Transcript Budget management - Swansea University

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An introduction to financial management of
Research Grants
• Overview of topics to be discussed:•
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Basic budget headings and terminology
Using the University’s financial and administrative systems
Brief guide to budget management
Monitoring, budget planning and reporting
Claims
Audit
Full Economic Costs and Overheads
Match Funding
Role of the DRI post award team
• What is the aim of project financial
management?
• To fully utilise the project budget on appropriate (eligible)
expenditure within a given timeframe
• To maintain a comprehensive and auditable trail of financial
records
• Hence:
• Project expenditure must be specific for the purposes defined in
the contract
• Project expenditure must be time limited
• Project expenditure must be evidenced
• You have the money…now what?
• Typically, the budget is outlined in the award letter or financial
annexe to a contract
• You will manage the award via a financial code
• A financial code will be issued by DRI and for a Research Project
will be either a “R” or a “V” code (usually for commercial
organisations with VAT considerations)
• For example, ELR 250 or EGV 300
• DRI also issue codes for Consultancies, e.g. JPC 250
• The basic components of a budget and
terminology
• Direct costs, Indirect costs and Income
• Direct costs: Usually Staff (N.I. and Superannuation included) and Non-staff
• Typically, Staff budgets are split across Academic, Administrators, RA’s,
Clerical and Technical Support
• Staff often includes Studentships
• Non-Staff; Equipment, Travel and Subsistence, Consumables, Office, Tuition
Fees, Other costs
• Indirect costs:- Overheads (fEC terms include directly allocated, Estates,
Infrastructure Technicians and Other Indirect)
• Grant income and other sources of income
• Example
• How does SU record the budget categories in
the Financial system?
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SU uses the QL financial system
The financial code consists of 3 main elements (3 levels)
Lv1 Alpha Lv2 Numeric Lv3 Numeric or EGR 250 300
Alpha cost centre (describing School/College) e.g. EGR – Engineering
Research
• Numeric cost centre e.g. 250
• Numeric budget analysis (sub-code) e.g. 300
• Hence, EGR250 300; described as Academic salaries for Engineering Research
project EGR250
• SU system for initiating payments of salary;
Staff costs:•
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PI or senior manager completes L6 request to HR
Costs on L6 are approved by DRI (Sirius amount checked against budget)
L6 formally approved
Appointment process implemented by HR
Salaries initiate payment on a monthly basis by charging financial code
Charge will include NI and Superannuation (if applicable)
Changes to staff costs usually take a lot of TIME – plan in advance!
Transfers of Staff time from other SU School budgets are possible and create
“slippage” on School salary budgets
• SU system for initiating payments of non staff
costs:• Purchases are typically processed via Purchase Order Processing by School
/College administrative staff
• Be aware of Financial Procedures and regulations in particular tendering
thresholds. You need to allow plenty of time for significant value (>£25,000)
purchases of goods and services
• Budget management – accounting for the
numbers
• Use a clearly structured and logical system that can be accessed
by others and is readily auditable
Basic budget flowchart
Establish budget
Profile
budget
Monitor
budget
Examine
variances and
take action
Audit may be
planned or
unannounced
Timely reports
to stakeholders
• Budget management – general advice
• Maintain a project file, award letter, Staff contracts, copies of
claims.
• Record the project financial information, e.g. spreadsheet
• Plan the budget profile
• Monitor the budget on a frequent basis (monthly or quarterly)
• Ensure spend is eligible, complies with Sponsor T & C
• Review the variances
• Prepare a regular financial Report to highlight variances
• Take corrective action where necessary (alert sponsor?)
• Understand SU financial FP&P, tender thresholds etc (EU rules)
• Budget management (general advice
continued)
• You may need to transfer budgets between major headings, i.e.
