standing financial instructions financial instructi.pdf · that each board must adopt standing...

Issued May 1999 - (Revised March 2002)Issued May 1998 - (Revised February 2002 )

Standing FinancialInstructions


FOREWORD

1. The “Directions on Financial Management in England” issued under HC(91)25 in 1991 statethat each Board must adopt Standing Financial Instructions (SFIs) setting out the responsibilities ofindividuals.

2. Each Board operates within a statutory framework within which it is also required to adoptStanding Orders. In addition to the Standing Orders and SFIs, there will be a Scheme of Delegation,Financial Procedural Notes and locally generated rules and instructions. Collectively these mustcomprehensively cover all aspects of financial management and control. In effect, they set thebusiness rules which directors and employees (including employees of third parties contracted to theHealth Authority/Trust) must follow when taking action on behalf of the Board.

3. The purpose of this document is to provide a checklist and explanation of the main matterswhich should be considered for inclusion by all Health Organisations in their own SFIs. Althoughthese proforma instructions are not themselves mandatory, the adoption of SFIs by Boards is, andonce locally tailored SFIs have been adopted by the Board they become mandatory on all directorsand employees of the organisation.


CONTENTS

1 INTRODUCTION

2 AUDIT

3 CONTRACT INCOME, BUSINESS PLANNING AND BUDGETARY CONTROL

4 ANNUAL ACCOUNTS AND REPORTS

5 BANK AND PAYMASTER ACCOUNTS

6 INCOME, FEES AND CHARGES AND SECURITY OF CASH, CHEQUES AND OTHER NEGOTIABLE INSTRUMENTS

7 CONTRACTING FOR PROVISION OF PATIENT SERVICES

8 TERMS OF SERVICE AND PAYMENT OF DIRECTORS AND EMPLOYEES

9 NON-PAY EXPENDITURE

10 EXTERNAL BORROWING AND INVESTMENTS

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

12 STORES AND RECEIPT OF GOODS

13 DISPOSALS AND CONDEMNATIONS, LOSSES, SPECIAL PAYMENTS

14 INFORMATION TECHNOLOGY

15 PATIENTS’ PROPERTY

16 FUNDS HELD ON TRUST

17 UNOFFICIAL FUNDS AND VALUABLES

18 RETENTION OF DOCUMENTS

19 RISK MANAGEMENT AND INSURANCE


1. INTRODUCTION

1.1 GENERAL

1.1.1 These Standing Financial Instructions (SFIs) are issued in accordance with the FinancialDirections issued by the Secretary of State under the provisions of Sections 99(3), 97(A)(4) and (7) ofthe National Health Service Act 1977 for the regulation of the conduct of the Trust in relation to allfinancial matters. They shall have effect as if incorporated in the Standing Orders of the Trust.

1.1.2 These SFIs detail the financial responsibilities, policies and procedures to be adopted by theTrust. They are designed to ensure that its financial transactions are carried out in accordance withthe law and Government policy in order to achieve probity, accuracy, economy, efficiency andeffectiveness. They should be used in conjunction with the Schedule of Decisions Reserved to theBoard and the Scheme of Delegation adopted by the Trust.

1.1.3 These SFIs identify the financial responsibilities which apply to everyone working for the Trustand its constituent organisations including Trading Units. They do not provide detailed proceduraladvice. These statements should therefore be read in conjunction with the detailed departmental andfinancial procedure notes. All financial procedures must be approved by the Director of Finance andInformation.

1.1.4 Should any difficulties arise regarding the interpretation or application of any of the SFIs thenthe advice of the Director of Finance and Information or Chief Internal Auditor MUST BE SOUGHTBEFORE YOU ACT. The Chairman shall be the final authority in the interpretation of StandingFinancial Instructions on which he shall be advised by the Director of Finance and Information.

1.1.5 It shall be the duty of the Chief Executive to ensure that existing employees and all newemployees are notified of their responsibilities within these instructions.

1.1.6 Should exceptional circumstances render any of these specific instructions inappropriate, theChief Executive, acting on advice of the Director of Finance and Information, shall have the power toissue a written dispensation. This applies to all such cases, except where the Chief Executive is thedirect beneficiary ; in such a case the Chairman shall authorise the written dispensation. This willcater for the exceptional circumstances providing the intention of these Instructions is met to themaximum extent possible. A copy of such dispensation must be retained by the recipient, and arecord of all such dispensations must be held by the Director of Finance and Information. TheDirector of Finance and Information shall report all such dispensations to the Board at its nextmeeting.

1.1.7 FAILURE TO COMPLY WITH SFIs IS A DISCIPLINARY MATTER WHICH COULD RESULT INDISMISSAL.

1.2 TERMINOLOGY

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

(a) “Trust” means the Royal Devon and Exeter NHS Trust;

(b) “Board” means the Board of the Trust;

(c) “Budget” means a resource, expressed in financial terms, proposed by the Trust for thepurpose of carrying out, for a specific period, any or all of the functions of the Trust;

(d) “Chief Executive” means the chief officer of the Trust;

(e) “Director of Finance and Information” means the chief financial officer of the Trust;

(f) “Budget Holder” means the director or employee with delegated authority to manage finances


(Income, Expenditure and Assets) for a specific area of the organisation; and

(g) All references in these instructions to the masculine gender shall be read as equally applicableto the female gender.

(h) “Funds held on Trust” shall mean those funds which the Trust holds at 1st April 1996 or date ofincorporation, receives on distribution by statutory instrument or chooses subsequently to acceptunder the powers derived under S.90 of the NHS Act 1997, as amended. Such funds may or may notbe charitable.

(i) “Legal Adviser” means the properly qualified person appointed by the Trust to provide legaladvice.

1.2.2 Wherever the title Chief Executive, Director of Finance and Information, or other nominatedofficer is used in these instructions, it shall be deemed to include such other director or employeeswho have been duly authorised to represent them.

1.2.3 Wherever the term “officer” or “employee” is used it shall be deemed to include all employeesof the Trust including employees of third parties contracted to the Trust when acting on behalf of theTrust.

1.2.4 Any employee of the Trust who solicits or accepts any gift or consideration of any kind fromcontractors or their agents or from any organisation, firms or individuals, as an inducement or rewardfor doing or refraining from doing anything in his official capacity, or for showing favour or disfavour toany person in his official capacity shall be liable to dismissal and to prosecution. ALL dealings shallbe in accordance with HSG (93)5 -Standards of Business Conduct for NHS Staff.

1.2.5 Powers not defined by Standing Orders or these Instructions shall be exercised on behalf ofthe Trust by such officers as the Chief Executive designates, within such limits and subject to suchconditions as the Chief Executive shall prescribe.

1.3 RESPONSIBILITIES AND DELEGATION

1.3.1 The Board exercises financial supervision and control by:

(a) formulating the financial strategy;

(b) requiring the submission and approval of budgets within overall forecast income;

(c) defining and approving essential features in respect of important procedures and financialsystems (including the need to obtain value for money); and

(d) defining specific responsibilities placed on directors and employees as indicated in theScheme of Delegation Document.

1.3.2. The board has resolved that certain powers and decisions may only be exercised by the Boardin formal session. These are set out in the ‘Reservation of Powers to the Board’ document.

1.3.3 The Board will delegate responsibility for the performance of its functions in accordance withthe Scheme of Delegation Document adopted by the Trust. (The extent of delegation should be keptunder review by the Board.)

1.3.4 Within the SFIs, 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 availablefinancial resources. The Chief Executive has overall executive responsibility for the Trust’s activitiesand is responsible to the Board for ensuring that its financial obligations and targets are met and hasoverall responsibility for the Trust’s system of internal control.


1.3.5 The Chief Executive and Director of Finance and Information will, as far as possible, delegatetheir detailed responsibilities but they remain accountable for financial control.

1.3.6 It is a duty of the Chief Executive to ensure that existing directors and employees and all newappointees are notified of and understand their responsibilities within these Instructions.

1.3.7 The Director of Finance and Information is responsible for:

(a) implementing the Trust’s financial policies and for co-ordinating any corrective actionnecessary to further these policies;

(b) maintaining an effective system of internal financial control including ensuring thatdetailed financial procedures and systems incorporating the principles of separation ofduties and internal checks are prepared, documented and maintained to supplementthese instructions;

(c) ensuring that sufficient records are maintained to show and explain the Trust’stransactions, in order to disclose, with reasonable accuracy, the financial position of theTrust at any time; and, without prejudice to any other functions of directors andemployees to the Trust, the duties of the Director of Finance and Information include:

(d) the provision of financial advice to the Trust and its directors and employees;

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

(f) the preparation and maintenance of such accounts, certificates, estimates, records andreports as the Trust may require for the purpose of carrying out its statutory duties.

1.3.8 All directors and employees, severally and collectively, are responsible for:

(a) the security of the property of the Trust and Patients Property and Trust Funds;

(b) avoiding loss;

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

(d) conforming with the requirements of Standing Orders, Standing Financial Instructions,Financial Procedures and the Scheme of Delegation.

1.3.9 Any contractor or employee of a contractor who is empowered by the Trust to commit the Trustto expenditure or who is authorised to obtain income shall be covered by these instructions. It is theresponsibility of the Chief Executive to ensure that such persons are made aware of this.

1.3.10 For any and all directors and employees who carry out a financial function, the form in whichfinancial records are kept and the manner in which directors and employees discharge their dutiesmust be to the satisfaction of the Director of Finance and Information.

1.3.11 All officers shall make available any relevant records or information to the Director of Financeand Information in connection with the carrying out of his duties of supervision of the Trust’s financialpolicies and systems of financial control, whether by internal audit or otherwise.

2 AUDIT

2.1 AUDIT COMMITTEE

2.1.1 In accordance with Standing Orders (and as set out in guidance issued by the NHS Executiveunder EL(94)40), the Board shall establish an Audit Committee which will provide an independentand objective view of internal control by:


(a) overseeing Internal and External Audit services;

(b) reviewing financial systems;

(c) monitoring compliance with Standing Orders and Standing Financial Instructions;

(d) reviewing schedules of losses and compensations and making recommendations to theBoard.

2.1.2 Where the Audit Committee feel there is evidence of ultra vires transactions, evidence ofimproper acts, or if there are other important matters that the committee wish to raise, the chairmanof the Audit Committee should raise the matter at a full meeting of the board. Exceptionally, thematter may need to be referred to the NHS Executive. (To the Director of Finance in the firstinstance.)

2.1.3 It is the responsibility of the Director of Finance and Information to ensure that an adequateinternal audit service is provided and the Audit Committee shall be involved in the selection processwhen an internal audit service provider is changed.

2.2 FRAUD AND CORRUPTION

2.2.1 In line with their responsibilities as set out in HSG(96)12, the Health Authority/Trust ChiefExecutive and Director of Finance shall monitor and ensure compliance with SofS Directions on fraudand corruption.

2.2.2 The Health Authority/NHS Trust shall nominate a suitable person to carry out the duties of theLocal Counter Fraud Specialist as specified by the NHS fraud and corruption manual and guidance.

