WORKSHOP: ¾ CLOSE EXERCISE & FORECAST OUTTURNS

1. WORKSHOP: ¾ CLOSE EXERCISE & FORECAST OUTTURNS

2. Year End Accounts • LA needs to produce consolidated set of accounts, as Schools are the prime record holder they are required to provide LA with their final outturn position. • Deadlines set by Corporate Services and are set to fit in with when CBC’s accounts have to be finalised. • Easter holidays – finish 30th March and schools return on 17th April. When timetable is available will publish deadlines on website.

3. Year End Accounts • Schools will need to complete returns in first few days of Easter holidays to meet deadlines. SFA’s will be available for queries. Non-Returns by schools may mean that we have to either: • close on the last I&E received (February) • Or estimate the final return. Either way schools will have to amend their local systems to agree to CBC for CFR purposes and schools balances will be larger.

4. ¾ Close Exercise • An exercise to provide a run through on completing some of the year end returns for new fully funded schools. • Wont be full year end but will show how to put balance sheet together. • Templates available on the website. • Submit returns to SFA who will review and let schools know if they need to amend anything for actual year end returns. • Complete returns as at 31st December and submit to SFA, no deadline as exercise is just for training purposes. • If you have bursary service booked for year end no need to submit ¾ close.

5. I&E to 31st December • No extra work, all schools (monthly or quarterly) will need to complete an I&E up to end of December • Ensure figures agree with system print, submitted as back-up as standard • Ensure Budget plan is latest version and agrees with local system.

6. VAT • Compile VAT claim for December and submit to Connie in normal way. NB deadline is currently 17th of the following month not 10th. • Calculate what months VAT claims are outstanding, December’s, November’s etc this is figure for VAT Debtor on Balance sheet. • For SIMS schools check this agrees with Net of VAT on Balances and Reserves report and total for VAT on Trial Balance. • For RM Finance schools use VAT debtor report • For G2 schools use the trial balance • Submit copies for SFA to check.

7. Bank Account and Petty Cash • Carry out December’s bank and petty cash reconciliation as standard. • Bank Balance/Cashbook balance not final bank statement balance will be figure for balance sheet. • Submit copies for SFA to check

8. Accruals • These will only be done at year end, not for ¾ close. • As centrally funded school, last year sent in to SFA who entered them on SAP and schools entered on local system. As fully funded school put on system following software providers guidance, complete lists and submit copies. But only for actual year end – not ¾ close.

9. Payroll Control Account • Depending on how you enter payroll on local system, may have a liability on balance sheet for payroll. • Check Trial balance on SIMS & G2 or Bvs Avs C on RM • If unsure check with your software provider

10. Balance Sheets • List of all assets owned and all liabilities owed by a school at a particular date • Monetary amounts are attributed to each of the assets and liabilities – balances on balance sheet accounts will be carried forward

11. Balance Sheet • Asset - Something valuable which the schools owns or has the use of • Stock ( only two schools report stock as an asset) • Bank Balance • Debtors – items owed to the school (will include VAT at year end for previous month) • Liability - Something which is owed to somebody else: • Loan • Creditors Goods purchased but not yet paid for.

12. Balance Sheet • Outstanding Vat Claims not credited back to bank. Could be more than one month and will include December’s claim. • Bank balance after December bank rec has been done • Any Petty cash in hand after December’s reconciliation has been done.

13. Cashflow • Complete in normal way up to end of December. • Submit copies in normal way.

14. Other Returns for ¾ Close • Devolved Formula Capital Return up to end of December. Complete expenditure and submit with copy invoices. • Quarterly Salaries & Wages return. • December Payroll listing • Budget vs Actual vs Committed for RM schools • Trial balance and balances & reserves report for SIMS & G2 schools.

15. Other Returns for Actual Year-End Same as when centrally funded:- • Earmarked Funds Form • Leasing Payments & Contributions • Trust Funds • CFR (June) • Quarterly Salaries & Wages return New ones now fully funded if don’t use SERCO payroll:- • Officers Emoluments – number of staff members whose basic pay falls within certain bandings

16. Year End Checklist • Handout year end checklist • Use as tick list as to what documents being submitted, and for those not submitted a reason why. • Gives a few final checks to ensure accounts balance

17. Governors Checklist • Intended to assist governors when reviewing the schools financial returns • Only as a guide, other more detailed checks may also be carried out as Governors feel appropriate. • Aimed at providing governors with independent assurance as to the satisfactory reporting of the schools I&E to the LA.

