The Financial Planning Process
The University undertakes a financial planning process on an annual cycle. The purposes of financial planning are:
- to ensure that the University has the best chance of achieving its financial operating strategy
- to highlight what has to happen (in financial terms) to get the University from where it is now to where it wants to be in the future
- to understand the impact of internal and external factors that will affect the University’s finances
- to enable the University to forecast how much income it will generate and how much it can spend on different activities
- to meet an Office for Students requirement for a financial forecast to be provided annually
The financial planning process involves a large number of people from across the University. This includes staff in academic and professional service departments, the University Executive Board and Finance Committee members as well as staff in the Finance Department.
How Does the Financial Planning Process Work?
Each year the University reviews and updates its financial plan (or forecast). This covers the current year, to see if we are still on target to achieve what we thought we were going to, and the subsequent five financial years.
The financial forecast is a rolling six year plan that is reviewed and updated on an annual basis. This ensures that the forecast takes account of the latest information that may affect the University’s financial position in the future.
Financial forecasting follows on from the Planning Round, where academic departments plan their student number targets as well as a draft expenditure plan. Further information on the Planning Round can be found on the Planning and Insight web page.
The University also reviews financial performance for the current year on a quarterly basis as part of the report on the Quarterly Financial Results, and on a monthly basis for core academic areas.
The Stages of the Financial Planning Process
Who Makes the Decisions?
At the end of the day it is the University Council that approves the financial forecasts on the recommendation of Finance Committee. However, leading up to this point a number of individuals and committees have an input to the process.
- Financial Planning and Analysis (Finance) – co-ordinate the preparation of the financial plans (see below)
- Academic and Professional Service Departments – plan activity levels for future years incorporating business plans for new activities.
- Faculties – prepare individual forecasts for each department based on the information coming from the academic planning process and predictions of staff and non-staff costs.
- Planning and Insight – co-ordinate the academic planning exercise that feeds into the financial plans.
- Student Services – provide intelligence and advice on student number projections.
- Research Finance (Finance) – prepare a forecast of research income and expenditure for the whole University.
- Capital Projects (Finance) – ensure that latest intelligence on the capital programme is built into the plans.
- Financial Accountancy and Treasury Management (Finance) – prepare cash flow forecast, predictions of income from investments, debt charges and prepare balance sheet forecast and predictions of depreciation charges.
- University Executive Board (UEB) – makes decisions on the overall financial position and what actions need to be taken to manage income and expenditure. Decides level of overall faculty/professional service budgets.
- Senate Budget Committee – comments on the financial forecasts to Senate.
- Finance Committee – provides overall guidance to UEB on financial position and recommends forecasts to University Council (without this recommendation the Council would not approve the forecasts).
What Happens to the Financial Forecast after it Has Been Approved?
Once the financial forecast has been approved by the Finance Committee and University Council a copy is sent to the Office for Students (OfS). This is a requirement that is placed on the University and the return is made in the University’s Annual Monitoring Statement. The submission of this report gives the OfS the assurance that the University is being managed in a financially sound manner.
The financial forecast also forms the basis for the budgets set for each department. It identifies what the University can afford to spend based on the forecast level of income. The University Executive Board decides how much can be spent in the Faculties and the Professional Service areas. The budgets for Faculties are determined using the Process for Budget Allocation (PBA) and agreed by UEB. Within departments, budget allocations for activities and individuals are determined by the Head of Department.