Standing Financial Orders

Transcription

1 Standing Financial Orders August 2012

2 Contents 1 Introduction Page 1 2 Current Position i. Provision of Internal and External Audit Staff ii. Financial Reporting through Financial Spine iii. Audit Committee iv. Standing Orders / Prime Financial Policies v. Scheme of Delegation vi. Charitable Funds vii. Committee Structure, including management and audit viii. Counter Fraud Arrangements ix. Accounts Payable and Receivable, Cash, Fixed Assets x. Payroll and Banking facilities xi. Clear arrangements for any risk-sharing with other CCGs and / or Local Authorities Page 1 Page 1 Page 2 Page 2 Page 2 Page 2 Page 2 Page 2 Page 3 Page 3 Page 3 Page 3 A Appendices Appendix 1: Audit Commission Letter re consultation on External Auditor Appendix 2: Audit Commission Letter re appointment of External Auditor Appendix 3: Letter re Internal Audit and Counter Fraud Contract 2013/14 Appendix 4: Shared Business Services Contract Appendix 5: Monthly Statement of Financial Position July 2012 Page 5 Page 5 Page Page Page Page 66 Financial Management Plan

3 Financial Management Plan 1. Introduction 1.1 A key requirement for the Clinical Commissioning Group (CCG) Authorisation process is that the CCG can evidence that it has financial management arrangements in place compliant with national requirements. This key requirement is set out within the Authorisation guidance for CCGs and states that CCGs will have appropriate and effective financial reporting, management and governance in order to meet its statutory financial reporting duties and in year financial performance reporting requirements. 1.2 NHS Stockport CCG has to provide evidence that it has satisfactory arrangements in place for each of the following 11 areas:- i. Provision of Internal and External Audit Staff ii. Financial Reporting through financial spine iii. Audit Committee iv. Standing Orders/standing financial instructions v. Scheme of Delegation vi. Arrangements for management of any charitable funds vii. Committee structure including management and audit viii. Counter fraud arrangements ix. Accounts payable and receivable, cash, fixed assets x. Payroll and banking facilities xi. Clear arrangements for any risk sharing with other CCGs 1.3 This paper describes the arrangements it currently has in place against each of the 11 requirements. It was reviewed by the Group s shadow Audit Committee in August Current position against national requirements 2.1 This section sets out the current position on the information / evidence we have available as part of our submission. i. Provision of Internal and External Audit Staff The Commissioning Support Service (CSS) product includes an offer for Internal Audit and there is a recognition that this will have benefits across the Greater Manchester (GM) footprint. However, given the limited time available to start the tender process and procure across GM by 1 st April 2013, our preferred option is that we retain our current provider, Audit North West, for a further year until March 2014 to ensure continuity of audit coverage and local knowledge is retained over the transition. All such proposals are to be agreed by the Shadow CCG Audit Committee. Financial Management Plan Page 1

4 Financial Management Plan Evidence source:- Audit Committee Terms Of Reference page 33 sections 7.2 and 7.3 in Governance and Committee Structures The Audit Commission have agreed a 5 year contract with Grant Thornton UK LLP to provide external audit across the North West. The CCG will therefore receive external audit provision over the next 4 years through Grant Thornton UK LLP as directed by the Audit Commission. Evidence source:- appointment letter from Audit Commission, ii. Financial Reporting through financial spine The PCT has already implemented the SBS ledger Oracle based system as part of the early adopter GM wide implementation. The contractual arrangements around the SBS ledger procurement was signed off by NHS Greater Manchester on behalf of the 10 PCTs. The PCT went live with the SBS system Oracle based system on 1 st July 2012 and this will provide the basis for the national Chart of Accounts for the CCG wef 1 st April Evidence source: - Sample reports extracted from SBS system (showing financial performance against agreed budgets) iii. Audit Committee The inaugural meeting of NHS Stockport CCG Audit group held on 14 th August has agreed the NHS Stockport CCG Audit Committee Terms of Reference. iv. Standing Orders / Prime Financial Policies These have been drafted and included as Appendices to the Constitution. These will be subject to review by the Governing Body at the August meeting as part of the preparation for CCG Authorisation. Evidence source:- CCG Constitution Appendix C and E v. Scheme of Delegation This has been drafted and included as Appendix Z to the Constitution. These will be subject to review by the Governing Body at the August meeting as part of the preparation for CCG Authorisation. Evidence source:- CCG Constitution, Appendix D vi. Charitable Funds The CCG will not hold any Charitable Funds on 1 st April Evidence source:- not applicable vii. Committee structure including management and audit The arrangements around Committee and sub-committee structure are set out within Section 6 of the Constitution. This sets out the purpose for those Committees which the CCG have already identified as Committees of the Governing Body and the basis on which any sub-committees are to be established. Financial Management Plan Page 2

