1. Budget planning
As part of the annual planning exercise, divisions and services are required to provide high-level budget projections which are used by the Planning and Resource Allocation Committee (PRAC) to provide guidance on budget targets. This exercise is carried out to ensure that actions contained within the academic and service plans are fully costed and that there is agreement on the likely budgetary outcome for the University before the detailed budgeting starts. Detailed guidance is agreed by Divisional Financial Controllers in January each year. Budgets and Forecasts are prepared on the BFT system, which includes agreed pay inflation assumptions. Other assumptions are agreed with DFCs.
Projections cover a four-year period i.e. current year plus three years forward.
The plans and budget projections are sent to PRAC along with the budget in June. The plans for the services are sent to the Budget Sub-Committee in February, where service targets are recommended to PRAC for the coming year. These targets form the basis of the 123 infrastructure charges, the mechanism by which the service costs are recharged to the divisions and to Central Costs & Adjustments. It is possible that PRAC might require the services to do some further work after this February meeting.
The HEFCE (Higher Education Funding Council for England) grant letter is received in early March after which the internal resource allocation model (JRAM) is run. This is the mechanism by which the University allocates the funding and fees it receives to individual departments.
The budget projections are updated with the allocation from the JRAM and the 123 infrastructure charge model and taken back to PRAC during April, where final budget targets for the following year are set.
2. Budget preparation
In accordance with the Financial Regulations, each department and division is required to complete its budget on the BFT as per the divisional timetable. During May and June these are reviewed and discussed with departments and divisional staff to ensure they are within the overall budgetary target. The budget is approved by PRAC and then by Council during June. A Budget Book is prepared for publication at the start of each Financial Year by the Head of Financial Planning & Analysis.
3. Budget upload
During July all departmental budgets are uploaded from the BFT to Oracle Financials by the Financial Planning team..
4. Budget reconciliation
Once budgets have been loaded onto Oracle Financials there is a final check by the Financial Planning Team to ensure that the figures match those in the Budget Book and on the BFT.
5. Budget monitoring
The approved budget provides an essential reference for financial control during the year. Units are required to report their performance against budget at least quarterly, and to alert their parent units of any material variances as they become known.
6. Forecasts
Divisions and services are required to prepare forecasts at the end of each Quarter of the Financial Year, in October (Q1), January (Q2) and April (Q3). Forecasts provide up-to-date information and supplement the year's Budget. Quarterly forecasts should include known, material changes in staffing, income or expenditure, and are scrutinised divisionally and centrally and then reported to PRAC for approval, along with analysis of the causes and impact of material variances from budget. The approved forecasts are loaded to Oracle Financials.
