Annual report and accounts 2023/2024

Published: 17 July 2025 Page last updated: 17 July 2025

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

Qualified opinion on financial statements

I certify that I have audited the financial statements of the Care Quality Commission for the year ended 31 March 2024 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 2024;
  • 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 financial statements is applicable law and UK adopted International Accounting Standards as interpreted by HM Treasury’s Government Financial Reporting Manual.

In my opinion, except for the possible effect of the matters described in the ‘Basis for qualified opinion on financial statements’ section of my certificate, the financial statements:

  • give a true and fair view of the state of the Care Quality Commission’s affairs as at 31 March 2024 and its net operating 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 qualified opinion on financial statements

Share of Teesside Pension Fund assets and related balances

At 31 March 2024, the Care Quality Commission recognised a net pension asset of £30.6 million in the financial statements, being its share of the Teesside Pension Fund surplus. This is comprised of: the fair value of the pension assets of £393.4 million, less the present value of the funded obligations of £308.4 million, less the impact of the asset ceiling adjustment of £54.3 million, as reported in Note 5.1 to the financial statements. I was unable to obtain sufficient, appropriate evidence regarding the valuation of the pension assets of £393.4 million and associated movements in the Statement of Comprehensive Net Expenditure for the: interest income (£17.2 million); return on plan assets (£20.5 million); and the impact of the asset ceiling adjustment (£54.3 million). This was because the 2023-24 financial statements of the Teesside Pension Fund were subject to a disclaimed audit opinion from the pension fund auditor. The disclaimed opinion arose because the pension fund auditor was unable to form an opinion on whether the financial statements were true and fair prior to the legislative backstop date for the completion of the pension fund audit in February 2025.

I was unable to satisfy myself by alternative means concerning the valuation of the net pension asset at 31 March 2024 by using other audit procedures. Consequently, I was unable to determine whether any adjustment to the net pension asset was necessary in the Care Quality Commission’s financial statements.

Regulatory Platform intangible asset

At 31 March 2024, the Care Quality Commission recognised an intangible asset with a carrying value £21.9 million in the financial statements (31 March 2023 - £20.7 million), representing the investment in its Regulatory Platform. The carrying value of the asset at 31 March 2024 is stated after adjustment for an impairment charge of £15.8 million. The impairment charge reflects the Care Quality Commission’s estimate of the reduction in the value of the asset arising from issues identified with its functionality. However, the Care Quality Commission has not finalised and submitted the results of its impairment review for audit ahead of issuing my audit opinion, or undertaken the work necessary to determine the allocation of the impairment between financial years.

As a result, I was unable to obtain sufficient, appropriate evidence regarding the value of the impairment charge and, therefore, the carrying value of the Regulatory Platform asset reported in the financial statements at 31 March 2024. I was also unable to obtain sufficient, appropriate evidence regarding the extent of any impairment that should have been applied to the Regulatory Platform asset balance of £20.7 million reported at 31 March 2023.

I was unable to satisfy myself by alternative means concerning the valuation of the Regulatory Platform asset at 31 March 2024 and 31 March 2023 by using other audit procedures. Consequently, I was unable to determine whether any adjustment to the Regulatory Platform asset impairment was necessary in the Care Quality Commission’s financial statements for those years.

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 (2022). 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 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 on regularity and qualified opinion on the financial statements.

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 twelve 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 requires entities to adopt the going concern basis of accounting in the preparation of the financial statements where it is 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 and my auditor’s certificate thereon. 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.

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.

As described in the basis for qualified opinion section of my report, I was unable to satisfy myself concerning the Care Quality Commission’s share of the Teesside Pension Fund assets of £393.4 million and related balances reported in the financial statements. I was also unable to satisfy myself concerning the impairment value of £15.8 million reported in respect of the Regulatory Platform intangible asset. I have concluded that where the other information refers to pension assets and related balances and intangible assets and related balances, it may be materially misstated for the same reason.

Opinion on other matters

In my opinion the part of the Remuneration and People 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, except for the possible effects of the matters described in the Basis for qualified opinion on financial statements section of my certificate, 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

Except for the possible effects of the matter described in the Basis for qualified opinion on financial statements section of my certificate, in 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.

Arising from the limitation on the scope of my work relating to the Care Quality Commission’s share of the Teesside Pension Fund pension assets and impairment of the Regulatory Platform intangible asset, referred to above:

  • I have not received all the information and explanations that I require for my audit; and
  • I was unable to determine whether adequate accounting records have been kept by the Care Quality Commission or returns adequate for my audit have not been received from branches not visited by my staff.

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

  • returns adequate for my audit have not been received from branches not visited by my staff; 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 People 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;
  • preparing financial statements which give a true and fair view in accordance with Secretary of State directions issued under the Health and Social Care Act 2008;
  • preparing the Annual Report, which includes the Remuneration and People Report, in accordance with Secretary of State directions issued 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 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, valuation of defined benefit pension schemes’ assets and liabilities and valuation of intangible assets. In common with all audits under ISAs (UK), I am required to perform specific procedures to respond to the risk of management override.

I 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 and pensions legislation.

Audit response to identified risk

To respond to the identified risks resulting from the above procedures:

  • 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 Risk 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
  • I addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and other adjustments; assessing whether the judgements on estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

I communicated relevant identified laws and regulations and potential risks of fraud to all engagement team members 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 sufficient appropriate audit evidence 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 I identify during my audit.