5 Financial Management Plan Evidence Source:- Constitution page 18 section Governance and Committee Structures page 2f sections 1a/b and 1bixp30 viii. Counter Fraud Arrangements The CSS product includes an offer for Counter Fraud services and there is a recognition that this will have benefits to CCGs across the GM footprint. However, given the ability to tender and start new service arrangements across GM by 1 st April 2013 is tight our proposed option is that we retain our current provider, Audit North West, for a further year until March 2014 to ensure continuity of counter fraud coverage and local knowledge over the transition. All such proposals are to be agreed by the CCG Audit Committee. Evidence source:- Letter to extend contract with ANW until March 2014, Audit Cttee Terms of Reference, Page 34, Section 7.5 in Governance and Committee Structures ix. Accounts Payable and Receivable, Cash, Fixed Assets The Accounts payable function will be secured via SBS and will be complimented by finance staff employed by the CCG. Evidence source:- SBS Service specification and CCG finance staffing structures in Organisational Structures x. Payroll and Banking facilities Notice of termination has been given to our current payroll provider, Central Manchester Foundation Trust, to terminate wef There is a proposal that the new payroll provider is to be commissioned on a GM scale footprint (i.e. single provider for all CCGs in GM) and this work is being led at GM level. A contingency arrangement has been flagged with our current payroll provider should the GM tender process not deliver by 1 st April The current banking arrangements with the Government Banking Service will continue to be used for the CCG Evidence source:- communication with CMFT on termination and contingency arrangements. Specification agreed with Government Banking Service. xi. Clear arrangements for any risk-sharing with other CCGs and/or Local Authorities NHS Stockport CCG is in discussion with other CCGs to consider shared working arrangements where there is a mutual benefit, economies of scale are achieved and service improvements deliver against measurable outcomes. The CCG wishes to continue the collaborative working arrangements with Stockport Metropolitan Borough Council (SMBC) and the continuation of pooled budgets and S75 Agreements entered into previously between PCT and SMBC. Financial Management Plan Page 3

6 Financial Management Plan Evidence source: collaborative working within Greater Manchester economy around Safe & Sustainable programme (re-named Healthier Together). NHS Stockport CCG is already establishing links with South Manchester & Trafford CCGs on areas of commissioning. Evidence source:- for other collaborative working arrangements ie. Pooled budget & S75 Agreements, a full list of these supported by budgetary commitments and schedules are available (as already agreed by the Health & wellbeing Integrated Commissioning Board and Shadow Health & Wellbeing Board). Financial Management Plan Page 4

7 Appendix 1 16 April 2012 Ms Gaynor Mullins MD, NHS Stockport Stockport Primary Care Trust Regent House Heaton Lane Stockport Cheshire SK4 1BS Direct line Dear Ms Mullins Stockport Primary Care Trust Consultation on auditor appointment for 2012/13 I am writing to consult you on the appointment of Grant Thornton UK LLP to audit the 2012/13 accounts of Stockport Primary Care Trust. The appointment would commence on 1 September Background to the proposed appointment We wrote to you on 6 March to advise you that the Audit Commission (the Commission) had completed the procurement to outsource the work of its in-house Audit Practice. Grant Thornton was successful in winning the contract covering your area. Grant Thornton is a leading business and financial adviser, with offices in 27 locations nationwide. Led by over 200 partners and employing 4,000 staff, the firm provides personalised audit, tax and specialist advisory services to over 40,000 corporate, public sector and private individual clients. The firm's national Public Sector Assurance team has been providing audit services to the Commission since it was created in 1983, and is one of the Commission's largest existing audit suppliers. The team has a full range of local authority and NHS audit clients across the UK including unitary, county, district, police, fire and pensions authorities, and NHS commissioner and provider organisations. The Public Sector Assurance team is led by twelve partners and directors, all of whom specialise in public sector assurance. The firm looks forward to providing a fresh perspective and approach to client service and to welcoming new colleagues from the Commission to ensure continuity and a smooth transition. Audit Commission, 1st Floor, Millbank Tower, Millbank, London, SW1P 4HQ T F Financial Management Plan Page 5

8 The Commission has agreed with the Department of Health that in the case of NHS primary care trusts, where the current appointed auditor (District Auditor or senior audit manager) and/or their second in command (audit manager) transfers to a firm under the Transfer of Undertakings (Protection of Employment) Regulations, the firm will be contractually obliged to nominate those individuals to continue in post until at least the completion of the 2012/13 audit unless specific circumstances prevent this. The consultation process The Commission has a statutory duty to appoint external auditors to local government and NHS bodies under Section 3 of the Audit Commission Act The Commission has a duty to consult local government bodies on the appointment. We also consult NHS bodies. Our Auditor appointments strategy, published in January, sets out the process we will follow in making this appointment. There will be a separate process for developing, consulting on and formally making any changes to auditor appointments that may become necessary in future years, including the appointment of auditors to the new NHS Clinical Commissioning Groups from 2013/14. Introductory meeting for the North West contract area To support the consultation on auditor appointments, we have arranged an introductory meeting in each contract area to give bodies the opportunity to meet the new firm proposed as their auditor. You are invited to attend a meeting hosted by Grant Thornton at Manchester Town Hall, Albert Square, Manchester M60 2LA on Tuesday 1 May from noon. Please can you confirm by Monday 23 April to introductorymeetings@auditcommission.gov.uk if you wish to attend the meeting and advise the names of the attendees. Two places are available for Stockport Primary Care Trust. The meeting agenda is attached to the end of this letter. Details of the venue are available in the agenda. Process for objecting to a proposed auditor appointment The process for bodies to object to a proposed auditor appointment is summarised in a chart available on the Commission s website. Under Stage 1 of the process, if you wish to make representations to the Commission about the proposed appointment please send them by to auditor-appointments@auditcommission.gov.uk by Friday 25 May. Your should set out the reasons why you think the proposed appointment should not be made. Financial Management Plan Page 6