2.2.3 The Local Counter Fraud Specialist shall report to the Health Authority/NHS Trust Director ofFinance and shall work with staff in the Directorate of Counter Fraud Services and the Counter FraudOperational Service in accordance with the NHS Executive Fraud and Corruption Manual.

2.3 DIRECTOR OF FINANCE AND INFORMATION


(a) ensuring that there are arrangements to review, evaluate and report on theeffectiveness of internal control and efficient use of resources by the establishment ofan internal audit function;

(b) ensuring that the internal audit is adequate and meets the NHS mandatory auditstandards;

(c) deciding at what stage to involve the police in cases of misappropriation, and other irregularities;

(d) ensuring that a strategic audit plan and an annual audit report is prepared for theconsideration of the Audit Committee and the Board. The annual audit report mustcover:

(i) progress against plan over the previous year,

(ii) a clear statement on the effectiveness of internal control,

(iii) major internal control weaknesses discovered,

(iv) progress on the implementation of internal audit recommendations,

(v) strategic audit plan covering the coming three years,

(vi) a detailed plan for the coming year.


2.3.2 The Director of Finance and Information or designated auditors are entitled without necessarilygiving prior notice to require and receive:

(a) access to all records, documents and correspondence relating to any financial or otherrelevant transactions, including documents of a confidential nature; (in which case theyshall have a duty to safeguard that confidentiality);

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

(c) the production of any cash, stores or other property of the Trust under an employee’scontrol; and

(d) explanations concerning any matter under investigation.

2.4 ROLE OF INTERNAL AUDIT

2.4.1 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 suitability of financial and other related management data;

(d) the extent to which the Trust’s assets and interests are accounted for and safeguardedfrom loss of any kind, arising from:

(i) fraud and other offences (where malpractice is suspected the Director of Financeand Information shall be notified immediately)

(ii) waste, extravagance, inefficient administration

(iii) poor value for money or other causes.

2.4.2 Whenever any matter arises which involves, or is thought to involve, irregularities concerningcash, stores, or other property or any suspected irregularity in the exercise of any function of apecuniary nature, the Director of Finance and Information must be notified immediately.

2.4.3 The Chief Internal Auditor will normally attend Audit Committee meetings and has a right ofaccess to all Audit Committee Members, the Chairman and Chief Executive of the Trust. Where, inexceptional circumstances, the use of normal reporting channels could be seen as a possiblelimitation of the objectivity of the audit, the Chief Internal Auditor shall seek the advice of theChairman of the Board.

2.4.4 The Chief Internal Auditor shall report direct to the Director of Finance and Information whoshall refer audit reports, under agreed reporting arrangements, to the appropriate officers designatedby him. Recipients of an audit report shall send a written response within one month stating theaction to be taken in response to the audit recommendations. Failure to take any necessary actionwithin a reasonable period shall be reported to the Chief Executive. The reporting system shall bereviewed at least every 3 years.

2.5 EXTERNAL AUDIT

2.5.1 The external auditor is appointed by the Audit Commission and paid for by the Trust. The AuditCommittee must ensure a cost-efficient service. Should there appear to be a problem which cannotbe resolved by the Audit Committee, then this should be raised with the external auditor and referredon to the Audit Commission if the issue cannot be resolved.


3. CONTRACT INCOME, BUSINESS PLANNING AND BUDGETARY CONTROL

3.1 CONTRACT INCOME

3.1.1 The Director of Finance and Information of the Trust will:

(a) periodically review the bases and assumptions used for compiling budgets and ensurethat these are reasonable and realistic and periodically review contract income and allother sources of income to ensure the Trust is obtaining all the funds due;

(b) prior to the start of each financial year submit to the Board for approval a reportshowing the total expected contract income received and the proposed allocationincluding any sums to be held in reserve; and

(c) regularly update the Board on significant changes to contract income and the uses ofsuch funds.

3.2 PREPARATION AND APPROVAL OF BUSINESS PLANS AND BUDGETS

3.2.1 The Chief Executive will compile and submit to the Board for approval a strategic and anannual business plan which takes into account financial targets and forecast limits of availableresources and is in accordance with the guidance issued by the NHS Executive. The annualbusiness plan will contain:

(a) a statement of the significant assumptions on which the plan is based;

(b) details of major changes in workload, delivery of services or resources required toachieve the plan.

3.2.2 The annual plan shall be reconcilable to an annual update of the financial proformas which theDirector of Finance and Information will prepare and submit to the Board and NHS Executive.

3.2.3 The Chief Executive is responsible for identifying and implementing cost improvements andincome generation initiatives in accordance with the requirements of the Annual Business Plan and abalanced budget.

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

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

(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.

3.2.5 The Director of Finance and Information shall monitor financial performance against budgetand business plan, periodically review them, and report to the Board on action to be taken. As aconsequence the Director of Finance and Information shall have the right of access to all budgetholders on budgetary related matters.

3.2.6 All budget holders must provide all financial, statistical and other relevant information asrequired by the Director of Finance and Information to enable budgets/ business plan forecasts to becompiled and monitored.

3.2.7 The Director of Finance and Information has a responsibility to ensure that reasonable trainingis delivered on an on-going basis to budget holders to help them manage financial resourcessuccessfully.


3.3 BUDGETARY DELEGATION

3.3.1 The Chief Executive may delegate the management of a budget or part of a budget to officersto permit the performance of a defined range of activities. This delegation must be in writing and beaccompanied by a clear definition of:

(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, upon the discharge of those delegated functions to theChief Executive.

3.3.2 The Chief Executive and delegated budget holders must not exceed the budgetary total orvirement limits set by the Board. Expenditure for which no provision has been made in an approvedbudget and not subject to funding under the delegated powers of virement shall only be incurred afterauthorisation by the Board.

3.3.3 Budgets shall be used only for the purpose for which they were provided and any budgetedfunds not required for their designated purpose(s) revert to the immediate control of the ChiefExecutive, subject to any authorised use of virement.

3.3.4 Non-recurring budgets should not be used to finance recurring expenditure without theauthority in writing of the Chief Executive or Director of Finance and Information.

3.4 BUDGETARY CONTROL AND REPORTING

3.4.1 The Director of Finance and Information 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) income and expenditure to date showing trends and forecast year-end position;

(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 of Finance and Information’s view of whether such actions aresufficient to correct the situation;

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

(c) investigation and reporting of variances from financial, workload and manpowerbudgets to managers;

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

(e) arrangements for the authorisation of budget transfers.

3.4.2 Each Budget Holder is responsible for ensuring that:

(a) any likely overspending or reduction of income which cannot be met by virement is notincurred without the prior consent of the original delegator ;


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

(c) no permanent employees are appointed without the approval of the Chief Executiveother than those provided for in the budget as approved by the Board.

3.4.3 The Chief Executive is responsible for identifying and implementing cost improvements andincome generation initiatives in accordance with the requirements of the Annual Business Plan and abalanced budget.

3.5 CAPITAL EXPENDITURE

3.5.1 The general rules applying to delegation and reporting shall also apply to capital expenditure.(The particular applications relating to capital are contained in Section 11.)

3.6 MONITORING RETURNS

3.6.1 The Chief Executive is responsible for ensuring that the appropriate monitoring forms aresubmitted to the NHS Executive within agreed timescales to the requisite monitoring organisation.

4. ANNUAL ACCOUNTS AND REPORTS

4.1 The Director of Finance and Information, on behalf of the Trust, will:

(a) prepare financial returns in accordance with the accounting policies and guidance givenby the Department of Health and the Treasury, the Trust’s accounting policies, andgenerally accepted accounting principles;

(b) prepare, certify and submit annual financial reports to the Secretary of State inaccordance with current guidelines; and

(c) submit financial returns to the Secretary of State for each financial year in accordancewith the timetable prescribed by the Department of Health.

4.2 The Trust’s audited annual accounts must be presented to a public meeting.

4.3 The Trust will publish an Annual Report, in accordance with guidelines on local accountability,and present it at a public meeting. The document will include inter alia:

(a) the Annual Accounts of the Trust;

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

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

(d) remuneration of the Chairman, highest-paid Director, and other Directors and highly-paid employees, in accordance with guidance relating to the Companies Acts and NHSExecutive Manual of Accounts.

5. BANK AND PAYMASTER ACCOUNTS

5.1 GENERAL

5.1.1 The Director of Finance and Information is responsible for managing the Trust’s bankingarrangements and for advising the Trust on the provision of banking services and operation ofaccounts. This advice will take into account guidance/ directions issued from time to time by the NHSExecutive.


5.1.2 The Board shall approve the banking arrangements made by the Director of Finance andInformation, including the investment of surplus funds and the operation of bank and Paymasteraccounts.

5.2 BANK AND PGO ACCOUNTS


(a) bank accounts and Paymaster accounts;

(b) establishing separate bank accounts for the Trust’s non-exchequer funds;

(c) ensuring payments made from bank or Paymaster accounts do not exceed the agreedoverdraft facility;

(d) reporting to the Board all arrangements made with the Trust’s bankers for accounts tobe overdrawn.

5.3 BANKING PROCEDURES

5.3.1 The Director of Finance and Information will prepare detailed instructions on the operation ofbank and Paymaster accounts which must include:

(a) the conditions under which each bank and Paymaster account is to be operated;

(b) the limit to be applied to any overdraft; and

(c) those authorised to sign cheques or other orders drawn on the Trust’s accounts.

5.3.2 The Director of Finance and Information must advise the Trust’s bankers in writing of theconditions under which each account will be operated, the limits to be applied to any overdraft andthe limitation on single signatory payments. All funds shall be held in accounts in the name of theTrust. No officer other than the Director of Finance and Information shall open any bank account inthe name of the Trust and ensure that instructions to bankers are issued.

5.3.3 All arrangements with the Trust’s bankers shall be made or approved by the Director ofFinance and Information within the general directions of the Board, and he shall be authorised tooperate banking accounts, at the bank’s address.

5.3.4 The Director of Finance and Information shall advise the bankers in writing of the officersauthorised to release money from and draw cheques on each bank account of the Trust, and shallnotify promptly the cancellation of any such authorisation.

5.3.5 In addition to the accounts specified below, the Director of Finance and Information may open,operate and close such National Giro, Patients Money Deposit or Purchasing Card accounts as hemay consider necessary and authorise minor imprest bank accounts to be opened and closed atsuch branches as he may decide, operating according to his instructions by any officers specified byhim. The Director of Finance and Information shall open, operate and close such accounts in thename of the Trust, other NHS bodies and charitable organisations (as approved by the Board); andshall advise the bankers in writing of the conditions under which each account shall be operated. Allfunds shall be held in accounts in the name of the Trust.

5.3.6 The bankers shall be notified in writing by the Director of Finance and Information of anyalterations in the conditions of operation of the accounts listed below that may be required by thefinancial regulations of the National Health Service, or by resolution of the Board as may benecessary from time to time.


