SFI-PGN Part of NTW(O)51- Standard Financial Instructions Policy

Transcription

1 Standard Financial Instructions Practice Guidance Note The Use of Budgetary Control V02 Date Issued Issue 1 Aug 2017 Aug 2018 Planned Review SFI-PGN Standard Financial Instructions Policy Author / Designation Responsible Officer / Designation Chris Cressey Head of Central Finance James Duncan Deputy Chief Executive / Executive Director of Finance Contents Section Description Page No. 1 Introduction 1 2 Schemes of Delegation 1 3 Reserves 2 4 Budget Setting Process 2 5 Recurring and Non-Recurring Budgets 3 6 Budgetary Control 3 7 Reporting Periods 4 8 Reporting 4 9 Virement 5 10 Overspends 5 11 Underspends 6 12 Coding and Authorisation of Transactions 6 13 Forecasting 6 Document No Appendices listed separate to PGN Description Issue Issue Date Review Date Appendix 1 Budget Setting Methodology 2017/ Aug 17 Aug 18

2 1 Introduction SFI-PGN The objective of this procedure is to set out the arrangements for effective financial management and control within Northumberland, Tyne and Wear NHS Foundation Trust (The Trust/NTW). 1.2 This procedure needs to be read in conjunction with the following documents, which can all be found on the Trust Intranet: Standing Orders (SOs) Standing Financial Instructions (SFIs) Schemes of Delegation Accountability Framework Decision Making Framework Service Level Agreements (SLAs) 1.3 The budgetary control arrangements within NTW are designed to complement the management decision-making process whereby financial responsibility is delegated to those officers responsible for the commissioning or management of services. 1.4 Whilst the Chief Executive of NTW is the accountable officer, effective financial control within NTW is the responsibility of all officers within NTW, under the direction of the Executive Director of Finance/Deputy Chief Executive and the Trust Board. 2 Schemes of Delegation 2.1 Under SFI reference within the Trust Scheme of Delegation the Executive Director of Finance has responsibility to, Devise and maintain systems of budgetary control. This Practice Guidance Note provides the guidance to support budgetary control within NTW. 2.2 Under the Trust s Standing Financial Instructions (SFIs) Reference the Chief Executive may delegate management of a budget or part of a budget to officers to permit the performance of defined activities. A budget holder is a named member of staff responsible for the transactions and financial performance of the resource within a cost centre. The Trust budget is delegated throughout the Trust hierarchy. Resources are allocated to cost centres managed by budget holders. Each cost centre has approved authorised signatories who have delegated authority to approve expenditure within approved limits against the resources on their assigned cost centres. Authorisation levels are agreed as per the Trust s Decision Making Framework. 2.3 Budget holders must ensure that: SFI-PGN Use of Budgetary Control - V02-Issue Aug17 -Standard Financial Instructions Policy 1

3 No overspend or reduction of income that cannot be met by virement from another budget is incurred without prior consent of the Board Approved budget is not used for any purpose other than that specifically authorised subject to the rules of virement No permanent employees, other than those provided for within available resources and manpower establishment are appointed without the approval of the relevant Group/Corporate Director 2.4 Non-recurring budgets should not be used to finance recurring expenditure. 3 Reserves 3.1 The availability and proposed use of any reserves will be reported to the Board with authorisation for their use delegated to the Chief Executive/Deputy Chief Executive. 3.2 The use of these reserves will be agreed by NTW s Executive Team under the guidance of the Executive Director of Finance/Deputy Chief Executive. 3.3 In managing their budgets, budget holders should not assume that they can access these funds. 4 Budget Setting Process 4.1 The Central Finance Team will produce a detailed annual budget and a summary plan in line with the requirements of NHS Improvement (the regulator). Budget Setting Guidance is set out in Appendix 1. These budgets will reflect the following: Service Level Agreements Workload and manpower plans (rotas where available) Be produced following discussion with appropriate budget holders Be prepared within the limits of available funds Identify potential risks & mitigations Identify any required cost improvement/efficiency targets 4.2 The budget setting process will broadly follow the steps set out below. 4.3 The Groups Business Support Teams in consultation with budget holders, General Managers & Triumvirates will set provisional budgets for Operational Groups, where possible based on the operational practices agreed to support services such as staffing rotas or contracts. 4.4 The Central Finance Team in consultation with budget holders & managers will set provisional budgets for Central Departments, where possible based on the operational practices agreed to support services such as staffing rotas or contracts. -Standard Financial Instructions Policy 2

4 4.5 The provisional budgets will then be agreed by the Board at which time it will become the formally adopted budget. 4.6 Any in year amendments to these budgets will be discussed with budget holders and confirmed either in writing or via The Executive Director of Finance has a responsibility to ensure that adequate training is delivered on an on-going basis to budget holders to help them manage successfully. Training is delivered by the Central Finance Team at budget holder level and Group Business Support Teams deliver training to Group Management and Triumvirates. 5 Recurring and Non-Recurring Budgets 5.1 A recurring budget is one that is available for the budget holder to utilise on a rolling year on year basis. Budget holders will be informed which elements of their budgets are recurring and non-recurring. 5.2 A non-recurring budget is a budget available for the budget holder to utilise over a fixed period of time agreed with the Executive Director of Finance/Deputy Chief Executive. If a non-recurring budget is not utilised in the agreed time, the funds can only be re-allocated with the agreement of the Executive Director of Finance/Deputy Chief Executive, subject to the restrictions placed on these types of funding. 5.3 Budget holders should ensure that they do not enter into recurring commitments (for example, appointing a permanent member of staff) using a non-recurring budget. 5.4 If any doubt exists regarding the status of a budget allocation it should be referred to the Group Accountants in the first instance. 6 Budgetary Control 6.1 It is the responsibility of budgets holders to ensure that: Any likely overspending or reduction of income that cannot be met by virement is not incurred without the prior consent of the Board. The amount provided in the approved budget is not used in whole or in part for any purpose other than that specifically authorised subject to the rules of virement No permanent employees are appointed without the approval of the Group/Corporate Directors other than those provided for within the available resources and manpower establishment as approved by the Board -Standard Financial Instructions Policy 3