9 The Managing Director, Audit Policy will consider carefully all representations and respond by Friday 8 June. If your representations are accepted, we will consult you on an alternative appointment. If your representations are rejected, there will be a further opportunity for you to make representations to a subcommittee of the Commission Board (the Board s Appointments Panel). The terms of reference and membership of the Panel are set out in the Auditor appointments strategy. The Commission Board will consider all proposed appointments at its meeting scheduled for 26 July. We aim to write to all bodies to confirm the Commission s decision by 10 August. Appointments timetable The appointments timetable is summarised below. Bodies to confirm attendance at introductory meeting Last date for representations to Managing Director, Audit Policy Managing Director, Audit Policy considers representations and responds to audited bodies Consultation on alternative auditor appointment (if representations accepted) starts Last date for representations to Board Appointments Panel (if representations not accepted by Managing Director, Audit Policy) Last date for representations on alternative auditor appointment Board Appointments Panel considers further representations from audited bodies Commission Board approves appointments Letters sent to audited bodies to confirm appointments approved by Commission Board Appointments begin by Monday 23 April Friday 25 May by Friday 8 June Monday 18 June Friday 6 July Friday 6 July Wednesday 11 July Thursday 26 July by Friday 10 August 1 September If you have any questions about the proposed auditor appointment or the consultation process, please us at auditor-appointments@audit-commission.gov.uk or call on If you have any questions about the introductory meeting, please us at introductorymeetings@audit-commission.gov.uk or contact Daniel Bird on Yours sincerely Marcine Waterman Director, Audit Policy and Regulation Financial Management Plan Page 7

10 Agenda Grant Thornton Introductory Event for Audited Bodies in the North West Date Tuesday 1 May Time noon Venue Manchester City Council Town Hall Albert Square Manchester M60 2LA Click here for directions to the venue Attendees Marcine Waterman, Audit Commission Andrew Davies, Audit Commission Daniel Bird, Audit Commission Grant Thornton Audited Bodies Item Lead 1. Welcome / introductions MW 2. The national picture MW Summary of the outcomes of the procurement exercise, including length of contracts Overview of national results and the shape of the market Impact on audit fees Sector specific issues 3. North West contract area AD Shape of the local market Area specific issues How independence issues will be managed Financial Management Plan Page 8

11 6 Item 4. Future shape of the Commission Lead MW Confirmation of the Audit Commission s role in respect of appointments Overview of other functions (national studies, NFI etc.) 5. Q&A (for the Commission) Audit Commission 6. Introduction to Grant Thornton Firm Introduction to senior team Information about engagement leads / audit teams across the contract area Arrangements for delivery of the audits Plans to ensure a smooth transition, including completion of outstanding work 7. Q&A (for Grant Thornton) Firm 8. Next steps MW Timetable for making appointments Overview of consultation / appeals process Contact details for the Commission 9. Informal discussions All Financial Management Plan Page 9

12 Appendix 2 31 July 2012 Ms Gaynor Mullins Chief Executive Stockport Primary Care Trust Regent House Heaton Lane Stockport Cheshire SK4 1BS Direct line auditorappointments@auditcommission.gov.uk Dear Ms Mullins Stockport Primary Care Trust - Appointment of external auditor I wrote on 16 April to consult you about my proposal for the appointment of an external auditor to Stockport Primary Care Trust from 1 September Auditor appointment This letter confirms the appointment of Grant Thornton UK LLP as external auditor to audit the accounts of Stockport Primary Care Trust for 2012/13. This appointment is made under section 3 of the Audit Commission Act 1998 and was approved by the Audit Commission Board at its meeting on 26 July. Audit quality and regulation The Audit Commission will continue to regulate the local public audit market and monitor the performance of the firms providing audit services until the government implements a new local public audit regime. This will ensure that local public bodies receive high-quality and effective audit services which provide value for money to the local taxpayer. We will: assess each year auditors compliance with their statutory terms of appointment; assess each year the quality of the audit work the firms carry out; consider and, if appropriate, approve auditors requests for variations to the scale audit fee where they have had to carry out more (or less) work; consider and, where we are satisfied that the work does not create a threat to the auditor s independence, approve auditors proposals to provide non-audit services to audited bodies; and monitor audited bodies satisfaction with the audit services provided by the firms. Audit Commission, 1st Floor, Millbank Tower, Millbank, London, SW1P 4HQ T F Financial Management Plan Page 10

