Annual report and accounts 2021/22

Published: 18 July 2023 Page last updated: 17 May 2024

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Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

Opinion on financial statements

I certify that I have audited the financial statements of the Care Quality Commission for the year ended 31 March 2022 under the Health and Social Care Act 2008.

The financial statements comprise the Care Quality Commission's:

  • Statement of Financial Position as at 31 March 2022;
  • Statement of Comprehensive Net Expenditure, Statement of Cash Flows and Statement of Changes in Taxpayers' Equity for the year then ended; and
  • the related notes including the significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Care Quality Commission financial statements is applicable law and UK adopted International Accounting Standards.

In my opinion, the financial statements:

  • give a true and fair view of the state of the Care Quality Commission's affairs as at 31 March 2022 and its net expenditure for the year then ended; and
  • have been properly prepared in accordance with the Health and Social Care Act 2008 and Secretary of State directions issued thereunder.

Opinion on regularity

In my opinion, in all material respects, the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (UK) (ISAs UK), applicable law and Practice Note 10 Audit of Financial Statements and Regularity of Public Sector Bodies in the United Kingdom (2020).  My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council's Revised Ethical Standard 2019. I have also elected to apply the ethical standards relevant to listed entities. I am independent of the Care Quality Commission in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern

In auditing the financial statements, I have concluded that the Care Quality Commission's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Care Quality Commission's ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the Accounting Officer with respect to going concern are described in the relevant sections of this certificate.

The going concern basis of accounting for the Care Quality Commission is adopted in consideration of the requirements set out in HM Treasury's Government Financial Reporting Manual, which require entities to adopt the going concern basis of accounting in the preparation of the financial statements where it anticipated that the services which they provide will continue into the future.

Other information

The other information comprises information included in the Annual Report but does not include the financial statements nor my auditor's certificate and report. The Accounting Officer is responsible for the other information.

My opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in my certificate, I do not express any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated.

If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

Opinion on other matters

In my opinion the part of the Remuneration and Staff Report to be audited has been properly prepared in accordance with Secretary of State directions issued under the Health and Social Care Act 2008.

In my opinion, based on the work undertaken in the course of the audit:

  • the parts of the Accountability Report subject to audit have been properly prepared in accordance with Secretary of State directions made under the Health and Social Care Act 2008; and
  • the information given in the Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements and is in accordance with the applicable legal requirements.

Matters on which I report by exception

In the light of the knowledge and understanding of the Care Quality Commission and its environment obtained in the course of the audit, I have not identified material misstatements in the Performance and Accountability Reports.

I have nothing to report in respect of the following matters which I report to you if, in my opinion:

  • adequate accounting records have not been kept by the Care Quality Commission or returns adequate for my audit have not been received from branches not visited by my staff; or
  • I have not received all of the information and explanations I require for my audit; or
  • the financial statements and the parts of the Accountability Report subject to audit are not in agreement with the accounting records and returns; or
  • certain disclosures of remuneration specified by HM Treasury’s Government Financial Reporting Manual have not been made or parts of the Remuneration and Staff Report to be audited is not in agreement with the accounting records and returns; or
  • the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Responsibilities of the Board and Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer's Responsibilities, the Board and Accounting Officer are responsible for:

  • maintaining proper accounting records; 
  • providing the C&AG with access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters;
  • providing the C&AG with additional information and explanations needed for his audit;
  • providing the C&AG with unrestricted access to persons within the Care Quality Commission from whom the auditor determines it necessary to obtain audit evidence;
  • ensuring such internal controls are in place as deemed necessary to enable the preparation of financial statements to be free from material misstatement, whether due to fraud or error;
  • ensuring that the financial statements give a true and fair view and are prepared in accordance with Secretary of State directions made under the Health and Social Care Act 2008;
  • ensuring that the annual report, which includes the Remuneration and Staff Report, is prepared in accordance with Secretary of State directions made under the Health and Social Care Act 2008; and
  • assessing the Care Quality Commission’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Accounting Officer anticipates that the services provided by the Care Quality Commission will not continue to be provided in the future.

Auditor's responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Health and Social Care Act 2008.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was considered capable of detecting non-compliance with laws and regulations including fraud

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulations, including fraud. The extent to which my procedures are capable of detecting non-compliance with laws and regulations, including fraud is detailed below.

Identifying and assessing potential risks related to non-compliance with laws and regulations, including fraud

In identifying and assessing risks of material misstatement in respect of non-compliance with laws and
regulations, including fraud, I:

  • considered the nature of the sector, control environment and operational performance including the design of the Care Quality Commission’s accounting policies, key performance indicators and performance incentives.
  • inquired of management, the Care Quality Commission’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Care Quality Commission’s policies and procedures on:
    • identifying, evaluating and complying with laws and regulations;
    • detecting and responding to the risks of fraud; and
    • the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including the Care Quality Commission’s controls relating to the Care Quality Commission’s compliance with the Health and Social Care Act 2008 and Managing Public Money;
  • inquired of management, the Care Quality Commission’s head of internal audit and those charged with governance whether:
    • they were aware of any instances of non-compliance with laws and regulations;
    • they had knowledge of any actual, suspected, or alleged fraud;
  • discussed with the engagement team and the relevant external specialists, including pensions, regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, I considered the opportunities and incentives that may exist within the Care Quality Commission for fraud and identified the greatest potential for fraud in the following
areas: revenue recognition, posting of unusual journals, complex transactions, bias in management
estimates and valuation of defined benefit pension schemes’ assets and liabilities. In common with all
audits under ISAs (UK), I am also required to perform specific procedures to respond to the risk of
management override of controls.

I also obtained an understanding of the Care Quality Commission’s framework of authority and other
legal and regulatory frameworks in which the Care Quality Commission operates. I focused on those
laws and regulations that had a direct effect on material amounts and disclosures in the financial
statements or that had a fundamental effect on the operations of the Care Quality Commission. The
key laws and regulations I considered in this context included the Health and Social Care Act 2008,
Managing Public Money, employment law, pensions legislation and tax legislation.

Audit response to identified risk

As a result of performing the above, the procedures I implemented to respond to identified risks included the following:

  • I reviewed the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described above as having direct effect on the financial statements;
  • I enquired of management and the Audit and Corporate Governance Committee concerning actual and potential litigation and claims;
  • I reviewed minutes of meetings of those charged with governance and the Board and internal audit reports; and
  • in addressing the risk of fraud through management override of controls, I tested the appropriateness of journal entries and other adjustments; assessed whether the judgements on estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

I also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of my certificate.

Other auditor's responsibilities

I am required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Report

I have no observations to make on these financial statements.

Gareth Davies
Comptroller and Auditor General
National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP

4 July 2023