WHC (2003) 022

Parc CathaysCaerdydd CF10 3NQ

Cathays ParkCardiff CF10 3NQ

Issue Date: 07th March 2003 Status: Action

Title: Local Health Board Standing Financial Instructions

For Action by: Local Health Boards Action required See paragraph(s) : Adoptionby the Board

For Information to: Local Health Board Chairpersons, Chief Executives and Directors of Finance

Sender: Mrs Ann Lloyd - Director, NHS Wales

National Assembly contact(s) : Mrs Ali Edmunds - NHS Restructuring (Financial Issues) Tel. 029 20825846

Enclosure(s):

Tel: 029 20825111 GTN: 1208Llinell union/Direct line: 029 20825846

Ffacs/Fax: 029 20825429Minicom: 029 20823280

http://cymruweb.wales.nhs.uk

WELSH HEALTH CIRCULAR

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Distribution List:

Local Health Board ChairpersonsLocal Health Board Chief ExecutivesLocal Health Board Directors of Finance

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[Insert name] HEALTH BOARDSTANDING FINANCIAL INSTRUCTIONS

FEBRUARY 2003

INDEX

1 INTRODUCTION ............................................................................................................................... 5

1.1 GENERAL........................................................................................................................................ 51.2 TERMINOLOGY............................................................................................................................. 61.3 RESPONSIBILITIES AND DELEGATION ................................................................................... 7

2 AUDIT .................................................................................................................................................. 9

2.1 AUDIT COMMITTEE..................................................................................................................... 92.2 DIRECTOR OF FINANCE ............................................................................................................ 102.3 ROLE OF INTERNAL AUDIT...................................................................................................... 11

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2.4 FRAUD AND CORRUPTION....................................................................................................... 112.5 EXTERNAL AUDIT...................................................................................................................... 12

3 RESOURCE LIMIT CONTROL..................................................................................................... 12

4 POWYS LOCAL HEALTH BOARD AND THE BUSINESS SERVICES CENTRE................. 13

5 ALLOCATIONS, BUSINESS PLANNING, BUDGETS, BUDGETARY CONTROL, AND MONITORING 14

5.1 ALLOCATIONS ............................................................................................................................ 145.2 PREPARATION AND APPROVAL OF ANNUAL SERVICE AND COMMISSIONING PLANS AND BUDGETS 145.3 BUDGETARY DELEGATION ..................................................................................................... 155.4 BUDGETARY CONTROL AND REPORTING ........................................................................... 165.5 CAPITAL EXPENDITURE........................................................................................................... 175.6 MONITORING RETURNS ........................................................................................................... 17

6 ANNUAL ACCOUNTS AND REPORTS ....................................................................................... 17

7 BANKING ARRANGEMENTS....................................................................................................... 18

7.1 POWYS LHB AND THE BUSINESS SERVICES CENTRE BANKING PROCEDURES ......... 19

8 INCOME, FEES AND CHARGES AND SECURITY OF CASH, CHEQUES AND OTHER NEGOTIABLEINSTRUMENTS................................................................................................................................ 20

8.1 INCOME SYSTEMS...................................................................................................................... 208.2 FEES AND CHARGES.................................................................................................................. 208.3 DEBT RECOVERY ....................................................................................................................... 218.4 SECURITY OF CASH, CHEQUES AND OTHER NEGOTIABLE INSTRUMENTS ................ 21

9 COMMISSIONING .......................................................................................................................... 22

10 SERVICE AGREEMENTS FOR THE PROVISION OF SERVICES......................................... 23

10.1 THE SERVICE AND FINANCIAL FRAMEWORK (SAFF) ................................................... 2310.2 PERFORMANCE AGREEMENTS AND LONG TERM AGREEMENTS (LTAS) ................ 23

11 TERMS OF SERVICE, ALLOWANCES AND PAYMENT OF MEMBERS OF THE BOARD AND EMPLOYEES............................................................................................................................................................. 24

11.1 REMUNERATION AND TERMS OF SERVICE .................................................................... 2411.2 FUNDED ESTABLISHMENT.................................................................................................. 2511.3 STAFF APPOINTMENTS ........................................................................................................ 2511.4 PROCESSING PAYROLL........................................................................................................ 2511.5 CONTRACTS OF EMPLOYMENT ......................................................................................... 26

12 NON-PAY EXPENDITURE............................................................................................................. 27

12.1 DELEGATION OF AUTHORITY............................................................................................ 2712.2 CHOICE, REQUISITIONING, ORDERING, RECEIPT AND PAYMENT FOR GOODS AND SERVICES 2712.3 JOINT FINANCE ARRANGEMENTS WITH LOCAL AUTHORITIES AND VOLUNTARY BODIES 30

13 CAPITAL INVESTMENT, PRIVATE FINANCING, FIXED ASSET REGISTERS AND SECURITY OF ASSETS............................................................................................................................................................. 31

13.1 CAPITAL INVESTMENT ........................................................................................................ 3113.2 PRIVATE FINANCE ................................................................................................................ 3213.3 ASSET REGISTERS................................................................................................................. 3313.4 SECURITY OF ASSETS........................................................................................................... 33

14 STORES AND RECEIPT OF GOODS ........................................................................................... 34

15 PATIENTS' PROPERTY (APPLICABLE TO PROVIDING LHBS).......................................... 35

16 DISPOSALS AND CONDEMNATIONS, LOSSES AND SPECIAL PAYMENTS .................... 37

16.1 DISPOSALS AND CONDEMNATIONS ................................................................................. 3716.2 LOSSES AND SPECIAL PAYMENTS .................................................................................... 37

17 FINANCE INFORMATION MANAGEMENT AND TECHNOLOGY...................................... 38

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18 FUNDS HELD ON TRUST .............................................................................................................. 40

18.1 GENERAL................................................................................................................................. 4018.2 EXISTING TRUSTS ................................................................................................................. 4018.3 NEW TRUSTS .......................................................................................................................... 4018.4 SOURCES OF NEW FUNDS ................................................................................................... 4118.5 INVESTMENT MANAGEMENT ............................................................................................ 4218.6 DISPOSITION MANAGEMENT ............................................................................................. 4218.7 BANKING SERVICES ............................................................................................................. 4318.8 ASSET MANAGEMENT.......................................................................................................... 4318.9 REPORTING............................................................................................................................. 4318.10 ACCOUNTING AND AUDIT .................................................................................................. 4318.11 ADMINISTRATION COSTS.................................................................................................... 4418.12 TAXATION AND VAT ............................................................................................................ 44

19 ACCEPTANCE OF GIFTS AND HOSPITALITY BY STAFF.................................................... 44

19.1 GENERAL................................................................................................................................. 4419.2 GIFTS ........................................................................................................................................ 4419.3 HOSPITALITY ......................................................................................................................... 45

20 PAYMENTS TO INDEPENDENT CONTRACTORS .................................................................. 45

21 RETENTION OF DOCUMENTS.................................................................................................... 46

22 RISK MANAGEMENT .................................................................................................................... 47

APPENDIX A.............................................................................................................................................. 49

APPENDIX B ...................................................................................(SEE ATTACHED SPREADSHEET)

1 INTRODUCTION

GENERAL

The Local Health Board (Constitution, Membership and Procedures (Wales) Regulations 2003 (SI 2003 No. 149,Wales19), (“the 2003 Regulations”)) require that each Local Health Board shall make, and may vary or revoke,Standing Financial Instructions for the regulation of the conduct of its members and officers in relation to allfinancial matters with which they are concerned. These Standing Financial Instructions (SFIs) are issued inaccordance with the financial directions governed by Act of Parliament under the provisions of section 99(3),97(A) 4 and 7 of the National Health Service Act 1977 for the regulation of the conduct of the LHB in relation toall financial matters. They shall have effect as if incorporated in the Standing Orders (SOs). There will be atraining and communication programme administered by [the Director of Finance] to affect these SFIs.

These Standing Financial Instructions detail the financial responsibilities, policies and procedures adopted by the LocalHealth Board (LHB). They are designed to ensure that the LHBs financial transactions are carried out inaccordance with the law and Government policy in order to achieve probity, accuracy, economy, efficiency andeffectiveness. Any Schedule of Decisions Reserved to the Board and any Scheme of Delegation adopted by theLHB should be formulated and used in conjunction with these instructions.

These Standing Financial Instructions identify the financial responsibilities that apply to everyone working for the LHBand its constituent organisations. They do not provide detailed procedural advice and should be read inconjunction with the detailed departmental and financial procedure notes. The Director of Finance must approveall financial procedures.

Should any difficulties arise regarding the interpretation or application of any of the Standing Financial Instructions thenthe advice of the Director of Finance must be sought before acting. The user of these Standing FinancialInstructions should also be familiar with and comply with the provisions of the LHBs Standing Orders.

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Failure to comply with these Standing Financial Instructions and Standing Orders is a disciplinary matter thatcould result in dismissal.

Overriding Standing Financial Instructions – If for any reason these Standing Financial Instructions are not compliedwith full details of the non-compliance and any justification for non-compliance and the circumstances aroundthe non-compliance shall be reported to the next formal meeting of the [Audit Committee] for referring action orratification. All members of the Board and staff have a duty to disclose any non-compliance with these StandingFinancial Instructions to the Director of Finance as soon as possible.

All guidance references made throughout these Standing Financial Instructions (e.g. Assembly circulars) are availablethrough the HOWIS website available to all NHS employees.

TERMINOLOGY

Any expression to which a meaning is given in Health Service Acts, or in Directions made under the Acts, shall have thesame meaning in these instructions; and

(a) “Assembly” means the National Assembly for Wales, or the Welsh Assembly Government or any personwhose authority emanates from the Assembly or from Parliament.

(b) "LHB" means the [insert name] Local Health Board.

(c) “Board" means the Chair, officer, and Non-Officer members of the LHB collectively as a body.

(d) “Chair" is the person appointed by the Assembly to lead the Board and is required to ensure that itdischarges its overall responsibility for the LHB as a whole. The expression "the Chair of the LHB" shall bedeemed to include the Vice-Chair of the LHB if the Chair is absent from the meeting or is otherwiseunavailable.

(e) "Chief Executive" means the chief officer of the LHB. The Chief Executive is the Accountable Officer ofthe LHB;

(f) "Accountable Officer" means the NHS Officer responsible and accountable for funds entrusted to the LHB.He/she shall be responsible for ensuring the proper stewardship of public funds and assets. For this LHB itshall be the Chief Executive.

(g) “Member” includes officer and Non-Officer members, associate members and co-opted members of theBoard but excludes the Chair (for associate and co-opted member definitions see Standing Orders).

(h) "Officer member" means a member of the Local Health Board who is the holder of any office set out inRegulation 3(3) of the Local Health Boards (Constitution, Membership and Procedures)(Wales) Regulations.The Officer members shall be:

(a) the Chief Executive(b) the Medical Director(c) the Director of Finance(d) the Nurse Director

(i) "Non-Officer member" means a member of the Board who does not hold any office set out in Regulation3(3) of the Local Health Boards (Constitution, Membership and Procedures)(Wales) Regulations.

(j) “Funds held on trust” shall mean those funds that the LHB holds on date of incorporation, receives ondistribution by statutory instrument or chooses subsequently to accept under powers derived under S.90 ofthe NHS Act 1977, as amended. Such funds may or may not be charitable.

(k) "Committee" means a committee created by the LHB.

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(l) "Committee members" means the persons formally appointed by the Board to sit on or to chair specificcommittees.

(m) "Director of Finance " means the chief financial officer of the LHB.

(n) "Nominated officer" means an officer charged with the responsibility for discharging specific tasks withinthese Standing Orders and related Standing Financial Instructions.

(o) "Officer" means an employee of the LHB. In certain circumstances, the term officer may include a personwho is employed by another LHB or by a third party contracted to the LHB who carries out functions onbehalf of the LHB.

(p) “Legal Advisor” means the properly qualified person appointed by the LHB to provide legal services.

(q) “Head of Internal Audit,” means the lead manager responsible for internal audit provisions, and shallinclude external providers or agents of internal audit services.

(r) “Constitution Regulations" shall mean the Local Health Boards (Constitution Membership and Procedures)Regulations 2003 (SI 2003 No. 7).

(s) "Commissioning" means the process for determining the need for and for obtaining the supply of healthcareand related services by the LHB within available resources.

(t) "Budget" means a resource, expressed in financial terms, proposed by the LHB for the purpose of carryingout, for a specific period, any or all of the functions of the LHB.

(u) “Budget Holder” means the director or employee with delegated authority to manage finances for thespecific area of the organisation.

(v) “Grants” for the purposes of these Standing Order means a payment made to a Voluntary organisation under Section64 of the Health Services and Public Health Act 1968.

(w) “Long Term Agreements”(LTAs) for the purposes of these Standing Orders mean agreements with NHSproviders for the supply of health care services which are not legally binding.

(x) "SFIs" means Standing Financial Instructions.

(y) "SOs" means Standing Orders.

Wherever the title Chief Executive, Director of Finance, or other nominated officer is used in these instructions, it shallbe 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 thirdparties contracted to the LHB when acting on behalf of the LHB.

RESPONSIBILITIES AND DELEGATION

The Board exercises financial supervision and control by:

(a) formulating the financial strategy;

(b) requiring the submission and approval of budgets within approved resource allocations;

(c) defining and approving essential features in respect of important procedures and financial systems (includingthe need to obtain value for money); and

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(d) defining specific responsibilities placed on members of the Board and employees as indicated in the Schemeof Delegation document.