13 2 We will continue to report publicly on the results of our quality review programme each year. This provides you with assurance that the firms have put in place systems and processes to deliver audit work of an appropriate quality. We are currently updating auditors statutory terms of appointment, which specify the Commission s regulatory requirements. I will write to you again in early September with more information on these terms of appointment. I will also provide details of the standards of performance that auditors will be expected to meet. Next steps I have passed the contact details for Stockport Primary Care Trust to the appointed firm and it will contact you about the arrangements for the audit in due course. In the meantime, if you have any questions about the appointment, please contact us via at auditorappointments@audit-commission.gov.uk. Yours sincerely Marcine Waterman Director, Audit Policy and Regulation cc Grant Thornton UK LLP Financial Management Plan Page 11

14 Appendix 3 Direct line: Gary.jones4@nhs.net Our ref: 29 August 2012 Mr D Rogers North West Internal NHS Audit Services Internal Audit Park View Offices Queens Park Hospital Haslingden Road Blackburn BB2 3HH 7 th Floor Regent House Heaton Lane Stockport SK4 1BS Tel: Fax: Text Relay Dear Dave Internal Audit & Counter Fraud contract 2013/14 This letter sets out the proposed arrangements for the above with regards to the services provided to the Stockport Clinical Commissioning Group wef 1 st April As you are well aware, much work has taken place this year planning for the transition from PCT into the new architecture and in particular the delivery method for the CCG (i.e options around make buy share). In addition, there is also a recognition across Greater Manchester (GM) that some services will derive improved benefits by being delivered by a single provider across GM. One of the areas being looked at falling within this category is Internal Audit & Counter Fraud. I am proposing to the Stockport CCG that we continue to retain the services of Audit North West during the 2013/14 financial year to ensure we retain the local knowledge of the Stockport system and associated risks etc. I understand that as the landscape and changes settle down all this will be revisited in the near future and we will be in touch to update on any developments. I look forward to maintaining the same excellent audit team and service throughout 2013/14 working with the Stockport CCG. Kind Regards Gary Jones Chief Finance Officer (Designate) cc Gaynor Mullins Ranjit Gill Tim Ryley Dr Ranjit Gill Accountable Officer Designate Mrs Gaynor Mullins Chief Operating Officer Designate Financial Management Plan Page 12

15 Appendix 4 Contract for the Provision of Managed Services Schedule K: Service Descriptions Financial Management Plan Page 13

16 Schedule K: Service Descriptions- General 1. Service Description General 1.1 Basic Services a) The Contractor provides a process for the generation and despatch of purchase orders and the administration and payment on behalf of the Authority of invoices payable in respect of the Authority s Suppliers and other sums payable on the Authority s request. Service provision includes the electronic receipting of goods or services, scanning, electronic storage and archiving of supplier invoices, electronic workflow processes for invoice authorisation. The service includes central helpdesk to resolve AP related queries. ( Purchase to Pay ). b) The Contractor provides a process for the generation of Authority sales orders, sales invoices, credit notes and a process for the receipt and allocation of monies in relation to Authority invoices. It also provides a debt management service as defined in the Contractor's Debt Management Policy( Order to Cash ). c) The Contractor provides a process for the management of the OPG bank account including daily bank reconciliations and a short term cash requirements forecast ( Cash Management ). d) The Contractor provides book keeping for the Authority, up to the point of trial balance generation. It provides month end closure and has responsibility for the implementation of a common, agreed accounting timetable. Full reconciliation ledger accounts where this function has been delegated to the Contractor. Reconciliation details shall be formally documented and agreed between the parties within 30 days of the Commencement Date. The service includes the provision and maintenance of a standard interface gateway into the Contractor s general ledger. ( Accounting to Reporting - General Ledger ) e) The Contractor is responsible for the production of financial management reports ( Portal Reports ) from the underlying accounting records, to agreed common monthly and annual timetables. The contractor will make available a standard reporting library. The ability to report against budget will be available to the Authority. ( Accounting to Reporting - Reporting ). The contractor will also ensure other reports are available to monitor transactions within the system. f) The Contractor provides a process to account for VAT associated with sales and purchase invoices. The Contractor will review the VAT transactions and invoices (including charitable purchases invoices) for VAT rate accuracy and produce VAT returns. ( VAT Services ) g) The Contractor provides for all Users a central helpdesk facility to deal with IT related queries. ( System Administration ). h) The Contractor shall not be liable for any loss or damage whatsoever insofar as any calculations or recommendations concerning the Contractor s assessment in respect of VAT reclaimed if such calculations or recommendations subsequently be judged or proved incorrect by the VAT Tribunal or H M Customs & Excise. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 2 of 53 Financial Management Plan Page 14

