Baverstock, Brian

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        2013 Financial Forecast Return Issue date:   Summary:   FAO:  5 July 2013  This document provides guidance for the completion of non-incorporated colleges’ FFR returns  Principals and directors of Scotland’s non-incorporated colleges Further information:   Contact: Wilma MacDonald Job title: Financial Analyst Department: Learning, Governance and Sustainability Tel: 0131 313 6565 Email: wmacdonald@sfc.ac.uk            Scottish Funding Council Apex 2 97 Haymarket Terrace Edinburgh EH12 5HD T 0131 313 6500 F 0131 313 6501 www.sfc.ac.uk 2 2013 Financial Forecast Return Guidance for completion Return must be provided by 31 August 2013 Introduction 1. As part of the SFC’s financial health monitoring framework, colleges are requested to provide a forecast out-turn for the current financial year (2012-13) and financial forecasts covering the next two years (2013-14 and 2014-15).   Key planning assumptions  2. When completing the return, colleges should base 2013-14 forecasts on the 2013-14 outcome agreements published on 17 June 2013.   3. The 2014-15 budget should be based on the 2013-14 funding allocations which are set out in the 2013-14 outcome agreements.  In light of the Scottish Government’s commitment to provide a floor in college funding of £522 million in 2013-14 and 2014-15, colleges should use a ‘flat cash’ planning assumption in relation to SFC grant (revenue and capital) and student support funding for the purposes of this return.  Also, for the purposes of this return only, colleges should budget for the same level of WSUMs as for 2013-14.  This is to ensure consistency across the sector, and does not represent any commitment on funding for 2014-15.   4. In the commentary document that should accompany the return, colleges should state the key underpinning assumptions applied to assist with our understanding of the forecasts. Pensions 5. For colleges that are using the ‘defined benefit’ treatment for one or more of their pension schemes, please enter the appropriate figures in note 10 on the ‘Additional Info’ sheet. 6. The assumptions made regarding the movements in the pension scheme asset/liability should be recorded in the space provided under note 10; the assumptions made regarding the impact on the income and expenditure account should be included in note 11 for service costs; and the assumptions made regarding the net return on the asset/liability should be included in note 12 on the ‘Additional Info’ sheet. 3 Structure of the FFR 7. The FFR takes the form of an excel spreadsheet which has eight sheets.  A copy, pre-populated with information unique to each college, has been sent directly to each college’s finance director/finance officer. For information purposes an unpopulated copy can be downloaded from the Guidance section of the website: http://www.sfc.ac.uk/guidance/GovernanceGuidance/FinancialSustainability/FinancialSustainabilityGuidance.aspx  8. Seven of the sheets require input by the college.  We suggest the order of completion is: (i) ‘Income’ (ii) ‘Expenditure’ (iii) ‘I&E’ (iv) ‘Balance Sheet’ and ‘Additional Info’ (these two sheets should be completed together, as various inputs on each drive figures on the other) (v) ‘Cash flow’  (vi) ‘Declaration’    Completion of the FFR Input of financial forecast figures and comparatives 9. The 2011-12 comparative figures have been populated taking figures from the 2011-12 financial statements return.  These figures have not been locked in the spreadsheet to allow you to make any necessary changes. 10. The sheets in the spreadsheet contain blue highlighted boxes into which the forecast figures should be input. 11. Please note that only whole numbers can be input into the return.  Please do not link the spreadsheet to another document or change the formatting in the spreadsheet. 12. This year, the spreadsheet does not alert you when an explanation for a variance is required.  Please enter explanations for any significant variances where appropriate. Sheets not requiring completion 13. The Summary sheet does not require to be completed.  This summarises various key figures from the spreadsheet, and it is populated automatically. 4 Commentary 14. Colleges should also provide a commentary on the financial forecasts.  This serves two purposes: • to explain how the financial forecasts reflect the college’s strategic plan; and  • to enable a proper understanding of key aspects of the financial forecast.   15. It would be helpful if the following areas could be covered by the commentary: Introduction 16. This should cover the context in which the forecasts have been prepared.  It should include an explanation of how the elements of the college’s strategic plan, human resource management strategy and estate strategy are reflected in the forecasts, and how these developments are to be financed. Review of financial performance 2012-13 17. Discuss the key features of the latest forecast financial performance in 2012-13 and highlight positive and negative variances from previous forecasts (e.g. 2012 financial forecast return). SFC recurrent grant 18. You should confirm your assumptions regarding SFC grants for 2013-14 and 2014-15. Changes in tuition fee income and other income 19. This should include details of the assumptions made regarding student numbers and the reasons for year-on-year movements in other sources of income including European funding. Changes in staff and non-staff costs 20. Discuss the reasons for year-on-year movements in pay and non-pay expenditure and the impact on non-pay expenditure of price changes and changes in the level of activity.   21. In particular the following areas should be addressed: • assumptions regarding pay awards and their impact on pay expenditure; • assumptions regarding staff numbers; • impact of equal pay audits; and • assumptions regarding future pension contribution costs. 5 Risk management 22. This should provide details of the key risks identified when preparing the forecast and details of the risk management strategies devised to deal with them. Any other information 23. This should provide any other information which you feel should be brought to our attention. Declaration 24. The ‘Declaration’ sheet should be signed and dated by the principal. Return of the FFR 25. Please send both a hard copy and an electronic copy of the return and the financial commentary by 31 August 2013.  26. The hard copy should be sent to:  Angela Iannetta, Administrative Officer, LGS, Scottish Funding Council, Apex 2, 97 Haymarket Terrace, Edinburgh, EH12 5HD. Alternatively, a signed copy can be emailed in PDF format to the GMAP-returns email address below. 27. The electronic copy should be sent to:  GMAP-returns@sfc.ac.uk Further information 28. Please contact Wilma MacDonald, Financial Analyst, Learning, Governance and Sustainability for further information, Tel: 0131 313 6565; email: wmacdonald@sfc.ac.uk.    Brian Baverstock  Head of Learning, Governance and Sustainability  

2013 Financial Forecast Return

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