Budget Manual

Version 2: April 2011

Authors: Mike Curtis, Victoria Smith and Gita Pullan

CONTENTS
SECTION 1: INTRODUCTION & BACKGROUND 1.1 1.2 Introduction Other Governance Arrangements PAGE 3 3

SECTION 2: DELEGATION OF AUTHORITY FROM THE BOARD 2.1 2.2 Types of Budget Holder Budgetary Limits 4 4

SECTION 3: SETTING BUDGETS 3.1 3.2 3.3 Aim Timetable Budget Calculation 6 6 6

SECTION 4: COMMITTING EXPENDITURE THE PROCESS AND SPECIFIC RULES 4.1 4.2 4.3 Pay Non-Pay Requisition of Goods and Services 10 10 12

SECTION 5: MANAGING BUDGETS: MONITORING & REPORTING 5.1 5.2 5.3 5.4 5.5 Cost Structure Monitoring Spend Reporting to the Board What to do if a Budget is Over or Under Spent Virements 13 14 15 16 18

SECTION 6: FURTHER INFORMATION AND HELP 6.1 6.2 Further Available Information Contacts 19 20

APPENDICES A B C Finance Leads Proforma for Virements Cost Centre Variance Report (Example) 21 22 23

SECTION 1: INTRODUCTION AND BACKGROUND

1.1 Introduction The aim of this manual is to provide guidance to all Delegated Budget Holders on their budget responsibilities and the parameters within which they must manage their budgets . This guidance is supplementary to the SHA Standing Orders, Standing Financial Instructions and detailed policies and procedures with which budget holders must also be familiar (see section 6). A budget is a specific sum of money allocated to carry out a specific plan for a specific period. It expresses plans and intentions in resource and financial terms, having regard for the quantity and quality of services to be given. The SHA has two types of budget: expenditure budgets and income budgets. Expenditure budgets are mainly funded from Department of Health Resource and Cash Limit allocations. Income budgets are used where the ability to spend relies on the receipt of cash income. No expenditure can take place without permission from the SHA Board. The Board gives permission to the Chief Executive through their delegated authority to commit expenditure up to: A maximum of 250,000 per single contract for Non-NHS Suppliers and over 1,000,000 payment to NHS organisations An SHA Board level agreed total expenditure budget The Board also allows the Chief Executive to delegate this authority to other SHA staff up to the limits above set by the Board. This delegation of spending authority to the Chief Executive is conditional on a comprehensive framework of control being put in place by the Director of Finance and others. The Corporate Governance Manual, which incorporates the Scheme of Delegation, Standing Orders and Standing Financial Instructions of the Authority is the overarching control framework but is supplemented by a range of supporting guidance, procedures and systems. This Budget Manual is part of this supplementary information and addresses the specific needs of budget holders committing expenditure on behalf of the Authority. 1.2 Other Governance Arrangements Budget holders are reminded of their responsibility in adhering to Standing Orders, Standing Financial Instructions, Scheme of Delegation, Financial Policies and the specific procedures for the ordering of goods and services as set out in the Procurement Manual.

SECTION 2: DELEGATION OF AUTHORITY FROM THE BOARD

2.1 Types of Budget Holder The Board delegates authority to budget holders. There are five levels of budget holder or manager:
1 2 3 4 5 Prime Budget Holder (Accountable Officer) Principle Delegated Budget Holder Delegated Budget Holder Budget Manager Authorised Signatory Chief Executive eg Executive Directors/Hosted Programme Directors eg Associate Directors/Post Graduate Dean/Senior Managers eg Senior Managers/Commissioning Managers Managers/Business Support Managers

The Chief Executive (as Accountable Officer) is the Prime Budget Holder for all the Authoritys budgets. The Chief Executive will normally delegate the management of a budget to SHA Directors and Hosted Programme Directors according to the objectives of the budget. In these circumstances the Director is the Principal Delegated Budget Holder. Any delegation of budgets by the Chief Executive has to be supported by a financial control framework that gives a clear definition of responsibility for the control of expenditure, exercise of virement and limits on the authorisation of expenditure as per the signatory list. These areas are covered within this manual. In many circumstances it may be appropriate for Principal Delegated Budget Holders to further delegate budgets to operational managers as Delegated Budget Holders. The Principal Delegated Budget Holder will however remain accountable to the Chief Executive for these budgets. Delegated Budget Holders can further devolve authority to key staff (Budget Managers) to manage individual budgets and authorise spend within these budgets, up to the limit prescribed in the authorised signatory list. Budget managers can give authority to members of their team (Authorised Signatories) to authorise expenditure within their budget as per the authorised signatory list All staff employed in managing budgets are accountable for the delivery of required standards of budget management at all times. 2.2 Budgetary Limits The budgetary limit for a Budget Holder is the total value of operating budgets for which they are responsible; this determines how much each budget holder can spend.