17 Schedule K: Service Descriptions- General i) Future Department of Health Initiatives or H.M. Government changes or initiatives introduced after the signature of this contract will not be undertaken as part of the standard service, but will be delivered under the terms of a Minor Works Order. 1.2 Other Services a) The Contractor is responsible for the maintenance of a system of internal controls and provision of year-end audit assurance statements to the Authority. ( Audit & Governance ). b) The Contractor will maintain a library of System training materials / toolkits to support Contractor processes and to allow delivery of training necessary for the Authority staff to operate the Contractor Systems. c) The Contractor will provide certain other services ( Other Services ) in addition to the Basic Services set out in a) to i) above, included in the Basic Service Charges E-Procurement The Eproc Service Delivery is defined as the offerings categorised below: a) Iproc front end Oracle Interface b) On Line requisition generation via Oracle. On line requisition approval via automatic workflow created in accordance with an approved organisation hierarchy supplied by the customer c) Automatic Purchase Order generation [Supplier details captured in the Purchase order based on supplier details received from the customer]. Purchase Order creation via approved requisitions delivered to Supplies department d) Automated Purchase Order delivered to suppliers via electronic routing software (Neo post as at the time of writing the document) via , Fax, or Post. Purchase Order delivery address in accordance to the stated delivery address as supplied by the customer e) Purchase Order functionality to allow Purchase orders to route delivery to an approved buyer as opposed to stated supplier f) Automated notification of Requisition and Purchase Order approval based around organisation hierarchy provided by the customer g) Electronic Catalogue management by the Supplies department, including Update, Add and Delete functionality of individual catalogue lines h) Support and Interface of NHSL catalogues onto the Eproc purchasing system i) Functional support offered via helpdesk, with second line support via operational team NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 3 of 53 Financial Management Plan Page 15

18 Schedule K: Service Descriptions- General Extended VAT Services a) The contractor shall also provide the following extended VAT services on a chargeable basis as detailed in Clause 6 of Section F of this Schedule for the following service descriptions: b) Partial Exemption Review : A review and calculation of Exempt income to total income as required annually by HM Revenue Service for all Health organisations. Results may need HM Revenue Service written agreement. c) Business Activities Review : A review of the sale of goods or services where made for a consideration. d) Zero-Rated catering review : A review of the organisations catering activities in order to identify any opportunities for zero rating the sale of foodstuffs. Agreement to the use of a zero rating percentage is required from HM Revenue Service. e) Capital - line by line analysis : A detailed review of an organisations capital schemes in order to establish individual VAT recovery percentages to be applied against each build project. f) PFI / LIFT Advice : Bespoke advice on structuring collaborative building projects in order to optimise VAT recovery for a Health organisation. All projects should obtain written approval from HM Revenue Service. g) VAT Training Services : Additional individual training solutions tailored to meet the organisation's needs, delivered in a range of media as required. h) COS Reviews (non clients) : A review of an organisation s Contracted-Out Services VAT recoveries under Section 41 VATA i) Construction Industry Scheme : Completion of Contractors monthly return for submission to HM Revenue Service j) Other VAT Compliance Reviews Note : The Extended VAT Services under will not be provided as part of the standard service but will be contracted under a Minor Work Order and paid for separately. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 4 of 53 Financial Management Plan Page 16

19 Schedule K: Service Descriptions- General 1.3 Supplementary Services Payroll Services The contractor shall provide the following Payroll services as detailed in Section 3 of this Schedule for the following service descriptions: a) Core Payroll Service b) Organisation Pay Structures c) Employee and Contractual Changes d) Allowances and Deductions e) Temporary Variations to Pay f) Pensions Service g) Overpayments and Underpayments h) Monthly and Year End processes i) Outside Organisations 1.4 General The Contractor will work in partnership with the Authority to create a strong working relationship. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 5 of 53 Financial Management Plan Page 17

20 Schedule K: Service Descriptions (A) Purchase to Pay 2. Service Descriptions Detailed (A) Purchase to Pay Procedure Reference Authority Responsibilities Contractor Responsibilities 1. Governance Ensure that the staff responsible for the processing of AP invoices are suitably trained; Ensure the accuracy and authorisation of all expenditure before it escalates to the next level within the organisation hierarchy. Ensure appropriate workable approval limits and escalation hierarchies are established and maintained to ensure that all invoices/notifications are accurately actioned, coded and approved. Ensure relevant training records are kept to demonstrate that staff are adequately trained. Work with the contractor to resolve service issues if and when they arise Process all invoices received as defined in this procedure. Ensure appropriate processing controls are implemented to support internal and external audit governance requirements Establish formal policies for the archive, storage and retrieval of documentation or imaging (as appropriate) to satisfy all legal retention requirements Provide access to training courses to allow the Authority to fulfil its responsibilities. Provide details, upon request, per Authority of all Contractor users and their responsibilities with access to the Authority s data Ensure relevant training records are kept to demonstrate that staff are adequately trained. Ensure that the staff responsible for the processing of AP invoices are suitably trained. Work with the Authority to resolve service issues if and when they arise NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 6 of 53 Financial Management Plan Page 18