18. Any Questions

19. Forecast Outturns

20. Outturn Workshop Why • Part of schools financial management process • In Scheme for Financing Schools (section 2.3.1 Financial Controls) • Forward planning

21. Outturn Workshop When • November (after reconciliation of October figures) • Deadline Friday 2nd December • Revision up to 10th February for material differences • Good practice – part of monthly reconciliation • LD Schools must submit monthly (20th) to SFA

22. Outturn Workshop Preparation • Up to date financial records (invoices, petty cash, orders and income entered) • Good budget working papers and assumptions • Formal Framework to project and report year end position

23. Outturn Workshop Process for Completion of Outturn • Monthly Monitoring – where are we now? • Analyse variances between budget and forecast - Example • Forecast - techniques/example

24. Outturn Workshop Monthly Monitoring • Compare budget to actual to date • Identify variances • Identify commitments • Compare to budget working papers

25. Outturn Workshop Analyse Variances (Example) CFR Actual Code Budget to Date Variance % E24 £0 £100 -£100 0 E25 £8,200 £7,600 £600 92.7 E26 £2,000 £2,200 -£200 110.0 E27 £3,150 £2,360 £790 74.9 E28 £6,103 £3,975 £2,128 65.1

26. Outturn Workshop Analyse Variances (Example) • The Budget for E28 is £6,103 and it is only 65% spent at the time of the forecast outturn therefore we may assume the forecast will be budget. • However if we may need to check the breakdown of the budget and the details of actual spend to date

27. Outturn Workshop Analyse Variances (Example) Breakdown of E28 - £6,103

28. Outturn Workshop Analyse Variances (Example) • As we can see from the example £150 actual spend is not included in the original budget • Therefore forecast will be actual spend + remaining budgeted services i.e. £3,975 + £1,028 + £1,250 = £6,253 • Although a £150 overspend may be immaterial, the example is for illustration

29. Outturn Workshop Forecasting Techniques • Extrapolate Divide Income/Expenditure by number of months to date (October=7) then multiply by 12 to extrapolate whole year

30. Outturn Workshop Extrapolate (Example) CFR Actual Cost per Forecast to Code Budget to P7 month 31.03.10 E12 £12,500 £10,235 ÷7 £1,462 x12 £17,544 E13 £3,000 £1,750 £250 £3,000 E14 £1500 £1325 £189 £2,268 E15 £2,340£1,170 £167 £2,004

31. Outturn Workshop Forecast – Techniques • Profile Add together the year to date figure as October/November with the budget profile for the remaining months

32. Outturn Workshop Profile (example) CFR Actual Profile Forecast to Code Budget to P7 P 8-12 31.03.11 E12 £12,500 £10,235 £2,350 £12,585 E13 £3,000 £2,000 £1,000 £3,000 E14 £1,500 £1,325 £300 £1,625 E15 £2,340£1,170 £1,170 £2,340

33. Outturn Workshop Other Forecast – Techniques • Take year to date and then use zero based budgeting (calculating from scratch the remaining income/expenditure for the rest of the year). • Use mixture of the above techniques

34. Outturn Workshop Pro – Forma • Available from Central Bedfordshire Learning Portal www.learning.centralbedfordshire.gov.uk (Management/Finance) • Continue to use schools own • Back up to proforma – System print which shows year to date spend and current budget • Can be system generated outturn if school uses budget profiling

35. Outturn Workshop What are we looking for • Balances – potential problems (deficit/surplus) • Viability • SFA to enter own predicted forecast for the school

36. Outturn Workshop The Template • Detailed guidance on website • Enter school name and cost centre • Cells which contain formula will be protected • Layout mirrors the SAP summary print – Revenue and Capital separate • Income/credit balances to be entered with a minus in front

37. Outturn Workshop How to Complete the Template • Enter the months as appropriate at top of actual and forecast columns • Year to date figures will be at the point you run your reports. This may be mid-way through November – therefore forecast column will be rest of November and December to March. • Year to date figures on the spreadsheet must match the YTD figures on your system print. • Current Budget figures must match your system print

38. Outturn Workshop How to Complete the Template • The spreadsheet will calculate your revenue and capital carry forwards • Revenue carry forward needs to be split between B01, B02 and B06 – template enters all into B02 • Capital carry forward needs to be split between B03, B04 and B05 – template enters all into B05.

39. Outturn Workshop • Differences between forecast and budget are acceptable – provide comments where the differences are material • Negative carry forward figure indicates an underspend – positive an overspend • B01 Earmarked Revenue balances cannot be used to off-set against a revenue overspend in B02 – schools must apply for a licensed deficit.

40. Outturn Workshop How to Complete the Template • Must be signed by the Headteacher but at some point presented to the Governors (please indicate date of meeting) • Submit to your School Financial Advisor by Friday 2nd December with system back-up • Can be re-submitted up until Friday 10th February. Only submit if there is a material change to the forecast surplus or deficit.

41. Question and Answer Session