Title of Report: Letter of Representation

BOARD – SUMMARY REPORT

Date of Board meeting: 8th June 2010

Title of Report: Letter of Representation

Title of Director: Director of Finance & Information

Paper Number: WL1855

Purpose of the report:

The report presents the Letter of Representation to the Board.

Recommendations to the Board:

To APPROVE the Letter of Representation.

Action required:

The Letter of Representation is signed by the Chief Executive and the Chairman. This letter is required by the external auditors prior to the Appointed auditor signing the Accounts with an unqualified opinion and forwards to the DH before the deadline of 11th June (9am)

Relationship with the Assurance Framework (Risks, Controls, and Assurance):

CO1: To provide a safe and effective service
CO3: To become a provider of choice
CO5: To build an engaged and patient focused workforce

Healthcare Standards (Core/Developments):

Regulation 10: Assessing and monitoring the quality of service provision.

Summary of Financial and Legal Implications:

The letter of representation is a key document in the Annual Accounts process and it provides assurance to PWC on matters in the annual accounts 2009/10.

Equality & Diversity and Public & Patient Involvement Implications:

None

WEST LONDON MENTAL HEALTH NHS TRUST

TRUST LETTER OF REPRESENTATION

FROM THE DIRECTOR OF FINANCE AND INFORMATION

The Board is asked to APPROVE the Letter of Representation

1.  Introduction

The purpose of this paper is to present the Letter of Representation of the Trust to the Board for approval.

2.  Letter of Representation

The letter of representation provides assurance to PWC, our external auditors on matters within the annual accounts 2009/10.

The letter includes a list of the differences found during the audit process that have not been adjusted in the final version of the accounts due to the fact that they are not considered to be material by the Trust as agreed with the external auditors.

This list of adjustments also forms part of the Audit Memorandum Report to those Charged with Governance (Item 6 on the agenda) and were subject to review by the audit committee on Thursday 3rd June.

3.  Conclusion

The letter of representation is required in order for our external auditors to sign our Annual Accounts in line with the Department of Health deadline of 11th June.

The Board is asked to APPROVE the Letter of Representation.

Barbara Byrne

Director of Finance and Information

June 2010

8th June 2010

This representation letter is provided in connection with your audit of the financial statements of West London Mental Health NHS Trust (“the Trust”) for the period ended 31 March 2010.

Your audit is conducted for the purpose of expressing an opinion as to whether the financial statements of the Trust give a true and fair view, in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and interpreted by the Department of Health Manual for Accounts, of the gains and losses, cash flows and financial state at the end of the financial period ended 31 March 2010 in accordance with the direction of the Secretary of State.

We acknowledge as directors our responsibilities under the National Health Service Act 2006 for preparing financial statements of the Trust which give a true and fair view, in accordance with IFRSs, and for making accurate representations to you.

We acknowledge that the Chief Executive has been designated as the Accountable Officer for the Trust by the Secretary of State and that the following requirements included in the Accountable Officer Memorandum have been complied with:

“You have a particular responsibility for ensuring that expenditure by the Trust complies with Parliamentary requirements. The basic principle which must be observed is that funds should be applied only to the extent and for the purpose authorised by Parliament…”

“As the Accountable Officer you have a responsibility to see that appropriate advice is tendered to the Board on all matters of financial probity and regularity…”

“If the Board or the Chairman is contemplating a course of action which you consider would infringe the requirements of propriety and regularity, you should set out in writing to the Chairman and the Board your objection to the proposal and the reasons for it.”

We confirm that the following representations are made on the basis of enquiries of management and staff of the Trust with relevant knowledge and experience and, where appropriate, of inspection of supporting documentation sufficient to satisfy ourselves that we can properly make each of the following representations to you.

We confirm, for all directors at the time the directors’ report is approved, to the best of our knowledge and belief and having made the appropriate enquiries, the following representations:

Accounting records

Each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that you (the Trust's auditors) are aware of that information, including that:

·  All the accounting records, whether for the purposes of financial reporting or any other purpose such as fiscal reporting, have been made available to you for the purpose of your audit and all the transactions undertaken by the Trust have been properly reflected and recorded in the accounting records.

·  All other records and related information which might affect the truth and fairness of, or necessary disclosure in, the financial statements, including minutes of directors’ and relevant management meetings, have been made available to you and no such information has been withheld.

So far as each director is aware, there is no relevant audit information of which you are unaware.

Accounting policies

We confirm that we have reviewed the Trust’s accounting policies and estimation techniques and, having regard to the possible alternative policies and techniques, the accounting policies and estimation techniques selected for use in the preparation of the financial statements are the most appropriate to give a true and fair view for the Trust’s particular circumstances, as directed by the Secretary of State.

Related parties

We confirm that we have disclosed all related party transactions relevant to the Trust and that we are not aware of any other such matters required to be disclosed in the financial statements whether under IAS 24 or other requirements, for example, the Manual for Accounts.

Employee benefits

We confirm that we have made you aware of all employee benefit schemes in which employees of the Trust participate.

Contractual arrangements/agreements

All contractual arrangements (including side-letters to agreements) entered into by the Trust with third parties have been properly reflected in the accounting records or, where material (or potentially material) to the financial statements, have been disclosed to you.

The Trust has complied with all aspects of contractual agreements that could have a material effect on the financial statements in the event of non-compliance. There has been no non-compliance with requirements of regulatory authorities that could have a material effect on the financial statements in the event of non-compliance.

We have disclosed all material agreements that have been undertaken by the Trust in carrying on its business.

Laws and regulations

We are not aware of any instances of actual or potential breaches of, or non-compliance with, laws and regulations which provide a legal framework within which the Trust conducts its business and which are central to the Trust’s ability to conduct its business or that could have a material effect on the financial statements.