21 Schedule K: Service Descriptions (A) Purchase to Pay 2. Invoice Processing 2.1. Receipt of invoice by Contractor (Excluding ready to Pay files) Quality of Invoice Ensure that its Suppliers are instructed to forward all invoices (where appropriate) to the Contractor at the agreed address Forward any invoices received by the Authority to the Contractor at the agreed address as soon as possible Advise new Suppliers as to the content of their invoices and in particular that such invoices contain the following information: Full trading address and registered office address as appropriate Valid invoice number and invoice date. (Tax point date) VAT registration number (where applicable) VAT rate charged for each taxable supply is clearly identified. The invoice is legible. A valid PO number or unique reference (which can be used to direct the invoice to the correct approver) is quoted. Agency invoices have the timesheets attached Invoice adds up correctly For non-commercial invoices, that the payee is clearly identifiable and payment details clearly displayed Ensure that only documents legally recognised as a true invoice will be scanned and verified onto the system and, without prejudice to the foregoing, all Supplier invoices which do not satisfy all of the following criteria shall be deemed to be not process able and rejected, not processed onto the system and returned to the Supplier with details of the reason for rejection: Full trading address and registered office address as appropriate Valid invoice number and invoice date. (Tax point date) VAT registration number (where applicable) VAT rate charged for each taxable supply is clearly identified and correctly charged (where applicable) The invoice is legible. A valid Purchase Order number or unique reference (which can be used to direct the invoice to the correct approver) is quoted. Agency invoices have the timesheets attached Invoice adds up correctly Ensure invoices received in foreign currencies are scanned accurately and in a timely manner, notify the Authority of any issues NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 7 of 53 Financial Management Plan Page 19

22 Schedule K: Service Descriptions (A) Purchase to Pay 2.2 Invoice / Credit Note Processing-Purchase Order (To the Point Of Ready to Pay) Workflow Management Resolve and action the following PO invoice holds : o o o o o Price Quantity Ordered Quantity Received Max Ship Amount Invoices in dispute Ensure notification relating to the above holds are actioned by the buyer/receiver within 5 working days from receipt of notification. Ensure Time Out Manager is set up for PO Notification escalation. Ensure all Open Interface Rejections are actioned by the buyer/receiver within 5 working days of receipt of notification. Maintain robust operating procedures to ensure that all PO workflow routines operate efficiently and effectively Identify the receipt of a valid PO invoice Match individual invoice lines to appropriate PO lines and receipt within 3 working days to enable payment. Ensure invoices containing price and quantity variances are placed on hold and returned to Authority within 3 working days.. Manage the resolution of the following PO invoice holds: o o o o o o o Hold Payment Multiline PO Tax Variance Distribution Variance Invoice Cancel Tax Amount Range Awaiting Credit Note Hold Quarterly review of net credit balances with suppliers to request a payment to clear the account NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 8 of 53 Financial Management Plan Page 20

23 Schedule K: Service Descriptions (A) Purchase to Pay 2.3 Invoice/ Credit Note Processing-Non purchase Order (To the Point of Ready to Pay) Workflow Management Notify Contractor of recipients for invoices and updates as appropriate. Take appropriate prompt action upon receipt of notification including: o o o Coding and/or approving invoice Forwarding notification to correct authoriser if known Return the notification to Contractor if: Correct approver is not known Invoice belongs to another organisation- where the invoice has been incorrectly scanned - not where it is incorrectly addressed, under these circumstances the trust must contact the supplier direct and either request a credit note or agree to cancel the invoice Invoice should be matched to a PO Attachments are required Ensure notification is actioned by the approver within 5 working days. Manage the resolution of the following Non PO invoice holds: o Awaiting Credit Note/Dispute (including NHS Invoices) Maintain robust operating procedures to ensure that all non PO workflow routines operate efficiently and effectively Forward, via workflow, all process able invoices received (without previous coding or approval) to the appropriate individual in the Authority for authorisation, or, where the Contractor is unable to identify the appropriate individual within the Authority, forward such invoices to the Authority s nominated IQM within 2 days following verification. Dummy AP documents only to be generated with written request /approval of authority Posting of debit adjustments to the ledger to correct over payments on supplier accounts will be done without requesting trust authority. Manage the resolution of the following Non PO invoice holds: o o o o o o o Scheduled Payment Multi-period posting Pre-paid VAT Tax Variance Tax Amount Range Distribution Variance NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 9 of 53 Financial Management Plan Page 21

