Preparing for the Practice End of Year Accounts

With the end of the fiscal and for many, also the financial year, almost upon us, there are a lot of loose ends to be tied up before those medical practices with a March year end, can send their accounting information to the accountants.

There has been an incredible strain on practice managers’ time over the last two years. The increased demand of patients and finding enough staff to cover both Covid sickness and isolation has meant that some have found themselves covering all roles leaving less time to focus on financial matters. The final straw for many has been the introduction of PCSE online which has added an extra burden due to both teething problems and having to learn how a new system works. Before sending information over to your accountants there are a number of things that can be checked.

To assist practice managers during these unprecedented times, where medical practices have witnessed the busiest period, both with patients and finding replacement staff due to Covid sickness, self- isolation and the recent changes with the PCSE online statements as opposed to Open Exeter, there are a number of things practice managers can check before sending the accountants the information.

The starting point is to ensure that all the basic information is complete. This is applicable to both practices keeping manual records or using a cloud-based software. It is important to include everything that is needed for the year end accounts:

• 12 months’ bank statements for the year, plus 1 month post year as a minimum
• 12 months’ NHS Statements; detailed PCSE statements including 3 months’ post year end to enable us to verify the debtors (income received after the year-end)
• QOF report for the relevant year
• 12 months’ detailed payroll reports including both employee and employer contributions.
• List of debtors (money owed to the practice at the end of the year) and creditors (money the practice owes at the end of the year).

Where accounting software is used, practice managers have to ensure that the following reconciliations have been done regularly to avoid the year end stress and reduce the number of queries from the accountants:

• The bank balance on your software agrees with the closing year end bank statement balance. This will ensure that all the income and expenses have been recorded. Also, where there are unreconciled items, make sure that these will be cleared after the year end.
• Reconciliation of your loan accounts and your credit card to the statements.
• Review the repairs and renewals code, items which need to be capitalised, that is for long term use in the business, 4 years and above and also costing £500 and above, to be moved to the Balance Sheet code under fixed assets.
• Upload all the NHS monthly statements, remittance advices and expense invoices, in particular legal and professional expenses which are not always allowable for tax purposes.

I would also recommend that the chart of account in your software is set to match the headings on the end of year accounts prepared by the accountant:

Ideally, please ensure that the 12 months’ NHS statements have been posted in detail and not just the net payment according the bank. For example:

Income can be broken down into the following headings:

• Monthly GMS or PMS Baseline
• Transitional Funding (for PMS practice)
• QOF Aspiration and Achievement
• PCN Participation
• NHS Enhanced Services; these comprise of different sources CCG remittances, Public Health Services, Network, Confed NIS services, PCN Enhanced.

Reimbursements can be analysed into rent, rates, water rates, clinical waste, CQC cost, drugs (PPA claims), sickness and maternity and Covid related reimbursements.

Other NHS Income such as training grants or Covid expansion funding (CEF) should also be shown separately.

Deductions for superannuation and levies should be recorded for the period. Where there are joining or leaving GPs (both partners and salaried), PCSE must be updated in a timely manner to ensure that the deductions are correct. The new PCSE online system should enable this to be actioned quickly, but there is a specific order of tasks to be completed for this which can be found under their user guides.

Being consistent with the postings is very important, for example ensuring that the twelve-monthly cloud- based subscriptions are posted to one account only and not for example, three months under subscriptions and 9 months to computer expenses. Making a posting schedule indicating account headings for standard income and expenses can be very helpful for those tending to have a lapse of memory and particularly where the job is shared.

Regarding the payroll, I would recommend that the practice managers always send a list with the names of all the salaried GPs, nurses, HCAs, pharmacists etc. for the year, together with the starters’ and leavers’ dates during the year to help the accountants classify the various roles accordingly and understand any variances in the year.

Cut-offs are very important. It is helpful for the practice managers to ensure that a list of debtors and creditors is given together with the other records. This would help to minimise the numbers of queries raised whilst we prepare the accounts, saving both the practice managers’ and accountants’ time. Practice managers would normally be aware of the income they have claimed for and which would be received after the year end but which relates to the current accounting year. They should also be aware of any outstanding invoices unpaid at the end of the year.

If there are known to be any long outstanding debtors or creditors in the accounts being carried forward, it would be useful if the practice managers could provide a list of what is still expected to be recoverable or payable. This can help to ensure that the balance sheet is not carrying forward any incorrect income or expenses. Examples of these might be rates or CQC reimbursements, or for expenses, up to date information regarding outstanding service charges.

With regard to PCN income, we will always request a copy of PCN accounts, where available, which will indicate if a surplus should be disclosed on the accounts.

Profit Sharing Arrangements (PSR) is the final but probably the most important information we require, as without it, we cannot complete the accounts. We need to know if any partners have joined or left during the year, session changes, pre-allocated income or expenditure such as training grants or extra paid sessions.

Finally, a short summary, which may include some of the above information, giving a general overview of particular changes that have occurred during the year, whether it be a partner having taken maternity leave to the lack of nursing staff. If you are ever not sure quite what to include or not, do contact your accounts manager who can advise.

As for getting your information to us, many of our clients are now emailing or uploading their documents to our secure portal. However, if you do not have the facility to scan/upload the information, kindly let us know and we will be able to arrange a courier for you.