5.3.7 There shall be a bank account in the name of the Royal Devon and Exeter Healthcare NHSTrust with the Paymaster Office for the purpose of receiving payments from other NHS andGovernment bodies and for making payments to other NHS and Government bodies. Balances onthis account will be transferred to the Trust’s Main Bank Account (see para. 5.3.8).

5.3.8 There shall be a bank account known as the ROYAL DEVON AND EXETER HEALTHCARENHS TRUST MAIN (COLLECTION) ACCOUNT) into which all monies received on behalf of the Trust,including the balances on the Trust’s Paymaster account (see para.5.3.7), except Trust Funds asdescribed in Section 16 of these Standing Financial Instructions, shall be paid, and out of whichpayments may only be made for the purpose of:-

(i) funding the subsidiary bank accounts, by cheque or other order signed by any twoofficers from a panel of signatories approved by resolution of the Board, or by approvedelectronic transfer.

(ii) telephone transfers by CHAPS (Clearing House Automated Payments Systems) to:

(a) the Paymaster Bank Account for the purposes in para 5.3.7:

(b) other bankers, as approved by the Director of Finance and Information, for investmentpurposes.

5.3.9 There shall be bank accounts known as the ROYAL DEVON AND EXETER HEALTHCARENHS TRUST SALARIES AND WAGES ACCOUNT and the ROYAL DEVON EXETER HEALTHCARENHS TRUST PAYMENTS ACCOUNT into which shall be paid only cheques and other orders andelectronic transfers drawn on the Collection Account in favour of the payments accounts respectivelyfor the total amount on each occasion of payments listed on schedules prepared in respect ofsalaries and wages, or payments of suppliers respectively. Cheques and orders drawn on salariesand payments accounts shall be signed by the Director of Finance and Information or otherauthorised signatory. Cheques will only be drawn to “cash” with specific, written authority of theDirector of Finance and Information or his deputy. All cheques drawn to “cash” must have a secondauthorised signature.

5.3.10 There shall be a Business Reserve Account in the name of the ROYAL DEVON AND EXETERHEALTHCARE NHS TRUST for the purpose of holding overnight monies transferred from theCollection Account.

5.3.11 All blank cheques or other orders for payment shall be ordered only on the authority of theDirector of Finance and Information, who shall make proper arrangements for their safe custody.

5.3.12 The Director of Finance and Information may enter into a formal agreement with the Director ofFinance of the Regional Health Authority or the Trust’s Bankers, as appropriate, for payments to bemade on behalf of the Royal Devon and Exeter Healthcare NHS Trust by electronic funds transfer(e.g. The Bankers Automated Clearing Services). Where such an agreement is entered into, theDirector of Finance and Information shall ensure that appropriate security procedures are observed inrelation to the Trust’s bank accounts concerned. The limits on such transfer to be determined andauthorised in writing by the Director of Finance and Information or his authorised deputy.

5.4 TENDERING AND REVIEW

5.4.1 The Director of Finance and Information will review the banking arrangements of the Trust atregular intervals to ensure they reflect best practice and represent best value for money byperiodically seeking competitive tenders for the Trust’s banking business.

5.4.2 Competitive tenders shall be sought at least every 5 years. The results of the tenderingexercise shall be reported to the Board.


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

6.1 INCOME SYSTEMS

6.1.1 The Director of Finance and Information is responsible for designing, maintaining and ensuringcompliance with systems for the proper recording, invoicing, collection and coding of all monies due,including NHS “Internal Market” transactions.

6.1.2 The Director of Finance and Information is also responsible for ensuring that systems are inplace for the prompt banking of all monies received, within a maximum period of 7 days from receipt.

6.2 FEES AND CHARGES

6.2.1 The Trust shall follow the NHS Executive’s advice in the “Costing For Contracting” Manual insetting prices for NHS internal market contracts.

6.2.2 The Director of Finance and Information is responsible for approving and regularly reviewingthe level of all fees and charges other than those determined by the NHS Executive or by Statute.Independent professional advice on matters of valuation shall be taken as necessary.

6.2.3 All employees must inform the Director of Finance and Information promptly of money duearising from transactions which they initiate/ manage, including all contracts, leases, tenancyagreements, private patient undertakings, rechargeable expenditure and other transactions.

6.3 DEBT RECOVERY

6.3.1 The Director of Finance and Information is responsible for taking the appropriate recoveryaction on all outstanding debts.

6.3.2 Debts not recovered should be dealt with in accordance with losses procedures and Section13 of these Standing Financial Instructions.

6.3.3 Overpayments should be prevented, detected and recovery initiated.

6.4 SECURITY OF CASH, CHEQUES AND OTHER NEGOTIABLE INSTRUMENTS

6.4.1 In these instructions:

“CASH” includes coins, bank notes, stamps, cheques and/or other negotiable instruments as thecontext may require.


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

(b) ordering and securely controlling any such stationery;

(c) the provision of adequate facilities and systems for employees whose duties includecollecting and holding cash, including the provision of safes or lockable cash boxes andapproving the procedures for keys, and for coin operated machines; and

(d) prescribing systems and procedures for handling cash and negotiable instruments onbehalf of the Trust.


6.4.3 The officer in charge of a department or location where cash is handled (other than in a ward)shall:-

(a) Obtain written confirmation from all members of staff concerned with the handling ofcash that they are aware of their duty to comply with Standing Financial Instructionsand with any supplementary instructions which may be issued by the Director ofFinance and Information;

(b) Satisfy himself, by inspection or otherwise, that the provisions of this section of theStanding Financial Instructions are strictly observed. Procedure manuals for ward staffshall incorporate the requirements of paragraphs 6.4.15 to 6.14.19, 6.4.21,15.8. and16.4.3.

6.4.4 Where for the purposes of this section there may be any doubt as to the division of supervisoryresponsibility between two or more officers, the officers to whom they are accountable shall giveinstructions in writing.

6.4.5 Official money shall not under any circumstances be used for the encashment of privatecheques.

6.4.6 “CASH” shall be banked intact and promptly in accordance with the Director of Finance andInformation’s instructions, to the credit of the main collection account. If not paid directly into the bankcash, shall be locked as soon as possible in the safe or cash box provided for this purpose.Disbursements shall not be made from cash received, except under arrangements approved by theDirector of Finance.

6.4.7 The holders of safe keys shall not accept unofficial funds for depositing in their safes unlesssuch deposits are in special sealed envelopes or locked containers. It shall be made clear to thedepositors that the Trust is not to be held liable for any loss, and written indemnities must be obtainedfrom the organisation or individuals absolving the Trust from responsibility for any loss.(See Section17 to these Standing Financial Instructions.)

6.4.8 Persons responsible for initiating the collection or accounting for amounts due to the Trustshall not handle cash or cheque remittances this shall be dealt with by a separate officer.

6.4.9 Each receipt of cash and each collection from coin-operated machine or cash register shall berecorded promptly by completion of an official receipt form. No other form of receipt is valid.

6.4.10 Whenever a cheque is paid into the bank, there shall be sufficient details to identify thetransaction, including the official receipt number if one has been issued by special request. Allcheques or other orders received that are in respect of monies due to the Trust shall be immediatelycrossed “ACCOUNT PAYEE” and made payable to THE ROYAL DEVON AND EXETERHEALTHCARE NHS TRUST.”

6.4.11 Official receipt forms, ticket agreement forms;(or other means of officially acknowledging orrecording amounts received or receivable); shall be consecutively numbered and of a designapproved by the Director of Finance and Information. They shall be obtained, stored recorded anddistributed in such a manner as he may require and subject to the same precautions as are applied tocash. Records showing the consecutive numbers of forms and tickets received, issued for use andremaining in stock shall be kept by each holder.

6.4.12 Official receipts shall be issued in all cases involving cash or postal orders and only whereespecially requested by the payer for cheques, etc.

6.4.13 Disposal of scrap material and items surplus to requirements shall be dealt with in accordancewith Section 7.15. of the Standing Orders.

6.4.14 Cash handling shall be kept to a minimum and banking facilities used whenever possible.


6.4.15 Whenever cash is transferred from the custody of one person to another it shall be the duty ofthe recipient to check it and of the other to obtain a written acknowledgement.

6.4.16 Safes and/or lockable cash boxes shall be provided for the custody of cash in all places whereit is necessary for cash to be held.

6.4.17 Coin-operated machines shall wherever possible be fitted with separately lockablecompartments for cash.

6.4.18 Cash boxes shall not be left unattended and shall be kept in a safe or locked receptacle whennot in use.

6.4.19 Cash held in a safe overnight shall be limited to such an amount as the Director of Financeand Information may approve.

6.4.20 The inspection of safes shall be included in security patrol duties.

6.4.21 Only the officer responsible for custody of the contents of a safe or cash box or for collectionfrom a coin-operated machine shall hold its key. The key of the safe shall be carried on the person, ordeposited in such a manner as the Director of Finance and Information may approve. Duplicate keysshall be deposited in accordance with the arrangements which the Director of Finance andInformation shall prescribe. The loss of the key shall be reported to the Director of Finance andInformation by the responsible officer immediately its loss is discovered. The Director of Finance andInformation shall arrange for all new or replacement keys to be despatched directly to him by themanufacturers.

6.4.22 Departments which are in receipt of regular and material postal remittances shall ensure thatthe incoming post is opened by officers working in pairs. All such cash, cheques or other ordersreceived shall be immediately entered in an approved form of register and signed by the openingofficers. Other departments must at the earliest opportunity take monies received to the HospitalGeneral Office or the Finance Office for receipting and banking.

6.4.23 Collections undertaken by Trust staff, from cash tills, telephone and other coin boxes, andfrom night safes shall be made at such intervals as shall be prescribed by or with the approval of theDirector of Finance and Information. The opening of each such box or safe and the counting andrecording of the contents shall be undertaken by two officers together. Both shall sign the record andthe keys shall, at other times, be separately held by a senior officer.

6.4.24 If it is necessary to enable an officer to make petty cash disbursements where chequepayment or bank transfer is impractical, he shall be provided with an imprest of such amount andsubject to such conditions as the Director of Finance and Information shall prescribe.

6.4.25 Each officer authorised to hold cash must keep an up-to-date record for each imprest induplicate in a form approved by the Director of Finance and Information. This shall record amountsreceived and/or paid, and, at least once a week, that record shall be reconciled with the amountactually in hand and the top copy forwarded to the Director of Finance and Information. Anydiscrepancy shall be reported to the office of the Director of Finance and Information without delay.

6.4.26 When an officer, whose duties including the holding of cash or receipt or cheque forms ortickets, hands over responsibility prior to leave or termination of appointment, both he and theincoming officer shall sign a handing over certificate stating:-

(a) the composition of the cash;

(b) the consecutive numbers of receipts, cheque forms and tickets;

(c) particulars of keys handed over;

(d) particulars of anything else being held for safekeeping.