The Board has resolved that certain powers and decisions may only be exercised by the LHB in a formal session. Theseare set out in the ’Reservation of Powers to the LHB document. All other powers have been delegated to theBoard.

The Board will delegate responsibility for the performance of its functions in accordance with the Scheme of Delegationdocument adopted by the LHB.

Within the Standing Financial Instructions, it is acknowledged that the Chief Executive is ultimately accountable to theBoard for ensuring that the Board meets its obligation to perform its functions within the available financialresources. The Chief Executive has overall executive responsibility for the LHBs activities; is responsible to theBoard for ensuring that its financial obligations and targets are met and has overall responsibility for the LHBssystem of internal control.

The Chief Executive and Director of Finance will, as far as possible, delegate their detailed responsibilities, but theyremain 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 appointeesare notified of, and understand their responsibilities within these Instructions.

The Director of Finance is responsible for:

(a) implementing the LHBs financial policies and for co-ordinating any corrective action necessary to furtherthese policies;

(b) maintaining an effective system of internal financial control including ensuring that detailed financialprocedures and systems incorporating the principles of separation of duties and internal checks are prepared,documented and maintained to supplement these instructions;

(c) working with neighbouring LHBs and the Business Services Centre to establish a degree of standardisationin relation to financial control procedures and good working practice;

(d) ensuring that sufficient records are maintained to show and explain the LHBs transactions, in order todisclose, with reasonable accuracy, the financial position of the LHB at any time; and

Without prejudice to any other functions of the LHB, and employees of the LHB, the duties of the Director ofFinance include:

(e) the provision of financial advice to other members of the Board and employees;

(f) the design, implementation and supervision of systems of internal financial control; and

(g) the preparation and maintenance of such certificates, estimates, records and reports as the LHB may requirefor the purpose of carrying out its statutory duties, including the certification of LHB accounts.

All members of the Board and employees, severally and collectively, are responsible for:

(a) the security of the property of the LHB;

(b) avoiding loss;

(c) exercising economy and efficiency in the use of resources; and

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(d) conforming to the requirements of Standing Orders, Standing Financial Instructions, Financial Proceduresand the Scheme of Delegation.

Any contractor or employee of a contractor who is empowered by the Board to commit the LHB to expenditure or who isauthorised to obtain income shall be covered by these instructions. It is the responsibility of the Chief Executiveto ensure that such persons are made aware of this.

For any and all members of the Board and employees who carry out a financial function, the form in which financialrecords are kept and the manner in which members of the Board and employees discharge their duties must be tothe satisfaction of the Director of Finance.

AUDIT

AUDIT COMMITTEE

In accordance with Standing Orders the Board shall formally establish an Audit Committee, with clearly defined terms ofreference, which will provide an independent and objective view of internal control. The Committee will:

(a) review the establishment and maintenance of an effective system of internal control and risk management.Reviewing the adequacy of:- all risk and control related disclosure statements- the structures, processes and responsibilities for identifying and managing key risks facing the

organisation- the operational effectiveness of policies and procedures including the compliance with the Welsh Risk

Management Standards- the policies and procedures for all work related to fraud and corruption, ensuring these are complied with

in line with Directions issued by the Assembly.

(b) overseeing Internal and External Audit services;

(c) reviewing Internal and External Audit strategy and plans;

(d) report to the Board on Internal and External Audit matters;

(e) reviewing financial systems and accounting policies and procedures;

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(f) ensuring compliance with Standing Orders and Standing Financial Instructions and reviewing any proposedchanges to these. Material amendments may only be made in exceptional circumstances and where priorapproval from the NHS Wales Director of Finance has been received;

(g) examine the circumstances of any occasions when Standing Orders in whole or in part are waived, ensuringthe provisions in 2.1.1 (f) have been followed;

(h) reviewing losses and special payments cases, their provision and payment schedules, and checklists (whereappropriate) and ensuring each ‘case write-off’ approval is actioned in accordance with the delegated limitsset by the Assembly; and making recommendations to the Board.

(i) liasing with External Audit over issues raised in the course of their audits.

(j) reviewing the information prepared to support the Welsh Risk Management Standard statements prepared onbehalf of the Board and advising the Board accordingly.

Where the Audit Committee considers there is evidence of ultra vires transactions, evidence of improper acts, or if thereare other important matters that the committee wishes to raise, the Chair of the Audit Committee should raise thematter at a full meeting of the board. Exceptionally, the matter may need to be referred to the NHS WalesDirector of Finance at the Assembly NHS Wales department.

It is the responsibility of the Director of Finance to ensure an adequate internal audit service is provided and the AuditCommittee shall be involved in the selection process when/if an internal audit service provider is changed.

DIRECTOR OF FINANCE

The Director of Finance is responsible for:

(a) ensuring there are arrangements in place to review, evaluate and report on the effectiveness of internalfinancial control including the establishment of an effective internal audit function;

(b) ensuring that the internal audit is adequate and meets the NHS mandatory internal audit standards as directedby the Internal Audit manual available on the HOWIS website (hard copies of the Internal Audit manual areavailable from the NHS Corporate Governance division within the NHS Wales department of the Assembly);

(c) deciding at what stage to involve the police in cases of misappropriation and other irregularities notinvolving fraud or corruption;

(d) ensuring that an annual internal audit report is prepared for the consideration of the Audit Committee and theBoard. The report must cover:

(i) a clear opinion on the effectiveness of internal control in accordance with current Welsh RiskManagement Standards available on the Welsh Risk Pool intra net site accessible through HOWIS(hard copies are available from the NHS Corporate Governance division within the NHS Walesdepartment of the Assembly),

(ii) major internal financial control weaknesses discovered,(iii) progress on the implementation of internal audit recommendations,(iv) progress against plan over the previous year,(v) strategic audit plan covering the coming three years,(vi) a detailed plan for the coming year.

The Director of Finance or designated auditors are entitled without necessarily giving prior notice to require and receive:

(a) access to all records, documents and correspondence relating to any financial or other relevant transactions,including documents of a confidential nature;

(b) access at all reasonable times to any land, premises, members of the Board or employee of the LHB;

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(c) the production of any cash, stores or other property of the LHB under a member of the Board or employee'scontrol; and

(d) explanations concerning any matter under investigation.

ROLE OF INTERNAL AUDIT

Internal Audit will review, appraise and report upon:

(a) the extent of compliance with, and the financial effect of, relevant established policies, plans and procedures;

(b) the adequacy and application of financial and other related management controls;

(c) the appropriateness and accuracy of financial and other related management data;

(d) the extent to which the LHBs assets and interests are accounted for and safeguarded from loss of any kind,arising from:

(i) clinical negligence, personal injury and other litigation claims,(ii) fraud and other offences,(iii) waste, extravagance, inefficient administration,(iv) poor value for money or other causes.

(e) Internal Audit shall also independently verify the Welsh Risk Management Standards in accordance withguidance from the Assembly.

Whenever any matter arises which involves, or is thought to involve, irregularities concerning cash, stores, or otherproperty or any suspected irregularity in the exercise of any function of a pecuniary nature, the Director ofFinance must be notified immediately.

The Head of Internal Audit will normally attend Audit Committee meetings and has a right of access to all AuditCommittee members, the Chair and Chief Executive of the LHB.

The Head of Internal Audit will forward audit reports directly to the Director of Finance.

The Director of Finance must ensure that any points arising in Internal Audit reports are followed up and resolved bylocal management, to his satisfaction.

A summary of findings by Internal Audit will be presented to the Audit Committee on a regular basis. Any major itemsof weakness will be reviewed by the Committee in detail, with progress on the resolution of such weaknessesbeing reported to the Board.

The Head of Internal Audit shall be accountable to the Director of Finance. The reporting system for internal audit shallbe agreed between the Director of Finance, the Audit Committee, the Business Services Centre and the Head ofInternal Audit. The agreement shall be in writing and shall comply with the guidance on reporting contained inthe NHS Internal Audit Manual. The reporting system shall be reviewed at least every 3 years.

FRAUD AND CORRUPTION

In line with their responsibilities, the LHB Chief Executive and Director of Finance shall monitor and ensure compliancewith the Minister for Health and Social Services Directions on fraud and corruption.

The LHB shall nominate a suitable person to carry out the duties of the Local Counter Fraud Specialist as specified bythe Fraud and Corruption Manual and guidance (Countering Fraud in the NHS in Wales – available on theHOWIS website).

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The Local Counter Fraud Specialist shall report to the LHB Director of Finance and shall work with staff in the NHSCounter Fraud Services and the NHS Counter Fraud Services Operational Service (Wales) in accordance withthe Fraud and Corruption Manual.

EXTERNAL AUDIT

The external auditor is appointed by the Audit Commission and paid for by the LHB. The Audit Committee must ensurethat the External Auditors provide a cost-efficient service. If the service provided is deemed unsatisfactory, theAudit Committee must work with the External Auditors to resolve any issues. Where these issues are notresolved and the quality of service remains unsatisfactory, the Audit Committee will refer the matter to the AuditCommission.

RESOURCE LIMIT CONTROL

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The LHB is required by statutory provisions not to exceed its cash and resource limits. The Chief Executive hasoverall executive responsibility for the LHBs activities and is responsible to the LHB for ensuring that it stayswithin its cash and resource limit.

Resource limits are initially set out in the annual revenue allocations Welsh Health Circular but can vary in-year, for example with the allocation of additional funds from Welsh Assembly Government central budgets.

The Local Health Board will:

(a) prepare and agree annual balanced budgets, which meet all probity, value for money and effectivenessrequirements;

(b) agree Service and Financial Frameworks and Long Term Agreements (LTAs);

(c) provide monthly reports in the form required by the Assembly;

(d) ensure money drawn from the Assembly against the financing requirement arising from the resource limit isrequired for approved expenditure only, and is drawn down only at the time of need; and

(e) be responsible for ensuring that an adequate system of monitoring financial performance is in place to enable theLHB to fulfil its statutory responsibility not to exceed its Annual Revenue and Capital Resource Limits.

(f) in accordance with the Assembly circular reference WHC (2000) 52, be required to produce and agree with theAssembly a robust recovery plan where the LHB is recovering a deficit position

POWYS LOCAL HEALTH BOARD AND THE BUSINESS SERVICES CENTRE

The Business Services Centre (BSC) will provide a number of support functions to Local Health Boards andother clients across Wales. The four main support functions will be: -

- Contractor/Primary Care Services (including Business, Patient and Clinical Support services);- Finance Function support services (Appendix B);- Human Resources and Organisational Development; and- Information Management & Technology services.

These Standing Financial Instructions will focus on the Finance function support services and its relation to theLocal Health Boards.

The BSC in providing the finance functions as laid down in Appendix B will ensure consistency across allLHBs in Wales with regards to financial reporting and control. It will also provide an efficient, value for moneyservice for the LHBs and its other clients across Wales.

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The detailed functional split for LHBs and the BSC are set out in the attached Appendix B, this will be thestarting point for each LHB when working with the Director of Finance of the BSC to establish a basis forfuture services.

Each LHB will work with their respective BSC and neighbouring LHBs to establish effective Service LevelAgreements (SLAs).

It is important to note that although the BSC will be providing these additional services, ultimateresponsibility for all finance matters relating to the LHB will remain with the LHB Chief Executive andFinance Director.

ALLOCATIONS, BUSINESS PLANNING, BUDGETS, BUDGETARY CONTROL, ANDMONITORING

ALLOCATIONS

The Director of Finance of the LHB will:

(a) periodically review the basis and assumptions used for distributing allocations and ensure that these arereasonable and realistic and secure the LHBs entitlement to funds;

(b) ensure allocations are made in line with the agreed Long Term Agreements (LTAs);

(c) prior to the start of each financial year submit to the LHB for approval a report showing the total allocationsreceived and their proposed distribution including any sums to be held in reserve; and

(d) regularly update the LHB on significant changes to the initial allocation and the uses of such funds.

PREPARATION AND APPROVAL OF ANNUAL SERVICE AND COMMISSIONING PLANS ANDBUDGETS

The Chief Executive will compile and submit to the Board an Annual Service and Commissioning Plan which will signalthe key issues and priorities of the LHB for the following financial year and form the basis of discussions withproviders and other partners during the subsequent SaFF process.

Draft plans will be prepared by July each year, following completion of the SaFF process the LHB will review andfinalise its Annual Service & Commissioning Plan and a finalised plan should be published by 31st March. Fulldetails of the Annual Service & Commissioning Plan timetable can be found in section 9 of this document.

The LHB is responsible for preparation of the Annual Service and Commissioning Plan. The final plan will need to besigned off by the Board.

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A copy of the plan in draft and final version should be provided to the Regional Office. The finalised plan, together withthe SaFF, will form the basis of the Performance Agreement between the LHB and the Regional Office of NHSWales.

The Annual Service and Commissioning Plan will include:

(a) Strategic Context- Brief overview of Health Needs Assessment- Strategic themes from local published partnership strategies

(b) Resource Framework- Resource Assumptions and Financial Plan

(c) National and Local Priorities (Outline of Service proposals/plans and priorities in detail for year one and inoutline for years two and three for- Promotion and Protection Health- Primary Care- Secondary Care- Tertiary Care

(d) Supporting Strategies- Public Involvement- Clinical Governance- Estates- Workforce- IM&T- Operational Development and Training- Performance Management

Prior to the start of the financial year the Director of Finance will, on behalf of the Chief Executive, prepare and submitbudgets for approval by the Board. Such budgets will::

(a) be in accordance with the aims and objectives set out in the Annual Service and Commissioning Plan and theSaFF;

(b) accord with workload and manpower plans;

(c) be produced following discussion with appropriate budget holders;

(d) be prepared within the limits of available funds; and

(e) identify potential risks.