Staff to Equipment. This is known as a “virement”
• Rules of virement vary from sponsor to sponsor. Be aware of
rules regarding transfer of budgets and seek authority of
sponsor in writing where transfers are permissable
• Be aware that a foreign currency carries possible burden of
exchange rate differences
• Be aware that income flow is on schedule, i.e. debt risk from a
sponsor in financial difficulty
• Budget management - Planning the time-line
for expenditure
• Typically, projects extend for several months and often years
• It is vital to understand the budget “profile” over the project
lifetime
• It is good practice to define the profile at the outset
• Profiling can be done in broad time periods but ideally over all
major expenditure heads (example)
• Facilitates a comparison between “where you are” against
“where you want to be”
• In the jargon, a “variance” of actual against target (budget)
• Many sponsors require a report of actual spend against profile
• Budget management - accounting for
commitments
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Ensure that you allow for future “known” expenditure, called
“commitments”
• Salary commitments can usually be calculated to contract enddate and are stated on the L6 application
• Non-salary commitments are entered into the Purchase Order
Processing System (POP)
• Some items of expenditure are planned into the budget profile
but be alert to pipeline expenditure that is not identified in any
formal system – keep record on a budget spreadsheet
• What can you expect to see on a SU financial
report?
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Example of QL
ACP –Accounts payable, expenditure or cash-out
PAY – a payment to staff
CBK, SIV – Cash-in or income invoiced
GEN – a journal transfer, often correcting errors or allocating
expenditure to other codes
List of sub-codes
Monthly project report
• Typical claims process
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Will be set by the grant terms and conditions from the sponsor
Usually an invoice or specified grant claim form
Frequency – usually quarterly (e.g. ESF ) , 6 monthly or annual
May be governed by milestones or deliverables
Claim will be prepared by DRI with PI’s input
Based on actual spend on QL (and matched funding documentation for
relevant grants e.g. ESF and Framework 7
Claim will need to be signed/dated and copies will be held by DRI and the PI
Sponsor will make payments to SU based on the claim /invoice submitted
• Overheads, fEC and closures
• Typically, SU attempts to recover all overheads from the
application of fEC (full Economic Cost) to the project budget
• Be aware that such overheads are “returned” to the School and
are not readily accessible to you the PI. You will manage the
“direct elements” of the award via a financial code
• You cannot spend against this “indirect” budget heading.
Charges are processed automatically (usually monthly by DRI)
and the income is transferred to the School business plan
• Project under-spends (not otherwise returned to sponsor) are
considered as “overheads” and although passed to an account
(usually) ear-marked to the PI are regarded as School income
• Typical audit requirements
• Specified by the grant’s terms and conditions
• Independent review of the claims made ( usually annual)
• carried out by an external firm of accountants e.g. Price
Waterhouse Coopers ( PWC ) for DTI or ERDF sponsored projects
or sometimes by JIAU (Internal Audit )
• Will involve an audit visit and this will be co-ordinated by DRI
• The auditors will check the claims thoroughly and will check
back to original sources e.g Finance Dept for payslips or
timesheets kept by the PI
• Please take it seriously – it is a fact of life ! Potential payback
• Preparation and planning is the key – DRI will help !
• Match Funding
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What is it ? Where will I come across it ? Why do I need to do it
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Resources put into the project by the University or others
e.g. Existing staff time , Overheads , Donated equipment
Audit trail – e.g. signed timesheets , hourly rates , University
overhead calculation
To date mainly on EC funded projects e.g. ESF,ERDF , Framework
7
Grants not paid at 100% so this allows us to cover our direct
costs
• Support from DRI and School
• Usually there are up to 4 School administrators with access to
QL (current financial information)
• Each School has a dedicated member of staff in DRI who will be
able to provide the most up-to-date information, support and
guidance. Capacity limitations can affect level of service
• Please try to give DRI reasonable notice
• Major projects (>£500k) will typically involve DRI meeting with
PI on a quarterly basis
• You can find web advice and support here: http://www.swan.ac.uk/research_innovation
• If you enjoyed financial management of your
project…apply for more funding and do it all
again!
– Thank you for your time