6.4.27 In the unavoidable absence of the outgoing officer, one or more other officers shall beappointed to carry out the hand-over to the incoming officer. Where the responsibility for an imprestchanges permanently, this fact shall be notified to the Director of Finance and Information. Hand-overcertificates evidencing the change in responsibility should be retained for future reference. During theabsence of the substantive key holder any officer or officers appointed to act temporarily in his placeshall be subject to these Standing Financial Instructions as though they were the substantive keyholder.

6.4.28 The Director of Finance and Information shall prescribe the system for the transporting ofcash, cash in transit (including cash moved within the Trust ) shall be suitably safeguarded. Whensubstantial amounts have to be moved, special security arrangements shall be made. Any employeewho has any indication that the safe custody of cash may be at risk shall immediately notify theDirector of Finance and Information and the Security Officer confidentially of the circumstances.

6.4.29 All unused cheques and other orders shall be subject to the same security precautions as areapplied to cash, and shall be maintained as controlled stationery.

6.4.30 The use of a cheque-signing machine shall be subject to such special security precautions asmay be required by the Director of Finance and Information, in accordance with HM(62)41 asamended.

6.4.31 Any loss or shortfall of cash, cheques or other negotiable instruments, shall be reported to theDirector of Finance and Information immediately, in accordance with the agreed procedure; (seeSFI’s section 13 - Disposals and Condemnations, Losses, Special Payments and InsuranceArrangements).

7. CONTRACTING FOR PROVISION OF PATIENT SERVICES

7.1 The Chief Executive is responsible for establishing contracts for the provision of services topatients in accordance with the Business Plan, and for establishing the arrangements for providingextra-contractual services. In carrying out these functions, the Chief Executive should take intoaccount the advice of the Director of Finance and Information regarding:

(a) costing and pricing of services;

(b) payment terms and conditions; and

(c) amendments to contracts and extra-contractual arrangements.

7.2 Contracts should be so devised as to minimise risk whilst maximising the Trust’s opportunity togenerate income. Contract prices should comply with “Costing for Contracting” guidelines.

7.3 The Director of Finance and Information shall produce regular reports detailing actual andforecast contract income with a detailed assessment of the impact of the variable elements ofincome.

7.4 Any pricing of contracts at marginal cost must be undertaken by the Director of Finance andInformation and reported to the Board.

7.5 The Chief Executive and Director of Finance and Information are the two officers empoweredto sign contracts and contract variations on behalf of the Trust.


8. TERMS OF SERVICE AND PAYMENT OF DIRECTORS AND EMPLOYEES

8.1 REMUNERATION AND TERMS OF SERVICE

8.1.1 The Board shall formally agree and record in the minutes of its meetings, the precise terms ofreference of the Remuneration and Terms of Service Committee, specifying which posts fall within itsarea of responsibility, its composition, and the arrangements for reporting. (The constitution of thiscommittee will be covered in Standing Orders. )

8.1.2 The Committee will:

(a) advise the Board about appropriate remuneration and terms of service for the ChiefExecutive and other executive directors, 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 ofexecutive directors as to ensure that they are fairly rewarded for their individualcontribution to the Trust - having proper regard to the Trust’s circumstances andperformance and to the provisions of any national arrangements for such staff whereappropriate;

(c) ensure that a process exists to monitor and evaluate the performance of individualexecutive directors ; and

(d) advise on and oversee appropriate contractual arrangements for such staff includingthe proper calculation and scrutiny of termination payments taking account of suchnational guidance as is appropriate.

8.1.3 The Committee shall report in writing to the Board the bases for its recommendations. TheBoard shall use the report as the basis for their decisions, but remain accountable for takingdecisions on the remuneration and terms of service of executive directors. Minutes of the Board’smeetings should record such decisions.

8.1.4 The Board will review proposals presented by the Chief Executive for setting of remunerationand conditions of service for those employees not covered by the Committee.

8.1.5 The Trust will remunerate the Chairman and Non-executive Directors in accordance withinstructions issued by the Secretary of State.

8.2 FUNDED ESTABLISHMENTS

8.2.1 The manpower plans are incorporated within the annual budget and will form the fundedestablishment.

8.2.2 The funded establishment of any department may not be varied without the approval of theChief Executive or a nominated officer.

8.3 STAFF APPOINTMENTS

8.3.1 No director or employee may engage, re-engage, or regrade employees, either on apermanent or temporary nature, or hire agency staff, or agree to changes in any aspect ofremuneration, unless the change is :

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

(b) within the limit of his approved budget;


(c) and in accordance with the Trust’s approved personnel policies and agreements.

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

8.4 PROCESSING OF PAYROLL


(a) specifying timetables for submission of properly authorised time records and othernotifications;

(b) the final calculation of pay, including the verification that the rate of pay and relevantconditions of service are in accordance with current agreements, the proper compilationof the payroll and for the payments made;

(c) making payment on agreed dates; ( The Director of Finance and Information shall paysalaries and wages on the currently agreed dates but may vary these when necessarydue to special circumstances e.g. Christmas and other bank holidays). Payments shallnot be made in advance of the authorised normal pay date except:-

(i) to cover a period of authorised leave involving absence on the normal pay date;or

(ii) where the prior approval of the Board has been obtained; or

(iii) in special cases authorised by the Director of Finance and Information andlimited to the net pay due at any time of payment; or

(iv) other advances in accordance with Whitley Council regulations or the Trust’spolicies (whichever is appropriate to the employee);

(d) agreeing method of payment;

(e) approving the form certification and submission process of all time records, pay sheetsand other pay records and notifications; and

(f) for the provision of standby arrangements for payments to employees in case of abreakdown of computer processing of financial systems.

8.4.2 The Director of Finance and Information will issue instructions regarding:

(a) verification and documentation of data;

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

(c) maintenance of subsidiary records for superannuation, income tax, social security andother authorised deductions from pay;

(d) security and confidentiality of payroll information;

(e) checks to be applied to completed payroll before and after payment;

(f) authority to release payroll data under the provisions of the Data Protection Act;

(g) methods of payment available to various categories of employee;

(h) procedures for payment by cheque, bank credit, or cash to employees;

(i) procedures for the recall of cheques and bank credits


(j) pay advances and their recovery;

(k) maintenance of regular and independent reconciliation of adequate pay controlaccounts with appropriate internal check procedures;

(l) separation of duties of preparing records and handling cash;

(m) a system to ensure the recovery from leavers of sums of money and property due bythem to the Trust;

(n) procedures for unclaimed wages; and

(o) authority to release payroll data to a security firm.

8.4.3 Appropriately nominated officers have responsibility for:

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

(b) completing time records, commencement of employment, and change of status ofemployment or circumstance in accordance with the Director of Finance andInformation’s instructions and in the form prescribed by the Director of Finance andInformation; and

(c) submitting termination forms in the prescribed form immediately upon knowing theeffective date of an employee’s resignation, termination or retirement. Where anemployee fails to report for duty in circumstances that suggest they have left withoutnotice, the Director of Finance and Information must be informed immediately.

8.4.4 A signed copy of the appointment form and such other documents as the Director of Financeand Information may require shall be sent to the payroll department immediately upon the employeecommencing duty.

8.4.5 A change of conditions form shall be sent to the payroll department immediately the effectivedate of a change in status of employment or personal circumstances of an employee is known.

8.4.6 Regardless of the arrangements for providing the payroll service, the Director of Finance andInformation shall ensure that the chosen method is supported by appropriate (contracted) terms andconditions, adequate internal controls and audit review procedures and that suitable arrangementsare made for the collection of payroll deductions and payment of these to appropriate bodies.

8.4.7 Payment of staff allowances, e.g. travelling and subsistence to officers, shall be made by theDirector of Finance and Information in accordance with the current regulations, subject to verificationof claim details, upon receipt of the prescribed form, duly completed and authorised by a budgetholder or other authorised officer.

8.4.8 The Director of Finance and Information shall require, as he deems necessary, departmentalheads to provide any relevant information in order to ensure that payment is made to the correctperson.

8.5 CONTRACT OF EMPLOYMENT

8.5.1 The Board shall delegate responsibility to the Director of Personnel to:

(a) ensure that all employees are issued with a Contract of Employment in a form approvedby the Board and which complies with employment legislation; and

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


9. NON-PAY EXPENDITURE

9.1 DELEGATION OF AUTHORITY

9.1.1 The Board will approve the level of non-pay expenditure on an annual basis and the ChiefExecutive will determine the level of delegation to budget managers.

9.1.2 The Chief Executive will approve:

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

(b) the maximum level of each requisition and the system for authorisation above that level.

9.1.3 The Chief Executive shall set out procedures on the seeking of professional advice regardingthe supply of goods and services.

9.2 REQUISITIONING, ORDERING, RECEIPT AND PAYMENT FOR GOODS AND SERVICES

9.2.1 The requisitioner, in choosing the item to be supplied (or the service to be performed) shallalways obtain the best value for money for the Trust. In so doing, the advice of the Trust’s adviser onsupply shall be sought (currently NHS Supplies). Where this advice is not acceptable to therequisitioner, the Director of Finance and Information (and/or the Chief Executive) shall be consulted.

9.2.2 The Director of Finance shall be responsible for ensuring the prompt payment of accounts andclaims.

No goods, services or works (other than works and services executed in accordance with a contract,purchases from petty cash, by Ward Purchasing card or where dictated by normal business practice),shall be ordered except on an official order duly signed by a designated officer, and contractors shallbe notified that they should not accept orders unless on an official form.

9.2.3 The Director of Finance and Information will:

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

(b) prepare procedural instructions on the obtaining of goods, works and servicesincorporating the thresholds;

(c) be responsible for the prompt payment of all properly authorised accounts and claims,in accordance with contract terms, or otherwise, in accordance with national guidance;

(d) be responsible for designing and maintaining a system of verification, recording andpayment of all amounts payable by the Trust. The system shall provide for:

(i) A list of directors/employees (including specimens of their signatures) authorised tocertify invoices.

( ii) Certification or by compliance that:

- goods have been duly received, examined and are in accordance with specification andorder, are satisfactory and that prices are correct;

- work done or services rendered have been satisfactorily carried out in accordance withthe order, and, where applicable, the materials used are of the requisite standard andthe charges are correct;

- in the case of contracts based on the measurement of time, materials or expenses, thetime charged is in accordance with the time records, the rates of labour are in accordance with the appropriate rates, the materials have been checked as regards quantity,


quality, that the charges for the use of vehicles, plant and machinery and otherexpenses have been examined and are reasonable;

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

- the account is arithmetically correct;

- the account has not been previously passed for payment;

- for stock items, the appropriate accounting entries have been made;

- the account is in order for payment.

(iii) A timetable and system for submission to the Director of Finance and Information ofaccounts for payment; provision shall be made for the early submission of accountssubject to cash discounts or otherwise requiring early payment.

(iv) Instructions to employees regarding the handling and payment of accounts within theFinance Department.

(v) That a form of certification is, attached to or impressed upon each invoice except wherepassing of invoices is achieved by computer matching with orders and goods receivednotes.

(e) be responsible for ensuring that payment for goods and services is only made once thegoods and services are received, (except as below).