5 6.2 Budgetary control will be exercised using information provided by the Executive Director of Finance/Deputy Chief Executive. It should be stressed, however, that primary responsibility for management of budgets including budgetary control rests with the budget holder. 6.3 Budget holders will be supported by a named member of the Central Finance Team to provide operational finance support. Senior Managers & the Triumvirates will be supported by the Group Business Support Teams. 6.4 The Executive Director of Finance/Deputy Chief Executive will ensure that there is appropriate support to budget holders and the Finance Directorate. The Finance Team will manage the routine monthly reporting cycle. Representatives of the Finance Team will report the financial position to the relevant Trust main management meetings. 6.5 The Group Business Support teams will report the financial position to Group meetings and provide more targeted support to areas with in-year budgetary pressures or where business advice is required to deliver service change through business cases/tenders/financial delivery schemes. 7 Reporting Periods 7.1 Reporting periods will consist of calendar months running from April (Period 1) to March (Period 12) each year. 8 Reporting 8.1 Under SFI reference The Executive Director of Finance/Deputy Chief Executive will be responsible for providing budgetary information and advice to enable the Chief Executive and other officers to carry out their budgetary responsibilities. Monthly reports are provided internally and externally. 8.2 The Executive Director of Finance/Deputy Chief Executive will ensure that NTW s Executive Directors receive a report updating them about the financial performance of the Trust and their services on a monthly basis. 8.3 Budget holders with responsibility for managing delegated budgets will receive reports regarding the performance of the budgets they manage on a monthly basis. 8.4 The budget holders will receive the reports in accordance with the timetable agreed with the Executive Director of Finance / Deputy Chief Executive. The reports will be uploaded onto the budget holders dashboard normally on the eighth working day of the end of the reporting period to which they relate. 8.5 Each month it is the budget holder s responsibility to review expenditure / income compared to budget and identify with the assistance of their Finance support, the factors influencing the position and corrective action where necessary. -Standard Financial Instructions Policy 4

6 8.6 If any overspending cannot be rectified then the budget holder s line manager should be notified as soon as the matter becomes apparent. 9 Virement 9.1 For the purposes of this document virement is the authorised transfer of a budgetary allocation. This may be: Between Income and Expenditure Between Pay and Non Pay Between Expenditure Budgets 9.2 Virements are usually requested/actioned by or as a result of changes relating to agreed Business Cases/Developments. 9.3 Virement can occur when a budget is underspent and the budget holder wants to use the slippage to fund other expenditure. 9.4 In order for this type of virement to be considered the budget holder must demonstrate that all the budgets managed by the budget holder will be underspent at the year-end. The Group and Trust financial positions will also be taken into consideration. 9.5 Virement may be temporary or permanent. A temporary virement will be nonrecurring and apply only to the financial year in which the virement is approved. 9.6 If the virement involves a transfer of funds between two different budgets/ services, then the transfer needs to be agreed by both budget holders/ Directorate/Group/Service Managers. Any changes to income budgets also need agreement of the Director of Commissioning & Quality Assurance. Further details re approving officers are provided in the Decision Making Framework. 10 Overspends 10.1 A budget is overspent when the expenditure that has been charged against the budget is more than the funds allocated to the budget. Income being less budget can also lead to a cost centre being overspent Budget holders should notify their Business Support immediately they suspect that their budget is likely to become overspent Overspending budgets will be highlighted through the Trust s Accountability Framework and are subject to the escalation process. 11 Underspends 11.1 A budget is underspent when the expenditure that has been charged against the budget is less than the funds allocated to the budget. -Standard Financial Instructions Policy 5

7 12 Coding and Authorisation of Transactions 12.1 It is the responsibility of the budget holder in consultation with Finance staff where necessary to ensure that vouchers and invoices relating to budgets that they control are: Properly authorised Coded to the correct ledger code 12.2 The Executive Director of Finance/Deputy Chief Executive will maintain a register of officers who are authorised to charge expenditure against budgets in conjunction with budget holders. Refer to the Trust s Authorised Signatory Procedure It is the responsibility of budget holders to ensure that any changes to the authorised signatory list are notified to the Finance Directorate so that the lists may be updated to reflect these changes It is the responsibility of budget holders to ensure ESR is updated in a timely manner where staff are moved to/from their cost centre. This is actioned through the staff moves form on the Trust Intranet site and will also update the Trust s dashboards. 13 Forecasting 13.1 Forecasts are the expected future use of resources to deliver services based on the most up to date local knowledge and expertise of the budget holder and their business/workforce support staff Financial and workforce forecasts are produced on a monthly basis. Budget holders have a responsibility to support business/workforce staff to produce as accurate a forecast as possible. -Standard Financial Instructions Policy 6