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Budgeting, Forecasting & Management Reporting

Budgeting, Forecasting & Management Reporting Policy

Policy Code: FN1842

Purpose

The purpose of this Policy is to ensure that the University meets its obligations in terms of the Financial Management Act, Federation University Australia Act(2010), Tertiary Education (Amendment) Act and the Australian Accounting Standards (AASB). It is to provide the framework for preparing the annual budget, recognising brought forward balances, forecasting the University’s annual financial position at the end of the budget year and provide an overview of the management reporting processes and defining the key timeframes in which reports are produced.

Scope

This Policy relates to both the top level budgeting, forecasting, brought forward balances and management reporting undertaken by the Finance Directorate as well as all Portfolios and Schools, commercial areas and regional campuses.

The University’s financial year, is 1 January to 31 December.

Definitions

Term Definition
Budget A budget is an organisational plan in financial terms.  The financial document is used to estimate future income and expenses.  A budget can also serve as a plan for action for achieving quantified objectives, standard for measuring performance and a device for coping with foreseeable adverse situations.
Brought forward balances   A balance which is entered in a general ledger at the start of a year (1 January) and represents the net balance of income less expenditure for a contractual fund, at the end of the preceding year (31 December).
Forecast Is a projection about the year end position, based on a number of factors including the use of historical data and current information and knowledge. It is developed in conjunction with the financial planning and budget team for budget managers during the year.
Management Reporting Management reporting is a detailed report of the actual year to date position and a full year forecast. It includes a Profit and Loss statement, cash flow balances and a Balance Sheet.

Policy Statement

Budget- An annual budget (for a calendar year) must be prepared by the University in accordance with Section 8 of the Federation University Act 2010. This section of the Act outlines the University’s requirements in respect of the University budget. The University’s annual budget is to be prepared and presented to Council for approval.

Each budget unit (Portfolio or School also referred to as a department or project) for both operating and research activities (where applicable) must prepare an annual budget in line with University’s Strategic Planning framework guidelines.

Unless specific approval has been granted to over spend in a given year, areas are not allowed to spend more than their agreed budget.

Brought Forward Balances- At the commencement of the new financial year, balances from all funds that have received approval will be brought forward. Expenditure budgets should be developed in accordance with the University’s budget timetable which directly relate to the carry forwards to ensure that expenditure and income is matched in line with accounting standard/contractual requirements.  

Forecasting-Forecasts are prepared both at a consolidated University level and cost centre level. A forecast should be based on all available information at the time of preparation, including historical data, commitments and expected income and expenditure. At the consolidated University level the Financial Planning and Analytics team is required to prepare reports and produce a forecast which aims to monitor the University’s performance against the approved budget (top down process).  This is reported on a regular basis to Council (and it's relevant committees).

Reports are available on demand on relevant discussion with Finance Business Partners and also aimed to be circulated to budget units at frequent intervals in line with reporting timeline set by Council (and its relevant Committee). All budget units are required to analyse their most recent year end forecast reports. It is the responsibility of budget managers  to conduct variance analysis with Finance Business Partners and provide comments highlighting any major change to the forecast from the budget.  However, more importantly it is necessary to develop any cost mitigating plans should any budget overspends be expected. 

Risk Analysis

Consideration will be given to allocating sufficient financial resources to areas which have particularly complex issues. Any issues or concerns surrounding budgetary control are mitigated by the processes and monitoring we have in place.  We ensure that every area of spending within the University receives regular monitoring reports.  External reporting ensures challenge and vigour to the University’s financial position.

Risks need to be monitored according to the Risk Management Framework set under Risk Management policy.

Responsibility

  • Chief Operating Officer/ Chief Financial Officer (as the Approval Authority) is responsible for monitoring the implementation, outcomes and scheduled review of this procedure.
  • Associate Director - Financial Planning and Analytics (as the Policy Sponsor) is responsible for maintaining the content of this procedure as delegated by the Chief Operating Officer/ Chief Financial Officer .

Promulgation

The Budgeting, Forecasting & Management Reporting Policy will be communicated throughout the University via:

1. Announcement on the FedNews website;

2. ‘Recently Approved Documents’ webpage to alert the University-wide community of the approved Policy;

3. Information/Training Sessions; and/or

4. Inclusion in the University's online Policy Library;

5. Distribution of e-mails to relevant University Staff and Stakeholders

Implementation

The Budgeting, Forecasting & Management Reporting Policy will be implemented throughout the University via:

1.   A FedNews announcement and on the ‘Recently Approved Documents’ page on the University’s Policy Central website.

2.   Staff induction sessions.