to how three liabilities were recorded – expenditure on a £500 Covid-19 recognition payment for staff, specifically those working in the independent sector; recording of sick pay liabilities with the NI Ambulance Service; and recording of payroll liabilities for clinical excellence awards.

In each case, the liabilities were recorded as accruals in the accounts, rather than provisions.

Mr Donnelly said accruals relate to planned expenditure where there is certainty around the timing and amount of the financial obligation.

He said liabilities should be recorded as provisions in instances where there is uncertainty over the timing and amount of the payment.

The Auditor General said there was enough uncertainty over the three accounting issues for them to have been recorded as provisions in the departmental accounts.

He said treating the items as accruals rather than as provisions had the effect of securing funds from existing budgets for future payments.

“I am concerned by the number of examples of the Department of Health and the wider HSC sector applying an accounting treatment for liabilities that does not meet the Department of Finance’s budgetary guidance or International Accounting Standards,” he said.

“The department contends that this does not represent an attempt to circumvent DoF budgetary guidance in order to retain funds and I have no evidence that this is the case.

“Nevertheless, the effect is to retain a significant amount of funding, more than £135 million, within the HSC sector that would otherwise have been re-distributed within the Northern Ireland funding bloc or returned to the Treasury.”

Responding to the publication of the Audit Office report, a spokesman for the Department of Health said: “The department has received the NIAO report, which it will consider and respond through the appropriate channels.”

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