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Frequently Asked Questions


Has any Trusts done papers to date on segmental reporting that would further support
the proposed rationale (single segment – healthcare) or do you have any other
comments on this/the SLR issue.


The NHS London IFRS website contains three papers on segmental reporting.

In addition

para 12 of IFRS 8 is likely to apply to most trusts and as a result you will not need to
report by segment.

IFRS8 (para 12) permits the aggregation of operating segments for external reporting
purposes where they ‘exhibit similar long-term financial performance if they have
similar economic characteristics.’ The para lists 5 considerations as to whether
segments have similar economic characteristics, namely:

- The nature of the products and services

- The nature of the production processes

- The type or class of customer for their products or services

- The methods used to distribute their products or provide their services

- The nature of the regulatory environment.

We suspect that for most trust all of the characteristics of each service line are similar;
but you will need to confirm from your own review and with your auditors.

The NHS circumstances where they may not be are for say:

- PCTs where there is a commissioning and a providing arm
- Acute Trusts that maybe also provided mental health services

In an earlier draft chapter for the 2008/09 IFRS-based manual for accounts for the
NHS in which it listed IFRS and interpretations (where they listed the standards, their
applicability to the NHS and differences between the two) there was a bit about IAS
19 (employee benefits) that stated that provisions for NHS EVRs will be discounted at
1.8% (the rate applicable to pensions) as opposed to 2.2% (Treasury rate).

This seems to have dropped out of any recent guidance and the FIMs restatement
guidance states that IFRS will not effect provisions.


Its for individual bodies to settle on a discounting rate they feel is appropriate and
agree the use of this rate with their external auditors.


Could you also add to the list of issues accounting for the PACS system. Have trusts
treated this formally like a finance lease or not. Have they depreciated the capital side
over 5 years or the term of the service provision agreement ( 7 years ). As a Finance
lease you would anticipate that there is a lease creditor which would be written off
over the term of the agreement. given that this has been paid for in full should we re
instate the creditor and have a pre payment.


This matter has been referred to DH for national guidance. Currently awaiting a


What approach is recommended with respect to Investment properties per IAS 40.

We have a number of independent residential properties which have in the past been
used by direct employees of the trust. The need for these as staff accommodation has
reduced over a number of years and the trust has therefore let some to private
individuals or to people employed by the local PCT.

My view of the IAS 40 definition says that these should be classified as Investment
Properties unless they are occupied by employees and for our Trust this could may
mean re classifying the assets.

Alternatively we could argue that the rent to private individuals is only temporary and
that, as the property is intended for staff use, it should continue to be part of the Trusts
normal working assets.

DH guidance initially thought the NHS would not hold investment properties.
Individual organisations who think they might be effected should discuss the matter as
soon as possible with their auditors and conclude on the appropriate treatment on a
case by case basis.

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