Trust Accounts Consolidation (TAC) schedules: Completion instructions month 9 2018/19 - NHS trusts and foundation trusts
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NHS trusts and foundation trusts Trust Accounts Consolidation (TAC) schedules: Completion instructions month 9 2018/19 December 2018
Wellington House
133-155 Waterloo Road
London SE1 8UG
To: NHS trust and NHS foundation trust finance teams
E: provider.accounts@improvement.nhs.uk
December 2018
Dear Colleagues
This document accompanies the release of the Trust Accounts Consolidation (TAC) schedules for month
9 2018/19. This is the second year of the schedules being used, so this guidance has been revised. It
now concentrates on explaining what has changed from the prior year, rather that introducing how the
form works.
Two important new accounting standards apply for the first time in 2018/19: IFRS 9 on financial
instruments and IFRS 15 on revenue from contracts with customers. Both are being applied from 1 April
2018; comparatives are not being restated. This means it’s really important that providers complete
the TAC schedules in a specific order this year. Please do read section 2.1.1 of this document which
explains this. This guidance is laid out as follows:
- Chapter 1 explains how the TAC schedules fit into the Provider Finance Return (PFR) form and
lists the TAC disclosures that can be omitted at month 9.
- Chapter 2 explains the key changes to the form compared to last year.
- Chapters 3 and 4 then work through the new and amended disclosures as a result of IFRS 9 and
IFRS 15 and give practical tips and definitions to add completion.
- Chapter 5 will be useful for anyone new to the form this year – it explains some key principles that
were first explained last year. There are no changes to this from 2017/18.
- Chapter 6 gives detailed guidance on particular notes and tables throughout the form – we’ expect
you’ll refer to this as necessary; it’s not intended to be read from start to end.
- Chapters 7 and 8 then give specific information on how to record a transfer by absorption and how
to consolidate a charity in the form. This guidance is unchanged from last year.
- Annex 2 lists every change in the form compared to last year. A new sub-section has been added
to explain a minor change made to the TAC schedules and this guidance since the
illustrative versions issued on 7 December.
At month 12 we will aim to keep changes to the TAC schedules compared to month 9 to a minimum.
If we can help, or you’d like to provide feedback, please get in touch. Details are in section 1.
Yours sincerely
Sector Financial Accounting team
NHS Improvement
NHS Improvement is the operational name for the organisation that brings together Monitor, NHS Trust Development Authority,
Patient Safety, the National Reporting and Learning System, the Advancing Change team and the Intensive Support Teams.Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
Contents
1. Introduction ............................................................................ 2
1.1. TAC schedules and PFR form ..................................................................... 2
1.2. Timetable and submission ........................................................................... 3
1.3. Disclosures that can be omitted at month 9 ................................................. 3
1.4. Supporting guidance and further information ............................................... 5
2. What’s new for 2018/19 ......................................................... 6
2.1. Key changes ................................................................................................ 6
2.2. Full list of changes ....................................................................................... 8
3. Application of new standard: IFRS 9 ...................................... 9
3.1. Introduction .................................................................................................. 9
3.2. Changes and additions to TAC schedules ................................................... 9
3.3. Requirements of the standard ................................................................... 15
4. Application of new standard: IFRS 15 .................................. 16
4.1. Introduction ................................................................................................ 16
4.2. Changes and additions to TAC schedules ................................................. 16
4.3. Requirements of the standard ................................................................... 22
4.4. Contract receivables decision tree............................................................. 22
5. Reminder of key principles ................................................... 23
5.1. Prior period comparatives .......................................................................... 23
5.2. Approach to charities ................................................................................. 23
5.3. Validations and Justify or Change points (JOCs) ...................................... 24
6. Detailed guidance: tab by tab............................................... 25
7. How to record a transfer by absorption ................................ 33
8. How to consolidate a charity into the TAC schedules .......... 35
Annex 1: Independent charities ................................................... 40
Annex 2: Changes to TAC schedules since 2017/18 month 12 ... 41
Annex 3: Addressing disclosure requirements of IFRS 7 following
adoption of IFRS 9 ....................................................................... 49
Annex 4: Addressing disclosure requirements of IFRS 15 ........... 60
1 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
1. Introduction
1.1. TAC schedules and PFR form
NHS Improvement will prepare consolidated provider accounts using the
information provided by providers in the Trust Accounts Consolidation (TAC)
schedules. NHS Improvement will also prepare a consolidation return on a specific
basis for inclusion within the Department of Health and Social Care (DHSC)’s group
accounts.
The TAC schedules are included alongside the standard monthly monitoring tabs in
the Provider Finance Return (PFR) form at months 9 and 12. Standing guidance on
the monthly monitoring tabs is issued separately in order to give continuity with
other months of the year. If this is your first time completing the form, please refer to
the Information tab before you start to complete the form: this explains what the
colours mean for different types of cell.
We recommend the following approach to completing the form:
1. Complete the TAC tabs to achieve a balancing set of accounts. If you
consolidate a charity (see section 5.2 below), leave this out for now. For
2018/19: please also see section 2.1.1 which expands on this point
given the 1 April 2018 adoption of IFRS 9 and IFRS 15.
2. Check the TAC validations and TAC JOCs to ensure that you have an
accurate data set.
3. If applicable, consolidate your charity into the TAC tabs (see section 5.2 and
chapter 8) and re-check the TAC validations and JOCs.
4. The monthly monitoring tabs are then fed from the TAC tabs as much as
possible. Review the monthly monitoring tabs and complete missing
information.
5. Add in updated forecast outturn (FOT) information to the monthly monitoring
tabs.
Separately, we will issue example accounts templates for month 12 which are
linked to the TAC schedules. The accounts templates do not form part of an
accounts direction to NHS trusts or foundation trusts.
2 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
1.2. Timetable and submission
We issued our detailed timetable letter on 14 November. The letter can also be
found at https://improvement.nhs.uk/resources/financial-reporting/.
