Finance Training

September 2014

Objectives

Financial Regulations, Financial Grant Memorandum

The Budget & MTFP Budget MonitoringYear-endExternal Funding

Financial Regulations – Why? What? Who?

The Local Government Act 1972 & Local Government Finance Act 1982 says that we must make arrangements for the proper administration of our financial affairs……. and that certain officers be named and made responsible for the administration of those affairs (NPO, CFO, Monitoring Officer)

A framework for managing our financial affairs. They go with Standing Orders, Scheme of Delegation, the FGM and the Procurement Procedures etc

Apply to everyone at all times

What’s in our Financial Regulations?

• Identifies our collective financial responsibilities and those relating to specific people (NPO, CFO, Directors and some other Officers!)

• Standards of conduct – honesty, openness, integrity, probity• Safeguarding public money / assets• Use of public money & assets is legal, authorised and provides

vfm• Safeguard against theft, fraud & corruptionThey are fairly high level - Not detailed procedures

Who should know what?Where to find them, when to refer to them, who is responsible

Which areas are Most relevant areas to you?•Making grants & contributions•Use of consultants•Virements•Looking after assets, stocks, stores, inventories & disposal of•Gifts & hospitality•Standards of conduct•Ordering goods & services – procurement •External funding

Financial Grant Memorandum

Explains who we are, how we were formed, how we are funded and how we should operate financially – who is responsible

How our financial cycle fits with that of Defra

Directs how we submit bids and budgets and how to claim NPG

Lays down prescribed reporting formats (financial returns, Business plans, NPMP etc)

The Budget & MTFP – where to start?

The budget is driven by:

Defra & Central Government PrioritiesOur priorities – Business PlanUK Government Vision & Circular 2010The National Park Management Plan Financial constraintsLocal circumstances

Budget Prep Timetable

July Member workshop – review / determine priorities for next year

September Review fees & charges / consider new ones

October Business plan priorities agreed (LT & Members) – commence writing service plans / work programmes – for next year

October Budget bid forms issued – Core & discretionary areas separated

November Directors review / refine budget bids & service plans

December Draft budget & MTFP built – to LT for consideration – refined & revised to reflect actual NPG (when notified)

January / Feb Draft Budget & MTFP to Members – strategic direction – refine

March Budget & MTFP approved

March Authorised signatories allocated/budget uploaded/budget book

Budget & MTFP Principles

• Sound financial planning – crucial for good decision making & achieving VFM

• Must be a balanced budget – income & expenditure must match

• Lawful (do we have the legal power)• Prudent, Affordable, Sustainable• Three years• Inflation• Zero base

Budget – who does what?

Me: Salaries, travel, transport, lots of corporate business running costs & corporate incomeYou (and me as I have budgets too): oService / project expenditure budgetsoIncome (fees & charges and external grants) oStart with core costs – must do / have to do/ contractedoNext discretionary spend i.e. what you plan to do to meet the priorities in NPMP / Business Plan / Service PlanoBe realistic about what you can achieve, don’t over-estimate costs or put contingencies in (unless part of a proper capital project) oZero base – start from scratch

Where do we get our money from?

2014/15 Budget £000 2013/14 Actual £000

National Park Grant 3,637 National Park Grant 3,975

Other Grants * 251 Other Grants 569Fees & Charges 304 Fees & charges 325Investment Interest 12 Investment Interest 16Sales 88 Sales 84Reserves * 800 Reserves 375Other Defra Grant 0 Other Defra Grant 156Capital Receipt 0 Capital Receipt 54

What the Budget looks like (1)

Coding structure – what & whyOverall structure of Cost Centres (services) – set out by DEFRA (all NPAs)Formalised in SERCOP – by CIPFA (All LA’s, Police, Fire)Codes: e.g. PMV BIOD 4202 Reports to: DEFRA, Government (multiple & WGA), Internal - management accounts, the Public, Auditors, Investors, Banks (SoA)Comparability, consistency, true cost of providing services, decision making, public interest – VFM and what they are getting for their money. Challenge & scrutiny

What the Budget Looks Like (2)

Summary budget – all 3 years Comparisons between years: Current, next year, plus 2 Salaries, travel & transport, premises, supplies & services,

Income Reserves & risk based assessment of Capital budget and prudential code indicators Treasury management & investment strategy Formally approved by the CFO & the Authority Returns to Gov’t & NPG profile & claims to Defra

Reserves (1)

Established on the advice of CFO & the Authority must make own judgement on level & reasons, taking into account local circumstances.Can be held for 3 main purposes:•Working balance – to cushion impact of uneven cash flows/avoid temp. borrowing•Contingency – to cushion impact of unexpected events/emergencies (Gen. Reserve minimum amount)•Earmarked reserves – means of building up funds to meet known/predicted requirements e.g. Allocations set aside to meet funding gaps in the Budget/MTFP