Budget holders must work within their budgetary limit (at cost centre level). Each budget is split into a number of differing categories of spend (budget heads). A budget holder can exceed the budget limit (amount allocated) for an individual budget head, within the overall operating budget (cost centre), but only if they are able to correspondingly reduce expenditure on other budget heads. This will ensure a balanced position and is subject to the rules on virement (see also Section 5.5 on Virement). Delegated Budget Holders can only authorise expenditure in line with the authorised signatory list and the maximum value they have authority to act at.

SECTION 3: SETTING BUDGETS

3.1 Aim 3.1.1 Overall Objective and Outcome The overall objective is to have detailed budgets in place by beginning of each financial year (April) that are consistent with activity and business plans, and a medium term strategy, endorsed and owned by managers and approved by the Board. All spending plans must be underpinned by agreed contracts where appropriate e.g. the Learning and Development Agreement. Maximum contract values must not exceed the overall budget available. 3.1.2 Document Outputs The documented output will be a detailed and comprehensive activity and financial plan for each financial year. Detailed budgets, properly profiled over 12 months will then be uploaded to the ledger by early May in time for period 2 reports. 3.2 Timetable Budgets are set for each financial year (12 months from April to March). The timetable for 2011/12 and indicative timetable for 2012/13 are:
Task Rank spending priorities Analysis of spending and activity projections Outline spending plans first cut from budget holders Budget holder review Outline spending plans second cut Admin Budgets to SMT/Hosted budgets to programme Directors/MPET budgets to Workforce SMT Outline spending plans Board approval Director review and sign off Approval of NHS (LDA) contracts by the Board (over 1m) Detailed budgets in place (by cost centre and subjective code) Budgets in ledger Board approval of detailed budgets Annual Cycle Completion Date September October/November December December/January January January February February March Mid March End March/Early April March/April 28/01/2011 31/01/2011 01/02/2011 09/02/2011 01/03/2011 Mid March March/April 05/04/2011 27/01/2012 30/01/2012 07/02/2012 13/02/2012 06/03/2012 Mid March March/April 03/04/2012 17/12/2010 2011/12 Plan 2012/13 Plan 30/09/2011 14/11/2011 16/12/2011

