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CRN East Midlands SOP for the monitoring of partner organisations

Published: 16 December 2019
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Version: v.1.2 October 2022
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Contents

Executive summary

This document is provided by the Clinical Research Network East Midlands (CRN EM) to set out the key processes applied within the region to obtain assurance for Minimum Control MO2 within the LCRN Minimum Financial Controls to support the delivery of the Performance and Operating Framework.  This standard operating procedure outlines the processes in place to ensure that LCRN funding provided to LCRN Partners is used solely to deliver NIHR portfolio research activities as per the LCRN Partner Organisation contracts.  In addition, it should also provide assurance that all financial information provided by LCRN Partners is accurate and all costs are valid and appropriately authorised.

Valid for use from October 2022

Review Date October 2023

Background

The University Hospitals of Leicester NHS Trust, as the Host organisation for the NIHR CRN East Midlands, is contracted by the Department of Health and Social Care (DHSC) to undertake timely and accurate budgetary monitoring and reporting of funds paid directly to Partner Organisations. Additionally, CRN East Midlands is required to provide sufficient assurance that NIHR CRN funding is used only on eligible CRN activity and in accordance with DHSC funding agreement terms. CRN East Midlands gains this assurance through a range of mechanisms which will be described in this document.

It is the expectation that the CRN EM Host Organisation will ensure that appropriate financial controls are in place for the management of the NIHR CRN funds provided to them.

This document provides guidance and outlines the step-by-step process required to obtain assurance from CRN EM partners, as per Minimum Control MO2.

Procedures

There are several processes in place to ensure the LCRN funding has been used in accordance with the contractual obligations of the Host Organisation. Each of these processes have been delegated by the Host Organisation through the CRN East Midlands Chief Operating Officer.

To support the delivery of research in the East Midlands each NHS Partner organisation has a Senior Team Link (STL) and a Host Finance Link (HFL).  The STL is a member of the LCRN Operational Management Group  (internally referred to as The Senior Leadership Team meeting) and the HFL is a member of the Host accounting team.  One of the purposes of the STL role is to support the budget setting process and provide ongoing support throughout the financial year to ensure that funding is appropriately managed in accordance with the contract.

As the CRN is expanding partnerships outside of the NHS, financial assurance procedures will be applied to these other organisations, which are commensurate with the level of funding and risk, with respect to CRN activities. All partners currently operate under a partner contract (A, B or C) and thus the expectations outlined within this document would apply, however the Monthly Financial Returns, ASTOX and Health Check visits currently are only applied for Partner A contract holders above the threshold annual value of £50,000.

Financial Returns

Each NHS Partner A, prior to the beginning of the financial year, submits an Annual Financial Plan (AFP) based on their funding allocation for that year.  This is then reviewed by the Senior Team Link (STL), DCOO and COO to ensure funding is used in accordance with the CRN Partner agreement and Performance Operating Framework (POF),  Attributing the cost of health and social care Research and Development (AcoRD) guidance and meets the needs of the region. Once agreed by the leadership team, this will be used as the basis on monitoring of expenditure throughout the year.

Partner A NHS organisations are required to submit monthly returns by 15th of each month to their Host Finance Link.  The returns should contain details of individual posts funded by the CRN EM in accordance with the agreed AFP submission.  The return should provide a list of individual posts funded, their pay band, WTE, actual cost incurred to date and forecast for the remainder of the financial year.  The return should also show any non-pay expenditure, including the reporting of any incurred overheads up to a maximum of 8% of the pay budget.

This monthly return is initially reviewed by the Finance Link for accuracy, cost is within pay band, non-pay and overhead costs are within agreed range, to monitor vacancy factor and ensure vacant posts are recruited as per plan.  Any discrepancies are identified and liaised with the finance contact at the Partner Organisation.  The return is then discussed with the Senior Team Link to feedback on findings of the return on a monthly basis and is appraised with the financial position of the allocation.  The Senior Team Link also provides information to the Finance Link of planned new posts, leavers and any other relevant information.  All findings are documented and Senior Team Link signs off the monthly return.  Monthly meetings are scheduled for the year as per attached time table – Appendix 1.

The Finance Links will also provide a financial overview of the Partner to the COO and/or Deputy COO in order to monitor and manage the overall CRN EM budget. This will be done on a quarterly basis as a minimum and always prior to NIHR finance tool submission.

The Deputy COO and COO will discuss this and make strategic financial decisions throughout the year, in order to achieve a break even position at the year end.