Reserves (2)

Other categories of earmarked reserves:Specific grants/contributions received to be used over more than 1 year (conditions/restrictions)Match funding reserve (MTMTE, NATH, GDLEAF, G&G)Brought forward commitments at year end (incl. Project Fund) – internal protocolsSums set aside for major schemes – Capital asset purchases, Repairs & Maintenance – the big stuff

Reserves (3)

We carry out a risk based analysis of our general earmarked reserve balances i.e. those contingency reserves. Monitored & revised to reflect local circumstances and external environment

When expenditure, which is being financed from a reserve is incurred, it is charged to the appropriate service, I make the necessary entries at year end to match it with reserves but I amend your budget monitoring spreadsheets and FINEST budgets so you can see what’s happening

Budget Management (1)

• Key performance indicator• Control resources• Informs achievement of objectives• Identifies financial problems & tells us when we need to take

corrective action• Informs decision making (current & future)• Undertaken monthly, reported quarterly• Ultimate responsibility – TCWG• Financial performance is visible – A&G, public domain

Budget Management (2)

• Monthly, automated “Tabs” emailed from FINEST – not pretty, but instant, real time, gives you something to work with whilst I do my work (see handout)

• Monthly Budget Monitoring spreadsheets produced by me (see handout)

• Reconciliations, Income projections, Outturn projections, Variance analysis, explanations

Budget Management (3)

What can I spend? – what was approved in the budget (amount and project) i.e. what you bid forWhat codes should I use? Can I overspend? – not without authorisation but:•New money / more income •Underspends in some areas – manage bottom line – but correct codes•Virements / Journals– within & between cost centres (handout)

•Reserves•Authority approval•ABSOLUTE emergency / H&S

Project Fund

An amount of unallocated budget that can be awarded:•To specific existing or new projects•To existing or new work programmes•To 3rd parties in the form of grants, contributions, match funding

Gives us flexibility / enables us to respond to new opportunities

How to access the project Fund

A Business case:•Briefing paper to Line Mgr/HoS/Director •PHPM proposal formDepending on type of project/work programmeFinancial approvals:•£0-£5k = Director•Over £5k = LT & NPO approval•Over £30k = the AuthorityNB: up to £2k – examine budget, underspends?

Year End

Instructions issued by finance & on ParknetStrict (legal) timetable – no extensions (proposal to shorten further)Orders / invoices: •accruals & carry forwardsGrants & contributions:• owed/outstanding/grant claims to be made•Carry forwards Employee benefits: Annual Leave, Flexi & Toil balancesFinally: Statement of Accounts and Audit

Audit

Internal Audit – Devon Audit Partnership•Carry out system audit work, set annual audit programme – report to & give assurance to Management & MembersExternal Audit – Grant Thornton LLP•Main work is around the SoA & AGS, set an annual programme – report to TCWG (Members) and the public

The work we do is checked / analysed for errors & omissions. Our procedures are verified and tested. My professional judgement is challenged and questioned. They give an “opinion”

Purchase OrdersOrders – must be raised for all purchases (even if via a contract) – it puts commitment on ledger and helps with budgeting Supplier / BACS form•UTR no. Determines if they are an employee or contractor (tax implications)•Money laundering / fraud / legal entity•Gets the order raised quickly•To match order / invoice•To enable faster paymentContractor Vetting Policy•All contractors•Register•Forms

Procurement - (Financial) Thresholds £1k & < £2.5k – 2 verbal quotes

£2.5k & < £10k – 3 written quotes

£10k & < £30k – 3 formal quotes, in writing, based on written spec & published evaluation/award criteria

£30k & < EU thresholds – tender process

EU Thresholds (at Jan 2014) – OJEU process– Goods & Services > £175,514– Works > £4,322,012

Procurement (2)

• ITT /ITQ - over £5,000 must be advertised on the Website (2014 data transparency code of practice)

• £10k & < £30k (3 formal quotes) = must have selection & award criteria

• Think ahead: Projects that are bigger in value & more complex will involve up front planning to ensure the legal process is adhered to

• Communication, allow plenty of time, stick to the process, be fair & equitable

External Funding

We are applying for more and more – “chasing the money”•Not always straight forward•Must assess Ts&Cs – can we comply? What are the risks and the benefits? •Legality, delivery of objectives, capacity to deliver•Clear roles and responsibilities in partnership/funding arrangements•Sometimes more complex than we realise•Must consult with HoR / HoL in advance – do you have the authority to commit? LT, Authority approval, match funding?•Claiming the money & records

Other

VAT – complicated area – please ask: expenditure, income, fees & charges, grants – we have a VAT Manual

FINEST = the Accounting ledger & everything is put on Idox – you can have access to both – training by Cornelia

Invoices – pay within 30 days or supplier’s Ts&Cs

Performance – payment of invoices & impact on small business – corporate social responsibility!