3.3 Budget Calculation During the budget setting period the finance team will work with budget holders to prepare their budgets. The individual finance team members will file the budget working papers. The budget upload template will be completed for all areas of work where budgets have been set and kept in the working paper file. The SHA has two main categories of budget: revenue and capital. This manual deals mainly with the revenue budgets. Capital budgets are outlined below, however if a budget
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holder does have a capital budget then they should seek further guidance on setting and monitoring from the Corporate Finance Team. 3.3.1 Revenue Expenditure Budgets Revenue budgets cover the purchase of goods and services consumed during year. The total revenue budget will be divided into separate operating budgets: Pay Non Pay Expenditure Income Pay Pay budgets cover the cost of employing NHS personnel. Both the cost of staff employed and number employed are recorded in budgets. The numbers of staff employed are recorded as Whole Time Equivalents (WTE) (aka FTE). Each budget heading in the Pay budget will also have a funded establishment figure. The funded establishment is the maximum number of whole time equivalent posts, by grade, that have been approved by the Board. The Chief Executive has delegated the authority to agree additional staffing level to the Vacancy Control Group, chaired by the Director of Workforce and Education. The funded establishment will be reported in the Board report against actual paid. Non-Pay Expenditure Non-pay is the generic heading that covers all other expenditure. For the purposes of this manual all MPET training and education budgets and hosted budgets will be classed as non-pay (with the exception of direct pay costs). Income Income relates to cash income received by the SHA. An example of income may be where the SHA has seconded out an employee and needs to recover the cost of employing that individual. Secondment agreements need to be in place and the finance team informed. 3.3.2 Capital Capital expenditure should normally be funded from a capital budget (funded from capital resource limit). Capital expenditure is expenditure that generates an asset for the SHA and will exclude items bought for educational institutions, PCTs or Trusts. Capital expenditure costs: 1. Items of a value of 5,000 or above that have a life greater than 1 year. 2. Items that are bought as a group the value of each exceeding 250, but in total amount to 5,000; e.g. IT systems. Before the purchase of these items the budget holder must check with the Corporate Finance Department that the necessary capital funding is available. Items of capital may not be purchased from ordinary revenue budgets. On receipt of these items, the Corporate Finance Department will need to be informed in order that they can be added to the asset register we are obliged to maintain. Capital assets generate an annual capital charge to revenue, and an annual depreciation charge against the capital value.
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The SHA does not normally purchase capital assets, if this is being considered please seek advice from the Finance Directorate. There may however, be circumstances where the SHA is advising and/or sponsoring the purchase of assets for use by NHS Trusts or PCTs, as part of a regional strategy, but where the assets will be purchased and owned by an NHS Trust or PCT and the costs included in their accounts. For example, where the purchase of a programme of specific medical equipment is being considered and the SHA (or any of its hosted organisations) is providing advice on identifying the most appropriate provider and best value for money. In such circumstances, it is essential that advice is sought at the earliest opportunity through either the SHAs procurement service provider (Leeds Partnerships NHS Foundation Trust) or the Finance Directorate. No contractual commitment should be entered into without first seeking this advice. Similarly the Head of Corporate Accounts and Finance will need to be informed if an asset is to be disposed of. A pro-forma for this purpose will be sent to the relevant budget holders quarterly. Managers should seek guidance before an asset is disposed of. 3.3.3 Principles and Guidance When preparing budgets, budget holders must take the following principles and guidance into account. General Principles The annual budgets for the SHA are based on the organisations anticipated resources, risks and developments known at the time of budget setting. Budgets will originate from discussions with budget holders and the finance directorate. The discussion will usually centre around the following: o The existing budgetary position for the current year o Review changes within the directorate which have happened over the previous 12 months and the impact of these, if any, on budgets, e.g. staff grade changes, secondments, additional posts, contract changes with Universities etc o Changes anticipated over the next 12 month period. This will include planned changes (vacancies), funding changes, and any other known factors which could affect the directorate provided o The ability to achieve efficiency savings within existing budgets All budgets are considered and submitted for approval by the Yorkshire and the Humber Strategic Health Authority Board. Delegated budget holders will be notified of the budgets for the year as soon as possible after this meeting. Budget holders will sign off their establishment and budget for the year to complete the process. At this point budgets will be transferred onto the General Ledger System, from which budget reports can be produced. Guidance on Costing Spending Plans 1. All plans must contain a clear schedule of assumptions.
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2. Inflation/Pay and Prices: Budgets to be based at 2011/12 price base stating clearly the rate of price uplift assumed. Where the Department of Health has issued rates, these should be used where appropriate. Separate guidance to be issued. 3. Recurrent/Non-Recurrent: Costs need to be analysed into recurrent/contractually committed and non-recurrent (can be turned off or on). 4. Pay and Non-Pay: Costs need to be split between pay and non-pay. 5. Cost Drivers: Most costs should be supported by a clear indication of the cost driver and the rate, e.g. wte x salary, student x placement rate, doctor x salary payment. Provide a schedule of standard rates to be paid. 6. Output Activity Measure/What are we buying: Be able to express the plan in outputs as well as cost inputs e.g. x trained doctors. 7. Phasing: Final detailed budgets should be phased in line with activity. 8. Sector Specific Guidance: (a) (b) (c) (d) Non-medical education and training show split between current and future workforce. Postgraduate Medical and Dental Education show any differences in spending rates across the region. NMET, SIFT & MADEL build in contribution to overall workforce general management costs. All build in costs for specific accommodation and management services received from the SHA.

Guidance on Funding Assumptions 1. Initial budget proposals should use latest information provided by the Department of Health on allocations. 2. Final budgets must reconcile to SHA Resource Limit Control document. If no information has been provided, funding estimates should be used and explained. 3. Carry forward should only be included where it relates to specific projects that have slipped activity into 2011/12 and agreed with the Deputy Director of Finance. 4. Both Gross Costs and income should be shown separately within the plans. 5. Spending should be compared to funding, to the level of detail funding is provided by DH e.g. spending on SpRs should be compared to funding on SpRs. Any difference between spending and funding (up or down) will have to be justified. Manager and Stakeholder Engagement The plan and the strategy must be owned and endorsed by the responsible Budget Holder. The role of finance is to provide financial advice and options for the SHA to make informed spending decisions. In particular, cost driver data and assumptions must be validated and agreed with the budget holder.

SECTION 4: COMMITTING EXPENDITURE THE PROCESS AND SPECIFIC RULES

The following rules need to be adhered to when Delegated Budget Holders are committing expenditure on behalf of the SHA: 4.1 Pay Appointment of Staff The authority to appoint staff rests with the Executive Directors within their funded establishment/operating budget total, subject to any current Human Resources policy/guidance. An Establishment Control and Recruitment Request Form is completed by the appointing Manager, along with the electronic payroll form (SW1). The same procedure applies to proposed job grading changes SW2 (see separate HR guidelines for the arrangements of staff secondments). If a budget holder wishes to implement any changes to the funded establishment or recruit into a vacancy, the ECF request form is submitted to the Vacancy Control Group for approval, justifying the business case along with management saving targets and the funding source for this post. All the policies and procedure on recruitment and selection along with the relevant forms and the appointed officers responsible shown on the signatory list can be seen in Appendix C. Authorising Overtime Only Executive Directors can authorise overtime. Assistant Directors and Delegated Budget Holders are not able to authorise payment of overtime working, in compliance with the Human Resources policies adopted by the Board. Delegated Budget Holders must obtain Executive Director Authorisation and document the reasons for payment of additional hours to individuals where additional leave is not an option. Agenda for Change and V.S.M Contracts Payments to staff must comply with Agenda for Change or V.S.M. rules (as appropriate).