The Director of Finance shall monitor financial performance against budget and Annual Service and CommissioningPlan, periodically review them, and report to the Board.

All budget holders must provide information as required by the Director of Finance to enable budgets to be compiled.

The Director of Finance has a responsibility to ensure that adequate training is delivered on an on-going basis to budgetholders to help them manage successfully.

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 s31 of the Health Act 1999. This delegation must be in writing andbe accompanied by a clear definition of:

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(a) the amount of the budget;(b) the purpose(s) of each budget heading;(c) individual and group responsibilities;(d) authority to exercise virement;(e) achievement of planned levels of service; and(f) the provision of regular reports.

The Chief Executive and delegated budget holders must not exceed the budgetary total or virement limits set by theBoard.

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.

BUDGETARY CONTROL AND REPORTING

The Director of Finance will devise and maintain systems of budgetary control. These will include:

(a) monthly financial reports to the Board in a form approved by the Board containing:

(i) the operating cost statement to date showing trends and forecast year-end position (in line withcurrent Resource Accounting requirements as set out by the Assembly);

(ii) movements in working capital;

(iii) capital project spend and projected outturn against plan;

(iv) explanations of any material variances from plan;

(v) details of any corrective action where necessary and the Chief Executive's and/or Director ofFinance's view of whether such actions are sufficient to correct the situation;

(b) the issue of timely, accurate and comprehensible advice and financial reports to each budget holder, coveringthe areas for which they are responsible;

(c) investigation and reporting of variances from financial, workload and manpower budgets;

(d) monitoring of management action to correct variances; and

(e) arrangements for the authorisation of budget transfers.

Each Budget Holder is responsible for ensuring that:

(a) any likely overspending or reduction of income that cannot be met by virement is not incurred without theprior consent of the Board;

(b) the amount provided in the approved budget is not used in whole or in part for any purpose other than thatspecifically authorised subject to the rules of virement; and

(c) no permanent employees are appointed without the approval of the Chief Executive other than thoseprovided for within the available resources and manpower establishment as approved by the Board.

The Chief Executive is responsible for identifying and implementing cost improvements and income generationinitiatives in accordance with the requirements of the Annual Business Plan, the Health Improvement Plan and abalanced budget.

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CAPITAL EXPENDITURE

The general rules applying to delegation and reporting shall also apply to capital expenditure. (The particularapplications relating to capital are contained in SFI Chapter 13.)

MONITORING RETURNS

The Chief Executive is responsible for ensuring that the appropriate monitoring returns are submitted within the requireddeadlines to the requisite monitoring organisation. The Assembly will issue detailed guidance together with theappropriate forms early in the new financial year.

All monitoring returns must be supported by a detailed commentary signed by the Director of Finance or in his/herabsence the Chief Executive. This commentary should also highlight and quantify any significant risks andassess on a high, medium or low basis the probability of these risks maturing.

All information made available to the monitoring organisation should also be made available to the LHB Board. TheAnnual Service and Commissioning Plans approved by the board will form the basis of the budgeted figuresentered on the monitoring returns. These should be consistent with the approved SaFF.

ANNUAL ACCOUNTS AND REPORTS

The Director of Finance, on behalf of the LHB, will:

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(a) be responsible for ensuring that financial reports are prepared in accordance with the accounting policies andguidance given by the Assembly, the LHBs accounting policies, and generally accepted accounting practice;

(b) prepare, certify and submit annual financial reports to the NHS finance division within the NHS Walesdepartment of the Assembly in accordance with current guidelines; and

(c) submit annual financial reports to the NHS finance division within the NHS Wales department of the Assemblyin accordance with the timetable prescribed by that division of the Assembly.

The LHBs annual accounts must be audited by an auditor appointed by the Audit Commission and adopted bythe Board at a public meeting.

The LHB will publish an annual report, in accordance with guidelines on local accountability, and present it at apublic meeting. The document will comply with the Assembly’s Manual for Accounts and Companies Acts,and will include inter alia;

(a) The Annual Accounts of the Local Health Board;

(b) details of relevant directorships and other significant interests held by the Board members;

(c) composition of the Remuneration and Terms of Service Committee;

(d) remuneration of the Chair, highest paid Director, and other Directors and highly-paid employees,

BANKING ARRANGEMENTS

The Director of Finance is responsible for:

(a) ensuring robust Service Level Agreements for banking arrangements are in place with their respective BusinessServices Centre;

(b) notifying the Business Services Centre when a new bank account is required;

(c) putting procedures in place to review/sign off a minimum of monthly cash book reconciliation’s;

(d) reporting to the Board all instances where cash reserves held in the Business Services Centre become negative (i.e.overdrawn) (together with any remedial action taken); and

(e) monitoring compliance with Assembly guidance on the level of cleared funds.

The Business Services Centre will administer and maintain all bank accounts on behalf of LHBs across Wales,but ultimate responsibility for cash management and financial control will remain with the respective LocalHealth Board.

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POWYS LHB AND THE BUSINESS SERVICES CENTRE BANKING PROCEDURES

The Powys LHB Director of Finance or nominated officer is responsible for:

(a) advising the Board on the provision of banking services, this advice should take into account anyguidance issued from the Assembly;

(b) prepare procedural instructions on the operation of all accounts for the approval of the Board;

(c) ensuring that signatory lists are prepared and are made available to all concerned containing details of alllevels of authorisation;

(d) reporting on the control and availability of funds to LHBs on a monthly basis.

The Director of Finance shall be responsible for establishing a maximum of five (5) Paymaster General's Office (PGO)accounts, but with the intention of reducing this number, into which:-

(a) all credits or payments from the Assembly are to be made;

(b) all credits or payments received from other LHBs are made;

(c) which any other credit or payment may be made;

and from which:-

(d) all payments to any NHS Body, and specified government bodies, may be made. No other types ofpayments from/to any other body shall be made.

In the operation of the PGO account, the Director of Finance shall ensure: -

(a) that payments authorised to be made from such an account do not exceed the amount credited to theaccount, and

(b) the nomination by the Board by specific resolution of a panel of Finance Officers including theDirector of Finance who are empowered to authorise the issue of orders payable by the PaymasterGeneral's Office, and to sign payable order authorisation schedules.

(c) two authorised Finance officers shall be required to sign PGO Payment and transfer schedules.

The Director of Finance shall be responsible for establishing a bank account at a nominated branch of a bank specified inSchedule 3 of the Directions on Financial Management in Wales (Assembly circular reference WHC (91) 102) orsuch other bank as the Assembly may direct to be used for: -

(a) the receipt of all income other than that paid to a PGO account except Charitable Funds income;

(b) the funding of any subsidiary account;

(c) the transfer of sums to a PGO account: and

(d) the making of payments other than payments to NHS or specified government bodies as where,following a tendering exercise, the Board is satisfied that the use of that bank for such paymentsprovides the best value for money.

The Director of Finance shall advise the bankers in writing, including a copy of the Board's resolution, of the conditionsunder which each account shall operate, the limits to be applied to any overdraft, and the limitation on Single

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Signatory Payments. All funds shall be held in accounts in the name of Powys LHB. No Officer other than theDirector of Finance shall open or close any bank account in the name of Powys LHB.

The Director of Finance shall advise the bankers of any alterations in the conditions of operation of accounts that may berequired by financial regulations of the health service or by resolution of the Board as may be necessary fromtime to time. The Director of Finance shall advise the LHB bankers in writing of the officers, and executivedirectors authorised to release money from the draw cheques on, each bank account of the LHB, and shall notifypromptly the cancellation of any such authorisation.

Any subsidiary bank accounts in the name of the LHB shall require two official signatories as nominated by the Directorof Finance. The main account can be overdrawn, but only to the extent of any net credit balance on subsidiarybank accounts maintained at the same branch in the same name and in the same right.

Officers shall be nominated in writing to authorise the payment of money from any subsidiary bank accounts.

Subsidiary accounts shall be funded by bank transfers drawn on the main account and signed by the Director of Financeor his nominees.

The Director of Finance should review the banking needs of the LHBs in Wales at regular intervals to ensure that theyreflect current business patterns and represent best value for money. Following such reviews, the Director ofFinance shall determine whether or not re-tendering for services is necessary. As a minimum, the Director ofFinance shall be responsible for completing a competitive tendering exercise and entering into a new contract atintervals not exceeding 5 years from a previous tendering exercise.

The Director of Finance shall be responsible for organising and evaluating the re-tendering process, and shall report theoutcome of the tendering exercise to the Board.

Where an agreement is entered into with another body for payments to be made on behalf of those bodies from bankaccounts maintained by the Powys LHB Business Services Centre, the Director of Finance shall ensure that theContractual Agreement between the Powys LHB Business Services Centre and the other body limits the liabilityof Powys LHB to authorised payments.

INCOME, FEES AND CHARGES AND SECURITY OF CASH, CHEQUES AND OTHERNEGOTIABLE INSTRUMENTS

INCOME SYSTEMS

The Director of Finance is responsible for putting procedures in place to ensure compliance with systems for the properrecording, invoicing, collection and coding of all monies due.

The Director of Finance is responsible for ensuring that systems are in place for the prompt banking of all moniesreceived.

FEES AND CHARGES

The Director of Finance is responsible for approving and regularly reviewing the level of all fees and charges other thanthose determined by the Assembly or by Statute.

Independent professional advice on matters of valuation shall be taken as necessary.

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All employees must inform the Director of Finance promptly of money due arising from transactions which theyinitiate/deal with, including all contracts, leases, and other transactions.

DEBT RECOVERY

The Director of Finance is responsible for the appropriate recovery action on all outstanding debts

Income not received should be dealt with in accordance with losses and special payments procedures. (See section 16.2)

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

SECURITY OF CASH, CHEQUES AND OTHER NEGOTIABLE INSTRUMENTS

The Director of Finance is responsible for:

(a) approving the form of all receipt books, agreement forms, or other means of officially acknowledging orrecording monies received or receivable;

(b) ordering and securely controlling any such stationery;

(c) the provision of adequate facilities and systems for employees whose duties include collecting and holdingcash, including the provision of safes or lockable cash boxes, the procedures for keys, and for coin operatedmachines; and

(d) prescribing systems and procedures for handling cash and negotiable securities on behalf of the LHB.

Official money shall not under any circumstances be used for the encashment of private cheques, nor IOU’s.

All cheques, postal orders, cash etc. shall be banked intact. Disbursements shall not be made from cash received, exceptunder arrangements approved by the Director of Finance.

The holders of safe/cash box keys shall not accept unofficial funds for depositing in their safe/cash box unless suchdeposits are in special sealed envelopes or locked containers. It shall be made clear to the depositors that theLHB is not to be held liable for any loss, and written indemnities must be obtained from the organisation orindividuals absolving the LHB from responsibility for any loss.

The opening of coin operated machines (including telephones) and the counting and recording of the takings shall beundertaken by two officers together, except as may be authorised in writing by the Director of Financed, and thecoin box keys shall be held by a nominated officer.

During the absence (e.g. on holiday) of the holder of a safe or cash box key, the officer who acts in his/her place shall besubject to the same controls as the normal holder of the key. There shall be written discharge for the safe and/orcash box contents on the transfer of responsibilities and the discharge document must be retained for inspection.

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COMMISSIONING

The LHB will be statutorily responsible and accountable for commissioning primary care, community healthservices, mental health services and secondary care services. Funding will be delivered to LHBs mainly for theirresident populations, but some funding, relating mainly to GP services, including for prescribing in thecommunity, will be allocated on a registered population basis.

In line with Welsh Assembly Government policy, secondary care commissioning decisions will be made bySecondary Care Commissioning Groupings (SCCG) involving the LHBs, the local authorities, NHS Trusts andrepresentatives from the voluntary sector and the private sector. Secondary care commissioning arrangementsshould:

� Drive and shape change in service delivery overtime;� Obtain the critical mass needed to achieve viable service provision based on the aggregated needs of

commissioners;� Ensure best value through the delivery of services to a common standard and specification to

neighbouring areas;� Strengthen the position of partners in agreeing service provision with providers;� Ensure effective use of management resources in LHBs, NHS Trusts and local authorities;� Ensure effective clinical governance by addressing such issues as strategic capacity, consultation and

patient involvement, clinical risk management, clinical risk audit, research and effectiveness, and staffmanagement and development.

Each LHB will formulate and implement an annual rolling Annual Service and Commissioning Plan (AS&CP)for its area. The purpose of the Annual Service and Commissioning Plan will be to translate the Strategy aims,objectives and priorities into LHB operational activity via the Service and Financial Frameworks (SaFF) andLong Term Agreements (LTAs). It will be based on financial allocations and service targets provided annuallyby the Welsh Assembly Government. Each AS&CP will cover primary care, community health care, mentalhealth, secondary health care, specialised/ tertiary services and public health. An overall commissioningframework will be agreed within the Annual Service and Commissioning Plan. This approach will enablecommissioning decisions to be made in a way that will drive and shape change in service delivery. It willensure a coherent and consistent approach to commissioning across primary care, community health care,mental health services, secondary health care, specialised/ tertiary services and public health. The secondarycare component of the Annual Service and Commissioning Plan will be determined by the SCCG, though it willbe for the Board of the LHB as the accountable body to agree the final terms of the secondary care componentof the AS&CP.