The month 9 PFR form (incorporating the TAC schedules) will be submitted three
times:
• 23 January 2019, noon (full submission including receivables and payables
agreement of balances data)
• 6 February 2019, noon (income and expenditure agreement of balances
data)
• 25 February 2019, noon (resubmission of receivables/payables and
income/expenditure agreement of balances data).
Please refer to the timetable letter for full details of the requirements of each
submission.
IMPORTANT – BREAKING LINKS
All links to other workbooks must be broken before the PFR form is
submitted to NHS Improvement. The protection in the PFR form means it is not
possible to use the tools within Excel to break all the links. Providers should use the
‘break links’ button on the cover.
1.3. Disclosures that can be omitted at month 9
NHS Improvement has issued a full set of TAC schedules to aid NHS trusts and
foundation trusts in their planning for the year end. Some disclosures are not
required to be completed at month 9. Where this is the case, the tables are clearly
marked as not applicable with red headers.
Any validation which relates to disclosures that are not required are coloured grey
in the summary on the validations tab and are excluded from the count of validation
fails.
TAC Note/table
TAC07 Note 2.2 Fees and charges
TAC07 Note 3.2 Transaction price allocated to remaining performance
obligations
- However as this is a new disclosure under IFRS 15, providers
should ensure they are familiar with the requirements of this
note before the year end.
3 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
TAC Note/table
TAC09 Note 5.4 Early retirements due to ill health
TAC09 Table 5A Staff sickness absence
TAC11 Note 9.2 The late payments of commercial debt Act
TAC13 Note 13.3 Economic lives of intangible assets
TAC14 Note 14.5 Economic lives of property, plant and equipment
TAC14 Table 14E Valuation methods for land and buildings
TAC15 Note 15.2 Investment property income and expenses
TAC19 Note 23.3 Third party assets
TAC20 Note 24.2 Early retirements included in payables
TAC21 Note 28.2 Finance lease details
(Not ‘finance lease obligations’, which must be completed)
TAC22 Note 30.3 Clinical negligence liabilities
TAC22 Note 31 Contingent liabilities / assets
TAC22 Table 31A Contingent assets and liabilities not required to be
disclosed under IAS 37 but included for parliamentary reporting and
accountability purposes
TAC28 Note 37.1 Capital commitments
TAC28 Note 37.2 Other financial commitments
TAC28 Note 38.1 / 38.2 Related party transactions and balances
This isn’t required to be completed at month 9, but as listed in the list
of changes, we have made changes to signage in this note so
providers are encouraged to double-check their prior year
comparatives.
TAC28 Note 39 Events after the reporting period
TAC28 Note 40.1 / 40.2 Breakeven duty
This is only applicable to the full year so can be ignored at month 9.
This note does not appear in templates issued to NHS foundation
trusts.
TAC28 Note 40.3 Capital resource limit
This is only applicable to the full year so can be ignored at month 9.
This note does not appear in templates issued to NHS foundation
trusts.
In future years we would hope to add the financial instrument disclosures on TAC27
to this list, but clearly they are important in 2018/19 given the adoption of IFRS 9.
4 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
Approach to on-SoFP pensions at month 9
Where a provider has an interest in an on-SoFP pension scheme (e.g. a local
authority pension), we expect that the actuarial information will not be available at
month 9. We recommend that such providers record no in-year movements in the
net pension liability in TAC26 at month 9 and instead account for the year to date
employer contributions on a ‘contribution basis’ at month 9 as staff cost expenditure
(given this is likely to be the approach being taken to in-year monitoring forms in
other months before month 12). TAC26 should be completed as normal at month
12 following receipt of actuarial information.
1.4. Supporting guidance and further information
Please refer to the following sources of guidance:
• The Department of Health and Social Care Group Accounting Manual
2018/19 (GAM) provides detailed accounting guidance for NHS trusts and
foundation trusts, and annual report guidance for NHS trusts
• The Foundation Trust Annual Reporting Manual 2018/19 provides annual
report guidance and accounts directions for NHS foundation trusts
• The DHSC Agreement of Balances Guidance is applicable to all bodies in
the DHSC group.
We will post any relevant updates to our webpage at
https://improvement.nhs.uk/resources/financial-reporting/
If there are any fixers to be issued for the PFR file, PFR contacts will be alerted by
email when the fixer is available in the ‘additional documents’ section of portals. If
we are aware of issues where a fixer has not yet been issued, we will post an
update on the Financial Reporting webpage: you may find it helpful to check this
page if you have a problem with the form.
If you have any queries on the TAC schedules, please contact the Sector Financial
Accounting team at Provider.Accounts@improvement.nhs.uk.
5 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
2. What’s new for 2018/19
2.1. Key changes
2.1.1. IFRS 9 and IFRS 15 implementation from 1 April 2018
Chapters 3 and 4 of this document explain how to complete the relevant sections of
the form affected by IFRS 9 and IFRS 15 adoption respectively. In applying the two
new standards, we advise conceptually thinking in terms of applying IFRS 15 first
and then IFRS 9. This is because IFRS 15 adoption may change balance sheet
items which then need to be measured in line with IFRS 9.
As explained in the GAM, the standards are being applied without restating prior
periods. Opening adjustments are made to reserves as at 1 April 2018. No
adjustments should be made to prior year numbers for IFRS 9 and IFRS 15 adoption.
We recommend completing the TACs as follows:
•Step 1: Review pre-populated prior year comparatives as normal.
1
•Step 2: Update prior year comparatives for any material prior year errors not
2 related to IFRS 9 or IFRS 15. Analyse any such changes on TAC33.
•Step 3: Complete tab TAC00: this contains the transition adjustments for IFRS
3 15 and IFRS 9 as at 1 April 2018.
