NHS organisations are presenting an “inaccurate or incomplete” picture in their annual reports, with some failing to disclose the key risks they face, according to a review by auditors Grant Thornton.

The firm – which recently won the largest of four public sector auditing contracts awarded by the Audit Commission – reported that large corporates took “on average five to six years from where the NHS is now to reach their current levels of compliance” with reporting standards.

Grant Thornton public sector assurance director Paul Hughes said its review of more than 100 trust and foundation trust 2010-11 reports showed “the standard of reporting is below where it should be, to the point that reports are presenting an inaccurate or incomplete picture”.  

It found that:

·        Only 13 per cent of trusts and 2 per cent of FTs disclosed the gifts and hospitality received by staff and senior management;

·        90 per cent of trusts and 27 per cent of FTs gave no information on board and committee attendance during the year;

·        65 per cent of trust and 13 per cent of FT reports failed “to adequately explain their model of board operation”;

·        45 per cent of trusts and 13 per cent of FTs make no mention of their principal risks.

After the financial crisis banks and companies were “heavily criticised” for the poor information on risk in their annual reports, the review states. “We are in the midst of substantial change in the NHS and it is essential that trusts and FTs take on board the lessons learnt from the corporate sector and ensure that sufficient disclosure is made on the process they have used to identify, evaluate and manage significant risks.”

On board governance, it states that there is a “lack of transparency on the overall board governance arrangements” that leaves readers “uncertain whether these arrangements really are effective”.

And it notes that non-executives are not in the majority in 41 per cent of FT and 33 per cent of trust boards. Since 2003 it has been a requirement that NEDs form the majority on the boards of FTSE 350 companies, it states. “The absence of such a NED bias potentially weakens the independent input and challenge that they bring”.

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