9.2.4. Prepayments are only permitted where exceptional circumstances apply or where dictated bynormal business practice or when the payment is made using a Ward Purchasing Card. In all suchinstances the budget holder is responsible for ensuring that all items due under a prepaymentcontract are received and he/she must immediately inform the appropriate Director or Chief Executiveif problems are encountered. Where exceptional circumstances apply, then:

(a) the appropriate Budget Holder must provide, in the form of a written report, a casesetting out all relevant circumstances of the proposed purchase. The report must setout the effects on the Trust if the supplier is at some time during the course of theprepayment agreement unable to meet his commitments;

(b) the Director of Finance and Information will need to be satisfied with the proposedarrangements before contractual arrangements proceed; and

(c) Prepayments are only permitted where the financial advantages outweigh thedisadvantages (i.e. cashflows must be discounted to NPV) and the intention is not tocircumvent cash limits.

9.2.5 Official Orders must:

(a) be consecutively numbered;

(b) be in a form approved by the Director of Finance and Information;

(c) state the Trust’s terms and conditions of supply and, shall incorporate an obligation onthe contractor to comply with the conditions printed thereon and;

(d) only be issued to, and used by, those duly authorised by the Chief Executive.

(e) no internal requisition order shall be issued for items for which there is no specific orgeneral provision in an authorised budget, and a budget holder or officer authorised byhim shall not requisition unless he is satisfied that there is such a provision. An order for


any item or items for which there is no budget provision must be authorised by theDirector of Finance and Information or by the Chief Executive.

(f) order/requisition forms shall only be issued to and signed by officers so authorised bythe Chief Executive. Lists of authorised officers shall be maintained and a copy of eachlist supplied to the Director of Finance and Information.

(g) orders shall not be placed in a manner devised to avoid the financial thresholdsspecified by the Board.

(h) verbal orders shall be issued only by officers designated by the Chief Executive andonly in cases of emergency or urgent necessity or if placed by an authorised WardPurchasing Card holder. These shall be confirmed by an official order clearly marked“Confirmation Order”.

(i) goods, e.g. medical equipment, shall not be taken on loan in circumstances that couldcommit the Trust to a future uncompetitive purchase.

(j) an exception to (a) and (c) above being when purchases are made by Ward PurchasingCard.

9.2.6 Officers must ensure that they comply fully with the guidance and limits specified by theDirector of Finance and Information and that:

(a) all officers shall inform the Director of Finance and Information’s creditor paymentssection promptly of all monies payable by the Trust arising from transactions which theyinitiate or manage, including contracts, leases, tenancy agreements and othertransactions;

(b) contracts above specified thresholds are advertised and awarded in accordance withEC and GATT rules on public procurement, and comply with the White Paper onStandards, Quality and International Competitiveness (CMND 8621);

(c) where consultancy advice is being obtained, the procurement of such skills must be inaccordance with guidance issued by the NHS Executive such as “The Procurement andManagement Of Consultants Within the NHS”, 1994;

(d) no order shall be issued for any item or items to any firm which has made an offer ofgifts, reward or benefit to Directors 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;

(iii) the Chief Executive in conjunction with the Director of Finance and Information andassisted by the Director of Personnel, where appropriate shall ensure that therequirements of the NHS Management Executive Guidelines “Standards of BusinessConduct for NHS Staff” HSG (93)5, are fully implemented. In particular:-

- ensuring that guidelines and procedures are brought to the attention of all staffand are effectively implemented;

- local conflict of interest policies are developed;

- regularly review such guidelines and procedures to ensure that they are kept upto date;

(e) no requisition/order is placed for any item or items for which there is no budget provisionunless authorised by the Director of Finance and Information on behalf of the Chief Executive;


(f) all goods, services, or works are ordered on an official order except works and servicesexecuted in accordance with a contract, purchases from petty cash or those madeusing a Ward Purchasing Card;

(g) verbal orders must only be issued very exceptionally - only by officers designated bythe Chief Executive and only in cases of emergency or urgent necessity. These mustbe confirmed within 24 hours by an official order and clearly marked “ConfirmationOrder”. An exception to the rule being those goods purchased using Ward PurchasingCards;

(h) orders are not split or otherwise placed in a manner devised so as to avoid the financialthresholds;

(i) goods are not taken on trial or loan in circumstances that could commit the Trust to afuture uncompetitive purchase;

(j) changes to the list of directors/employees authorised to certify invoices are notified tothe Director of Finance and Information;

(k) purchases from petty cash are restricted in value and by type of purchase inaccordance with instructions issued by the Director of Finance and Information;

(l) petty cash records are maintained in a form as determined by the Director of Financeand Information;

(m) if required, a duplicate copy of every order shall be sent to the Director of Finance ofInformation immediately the order is issued;

(n) the ordering of supplies and certification of the receipt of those supplies shall be carriedout by separate persons. An exception to the rule being those goods purchased usingWard Purchasing Cards.

9.2.7 Where an officer certifying accounts relies upon other officers to undertake preliminarychecking he shall, wherever possible, ensure that those who check delivery or execution of work actindependently of those who have placed orders and negotiated prices and terms.

9.2.8 In the case of contracts for building or engineering works which require payment to be madeon account during the progress of work, the Director of Finance and Information shall make paymenton receipt of a certificate from the appropriate technical consultant or officer. Without prejudice to theresponsibility of any consultant or estates officer appointed to a particular building or engineeringcontract, a contractor’s account shall be subjected to such financial examination by the Director ofFinance and Information and such general examination by the Head of Estates as may be considerednecessary, before the person responsible to the Trust for the contract issues the final certificate.

9.2.9 The Director of Finance and Information may authorise advances on the imprest system forpetty cash and other purposes as required. Individual payments from such imprests must not exceedan amount authorised by the Director of Finance and Information and must in all cases be supportedby vouchers showing details of the transaction.

9.2.10 Budget holders shall, as soon as possible after 31st March each year and not later than thedate specified by the Director of Finance and Information, notify him of all outstanding expenditureincurred relating to the previous financial year that has not been notified to the Director of Financeand Information by the raising of a Goods Received Note.

9.2.11 The Chief Executive must ensure that the Trust’s Standing Orders are compatible with therequirements issued by the NHS Executive in respect of building and engineering contracts(CONCODE) and land and property transactions (ESTATECODE). The technical audit of thesecontracts shall be the responsibility of the relevant Director. The Director of Finance and Information


shall ensure that the arrangements for financial control and financial audit of building and engineeringcontracts and property transactions comply with the guidance contained within these codes.

10. EXTERNAL BORROWING AND INVESTMENTS

10.1 EXTERNAL BORROWING

10.1.1 The Director of Finance and Information will advise the Board concerning the Trust’sability to pay interest on, and repay, both the originating capital debt and any proposed newborrowing, Trust’s external financing limit and any temporary borrowing limit set by the NHSExecutive. The Director of Finance and Information is also responsible for reporting periodically to theBoard concerning the originating debt and all loans and overdrafts.

10.1.2 Any application for a loan or overdraft will only be made under the authorisation ofPanel signatories, as approved by the Board.

10.1.3 The Director of Finance and Information shall prepare detailed procedural instructionsconcerning applications for loans and overdrafts and any other form of financing as required by theboard from time to time and on the form of records to be maintained.

10.1.4 All short term borrowings should be kept to the minimum period of time possible,consistent with the overall cash flow position. Any short term borrowing requirement in excess of onemonth must be authorised by the Director of Finance and Information and be repayable within 12months.

10.1.5 All long term borrowing must be consistent with the Business Plan.

10.2 INVESTMENTS

10.2.1 Temporary cash surpluses must be held only in such public or private sectorinvestments as notified by the Secretary of State and authorised by the Board.

10.2.2 The Director of Finance and Information is responsible for advising the Board oninvestments and shall report periodically to the Board concerning the performance of investmentsheld.

10.2.3 The Director of Finance and Information will prepare and issue detailed proceduralinstructions on the operation of investment accounts and on the records to be maintained.

11. CAPITAL INVESTMENT, PRIVATE FINANCING, FIXED ASSET REGISTERS ANDSECURITY OF ASSETS

11.1 CAPITAL INVESTMENT

11.1.1 The Chief Executive:

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

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

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


11.1.2 For every capital expenditure proposal the Chief Executive shall ensure:

(a) that a business case (in line with the guidance contained within the Capital InvestmentManual) is produced setting out:

(i) an option appraisal of potential benefits compared with known costs to determinethe option with the best return of benefits to costs; and

(ii) appropriate project management and control arrangements; and

(b) that the Director of Finance and Information has certified professionally to the costs andrevenue consequences detailed in the business case.

11.1.3 For capital schemes where the contracts stipulate stage payments, the Chief Executive willissue procedures for their management, incorporating the recommendations of “Estatecode”.

The Director of Finance and Information shall issue procedures for the regular reporting ofexpenditure and commitment against authorised expenditure.

11.1.4 The approval of a capital programme shall not constitute approval for expenditure on anyscheme.

The Chief Executive shall issue to the officer responsible for any scheme:

(a) specific authority to commit expenditure;

(b) authority to proceed to tender;

(c) approval to accept a successful tender. (The acceptance of tenders shall conform withthe Trusts’ procedures as set out in the Standing Orders).

The Chief Executive will issue a scheme of delegation for capital investment management inaccordance with “Estatecode” guidance and the Trust’s Standing Orders.

11.1.5 The Director of Finance and Information shall issue procedures governing the financialmanagement of capital investment projects including variations to contract, and valuation foraccounting purposes.

11.2 PRIVATE FINANCE

11.2.1 When the Trust proposes to use finance which is to be provided other than through its EFL,the following procedures shall apply:

(a) The Director of Finance and Information shall demonstrate that the use of private financerepresents value for money and genuinely transfers risk to the private sector.

(b) Where the sum involved exceeds delegated limits, the business case must be referred to theappropriate NHS Regional Office or treated as per current guidelines.

(c) The proposal must be specifically agreed by the Board.

11.3 ASSET REGISTERS

11.3.1 The Chief Executive is responsible for ensuring that a proper system exists for themaintenance of registers of assets, taking account of the advice of the Director of Finance andInformation concerning the form of any register and the method of updating, and arranging for aphysical check of assets against the asset register to be conducted once a year.

11.3.2 The Trust shall maintain an asset register recording fixed assets. The minimum data set to beheld within these registers shall be as specified in the Capital Charges Manual as issued by the NHSExecutive.


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

(a) properly authorised and approved agreements, architect’s certificates, supplier’sinvoices and other documentary evidence in respect of purchases from third parties;

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

(c) lease agreements in respect of assets held under a finance lease and capitalised.

11.3.4 Where capital assets are sold, scrapped, lost or otherwise disposed of, their value must beremoved from the accounting records and each disposal must be validated by reference toauthorisation documents or invoices.

11.3.5 The Director of Finance and Information shall approve procedures for reconciling balances onfixed assets accounts in ledgers against balances on fixed asset registers.