4.2 Non-Pay Spending on Public Money: Golden Rules Checklist The SHA has the following golden rules that must be followed by budget holders when committing expenditure. Full details of these are set out in the SHA Procurement Manual, and are summarised on the following page.

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Golden Rule 1 2 Affordability

Question

3 3.1

Is the spend within budget? (Does the spend require transfer of budget between lines? (virement) budget transfer rules must be followed) Authorisation Is the expenditure being committed within the delegated authority (requisition or payment) of the person committing it? Check authorised signatories list and levels if above 250,000 Board approval required. Procurement Process Followed: Procurement 1 Case of need/ business case Is the business need behind the spending proposal clear? This should normally be addressed at the budget setting stage. Budget holders need to able to assure themselves that the business need is still valid. No commitment should be given to a supplier(s) which would compromise the purchasing position of the SHA Is a detailed written specification in place, setting out precisely what is being purchased? (Quantity, outputs, timescale, responsibilities etc.) A requisition must be raised on the Oracle e-procurement system which should be correctly approved before being sent on to the SHA supplies services and a purchase order number obtained. This strengthens control of financial commitments and value for money (VFM). Is a competitive process being followed, in line with SHA competition rules? i.e. all purchases above 10,000 including suppliers covered by OGC up to 10k: written quote required (e-mail is ok) 10k-101,323 (37,000 Euros): 3 written quotes Over 101,323: tender process required (including EU where appropriate or Framework Agreement mini tender Over 250k: prior Board approval (plus normal tendering) Is an order or contract in place showing deliverables & costs and in line with standard NHS terms and conditions? Is it clear what evidence is required to show goods or services have been delivered to trigger payment? Does the spending proposal represent value for money? Could you demonstrate this to the SHA Board? Has specialist advice been obtained and followed?

3.2. Procurement 2 Confidentiality and Conduct 3.3 Procurement 3 Specification 3.4 Procurement 4 Requisition

3.5

Procurement 5 Competitive process followed: Any variation from this must be: a) approved by DoF b) explained to the Audit Committee

3.6 3.7 4 5

Procurement Contract Procurement 7 Delivery VFM Specialist Technical Advice Been Obtained e.g. IT, Estates, Procurement, Contractors, Finance, Legal

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4.3 Requisition of Goods and Services Delegated Budget Holders may requisition goods or services as per the Procurement Manual that can be found on the intranet at the following link: http://nww.yorksandhumber.nhs.uk/document.php?o=3773 Delegated Budget Holders may only authorise requisitions against those budget headings for which they are the budget holder. If a Delegated Budget Holder wishes to requisition an item from another Delegated Budget Holders budget then the requis ition must be authorised by the other Delegated Budget Holder. Expenditure must be coded to where it is incurred. This will inform the budget setting process for the subsequent year. Delegated Budget Holders must ensure that all requisitions have the appropriate financial code applied. If these code details are not completed then the purchase order may be delayed. Each Delegated Budget Holder will be issued with a list of financial codes applicable to their budgets. If a Delegated Budget Holder is unsure of the correct financial code or requires further information on their application, then their Management Accountant should be contacted in the first instance. Accurate financial coding is absolutely essential, since this determines against which budget head expenditure will be charged. The accuracy of expenditure reporting back to budget holders is therefore dependent upon the accuracy and completeness of financial coding at the outset.

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SECTION 5: MANAGING BUDGETS MONITORING AND REPORTING

5.1 Cost Structure Once budgets have been set actual costs (and income) will be posted onto the ledger and it is the delegated budget holders responsibility to monitor actual spend against budget. To ensure control over the budgets each operational budget will be classified and controlled according to its link with the organisational structure of the SHA and the purpose of the budget. As such it will be classed according to both its Cost Centre Operational Description (The Subjective Analysis) 5.1.1 Cost Centres Each individual budget line will be grouped by a Cost Centre which collects expenditure/income into a department or particular funding area. The cost centres will normally match the organisation decision making structure of the SHA. Currently cost centres are grouped into the following key areas: SHA Administration; Workforce Education and Training; and Hosted Organisations. In most cases there is a single Delegated Budget Holder for each cost centre, but in some cases responsibility is split across budget holders according to the specific budget line (see subjective analysis below). The Cost Centre Budget is the main unit of financial control. 5.1.2 Operational Budget Lines (The Subjective Analysis)

