Department of Health
Contracts for ISTCs, FESC, Decontamination EAPC and FPC
The Commercial Directorate of the Department of Health has appointed contractors to carry
out a review of the IFRS implications for all NHS contracts held by Commercial Directorate.
The contractors will provide an opinion for each contract about what the IFRS implications
are, and this will be shared with the NHS thus supporting a number of NHS bodies in their
Note that the reviews will provide an accounting opinion to support the contract treatment
under IFRS. It remains the responsibility of each NHS body to determine the accounting
entries needed to support the appropriate treatment of these contracts under IFRS.
The planned work will cover the following contracts:
ISTCs (Independent Sector Treatment Centres), Wave 1 and Wave 2;
FESC (Framework for procuring External Support for Commissioners);
Decontamination Contracts; and
EAPC (Equitable Access in Primary Care) and FPC (Fairness in Primary Care).
Expected IFRS impact
The Department of Health funds all of these contracts through central budgets but there will
also be an impact on the financial statements of individual NHS bodies. While it is difficult to
quantify the impact, the expectation is that the following areas will be affected for the NHS:
Wave 1 ISTC contracts are already on PCT balance sheets as finance leases. The
main change will be accounting separately for land and buildings, and classifying the
land as an operating lease;
Where ISTC assets are held by the private sector there may be an IFRIC 4 implied
lease which may need to be accounted for through public sector accounts.
It is also possible that new financial instruments may be identified in the contract review.
Timing of the work
The work is due to commence before the end of October 2008. The initial indicative findings
will be available by the end of November 2008, and draft opinions for each contract available
by 10 December 2008. Opinions will be finalised before the end of January 2008.
Individual NHS bodies should contact the Department of Health to obtain a copy of the
opinion relating to their arrangements.
Contact at the Department of Health
The review is being led by Marc Brotherton, Commercial Directorate Financial Controller. If
you have one of the contracts covered by the review you should liaise with Marc during
November 2008. Marc’s contact details are firstname.lastname@example.org, (Tel: 020 763