•Step 4: Input any 1 April mergers/acquisitions on TAC30. Enter any
4 subsequent IFRS 15 and 9 adjustments below the main table.
•Step 5: Complete the rest of the TAC schedules (apart from TAC28A),
5 including any other absorption transfers.
•Step 6: If required, consolidate charity.
6
•Step 7: Complete tab TAC28A - impact of IFRS 15 on current reporting
7 period.
Please refer to chapters 3 and 4 of this document for more detail on IFRS 9
and IFRS 15 adoption and form completion.
6 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
2.1.2. TAC21: Borrowings – Note 29 Reconciliation of liabilities arising from
financing activities
Disclosure initiative amendments to IAS 7 require entities to disclose a
reconciliation of the movements in liabilities that arise from financing activities,
clearly showing both cash and non-cash movements.
Note 29 on TAC21 collects this information. Within this note cash movements and
non-cash movements should be recorded gross. This therefore means that interest
charges arising in the year (application of the effective interest rate) increase the
liability as a non-cash movement and interest cash payments subsequently reduce
it.
Cash flows for payments of principal are populated from TAC05 however in some
instances may require reallocation between columns. Cash flows for interest
payments are populated for loans only – for PFI and finance leases these
movements should be entered manually, excluding any amounts that relate to
contingent rent. Interest arising in year on PFI is populated but the interest arising
on loans and finance leases should be entered manually excluding any contingent
rents or interest which has been capitalised. Absorption transfers are fed from
TAC30. Any other non-cash movements such as new finance leases or disposals
should be entered manually. Checks are included beneath the note to ensure that
opening and closing balances match the borrowings and finance lease notes. A
simplified counterparty split has been included for movements on finance lease
payables to facilitate eliminations in the consolidated provider and DHSC accounts.
Information for the comparative year is not required in the year of adoption (IAS 7,
paragraph 60) so there is no prior year version of this table.
2.1.3. TAC22: Provisions – Note 30 Provisions for liabilities and charges
A new category has been included in the provisions note for ‘Pensions – injury
benefits’. Providers previously including injury benefits in ‘Other’ or ‘Pensions –
early departure costs’ should reclassify those amount into the new column in the
prior year note. Where providers clearly indicated in the freetext in their 2017/18
TAC forms that ‘other provisions’ included injury benefits, a JoC check has been
included to check these amounts have been reclassified to the new column.
The previous column for ‘continuing care’ provisions has now been removed as this
is no longer expected to apply to NHS providers.
7 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
2.1.4. TAC26: Pension – Table 35A Breakdown of amounts recognised in the
SoCI
A new table has been added to TAC26 for those providers recognising a defined
benefit pension liability / asset on their balance sheet. This table collects
information on where the pension costs charged to the SoCI under IAS 19 have
been recognised. Should the line in which your trust has recognised its defined
benefit pension charges / credits not be listed, please record such amounts in
PEN0500 and note the relevant lines in the freetext box provided.
2.2. Full list of changes
A full list of changes to the TAC schedules compared to month 12 2017/18 is
provided in annex 2 to this document.
Changes in the form can also be identified with the following conventions
throughout the template itself:
• Purple shading – indicates a column, row, table or sheet that is a new
requirement
• Red text – indicates a change in the requirement of an existing row
• On TAC Validations and TAC JoCs, changes are marked as NEW or
Amended in red text on the left-hand side.
8 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
3. Application of new standard: IFRS 9
3.1. Introduction
Section 2.1.1 of this document explains the high-level principles for completing the
form in light of IFRS 9 and IFRS 15 adoption. It also includes a recommended
overall approach to completing the TAC schedules. Adopting IFRS 9 means many
of the disclosure requirements in IFRS 7 are required: this chapter will largely refer
to IFRS 7 and this is where the disclosure requirements are specified. Please refer
to the GAM for more information on the measurement provisions of IFRS 9
specifically.
This chapter specifically deals with the impact on the TAC schedules of adopting
IFRS 9. The disclosure requirements in IFRS 7 resulting from IFRS 9 adoption are
extensive. In the TAC schedules we do not collect information that we expect not to
be material to the group and is not required for any other purpose, or for reporting
to the Department. This means that not every disclosure requirement in the
standard is included in the TACs: see section 3.3 for more on this. This chapter
seeks to explain what you need to do in order to complete the TAC schedules.
3.2. Changes and additions to TAC schedules
3.2.1. TAC00: New standards – 1 Apr 18 – Table T1 SoFP adjustments for the
implementation of IFRS 15 and IFRS 9 on 1 April 2018
This table collects the impact of adoption of the new standards on the 1 April 2018
opening balance sheet. To simplify the presentation, the rows of this table only
show the SoFP lines that we expect may be affected by IFRS 9 and IFRS 15
adoption. Other rows are summarised.
The DHSC GAM consultation explained the impact of moving from measuring loans
from DHSC at historic cost to an amortised cost basis. In practice this means that
the carrying value of the loan presented in the financial statements should include
both the loan principal and any interest accrual as at the reporting date. This table
pre-populates this impact on row IFRS0080 using prior year data on interest
accruals (both DHSC and other loans). It is expected that the opposite entry will
appear in row IFRS0090 but the formula here can be overwritten to also include any
other changes in borrowings.
This table should be completed before other areas of the TACs as it will drive
opening balances in several movements notes and ensure that these non-cash
movements are excluded from the cash flow.
9 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
3.2.2. TAC00: New standards – 1 Apr 18 – Table T2 Impact of IFRS 9 on
financial assets as at 1 April 2018
This table is designed to meet the requirements of paragraphs 42I, 42L and 42O of
IFRS 7. We’ve termed it a ‘table’ rather than ‘note’ as we do not expect any
providers to have material impacts so as to require disclosure in local accounts.
The table discloses the impact of IFRS 9 adoption upon the measurement and
classification of financial assets. It is designed to follow the familiar format of the
financial assets table in TAC27 except the rows and columns have been
transposed, to avoid having an excessive number of columns. It is a table of
carrying values, not fair values.
