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Finance Training for Budget

Holders 2011/12

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Programme Introduction

Budget Management Procurement

Break

Payments

Counter Fraud

Close

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Purpose of Budgeting (1)

PLANNING• Involves managers in planning future activities in detail

AID COMMUNICATION• Senior management briefing front-line management and

staff.

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Purpose of Budgeting (2)

CO-ORDINATION• Levels of support services provided

• Senior management can get an overview

• Goal congruence, dysfunctional behaviour

MOTIVATION• Challenge

• Encourage continual innovation and improvement

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Purpose of Budgeting (3)

ASSESSING PERFORMANCE• Can be useful to assess performance in financial aspects

of a manager’s role

CONTROL• Differences require explanation and understanding

• Management by exception, concentrate on the significant deviations

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Budget Reporting

Summary Report Cost Centre Report Nominal Roll Timeliness Review and Feedback

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Budget Reports (1)

Comparison of budget v actual income & expenditure

Data from various sources:Payroll systemSales LedgerPurchase LedgerCashiersSuppliesAccruals

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Budget Reports (2)

The budget report contains :-

Annual Pay, Non pay & Income budget and budgeted WTE

Year to date budget

Actual expenditure for the year to date

Variances relating to the year to date

Last Months Variance

Monthly actual expenditure

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Period: 01-2012

Submitted: 04-MAY-11 14:59:19WTE WTE WTE Annual YTD YTD YTD Last Mnth This Mnth

Cost Centre=1111 (Adult - County) Budget Actual Variance Budget Budget Actual Variance Variance Actual

PAY

C3CX ADMIN & CLERICAL - BAND 3 0000 (1.92) (1.00) 0.92 (43,262) (3,605) (1,882) 1,723 3,071 (1,882)C4CX ADMIN & CLERICAL - BAND 4 0000 (1.00) (1.00) 0.00 (26,313) (2,193) (2,127) 66 (442) (2,127)CXAX ADMIN & CLERICAL - AGENCY 0000 0.00 0.00 0.00 0 0 0 0 (2,725) 0 N6CX NURSE - BAND 6 0000 (2.00) (2.00) 0.00 (79,767) (6,647) (6,407) 240 (2,859) (6,407)N7CX NURSE - BAND 7 0000 (1.00) (1.00) 0.00 (48,918) (4,077) (4,101) (24) (3,770) (4,101)T6CX OCCUPATIONAL THERAPIST - BAND 6 0000 (0.83) (0.83) 0.00 (34,584) (2,882) (2,885) (3) 914 (2,885)

PAY TOTAL (6.75) (5.83) 0.92 (232,844) (19,404) (17,402) 2,002 (5,811) (17,402)

NON PAY

6390 Cleaning Services 0000 0.00 0.00 0.00 (2,833) (236) 0 236 (191) 0 6510 Books, Journals & Subscription 0000 0.00 0.00 0.00 (243) (20) 0 20 243 0 6516 Printing & Stationery 0000 0.00 0.00 0.00 (1,000) (83) 0 83 (1,396) 0 6541 Postage & Carriage 0000 0.00 0.00 0.00 (371) (31) 0 31 (24) 0 6564 Mobile Telephone Call charges 0000 0.00 0.00 0.00 (251) (21) 0 21 (182) 0 6574 Telephone equipment 0000 0.00 0.00 0.00 (3,774) (315) (187) 128 442 (187)6653 Leased Cars 0000 0.00 0.00 0.00 (1,200) (100) (50) 50 (9) (50)6659 Travel & Subsistence 0000 0.00 0.00 0.00 (4,000) (333) (175) 158 (10) (175)6860 Electricity 0000 0.00 0.00 0.00 (1,177) (98) (321) (223) 752 (321)6861 Gas 0000 0.00 0.00 0.00 (1,832) (153) (691) (538) (1,017) (691)6869 Water Rates 0000 0.00 0.00 0.00 (600) (50) 0 50 (1,759) 0 7022 Rates 0000 0.00 0.00 0.00 (5,214) (435) (435) 0 350 (435)7025 Rent 0000 0.00 0.00 0.00 (19,500) (1,625) 0 1,625 0 0

NON PAY TOTAL 0.00 0.00 0.00 (41,995) (3,500) (1,859) 1,641 (2,801) (1,859)

TOTAL EXPENDITURE (6.75) (5.83) 0.92 (274,839) (22,904) (19,261) 3,643 (8,612) (19,261)

INCOME

8358 Misc Income 0000 0.00 0.00 0.00 0 0 0 0 (7,360) 0

INCOME TOTAL 0.00 0.00 0.00 0 0 0 0 (7,360) 0

GRAND TOTAL (6.75) (5.83) 0.92 (274,839) (22,904) (19,261) 3,643 (15,972) (19,261)

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Pay Costs - makeup

PaySalariesOvertimeEnhancementsBank & Agency

costsEmployers on

costs:-National InsuranceSuperannuation

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NOMINAL ROLL - Month 1 2011/12 Adult County

