Old wine in new bottles: IFRS adoption in NHS foundation trusts

Abstract

UK public sector organizations, including NHS foundation trusts, have changed to International Financial Reporting Standards (IFRS). Treasury aims were ‘to bring benefits in consistency and comparability between financial reports in the global economy and to follow private sector best practice’. This comparative analysis of foundation trusts' financial statements under IFRS shows worse financial results and lower surpluses for the year, higher values of fixed (non-current) assets and more indebtedness than under UK GAAP. Implications of the new accounting regime on comparability and transparency of NHS organizations are discussed—some wine shows improvement, while other wine looks worse in the new bottles.

Keywords:

• Financial accounts
• foundation trusts
• IFRS
• NHS
• UK GAAP

Acknowledgement

This study was carried out with the financial support of the Spanish National R&D Plan through the Research Project ECO201017463 ((ECON-FEDER).

Notes

^* FTs are independent organizations locally governed, but monitored by Monitor, they report directly to parliament, whereas NHS trusts are within the NHS hierarchy headed by the Department of Health. All NHS trusts are expected to become FTs.

Additional information

Notes on contributors

Sheila Ellwood

Sheila Ellwood is Professor of Financial Reporting at Bristol University, UK.

Javier Garcia-Lacalle

Javier GarciaLacalle is a lecturer in the Department of Accounting and Finance, Zaragoza University, Spain.