The timetable for production of the Annual Service and Commissioning Plan will be as follows :-

(a) June/July each year a first draft of the Plan should be produced, it should provide the detailed operationalframework for actvity in the forthcoming financial year and look forward in less detail to activity in years 2 and3. The draft plan must be made available for public inspection.

(b) It needs to be recognised that the plan will be amended in the light of financial allocations and the AnnualPlanning Guidance which will be issued by the Assembly around November of each year. Prior to financialallocations being notified in November of each year the LHB should be developing an outline Annual Serviceand Commissioning Plan in discussion with local partners.

(c) Between November and March the LHB will finalise the Annual Service and Commissioning Plan, in the light offinancial allocations, the Annual Planning Guidance and the outcome of the discussion. The Annual Service andCommissioning Plan should be agreed and signed-off by the Board of the LHB and submitted to the AssemblyRegional Office by the end of March in preparation for the forthcoming financial year.

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In formulating and implementating the Annual Service and Commissioning Plan the LHB will need to workclosely with NHS Trusts, the All Wales Public Health Service, Health Commission Wales (Specialist Services),local authorities, the voluntary sector and the private sector, to ensure their service and commissioning activitiesreflect local need and priorities.

SERVICE AGREEMENTS FOR THE PROVISION OF SERVICES

THE SERVICE AND FINANCIAL FRAMEWORK (SaFF)

The objective of the SaFF is to clarify priorities and link resources to activity and quality. Crucially, the discussionsbetween LHBs, Trusts and their partners which result in the determination of the SaFF are the key drivers forservice change and the mechanism which will resolve any conflicts of interest or adverse impacts betweenorganisations. The SaFF will consist of the aggregation of the agreements reached between LHBs and Trusts andwill thus be capable of reconciling issues across the health system. The Assembly Regional Director will sign-off the SaFF and prepare individual Performance Agreements for each LHB and NHS Trust which reflect theirpart in delivering the SaFF. The SaFF will cover the range, volume, cost and quality of services that will beprovided to the local community.

From the agreed SaFFs will flow the Long Term Agreements (LTA), which will include:� Service Developments (service outline, waiting times, clinical standards, emergency response)� Clinical Governance� Quality specification� Resources to be made available (by LHB)� Human Resources Issues� Estates Issues� Information Requirements

A detailed description of the role of the SaFF is set out in the Assembly circular reference WHC (2003)01.

PERFORMANCE AGREEMENTS AND LONG TERM AGREEMENTS (LTAs)

By 31st March each year the planning and commissioning process for the forthcoming year will have been concluded.LHBs will have approved the organisation’s Annual Service & Commissioning Plan in final form. Trust Boardswill have approved the Annual/Operational Plan for the organisation. Service and Financial Frameworks willhave the commitment of each organisation, and will be approved by the relevant Regional Director. The finalstages in the Annual Planning and Commissioning process are the completion of the Performance Agreements

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between each individual organisation and the Regional Director on behalf of the Welsh Assembly Government,and preparation of the LTAs.

The Regional Director will draw up Performance Agreements with each NHS organisation. These will be based on theoutcome of the Annual Planning and Commissioning process and the agreed plans to deliver national and localobjectives.

LHBs will then prepare LTA documents to set out the responsibilities of NHS Trusts who are delivering services onbehalf of LHBs through agreed plans. The LHBs, as part of their commissioning responsibility, will undertakemonitoring of NHS Trusts in the delivery of agreed plans through the LTA process.

TERMS OF SERVICE, ALLOWANCES AND PAYMENT OF MEMBERS OF THE BOARD ANDEMPLOYEES

REMUNERATION AND TERMS OF SERVICE

In accordance with Standing Orders the Board shall establish Remuneration and Terms of Service Committee, withclearly defined terms of reference, specifying which posts fall within its area of responsibility, its composition,and the arrangements for reporting. The constitution of this committee will be covered in the Standing Orders.

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The Committee will:

(a) advise the Board about appropriate remuneration and terms of service for the Chief Executive, other officermembers employed by the LHB and other senior employees including:

(i) all aspects of salary (including any performance-related elements/bonuses);

(ii) provisions for other benefits, including pensions and cars;

(iii) arrangements for termination of employment and other contractual terms;

(b) make such recommendations to the Board on the remuneration and terms of service of officer members ofthe Board and other senior employees to ensure they are fairly rewarded for their individual contribution tothe LHB - having proper regard to the LHBs circumstances and performance and to the provisions of anynational arrangements for such members and staff where appropriate;

(c) monitor and evaluate the performance of individual officer members of the Board (and other senioremployees); and

(d) advise on and oversee appropriate contractual arrangements for such staff including the proper calculationand scrutiny of termination payments taking account of such national guidance as is appropriate.

The Committee shall report in writing to the Board the basis for its recommendations. The Board shall use the report asthe basis for their decisions, but remain accountable for taking decisions on the remuneration and terms ofservice of officer members. Minutes of the Board's meetings should record such decisions.

The Board will after due consideration and amendment if appropriate approve proposals presented by the ChiefExecutive for setting of remuneration and conditions of service for those employees and officers not covered bythe Committee.

The LHB will pay allowances to the Chair, Non-Officer members of the Board in accordance with instructions issued bythe Assembly.

FUNDED ESTABLISHMENT

The manpower plans incorporated within the annual budget will form the funded establishment.

The funded establishment of any department may not be varied without the approval of the Chief Executive.

STAFF APPOINTMENTS

No officer may engage, re-engage, or re-grade employees, either on a permanent or temporary nature, or hire agencystaff, or agree to changes in any aspect of remuneration:

(a) unless authorised to do so by the Chief Executive; and

(b) within the limit of his approved budget and funded establishment.

The Board will approve procedures presented by the Chief Executive for the determination of commencing pay rates,condition of service, etc, for employees.

PROCESSING PAYROLL

The Director of Finance is responsible for:

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(a) securing the provision of an efficient, value for money payroll service;

(b) specifying timetables for submission of properly authorised time records and other notifications;

(c) the final determination of pay;

(d) agreeing the timing and method of payment with the contracted payroll provider;

The Director of Finance will issue instructions regarding:

(i) verification and documentation of data;

(ii) the timetable for receipt and preparation of payroll data and the payment of employees;

(iii) maintenance of subsidiary records for superannuation, income tax, social security and other authoriseddeductions from pay;

(iv) security and confidentiality of payroll information;

(v) authorising the release of payroll data under the provisions of the Data Protection Act;

(vi) maintenance and/or the authorisation of regular and independent reconciliations of pay controlaccounts;

(vii) operating a system to ensure the recovery from leavers of sums of money and/or property due by themto the LHB.

Appropriately nominated managers have delegated responsibility for:

(a) submitting time records, and other notifications in accordance with agreed timetables;

(b) completing time records and other notifications in accordance with the contract of Service LevelAgreements; and

(c) submitting termination forms in the prescribed form immediately upon knowing the effective date of anemployee or officer’s resignation, termination or retirement. Where an employee fails to report for duty or tofulfil obligations in circumstances that suggest they have left without notice, the Director of Finance and/orChief Executive must be informed immediately.

Regardless of the arrangements for providing the payroll service, the Director of Finance shall ensure that the chosenmethod is supported by appropriate (contracted) terms and conditions, with adequate internal controls and auditreview procedures. He/she will also ensure that suitable arrangements are made for the collection of payrolldeductions and payment of these to appropriate bodies.

CONTRACTS OF EMPLOYMENT

The Board shall delegate responsibility to a manager for:

(a) ensuring that all employees are issued with a Contract of Employment in a form approved by the Board andwhich complies with employment legislation; and

(b) dealing with variations to, or termination of, contracts of employment.

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NON-PAY EXPENDITURE

DELEGATION OF AUTHORITY

The Board will approve the level of non-pay expenditure on an annual basis and the Chief Executive willdetermine the level of delegation to budget managers.

The Chief Executive will set out:

(a) the list of managers who are authorised to place requisitions for the supply of goods and services; and

(b) 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 andservices.

CHOICE, REQUISITIONING, ORDERING, RECEIPT AND PAYMENT FOR GOODS ANDSERVICES

The requisitioner, in choosing the item to be supplied (or the service to be performed) shall always obtain thebest value for money for the LHB. In so doing, the advice of the LHBs adviser on supply shall be

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sought. Where this advice is not acceptable to the requisitioner, the Director of Finance and/or theChief Executive shall be consulted.

The Director of Finance shall be responsible for the prompt payment of accounts and claims. Payment of contractinvoices shall be in accordance with contract terms, or otherwise, in accordance with national guidance.

The Director of Finance will:

(a) advise the Board regarding the setting of thresholds above which quotations (competitive or otherwise) orformal tenders must be obtained; and, once approved, the thresholds should be incorporated in standingorders and regularly reviewed;

(b) prepare procedural instructions [where not already provided in the Scheme of Delegation or procedure notesfor budget holders] on the obtaining of goods, works and services incorporating the thresholds and BSCinvolvement in the process;

(c) ensure provisions are in place for the prompt payment of all properly authorised accounts and claims;

(d) ensure provisions are in place for designing and maintaining a system of verification, recording and paymentof all amounts payable. The system shall provide for:

(i) A list of Officer Board members and employees (including specimens of their signatures)authorised to certify invoices.

(ii) 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 arecorrect;

- in the case of contracts based on the measurement of time, materials or expenses, the timecharged is in accordance with the time sheets, the rates of labour are in accordance with theappropriate rates, the materials have been checked as regards quantity, quality, and price andthe charges for the use of vehicles, plant and machinery have been examined;

- where appropriate, the expenditure is in accordance with regulations and all necessaryauthorisations have been obtained;

- the account is arithmetically correct;- the account is in order for payment.

(iii) for the early submission of accounts subject to cash discounts or otherwise requiring earlypayment.

(iv) detailed instructions for LHB and BSC employees regarding the handling and payment ofaccounts.

(e) be responsible for ensuring that payment for goods and services is only made once the goods and services arereceived, (except as 12.2.4 below);

(f) be responsible for ensuring compliance with the Public Sector Payment policy ensuring that a minimum of95% of creditors are paid within 30 days of receipt of goods or a valid invoice (whichever is later) unlessother payment terms have been agreed.

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

(a) Prepayments are only permitted where the financial advantages outweigh the disadvantages (i.e. cash flowsmust be discounted to Net Present Value (NPV) using the National Loans Fund (NLF) rate plus 2%).

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(b) the appropriate officer member must provide, in the form of a written report, a case setting out all relevantcircumstances of the purchase. The report must set out the effects on the LHB if the supplier is at some timeduring the course of the prepayment agreement unable to meet his commitments;

(c) the Director of Finance will need to be satisfied with the proposed arrangements before contractualarrangements proceed (taking into account the EU public procurement rules where the contract is above astipulated financial threshold); and

(d) the budget holder is responsible for ensuring that all items due under a prepayment contract are received andhe/she must immediately inform the appropriate Director or Chief Executive if problems are encountered.

Official Orders must:

(a) be consecutively numbered;(b) be in a form approved by the Director of Finance;(c) state the LHBs terms and conditions of trade; and(d) 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 ofFinance and that:

(a) all contracts [other than for a simple purchase permitted within the Scheme of Delegation or delegatedbudget], leases and other commitments which may result in a liability are notified to the Director of Financein advance of any commitment being made;

(b) contracts above specified thresholds are advertised and awarded in accordance with EU and GATTDirectives governing Public Procurement, further details can be found in the Assembly circular referenceDGM(96) 4.

(c) where consultancy advice is being obtained, the procurement of such advice must be in accordance withguidance issued by the Assembly;

(d) no order shall be issued for any item or items to any firm that has made an offer of gifts, reward or benefit todirectors or employees, other than:

(i) isolated gifts of a trivial character or inexpensive seasonal gifts, such as calendars;

(ii) conventional hospitality, such as lunches in the course of working visits;

For further guidance refer to Assembly circular reference DGM(93)84 ‘Standards of Business Conduct forNHS staff’ and the Model Standing Orders.

(e) no requisition/order is placed for any item or items for which there is no budget provision unless authorisedby the Director of Finance on behalf of the Chief Executive;

(f) all goods, services, or works are ordered on an official order except works and services executed inaccordance with a contract, purchases from petty cash or on purchase cards;

(g) verbal orders must only be issued very exceptionally - by an employee designated by the Chief Executive andonly in cases of emergency or urgent necessity. These must be confirmed by an official order and clearlymarked "Confirmation Order";

(h) orders are not split or otherwise placed in a manner designed to avoid the financial thresholds;

(i) goods are not taken on trial or loan in circumstances that could commit the LHB to a future uncompetitivepurchase;

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(j) changes to the list of members and officers authorised to certify requisitions, orders and invoices are notifiedto the Director of Finance;

(k) purchases from petty cash are restricted in value and by type of purchase in accordance with instructionsissued by the Director of Finance; and

(l) petty cash records are maintained in a form as determined by the Director of Finance.

The Chief Executive and Director of Finance shall ensure that the arrangements for financial control and financial auditof building and engineering contracts and property transactions comply with the guidance contained withinConcode and Estatecode and Assembly circular reference WHC (2000) 84. The technical audit of thesecontracts shall be the responsibility of the relevant Director.

JOINT FINANCE ARRANGEMENTS WITH LOCAL AUTHORITIES AND VOLUNTARY BODIES

Payments to local authorities and voluntary organisations made under the powers of section 28A of the 1977 NHS Actshall comply with procedures laid down by the Director of Finance, which shall be in accordance with this Act.