We are not aware of any irregularities, or allegations of irregularities, involving management or employees who have a significant role in the accounting and internal control systems, or that could have a material effect on the financial statements.

Fraud

We acknowledge our responsibility for the design and implementation of internal control to prevent and detect fraud.

We have disclosed to you:

i)  the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud

ii)  our knowledge of fraud or suspected fraud affecting the Trust and involving:

· Management

· Employees who have significant roles in internal control, or

· Others where the fraud could have a material effect on the financial statements;

iii)  our knowledge of any allegations of fraud, or suspected fraud, affecting the Trust’s financial statements communicated by employees, former employees, analysts, regulators or others.

Assets and liabilities

We have no plans or intentions that may materially alter the carrying value or classification of assets and liabilities reflected in the financial statements.

In our opinion, on realisation in the ordinary course of the business of the Trust the current assets in the balance sheet are expected to produce no less than the net book amounts at which they are stated.

The Trust has satisfactory title to all assets and there are no liens or encumbrances on the Trust's assets.

We confirm that we have carried out impairment reviews appropriately, including an assessment of when such reviews are required, where they are not mandatory. We confirm that we have used the appropriate assumptions with those reviews.

Provisions

Full provision has been made for all liabilities at the balance sheet date including guarantees, commitments and contingencies where the items are expected to result in significant loss Other such items, where in our opinion provision is unnecessary have been appropriately disclosed in the financial statements. We confirm we believe all provisions for liabilities and charges held in the balance sheet as at 31 March 2010 meet the requirements of IAS 37.

Income and expenditure

We confirm that we have recognised all income receivable in 2009/10 in the income and expenditure account except where this income relates to specific activity to be delivered in future years.

We confirm the Trust has prepared the financial statements on the accruals basis for both income and expenditure.

Misstatements detected during the audit

We acknowledge our responsibility for the design and implementation of internal control to prevent and detect error.

We confirm that the financial statements are free from material misstatement, including omissions.

We confirm that the reasons why the misstatements that you have brought to our attention below in the attachment to this letter have not been adjusted in the financial statements is because the directors believe their effect both individually and in aggregate is not material to the truth and fairness of the financial statements either taken as a whole or in connection with the ability properly to assess the performance and/or the financial position of the Trust.

Taxation

We have complied with the taxation requirements of all countries within which we operate and have brought to account all liabilities for taxation due to the relevant tax authorities whether in respect of any corporation or other direct tax or any indirect taxes. We are not aware of any non-compliance that would give rise to additional liabilities by way of penalty or interest.

In particular:

·  In connection with any tax accounting requirements, we are satisfied that our systems are capable of identifying all material tax liabilities and transactions subject to tax and have maintained all documents and records required to be kept by the relevant tax authorities in accordance with the law of each country or in accordance with any agreement reached with such authorities.

·  We have submitted all returns and made all payments that were required to be made (within the relevant time limits) to the relevant tax authorities including any return requiring us to disclose any tax planning transactions that have been undertaken, whether for the Trust’s benefit or any other party’s benefit.

·  We are not aware of any taxation, penalties or interest that are yet to be assessed relating to either the NHS body or any associated company for whose taxation liabilities the Trust may be responsible.

Subsequent events

There have been no circumstances or events subsequent to the period end which require adjustment of or disclosure in the financial statements or in the notes thereto.

As minuted by the board of West London Mental Health NHS Trust at its meeting on 8th June 2010.

......

(Chairman) Chief Executive

For and on behalf of West London Mental Health NHS Trust.

Date ……………………

ENCLOSURE B

Paper WL1855

Appendix – Summary of Unadjusted Misstatements

We have identified the following misstatements during our audit of the financial statements that have not been adjusted by management.

Unadjusted Misstatement / Statement of Comprehensive Income / Statement of Financial Position
Dr / Cr / Dr / Cr
Adjustments which impact on the financial position
Depreciation
Testing of depreciation revealed negative depreciation in respect of negative additions (£5,000) and also depreciation had not been applied to non-operational assets (£201,000) / Expenditure
£206,000 / Accumulated depreciation
£206,000
Accruals – Revenue
Our work identified two under accruals relating to revenue expenditure. / Expenditure
£53,000 / Accruals
£53,000
Other operating income
Testing of other operating income identified one item which is being disputed by the customer and is not deemed to be recoverable. / Expenditure
£6,000 / Provision for impairment of receivables
£6,000
Unadjusted Misstatement / Statement of Comprehensive Income / Statement of Financial Position
Dr / Cr / Dr / Cr
Adjustments which impact on the financial position
Patient’s monies – Ealing
It was noted that total assets held for Ealing patient monies did not fully net off against the liabilities held. / Expenditure
£5,000 / Provisions
£2,000 / Patient monies control account
£7,000
Provisions
There was a difference noted between the Capsticks provision per the confirmation provided and the value of the legal provision held in the accounts. / Expenditure
£7,000 / Provisions
£7,000
Capitalised costs
Our review of the repairs and maintenance expenditure highlighted three items charged to revenue that should have been capitalised. / Expenditure
£19,000 / Additions
£19,000
Intra-NHS receivables
One item tested was found not to be an NHS receivable as at the year end. / Income
£9,000 / NHS receivables
£9,000
Unadjusted Misstatement / Statement of Comprehensive Income / Statement of Financial Position
Dr / Cr / Dr / Cr
Classification adjustments
Accruals – Capital
Our work identified one under accrual relating to a capital addition. / Property, plant and equipment
£23,000 / Accruals
£23,000