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Principles for the carry forward of unspent balances and access to project surpluses between financial years for professional services

Application of principles

These principles apply to non staff departmental budgets and to non earmarked project accounts which achieve a surplus only. For details of non earmarked project types please see Appendix 1 (see bottom of this page). The principles apply to the creation and subsequent spend from Reserve Accounts arising from the following:

• Net underspends on departmental non staff expenditure in core cost centres due to timing differences across financial years
• Net underspends on departmental non staff expenditure in core cost centres where specific requests are made by a department to spend funds in the following financial year on non capital items
• Net underspends on departmental non staff expenditure in core cost centres where specific requests are made by a department to spend funds in the following financial year on capital items (over the capitalisation value)
• The remaining net underspend on departmental non staff expenditure across Professional Services after the deduction of specific requests made by departments.  A percentage of which will be allocated to an ‘Investment Fund’ for the Registrar and Secretary to use at his discretion in the following financial year on Professional Services strategic projects or new cross departmental initiatives.  This is separate funding to the ‘Headroom Fund’ which, for example, may be used by the Registrar and Secretary to support unexpected expenditure requests or short term departmental resource issues
• Credit balances on non earmarked project accounts (total credit value after year- end adjustments and/or closure each 31 July)

These principles do not apply to unspent balances in departmental staff budgets.  If cost savings are achieved in a financial year and are recurrent in the forecast for the following year with the forecast being less than the current year budget, the cost reduction achieved will be considered as part of the budget setting process.  For example, during June/July 2010 when setting budgets for the 2010/11 financial year the original staff budget for 2009/10 was compared with the forecast for 2010/11. Departments which had achieved considerable cost reductions in the staff establishment from 2009/10 budget to the 2010/11 forecast received a savings target of 3% rather than 4% to reflect the cost savings already achieved.

 

Use of agreed carry forward amounts

Under spends on departmental non staff expenditure can be used for the following:

• Planned non staff expenditure arising due to timing differences across financial years
• Capital expenditure (amounts above the limit for capitalisation)
• Planned specific non staff expenditure such as equipment purchases

Credit balances on non earmarked project accounts can be used for the following:

• Planned non staff expenditure arising from timing differences across financial years
• To provide funding for specific initiatives that straddle a maximum of two financial years and not to act as a substitute for core expenditure when planning for future savings in recurrent departmental running costs
• Planned specific non staff expenditure such as equipment purchases

 

Principles

The following principles apply to all approved carry forward requests:

• The carry forward request must relate to planned specific non staff expenditure such as equipment purchases
• Amounts to be carried forward must be agreed in advance.  This will be on a case by case basis and a lower materiality limit may be applied
• Project account net surpluses will be collated at departmental level prior to a carry forward request by the HOD.  Indirect costs will be considered and should be reflected in the value of the carry forward request
• Any agreed amounts to be carried forward will be time bound (to be spent by the end of the following financial year) and an indication of amounts to be spent and timing will be required
• Underspends will only be considered for carry forward where they relate to non staff expenditure – underspends on staffing cannot be carried forward from one year to the next
• Carry forward will only be considered on a net basis i.e. if staff costs are overspent in the financial year these will be deducted from non staff unspent balances with the net amount only being available for consideration
• Any agreed amounts will be transferred to a specific departmental reserve.  The purpose of this reserve is to provide funding for specific non staff initiatives that straddle financial years not to act as a substitute for core expenditure when planning for future savings in recurrent departmental running costs
• The planned expenditure is subject to robust financial planning and must be included within the financial forecast approved by Council in July of each year.  Permitted expenditure from specific reserves will be notified as part of the annual budget setting process.  This is to ensure that total planned expenditure is affordable in the context of the University’s overall financial position
• All amounts included in the financial forecast will be subject to specific approval by the Director of Finance and the Registrar and Secretary
• The carry forward amount approved in the forecast is the maximum allowable.  The reserve adjustment will be actioned after each yearend and will reflect the carry forward value of either the actual value of underspends and project surpluses or the forecast amount
• The balances on specific reserve accounts and the planned drawdown will be presented as part of the quarterly financial reporting for Professional Services
• The balances on specific reserve accounts will be reviewed each quarter and at the end of each financial year.  Any balance remaining at the end of each financial year will be removed.  If a department is successful in gaining approval for the carry forward of unspent balances in consecutive years the same reserve account is to be used and the approved expenditure amount will be allocated to the specific reserve following Council approval of the financial forecast in July and the outcome of the year end process
• The value of departmental non staff underspends will be monitored over time and if underspends of a large value are consistently achieved in consecutive years the non staff resource requirement will be reviewed and may be adjusted as part of budget setting

Appendix 1

The principles cover the following non earmarked project types:
XC - Conference Accounts
XG - General Services Rendered
XO - Other
XS - Short Courses

 

Need help or more information

Who to contact
A Finance Manager supports Professional Services Departments with queries relating to departmental expenditure and budgets.