Scottish health organisations have been warned against manipulating payments to meet cash targets by the head of the National Audit Office.

'Where payments are accelerated mainly to achieve cash targets, there is a conflict with sound cash management and a risk that normal financial controls might not operate, ' says Sir John Bourn in his report on the summarised accounts of the NHS in Scotland for 1996-97 His report draws attention to Lothian health board, which advanced West Lothian trust£2.5m to bring forward drugs purchases and created£5.2m cash floats for trusts.

It says the 'ostensible' aim of the floats was to compensate trusts for delays between treating GP fundholder patients and receiving payment.

However, it concludes the trusts 'did not need any cash-flow help from the board' and notes that 'if the board had not made these payments it would have failed to expend enough cash to meet its 1 per cent cash limit target'.

Nevertheless, the report says, 'accounting and financial controls across the NHS in Scotland are generally sound'.

Health boards reported a technical deficit of£7.8m in 1996-97 and a cumulative deficit of£30m.

Trusts reported a surplus of£2.9m in 1996-97 and an accumulated surplus of£89m, although seven trusts finished the year in deficit.

Sir John's report on the summarised accounts for the NHS in Wales says four of the five Welsh health authorities finished 1996-97 in deficit, with three showing accumulated deficits of between£3m and£9m.

The report says that these deficits, and those of trusts, are likely to increase in 1997-98.

Four trusts ended 1996-97 in deficit but 13 are forecasting a deficit this year and their total deficit is likely to rise from£680,000 to£15.8m.

Both reports are on the Internet.