Transcript LPT context…

Finance Training
for Budget
Holders 2011/12
www.leicspt.nhs.uk
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 system
Sales Ledger
Purchase Ledger
Cashiers
Supplies
Accruals
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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 14:59:19
Cost
PAY
C3CX
C4CX
CXAX
N6CX
N7CX
T6CX
WTE
Budget
Centre=1111 (Adult - County)
ADMIN & CLERICAL - BAND 3
ADMIN & CLERICAL - BAND 4
ADMIN & CLERICAL - AGENCY
NURSE - BAND 6
NURSE - BAND 7
OCCUPATIONAL THERAPIST - BAND 6
0000
0000
0000
0000
0000
0000
WTE
Actual
WTE
Variance
Annual
Budget
YTD
Budget
(1.92)
(1.00)
0.00
(2.00)
(1.00)
(0.83)
(1.00)
(1.00)
0.00
(2.00)
(1.00)
(0.83)
0.92
0.00
0.00
0.00
0.00
0.00
(6.75)
(5.83)
0.92
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
(2,833)
(243)
(1,000)
(371)
(251)
(3,774)
(1,200)
(4,000)
(1,177)
(1,832)
(600)
(5,214)
(19,500)
(236)
(20)
(83)
(31)
(21)
(315)
(100)
(333)
(98)
(153)
(50)
(435)
(1,625)
0
0
0
0
0
(187)
(50)
(175)
(321)
(691)
0
(435)
0
0.00
0.00
0.00
(41,995)
(3,500)
(6.75)
(5.83)
0.92
(274,839) (22,904)
0.00
0.00
0.00
0
0
INCOME TOTAL
0.00
0.00
0.00
0
0
GRAND TOTAL
(6.75)
(5.83)
0.92
PAY TOTAL
NON PAY
6390 Cleaning Services
6510 Books, Journals & Subscription
6516 Printing & Stationery
6541 Postage & Carriage
6564 Mobile Telephone Call charges
6574 Telephone equipment
6653 Leased Cars
6659 Travel & Subsistence
6860 Electricity
6861 Gas
6869 Water Rates
7022 Rates
7025 Rent
0000
0000
0000
0000
0000
0000
0000
0000
0000
0000
0000
0000
0000
NON PAY TOTAL
TOTAL EXPENDITURE
INCOME
8358 Misc Income
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0000
(43,262)
(26,313)
0
(79,767)
(48,918)
(34,584)
YTD
Actual
YTD
Variance
Last Mnth
Variance
This Mnth
Actual
(3,605)
(2,193)
0
(6,647)
(4,077)
(2,882)
(1,882)
(2,127)
0
(6,407)
(4,101)
(2,885)
1,723
66
0
240
(24)
(3)
3,071
(442)
(2,725)
(2,859)
(3,770)
914
(1,882)
(2,127)
0
(6,407)
(4,101)
(2,885)
(232,844) (19,404)
(17,402)
2,002
(5,811)
(17,402)
236
20
83
31
21
128
50
158
(223)
(538)
50
0
1,625
(191)
243
(1,396)
(24)
(182)
442
(9)
(10)
752
(1,017)
(1,759)
350
0
0
0
0
0
0
(187)
(50)
(175)
(321)
(691)
0
(435)
0
(1,859)
1,641
(2,801)
(1,859)
(19,261)
3,643
(8,612)
(19,261)
0
0
(7,360)
0
0
0
(7,360)
0
3,643
(15,972)
(274,839) (22,904)
(19,261)
(19,261)
Pay Costs - makeup
Pay
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Salaries
Overtime
Enhancements
Bank & Agency costs
Employers on costs:National Insurance
Superannuation
NOMINAL ROLL - Month 1 2011/12 Adult County
Enhanced
OT Hours Enhanced Hours
Cost Expense Assignment Position
Increment
WTE
WTE
Gross OT Hours Worked Hours Worked
Centre Number Number Number Payscale Date
Full Name
Contracted Worked Cost
Paid SUM SUM
Paid SUM 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
0.00
C3CX 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
0.00
1111 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
0.00
1111 N6CX 1234570 12347 XR06:10 27-Jun-10 Clapton, Mr. Eric
1.00
1.00
3575.52 0.00
0.00
0.00
0.00
1111 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
0.00
1111 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
0.00
1111 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
0.00
1111 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
0.00
1111 7288 1234570 12347 XR07:8 1-Nov-11 Clapton, Mr. Eric
120.00 0.00
0.00
0.00
0.00
1111 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
BUT
Requires 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 Centre
Second 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



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
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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 Budget variance at
to end of month 9
end of month 9
£
£
£
£
102,000
76,500
82,000
(5,500)
30,000
22,500
18,000
4,500
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
-
241,000
180,750
186,050
(5,300)
Pay costs:
Nursing and care
staff salaries
Technical staff
salaries
Non pay costs:
Total costs:
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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
Submit form to Line Manager
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.)
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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
[email protected]
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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
EBITDA £:
EBITDA %:
Net I&E surplus:
Closing cash balance:
Financial Risk Rating:
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2011/12
2012/13
2013/14
2014/15
2015/16
£000
£000
£000
£000
£000
16,423
6.3%
6,364
12,465
4
14,676
5.9%
4,726
18,986
4
14,629
6.1%
4,689
20,823
4
14,985
6.4%
5,027
26,458
4
15,738
6.8%
5,913
33,877
4
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: [email protected],uk


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