Foundation trusts query accounting changes

The introduction of new international financial reporting standards in April 2009 could oblige trusts to publish commercially sensitive details of their costs if they have implemented service line reporting.

Service line reporting is regarded as best practice by the Department of Health and Monitor as it enables hospitals to determine where they make and lose money.

Participants at last week's Healthcare Financial Management Association technical seminar heard that the new standards could make service line reporting less attractive.

One senior finance officer at a trust said: "The segmental reporting rules in the international standards mean that those who do service line reporting may have to report that detailed information to their competitors. We have a private provider on our doorstep and they're not going to tell us where they're making a profit and a loss, so why should we tell them?"

The international rules state that an organisation's accounts should be presented at the same level of detail reported to its "chief operating decision maker". HFMA seminar participants said they feared this meant those implementing service line reporting would need to publish their accounts at that level, which would mean showing precisely which areas made a profit and which made a loss.

Monitor's chief operating officer Stephen Hay said: "Service line reporting is good management practice which is being widely adopted across the health service. Financial reporting disclosure requirements should not discourage foundation trusts, or others, from adopting [it]."

Concerns about the relationship between service line reporting and international standards follow uncertainty about how private finance initiative schemes should be accounted for under the new standard. Treasury delays in clarifying that matter caused the chancellor to announce last week that implementation of the new rules will be delayed for a year.