Main Subjective Within each cost centre there will be a number of budget lines or budget headings, representing the key areas of expenditure (e.g. travel, hospitality etc) within the operating budget. The budget headings are determined by the National Coding Chart of accounts structure and are called the subjective analysis. Analysis 1 Further codes called analysis 1 codes are used to provide extra details to the SHA that are not available within the national coding structure e.g. tuition costs or salary replacement costs. Analysis 2 Analysis 2 codes are used to group expenditure by supplier e.g. NHS bodies and educational institutions (e.g. University of Leeds, etc). This analysis is required for the annual accounts. The Coding System Each budget and each item of expenditure recorded against this is given a code according to: 1. Cost centre e.g. A40025 2. Subjective description e.g. AAAA 3. Analysis 1 e.g. 12345
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4. Organisation/Analysis 2 e.g. BBBBB For Example:

A40180 NPfIT 7310 Legal & Professional Fees C4111 SLA Costs 00RWY Calderdale/Huddersfield Trust

5.2 Monitoring of Spend Each Delegated Budget Holder will be supplied with a budget holder report every month, and they will also be able to inquire themselves on the system by using the PORTAL tool. The budget holder should be able to see his/her reports from the last day in the month (soft close). These reports will need to be looked at by the budget holder and any amendments or queries required to their particular cost centre needs to be informed to their management accountant by the 4th working day. Finance will ensure that these queries are completed and any amendments to the general ledger actioned, within 6 working days of the month end (hard close). The Management accountants will have a meeting with the budget holders and issue a final report to go through, taking into account all the amendments, and will issue a final report to the budget holders e.g. Junes statement will be distributed during July. No statements are prepared for April due to budget set up timing and the reversal of previous year-end creditors not being affected until May. If however budget holders need information relating to transactions in this period, they should contact the Deputy Director of Finance. Income and Expenditure details will consist of: Salaries and wages expenditure, based on actual payments through the payroll system. Income & Expenditure against other expenditure budgets, represented by: o o Actual payments made for goods/services during the period. Manual estimate of the cost of goods/services received during the period but where payments have not yet been made (accruals). These will include estimates for services only invoiced periodically, e.g. utilities and education contracts. Income from Invoices raised through the debtors system.

If a budget holder requires a more detailed analysis of Income and Expenditure, then they should contact the Management Accountant responsible for their area of work (see Appendix A). Finance Department quality standards will ensure that any such additional information requests will be addressed promptly. The annual budget for each budget head will be phased throughout the year, based on the expected pattern of expenditure as agreed with Delegated Budget Holders. This will, in the main, be on the basis of twelfths (e.g. for salaries and wages), but where appropriate as in the case of some Workforce and Hosted organisations contracts, then alternative phasing (e.g. quarterly ) can be applied.

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5.3 Reporting to the Board A summary of the reported position, including agreed management action, will be incorporated into the next report on the overall financial position of the Authority. Reports are prepared and reported monthly. Budget Holders will be accountable for significant variances and for implementing management action to address the imbalance. An example of the summary finance information reported to the Board is given below.
Description Staffing at month 7 Approved Establishment Actual (Avg) Year to Date: 7 months Budget to Date Exp to date Variance Forecast Year End Annual Budget Expenditure Variance

1. Administration 2. Training & Education 3. Hosted progs Cancer Screening NPfIT Other Hosted Programme Funding ESR Total hosted 4 Regional Projects Total - all

WTE 133 206

WTE 112 197

000 6,387 307,161

000 5,823 306,376

000 564 785

000 12,512 528,926

000 10,773 518,838

000 1,739 10,090

18 46 64 0 62 190 0 528

18 39 21 0 51 128 2 439

35,265 5,302 12,743 6,851 2,434 62,595 1,151 377,294

12,800 3,264 5,468 2 1,746 23,280 988 336,467

22,465 2,038 7,275 6,849 688 39,315 163 40,827

47,600 8,928 29,806 8,106 4,574 99,014 2,706 643,158

25,030 6,241 13,531 2 3,799 48,603 2,235 580,449

22,570 2,687 16,275 8,104 775 50,411 471 62,711

Each Finance Lead is responsible for collating all information from their budget holders and preparing reports for their area of responsibility, including analysis at Cost Centre level (see example in appendix C). The reports are then summarised into the categories above. In preparing the reports, the Finance Leads must consider all of the following factors: The Budget Does the budget equal the resource limit (from the Resource Limit Control Schedule)? If no, what is the reason? Is any of the resource limit not yet confirmed in the download? (See Anticipated Resources in Control Schedule). Is the funding at risk? What percentage of budget is profiled to this period and is this reasonable for this particular budget? Do budgets reconcile to contractual agreements (eg LDA, Universities, MPET, Cancer Screening)?

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How much of the budget is not included in contracts? 1. Amounts covered by contracts with University Sector, the NHS (LDA), and with other organisations 2. Amount still to be allocated to a university contract/LDA 3. Amount not managed under University contract/LDA 4. Total Annual Budget Is any of the cash income not secure and at risk? Is all anticipated income budgeted for?

