Item 8 - Sheffield Health and Social Care

of all assets less the value of all liabilities, except for(i) donated assets (including lottery funded assets),(ii) net cash balances held with the GovernmentBanking Services (GBS) excluding cash balancesheld in GBS accounts that relate to a short-termworking capital facility and (iii) any PDC dividendbalance receivable or payable. In accordance withthe requirements laid down by the Department ofHealth (as the issuer of the PDC), the dividend forthe year is calculated on the average relevant netassets as set out in the ‘pre-audit’ version of theannual accounts. The dividend thus calculated is notrevised should any adjustment to net assets occur asa result of the audit of the annual accounts.1.14 Value added taxMost of the activities of the Trust are outside thescope of VAT and, in general, output tax does notapply and input tax on purchases is not recoverable.Irrecoverable VAT is charged to the relevantexpenditure category or included in the capitalisedpurchase cost of property, plant and equipmentassets. Where output tax is charged or input VAT isrecoverable, the amounts are stated net of VAT.1.15 Corporation taxThe Trust has carried out a review of corporation taxliability of its non-healthcare activities. At present allactivities are either ancillary to patient care activityor below the de-minimis £50,000 profit level atwhich corporation tax is due.1.16 Foreign exchangeThe functional and presentational currenciesof the Trust are sterling.1.17 Third party assetsAssets belonging to third parties (such as moneyheld on behalf of patients) are not recognised in theaccounts since the Trust has no beneficial interest inthem. However, they are disclosed in note 21 to theaccounts in accordance with the requirements ofHM Treasury’s Financial Reporting Manual.1.18 Losses and special paymentsLosses and special payments are items thatParliament would not have contemplated whenit agreed funds for the health service or passedlegislation. By their nature they are items thatideally should not arise. They are therefore subjectto special control procedures compared with thegenerality of payments. They are divided in todifferent categories, which govern the way thatindividual cases are handled. Losses and specialpayments are charged to the relevant functionalheadings in expenditure on an accruals basis,including losses which would have been made goodthrough insurance cover had NHS trusts not beenbearing their own risks.However the losses and special payments note iscompiled directly from the losses and compensationsregister which reports on an accruals basis with theexception of provisions for future losses.1.19 Accounting standards that have beenissued but have not yet been adoptedA number of standards, amendments andinterpretations have been issued by the IASB buthave not yet been adopted by the EU and aretherefore not reflected in the Foundation TrustAnnual reporting Manual. We have consideredthese changes and have concluded that nonewill have a material impact on the Trust.1.20 Critical Judgements and key sourcesof estimation uncertaintyIn the application of the Trust’s accounting policies,management is required to make judgements,estimates and assumptions about the carryingamounts of assets and liabilities that are not readilyapparent from other sources. The Trust confirmsthat it has not used any key assumptions concerningthe future or had any key sources of estimationuncertainty at the end of the reporting period,that have a significant risk of causing a materialadjustment to the carrying amounts of assets andliabilities within the next financial year that needto be disclosed under IAS1.The main area of estimation uncertainty withinthe Trust is the carrying value of the propertyportfolio and the assumptions used in thedetermination of fair value at the Statement ofFinancial Position date. In accordance with Trustpolicy, a property valuation is commissioned everyfive years with interim valuations every third year.The revaluations are undertaken by professionalvaluers and significantly reduce the risk of materialmisstatement. The last interim revaluation tookplace on 1 April 2012.Provisions have been calculated having recognisedan obligating event during the year and includeestimates and assumptions relating to the carryingamounts and timing of the anticipated payments.The litigation provisions are based on estimatesfrom the NHS Litigation Authority and the injurybenefit provisions on figures from NHS Pensions.A further area where estimation is required relatesto the net liability to pay pensions in respect of thestaff who transferred to the Trust from Sheffield CityCouncil. This estimation depends on a number ofcomplex judgements relating to the discount rateused, the rate at which salaries are projected toincrease, changes in the retirement ages, mortalityrates and expected returns on pension fund assets.A firm of consulting actuaries is engaged by theSouth Yorkshire Pensions Authority to provide theTrust with expert advice about the assumptions tobe applied. See note 26.1.21 Merger accounting and transformingcommunity servicesFor functions that have been transferred to the trustfrom another NHS or local government body, theassets and liabilities are recognised in the accountsas at the date of transfer. The assets and liabilitiesare not adjusted to fair value prior to recognition.The net gain or loss corresponding to the net assetsor liabilities transferred is recognised within incomeor expenses, but not within operating activities.For property plant and equipment assets andintangible assets, the cost and accumulateddepreciation/amortisation balances from thetransferring entity’s accounts are preserved onrecognition in the trust’s accounts. Where thetransferring body recognised revaluation reservebalances attributable to the assets, the trust makesa transfer from its income and expenditure reserveto its revaluation reserve to maintain transparencywithin public sector accounts.For functions that the trust has transferred toanother NHS or local government body, the assetsand liabilities transferred are de-recognised fromthe accounts as at the date of transfer. The net lossor gain corresponding to the net assets or liabilitiestransferred is recognised within expenses/income,but not within operating activities. Any revaluationreserve balances attributable to assets de-recognisedare transferred to the income and expenditurereserve. Adjustments to align the acquired functionto the foundation trust’s accounting policies areapplied after initial recognition and are adjusteddirectly in taxpayers’ equity.No assets or liabilities were transferred to, or from,Sheffield Health and Social Care NHS FoundationTrust in 2012 – 13. However, we expect to take on£583,330 worth of assets, mostly buildings and ITequipment from NHS Sheffield on the closure of thePrimary Care Trust. These assets will transfer on the1st April 2013. For more information see note 23.2. Operating segmentsThe Trust considers that it has one operatingsegment, that being the provision of healthand social care. All revenues are derived fromwithin the UK.Details of operating income by classification andoperating income by type are given in Note 3.165166