Pooled Fund Arrangements – Where the new partnership working arrangements require the LHB to enter into pooledfund arrangements with Local Authorities and/or Voluntary organisations, SI 2000 No. 2993 Directions willapply.

Where the partners have decided to enter into pooled fund arrangements the agreement must be in writing and mustspecify -

(a) the agreed aims and outcomes of the pooled fund arrangements;

(b) the contributions to be made to the pooled fund by each of the partners and how those contributions may bevaried;

(c) both the National Health Service functions and the health-related functions the exercise of which are thesubject of the arrangements;

(d) the persons in respect of whom and the kinds of services in respect of which the functions referred to in sub-paragraph (c) may be exercised;

(e) the staff, goods, services or accommodation to be provided by the partners in connection with thearrangements;

(f) the duration of the arrangements and provision for the review or variation or termination of thearrangements; and

(g) how the pooled fund is to be managed and monitored including which partner is to be the host partner inaccordance with paragraph 12.3.4.

The partners shall agree that one of them ("the host partner") will be responsible for the accounts and audit of the pooledfund arrangements and the host partner shall appoint an officer of theirs ("the pool manager") to be responsiblefor –

(a) managing the pooled fund on their behalf; and

(b) submitting to the partners quarterly reports, and an annual return, about the income of,and expenditure from, the pooled fund and other information by which the partners can monitor theeffectiveness of the pooled fund arrangements.

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The partners may agree that an officer of either may exercise both the National Health Service functions andhealth-related functions that are the subject of the pooled fund arrangements.

The host partner shall arrange for the audit of the accounts of the pooled fund arrangements and shall requirethe Audit Commission to make arrangements to certify an annual return of those accounts under section28(1)(d) of the Audit Commission Act 1998[25].

CAPITAL INVESTMENT, PRIVATE FINANCING, FIXED ASSET REGISTERS AND SECURITYOF ASSETS

CAPITAL INVESTMENT

The Chief Executive:

(a) shall ensure that there is an adequate appraisal and approval process in place for determining capitalexpenditure priorities and the effect of each proposal upon business plans;

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(b) is responsible for the management of all stages of capital schemes and for ensuring that schemes aredelivered on time and to cost; and

(c) shall ensure that the capital investment is not undertaken without confirmation of purchaser(s) support andthe availability of resources to finance all revenue consequences, including capital charges.

For every capital expenditure proposal the Chief Executive shall ensure:

(a) that a business case (in line with the guidance contained within the Capital Investment Manual, Assemblycircular references DGM(95) 11, DGM(95) 112 and DGM(95) 50) is produced setting out:(i) an option appraisal of potential benefits compared with known costs to determine the option with the

highest ratio of benefits to costs; and(ii) appropriate project management and control arrangements;(iii) the involvement of appropriate external agencies; and

(b) that the Director of Finance has certified professionally to the costs and revenue consequences detailed in thebusiness case.

For capital schemes where the contracts stipulate stage payments, the Chief Executive will issue procedures for theirmanagement, incorporating the recommendations of Concode.

The Director of Finance shall assess on an annual basis the requirement for the operation of the CITD(construction industry tax deduction) scheme in accordance with Inland Revenue guidance.

The Director of Finance shall issue procedures for the regular reporting of expenditure and commitment againstauthorised 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:

(a) specific authority to commit expenditure;

(b) authority to proceed to tender;

(c) approval to accept a successful tender.

The Chief Executive will issue a scheme of delegation for capital investment management in accordancewith Estatecode guidance and the LHBs Standing Orders.

The Director of Finance shall issue procedures governing the financial management, including variations to contract, ofcapital investment projects and valuation for accounting purposes.

PRIVATE FINANCE

The LHB should normally test for PFI when considering a capital procurement. When the LHB proposes to use financethat is to be provided other than through its Allocations, the following procedures shall apply:

(a) The Director of Finance shall demonstrate that the use of private finance represents value for money andgenuinely transfers significant risk to the private sector.

(b) The Board must specifically agree the proposal.

(c) Where the sum involved exceeds delegated limits, the business case must be referred to the appropriateDivision within the NHS Wales Department and/or treated as per current guidelines.

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ASSET REGISTERS

The Chief Executive is responsible for the maintenance of registers of assets, taking account of the advice of the Directorof Finance concerning the form of any register and the method of updating, and arranging for a physical check ofassets against the asset register to be conducted once a year.

Each LHB shall maintain an asset register recording fixed assets. The minimum data set to be held within these registersshall be as specified in the Capital Accounting Manual as issued by the Assembly. [NB it is stronglyrecommended that this minimum data set be expanded].

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

(a) properly authorised and approved agreements, architect's certificates, supplier's invoices and otherdocumentary evidence in respect of purchases from third parties;

(b) stores, requisitions and wages records for own materials and labour including appropriate overheads; and

(c) 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 accountingrecords and each disposal must be validated by reference to authorisation documents and invoices (whereappropriate).

The Director of Finance shall approve procedures for reconciling balances on fixed assets accounts in ledgers againstbalances on fixed asset registers.

The value of each asset shall be indexed to current values in accordance with methods specified in the CapitalAccounting Manual issued by the Assembly.

The value of each asset shall be depreciated using methods and rates as specified in the Capital Accounting Manualissued by the Assembly.

The Director of Finance of the LHB shall calculate and pay capital charges as specified in the Capital AccountingManual issued by the Assembly.

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 donatedassets) must be approved by the Director of Finance. This procedure shall make provision for:

(i) recording managerial responsibility for each asset;(ii) identification of additions and disposals;(iii) identification of all repairs and maintenance expenses;(iv) physical security of assets;(v) periodic verification (suggested quarterly, but as a minimum every six months) of the existence of,

condition of, and title to, assets recorded;(vi) identification and reporting of all costs associated with the retention of an asset; and(vii) reporting, recording and safekeeping of cash, cheques, and negotiable instruments.

All discrepancies revealed by verification of physical assets to the fixed asset register should be notified to the Directorof Finance.

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Whilst each employee and officer has a responsibility for the security of property of the LHB, it is the responsibility ofBoard members and senior employees in all disciplines to apply such appropriate routine security practices inrelation to NHS property as may be determined by the Board. Any breach of agreed security practices must bereported in accordance with instructions.

Any damage to the LHBs premises, vehicles and equipment, or any loss of equipment, stores or supplies must be reportedby Board members and employees in accordance with the procedure for reporting losses.

Where practical, assets should be marked as LHB property.

STORES AND RECEIPT OF GOODS

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

(a) kept to a minimum;(b) subjected to annual stock take;(c) valued at the lower of cost and net realisable value.

Subject to the responsibility of the Director of Finance for the systems of control, overall responsibility for thecontrol of stores shall be delegated to an employee by the Chief Executive. The day-to-day responsibility maybe delegated by him to [departmental employees and stores managers/keepers], subject to such delegation beingentered in a record available to the Director of Finance.

The responsibility for security arrangements and the custody of keys for any stores and locations shall be clearlydefined in writing by the designated manager. Wherever practicable, stocks should be marked as health serviceproperty.

The Director of Finance shall set out procedures and systems to regulate the stores including records for receiptof goods, issues, and returns to stores, and losses.

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Stocktaking arrangements shall be agreed with the Director of Finance and there shall be a physical checkcovering 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 ofthe Director of Finance.

The designated Manager shall be responsible for a system approved by the Director of Finance for a review ofslow moving and obsolete items and for condemnation, disposal, and replacement of all unserviceable articles.The designated Officer shall report to the Director of Finance any evidence of significant overstocking and ofany negligence or malpractice (see also section 16 - Disposals and Condemnations, Losses and SpecialPayments). Procedures for the disposal of obsolete stock shall follow the procedures set out for disposal of allsurplus and obsolete goods.

For goods supplied via the Welsh Health Supplies agency or any other NHS purchasing and supplies agencycentral warehouses, the Chief Executive shall identify those authorised to requisition and accept goods from thestore. The authorised person shall check receipt against the delivery note before forwarding this to the Directorof Finance who shall satisfy himself that the goods have been received before accepting the recharge.

PATIENTS' PROPERTY (APPLICABLE TO PROVIDING LHBs)

The LHB 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 or confused patients, or found in the possessionof patients dying in hospital or dead on arrival. Such property shall be dealt with as provided below.

The Chief Executive shall be responsible for informing patients or their guardians, as appropriate, before or atadmission by:

(a) notices and information booklets,

(b) hospital admission documentation and property records,

(c) the oral advice of administrative and nursing staff responsible for admissions, and

(d) that the LHB will not accept responsibility or liability for patients' property brought into health servicepremises, unless it is handed in for safe custody and a copy of an official patient's property record isobtained as a receipt.

The Director of Finance shall ensure that detailed written instructions are provided on the collection, custody,recording, safekeeping and disposal of patients' property (including instructions on the disposal of deceased patients’property and that of patients transferred to other premises) for all staff whose duty it is to administer in any way theproperty of patients. These instructions shall cover the necessary arrangements for withdrawal of cash ordisbursement of money held in accounts of patients who are incapable of handling their own financial affairs.

A patients' property record, in a form determined by the Director of Finance, shall be completed in respect of thefollowing:

(a) property handed in for safe custody by any patient (or guardian as appropriate); and

(b) property taken into safe custody having been found in the possession of:

(i) mentally disordered patients,

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(ii) confused and/or disorientated patients,(iii) unconscious patients,(iv) patients dying in hospital(v) patients found dead on arrival at hospital(vi) patients severely incapacitated for any reason

(c) A record shall be completed in respect of all persons in category (b), including a nil return if no property istaken into safe custody.

The record shall be completed by a member of staff in the presence of a second member of staff and in the presenceof the patient or personal representative where practicable. It shall then be signed by both members of staff and bythe patient, except where the latter is restricted by physical or mental incapacity. Any alterations shall be validatedby signatures as required for the original entry on the record.

Property handed over for safe custody shall be placed into the care of the Chief Executive's administrative staff,except where there are no administrative staff present, in which case the property shall be placed into the care of themost senior member of the nursing staff on duty.

Patients' income, including pensions and allowances shall be dealt with in accordance with current Department ofHealth and Benefits Agency instructions. For long stay patients, the Chief Executive shall ensure that positive actionis taken to use their funds effectively and to provide for the benefit of the patient.

Except as provided in the following three paragraphs’s, refunds of cash handed in for safe custody will be dealt within accordance with Financial Control Procedures. Property other than cash, which has been handed in for safecustody shall be returned to the patient, as required, by the Officer who has been responsible for its security. Thepatient or guardian as appropriate and witnessed shall receipt the return.

The officer who has been responsible for its security shall effect the transfer of property of deceased patients. Suchproperty shall be dealt with in accordance with the written instructions issued by the Director of Finance; and inparticular where cash or valuables have been deposited for safe custody they shall only be released after writtenauthority has been given by the Director of Finance. Such authority shall include details of the lawful kin or otherperson entitled to the cash and valuables in question.

In all cases where property, including cash and valuables, of a deceased patient is of a total value of more than£5,000 (or such 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 isreleased. Where the total value of the property is £5,000 or less, forms of indemnity shall be obtained.

In respect of deceased patients' property, if there is no Will and no lawful kin, the property vests in the Crown, andparticulars shall, therefore, be notified to the Treasury Solicitor.

Any funeral expenses necessarily borne by the LHB are a first charge on a deceased person's estate. Wherearrangements for burial or cremation are not made privately any cash of the estate held by the hospital may beappropriated towards funeral expenses, upon the authorisation of the Director of Finance. No other expenses or debtsshall be discharged out of the estate of a deceased patient without the agreement of the Director of Finance.

Staff, on appointment, shall be informed in writing of their responsibilities and duties for the administration of theproperty of patients.

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DISPOSALS AND CONDEMNATIONS, LOSSES AND SPECIAL PAYMENTS

DISPOSALS AND CONDEMNATIONS

The Director of Finance must prepare detailed procedures for the disposal of assets including condemnations, and ensurethat these are notified to managers.

When it is decided to dispose of a LHB asset, the head of department or authorised deputy will determine and advise theDirector of Finance of the estimated market value of the item, taking account of professional advice whereappropriate.

All unserviceable articles shall be:

(a) condemned or otherwise disposed of by an employee authorised for that purpose by the Director of Finance;

(b) recorded by the Condemning Officer in a form approved by the Director of Finance, which will indicate whether thearticles are to be converted, destroyed or otherwise disposed of. All entries shall be confirmed by thecountersignature of a second employee authorised for the purpose by the Director of Finance.

The Condemning Officer shall satisfy himself as to whether or not there is evidence of negligence in use andshall report any such evidence to the Director of Finance who will take the appropriate action.

LOSSES AND SPECIAL PAYMENTS

The Director of Finance must prepare procedural instructions on the recording of and accounting for losses and specialpayments.

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Any employee or officer discovering, or suspecting a loss of any kind must either immediately inform their head ofdepartment, who must immediately inform the Chief Executive and/or Director of Finance, or inform an officercharged with responsibility for responding to concerns involving loss confidentially. This officer will thenappropriately inform the Director of Finance and/or Chief Executive. Where a criminal offence is suspected, theDirector of Finance must immediately inform the police if theft or arson is involved. In cases of fraud andcorruption or of anomalies which may indicate alleged fraud or corruption, the Director of Finance or the LocalCounter Fraud Officer (LCFO) must inform the NHS CFS OS Wales in accordance with the Minister for Healthand Social Services Directions (for further guidance see ‘Countering Fraud in the NHS Wales’ – available on theHOWIS website).

The Director of Finance or the LCFO must notify the fraud liaison officer within the NHS Wales Department and theExternal Auditor of all frauds.

