Finance team at scandal trust was ‘under-staffed and unable to whistleblow’

University Hospitals of Leicester Trust is subject to ongoing investigations into its financial accounts, after a near £50mhole was uncovered in its 2018-19 position, with the trust subsequently unable to complete its accounts in 2019-20 and 2020-21.

The trust has since recruited a completely new senior management team, including a new chief executive, chair and chief financial officer.

Lorraine Hooper, the new CFO, told HSJ there had been “a number of inter-related issues” which led to the accounting problems, “but principally [it] was the need for us to deliver against a control total [and] some of the pressures and challenges of being able to do that”.

She said this led to “aggressive accounting treatment” by the trust’s management, which was in some instances “inappropriate”.

She added: “All of that was compounded by the finance function being significantly understaffed and it was difficult for that team to see how they could whistleblow and raise concerns.

“I’ve made a concerted effort to make sure the senior finance team are not in an ivory tower and that we are accessible and transparent about what we do.”

She said the culture and processes in the department have improved significantly.

The trust has this week published its 2019-20 accounts, along with an audit report from Grant Thornton. They state the trust has now reported a revised in year deficit of £120m.

The report adds: “The audit of the 2019/20 financial statements has taken many months… During this period we have received 15 versions of the financial statements with a movement in the reported deficit from £67.2 million to £120.9 million….

“Prior to the introduction of the new management team, management intentionally misstated both the trust’s in year financial position and its year-end financial position. It has done so through the inappropriate recognition of both income and expenditure, changes in accounting policies, and the inappropriate use of journals.

“It is only in recent months (from January 2021) that the trust has invested appropriately in its finance team, internal control systems, in-year financial reporting, and year-end financial reporting procedure.

Despite the progress under the trust’s new management, the report adds: “Due to the significant under-investment, board decisions on accounting policies, and deliberate management override of control in previous years it has not been possible for the trust to resolve aII the issues which have impacted on the accuracy of its financial reporting. In our view it is likely that the trust may only be able to return to a position of having unqualified accounts in two to three years’ time.”

Richard Mitchell, the trust’s CEO, said governance has been strengthened since 2019-20, along with recruitment to key positions.

He added: “We have learnt from the past and whilst it will take time, we will get Leicester to the place it needs to be for the people who use our services and for the people who work here.”

Last year, HSJ revealed how NHS England had referred the trust’s former CEO John Adler and ex CFO Paul Traynor to the CQC under “fit and proper persons” regulations, in connection with their role in the collapse in the trust’s finances.

However, the commission said the referral could not be taken further because the regulations could not be applied to those who no longer work at a registered healthcare provider.

Mr Adler is currently listed as a public governor at Sheffield Childrens’ NHS trust, while Mr Traynor is CFO of the Open University.