Budget Monitoring Notes
BUDGET MONITORING NOTES
Prior to the preparation of any monitoring statement the following checks should be completed
If these checks are made and all necessary adjustments completed then the production of a monitoring statement should be relatively straightforward. However, as we are all aware, it is still possible to either not notice or fail to correct an error. The table below indicates points to notice when preparing any budget monitoring statement, the reason for their occurrence and whether or not any corrective action is necessary.
Items to notice / Reason / Comments/ActionNOTE 1.
Significant variations between committed and actual salary costs on all similar contracts. / Software/upgrade not current. / Check ScoMIS website to ensure there are no upgrades outstanding.
NOTE 2.
Cost centre structure lacks clarity. / Difficult to identify income and expenditure transactions against budgets. / Use a blank Monitor to determine adequacy of cost centre structure. Redesign to assist staff and governors
NOTE 3.
Incorrect individual staff contract commitments. / Database for contract duration, grade, hours worked or superannuation status incorrect. / View individual salary projections in FMS to check variations. Make adjustments within Personnel Module. Run Integrator to update FMS.
If appropriate notify Payroll of contract changes.
NOTE 4.
Unallocated or Over Allocated amounts as shown on the Fund Summary page of the Monitoring Statement. / Under the original budget column this figure should be equivalent to the contingency set when the budget was agreed by governors.
Under the current budget column this figure should be the difference between the current income budget allocations and the current expenditure budget allocations which may or may not be the same as the original amount. / No action necessary except possibly to explain to governors.
NOTE 5.
An amount showing against Fund Allocation. / Budget incorrectly assigned to Fund instead of Income and Expenditure. / Delete amount shown against Fund Allocation
Items to notice / Reason / Comments/Action
NOTE 6.
No original budget entry against cost centres on the Monitor Statement. / Budget has not been fixed. / Once the budget has been agreed by governors it should be fixed within FMS6. If a decision to change any budget allocations is then made during the year then governors can see any variations between original and current budgets.
All adjustments to budget allocations should be made in accordance with the School Finance Policy and fully documented.
Note 7.
Local & central ledger/budget details do not agree. / Reconciliation not undertaken or completed. / Potential for decisions based on inaccurate data.
Match latest transaction reports. Evidence by comparison between FMS Summary Trial Balance and monthly FINEST report from the Authority.
NOTE 8a.
Carry forward (RETAINED EARNINGS) showing zero. / FMS set up incorrectly. (Unless c/fwd is zero – this would be very rare) / Ensure that the carry forward is included within budget allocations and adjust FMS for the following year.
Items to notice / Reason / Comments/Action
NOTE 8b.
Carry forward (RETAINED EARNINGS) incorrect. / Previous year not reconciled to LA records. / If before final closedown of previous year amend FMS6 to ensure correct carry forward figure against new year ledger code RETAIN. Any adjustments required should be completed by means of a direct central payment/receipt.
If after final closedown of previous year need to adjust FMS6 accordingly and reflect the correct carry forward either by
a)setting up a cost centre for the difference between the actual and the figure identified on the monitor statement, or
b)revise the school budget share income cost centre by the difference.
NOTE 9.
Available cost centre balances differ from expected level. / Unnecessary commitments remain within staffing, orders, invoices and income. / Review validity of outstanding commitments.
Check following reports:
Orders – Reports, Purchase Orders (choose outstanding orders)
Invoices –Central, Manual reconciliation (change to date order)
Staffing –Personnel Links, Salary Projections (Highlight each Cost Centre and View Details)
Income – Focus, Central Manual Reconciliation
Items to notice / Reason / Comments/Action
NOTE 10.
Significant variations on income cost centres. / Original budget allocation incorrect.
Income entries posted to incorrect cost centres, including, expenditure ones.
Planned income not recorded. / Refer to original budget paper and if variation is genuine and budget was set up incorrectly explain to governors and, with their agreement, revise current budget.
If variation is not genuine need to correct, either within FMS6 or on monitor, and complete a revised monitor.
Adjust within FMS6 by completing journal entries and re-run monitor.
Record planned income and include notes on any assumptions made.
Items to notice / Reason / Comments/Action
NOTE 11.
Significant variations on Staffing Cost Centres. / Original budget allocation incorrect.
Personnel records incorrect and therefore, commitment in FMS6.
Staff changes agreed with governors since setting original budget not reflected in revised budget allocations.
High or low level of teaching staff sickness resulting in significant variation on the Supply budget.
High level of teaching staff sickness covered by temporary contracts.
Where a separate cost centre exists for supply cover for training/staff development. / Refer to original budget papers and if variation is genuine and budget was set up incorrectly then explain to governors and revise, with their agreement, current budget allocation.
Revise personnel within SIMS, run Integrator and complete a revised monitor.
Revise current budget in line with staffing changes agreed by governors.
Enter realistic amount of expenditure in the planned expenditure column and explain with notes the reasons for any variation from current budget.
Revise budget, if necessary.
Take steps, if possible, to minimise any overspend.
Revise current budget allocation with governors agreement
Any projected overspend should relate to either supply for training agreed after the budget was set or supply for centrally funded courses where additional income should have been received, probably under additional standards funds.
