Audited Annual Accounts 2021/22

Argyll and Bute Council · 23 November 2022
Back to Argyll and Bute HSCP Integration Joint Board (IJB) — 23 November 2022 and its agenda

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Integration Joint Board     
Date of Meeting:  23 November 2022 
Title of Report: Audited Annual Accounts 2021/22 
Presented by: James Gow, Head of Finance and Transformation 
The Integration Joint Board is asked to: 
 Note that Audit Scotland have completed their audit of the annual accounts
for 2021-22 and have issued an unqualified Independent Auditor’s Report.
 Consider the 2021/22 Annual Audit Report prepared by Audit Scotland and
management responses to the recommendations. 
 Approve the draft letter of Management Representation to Audit Scotland.
 Approve the Audited Accounts for signature and publication. 
1. EXECUTIVE SUMMARY 
1.1 The Integration Joint Board is required to produce a set of audited annual
accounts for 2021/22. These accounts were produced within the revised,
extended timescale and have been subject to independent audit by the external
auditors, Audit Scotland. The audit process has been completed and Audit
Scotland have issued an unqualified report. The Accounts, Audit Report and
Letter of Representation have all been considered by the Audit & Risk
Committee at its meeting on the 9th November. 
1.2 The purpose of this report is to enable the Integration Joint Board to review the
Annual Report and Accounts. The Annual Accounts are provided as Appendix
1. These are prepared in line with current guidance and provide detail on
financial performance, governance arrangements and the independent external
audit report. These require to be signed by the Chair, Chief Officer and Head of
Finance & Transformation. 
1.3 In respect of financial performance the accounts are reporting that the HSCP
underspent against the allocations made available to it, repaid its outstanding
debt in full and ended the year with increased earmarked reserves. These have
all been earmarked for specific purposes.   
1.4 In addition to the audit report contained within the Annual Accounts, Audit
Scotland have also prepared a more detailed Annual Audit Report (Appendix 2).
This will also be made publicly available in due course. Whilst the Annual Audit
Report makes no recommendations for improvement in terms of accounting and
financial reporting it does highlight the financial sustainability risk facing the IJB
and the public sector more widely at the current time.

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2. INTRODUCTION 
2.1 The Integration Joint Board is required to produce an audited set of annual
accounts for 2021-22. The unaudited accounts were produced in line with the
agreed timetable and statutory timescales and approved by the Audit & Risk
Committee on 28 June 2022 for publication and submission to external audit.
The Audit process is now complete and the audited accounts require to be
approved by the Integration Joint Board prior to 30 November 2022 as a result
of the agreed extended deadlines in place for IJB financial reporting.   
3. DETAIL OF REPORT 
3.1  The Integration Joint Board was established under the requirements of the
Public Bodies (Joint Working) (Scotland) Act 2014 and is a section 106 body as
defined in the Local Government (Scotland) Act 1973. The financial statements
are therefore prepared in compliance with the Code of Practice on Local
Authorities Accounting in the United Kingdom supported by International
Financial Reporting Standards (IFRS) unless legislation or statutory guidance
requires different treatment. 
3.2 The Annual Accounts are subject to independent audit by Audit Scotland and
some minor changes have been made in respect of disclosures and the
narrative contained within the report. There has also been one change to the
figures initially presented which was to add £395k (net) to both income and
expenditure. This has had no impact on the net expenditure position and has
not changed the closing reserves balances or the repayment of debt to the
council. The adjustment related to the way in which PPE related income and
expenditure is accounted for by Argyll & Bute Council. The Audited Annual
Accounts for 2021-22 are included as Appendix 1, these incorporate the
Independent Auditors Report.     
3.3 Audit Scotland are able to conclude that the Integration Joint Board’s accounts
present a true and fair view of the financial performance of the IJB during the
year. The Independent Auditors Report provides further information on the audit
process and basis of the opinion. It is acknowledged that the IJB is highly
dependent upon both partners in respect of financial accounting processes and
systems. 
3.4  Audit Scotland have prepared an Annual Audit Report for consideration by the
IJB (Appendix 2). This indicates that the auditors are content with financial
accounting and reporting and concludes that governance and arrangements for
securing value for money were likewise appropriate during the year.  Whilst the
report makes no recommendations for improvement in respect of financial
stewardship or reporting, it does make recommendations in respect of the wider
operating environment and the financial sustainability challenge currently faced
by the HSCP. The recommendations and the management responses are
included in the Audit Scotland report and relate to: 
 Financial Sustainability; and
 Performance Reporting. 
In respect of financial management and governance, Audit Scotland conclude:  
‘Senior management and members receive regular and accurate
financial information on the IJB’s financial position and have concluded