Actual Expenditure Year to Date Does the reported year to date expenditure agree to the ledger? How much of the reported actual spend is estimated? (m) What are the bases of estimates? (confirm they are not matched to budget) Where accruals are based on contract/LDA value, do they reflect up to date contract activity? What are the main material accruals (list)? Based on the above are the estimates robust or risky? Year to Date Variances Has the year to date and forecast variance changed since last month? Which cost centres have the largest variances and if so why? Does expenditure to date seem reasonable? Is the budget profiled properly and in accordance with the flow of business? Has anything unexpected arisen in the month e.g. more expenditure? Procurement Is everything flowing correctly and are there any delays that need to be followed up or are there any issues? If a variance has arisen how we are going to report/deal with it i.e. is it a saving and if so recurrent/non-recurrent, or do we reprofile the budget in accordance with budget holder discussions, or due to timing/change in the year Forecast What percentage of total spend is still to happen? What is the average monthly spend forecast for the rest of the year? Is it greater than the rate of spend to date? Are you confident the forecast spend will happen? Is the forecast outturn consistent with Year to Date position? If no, what is the reason? What are the key risks/uncertainty to the reported forecast position and what is their value? How are the risks being managed? 5.4 What to do if a Budget is Over or Under Spent

Budget Overspends at Cost Centre Level Budgets and Cost Centres are at the heart of the system of financial control operated by the SHA. Authority to commit expenditure is limited to the cost centre budget allocated to the budget holder. This authority will have been exceeded if expenditure is in excess of the allocated cost centre budget and staff could face disciplinary action. Budget overspends at cost centre level can only occur with the written approval of the Principal Budget Holder and Director of Finance. A virement process has been put in
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place to manage budget transfers and provide budget holders with a degree of budgetary flexibility. Where a Delegated Budget Holder is forecasting a year-end overspend for an individual cost centre that can not be managed back into balance, then the reasons for this must be clarified in writing as soon as the problem is identified (through the monthly reports). The Delegated Budget Holder should initiate discussions with the Principal Delegated Budget Holder e.g. Director, and the Deputy Director of Finance in the first instance, who will then report back to the Director of Finance. The Director of Finance can then give consideration to the maintaining of the overall financial balance across the Authority during the year, and by year end. Budget Overspends at Subjective Line Item Level As stated above, Delegated Budget Holders do not have the authority to overspend their budget(s) at cost centre level. Overspendings on individual budget head(s) within a cost centre must be matched by at least corresponding underspends on other budget headings within the same cost centre by the year-end. At any time a budget head may be showing an under or over spend, but particular attention must be given to the forecast year-end position. In-Year Variances Variances during the year need to be fully understood, e.g. pattern of expenditure at variance from the budget phasing, in order that the underlying financial position can be determined and management action established to bring expenditure back into line with budgets. Managing Underspends at Cost Centre Level If a budget is forecast to be underspent, then the savings will be classified into two distinct categories: Fortuitous: These are savings which accrue without the budget holder taking any specific action, e.g. low take up of commissioned training places. Planned: These are savings which are the direct result of specific action taken by a budget holder.

Fortuitous savings will normally be vired to the Principal Budget Holder who may use these funds, for example, to correct an adverse budget position elsewhere or to meet emerging priorities. For planned savings, discussion by the management team will determine whether some or all of the savings should be retained by the budget holder in the current year, subject to virement rules. For example, clarification will be needed that any commitment is of a nonrecurrent nature and that the budget holder has clearly identified how and when savings will be released. See section 5.5 on virement. Notwithstanding these arrangements, the Principal Budget Holder has the right to request the use of any planned savings to correct an adverse budget position elsewhere within the Authority or in overall terms across the Authority. If a budget holder wishes to carry forward an underspend into the next financial year, then this should be included as part of the budget planning process. The ability of the SHA to carry forward underspent budgets is dependent on corresponding agreement by the Department of Health to carry forward the total SHA underspend.
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Where income is received by the SHA and it is for a specifically identified programme, which crosses financial years, the SHA may defer this income into the following year in line with accepted accounting principles. This income will then be available to meet commitments in the following financial year. The Chief Executive of the SHA has the responsibility to ensure that the Authority overall does not overspend. In order to achieve this, Delegated Budget Holders need to recognise their corporate responsibilities that underpin day to day budgetary control. 5.5 Virements

Virement (Transfer) Between Cost Centres A virement is an in-year budget transfer, reducing an approved budget no longer required and increasing a budget holders authority to commit expenditure in a different area. The rules and process that apply in the approval of budget virement are described below. Virement (in-year budget transfer) is not normally permitted: From non-pay to pay From non-recurrent to recurrent expenditure Where it would be in breach of the rules on earmarked funding arrangements Where the transfer would commit the SHA to additional recurrent funding in excess of affordable medium term financial plans Where the transfer would adversely impact upon a requirement to achieve a saving in order to produce an overall financial balance Virements for the SHA Admin Budgets, Transitional Budget and Hosted Budgets up to 500,000 have to be approved by the Director of Finance, with the exception of MPET funded budgets (Workforce Training and Development) for which Delegated Budget Holders may approve individual virement up to 100,000. MPET virements over 100,000 and up to 1,000,000 will need approval from Director of Workforce or Director of Finance. Any virements over the limits mentioned above will need to be approved by the Board. To obtain authorisation for the virement of resources between budgets, a virement approval budget transfer form has to be completed. This requires: The budget holder (or holders where the virement is between budgets managed by different Directors) to sign to signify agreement The form to be authorised by the relevant Director