The first part of the table is for the original measurement under IAS 39. The values
are pre-populated from your 2017/18 final TACs. They are unlocked but we
wouldn’t expect them to change. Providers must complete the second part of the
table, showing how these financial assets are measured and classified under IFRS
9. If a financial asset has been newly recognised or derecognised as a result of
adopting IFRS 15, that should be included in the second part of the table. In the
third part of the table, which separates out the reasons for changes in the 1 April
2018 balances, please allocate such movements into the row “Recognition,
derecognition or reclassification under IFRS 15” (row subcode IFRS0480).
Previously, the debtor associated with the Injury Cost Recovery (ICR, formerly
Road Traffic Accident (RTA)) scheme has not been considered a financial
instrument as it does not arise under contract. It was therefore not previously
included in providers’ IFRS 7 disclosures for financial assets, reflected in the top
part of table T2. In December 2018, HM Treasury amended the FReM to include a
new adaptation to IAS 32 on the definition of a financial instrument which now
includes such balances. HM Treasury has confirmed this change should apply from
1 April 2018 in line with how IFRS 9 and 15 are being applied. Providers with ICR
debtors should therefore include this in the second part of the table (carrying values
under IFRS 9 as at 1 April 2018) in row IFRS0400. Please note that the ICR debtor
is non-DHSC as the Compensation Recovery Unit is not hosted by a DHSC body.
In analysing the changes in the bottom part of the table, newly considering the ICR
debtor as a financial instrument should be added to row IFRS0500 for other
measurement changes.
The checks at the bottom of the table ensure that it has been fully completed and
that the overall change in carrying values agrees to that entered in table T1.
10 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
3.2.3. TAC00: New standards – 1 Apr 18 – Table T3 Impact of IFRS 9 on
financial liabilities as at 1 April 2018
This table is designed to meet the requirements of paragraphs 42L and 42O of
IFRS 7. We’ve termed it a ‘table’ rather than ‘note’ as we do not expect any
providers to have material impacts so as to require disclosure in local accounts.
The table discloses the impact of IFRS 9 adoption upon the measurement and
classification of financial liabilities. It is designed to follow the familiar format of the
financial assets table in TAC27 except the rows and columns have been
transposed, to avoid having an excessive number of columns. It is a table of
carrying values, not fair values.
The first part of the table is for the original measurement under IAS 39. The values
are pre-populated from your 2017/18 final TACs. They are unlocked but we
wouldn’t expect them to change. Providers must complete the second part of the
table, showing how these financial liabilities are measured and classified under
IFRS 9. Although IFRS 15 adoption may change contract liabilities (deferred
income), these are not financial liabilities (not settled in cash) and so IFRS 15
adoption is not expected to affect this IFRS 9 table.
All providers with DHSC loans at 1 April 2018 will need to reallocate the interest
accrual out of payables for the reason explained in 3.2.1 above.
The checks at the bottom of the table ensure that it has been fully completed and
that the overall change in carrying values agrees to that entered in table T1.
3.2.4. TAC00: New standards – 1 Apr 18 – Table T4 Impact of IFRS 9 on
allowance for doubtful debts as at 1 April 2018
This table is designed to meet the requirements of paragraph 42P of IFRS 7. We’ve
termed it a ‘table’ rather than ‘note’ as we do not expect any providers to have
material impacts so as to require disclosure in local accounts.
This is an analysis of the 1 April 2018 credit loss allowance, specifically for
receivables. The standard requires the analysis to be split by financial asset class
used in the SoFP. Credit loss allowances on other financial assets are not material
to the consolidated provider accounts, and so this table only relates to receivables.
This will feed into the opening for the credit loss allowance note on TAC18.
The first part of the table is for the original measurement under IAS 39. The values
are pre-populated from your 2017/18 audited TACs. All providers must use the
second part of the note to split out credit loss allowances relating to contract
receivables and contract assets separately from those relating to other receivables.
This is because the form needs the 1 April amounts in order to meet the IFRS 15
11 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
disclosure requirement covered by the table on TAC18. Note that the GAM adapts
the definition of a contract to bring ICR income under IFRS 15. Allowances for ICR
debtors should therefore be included in the contract receivables row (IFRS0680).
3.2.5. TAC01: Confirmations
As explained in section 3.1 we aren’t collecting information where we do not expect
the position to be material for the consolidated provider accounts. To ensure this is
accurate, we have added some additional confirmation questions to understand
individual providers’ circumstances.
We have also taken the opportunity to re-order existing confirmation questions so
that those relating to financial instruments sit together. Questions 12 to 18 cover
financial instruments.
3.2.6. TAC02: SoCI
Other comprehensive income is separated into items that may be reclassified into
income and expenditure in the future and those that will not be.
A new row has been added for fair value gains/losses on equity instruments
designated at fair value through OCI, separate from financial assets mandated as
such due to the former not being reclassified into income and expenditure upon
derecognition of the instrument.
3.2.7. TAC03 SoFP and TAC04 SoCIE
The reserve “Available for sale investments reserve” has been renamed “Financial
assets at FV through OCI reserve”.
The relevant rows in the SoCIE have been renamed similarly, with also separate
rows for equity instruments designated at fair value through OCI and financial
assets mandated as such given the different presentation required in the SoCI
(TAC02).
Implementation adjustments taken to reserves on 1 April 2018 are fed into
dedicated rows in the SoCIE from information entered on TAC00 (and TAC33 for
University Hospitals Birmingham and Mersey Care who merged with other
organisations on 1 April 2018).
3.2.8. TAC11: Finance & other – Note 10 Other gains and (losses)
The main change is that gains and losses on disposal of financial assets are now
split between those that were held at amortised cost and those held under a
different measurement category, to meet the new requirement of IFRS 7 paragraph
20A.