For losses apparently caused by theft, arson, neglect of duty or gross carelessness, except if trivial, the Director ofFinance must immediately notify:

(a) the Board, and(b) the External Auditor.

Within limits delegated to it by the Assembly, the Board shall approve the writing-off of losses or the making of specialpayments.

The Director of Finance shall ensure all losses and special payments cases (including those in respect of provision offamily practitioner services) are registered and maintained on the centralised Losses and Special PaymentsRegister (LaSPaR) database system and that case write-off action is properly recorded on the system.

For any loss, the Director of Finance should consider whether any insurance claim could be made from the Welsh RiskPool or from other commercial insurance arrangements.

The Director of Finance shall maintain a Losses and Special Payments Register in which case write-off action isrecorded.

No losses or special payments exceeding delegated limits shall be authorised/made without the prior approval of the NHSWales Director of Finance.

All novel, contentious and repercussive cases must be referred to the appropriate division within the NHS Walesdepartment at the Assembly irrespective of the delegated limit.

FINANCE INFORMATION MANAGEMENT AND TECHNOLOGY

The Director of Finance, who is responsible for the accuracy and security of the computerised financial data of the LHB,shall:

(a) ensure that robust Service Level Agreements are in place with the Business Services Centre and/or otheragency providers for computerised data held by those other parties on behalf of the LHB.

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(b) work in conjunction with the Business Services Centre and/or other agency providers to establish effectiveand detailed Financial Control Procedures. These procedures should be clear and concise, detailingfunctional responsibilities and the interface between both organisations. The Service Level Agreement andthe Financial Control Procedures should provide the Chief Executive, who is ultimately accountable for allfinancial information relating to the LHB, with assurance that financial data is accurate and secure.

(c) devise and implement any necessary procedures to ensure adequate (reasonable) protection of the LHBs data,programs and computer hardware for which he/she is responsible from accidental or intentional disclosure tounauthorised persons, deletion or modification, theft or damage, having due regard for the Data ProtectionAct 1998;

(d) ensure that adequate (reasonable) controls exist over data entry, processing, storage, transmission and outputto ensure security, privacy, accuracy, completeness, and timeliness of the data, as well as the efficient andeffective operation of the system;

(e) ensure that adequate controls exist such that the computer operation is separated from development,maintenance and amendment;

(f) ensure that an adequate management (audit) trail exists through the computerised system and that suchcomputer audit reviews as he/she may consider necessary are being carried out.

The Director of Finance shall satisfy him/herself that new financial systems and amendments to currentfinancial systems are developed in a controlled manner and thoroughly tested prior to implementation. Wherethis is undertaken by another organisation, assurances of adequacy must be obtained from them prior toimplementation.

In the case of computer systems which are proposed General Applications (i.e. including those applications which themajority of LHBs in the Region wish to sponsor jointly through the Business Services Centre) all responsible directorsand employees will send to the Director of Finance:

(a) details of the output specification and outline design of the system;

(b) in the case of packages acquired either from a commercial organisation, from the NHS, or from anotherpublic sector organisation, the operational requirement.

The Director of Finance shall ensure that, contracts for computer services for financial applications with another healthorganisation 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 rightsof access for audit purposes.

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

Where computer systems have an impact on corporate financial systems the Director of Finance shall satisfy him/herselfthat:

(a) systems acquisition, development and maintenance are in line with corporate policies such as the InformationManagement and Technology Strategy of the LHB;

(b) data assembled for processing by financial systems is adequate, accurate, complete and timely, and that amanagement (audit) trail exists;

(c) Director of Finance staff have access to such data; and

(d) such computer audit reviews are being carried out as are considered necessary.

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FUNDS HELD ON TRUST

GENERAL

Standing Orders encompass the LHBs responsibilities as a corporate trustee for the management of funds itholds on trust, and defines how those responsibilities are to be discharged. They explain that althoughthe management processes may overlap with those of the organisation of the LHB, the trusteeresponsibilities must be discharged separately and full recognition given to its dual accountabilities tothe Charity Commission for charitable funds held on trust and to the Assembly for all funds held ontrust.

The reserved powers of the Board and the Scheme of Delegation make clear where decisions regarding theexercise of discretion as to disposals are to be taken and by whom. Members and officers must takeaccount of that guidance before taking action.

As management processes overlap most of the sections of these Standing Financial Instructions will apply to themanagement of funds held on trust.

The over-riding principle is that the integrity of each trust must be maintained and statutory and trustobligations met. Materiality must be assessed separately from Exchequer activities and funds.

EXISTING TRUSTS

The Director of Finance shall arrange for the administration of all existing Trusts in conjunction with a LegalAdvisor. They shall produce detailed codes of procedures covering every aspect of the financialmanagement of funds held on trust, for the guidance of Directors and employees. Such guidance shallidentify the restricted nature of certain funds.

The Director of Finance shall periodically review the funds in existence and shall make recommendations to theBoard regarding the potential for rationalisation of such funds within statutory guidelines.

NEW TRUSTS

The Director of Finance shall, in conjunction with a Legal Advisor, arrange for the creation of a new Trustwhere funds and/or other assets, received in accordance with LHB policies, cannot adequately bemanaged as part of an existing Trust.

The Legal Adviser shall put in place arrangements as laid out in the Standing Orders for the submission of anew governing instrument to the Board. Such instruments shall clearly identify, inter alia, the objects of

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the new Trust, the capacity of the LHB to delegate powers to manage and the power to assign the residueof the Trust to another fund contingent upon certain conditions, e.g. discharge of original objects.

SOURCES OF NEW FUNDS

In respect of new Donations the Director of Finance shall:

(a) provide guidelines to officers of the LHB as to how to proceed when offered funds. These include:

- the identification and recording of the donors intentions;- the avoidance of new trust and impossible objects;- sources of immediate further advice; and- treatment of offers for personal gifts;

(b) provide secure and appropriate receipting arrangements, indicating that funds have been accepteddirectly into the LHBs Trust Funds.

In respect of Legacies and Bequests the Director of Finance shall:

(a) provide guidelines to officers of the LHB regarding any approach in relation to:

- the wording of wills;- the receipt of funds/other assets from executors;

(b) where necessary, obtain grants of probate, or make application for grant of Letters of Administrationof a will with executors and to discharge them from their duty;

(c) be empowered, on behalf of the LHB, to negotiate arrangements regarding the administration of awill with Executors and to discharge them from their duty; and

(d) in conjunction with the Legal Advisor, ensure the appropriate treatment of all legacies and bequests.

In respect of Fundraising the Director of Finance shall:

(a) with the Legal Advisor, deal with all arrangements for fundraising by and/or on behalf of the LHBand ensure compliance with all statutes and regulations;

(b) be empowered to liaise with other organisations/persons raising funds for the LHB and provide themwith an adequate discharge. (The Director of Finance shall be the only person empowered to giveapproval for such fundraising);

(c) be responsible, along with the Legal Advisor for alerting the Board to any irregularities regarding theuse of the LHBs name or its registration numbers; and

(d) be responsible, along with the Legal Advisor, for the appropriate treatment of all funds receivedfrom this source.

In respect of Trading Income the Director of Finance shall:

(a) be responsible, along with the Legal Advisor and other designated officers, for any tradingundertaken by the LHB as corporate trustee; and

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(b) be responsible, along with the Legal Advisor, for the appropriate treatment of all funds receivedfrom this source.

In respect of Investment Income, the Director of Finance on behalf of the Chief Executive shall be responsiblefor the appropriate treatment of all dividends, interest and other receipts form this source.

INVESTMENT MANAGEMENT

The Director of Finance shall be responsible for all aspects of the management of the investments of funds heldon trust. The issues on which he/she shall be required to provide advice to the Board shall include:

(a) in conjunction with the Legal Advisor, the formulation of investment policy within the powers of theLHB under statute and within governing instruments to meet its requirements with regard to incomegeneration and the enhancements of capital value;

(b) the appointment of advisors, brokers and, where appropriate, funds managers and the Director ofFinance shall agree, in conjunction with the Legal Advisor, the terms of such appointments and forwhich written agreements shall be signed by the Chief Executive;

(c) the pooling of investment resources and the preparation of a scheme for the approval by the CharityCommission;

(d) the participation of the LHB in common investment funds and the agreement of terms of entry andwithdrawal from such funds;

(e) the uses of trust assets. Such use shall be appropriately authorised in writing and charges raisedwithin policy guidelines;

(f) the review of the performance of offices, brokers and investment managers; and

(g) the reporting of the performance of the investment arrangements.

DISPOSITION MANAGEMENT

The exercise of the LHBs dispositive discretion shall be managed by the Director of Finance in conjunctionwith the Board. In so doing he/she shall be aware of the following:

(a) the objects of various funds and the designated objectives;

(b) the availability of liquid funds within each trust;

(c) the powers of delegation available to commit resources;

(d) the avoidance of the use of exchequer funds to discharge trust fund liabilities (except whereadministratively unavoidable), and to ensure that any indebtedness to the Exchequer shall bedischarged by trust funds at the earliest possible time;

(e) that funds are to be spent rather than preserved, subject to the wishes of the donor and the needs ofthe LHB; and

(f) the definitions of ‘charitable purposes’, see the NHS Charitable Funds guide.

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BANKING SERVICES

The Director of Finance shall advise the Board and, with its approval, shall ensure that appropriate bankingservices are available via the Business Services Centre to the LHB as a corporate trustee. These bankaccounts should permit the separate identification of liquid funds to each trust where it is deemednecessary by the Charity Commission.

ASSET MANAGEMENT

Assets in the ownership of or used by the LHB as corporate trustee, shall be maintained along with the generalestate and inventory of the assets of the LHB. The Director of Finance shall ensure:

(a) in conjunction with the Legal Advisor, that appropriate records of all assets owned by the LHB ascorporate trustee are maintained, and that all assets, at agreed valuations, are brought to account;

(b) that appropriate measures are taken to protect and/or to replace assets;

(c) that donated assets received on trust rather than into the ownership of the Assembly shall beaccounted for appropriately; and

(d) that all assets acquired from funds held on trust which are intended to be retained within the trustfunds are appropriately accounted for, and accounted for/kept separate from those assets in the nameof the Assembly.

REPORTING

The Director of Finance shall ensure that reports are made to the Board with regard to, inter alia, the receipt offunds, investments, and the disposition of resources.

The Director of Finance shall prepare annual accounts in line with the ‘Funds Held in Trust Manual forAccounts’ (copies of which can be obtained from the NHS Finance division within the NHS WalesDepartment of the Assembly) and shall be submitted to the Board within agreed timescales.

The Director of Finance, in conjunction with the Legal Advisor, shall prepare an annual trustee’s report(separate reports for charitable and non-charitable trusts) and the required returns to the Assembly andthe Charity Commission.

The annual accounts and the trustee report will be subject to audit outside of the normal business activities ofthe LHB.

ACCOUNTING AND AUDIT

The Director of Finance shall maintain all financial records to permit the production of reports as above and tothe satisfaction of internal and external audit.

The Director of Finance shall ensure that the trustee records, accounts and returns receive adequate scrutiny byinternal audit during the year. He/she will liaise with external audit and provide them with all necessaryinformation.

The Board shall be advised by the Director of Finance on the outcome of the annual audit and shall submit theaudit certificate for the Board’s information.

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ADMINISTRATION COSTS

The Director of Finance shall identify all costs directly incurred in the administration of funds held on trust and, inagreement with the Board, shall charge such costs to the appropriate trust accounts.

TAXATION AND VAT

The Director of Finance shall ensure that the LHBs liability to taxation and excise duty is managed appropriately, takingfull advantage of available concessions and shall be responsible for the preparation and submission of therequired returns and the recovery of deductions at source.

ACCEPTANCE OF GIFTS AND HOSPITALITY BY STAFF

GENERAL

The Director of Finance shall ensure that all staff are made aware of the LHB policy on acceptance of gifts and otherbenefits in kind by staff. This policy should follow the guidance contained in the ‘Standards of BusinessConduct for NHS staff’ Assembly circular reference DGM(93)84 (updated guidance will be issued in 2003)andthe Model Standing Orders.

GIFTS

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Casual gifts offered by contractors or others, e.g. at Christmas time, should not be in any way connected with theperformance of duties so as to constitute a conflict of interest. Articles of low intrinsic value such as calendars,diaries or small tokens as a general rule may be accepted.

HOSPITALITY

Modest hospitality provided it is normal and reasonable in the circumstances, e.g. lunches in the course of working visits,may be acceptable, though it should be similar to the scale of hospitality which the NHS as an employer wouldbe likely to offer.

Staff should decline all other offers of gifts, hospitality and entertainment. If in doubt they should seek advice from asenior manager and/or Director.

Where honorariums are offered to LHB employees or related contractors for such acts as presenting at healthconferences, the payment should be made directly to the LHB and distributed to the employee/contractor in linewith Inland Revenue requirements.

PAYMENTS TO INDEPENDENT CONTRACTORS

The LHB will approve additions to, and deletions from, approved lists of contractors, taking into account the healthneeds of the local population, and the access to existing services. All applications and resignations received shall bedealt with equitably, within any time limits laid down in the contractors' NHS terms and conditions of service.

The Chief Executive shall:

(a) ensure that lists of all contractors, for which the LHB is responsible, are maintained in an up to datecondition; and

(b) ensure that systems are in place to deal with applications, resignations, inspection of premises, etc, within theappropriate contractor's terms and conditions of service.