Astox

At the end of the financial year all NHS Partner As are asked to complete and sign an Annual Statement of Expenditure (ASTOX)  (Appendix 2) for the funding received in-year.  The purpose of the annual return is to seek confirmation that funding has been utilised in accordance with the contractual obligations and to follow best practice recommended by Host auditors and NIHR CRN Coordinating Centre.

Finance Health Check Visits

Following a NIHR CRN Coordinating Centre finance health check at CRN East Midlands, we were advised to introduce a mechanism to provide an understanding of the systems in use, the financial support available in the Partner Organisation and the financial management arrangements in place.  The recommendation was to ensure that each Partner Organisation would be reviewed at least once and to undertake at least one healthcheck per quarter. 

This approach applies for all NHS Partner A contract holders above £50,000, please see below for smaller and other partners.

Purpose

The intention of the visit is to obtain a broader understanding of the control environment in place and to be assured that Partners have  appropriate and adequate procedures/policies in place to monitor expenditure incurred within the Partner for the funding received from CRN EM. It also covers how funding is used and that it is used for eligible purposes only and in accordance with the terms of the funding agreement (PO/LCRN Host Organisation Contract)

Process

  • As at September 2022,  all NHS NHS POs with a contract value above £50,000 have had one visit in the first round of finance health checks and a second round has commenced. There has been significant learning and some refinements to the process, the revised process for December 2021 onwards is detailed below.
    • To commence the process, an Internal Finance Health Check Visit Scoring Matrix is to be completed by the relevant Senior Team and Finance Team Link for each organisation to undergo a health check
    • The COO, DCOO and Host Finance Lead will meet to review the scoring matrix, along with a consideration of the size of the budget, and other pertinent information, to define a schedule of visits.   
    • Approximately two months prior to a visit the Partner Organisation is notified and arrangements made for the visit.
    • Prior to the visit, the Partner Organisation is required to complete the revised Finance Health Check questionnaire and provide evidence to support the submission, two weeks prior to the visit.
    • All evidence is  reviewed by Senior Team Link, DCOO/COO, Host Finance Lead and Finance Link
    • The visit is an opportunity to discuss the questionnaire and have a two way communication regarding finance issues, as well as research delivery and any other business that the Partner/LCRN team find pertinent.
    • Approximately 2-4 weeks after the visit a draft feedback letter is sent to the Partner Organisation for all parties involved to comment.  
    • A final letter is sent to the Chief Executive and Finance Director of the Partner Organisation within 2-4 weeks of this draft report, outlining findings and any recommendations.

    Should any concerns be raised during a health check then this would be followed up to ensure that any actions or recommendations have been implemented until satisfied that contractual obligations are being adhered to

Assurance for smaller organisations

The below approaches will be monitored via the CRN Finance Working Group, and then formally reviewed at the next annual review of the SOP.

Primary care sites

Those over £50,000: hold Partner A contracts and as such from January 2022 the CRN commenced a programme of partner Finance Health Checks, where appropriate. These follow a similar format to the above, although due to the value of the contracts on average being significantly lower than the other NHS Partner As, the questionnaire has been adapted, and visits undertaken also reflect this. As this is a new process, this will be reviewed on a regular basis, at least annually,

The use of annual ASTOX statements for this group of partners is also under consideration as a further assurance measure. 

Those below the £50,000 threshold: hold Partner B or C contracts.  Under these executed contracts, partners are required to manage the CRN funding very clearly, however there is currently no requirement for further assurance measures to be established, due to the value of the contacts and potential risk. In many cases the funding within these contracts is already through a managed scheme such as the RSI Scheme for GPs, Service Support Costs and Excess Treatment costs. 

Other partners

Those above the £50,000 threshold, hold Partner A contracts. There are a small number of partners which fit this category, and for financial assurance are considered as follows:

Nottingham CityCare and LOROS: are both small scale with respect to research delivery activities and have a close 1-2-1 relationship with members of the Senior Team through the Senior Team Link role. Through those relationships, and under the contracting arrangements (Partner A) assurance is sought. At present there is no further requirement for financial assurance, although this will be reviewed if the contract value raises above £100,000 per annum.

Nottingham and Leicester Universities: Partner A contracts are in place for the primary purpose of payments to CRN Clinical Divisional and Specialty Leads, and for a very small number of research related projects. There is a good level of assurance in place wrt the Lead payments, and the output of the Leads activity is tracked through a separate performance framework exercise. Project output is also assured through an annual review exercise for strategic/innovation type funding. Further assurance is not required at this time, based on the payment value. 

Other partners, under the £50,000 threshold, as above these partners hold either partner B or C contracts.  Under these executed contracts, partners are required to manage the CRN funding very clearly, however there is currently no requirement for further assurance measures to be established, due to the value of the contacts and potential risk.