12 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
3.2.9. TAC15: Investments & groups – Note 17.1 Other investments / financial
assets (non-current)
There are now separate rows for the fair value gains and losses on equity
instruments designated at fair value through OCI and financial assets mandated as
such, to match the presentation required in the SoCI (TAC02).
Note that this is a table of movements in the net carrying value of financial assets,
so is already net of any credit loss allowances. IFRS 9 changes the way
impairments to financial assets are measured by applying an expected credit loss
model. This is likely to result in losses being recognised earlier than they have been
previously. Movements in stage 1 and 2 credit loss allowances (initial 12 month
expected losses and lifetime expected losses where the financial asset has reduced
in credit quality) should be recorded in the new row for ‘(increases)/decreases in
credit loss allowances’. Such losses feed into the ‘movement in credit loss
allowance’ row in the operating expenses note along with any movements in
allowances on receivables.
Once a credit impairment event has occurred, these losses reach stage 3 and the
stage 1 and 2 loss allowances should be reversed and an impairment (stage 3 loss)
recorded in TAC12 which will feed the net impairments row in Note 17.1. This will
appear as an impairment in the operating expenses note.
3.2.10. TAC15: Investments & groups – Table 17A Gross carrying value of
other investments / financial assets
As explained in section 3.2.4 for transition, we are not collecting a full reconciliation
of movements in credit loss allowances for non-receivable financial assets
(investments) as we do not expect it to be material to the consolidated provider
accounts and are instead recording investments on a net basis.
Table 17A collects the value of the total credit loss allowance on other financial
assets and uses this to compute the gross carrying value at the balance sheet date.
This will allow us to assert that credit loss allowances for these financial assets are
not material.
3.2.11. TAC18: Receivables – Note 20.2 Allowance for credit losses (doubtful
debts)
This table expands the previous TAC table on the allowance for doubtful debts to
meet the requirements of IFRS 7 paragraphs 35H and 35I. It is also split between
contract receivables and other receivables in order to satisfy the requirements of
IFRS 15 that credit losses on contract receivables / contract assets are disclosed
separately to credit losses on other types of receivable. Additionally, it collects the
13 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
portion applicable to balances with DHSC group bodies, in order to facilitate group
eliminations.
In general, movements in providers’ credit loss allowances are expected to relate to
the following four main rows:
• New allowances arising – lifetime expected credit losses assessed when
initially recognising the receivable
• Changes in the calculation of existing allowances – changes in allowances
for receivables recognised in a previous period including changes in the
credit quality of the debtor.
• Reversals of allowances – where the allowance is released because the
receivable has been paid
• Utilisation of allowances – where the receivable is subsequently written off
Most providers are unlikely to need to use the ‘changes arising following
modification of contractual cash flows’ (where credit payment terms are altered) or
‘foreign exchange and other changes’ rows.
Checks at the bottom of the table ensure that the closing total for credit loss
allowances agrees to the main receivables note.
3.2.12. TAC20: Payables – Note 24.1 Trade and other payables
The lines for accrued interest are now locked for the current year as loans will now
be held at amortised cost. See section 3.2.1 above. Any comparative for accrued
interest should remain in this note and not be restated.
3.2.13. TAC21: Borrowings – Note 27 Borrowings
Loans, including those from DHSC, are now held at amortised cost. This is
explained further in the GAM consultation. For DHSC loans, the effective interest
rate is the DHSC nominal rate. This doesn’t change the structure of this table but
will in most cases change the carrying value of the loan, with interest no longer
accrued separately but instead added to the carrying value of the loan at the
balance sheet date. The checks at the right hand side of this note which are
populated by fixer have been amended to reflect the updated carrying values of DH
loans. Both principal and interest accrual balances are now validated together
against this note.
IFRS 9 is applied from 1 April 2018 so there should be no amendments to prior year
values.
14 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
3.2.14. TAC27: Fin Inst – Note 36.1 Carrying value and fair value of financial
assets
This note has been updated to reflect the measurement categories included in IFRS
9. The financial asset classes (to relate to the balance sheet) have remained the
same as the prior year as much as possible. This remains primarily an analysis of
carrying value but where fair values would differ significantly from the carrying
values recognised, trusts continue to indicate this in columns L and M (this
functionality is unchanged from prior year).
There is no prior year table in this year’s TACs as the information is presented as
part of the transition disclosures on TAC00. If you use your own accounts template
rather than the template supplied by NHS Improvement, the prior year disclosure in
an IAS 39 format can be linked to TAC00.
3.2.15. TAC27: Fin Inst – Note 36.2 Carrying value and fair value of financial
liabilities
This note has been updated to include the measurement categories included in
IFRS 9. The financial liability classes (to relate to the balance sheet) have remained
the same as the prior year as much as possible. This remains primarily an analysis
of carrying value but where fair value would differ significantly from the carrying
values recognised this should be indicated in columns J and K as previously.
There is no prior year table in this year’s TACs as the information is presented as
part of the transition disclosures on TAC00. If you use your own accounts template
rather than the template supplied by NHS Improvement, the prior year disclosure in
an IAS 39 format can be linked to TAC00.
3.3. Requirements of the standard
Annex 3 to this document sets out how the disclosure requirements of IFRS 7
(following adoption of IFRS 9) have been reflected in the TAC schedules together
with additional considerations for your local accounts.
15 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
4. Application of new standard: IFRS 15
4.1. Introduction
Section 2.1.1 of this document explains the high level principles for completing the
form in light of IFRS 9 and IFRS 15 adoption. It also includes a recommended
overall approach to completing the TAC schedules.
This chapter specifically deals with the impact on the TAC schedules of adopting
IFRS 15. The disclosure requirements in the standard are extensive. In the TAC
schedules we do not collect information that we expect to not be material to the
group and is not required for any other purpose, or for reporting to the Department.