If the forecast spend is correct the current budget should be adjusted.
Items to notice / Reason / Comments/Action
NOTE 12.
Significant variations on non-staffing Cost Centres / Original budget allocation incorrect
Expenditure posted to incorrect cost centres.
Planned expenditure not recorded.
Expenditure less or more than anticipated / Refer to original budget papers and if variation is genuine and budget was set up incorrectly then explain to governors and, with their agreement, revise current budget.
If variation is not genuine need to correct, either within FMS or on Monitor, and complete a revised monitor.
Adjust within FMS6 and re-run monitor.
Record planned expenditure and include notes on any assumptions made.
Explain as a note and suggest to governors revising the current budget.
NOTE 13.
No explanation for planned expenditure /income, or variations on non-staffing cost centres / Notes not included with monitor statement. / Include detailed notes with monitor statement to explain contents.
If notes are saved as part of the monitor then they will be available when examining the monitor in the future.
Notes are essential in the compiling of a good monitor statement.
NOTE 14.
Cost centres with income and/or expenditure but with no budget. / Self financing cost centre e.g. school visits.
Income/expenditure posted to incorrect cost centre. / Record planned income/expenditure to balance budget to zero. If you think that it will over/under spend then do not balance to zero and explain with a note to governors the reason why.
Transfer to correct cost centre within FMS6 and re - run monitor.
Items to notice / Reason / Comments/Action
NOTE 15.
All cost centres showing zero variations. / Auto key used by Secondary Schools.
Full spend assumed on all expenditure budgets and the assumption that all income budgeted for will be received by Primary Schools. / Only reflect in planned expenditure or income columns the amount you anticipate spending/receiving. Do not automatically assume a full spend. This may lead to shocks later in the year and you may find your carry forward subject to capping.
NOTE 16.
Projected year-end balance significantly different to previous monitor / Increases/decreases in income and/or expenditure that were not known when previous monitor was completed.
Appointment of additional or loss of staff since previous monitor. / Completion of comparison report similar to Appendix A which can be typed on a separate sheet and attached to the Monitor, or Appendix B which can be typed and saved on the Monitor itself.
Appendix A
For those monitors that indicate a significant difference in the year end position compared to the previous one an explanation of the difference would prove useful both to staff as a tool for revision of spending plans and to governors as an aid to understanding why variances arise.
A simple reconciliation of the difference between the two forecast year end positions could be presented in the following way.
Comparison of Monitor of 1st November 2006 with that of 20th January 2007.
Monitor of 01/11/2006 / Monitor of 20/01/2007 / Variation£ / £ / £ / £ / £
Surplus from previous year / 20,000 / 20,000
Income Budgets
Income / 1,000,000 / 1,030,000 / (i) / 30,000
1,020,000 / 1,050,000
Expenditure Budgets
Staffing / 880,000 / 890,000 / (ii) / 10,000
Curriculum / 30,000 / 33,000 / (iii) / 3,000
Administration / 10,000 / 10,000
Energy / 30,000 / 30,000
Services / 50,000 / 50,000
Premises / 28,000 / 1,028,000 / 30,000 / 1,043,000 / (iv) / 2,000
Forecast Surplus(+)/Deficit(-) / -8,000 / 7,000 / 15,000
Notes
(i) Additional income received since the last Monitor includes £15,000 SEN funding, £10,000
Standards Funds for Personalised Learning and £3,000 E - Learning Credits.
(ii) Additional staffing costs £10,000 provide for additional LSA support for SEN.
(iii) Increase in curriculum spend reflects the E – Learning Credits allocation.
(iv) Increased caretaking costs.
Row titles, Income, Staffing and so on will differ from school to school and should reflect the level 1 headings within your monitor statement.
Figures should be forecast income/expenditure to the year end and NOT budget allocations.
The notes on the summary only explain reasons for significant variations in the level 1 headings as more detailed notes on individual cost centres/budget lines should be contained within the monitor.
Whilst this summary would usually only be completed for monitor statements that show significant variations there is no reason why it cannot be applied to any monitor.
Appendix B
For those monitors that indicate a significant difference in the year end position compared to the previous one an explanation of the difference would prove useful both to staff as a tool for revision of spending plans and to governors as an aid to understanding why variances arise.
A simple reconciliation of the difference between the two forecast year end positions could be presented in the following way.
Balance per Monitor of 30/11/06£23256 surplus
Add
Increased Income/Reduced Expenditure
Income Budgets 6,344
Premises Budgets 1,200 6544
£30,800
Less
Reduced Income/Increased Expenditure
Staffing Budgets 7,345
Curriculum1,100
Administration Budgets 1,000
Contracted Services 80010245
Balance on current Monitor 01/01/0720555 surplus
Row titles, Income, Staffing and so on will differ from school to school and should reflect the level 1 headings within your monitor statement.
Figures should be forecast income/expenditure to the year end and NOT budget allocations.
The notes on the summary only explain reasons for significant variations in the level 1 headings as more detailed notes on individual cost centres/budget lines should be contained within the monitor.
Whilst this summary would usually only be completed for monitor statements that show significant variations there is no reason why it cannot be applied to any monitor