24 Schedule K: Service Descriptions (A) Purchase to Pay 2.4 Credit notes Non-PO o Identify the need for a credit note and contact the supplier to make the request. The Authority shall then place the invoice on an awaiting credit note hold. Arrange for such credit notes to be sent directly to the Contractor or to be forwarded to the Contractor immediately upon receipt, ensuring the reference of any associated invoice is shown on the credit note. o Action credit notes in a timely and efficient manner within 2 working days i.e. remove Awaiting Credit note hold on invoice when credit note received. PO o Identify need for credit note and contact supplier to make request. o Arrange for such credit notes to be sent to contractor ensuring reference of any associated invoice is shown on the credit note. o Confirm in notification which is returned to Contractor that credit note has been requested, giving details of date, who agreed, value and contact name and number. Non-PO PO o Review awaited credit notes in the awaiting credit note hold on a weekly basis and follow up those > 1 month old. o Review awaited credit notes in the awaiting credit note hold on a weekly basis and follow up those > 1 month old. o Verify and accurately process all credits received. o Remove invoices from credit note hold once credit note received. o Review awaited credit note in the awaiting credit note hold on a weekly basis and follow up those > 1 month old. On a quarterly basis SBS conducts a review of the vendor database ensuring that same suppliers are on one site. 2.5 Payment Requests Ensure full payment request details are entered onto the Web form and the request is correctly authorised within 2 working days of the request being raised. Review a listing of all payment requests for errors within 2 working days. Despatch payments on next scheduled run. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 10 of 53 Financial Management Plan Page 22

25 Schedule K: Service Descriptions (A) Purchase to Pay 3. Query Management 3.1 Query Resolution Take necessary action as required by the Contractor to enable resolution of supplier queries. Advise all Suppliers to communicate directly to the Contractor in the first instance with regard to invoice settlement queries. Advise Suppliers to utilise dedicated or telephone enquiry capability for routine queries. Ensure that there is one contact telephone number dedicated to responding to Supplier queries and that this is adequately staffed. Receive, log and respond to Supplier queries using one of the following channels of communication: Telephone, Fax, Letter, . Resolve Supplier queries in accordance with the service levels predefined for different types of queries, (maximum of 14 days). 3.2 Legal Action Maintain accountability for resolution of legal action. Respond to any communication of impending legal action within 24 hours to eliminate additional costs. Work with the contractor to resolve the issues associated with the pending legal claim. Provide Contractor with relevant point of contact on legal matters. Assist the Contractor to resolve any legal claims by provision of requested information and documents. Co-ordinate resolution of any legal claim, either pending or active. Notify the Authority of any pending legal actions within 24 hours, if unable to fully resolve. Work with the authority to resolve the issues associated with the pending legal claim. Track and communicate the resolution or escalation of pending legal actions to the Authority. Assist the Authority in resolution of the legal claim by forwarding all documents relevant to disputing the claim. Provide Authority with a named point of contact. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 11 of 53 Financial Management Plan Page 23

26 Schedule K: Service Descriptions (A) Purchase to Pay 4. Payments Management 4.1 General Pre-requisites Co-ordinate with the Contractor to ensure that all system payment requests can be actioned by the Contractor in a timely manner. Pay invoices by their due dates subject to payment authorisation and availability of funds. Pay all non-invoice payment requests by their due dates as per supplier file. Produce and send remittance advice to all Suppliers (within 24 hours of final payment run). Take discounts for early payment as a matter of standard operating policy unless instructed otherwise by Authority. Run scheduled payment processes. Where arrangements exist (e.g. all runs or if over a certain value), contact the Authority prior to finalising a payment run 4.2 Recording of Payments Provide data capture routines and assign roles and responsibility for the use, recording and communication to Contractor of payments made via local cheque books (This will usually be in the case of emergency payments). Process, record and control all payments made. 4.3 Cash Planning Provide a designated individual to co-ordinate the ranking of payments to suppliers where cash limitations are applied. Only make payments following consultation and agreement with cash management team to ensure cash is available to fund payment runs. Co-ordinate with the Authority, if required, to rank payments in accordance with instructions received. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 12 of 53 Financial Management Plan Page 24

27 Schedule K: Service Descriptions (A) Purchase to Pay 5. AP Static Data 5.1 User Responsibilities, Approval Hierarchies and Approval Limit Maintenance Ensure user responsibilities approval limits and approval hierarchies are established to ensure that all invoices can and are accurately coded and approved. Process changes within 2 days. Communicate changes to the Contractor in a timely manner. 5.2 Set up and maintenance of Supplier Master Data For new suppliers, complete the New Supplier set up request form and submit to the Contractor, preferably in electronic format in a timely manner. Request set-up of new Suppliers Process new Supplier non-purchase Order set up requests whether received directly from Authority or as a result of invoices from new suppliers arising from invoices received from scanning into the Supplier master file within 3 working days.. Sufficient details to enable use as a purchase site to be set up within 24 hours. Maintain the Supplier master file data ensuring the accuracy and integrity of the database is maintained e.g. consistent naming conventions and avoiding duplications. Obtain bank details from new suppliers to facilitate electronic payment. Action changes and amendments requested to the Supplier master file within 24 hours, from receipt of correctly completed New Supplier set up form. Notify the Authority of changes made to the supplier files within 24 hours. 6. Ready to Pay file interface Ensure that the data is provided from the alternative system within 2 working days from receipt. Any changes to a supplier set up are notified to the contractor as soon as practicable (within 2 working days). Adjustments arising from interface failures are actioned as soon as practicable (within 24 hours). Notify the Authority the file has been received Errors arising from failures are notified to the Authority to enable remedial action to be taken, within 6 hours of the failure. Reconcile Ready to Pay files to batch header and ensure manually approved (same for manual batches). Notify the contractor the file has been sent. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 13 of 53 Financial Management Plan Page 25