This means that not every disclosure requirement in the standard is included in the
TACs: see section 4.3 for more on this. This chapter seeks to explain what you
need to do in order to complete the TAC schedules.
4.2. Changes and additions to TAC schedules
4.2.1. TAC00: New standards - 1 Apr 18 – Table T1 SoFP adjustments for the
implementation of IFRS 15 and IFRS 9 on 1 April 2018
This table collects the impact of adoption of the new standards on the 1 April 2018
opening reserves position. To simplify the presentation, the rows of this table only
show the SoFP lines that we expect may be affected by IFRS 9 and IFRS 15
adoption. Other rows are summarised. The ‘all other assets’ row (IFRS0050) should
only be used where contract costs have been recognised as an asset in
accordance with paragraphs 91 to 98 of IFRS 15. Such accounting treatment is
expected to be rarely used.
This table should be completed before other areas of the TACs as it will drive
opening balances in several movements notes and ensure that these non-cash
movements are excluded from the cash flow.
Note that in the rare circumstance where contract costs have been recognised as
an asset (per above), we cannot determine where on the SoFP this will have been
recorded so this adjustment may need to be manually adjusted out of the cash flow.
4.2.2. TAC01: Confirmations
Significant judgements made in the application of IFRS 15 are required to be
disclosed in local accounts (IFRS 15 paragraph 123). To aid the assessment of
whether such local judgements are material to the consolidation, providers are
asked in confirmation question 12 whether such significant judgements have been
16 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
made locally (outside of the NHS standard contract). Judgements disclosed by
providers will be considered centrally to form a disclosure for the consolidated
accounts.
4.2.3. TAC04: SOCIE
Implementation adjustments taken to reserves on 1 April 2018 are fed into
dedicated rows in the SoCIE from information entered on TAC00 (and TAC33 for
University Hospitals Birmingham and Mersey Care who merged with other
organisations on 1 April 2018).
4.2.4. TAC07: Op Inc 2 – Note 2.1 Other operating income
Paragraph 113(a) of IFRS 15 requires providers to disclose revenue recognised
from contracts with customers separately from other sources of revenue. This note
has therefore been updated to split out IFRS 15 revenue streams from non-IFRS 15
revenue streams (ie those recognised in accordance with other standards). This
has resulted in lines of income appearing in a different order to previous returns.
This re-ordering has also been reflected in monthly monitoring (PFR) and plan
(FPR) forms for consistency.
Additional guidance on applying the standard: Approach to classifying income
Although IFRS 15 is titled Revenue from contracts with customers, it specifies that
contracts may be written, oral or implied by customary business practices.
Therefore this incorporates the majority of income that was previously recognised
under IAS 18. The absence of a formal written contract does not take the revenue
out of the scope of this standard. Providers should therefore approach this with the
view that unless revenue streams are covered by another standard or specifically
excluded from scope by paragraph 5 of the standard, then the revenue should be
recognised under IFRS 15. For the avoidance of doubt, the following revenue
streams do fall within the scope of IFRS 15:
• Injury cost recovery income – the GAM specifically amends the definition of
a contract to bring this revenue stream into the scope if IFRS 15.
• Income associated with the treatment of NHS patients, such as non-
contracted activity, over-performance and partially completed spells.
• Income from the Provider Sustainability Fund – this is clarified as ‘in scope’
in the GAM
• Cash revenue streams such as car parking income and catering where the
oral or implied contract is entered into at the point of cash being taken.
17 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
A new line has been added to record ‘other’ income which is not recognised under
IFRS 15. This is expected to be small as most other income streams are assumed
to be recognised under IFRS 15. Table 2A is therefore now a breakdown of other
IFRS 15 income.
Note that as revenue from patient care activities is all expected to be recognised in
accordance with IFRS 15, no changes have been made to TAC06.
4.2.5. TAC07: Op Inc 2 – Note 3.1 Additional information on contract revenue
(IFRS 15) recognised in the period
This note collects additional information on revenue recognised under IFRS 15 in
the year. A simplified counterparty split is collected to facilitate group eliminations to
be made in the all provider and DH consolidated accounts.
Paragraph 116 (b) of the standard requires disclosure of revenue recognised that
was previously included in contract liabilities (ie release of deferred income during
the year).
Paragraph 116 (c) requires disclosure of additional revenue recognised from
performance obligations satisfied (or partially satisfied) in a previous period. This
will include for example variable consideration where an estimate was made in the
previous period.
4.2.6. TAC07: Op Inc 2 – Note 3.2 Transaction price allocated to remaining
performance obligations
This note collects information on revenue expected to be recognised in future
periods from performance obligations that are unsatisfied (or partially satisfied) at
the period end. This is therefore contracts that have commenced prior to the period
end but for which performance obligations are outstanding and income has not yet
been recognised. This is required by paragraph 120 of IFRS 15.
The practical expedients in paragraph 121 should be exercised therefore excluding
any contracts that are for one year or less in duration and contracts where an entity
has a right to consideration directly corresponding to work done to date .
Information is collected in a simplified counterparty split to allow group eliminations.
4.2.7. TAC08: Op Exp – Note 4.1 Operating expenditure
There is a new line in the expenditure note to disclose movements in credit loss
allowances for contract receivables / assets separately from movements in
allowances on all other receivables and financial assets. This meets the
requirement of IFRS 15 paragraph 113(b). Charges are fed into this note from the
18 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
credit loss allowances movements table for receivables on TAC18 – a counterparty
split should be added.
4.2.8. TAC18: Receivables – Note 20.1 Receivables
Paragraph 16 (a) of IFRS 15 requires entities to disclose the value of contract
receivables and contract assets.