(c) ensure robust Service Level Agreements are in place for Contractor/Primary Care services provided by theBusiness Services Centre.

The Director of Finance shall:

(a) ensure that only contractors who are included on the LHBs approved lists receive payments;

(b) ensure provisions are in place to maintain a system of payments such that all valid contractors' claims arepaid promptly and correctly, and are supported by the appropriate documentation and signatures;

(c) ensure that regular independent verification of claims is undertaken, to confirm that:

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(i) rules have been correctly and consistently applied;(ii) overpayments are detected (or preferably prevented) and recovery initiated; and(iii) suspicions of possible fraud are identified and subsequently dealt with as per Minister for Health

and Social Services Directions on fraud and corruption.

(d) ensure that arrangements are in place to identify contractors receiving exceptionally high, low or nopayments, and highlight these for further investigation; and

(e) ensure that a prompt response is made to any query raised by either Health Solutions Wales or the DentalPractice Board, regarding claims from contractors submitted directly to them.

(f) ensure that all losses and special payments in respect of provision of family practitioner services are covered bythe procedural instructions on the recording of and accounting for losses and special payments.

RETENTION OF DOCUMENTS

The Chief Executive shall be responsible for maintaining archives for all documents required to be retained inaccordance with Assembly guidelines including circular reference WHC(00) 71 and the Data Protection Act 1998.

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The documents held in archives shall be capable of retrieval by authorised persons.

Documents held in accordance with regulation shall only be destroyed at the express instigation of the Chief Executive,records shall be maintained of documents so destroyed.

RISK MANAGEMENT

The Chief Executive shall ensure that the LHB has a programme of risk management, in accordance with currentAssembly Welsh Risk Management Standards available on the Welsh Risk Pool intra net site through HOWIS, whichmust be approved and monitored by the Board.

The programme of risk management shall include:

(a) a process for identifying and quantifying risks and potential liabilities;

(b) a process for ongoing compliance with the Welsh Risk Management Standards as set out by the Welsh RiskPool and the Assembly;

(c) engendering among all levels of staff a positive attitude towards the control of risk;

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(d) management processes to ensure all significant risks and potential liabilities are addressed includingeffective systems of internal control, cost effective insurance cover, and decisions on the acceptable level ofretained risk;

(e) contingency plans to offset the impact of adverse events;

(f) audit arrangements including; internal audit, clinical audit, health and safety review;

(g) decision on which risks shall be insured.

(h) arrangements to review the risk management programme.

The existence, integration and evaluation of the above elements will assist in providing a basis to make astatement on the effectiveness of Internal Control within the Annual Report and Accounts as required bycurrent Assembly guidance.

The Board shall decide if the LHB will insure through the risk pooling schemes administered by the Welsh Risk Pool orself-insure for some or all of the risks covered by the risk pooling schemes. If the Board decides not to use the riskpooling schemes for any of the risk areas (clinical, property and employers/third party liability) covered by the schemethis decision shall be reviewed annually.

With three exceptions LHBs may not enter into insurance arrangements with commercial insurers. The exceptions are:

(1) LHBs may enter commercial arrangements for insuring motor vehicles owned by the LHB including insuringthird party liability arising from their use;

(2) where the LHB is involved with a consortium in a Private Finance Initiative contract and the otherconsortium members require that commercial insurance arrangements are entered into; and

(3) where income generation activities take place. Income generation activities should normally be insuredagainst all risks using commercial insurance. If the income generation activity is also an activity normallycarried out by the LHB for a NHS purpose the activity may be covered in the risk pool. Confirmation ofcoverage in the risk pool must be obtained from the Welsh Risk Pool.

In any case of doubt concerning a LHBs powers to enter into commercial insurance arrangements the FinanceDirector should consult the Regional Office and/or the Welsh Risk Pool.

Where the Board decides to use the risk pooling schemes administered by the Welsh Risk Pool the Director of Financeshall ensure that the arrangements entered into are appropriate and complementary to the risk management programme.The Director of Finance shall ensure that documented procedures cover these arrangements.

Where the Board decides not to use the risk pooling schemes administered by the Welsh Risk Pool for one or other of therisks covered by the schemes, the Director of Finance shall ensure that the Board is informed of the nature and extent ofthe risks that are self insured as a result of this decision. The Director of Finance will draw up formal documentedprocedures for the management of any claims arising from third parties and payments in respect of losses that will not bereimbursed.

All the risk-pooling schemes require members to make some contribution to the settlement of claims (the ‘deductible’).The Director Finance should ensure documented procedures also cover the management of claims and payments belowthe deductible in each case.

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Appendix A

LOCAL HEALTH BOARD

FINANCIAL LIMITS (inclusive of VAT)

POST FINANCIALLIMIT£’000

Board No Limit

Chief Executive 75

Director of Finance 40

Medical Director 40

Nurse Director 40

Delegated Budget Holders 10

Notes:

1. Financial limits can be reduced at the discretion of the Board.

2. Financial limits cannot be increased without the approval of the NHS Wales Director of Finance at the Assembly NHS Walesdepartment.

3. Financial limits can be delegated in part or in total either generally or for specific items.

4. Individual LHB directors can limit delegated budget holders to less than £10k at their discretion.

5. These limits apply to requisition authorisations, which is where the control lies.

6. In exceptional circumstances the Chair may have delegated authority on behalf of the Board. Any use of delegated authority tothe Chair must be included in the minutes of the next meeting of the Board.

TENDERING AND CONTRACTING

The Local Health Board is legally required to make Standing Orders for the regulation of its proceedings and business.This section must be read in association with the appropriate sections of the Local Health Boards Standing Orders. TheDirector of Finance shall advise the LHB Board regarding the setting of limits above which formal tenders or quotationsmust be obtained. The Director of Finance shall prepare procedures for the operation of such limits in purchasing goods,

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services and works. Furthermore, the purchase of goods, services and works shall not be broken down in a mannerdevised to avoid the competitive tendering and quotation limits.

These limits will also apply to disposals.

(a) Competitive Tendering:

Competitive tenders shall be invited, from among companies or individuals equipped to meet NHSstandards and requirements, for the supply of goods, materials and manufactured articles, for therendering of services, for building and engineering works of construction and maintenance, and fordisposals where the value (exclusive of VAT) will exceed £50,000. Where appropriate, procedures willbe in accordance with the relevant EC Directives on public purchasing directions, which can be found inthe Assembly circular reference DGM 96 (4).

(b) Form of Contract:

An official order or letter of acceptance for every contract resulting from an invitation to tender shall beissued for all building and engineering works.

Every contract for building and engineering works that exceeds the sum of £50,000 shall be executedunder the common seal of the Local Health Board.

b) Quotations:

Competitive quotations shall be obtained in writing (including electronic data) wherever possible from aminimum of three suitable companies or individuals on approved lists where the value will be not lessthan £10,000 and not more that £50,000.

c) Verbal and/or written quotations may be obtained on purchases below £10,000. It is the responsibility ofthe Director of Finance to ensure robust financial control systems are in place for the procurement ofgoods, services and/or works below the £10,000 threshold.

This will be the starting point at which each LHB together with the Director of Finance of the Business Services Centre will establish a functional split for the future.

APPENDIX B

Finance Functions ScheduleThe purpose of this document is to identify which tasks are to be carried out by the

BSC, and which the LHBs will undertake themselves. It does NOT seek to identify those tasks which the BSC will be carrying out on its own behalf, i.e. in relation to its own

staffing, overheads etc.

FINANCE FUNCTION ANALYSIS

FUNCTIONS1. Financial Management & Planning

2. Financial Control

3. Financial Reporting

4. Management Accounts

5. Ledger Management

6. Financial Accounts

7. Corporate Governance

8. Financial Services

9. Treasury Management

10. Procurement/Purchasing

11. Lease Car Management

12. Internal Audit

13. Anti Fraud & PPV

14. Commissioning Support

LHB BSC1. Financial Management & Planning

(a) Service & Financial Framework (SAFF)

(i) Lead the SAFF process from the finance perspective. �

(ii) Provision of financial planning guidance for the completion of the SAFF. �

(iii) Co-ordination of SAFF financial bids from Trusts, etc. �

(iv) Provision of costing data to support LHB initiated SAFF bids. �

(v) Maintaining analyses detailing the financial effect of the SAFF bids on �

the organisation.

(vi Completion of the finance schedules of the SAFF. �

(vii) Completion of the overall SAFF submission. �

(viii) Submission of the SAFF to WAG �

(b) Financial Strategy

(i) Preparation of a draft financial strategy in line with the SAFF for Board �

approval.

(ii) Interpretation of the annual Allocation Letter. �

(iii) Ensuring that the LHB receives its entitled allocation in line with agreed �

national policies.

(iv) Preparation of a balanced final financial strategy in line with the SAFF �

for Board approval.

(v) Provision of various costing data to enable the production of the financial �

strategy.

(c) Forecasting

(i) Provision of Resource data to enable forecasting to take �

place.

(ii) Provision of patient activity data to enable accurate forecasting. �

(Note - this would be via the IM&T arm of the BSC).

(iii) Preparation of accurate resource accounting forecasts. �

FINANCE FUNCTION ANALYSISFunction

FINANCE FUNCTION ANALYSIS

LHB BSC(iv) Control of creation, and release from financial reserves. �

(d) Financial Advice

(i) Provision of high quality financial advice to the Board and individual �

managers, on all aspects of the finance function.

(ii) Liason with external bodies (eg WAG, Local Authority, voluntary sector) �

in relation to financial issues.

(e) Business Cases

(i) Analysis of the financial sections of business cases submitted by Trusts. �

(ii) Recommendation of support or otherwise for Trust business cases, from �

the financial perspective.

(iii) Provision of costings for LHB initiated business cases. �

(iv) Preparation of the finance section for LHB initiated business cases. �

(f) Risk Management

(i) Ensure that all of the above areas take due account of financial risk �

management.

(g) BSC Liaison(i) Lead in ensuring a comprehensive SLA is agreed. �

(ii) Ensure excellent channels of communication are maintained at all times. � �

2. Financial Control

(a) Resource Accounts Monitoring

(i) Ensure a comprehensive reporting timetable is agreed and in place. �

(ii) Ensure that accurate resource accounting data is available in accordance �

with the timetable.

(iii) Ensure that the resource data is monitored against the plan on at least a �

monthly basis, and that action is taken to seek to address areas of variance from the planned position.

(iv) Ensure that control account and balance sheet reconciliations are �

carried out in accordance with the timetable.

Function

FINANCE FUNCTION ANALYSIS

LHB BSC(b) Audit

(i) Ensure that LHB internal and external audit plans are prepared, and �

agreed by the Board.

(ii) Ensure that all LHB specific financial procedures are prepared, in place �

and adhered to.

(iii) Ensure that all BSC specific financial procedures are prepared, in place �

and adhered to.

(iv) Hold regular meetings with external audit to ensure both parties are �

fully briefed on all live issues.

(c) Benchmarking

(i) Maintain library of benchmarking material �

(ii) Provision of various comparative analyses, both to seek to reduce cost �

and improve productivity.

(iii) Copy all relevant data to LHB to maintain benchmarking library �

(iv) Regularly compare the BSC service cost with other centres. �

(d) Finance Training

(i) Quality Assure succession planning to ensure that staff receive sufficient � �

training to perform their tasks to a high standard.

(ii) Ensure staff have the opportunity for personal development training. � �

(iii) Provision of finance training to the Board and non finance managers, � �

in all relevant areas.

(iv) Training in use of financial ledger �

3. Financial Reporting

(a) Board Reporting

(i) Ensure that a detailed and comprehensive financial report is prepared for �

each Board meeting.

LHB BSC

(ii) Ensure that reports are available that accurately detail the finance position �

in total, for patient care services, and by budget holder.

(iii) Analysis of the above reports to ensure that the Board report is as up to �

Function

FINANCE FUNCTION ANALYSISFunction

date and accurate as possible.

(iv) Ensure that balance sheet reports are also available in line with the �

reporting timetable.

(b) WAG Resource Accounts Monitoring Returns

(i) Assembly of all necessary financial information to enable the returns �

to be completed on time.

(ii) Provision to BSC of any information necessary to complete tables �

(iii) Prepare draft tables for consideration by LHB �

(iv) Completion and submission of the returns.with attendant narrative �

4. Management Accounts

(a) Budget Setting

(i) Production of the overall budget setting strategy. �

(ii) Preparation of the detailed individual departmental pay and non pay �

budgets.

(iii) Production of a schedule of LTA quantums to reconcile to the total �

patient care services budget.

(iv) Input of the individual patient care services budgets to the ledger. �

(b) Budgetary Control

(i) Ensure that individual budget report printouts are produced in line with �

the timetable, and in an accurate and high quality manner.

(ii) Ensure all relevant standing and reversible journals are input to the ledger. �

(iii) Produce schedules of manual journals for input in line with the timetable. �

(iv) Input the manual journals as required. �

(v) Ensure that any standard budget input is automatically carried out, as �

agreed with LHB's.

LHB BSC

(vi) Ensure budgets are phased appropriately. �

(vii) Produce schedules of budget changes in line with the timetable. �

(viii) Input the budget changes as required. �

FINANCE FUNCTION ANALYSISFunction

(ix) Carry out variance analyses as necessary, to enable the LHB to take �

remedial action with budget holders.

(x) Ensure deferred income is treated correctly and consistently for all LHB's. �

(xi) Maintain a schedule of individual LTA quantums and adjustments. �

(xii) Produce a comprehensive summary Resource Accounting which �

reconciles to the financial plan and the ledger.