28 Schedule K: Service Descriptions (A) Purchase to Pay 7. Period End Transacting 7.1. Month End Review and control un-invoiced receipts report to ensure only valid un-invoiced receipts are accrued. Close the AP sub-ledger in accordance with the published monthly accounting timetable. Process all outstanding transactions in order to facilitate the efficient opening and closing of payable periods (comprising the Payables, Purchasing and Inventory ledgers) in accordance with the timetable agreed between the parties. Maintain and monitor checklist of month end close process. Reconcile all postings in the Accounts Payable Ledger to the General Ledger AP Control Account within 2 days of Sub ledger close. Develop timetable in conjunction with Authority. 8. Reporting and Analysis 8.1. Monthly None applicable. Operate, review, control and communicate as appropriate the un-invoiced receipt report and the non PO accruals reports to the Authority in order to facilitate month end /year end PO and non PO accruals. nominated contact within 24 hours of Sub ledger close. Capture, collate and communicate appropriate Contractor and Authority AP processing performance statistics. Make available to the Authority s AP trial balance showing aged creditors as at month end close of the AP ledger within 3 working days of completing reconciliation of AP to GL. Provide Invoices on Hold report. 8.2 Year-end / ad-hoc, as specified by DoH Work with the contractor to ensure that all NHS creditor queries are resolved. Scan and verify NHS invoices as a priority to assist the Authority in achieving DoH deadlines. Agree NHS creditor balances. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 14 of 53 Financial Management Plan Page 26

29 Schedule K: Service Descriptions (B) Order to Cash B) Order to Cash Procedure Reference Authority Responsibilities Contractor Responsibilities 1. Governance Make available and provide updates of departmental organisation charts and contact details for processing staff. Ensure, in co-ordination with the Contractor, the accuracy and timely raising of all sales invoices and credit memo are validated in time for prompt despatch and subsequent collection of monies. Ensure appropriate workable approval limits and escalation hierarchies are established to ensure that all sales invoices and credit memos are appropriately and efficiently approved. Process all sales invoices and credit memos raised as defined in this procedure. Ensure appropriate processing controls are implemented to support internal and external audit governance requirements. Establish formal policies for the archive, storage and retrieval of documentation or imaging (as appropriate) to satisfy all legal retention requirements. 2. Sales Invoicing 2.1. Raising a Sales Order/Invoice request Identify the need for a sales order to be raised to a customer. Raise the sales orders request in a timely and efficient manner so as to assist prompt debt collection. Ensure that the customer the invoice is being raised to is a valid customer and has a valid address. Communicate all sales order discrepancies/errors that have been outstanding on the Sales Order exception report over 48 hours to the Authority within 2 working days. Ensure that when the order is raised, all of the required information, to allow for future collection of the debt is available in accordance with the existing SBS Debt Management Policy. Ensure that the correct product pricing is entered on to the sales order request. Ensure that all sales orders are appropriately approved within 5 working days. Ensure that all sales order errors/discrepancies are resolved within 5 working days of notification either via workflow or from Contractor. Ensure that standard generic customers for NHS customers are used to raise sales invoices Ensure that all income is raised in accordance with guidance and deadlines in the Treasury Management Rules issued by the DOH Action invalid/new GL code combinations in a timely and efficient NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 15 of 53 Financial Management Plan Page 27

30 Schedule K: Service Descriptions (B) Order to Cash manner in accordance with the agreed sales order management procedures within 1 working day 2.2 Raising a Manual Credit Identify need for a manual credit to be raised to a debtor. Complete the appropriate form and submit to Contractor ensuring appropriate level of authorisation for submission. Process manual credit requests within 2 working days. Ensure the appropriate GL code combination is set up prior to submission. 2.3 Raising a Credit Memo Request Identify the need for a credit memo request (CMR) to be raised. Raise the credit memo request within 1 working day of identifying the need for a CMR to be raised.. Ensure that all credit memo requests are investigated and/or approved in a timely mannerwithin 5 working days. Identify the need for a credit memo request to be raised. Raise the CMR within 1 working day of identifying the need for a CMR to be raised. Ensure all CMRs are validated and forwarded for authority approval within 2 working days. 2.4 Despatch of Invoices, Credit Notes and Attachments Where electronic attachments are appropriate the authority must ensure all electronic attachments comply with Contractor guidelines. Where electronic attachments are inappropriate, authority to ensure hard copies are despatched to the debtor within 2 working days of order approval. Identify documents requiring attachments and match appropriately. Print and despatch invoices and credit notes in a timely and efficient manner, following invoice/credit generation within the sales ledger within 2 working days.. NHS SBS Framework Sch K Service Descriptions v2.20 AAA Page 16 of 53 Financial Management Plan Page 28