11.3.6 The value of each asset shall be indexed to current values in accordance with methodsspecified in the Capital Charges Manual issued by the NHS Executive.

11.3.7 The value of each asset shall be depreciated using methods and rates as specified in theCapital Charges Manual issued by the NHS Executive.

11.4 SECURITY OF ASSETS

11.4.1 The overall control and security of assets is the responsibility of the Chief Executive.

11.4.2 The Chief Executive shall ensure that all directors and officers including heads of departmentare aware of these arrangements and their respective responsibilities for ensuring that the assetregister is maintained.

11.4.3 Asset control procedures shall be approved by the Director of Finance and Information. Thisprocedure shall make provision for:

(a) recording managerial responsibility for each asset;

(b) identification of additions and disposals;

(c) identification of all repairs and maintenance expenses;

(d) physical security of assets;

(e) periodic verification of the existence of, condition of, and title to, assets recorded; (Theitems on the asset register shall be physically checked at least annually by theappropriate budget holder or head of department, who shall certify that the register iscorrect and the items are in their possession. All discrepancies shall be notified inwriting to the Director of Finance and Information who may also undertake such otherindependent checks as he considers necessary.)

(f) identification and reporting of all costs associated with the retention of an asset; and

(g) reporting, recording and safekeeping of cash, cheques, and negotiable instruments.

11.4.4 All discrepancies revealed by verification of physical assets to fixed asset register shall benotified to the Director of Finance and Information.

11.4.5 Whilst each employee has a responsibility for the security of property of the Trust, it is theresponsibility of directors and employees in all disciplines to apply such appropriate security


practices in relation to NHS property as may be determined by the Board. Any breach of agreedsecurity practices should be reported to the Director of Finance and Information or Security Officer.

11.4.6 Any damage or loss to the Trust’s assets must be reported by directors and employees inaccordance with the procedure for reporting losses. See Section 13 of these Standing FinancialInstructions.

11.4.7 Where practical, assets should be marked as Trust property.

11.4.8 Inventories shall also be maintained and receipts obtained for:-

(a) equipment on loan

(b) all contents of furnished lettings.

11.4.9 Officers responsible for security shall liaise with the appropriate budget holder(s) in order toensure that no equipment is subject to any unreasonable security risk. Persistent breaches of agreedsecurity practices shall be reported to the Chief Executive.

11.4.10 On the closure of a ward or department, a check as in paragraph 11.4.3 (e) above shallbe carried out and a responsible officer shall certify a list of items held and showing eventualdisposal.

12. STORES AND RECEIPT OF GOODS

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

(a) kept to a minimum;

(b) subjected to annual stocktake;

(c) valued at the lower of cost and net realisable value.

12.2 Subject to the responsibility of the Director of Finance and Information for the systems ofcontrol, overall responsibility for the control of stores shall be delegated to an employee by the ChiefExecutive. The day-to-day responsibility may be delegated by him to departmental employees andstores managers/ keepers, subject to such delegation being entered in a record available to theDirector of Finance and Information. The control of Pharmaceutical stocks shall be the responsibilityof a designated Pharmaceutical Officer; the control of fuel oil by a designated estates manager.

12.3 The responsibility for security arrangements and the custody of keys for all stores andlocations shall be clearly defined in writing by the designated manager/ Pharmaceutical Officer/Estates Manager. Wherever practicable, stocks should be marked as Trust property.

12.4 The Director of Finance and Information shall set out procedures and systems to regulate thestores including records for receipt of goods, issues, and returns to stores, and losses.

12.5 Stocktaking arrangements shall be agreed with the Director of Finance and Information andthere shall be a physical check covering all items in store at least once a year. The physical checkshall involve at least one independent officer other than the storekeeper. The stocktaking recordsshall be numerically controlled and signed by the officers undertaking the check. Any surpluses ordeficiencies revealed on stocktaking shall be reported to the Director of Finance and Informationimmediately and he may investigate as necessary.

12.6 Where a complete system of stores control is not justified, alternative arrangements shallrequire the approval of the Director of Finance and Information.


12.7 The designated Budget holder/Pharmaceutical Officer shall be responsible for a systemapproved by the Director of Finance and Information for a review of slow moving and obsolete itemsand for condemnation, disposal, and replacement of all unserviceable articles. The designatedOfficer shall report to the Director of Finance and Information any evidence of significant overstockingand of any negligence or malpractice (see also 13, Condemnations, Losses, Special Payments andInsurance Arrangements). Procedures for the disposal of obsolete stock shall follow the proceduresset out for disposal of all surplus and obsolete goods.

12.8 For goods supplied via NHS Supplies warehouses or other locations, the Chief Executiveshall identify those authorised to requisition and accept goods from the store. Where the Trust ischarged directly by NHS Supplies itself for goods supplied to the Trust, then the Director of Financeand Information shall seek appropriate written confirmation from NHS Supplies before accepting thecharge.

12.9 All goods received shall be checked as regards quantity and /or weight and inspected as toquality and specification. A delivery note shall be obtained from the supplier at the time of deliveryand shall be signed by the person receiving the goods. Instructions shall be issued to staff coveringthe procedure to be adopted in those cases where a delivery note is not available. Particulars of allgoods received shall be entered on a goods received record on the day of receipt. If goods areunsatisfactory or short on delivery, they shall only be accepted on the authority of the relevantresponsible officer. Where goods are subsequently found to be unsatisfactory, the goods receivedrecord shall be marked accordingly. In both cases the suppliers shall be notified immediately thediscrepancy is discovered.

12.10 The issue of stores shall be supported by an authorised requisition note, and a receipt for thestores issued shall be returned to the Department. Where a “topping up” system is used, a recordshall be maintained and approved by the Director of Finance and Information. Regular comparisonsshall be made by the designated officers of the quantities issued to wards/departments, etc., andexplanations recorded of significant variations.

12.11 Breakage’s, deterioration’s due to overstocking and other losses of goods in stores shall berecorded as they occur, and a summary shall be presented to the Director of Finance and Informationat quarterly intervals. Nil returns must be submitted. Tolerance limits shall be established for all storessubject to unavoidable loss, i.e. shrinkage in the case of certain foodstuffs and natural deterioration ofcertain goods.

12.12 Officers responsible for the custody and control of stores must notify losses due to theft, fraudand arson, in accordance with Section 13 of these instructions.

12.13 The Director of Finance and Information shall be informed of any variations in policy that arelikely to result in any significant variation in overall stock levels.

13. DISPOSALS AND CONDEMNATIONS, LOSSES, SPECIAL PAYMENTS AND INSURANCEARRANGEMENTS

13.1 DISPOSALS AND CONDEMNATIONS

13.1.1 The Director of Finance and Information shall prepare detailed procedures for the disposal ofassets including condemnations, and ensure that these are notified to budget holders.

13.1.2 When it is decided to dispose of a Trust asset, the budget holder will determine and advise theDirector of Finance and Information of the estimated market value of the item, taking account ofprofessional advice where appropriate.

13.1.3 All unserviceable articles shall be:


(a) condemned or otherwise disposed of by a condemning officer authorised for thatpurpose by the Director of Finance and Information;

(b) recorded by the Condemning Officer in a form approved by the Director of Finance andInformation which will indicate whether the articles are to be converted, destroyed orotherwise disposed of. All entries shall be confirmed by the countersignature of asecond employee authorised for the purpose by the Director of Finance andInformation.

13.1.4 The Condemning Officer shall satisfy himself as to whether or not there is evidence ofnegligence in use and shall report any such evidence to the Director of Finance and Information whowill take the appropriate action.

13.2 LOSSES AND SPECIAL PAYMENTS

13.2.1 It shall be the duty and responsibility of every employee of the Trust to promote the greatestpossible efficiency and economy in the use of resources provided for the purposes of the Trust andprevent losses of all kinds

13.2.2 The Director of Finance and Information shall prepare procedural instructions on the recordingof and accounting for losses, special payments and insurance arrangements. The Director ofFinance must also prepare a ‘fraud response plan’ that sets out the action to be taken by bothpersons detecting a suspected fraud and those persons responsible for investigating it.

13.2.3 For losses apparently caused by theft, arson, neglect of duty or gross carelessness, except iftrivial, the Director of Finance and Information must immediately notify:

(a) the Board of Directors, and

(b) the Statutory Auditor, (the Audit Commission).

13.2.4 Within limits delegated to it by the NHS Executive, the Board of the Trust shall approve thewriting-off of losses. The Board shall delegate its responsibility for the approval of write-off andauthorisation of special payments to the Chief Executive and Director of Finance and Informationacting jointly, for such categories or values of losses as the Board may determine. In this context the“write-off of loss” means also:-

(a) the abandonment of claims;

(b) the charging of fruitless payments; and

(c) the making of compensation and ex-gratia payments.

In line with SFI 2.1.1.(d) the Audit Committee will, at regular intervals, review all schedules of Lossesand Compensation on behalf of the Board.

13.2.5 The Director of Finance and Information shall be authorised to take any necessary steps tosafeguard the Trust’s interests in bankruptcies and company liquidations.

13.2.6 For any loss, the Director of Finance and Information should consider whether any insuranceclaim can be made against insurers.

13.2.7 The Director of Finance and Information shall maintain a Losses and Special PaymentsRegister in which write-off action is recorded.

13.2.8 No special payments exceeding Trust delegated limits shall be made without the prior approvalof the NHS Executive.


13.2.9 No special payments exceeding delegated limits determined by the Board shall be madewithout the prior approval of the Director of Finance and Information.

13.2.10 All unserviceable articles of the same classification having an individual or aggregatereplacement value exceeding £50 or such other value as may be set by the Board from time to timeshall be condemned or otherwise disposed of by an officer authorised for that purpose by the ChiefExecutive. The officer concerned shall maintain a record of items condemned and their disposal. Thecondemning officer shall satisfy himself as to whether or not there is evidence of negligence in useand shall report any such evidence to the Chief Executive and the Director of Finance andInformation who shall take appropriate action.

13.2.11 Every loss shall be recorded without delay on the Trust’s Losses register to bemaintained by the Director of Finance and Information and investigated in such a manner as theDirector of Finance and Information may require. Write-off action shall be recorded against each entryin the register.

13.2.12 The Director of Finance and Information shall submit to the Board a summary of losseseach quarter with details of all cases where the amount exceeds the limits delegated by the Board.

13.2.13 Rules for ex-gratia payments and delegated limits for the purposes of this section ofStanding Financial Instructions are set out in the Appendix to them.

13.2.14 Personal Injury and Clinical Negligence Cases. All out of court settlement or paymentsin respect of personal injury and clinical negligence cases must first be approved by the ChiefExecutive if they exceed the ex gratia payments in 13.2.14 above.

