New move aims to bring health organisations more in line with Cadbury principles.
The NHS Executive is set to publish new corporate governance guidance requiring trusts to adopt controls assurance statements that prove the effectiveness of their risk-assessment systems.
Based on the principles laid down for business by the Cadbury and Hampel reports on corporate governance, the controls assurance statements are intended to bring together a range of measures that have been adopted by the NHS.
The more comprehensive Controls Assurance Statement – embracing all internal control, financial or non-financial – is expected to become mandatory in 1999/2000.
All boards of directors will be told to review their positions and consolidate, rationalise and complete the control frameworks.
The move, however, is likely to meet with some opposition from trusts, fearing that the new procedures could prove a potentially costly burden.
In a circular published in April 1998, the executive warned that the impact of complying with additional requirements would be ‘significant’ for some health bodies.
Tony Cook, lecturer at Birmingham University’s department of accounting and finance, said the move was a ‘step in the right direction’.
‘The standard of financial reporting within the NHS varies enormously.
There is scope for direction to improve the standard. Overall, the principles of corporate governance in the health service are very much in line with Cadbury’s recommendations,’ Cook said.
The principles of the additional statement are clear. It is intended to provide an overall assurance that the organisation has a comprehensive risk-management strategy in place to cover all significant non-clinical areas.
In addition to the statement appearing in annual reports, health organisations must also demonstrate that an effective risk-management strategy is being implemented, regularly reviewed and improved.
Eventually, the executive plans to use independent verifiers to check trusts are adhering to the new requirements.