The virement approval forms are kept centrally with the Systems Controller in the Corporate Finance Team. Virement Within a Single Cost Centre A virement form also need to be completed where resources are transferred between individual lines within a single cost centre, unless the transfer is from pay to non-pay, or non-pay to pay (in which case establishment procedures must also be followed). These can be approved by the Budget Holder.
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SECTION 6: FURTHER INFORMATION AND HELP

6.1 Further Available Information

Essential information for Budget Holders can be found as per the table below.
ITEM Standing Orders Standing Financial Instructions Scheme of Delegation Authorised Signatory List Pay Authorised Signatory Non-Pay Financial Codes Listing Procedure Notes, including: Cash Forecasting cash Drawing down cash Managing Cash to Month End Petty Cash Local Banking Accounts Payable Non PO Approval PO Approval Raising Payment with no invoice Purchasing Card Authorising Payment Runs Accounts Receivable Raising Sales Orders Reviewing Aged Debt General Ledger Journals Budget journal upload Account Enquiries Reports Payroll Payroll File Release Payroll Error Suspense Clearance Electronic SW Forms VAT VAT Procedures Procurement Procedures Including Golden Rules
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LOCATION G:\New Yorks and Humber SHA Business\Corporate Governance - Info For Staff G:\New Yorks and Humber SHA Business\Payroll Forms & Procedures\Signatory list H:\Corporate Finance\Authorised Signatories for Y&H\Y&H Signatory 08-09 H:\Corporate Finance\Chart of Accounts Q32\Chart of Accounts 2008-09

H:\Corporate Finance\Procedure Notes

General Resource Control FIMS Reporting Board Reporting Quarterly Debtor / Creditor Exercise Quarterly I&E Agreements Balance Sheet Reconciliations Workforce Salary Replacement Costs Education Commissioning Data Flows Deanery Financial Procedures Spending Limits (the authorised signatory list is updated monthly) Lists of Approved Firms and Addition of Suppliers H:\Corporate Finance\Authorised Signatories for Y&H\Y&H Signatory 10-11\ xxx month Please contact our supplies department on 0113 295 3910

6.2

Contacts

The following people can be contacted for help and advice.

Name
Mike Curtis Victoria Smith Gita Pullan Ian Savory Duncan Butler Richard Wainwright Rob Jamison Tony Dudson Grace Jeffrey Simon Ndhlovu Fintan OShea Alison Hunt Judith Pummell Gaynor Clark Ken Shepherd David Escreet Caroline Garnham Louise Kemp Richard Swaine

Role
Deputy Director of Finance Head of Corporate Accounts and Systems Senior Management Accountant (Governance and Reporting) Financial Systems Controller Management Accountant (Admin) Finance Assistant Management Accountant (Hosted Budgets) Workforce Finance Lead (NMET & Workforce Admin) Senior Finance Manager (NMET & Workforce Admin) Finance & Commissioning Performance Manager (NMET & Workforce Admin) Finance Manager (NMET) Workforce Finance Lead (MADEL/SIFT) Senior Finance Manager (SY MADEL/SIFT/DIFT Senior Finance Manager (WYMADEL) Finance Manager (NEY MADEL) Finance Analyst (SIFT/DSIFT) Finance Assistant (SY MADEL & SIFT) Finance Assistant (WY & NEY MADEL) Finance Clerk (WY & NEY MADEL)

Email Address
Mike.Curtis@yorksandhumber.nhs.uk Victoria.Smith@yorksandhumber.nhs.uk Gita.Pullan@yorksandhumber.nhs.uk Ian.Savory@yorksandhumber.nhs.uk Duncan.Butler@yorksandhumber.nhs.uk Richard.Wainwright@yorksandhumber.nhs.uk Rob.Jamison@yorksandhumber.nhs.uk Tony.Dudson@yorksandhumber.nhs.uk Grace.Jeffrey@yorksandhumber.nhs.uk Simon.Ndhlovu@yorksandhumber.nhs.uk Fintan.OShea@yorksandhumber.nhs.uk Alison.Hunt@yorksandhumber.nhs.uk Judith.Pummell@yorksandhumber.nhs.uk Gaynor.Clark@yorkandhumber.nhs.uk Ken.Shepherd@yorksandhumber.nhs.uk David.Escreet@yorksandhumber.nhs.uk Caroline.garnham@yorksandhumber.nhs.uk l.kemp@yorshiredeanery.com R.Swaine@yorkshiredeanery.com 20