14. INFORMATION TECHNOLOGY

14.1 The Director of Finance and Information is responsible for guaranteeing that systems are inplace to ensure the accuracy and security of the computerised financial data of the Trust and shall:

(a) devise and implement any necessary procedures to ensure adequate protection of theTrust’s data, programs and computer hardware for which he is responsible, fromdeletion or modification, theft or damage, accidental or intentional disclosure tounauthorised persons, having due regard for the Data Protection Act 1984;

(b) ensure that adequate controls exist over data entry, processing, storage, transmissionand output to ensure security, privacy, accuracy, completeness, and timeliness of thedata, as well as the efficient and effective operation of the system;

(c) ensure that adequate controls exist such that the computer operation is separated fromdevelopment, maintenance and amendment;

(d) ensure that an adequate audit trail exists through the computer system and that suchcomputer audit reviews as he may consider necessary are carried out.

14.2 The Director of Finance and Information shall satisfy himself that new financial systems andamendments to current financial systems are developed in a controlled manner and thoroughly testedprior to implementation. Where this is undertaken by another organisation, assurances of adequacywill be obtained from them prior to implementation.

14.3 In the case of computer systems which are proposed general applications (i.e. normally thoseapplications which the majority of Trusts / Authorities in the Region wish to sponsor jointly) allresponsible directors and employees will send to the Director of Finance and Information:


(a) details of the outline design of the system;

(b) In the case of packages acquired either from a commercial organisation, from theNHS, or from another public sector organisation, the operational requirements.

14.4 The Director of Finance and Information shall ensure that contracts for computer services forfinancial applications with another health organisation or any other agency shall clearly define theresponsibility of all parties for the security, privacy, accuracy, completeness, and timeliness of dataduring processing, transmission and storage. The contract should also ensure rights of access foraudit purposes.

14.5 Where another health organisation or any other agency provides a computer service forfinancial applications, the Director of Finance and Information shall periodically seek assurances thatadequate controls are currently in operation.

14.6 Where computer systems have an impact on Trust financial systems the Director of Financeand Information shall satisfy himself that:

(a) systems acquisition, development and maintenance are in line with the Trust’sInformation Technology Strategy and other policies;

(b) data produced for use with financial systems is adequate, accurate, complete andtimely, and that an audit trail exists;

(c) Finance and Information staff have appropriate access to such data; and

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

15. PATIENTS’ PROPERTY

15.1 The Trust has a responsibility to provide safe custody for money and other personal property(hereafter referred to as “property”) handed in by patients, in the possession of unconscious orconfused patients, or found in the possession of patients dying in hospital or dead on arrival. Suchproperty should be dealt with in accordance with these instructions.

15.2 The Chief Executive is responsible for ensuring that patients or their guardians, asappropriate, are informed where possible before or at admission by:

- notices and information booklets,

- hospital admission documentation and property records,

- the oral advice of administrative and nursing staff responsible for admissions, that theTrust will not accept responsibility or liability for patients’ property brought into Trustpremises, unless it is handed in for safe custody and a copy of an official patients’property record is obtained as a receipt.

15.3 Where DOH instructions require the opening of separate accounts for patients’ monies, theseshall be opened and operated under arrangements specified by the Director of Finance andInformation. Monies deposited in excess of the patients’ needs shall be invested in accordance withguidance from the Secretary of State and in accordance with arrangements specified with theDirector of Finance and Information.

15.4 Where NHS Executive instructions require the opening of separate accounts for patients’monies, these shall be opened and operated under arrangements agreed by the Director of Financeand Information.

15.5 In all cases where property of a deceased patient is in excess of £5,000 (or such other amountas may be prescribed by any amendment to the Administration of Estates, Small Payments, Act1965), the production of Probate or Letters of Administration shall be required before any of the


property is released. Where the total value of property is £5,000 or less, forms of indemnity shall beobtained, ( unless Probate or Letters of Administration are produced ).

15.6 Employees should be informed, on appointment, by the appropriate manager of theirresponsibilities and duties for the administration of the property of patients.

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

15.8 It shall be the duty of every employee of the Trust into whose personal custody any money orother property of a patient is received to comply with the requirements of Standing FinancialInstruction Section 6 which details cash handling requirements.

Valuable articles shall be dealt with in the same way as cash.

15.9 A Patients’ Property Record in a form determined by the Director of Finance and Informationshall be completed in respect of the following:-

(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;

(ii) confused and/or disorientated patients;

(iii) unconscious Patients;

(iv) patients dying in hospital;

(v) persons found to be dead on arrival at hospital;

(vi) patients severely incapacitated for any other reason.

A record shall be completed in respect of all persons in category 15.9(b) including a nil return if noproperty is taken into safe custody.

15.10 The Patient’s Property record shall be completed by an officer of the Trust in the presence ofthe patient or guardian as appropriate. It shall then be signed by both the officer of the Trust and bythe patient/guardian, except where the patient is restricted by physical or mental incapacity and notrepresented by a guardian, in which case two officers of the Trust shall act. Any alteration shall bevalidated by signatures as required for the original entry on the Record.

15.11 Property handed over for safe custody shall be placed in the care of the officer nominated bythe Chief Executive, unless such a person is not available, in which case the property shall be placedinto the care of the most senior member of the nursing staff on duty. Cash received from patients forsafe custody shall be paid into the Trust’s bank account.

15.12 Patients’ income, including pensions and allowances, shall be dealt with in accordance withcurrent DOH instructions, i.e. HM(71)90 and HM(72)51, and any subsequent amendments thereto.

15.13 Except as provided below in paragraphs 15.15 to 15.16, refunds of cash handed in for safecustody will be dealt with in accordance with current DOH instructions (the provisions of HM(71)90,and any subsequent amendments thereto). Property other than cash which has been handed over forsafe custody shall be returned to the patient/guardian, as required, by the officer who has beenresponsible for its security. The return shall be receipted by the patient or guardian as appropriate,and witnessed.

15.14 The disposal of property of deceased patients shall be effected by the officer who has beenresponsible for its custody. Such disposal shall be in accordance with the written instructions issued(as referred to in 15.3 above).


15.15 In respect of a deceased patients property, if there is no Will and no lawful kin, the propertyvests with the Crown, and particulars shall, therefore, be notified to the Treasury Solicitor, or to theDuchies of Lancaster and Cornwall, as appropriate.

15.16 Where arrangements for burial or cremation are not made privately, any cash of the estateheld by the Trust shall be appropriated towards funeral expenses. Any funeral expenses necessarilyborne by the Trust are a first charge on a deceased person’s estate. No other expenses or debtsshall be discharged out of the estate of a deceased patient.

16. FUNDS HELD ON TRUST

Preamble: Within this section of the Standing Financial Instructions “Trust Funds” are those gifts,donations and endowments made under the relevant charities legislation and held on trust forpurposes relating to the National Health Service, the objects of which are for the benefit of theNational Health Service in England. They are administered by the Board of Directors acting asTrustees.

16.1 INTRODUCTION

16.1.1 The discharge of Royal Devon and Exeter Healthcare Trust’s corporate trustee responsibilitiesare distinct from its responsibilities for exchequer funds and may not necessarily be discharged in thesame manner. However there must still be adherence to the overriding general principles of financialregularity, prudence and propriety. Trustee responsibilities cover both charitable and non-charitablepurposes. The Director of Finance and Information shall ensure that each fund is managedappropriately with regard to its purpose and to its requirements.

16.1.2 This Section of the SFIs shall be interpreted and applied in conjunction with the rest of theseInstructions, subject to modifications contained herein and that expenditure from the Trust Fundsshall be restricted to the purpose(s) of the appropriate Trust and be made only with the approval ofthe Board.

16.1.3 The Director of Finance and Information is responsible to the Board for ensuring that theseSFI’s are applied. He shall prepare detailed procedural instructions concerning the receiving,recording, investment and accounting for Trust Funds. The Director of Finance and Information shallensure that such accounts and records as may be necessary to record and protect all transactionsand funds of the Trust as trustees of non-exchequer funds, including an investments register aremaintained.

16.1.4 The over-riding principle is that the integrity of each trust must be maintained and statutoryobligations and trust obligations met. Materiality must be assessed separately from Exchequeractivities and funds.

16.2 EXISTING TRUSTS

16.2.1 The Director of Finance and Information shall prepare written instructions on the generaloperation of all Trust Funds. These shall included the requirement that the Trustees of each Trustestablish a governing instrument for the Trust, including suitable restrictions on the use of TrustFunds as appropriate to the nature of the Trust in question.

16.2.2 The Director of Finance and Information shall periodically review the funds in existence andshall make recommendations to the Board regarding the potential for rationalisation of such fundswithin statutory guidelines.

16.2.3 The Director of Finance and Information may recommend an increase in the number of fundswhere this is consistent with Royal Devon and Exeter’s policy for ensuring the safe and appropriatemanagement of restricted funds, e.g., designation for specific wards or departments.


16.3 NEW TRUSTS

16.3.1 The Director of Finance and Information shall arrange for the creation of a new trust wherefunds and/or other assets, received in accordance with Royal Devon and Exeter’s policies, cannotadequately be managed as part of an existing trust.

16.3.2 The Director of Finance and Information shall present the governing document to the Board foradoption as required in Standing Orders for each new trust. Such document shall clearly identify,inter alia, the objects of the new trust, the capacity of the Board to delegate powers to manage andthe power to assign the residue of the trust to another fund contingent upon certain conditions, e.g.,discharge of original objects.

16.4 SOURCES OF NEW FUNDS

16.4.1 All gifts accepted shall be received and held in the name of the Royal Devon and ExeterHealthcare Trust and administered in accordance with policy, subject to the terms of specific trusts.As the Royal Devon and Exeter Healthcare Trust can accept gifts only for any purposes relating tothe Health Service, officers shall, in cases of doubt, consult the Director of Finance and Informationbefore accepting any gifts. Advice to the Board on the financial implications of fund raising activitiesby outside bodies or organisations shall be given only by the Director of Finance and Information.

16.4.2 In respect of Donations, the Director of Finance and Information shall:

(a) provide guidelines to officers of Royal Devon and Exeter Healthcare Trust as to how toproceed when offered funds. These to include:

(i) the identification of the donors intentions;

(ii) where possible, the avoidance of new trusts;

(iii) the avoidance of impossible, undesirable or administratively difficult objects;

(iv) sources of immediate further advice; and

(v) treatment of offers of personal gifts; and

(b) provide secure and appropriate receipting arrangements which will indicate that fundshave been accepted directly into Royal Devon and Exeter Healthcare’s trust funds andthat the donor’s intentions have been noted and accepted.

16.4.3 All gifts, donations and proceeds of fund-raising activities which are intended for the Trust’suse shall be handed immediately to the cashier, to be banked and credited to the fund.

16.4.4 In respect of Legacies and Bequests, the Director of Finance and Information shall:

(a) provide guidelines to officers of Royal Devon and Exeter Healthcare Trust covering anyapproach regarding:

(i) the wording of wills;

(ii) the receipt of funds/other assets from executors;

(b) be the Trust’s nominee in order to obtain a legacy due to the Trust and shall wherenecessary, obtain grant of probate, or make application for grant of letters ofadministration, where Royal Devon and Exeter Healthcare Trust is the beneficiary;

(c) be empowered, on behalf of Royal Devon and Exeter Healthcare Trust, to negotiatearrangements regarding the administration of a will with executors and to dischargethem from their duty; and


(d) be directly responsible for the appropriate treatment of all legacies and bequests.