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the IJB has appropriate budget monitoring arrangements in place.
Comprehensive budget monitoring reports are reported to the Board and
the Finance and Policy Committee. These contain information on the
year-to-date financial position, forecast outturn for the year, variance
analysis with explanations, progress in delivering savings and significant
financial risks. The reports contain enough detailed information to enable
members to carry out effective scrutiny and challenge of the IJB’s
finances.’
‘The IJB has appropriate governance arrangements in place that support
the scrutiny of decisions by the Board. Governance arrangements
operating throughout the Covid-19 pandemic have been appropriate and
operated effectively. There is effective scrutiny, challenge and informed
decision making.’
The report also highlights that the Scottish Government have indicated their
intention to clawback some of the reserves held by IJBs. 
3.5 In respect of financial performance, a summary of spend and resources is
provided below:  
2020/21   2021/22  
£’000 £’000
97,500 Employee Costs 101,153
10,100 Premises Costs 10,009
14,667 Supplies and Services 15,183
2,362 Transport Related Costs 3,201
142,976 Third Party Payments 148,745
(17,331) Income (19,104)
50,281 Primary Care Services 52,930
274 Other  248   
300,829 Total Expenditure 312,365   
(306,809) Total Funding (326,975) 
(5,981) Excess Funding / Increase in
Earmarked Reserves (14,610) 
Total reported spend for the year increased by 3.8% against the prior year with
direct staff costs accounting for 32% of net expenditure. 
3.5 The funding allocated to the HSCP during the year was reduced by the debt
repayment. The balance owed at the start of the year was £2.8m, funding up to
this total was retained by Argyll and Bute Council and the debt is now settled in
full. Additionally, £2.6m was repaid in 2020/21 (£5.4m repaid in total). 
3.6 In respect of the balance sheet, the debtor is equivalent to the earmarked
reserves held by NHS Highland and Argyll and Bute Council. These reserves
have all been earmarked for specific purposes and a short description of this is
included in Note 7 of the annual report. The aggregated position is:

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Reserves £’000
Opening Reserves Balance 6,586
Spend against opening reserves (3,555)
Unspent funds allocated to reserves 18,166  
Closing Reserves 21,196 
Of the closing reserves, £20.5m is earmarked for specific purposes which align
to the purposes for which they were allocated (mostly by the Scottish
Government). The HSCP is reporting a general underspend of £682k and it has
allocated this to its general reserve and earmarked it to pay for specific
transformation projects which are progressing in 2022/23. 
3.7 In summary, the accounts present a favourable view of financial performance,
summarise progress with the governance improvement agenda and highlight
the new strategic plan. This represents the second year in succession whereby
the HSCP has operated within budget and now has resource at its disposal to
start to progress improvement and transformation projects. 
3.8 The Integration Joint Board is also asked to approve the draft letter of
management representation (Appendix 3).   
4. RELEVANT DATA AND INDICATORS 
4.1 Information contained within the accounts is derived from the financial systems
of NHS Highland and Argyll and Bute Council. The audit of the IJB accounts is
supported by the audits of both partners.   
5 CONTRIBUTION TO STRATEGIC PRIORITIES 
5.1 The annual accounts are a key statutory reporting and accountability
requirement. They communicate both financial and key service delivery
performance information in an accessible public document. 
6. GOVERNANCE IMPLICATIONS 
6.1 Financial Impact – The IJB is required to consider and approve the Audited
Annual Accounts for 2021-22 by 30th November 2022. The accounts present a
favourable summary of financial performance during 2021/22 and the position
at the year end. The Annual Audit Report provides important independent
assurance to the IJB in respect of financial management and governance. The
audit report refers to actions currently being taken by the Scottish Government
to seek to claw back some of the reserves held by HSCPs. 
6.2 Staff Governance – None 
6.3 Clinical Governance - None 
7. EQUALITY & DIVERSITY IMPLICATIONS 
7.1 None

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8. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE 
8.1 None 
9. RISK ASSESSMENT 
9.1 There are no changes to the risk register arising from the contents of this report.
The improved financial position is reflected in a reduced level of risk in respect
of financial sustainability. The reserves position means that there is risk that
future funding is affected by levels of reserves held within IJB’s nationally. The
Auditor has highlighted the medium term risk relating to financial sustainability
and the outlook for funding of public services going forward. 
10. PUBLIC & USER INVOLVEMENT & ENGAGEMENT 
10.1 The unaudited annual accounts were made publicly available for comment. The
accounts will be made publicly available by the HSCP and the Annual Audit
Report will be published by Audit Scotland. 
11. CONCLUSIONS 
11.1  The Audited Annual Accounts for 2021-22 require to be approved by the IJB by
30 November. These were audited by Audit Scotland, the IJB external auditors,
and an unqualified independent auditors report has been received.  There were
a small number of changes required to the unaudited accounts as part of the
audit process. The accounts report that the IJB operated within budget during
the year, repaid all of the debt due to Argyll & Bute Council and that its
governance arrangements were appropriate. The Audit report provides the
Board with independent assurance in respect of financial management and
governance.     
12. DIRECTIONS 
Directions
required to
Council, NHS
Board or
both.
Directions to: tick
No Directions required √
Argyll & Bute Council 
NHS Highland Health Board 
Argyll & Bute Council and NHS Highland Health Board 
AUTHOR NAME: James Gow, Head of Finance and Transformation
EMAIL: james.gow@argyll-bute.gov.uk 
APPENDICES:
Appendix 1:  Audited Annual Accounts 2021-22 and Audit Report
Appendix 2:  Audit Scotland Annual Audit Report
Appendix 3: Draft Letter of Management Representation to Audit Scotland