Appendix A Finance Leads: Workforce Budgets

Education Commissioning Workforce and Pay Modernisation Workforce Admin Undergraduate Medical Education Undergraduate Dental Education HYMS Research & Development Y&H Postgraduate Deanery South Yorkshire Locality Office South Yorkshire & East Midlands Dental Deanery Y&H Postgraduate Deanery West Yorkshire Locality Office Y&H Postgraduate Deanery North Yorkshire Senior Finance Manager NMET Senior Finance Manager NMET Senior Finance Manager NMET Senior Finance Manager SIFT Finance Analyst Senior Finance Manager DSIFT Finance Analyst Senior Finance Manager HYMS R&D Grace Jeffrey Grace Jeffrey Grace Jeffrey Judith Pummell David Escreet Judith Pummell David Escreet Judith Pummell

Senior Finance Manager SYLO MADEL Judith Pummell Senior Finance Manager SYLO MADEL Finance Manager -WYLO MADEL Finance Manager NEY MADEL Judith Pummell Gaynor Clark Ken Shepherd

Finance Leads: Admin Budgets

Office of the Chair Chief Executives Performance & Delivery Strategy and Systems Reform Finance & Investment Patient Care & Partnerships Communications & Public Relations Estates Reserves Management Accountant Admin Management Accountant Admin Management Accountant Admin Management Accountant Admin Management Accountant Admin Management Accountant Admin Management Accountant Admin Management Accountant Admin Management Accountant Admin Duncan Butler Duncan Butler Duncan Butler Duncan Butler Duncan Butler Duncan Butler Duncan Butler Duncan Butler Duncan Butler

Finance Leads: Hosted Budgets

Electronic Staff Records Cancer Screening Programmes National Programme for IT Commercial Procurement Collaborative Other Hosted Programmes Shared Services Centre Cash Management Ledger Management Audit Liaison/Guidance re SFIs/SFOs etc Payroll Liaison /VAT/Procurement Invoice Queries Management Accountant -ESR Management Accountant - Hosted Management Accountant - Hosted Management Accountant - Hosted Management Accountant - Hosted Head of Corporate Accounts & Systems Systems Controller Finance Team Head of Corporate Accounts & Systems Senior Management Accountant Finance Assistant Brian Fitzpatrick Trevor Hallat Rob Jamison Rob Jamison Rob Jamison Victoria Smith Ian Savory All Victoria Smith Gita Pullan Richard Wainwright

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Appendix B Budget Virement

VIREMENT

Ref: V

Recurrent/Non recurrent Amount '000s Admin Workforce Hosted

Financial Code From To

Description & Reason for Virement

Budget Manager:

Authorised by:.

Input by Finance Date Journal

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Appendix C Cost Centre Variance Report Example

Wte
Funded Worked Contracted Actual

Annual Budget

Budget

In Month Actual

Variance

Budget

Year to Date Actual

Variance

Budget Holder

Finance Manager

Explanation of YTD Variance Select from Drop Down Menu

Q00000 XXXXXXXXX Q00000 A40000 A40000 A40000 A40000 A40000 A40000 A40000 A40000 A40000 XXXXXXXXX Line 1 Line 2 Line 3 Line 4 Line 5 Line 6 Line 7 Line 8 Line 9 Total

0.00 0.00 0.00 0.00 0.00 0.00 0.10 0.00 0.00 0.10

0.00 0.00 0.00 0.00 0.00 0.00 0.10 0.00 1.00 1.10

0.00 0.00 0.00 0.00 0.00 0.00 0.10 0.00 1.00 1.10

0.00 0.00 0.00 0.00 0.00 0.00 0.10 0.00 1.00 1.10

16,219,161 8,673,341 4,674,592 396,979 3,250,052 985,200 314,000 3,424,366 2,009,134 39,946,825

1,363,264 722,778 389,549 33,081 271,837 82,099 26,166 285,363 167,427 3,341,564

1,346,614 722,779 389,400 33,200 284,517 90,458 20,281 285,300 176,406 3,348,955

-16,650 1 -149 119 12,680 8,359 -5,885 -63 8,979 7,391

14,855,898 7,950,555 4,285,039 363,891 2,978,207 903,089 287,826 3,138,993 1,841,697 36,605,195

14,867,564 7,950,555 4,284,300 364,000 2,918,583 907,127 324,528 3,138,300 1,869,788 36,624,745

11,666 0 -739 109 -59,624 4,038 36,702 -693 28,091 19,550

Name Name Name Name Name Name Name Name Name

Name Name Name Name Name Name Name Name Name

spend ahead of profile forecast b/e roundings roundings real under spend - will be used to offset higher spend ahead of profile forecast b/e real over spend - to be offset by under spend on roundings spend ahead of profile forecast small over spend

23