Manager Orientation

Budgeting & Forecasting

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Today’s AgendaNew Budget Model Principles

Overview of budgeting and forecasting

Timelines

How the Funds work

Role of Financial Planning & Analysis

Overview of capital budgeting

Introduction to budgeting and forecasting models

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Objectives

1. Introduction to the Budgeting Principles

2. Gain an understanding of the budgeting and forecast process.

3. Define the responsibilities of a budget owners in the budgeting and forecasting process.

4. Be aware of the budgeting and forecasting timelines.

5. Introduction to the various budgeting and forecast models

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Budget Model Principles

One university family Alignment with vision and priorities Mindfulness Accountability Transparency Financial sustainability Flexibility and entrepreneurialism Incentives

4

New Budget Model Principles: Align human,

financial, and capital resource allocations

decisions with Eyes High / provincial results-based

budgeting

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Budgeting

A budget is the plan developed by an organization as its benchmark to achieve its financial goals and objectives for a period of time – generally for one year at a time.

Project budgets often span more than a single year.

Changes to a budget occur in the form of a forecast.

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Purpose of Budgeting

Provides a benchmark for evaluating financial performance against the goals and objectives.

Helps an organization allocate financial resources.

A communication tool used to expresses financial goals and objectives of the organization.

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What is Forecasting?

Forecasting is:

the change in the future financial expectation from the original budget usually as result of new information.

a process of estimation to predict our financial results by using current and historical information.

performed monthly to incorporate changes in expectations such as delayed hiring or purchase of materials.

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Purpose of Forecasting

A tool that provides information to help make prudent business decisions and to understand the financial results and health of an organization.

Helps to identify unexpected issues or new information so that decisions for corrective action can be made.

Helps to identify potential opportunities and risks.

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Differences Between Budgeting and Forecasting

Budgeting is the financial plan that is produced each year and is the guideline for which goals and objectives are evaluated. Forecasting is the change of those original expectation within the fiscal year.

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Responsibilities of the Budget Owner

Budget Owners are:

individuals who are authorized to approve and incur expenses under a Department ID (DeptID) or project.

responsible for the effective and efficient allocation and use of financial resources within their departments or project.

responsible for preparing the budgets and forecasts for their respective departments within the specified timelines.

responsible for explaining any differences (variances) between their actual and expected results with the help of their finance partner

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Types of Budget Owners

Department Budget Owners: are individuals who are responsible for a functional operating area within a faculty/unit.

Project Budget Owners: are individuals who are responsible for managing a project and may include Principal Investigators of a research project and Project Managers of capital/non-capital projects.

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Types of Budgets

Annual Operating Budgets: are completed for all functional faculty/units (including current year capital) as part of the annual institutional plan and is submitted to the Minister of Alberta Enterprise and Advanced Education (EAE) every March.

Project Budgets: are estimates of the costs of an entire project that may span several years. The current year project (capital) budget is included in the annual operating budget. Project budgets must be completed and approved before the start of a project.

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August

March

Board Approval

April

Fiscal Year Begins

February

Federal/Provincial Budgets

November

VP Budget Roll-up

July

Expert Forum

June

Key Budget Drivers

December

Strategic Initiatives

January

Budget Review

May

Planning Process Begins

October

Budgets Submitted

September

Budget Principles /

Process

Annual Budgeting Process

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Financial Planning Timelines

March 15th Annual Institutional Plan and

Budget Submitted to EAE

July to October Prepares Budget

Guidelines, Updates Budget Models, and

Issues Budget Envelope

October Faculty/Units Complete and Submit

their Budget and Annual Plans.

November to DecemberVice Presidents and

Executive Leadership Reviews of Budget and

Plans

Ongoing Financial

Management (Forecasting and

Variance Analysis)

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Forecast Timelines

Monthly - prepare monthly institutional forecasts that includes Year-to-Date (YTD) analysis of actual results compared with the budget. This analysis is provided to Financial Reporting to be used in the Financial Report Package provided to Executive Management, Audit Committee and the Board of Governors.

Year-end - the analysis completed by the faculty/unit is used in preparing the institutional Financial Statements and Annual Report.

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How the Fund Codes workThe way we were

Fund Name Fund CodesOperating Fund 10, 35, BlankAncillary Fund 15Other Operating Fund 12. 20, 30, 40, 45Other Restricted Fund 50, 70Research Fund 11, 60

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How the Fund Codes workThe reason for the change

Then Public Sector Accounting Standards (PSAS) came into affect and we were required to look at our Fund groupings in a slightly different way.

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How the Funds workThe way we are

Academic & Institutional (excluding FOM) Fund 10, 35, Blank, 12. 20, 30, 40, 45

Facilities Operation & Maintenance (FOM) Same funds as above but restricted to certain department and account numbers

Ancillary Fund 15

Special Purpose & Trust Fund 50, 70

Research Fund 11, 60

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Role of Financial Planning and Analysis (FP&A)Coordinate the budgeting and support forecast processes.

Support the preparation of the monthly, quarterly, and annual institutional reports including financial analysis for the institutional financial statements and internal financial reporting.

Maintain and update budgeting and forecasting models.

Support the Finance partners.

Support management in business analysis for general business support.

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Responsibilities of the Finance Partner, Budget owner and FP&A

The Finance Partner is responsible for working with the budget owner entering the data into the models, reviewing and validating financial information for the faculty/unit they support.

Budget owners are responsible for reviewing and validating information entered into the models for their DeptIDs with the support of the finance partner.

FP&A is responsible for consolidating and verifying the information, ensuring the accuracy of calculations, populating the models with relevant data, and maintaining the models by coordinating required changes to the models as required.

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What is Capital?

To identify, assess and plan for the capital needs of the institution

To ensure the long-term goals and objectives goals of the university are realized.

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What is the Capital used for?

Books and collections

Furniture, Computers, Buildings & Equipment

A detailed account description listing can be located at the Finance website.

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Models

The university uses Cognos Enterprise Planning (EP) which is a web-based application for all budget and forecasting models

Finance Partners are responsible for entering data into the models and reviewing the data at the various levels which include department, faculty/unit and at an overall institutional level for the areas they are responsible for.

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Master Budget Model

The Master Budget Model allows for all of the institution’s faculty/units to enter their budget into a single database.

The detailed Salary Budget Model roles into the Master Budget model automatically. Budgets are by person and comprise the largest component of our expenses in a year.

The model is capable of reporting financial information at department, faculty/unit and at an institutional level.

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Variance and Forecast Model

The Variance and Forecast model allows all of the institution’s faculty/units to enter their forecast and variance analysis into a single database for ease of consolidation. The Model is based on a rolling forward forecasting method that combines YTD actual with estimates of the remaining periods for the year to arrive at a forecast.

The model is capable of reporting financial information at department, faculty/unit and an institutional level.

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Where to go for help

Your finance partner is always your first point of contact, however you can reach anyone on the FP&A team in the following ways:

Our email address is: fpa@ucalgary.ca

Our website is:

http://www.ucalgary.ca/finance/

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