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Risk Our response to the risk Key observations communicated to the
Audit Committee

Accounting for the Private We involved our financial modelling Our PFI expert reviewed the accounting
Finance Initiative and PFI experts to: model for PFI scheme and we are satisfied
of the integrity of the model.
Alder Hey has a significant • Test the integrity of the
PFI scheme. Accounting for financial model used by the
this material scheme requires Council. We have further tested the application of
the use of a complex financial the PFI model and were satisfied that the
model, the calculation of • Test the completeness PFI liability is not materially misstated.
estimates and the application and accuracy of the inputs to
of management judgement. the financial model and the
As a first year audit, under ISA subsequent correct application
510 we are obliged to carry out of the outputs to the financial
additional procedures to satisfy statements.
ourselves on the accuracy of
opening balances.

As PFls use complex models
for accounting, involving
significant assumptions
we will carry out additional
procedures to gain assurance
on the appropriateness of the
underlying models.

Valuation of Land and We evaluated the competence, We found the appointed valuer to be
Buildings capabilities and objectivity of appropriately qualified with the relevant
management’s specialist (the valuer). skills to perform the valuation analysis.
Land and buildings accounts
for a significant proportion of
We performed tests over the We concluded that the valuation was
the Trusts net assets (£193
completeness and appropriateness undertaken in accordance with relevant
million out of £206 million as
of information provided to the valuer, financial reporting guidance , and the key
at 31 March 2018). The Trust
and considered the assumptions assumptions used in the valuation were
carries out a rolling valuation
used by the valuer to assess if they appropriate and within expected ranges.
programme with the value
are with acceptable ranges.
and remaining useful lives of
We concluded that the valuation was
land and buildings have been
We reviewed the classification undertaken in line with the Trusts’
estimated by their appointed
of assets and ensure the correct accounting policies
external valuers.
valuation methodology has been
applied, in addition to ensuring
A full valuation was held in
the valuer’s conclusions have
2017/18.
been appropriately recorded in the
accounts.
The valuation of land and
buildings is complex and
is subject to a number of
assumptions and judgements.
A small movement in these
assumptions can have a
material impact on the financial
statements.

Alder Hey Children’s NHS Foundation Trust 197 Annual Report & Accounts 2017/18