A contract receivable is a provider’s unconditional right to receive cash or other
consideration in relation to contracts with customers (revenue under IFRS 15). An
unconditional right will most often arise once performance obligations have been
satisfied. A provider does not need to have raised an invoice to have an
unconditional right to consideration. If a contract specifies that the NHS provider is
entitled to payment in advance then the contract receivable arises before the
performance obligations have been satisfied (a contract liability will then also be
recognised where such performance obligations have not been satisfied by the
period end).
A contract asset is where the provider’s right to consideration is still conditional on
another factor (other than the passage of time or an administrative process). If a
provider has simply not issued an invoice at the period end but otherwise has an
unconditional entitlement to the consideration, this is not a contract asset – such
‘not yet invoiced’ amounts are contract receivables. Contract assets are not the
same as ‘accrued income’ before the adoption of IFRS 15. Further, the term
‘contract asset’ does not refer to assets arising from contract costs (per paragraph
91 of IFRS 15) – where such examples are expected to be rare for NHS providers.
There is a clear overlap between contract receivables under IFRS 15 and trade
receivables and accrued income from the previous analysis of receivables. To avoid
the burden of requiring multiple analyses of receivables, the old trade receivables
and accrued income categories within receivables have now been locked. Current
year receivables should instead be analysed using the new rows.
• Contract receivables (IFRS 15): invoiced – this is expected to relate to
contract receivables that are on the sales ledger.
• Contract receivables (IFRS 15): not yet invoiced / non-invoiced – where your
contract receivables have not yet been invoiced at the year end and so are
accrued on the GL instead or where no invoice is required to be raised (eg
PSF).
• Contract assets (IFRS 15): Where performance obligations have been
partially satisfied and revenue has been recognised but the provider has no
entitlement to any consideration until further performance obligations have
19 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
been satisfied. We don’t expect this to be a significant item for most
providers.
• Any ‘accrued income’ that does not relate to income recognised under IFRS
15 should be included in ‘other receivables’ or other relevant receivable
categories (eg VAT receivables, capital receivables etc). Such amounts are
not expected to be material for most providers.
A decision tree has been included in section 4.4 to aid providers in concluding in
which of these new rows to classify balances.
Additional guidance on applying the standard: Approach to identifying contract
balances
Similar to the advised approach for classifying income, providers will likely find it
less burdensome to approach this by identifying receivables which do not relate to
revenue recognised under IFRS 15. These will include:
• receivables where the income is recognised in accordance with another
standard (eg lease receivables and accrued grants and donations
accounted for under IAS 20),
• receivables where the associated gain or loss is not an item of revenue (eg
proceeds on disposal of PPE),
• receivables relating to taxes paid and PDC dividends; and
• receivables where the counterparty is not considered a customer by the
standard (eg credit balances reclassified from payables – these relate to
refunds of expenditure so the counterparty is not the customer).
4.2.9. TAC20: Payables – Note 25 Other liabilities
IFRS 15 also requires contract liabilities to be separately disclosed. Contract
liabilities are where consideration is received or receivable ahead of the provider
completing performance obligations (ie ahead of recognising revenue). This is
therefore all deferred income in relation to IFRS 15 revenue. The previous deferred
income row in note 25 on TAC20 has been renamed to meet this disclosure
requirement. Should the provider have any other deferred income which does not
relate to IFRS 15 revenue, deferred grants, PFI credits or lease incentives, a new
row has been added for ‘Deferred income: other’. However as most deferred
income will fall under IFRS 15, this new row is expected to be rarely used.
20 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
4.2.10. TAC28A: IFRS15 1819 – Table T5 Breakdown of opening IFRS 15
adjustment by counterparty
This table pulls through the 1 April 2018 IFRS 15 implementation adjustments
recorded previously in TAC00. The table requires a counterparty split to be entered
for to permit group level eliminations to be performed. Note this table applies to
IFRS 15 only.
4.2.11. TAC28A: IFRS15 1819 – Table T6 Impact of the adoption of IFRS 15 on
this reporting period
As IFRS 15 is applied retrospectively without restatement of comparatives,
paragraph C8 of IFRS 15 requires entities to disclose the impact on financial
statement line items in the current period resulting from the application of IFRS 15.
This table is therefore designed to collect the impact of IFRS 15 on the current year
SoCI, SoFP and SoCF.
Providers are advised not to attempt to complete this table until the primary
statements in TACs 2 to 5 have been balanced. The primary statements after the
application of IFRS 15 (ie per TACs 2 to 5) feed through to column F. The impact of
IFRS 15 on 1 April 2018 opening balances, already entered on TAC00 is fed into
column G. Such adjustments to receivables and deferred income are assumed to
be current. Where they relate to non-current amounts, please enter the non-current
figure in the relevant row which will reduce the value of the adjustment disclosed as
current. For providers who underwent a merger or acquisition on 1 April 2018, any
IFRS 15 impact on transferred balances recorded in TAC30 is similarly populated
into column H.
In column I providers should enter the in-year impact of applying the new standard.
This is therefore the change in income recognised as a result of the new standard
and the corresponding movement in receivables and payables. There is a check
beneath the table to ensure the impact recorded in this column is a balancing
double entry. The impact on the cash flow is automatically calculated.
In columns K to N, a breakdown of the total of all the impact columns (G to I) by
counterparty is required to make eliminations in the group accounts. This includes a
breakdown of the opening adjustment taken to reserves on 1 April. The checks in
column Q ensure counterparty breakdown is complete with column P identifying
how much is left to allocated.
Note that this table applies to IFRS 15 only. There is no similar requirement for
IFRS 9 as this is specifically removed by paragraph 42Q of IFRS 7. Column I
should therefore only include the in-year impact of IFRS 15.
21 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
4.3. Requirements of the standard
Annex 4 to this document sets out how the disclosure requirements of IFRS 15
have been reflected in the TAC schedules together with additional considerations
for your local accounts.
4.4. Contract receivables decision tree
We have prepared the following decision tree to assist with understanding the
classification differences between contract receivables and contract assets:
Does the contract
Has invoice been
specify a right to receive Yes
issued?
payment in advance?