Cost Centre

Expense Number

Assignment Number

Position Number Payscale

Increment Date Full Name

WTE Contracted

WTE Worked

Gross Cost

OT Hours Paid SUM

OT Hours Worked SUM

Enhanced Hours Paid SUM

Enhanced Hours Worked SUM

1111 C3CX 1234567 12345 XN03:8 1-Oct-05 Cole, Mrs. Cheryl 1.00 1.00 1882.10 0.00 0.00 0.00 0.00C3CX Total 1.00 1.00 1882.10 0.00 0.00 0.00 0.00

1111 C4CX 1234568 12346 XN04:8 1-Oct-06 Stewart, Mrs. Moria 0.70 0.80 1716.68 0.00 0.00 0.00 0.001111 C4CX 1234569 12346 XN04:4 2-Feb-12 Thatcher, Mrs. Margaret 0.20 0.20 410.32 0.00 0.00 0.00 0.00

C4CX Total 0.90 1.00 2127.00 0.00 0.00 0.00 0.001111 N6CX 1234570 12347 XR06:10 27-Jun-10 Clapton, Mr. Eric 1.00 1.00 3575.52 0.00 0.00 0.00 0.001111 N6CX 1234571 12347 XR06:10 28-Apr-10 Croper, Miss Hayley 1.00 1.00 2831.48 0.00 0.00 0.00 0.00

N6CX Total 2.00 2.00 6407.00 0.00 0.00 0.00 0.001111 N7CX 1234572 12348 XR07:8 1-Nov-11 Barlow, Mr. Ken 1.00 1.00 4101.00 0.00 0.00 0.00 0.00

N7CX Total 1.00 1.00 4101.00 0.00 0.00 0.00 0.001111 T6CX 1234573 12349 XR06:10 1-Oct-05 Middleton, Ms. Pippa 0.83 0.83 2885.10 0.00 0.00 0.00 0.00

T6CX Total 0.83 0.83 2885.10 0.00 0.00 0.00 0.001111 7270 1234573 12349 XR06:10 1-Oct-05 Middleton, Ms. Pippa 50.00 0.00 0.00 0.00 0.00

7270 Total 0.00 0.00 50.00 0.00 0.00 0.00 0.001111 7288 1234570 12347 XR07:8 1-Nov-11 Clapton, Mr. Eric 120.00 0.00 0.00 0.00 0.001111 7288 1234572 12348 XR03:7 1-Oct-08 Barlow, Mr. Ken 55.00 0.00 0.00 0.00 0.00

7288 Total 0.00 0.00 175.00 0.00 0.00 0.00 0.00

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Accruals and Prepayments

Manual adjustments for items not generated from source accounting systems

Examples:

• Income not yet invoiced for services provided• Invoices presented but not yet paid• Advanced payments

BUTRequires budget holders to work closely with Finance colleagues

to ensure completeness

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Finance codes (1)

The finance code is a 12 digit code made up as follows:

First four characters are the Cost CentreSecond four Characters are the Subjective Code Third four characters are the Analysis Code

Cost centre code is unique to individual budget Subjective code is universal across Trust Analysis code is universal across Trust

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Finance codes (2)

The Cost Centre code should not be shared

It is imperative that the correct Subjective code is used related to the goods or service

The Analysis code gives the opportunity to analyse budgets further e.g. Non Recurrent budgets, CIPs, Recharges

Above all it is important that the correct code is used

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Improving Efficiency

Requirement for the Trust to deliver ongoing recurrent efficiencies to address:- Negative Growth Internal Cost Pressures e.g. incremental drift

and Drugs pressures Support future Developments Strengthen financial viability

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Possible Areas for Payroll Savings

Skill Mix

Review shift patterns (remove overlap, overtime payments)

Consider alternatives to current practices

Request and act on suggestions from staff

Embrace Lean methodology

Reduce time lost to sickness and absenteeism

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Possible areas for Non Pay Savings

Record Commitments

Stock

Bulk purchases

Minimise the use of goods and services

Make good use of assets

Improving income generation

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Budget Holder Issues

Budget setting for new financial year Identification of savings Savings targets (Cost Improvement Programme) Costing of new developments Identification of cost pressures (eg technology

advances, clinical practice, incremental drift) Forecasting year end positions Recovery plans

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Accessing Reports (1)

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Accessing Reports (2)

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Accessing Reports (3)

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Budget Exercise (1)Annual budget

Planned budget to end of month 9

Actual expenditure to end of month 9

Budget variance at end of month 9

£ £ £ £

Pay costs:

Nursing and care staff salaries 102,000 76,500 82,000 (5,500)

Technical staff salaries 30,000 22,500 18,000 4,500

Non pay costs:

Drugs and dressings 36,000 27,000 28,800 (1,800)

Physiotherapy and occupational therapy supplies 28,000 21,000 23,500 (2,500)

Cleaning 10,000 7,500 7,500 -

Building maintenance (including heat and light) 15,000 11,250 11,250 -

Administration costs 20,000 15,000 15,000 -

Total costs: 241,000 180,750 186,050 (5,300)

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Budget Exercise (2)

1. What is the total annual budget expenditure 2. Which is the single largest category of

expenditure 3. Which of the variances do you believe needs

further investigation 4. What actions would you take to address any

overspends

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Standards in Business

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Code of Business Conduct A revised Code of Business Conduct for Trust Staff was approved by the Trust

Board 29 October 2009. It is intended to make staff aware of the Trust’s expectations of their business conduct and behaviour.