(xiii) Maintain a schedule of voluntary sector agreements and their quantums. �

(c) Budget Reports

(i) Identify those budget reports that are required. �

(ii) Create and maintain the required budget reports. �

(iii) Create and maintain new budget reports as required. �

(iv) Carry out report line analyses as requested. �

(v) Ensure that details of those staff charged to each budget report are �

available and accompany the report.

5. Ledger Management

(a) Overall Management

(i) Overall responsibility for the management and maintenance of the ledger. �

(ii) Ensure all staff adhere to documented procedures. � �

(iii) Ensure the ledger is managed in such a way that down time is kept to a �

minimum.

(iv) Ensure that each LHB has adequate view, interrogation and print access �

to the ledger.

(b) Ledger Maintenance

LHB BSC

(i) Maintain and update as necessary a procedures manual for the operation �

of the ledger.

(ii) Ensure all necessary staff are provided with updates to the manual as �

they occur.

(iii) Ensure individual access requirements to the system are appropriately �

set.

FINANCE FUNCTION ANALYSISFunction

(iv) Creation, maintenance and correct linking of all account codes within the �

ledger.

(v) Ensure the integrity of ledger data at all times. �

(vi) Ensure that control accounts are reconciled and suspense accounts �

clerared, in line with the agreed timetable.

(vii) Logging of any system faults and down time, and the initiation of �

corrective action.

(viii) Act as point of contact with the system manufacturer and IM&T in �

relation to all system issues, be they hardware, software or communications links issues. (Link with the IM&T arm of the BSC).

(ix) Develop the use of the software to improve efficiency. �

(c) System Security

(i) Ensure that adequate security procedures are in place and adhered to, in � �

relation to both the software and the hardware on which it resides.

(ii) Ensure back up procedures are in place, and strictly adhered to. �

(d) System Generated Audit Reports

(i) Ensure that such reports are regularly printed and reviewed. �

(ii) Ensure that any necessary action as a result of these reports is taken. �

6. Financial Accounts(a) Annual Statutory Accounts

(i) Production of the accounts, the notes to accompany them, and the �

summarised accounts for the Annual Report.

(ii) Responsibility for the figures within and signing off the accounts, the �

notes to accompany them, and the summary a/c's for the Annual Report.

LHB BSC

(iii) Production of and agreement to a comprehensive annual accounts �

timetable, to enable their submission to WAG on time.

(iv) Adherence to the agreed annual accounts timetable. � �

(v) Agree all inter NHS year end debtors and creditors. �

(vi) Authorise amendments to debtors and creditors as part of the year end �

agreement process.

(vii) Completion of other non narrative eoy financial returns required by WAG. �

FINANCE FUNCTION ANALYSISFunction

(viii) Resposibility for the figures within and signing off any other year end �

financial returns required by WAG.

(b) Tax and National Insurance Issues

(i) Ensure all tax and NI issues are properly dealt with. �

(ii) Preparation and issue of P11D's, and also obtaining exemptions as �

appropriate. Note: P11D work may be delegated to payroll provider by agreement

(iii) Provision of advice on the operation of VAT. �

(iv) Calculation, preparation and submission of VAT reclaims as necessary. �

(c) Losses and Compensation

(i) Maintain a losses and compensation register/input to LASPAR. �

(ii) Ensure that all losses and compensation payments are properly �

documented and authorised.

(iii) Make compensation payments as necessary. �

(iv) Prepare regular reports on losses and compensation to enable reporting �

to each LHB Audit Committee to take place.

(v) Report all losses, and compensation payments to the Audit Committee. �

(d) Capital Charges

(i) Sign off Trusts capital charges estimates. �

(ii) Prepare as necessary LHB capital charge forecasts. �

LHB BSC

(iii) Authorise and submit any LHB capital charge forecasts to WAG. �

(e) Asset Register

(i) Maintenance of LHB asset registers as necessary. �

(ii) Ensure that any asset disposals are dealt with properly. �

(iii) Ensure any additions to or disposals of assets are notified promptly. �

(iv) Ensure that asset register changes are actioned, including indexation. �

(f) Free Nursing Care

FINANCE FUNCTION ANALYSISFunction

(i) Provision of relevant data to the BSC regarding nursing home placements. �

(ii) Maintenance of an up to date patient database to enable correct �

payments and accurate financial projections to be made.

(iii) Reconcile database to ledger �

(iv) Prepare financial projections �

(v) Liase with nursing homes to ensure correct procedures are followed, and �

ensure documentation is sent to nursing home residents as necessary.

(g) Charitable Funds

(i) Provide information to BSC to ensure appropriate recording �

of receipts and payments, establishing funds and registering with Charity Commissioner

(ii) Ensure appropriate charities are created and registered with the �

Charity Commission for any monies received.

(iii) Responsibility for discharging any charitable funds appropriately. �

(iv) Making of any charitable funds payments. �

(v) Creation of separate charitable funds bank accounts as necessary. �

(h) Signatory Lists

(i) Ensure that all authorised signatory lists within LHBs are up to date �

and regularly reviewed.

(ii) Notification of any authorised LHB signatory lists changes. �

LHB BSC

(iii) Ensure that authorisation is in line with the signatory lists. �

(I) Continuing care

(i) Maintenance of an up to date patient database to enable correct � �

payments and financial projections to be made.(Except where continuing care is devolved to NHS Trust)

(ii) Reconcile database to ledger �

(iii) Prepare financial projections �

7. Corporate Governance

(a) Governance Structure

FINANCE FUNCTION ANALYSISFunction

(i) Ensure SO's and SFI's are in place. �

(ii) Ensure a scheme of delegation is in place. �

(iii) Ensure an anti fraud and corruption policy is in place. �

(iv) Ensure a register of interests is maintained for all staff and members.

(v) Ensure a hospitality register is maintained. �

(vi) Ensure an Audit Committee is created, and meets as per the SFI's. �

(vii) Ensure a Remuneration Committee is created to meet as necessary. �

(b) Audit Issues

This relates to LHB Audit issues. BSC Audit issues will be coveredby Powys LHB, but there will need to be an interface, particularlyfor annual accounts, where the LHB and BSC audit teams differ

(i) Ensure that an adequate internal audit function is in place. �

(ii) Ensure that internal and external audit annual plans are agreed by the �

Audit Committee.

(iii) Ensure these plans take account of the Best Value agenda. �

(iv) Ensure arrangements are in place to investigate any suspected �

occurences of fraud.

LHB BSC

(c) Governance Training

(i) Ensure specific governance training is provided to the Board on at least an �

annual basis.

8. Financial Services

(a) Creditor Payments

(i) Ensure efficient payment of all creditors. �

(ii) Ensure compliance with the public sector payment policy. � �

(iii) Ensure all payments are made in line with the SFI's and other relevant �

procedures.

(iv) Co-ordinate the production of creditor payments information for the �

annual accounts.

FINANCE FUNCTION ANALYSISFunction

(v) Maintain an analysis of primary care contractor payments, and ensure �

information is posted to the ledger in accordance with the timetable.

(vi) Design and agree with LHBs a small purchases payment procedure. �

(vii) Production of various management information as required. �

(viii) Resolution of disputes on inter NHS invoices. �

(b) Debtors

(i) Raising debtor requests for debtor invoices and credit notes. � �

(ii) Timely production and despatch of debtor invoices and credit notes. �

(iii) Monthly production of aged debtor analysis. �

(iv) Production of a bad debt policy and procedure. �

(Possibly common to all LHBs)

(v) Production of a schedule of bad debts for write off, in line with the relevant �

bad debt policy.

(vi) Authorisation of bad debt write offs. �

(vii) Actioning of bad debt write offs through the ledger. �

(viii) Production of various management information as required. �

LHB BSC(ix) Resolution of disputes on inter NHS debtors. �

(x) Recharge NHS Trusts for FP10(HP)s �

(c) Staff Travel Expenses (Excluding Lease Car Travel Expenses)

(i) Ensure that all claims are properly authorised. �

(ii) After authorisation forward claims to payroll for payment with the next �

salary run.

(d) Payroll and Pensions (staff)(Note - to be provided via an SLA with a payroll agency and not the BSC.The payroll agency will also need an SLA with the BSC for payment data).

(i) Completion of pay cards. �

(ii) Forwarding of pay cards to the payroll agency. �

(iii) Sign off the year end payroll data to Inland Revenue (P35). �

FINANCE FUNCTION ANALYSISFunction

(e) Pension administration (Independent contractors) �

9. Treasury Management

(a) Cash Management

(i) Monitor cash requirements in both PGO and commercial bank accounts �

to ensure that cash balances are maintained in line with WAG policies.

(ii) Ensure that cash requisitions are submitted accurately and on time. �

(iii) Confirm to BSC total value of cash to be drawn at year end �

(iv) Ensure correct cash drawing against allocation at the year end. �

(b) Cash Monitoring

(i) Ensure all WAG cash monitoring forms are completed and submitted �

within the required time scale.

(c) Cash Receipting

(i) Maintenance of a cashiering function. � �

(ii) Ensure all income received is promptly banked and properly recorded, � �

with sufficient information to enable accurate coding.

LHB BSC

(iii) Ensure all income received is properly coded onto the ledger. �

(d) Banking Arrangements

(i) Ensure the smooth operation of both PGO and commercial bank accounts �

(ii) Ensure cheque, PGO and other signatory lists are maintained and kept �

up to date.

(iii) Ensure all BACS, CHAPS, RFT, and other automated payments are �

made in accordance with procedures.

(iv) Ensure the commercial banking arrangements provide best value by �

periodically retendering.

(v) Ensure agency banking arrangements are available to enable local �

banking and petty cash reimbursement as appropriate.

(e) Petty Cash

(i) Responsibility for the management of the petty cash float, and ensuring �

FINANCE FUNCTION ANALYSISFunction

that it is operated in accordance with procedures.

(ii) Making of regular petty cash reimbursement claims. �

(iii) Provision of petty cash top up payments in line with the reimbursement �

claim.

(iv) Cashing of the top up payments in line with procedures. �

10. Procurement/Purchasing

(a) Tenders

(i) Carrying out tendering exercises in line with the SO's and SFI's. �

(Note - this is likely to be via an SLA with a Trust).

(b) Quotations

(i) Obtaining quotations as necessary and in accordance with the SO's and �

SFI's.

(c) Requisitions

(i) Completion of requsitions for all purchases, including those where a �

tendering or quotation exercise has been undertaken. (Note - a separate small purchases procedure may be agreed).

LHB BSC(ii) Forwarding of requisitions to the BSC for input. �

(iii) Input of all requsitions for goods and services. �

(d) Orders

(i) Production of orders for goods and services following the imput of �

requisitions.

(ii) Forwarding a copy of the order to the LHB in a timely manner. �

(e) GRN's/Receipting

(i) Completion of GRN's in accordance with procedures. �

(ii) Forwarding of completed GRN's to the BSC for input. �

(iii) Input to the system of all completed GRN's. �

11. Lease Car ManagementIt is envisaged that there will be a single lease car policy covering all LHGs in Wales

FINANCE FUNCTION ANALYSISFunction

(a) Lease car management

(i) Authorisation of request, ensuring that applications are in line �

with policy and forwarding to BSC

(ii) Management of scheme �

(iii) Arrange relief car when lease car is off the road for maintenance etc �

(b) Lease Car Travel Expenses

(I) Certification of claims and forward to BSC �

(ii) Recording of mileage details �

(iii) Forwarding to payroll for payment in the next salary run. �

12. Internal Audit(Note - It is proposed that this function be discharged by a single body foreach BSC area, preferably employed within the service by a host LHB orTrust).

LHB BSC

(a) Planning

(i) Ensure that an adequate internal audit function is in place, in line with the �

Internal Audit Manual.

(ii) Ensure that an annual internal audit plan is agreed. �

(iii) Ensure this plan is agreed by the Audit Committee. �

(b) Reporting

(i) Ensure timely receipt of internal audit reports. �

(ii) Ensure that all agreed recommendations are followed up, and �

management responses obtained.

(iii) Ensure that those recommendations affecting the finance function are � �

actioned.

(iv) Ensure that all audit reports are placed before the Audit Committee. �

13. Counter Fraud & Compliance checking (PPV)

FINANCE FUNCTION ANALYSISFunction

(a) Counter Fraud

(i) Ensure that a counter fraud culture is promoted. �

(ii) Ensure access to a LCFS to investigate suspected cases of fraud. �

(iii) Ensure appropriate fraud reporting arrangements are put in place. �

(iv) Ensure that an annual counter fraud work plan is produced, and �

agreed by the Audit Committee.

(v) Deliver counter fraud service via LCFS �

(b) Compliance checking of contractor payments (PPV)

(i) Ensure compliance visits are carried out in accordance with �

an agreed timetable..

(ii) Ensure compliance reports are prepared �

(iii) Ensure resultant action from compliance reports �

LHB BSC

14. Commissioning Support

(a) LTA Negotiation

(i) Ensure that the process is supported from the finance perspective. �

(ii) Evaluate LTA bids by Trusts not covered by the SAFF process. �

(iii) Provision of ad hoc costings to support this process. �

(b) LTA Monitoring

(i) Support the process from the finance perspective. �

(ii) Analysis of the potential financial effect of over and under performance. �

(c) Continuing Care

(i) Provide financial support to the decision making process. �

(d) Individual Patient Commissioning

(i) Provide financial support to the decision making process. �

FINANCE FUNCTION ANALYSISFunction

Please note: All financial services to the National Public Health Servicewill be provided through Velindre NHS Trust.