Yes No
Contract Contract
No receivable: receivable: non-
invoiced invoiced
Have you
No income or
satisfied the
No receivable to be
performance
recognised
obligations?
Partially Yes: fully
Does contract Does contract
withhold payment until specify dependence on
further performance No another factor before
obligation(s) have been consideration is
completed? payable?
Yes
Yes No
Contract asset Has invoice been
issued?
Yes No
Contract receivable: Contract receivable:
invoiced (to the extent of non-invoiced (to the
performance obligations extent of performance
completed) obligations completed)
22 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
5. Reminder of key principles
This chapter does not contain any new information since 2017/18.
5.1. Prior period comparatives
Prior period adjustments within local accounts are rare but may be required in
application of International Accounting Standard (IAS) 8. Prior period comparatives
are populated into the TAC schedules for NHS foundation trusts using data from the
2016/17 audited FTC form and are unlocked. If a provider needs to make a prior
period adjustment in its accounts, it should be reflected in the TAC schedules in
exactly the same way. The key thing is that at month 12 your audited accounts and
TAC schedules must be fully consistent, including prior year numbers. If you do
change a prior period figure, TAC33 (PPAs) will identify this and ask for an
explanation. For 2018/19, prior year comparatives must not be restated for the
impact of IFRS 9 or IFRS 15.
Where NHS Improvement contacted your trust in the prior year in relation to an
error identified in your FTC, the adjustments agreed with you have been reflected in
your populated comparatives. Any such central changes for your specific trust
are explained in the email from Provider Accounts dated 20 or 21 December.
Please review this email for details; we ask you to not change the figures back
without talking to us (Provider Accounts) first.
5.2. Approach to charities
Some NHS providers consolidate an NHS charity into their accounts under the
requirements of IFRS 10. Section 8 explains why this means we need to allow the
consolidation of charities within the TAC schedules. Within the TAC schedules
there are blue headed columns to enable preparers to present intra-group
eliminations for their charity consolidation specifically. If you do not consolidate a
charity under IFRS 10 you can simply ignore the blue headed columns.
DHSC is required to consolidate almost all NHS charities into its accounts,
regardless of local consolidation.
For an NHS provider with a linked charitable fund, there are 3 different
circumstances, which determine how the TAC schedules should be completed:
1. Provider has NHS charity it is consolidating under IFRS 10:
o The consolidation should also be reflected in the TAC schedules as
the TAC schedules must be consistent with the provider’s accounts.
23 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
o All providers consolidating a charity should refer to the guidance in
section 8 which provides detailed instructions on charity consolidation
in the TAC schedules.
o In this scenario please complete TAC40 (Charity - consol) and leave
TAC41 (Charity – non-consol) blank.
2. Provider is not consolidating its charity and the charity is included on the list
of charities regarded as ‘fully independent’ by DHSC:
o Some charities are ‘fully independent’ and are entirely excluded from
the DHSC consolidation. These are listed in annex 1. In these cases
please do not complete either TAC40 or TAC41.
3. Provider is not consolidating its charity under IFRS 10 and the charity is not
listed in annex 1:
o For these charities, we need to collect summary data to enable DHSC
to complete its ‘all charities’ consolidation centrally.
o In this scenario please ignore TAC40 (Charity - consol) and all the
blue headed charity columns in the TAC (these are for charity
consolidators). But please complete TAC41 (Charity – non-consol)
and we will pass this information to DHSC.
If a provider is in the rare situation of being in more than one of these
circumstances (i.e. they have more than one linked charity, treated differently),
please get in touch with Provider Accounts.
5.3. Validations and Justify or Change points (JOCs)
Validations must be passed in each submission, unless you have contacted
Provider Accounts in advance and obtained clearance prior to submission. A JOC is
a softer validation: the form will identify if any data appears unusual, and the user
must then justify (explain) it or make any necessary change. If you are experiencing
any problems with accounts (TAC) validations or JOCs as part of completing the
TAC schedules, please contact us at provider.accounts@improvement.nhs.uk well
in advance of the deadline for submitting the form. We will only accept validation
fails where they have been pre-approved, and will review all JOC explanations.
24 |Trust Accounts Consolidation schedules: Completion instructions month 9 2018/19
6. Detailed guidance: tab by tab
This section provides standing guidance on specific notes and tables in the TAC
schedules. Any changes from the prior year are covered in section 2 of the
document. For specific guidance defining rows, please refer to the ‘i’ boxes included
within the template. Information in an ‘i’ box is not repeated in this document.
6.1.1. TAC00 New standards
• Please refer to sections 3 and 4 of this document.
6.1.2. TAC02 SoCI, TAC06/07 Op Inc, TAC08 Op Exp, TAC11: Discontinued
operations rows
• Use of these rows is expected to be very rare. Please refer to the definition
in the GAM.
6.1.3. TAC05 SoCF
• This statement, like all the primary statements, is presented on a group basis
including consolidated charitable funds.
• Row SCF0120 removes all income relating to capital donations from the
operating section of the cash flow; row SCF0220 adds the cash element
back into the investing section.
• The reconciliation boxes (tables CF1 and CF2) should largely automatically
generate the cash flow statement. Unless you know you have a rare and
specific scenario, large entries in the ‘other adjustment’ rows are not
expected.
• Table CF3 derives the charitable fund cash movements rows for the cash
flow statement. It can be ignored if you do not consolidate a charity.
• Table CF4 is the primary source of entry for cash flow movements in DHSC
loans. This level of detail is required so we can feed through to the monthly
monitoring tabs in the PFR form.
6.1.4. TAC05A SOCF MI rec
• This table computes a ‘without charity’ version of the cash flow statement to
feed through to monthly monitoring tabs in the PFR form.
• This tab should be ignored by trusts that do not consolidate a charity.
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