Gareth Davies
Comptroller and Auditor General

National Audit Office
157-197 Buckingham Palace Road
Victoria
London SW1W 9SP

15 July 2025

The Report of the Comptroller and Auditor General to the Houses of Parliament

Introduction

1. The Care Quality Commission (CQC) is an Executive Non-Departmental Public Body and component of the Department of Health and Social Care (DHSC) Group. It is an independent regulatory body overseeing the quality of care provided by health and social care services in England and is principally funded through registration fees charged to providers.

2. This Report explains the basis of my qualification in relation to the availability of evidence to support CQC’s: share of pension scheme assets held by the Teesside Pension Fund and related balances; and the valuation and associated impairment of its Regulatory Platform intangible asset reported in the financial statements.

Sufficiency of evidence for Teesside Pension Fund assets and related balances

3. CQC participated in 13 Local Government Pension Schemes (LGPS) during the year ended 31 March 2024. CQC’s involvement in those schemes is a legacy of its predecessor bodies when it was formed in 2009, being: the Commission for Social Care Inspection; the Healthcare Commission; and the Mental Health Act Commission. The schemes are all closed to new CQC entrants and CQC’s involvement in them is gradually reducing over time.

4. As set out in Note 5.1 to the financial statements, the scheme in which CQC has the largest interest is the Teesside Pension Fund. At 31 March 2024, CQC recognised a net pension asset of £30.6 million in the financial statements, being its share of the Teesside Pension Fund surplus. This is comprised of: the fair value of the pension assets of £393.4 million, less the present value of the funded obligations of £308.4 million, less the impact of the asset ceiling adjustment of £54.3 million. The asset ceiling adjustment is an accounting adjustment which limits how much of a pension surplus can be reported in the Statement of Financial Position based on the amount an organisation can access or benefit from that surplus.

5. Due to the number of admitted bodies to the scheme, it is not practicable for the auditors of those admitted bodies to undertake audit procedures directly on the assets held by the pension fund. The auditors of the Teesside Pension Fund provide assurance to the auditors of admitted bodies to enable them to conclude over the accuracy of transactions and balances included within individual entity accounts.

6. As disclosed in the Governance Statement, the pension fund auditor was unable to form an opinion on whether the Teesside Pension Fund financial statements were true and fair prior to the legislative backstop date for the completing its audit in February 2025. Accordingly, the pension fund auditor issued a disclaimed audit opinion in respect of the Teesside Pension Fund’s 2023-24 financial statements.

7. In the absence of assurances from the Teesside Pension Fund auditor, I do not have sufficient, appropriate evidence regarding the valuation of the pension assets of £393.4 million and associated movements in the Statement of Comprehensive Net Expenditure for the: interest income (£17.2 million); return on plan assets (£20.5 million); and the impact of the asset ceiling adjustment (£54.3 million). I have limited the scope of my audit opinion in respect of the absence of assurance for these material balances in the financial statements.

8. I recognise that there is limited action CQC can take in relation to the assurances over these balances given that they are controlled by the Teesside Pension Fund and the pension fund auditor. I understand that the pension fund auditor will be completing its work on the 2024 pension fund balances as part of its 2024-25 audit. I will consider the outcome of that work as part of my audit of CQC’s 2024-25 financial statements.

Regulatory Platform intangible asset

9. Between 2019 and 2024, CQC developed a Regulatory Platform asset to support the roll-out of its Single Assessment Framework approach to regulating the health and care sector. This involved constructing a new cloud-based application to replace its previous customer relationship management system. The Provider Portal component of the Regulatory Platform, designed to allow document submissions and interactions between providers and CQC staff, went live to all registered providers in March 2024. The Provider Portal became the main channel for interaction with providers from that point.

10. In May 2024, the Department of Health and Social Care commissioned Dr Penny Dash to undertake a review of CQC. Dr Dash published an interim report in July 2024 and a final report with recommendations in October 2024. Alongside concerns about the governance of the organisation, the reports highlighted significant operational issues with the Regulatory Platform.

11. A further review by an external IT expert was commissioned by the new Chief Executive, Sir Julian Hartley, the results of which were published in March 2025. The review found that there was poor implementation of the Regulatory Platform and Single Assessment Framework, with urgent fixes being required to deliver the intended functionality.

12. These external reports indicated that the Regulatory Platform asset recognised within CQC’s financial statements was impaired at 31 March 2024. At 31 March 2024, the carrying value of the Regulatory Platform intangible asset in the financial statements was £21.9 million (31 March 2023 - £20.7 million). The carrying value of the asset at 31 March 2024 is stated after adjustment for an impairment charge of £15.8 million. The impairment charge reflects CQC’s estimate of the reduction in the value of the asset arising from the issues identified with its functionality. Disclosure of the asset and the related impairment charge are included in Note 9 to the financial statements.

13. CQC has commenced an impairment review exercise to establish the value of the Regulatory Platform asset at 31 March 2024 and the related impairment charge though this is not yet complete. Based on the work undertaken to date, management have concluded that a further technical assessment is required to establish a valuation for the Regulatory Platform asset and the related impairment charge. In the absence of an adequate impairment review which meets the requirements of the financial reporting framework, I do not have sufficient, appropriate evidence regarding the carrying value of the asset or the value of the impairment charge reported in the financial statements. I was also unable to obtain sufficient, appropriate evidence regarding the extent of any impairment that should have been applied to the asset balance of £20.7 million at 31 March 2023. I have limited the scope of my audit opinion in respect of the absence of assurance for these material balances in the financial statements.

14. CQC expects to complete its impairment review which I will test as part of my audit of the 2024-25 accounts. The impairment review will cover both the opening and closing balances reported in the 2024-25 accounts.