Report finds ‘weaknesses’ in NHS Tayside financial management

There was a lack of “open and transparent governance” in the financial management of NHS Tayside which used endowment funds to cover general running costs, a report has found.

The independent review by accountants Grant Thornton identified a "number of weaknesses'' in the health board’s financial management arrangements.

The board agreed to use £3.6 million from its endowment fund, which is made up of donations from the public or bequests in wills, to help it break even in 2013/14.

The revelations in April prompted the resignation of NHS Tayside chairman Professor John Connell, with the Greater Glasgow health board boss John Brown now installed in the job on an interim basis.

NHS Tayside has said it will refund the money from its endowment fund.

The Grant Thornton review said the decision-making process related to the retrospective £3.6 million use of endowment funds was "not subject to fully open and transparent governance processes''.

It said: "Based on our review it would appear that the NHS Tayside Board historically did not have full visibility of the NHS Tayside financial position, and in particular in 2013/14 when the optimism of achieving in-year financial balance declined.

"Our review identifies a number of weaknesses in NHS Tayside's financial management arrangements alongside a lack of open and transparent governance which may have evolved based on NHS Tayside's organisational culture and historic working practices."

The report added: "In the case of the decision to retrospectively apply endowment money of £3.6 million we have evidenced examples within NHS Tayside where the anticipated financial controls, particularly across management; scrutiny; and assurance were either not in place or did not operate as effectively as intended."

In recent years NHS Tayside had to be bailed out with £45.3 million of Scottish Government loans.

The report, commissioned by the Scottish Government, makes a number of recommendations including that the health board's finance department should review how it forecasts the likely future financial position and how robust this is.

Health Secretary Shona Robison said: "This report highlights the historic poor financial governance and management practice within NHS Tayside.

"It also highlights the decision-making process related to the retrospective use of endowment funds was not subject to fully open and transparent governance processes and that these issues were not raised or discussed with the Scottish Government.''

She added: "All the recommendations in the report have been accepted in full and progress is already being made towards them.''

NHS Tayside said its new leadership team have already implemented a number of reviews and improvements in their first weeks at the helm, including an agreement by board members to repay the endowment money which had been retrospectively applied in 2013/14 and an overhaul of the way that financial reports are presented.

Chief executive Malcolm Wright said: "Today's report is very unsatisfactory for NHS Tayside in a number of areas but the lack of open and transparent governance processes regarding financial management shown over the years is extremely serious.

"Since the new chairman John Brown and I came to Tayside last month, we have been very clear about our intentions for this organisation going forward and that is an absolute commitment that transparency must be at the forefront of everything we do, with honesty and openness now the overriding feature of all board business.

"This independent review reinforces our position of transparency first and we will now relentlessly pursue improvements to our financial reporting and governance to ensure all recommendations are implemented."