16.4.5 The Director of Finance and Information shall be kept informed of all enquiries regardinglegacies and shall keep an appropriate record. All correspondence concerning a legacy shall be dealtwith on behalf of the Trust by the Director of Finance and Information who alone shall be empoweredto give an executor or other personal representative a good discharge.

16.4.6 In respect of Fund-raising, the Director of Finance and Information shall:

(a) deal with all arrangements for fund-raising by and/or on behalf of Royal Devon andExeter Healthcare Trust and ensure compliance with all statutes and regulations. Heshall be required to advise the Board on the financial implication of any proposal forfund-raising activities which the Trust may initiate, sponsor or approve;

(b) be empowered to liaise with other organisations/persons raising funds for Royal Devonand Exeter Healthcare Trust and shall approve the proposed arrangements for raisingfunds and remitting funds raised to the Trust. The Director of Finance and Informationshall be the only officer empowered to give approval for such fund-raising subject to theoverriding direction of the Board;

(c) be responsible for alerting the Board to any irregularities regarding the use of RoyalDevon and Exeter Healthcare Trust’s name or its registration numbers; and

(d) be responsible for the appropriate treatment of all funds received from this source.

16.4.7. In respect of Trading Income, the Director of Finance and Information shall:

(a) be responsible for any trading undertaken by Royal Devon and Exeter Healthcare Trustas corporate trustee; and

(b) be responsible for the appropriate treatment of all funds received from this source.

16.4.8. In respect of Investment Income , the Director of Finance and Information shall beresponsible for the appropriate treatment of all dividends, interest and other receipts from this source(see 16.5 below).

16.5 INVESTMENT MANAGEMENT

16.5.1 The Director of Finance and Information shall be responsible for all aspects of themanagement of the investment of funds held on trust; such investments shall be invested inaccordance with the Trust’s policy and subject to statutory requirements. The issues on which heshall be required to provide advice to the Board shall include:-

(a) the formulation of investment policy within the powers of Royal Devon and ExeterHealthcare Trust under statute and within governing instruments to meet itsrequirements with regard to income generation and the enhancement of capital value;

(b) the appointment of advisers, brokers, and, where appropriate, fund managers and:

(i) the Director of Finance and Information shall agree the terms of suchappointments; and for which

(ii) written agreements shall be signed by the Chief Executive;

(c) pooling of investment resources and the preparation of a submission to the CharityCommission for them to make a scheme;


(d) the participation by Royal Devon and Exeter Healthcare Trust in common investmentfunds and the agreement of terms of entry and withdrawal from such funds;

(e) that the use of trust assets shall be appropriately authorised in writing and chargesraised within policy guidelines;

(f) the review of the performance of brokers and fund managers;

(g) the reporting of investment performance.

16.5.2 All share and stock certificates and property deeds shall be deposited either with the bankersacting on behalf of the Trustees or in a safe, or a compartment within a safe, to which only thedesignated responsible officers shall have access.

16.6 DISPOSITION MANAGEMENT

16.6.1 The exercise of this Royal Devon and Exeter Healthcare Trust’s dispositive discretion shall bemanaged by the Director of Finance and Information in conjunction with the Board. In so doing heshall 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 (exceptwhere administratively unavoidable), and to ensure that any indebtedness to theExchequer shall be discharged 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 andthe needs of Royal Devon and Exeter Healthcare Trust; and

(f) the definitions of “charitable purposes” as agreed by the NHS Executive with the CharityCommission.

16.6.2 Budgets will be set annually for expenditure, in accordance with the policy of the Trust. Thesetting of budgets and itemisation of expenditure shall form part of the procedures for approving thefinancial budgets of the Trust. Budget holders will be determined by the Chief Executive.

16.6.3 Expenditure of any trust fund shall be conditional upon:-

(a) the item being within the terms of the appropriate trust and the procedures approved bythe Board;

(b) being within the budget set for the fund; and

(c) for items falling within the capital definition the prior approval of the Chief Executive isobtained.

(d) being authorised by the budget holder in writing, or by an officer to whom the budgetholder has delegated, in writing, power to authorise expenditure.

16.7 BANKING SERVICES

16.7.1 The Director of Finance and Information shall advise the Board and, with its approval, shallensure that appropriate banking services are available to Royal Devon and Exeter Healthcare Trustas corporate trustee. These bank accounts should permit the separate identification of liquid funds toeach trust where this is deemed necessary by the Charity Commission.


16.8 ASSET MANAGEMENT

16.8.1 Assets in the ownership of or used by Royal Devon and Exeter Healthcare Trust as corporatetrustee, shall be maintained along with the general estate and inventory of assets of Royal Devonand Exeter Healthcare Trust. The Director of Finance and Information shall ensure:

(a) that appropriate records of all assets owned by Royal Devon and Exeter HealthcareTrust as corporate trustee are maintained, and that all assets, at agreed valuations, arebrought to account;

(b) that appropriate measures are taken to protect and/or to replace assets. These toinclude decisions regarding insurance, inventory control, and the reporting of losses;

(c) that donated assets received on trust rather than into the ownership of Royal Devonand Exeter Healthcare Trust shall be accounted for appropriately;

(d) that all assets acquired from funds held on trust which are intended to be retainedwithin the trust funds are appropriately accounted for, and that all other assets soacquired are brought to account in the name of the Royal Devon and Exeter HealthcareTrust.

16.9 REPORTING

16.9.1 The Director of Finance and Information shall ensure that regular reports are made to theBoard with regard to, the receipt of funds, investments, and the disposition of resources.

16.9.2 The Director of Finance and Information shall prepare annual accounts in the required mannerwhich shall be submitted to the Board within agreed timescales.

16.9.3 The Director of Finance and Information shall prepare an annual trustees’ report (separatereports for charitable and non-charitable trusts) and the required returns to the NHS Executive and tothe Charity Commission for adoption by the Board.

16.10 ACCOUNTING AND AUDIT

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

16.10.2 The Director of Finance and Information shall ensure that the records, accounts andreturns receive adequate scrutiny by internal audit during the year. He will liaise with external auditand provide them with all necessary information.

16.10.3 The Board shall be advised by the Director of Finance and Information on the outcomeof the annual audit. The Chief Executive shall submit the Management Letter to the Board.

16.11 ADMINISTRATION COSTS

16.11.1 The Director of Finance and Information shall identify all costs directly incurred in theadministration of funds held on trust and, in agreement with the Board, shall charge such costs to theappropriate trust accounts.

16.12 TAXATION AND EXCISE DUTY

16.12.1 The Director of Finance and Information shall ensure that Royal Devon and ExeterHealthcare Trust’s liability to taxation and excise duty is managed appropriately, taking full advantageof available concessions, through the maintenance of appropriate records, the preparation andsubmission of the required returns and the recovery of deductions at source.


17. UNOFFICIAL FUNDS AND VALUABLES

17.1 Unofficial funds or valuables may be accepted for safe-keeping providing that:-

(a) the depositor acknowledges in writing that the Trust will not be liable for any loss arisingfrom whatever cause;

(b) deposits are in identifiable and securely sealed or locked containers.

17.2 Where unofficial funds are deposited as a regular arrangement or for any length of time awritten indemnity must be obtained from the individual or organisation concerned, absolving the Trustfrom responsibility for any loss arising from whatever the cause.

17.3 Suitable limits concerning deposits of unofficial money or valuables as a regular arrangementshall be prescribed by the Director of Finance and Information. The prescribed limits shall not beexceeded without the prior authorisation of the Director of Finance and Information.

17.4 So far as practicable, officers who handle official cash or valuables shall not at the same timehold an office of financial responsibility in any organisation whose funds are deposited with the Trust.Every case where this is not possible should be authorised by the Director of Finance andInformation and a record made of the circumstances.

17.5 The officer accepting unofficial money or property for safe-keeping shall be responsible for:-

(a) obtaining a written indemnity where necessary;

(b) ensuring the prescribed limits are not exceeded;

(c) notifying the Director of Finance and Information of any variations to the list of officersand organisations.

18. RETENTION OF DOCUMENTS

18.1 The Chief Executive shall be responsible for maintaining archives for all documents required tobe retained under the direction contained in HSG 1999/53.

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

18.3 Documents held under HSG 1999/53 shall only be destroyed at the express instigation of theChief Executive, records shall be ,maintained of the documents destroyed.

19. RISK MANAGEMENT AND INSURANCE

19.1 The Chief Executive shall ensure that the Trust has a programme of Risk Management whichwill be approved and monitored by the board.

19.2 The programme of risk management shall include:

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

(b) engendering among all levels of staff a positive attitude towards the control of

risk;

(c) management processes to ensure all significant risks and potential liabilities

are addressed including effective systems of internal control, control effective

insurance cover, and decisions on the acceptable level of retained risk;

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


(e) audit arrangements including; internal audit; clinical audit; health and

safety review;

(f) arrangements to review the risk management programme.

The existence, integration and evaluation of the above elements will provide a basis to make astatement on the effectiveness of Internal Financial Control within the Annual Report and Accounts asrequired by HSG(97)17.

19.3 The Director of Finance and Information shall ensure that insurance arrangements exist inaccordance with the risk management programme.

19.4 INSURANCE ARRANGEMENTS

19.4.1 The Director of Finance and Information shall be informed of any insurance cover to beeffected on behalf of the Trust and of any negotiations concerning insurance claims.

19.4.2 The Director of Finance and Information shall be notified of all new risks, properties, vehicles,and other assets which require to be insured and of any alterations affecting insurance’s.

19.4.3 The Director of Finance and Information shall be notified immediately in writing of any loss,liability or damage or any event likely to lead to a claim.

19.4.4 At, or before, the beginning of each financial year the Board will consider and approve theinsurance and risk management arrangements for the Trust.

20 OPERATION OF SHARED SERVICES ON BEHALF OF OTHER NHS BODIES.

20.1 Royal Devon & Exeter Healthcare Trust staff may operate shared service functions on behalfof other NHS Bodies.

20.2 Where the Royal Devon & Exeter Healthcare Trust operates shared services these will besubject to the normal audit requirements as set out in Standing Financial Instructions.

20.3 Where the Royal Devon & Exeter Healthcare Trust operates Shared Financial Services orHuman Resources Services then the Standing Orders and Standing Financial Instructions of thecustomer organisation will also apply.

20.4 Determination of which SFI/SO/Scheme of Delegation applies to staff at shared service in anyparticular instance will be down to the Director of Finance and Information or Director of HumanResources (for HR issues) of the Royal Devon & Exeter Healthcare Trust.

20.5 Where the above SFI’s are found to be inconsistent with the operational needs of a sharedservice the Director of Finance and Information or Human Resources (for HR issues) of the RoyalDevon & Exeter Healthcare Trust will formally approve the amendments and report the change to theBoard at the earliest opportunity.