Guidance is provided for dealing with:• Gifts – no more than £25 (as item or combination of items)• Hospitality – treated same as gifts in terms of benefit received• Declaration of Interests – when and how to do this (especially for contracts)• Maintaining Confidentiality• Commercial sponsorship for commercial courses and conferences• Outside employment - guidance• Private Practice – what is expected• Relationships with Pharmaceutical Industry and other commercial interests• Guidance on dealing with fraud

Flowcharts to assist declaration decisions, and useful guidance, and forms to complete are provided – and who to contact if not sure!

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Process for Registering Offers of

Gifts, Hospitality and Sponsorship Complete a ‘Registration of Offers of Gifts, Hospitality &

Sponsorship Form’, (Appendix A of Code), including whether the offer was accepted or declined

Form to be reviewed and signed by Line Manager, and a copy retained in employee’s personal file

Local Register Holder to receive and record onto Local Register.

(Local Register will then be sent quarterly to Chief Executive’s Office.)

Submit form to Line Manager

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Standing Orders and Standing Financial Instructions

Revised Standing Orders and Standing Financial Instructions were approved by the Trust Board 26 November 2009. They replace the previous version approved by the Trust Board in October 2007.

The two documents together are the Trust’s financial governance framework for all those involved in financial decision making and with powers of expenditure.

The documents are intended to provide a pragmatic, flexible, robust and transparent set of rules for discharging of our public funds for the benefits of patients and carers.

Key changes for October 2009 were: Accuracy amendments eg changes of job titles Reflecting changes to any policy updates referenced Improved clarity for Trust Board reserved powers eg approval levels for special

payments, business planning Reflecting governance developments eg wider remit of Audit committee Revised budget expenditure limits and authorities for spend

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Scheme of Delegation

The Trust Scheme of Delegation is a detailed list of what the board can decide on who the board empowers to take actions or make decisions, examples include:-• Approving of Standing Orders • Approving Budgets • Approving business cases for capital investment• Receiving and approving annual reports & accounts • Specific delegated powers to budget holders include – • No overspend or reduction in income is incurred within the prior consent

of the Board • Approved budget is not used for anything else than that specified • No permanent employees are appointed other than those provided for in

available resources and within establishment

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Charitable Funds

The Trust has a number of Charitable funds hosted by Leicestershire County & Rutland PCT.These funds can be used to supply benefits to patients and staff if the criteria and authorisation procedures are followed correctly.For more information contact your Service Manager or Andy Morrell (who runs the funds on LPT’s account) on tel. no. 0116 295 7569 or E-mail andy.morrell@lcrpct.nhs.uk

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Future Awareness

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LPT Finances: The Future

Continue to deliver financial targets whilst improving / delivering the 2012 vision and beyond

Long Term Financial Model (LTFM) shows – EBITDA / Cash / Capex

Economic forecasts show negative income uplifts from Commissioners from 2011/12

Delivery of efficiency underpins entire financial strategy Requirement to earn additional new business Impact of merger with Community services

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Our Future Plans (LPT incl CHS)

Key metrics, LTFM version 15.1 (draft) – initial StHA plan position

LTFM V12.1 2011/12 2012/13 2013/14 2014/15 2015/16

£000 £000 £000 £000 £000

EBITDA £: 16,423 14,676 14,629 14,985 15,738

EBITDA %: 6.3% 5.9% 6.1% 6.4% 6.8%

Net I&E surplus: 6,364 4,726 4,689 5,027 5,913

Closing cash balance: 12,465 18,986 20,823 26,458 33,877

Financial Risk Rating: 4 4 4 4 4

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Service Line Reporting (1)

SLR Implementation:

Attribute all income to the operational ‘Service Lines’,

Allocate all costs to the ‘Service Lines’, Agree a method to apportion the overhead costs

across the Service Lines, Develop a reporting structure whereby the service

reports feed into the relevant business units

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Service Line Reporting (2)

Benefits of SLR

Greater understanding of Service performance Ability to target development funds Greater autonomy for the Services Identification of poor performing Services Additional information for the Management teams /

Trust Board

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Contact Details

For management accounts queries please contact your relevant finance manager or alternatively my details are:-

Ian Ferrin, Head of Business Unit Finance (Adult lead)

Tel. 0116 246 3579 e-mail: ian.ferrin@leicspart.nhs,uk