Introduction
to
Session Objective
Leave with an understanding of the budgeting and forecast process at the U of C.
Define the responsibilities of a budget owners in the budgeting and forecasting process.
Be aware of the budgeting and forecasting timelines.
Gain an understanding of the Finance Partner role.
Have knowledge of the various budgeting and forecast models used at the U of C.
Introduce you to the internal financial reporting tools that are available for use.
Today’s Agenda
Overview of budgeting and forecasting
Role of the Finance Partner
Overview of capital budgeting
Introduction to budgeting and forecasting models
Definitions of Financial Budgeting
Budgeting is a financial plan developed from an
organization’s goal and objectives that outlines a
desired future state of revenues and expenses.
Budgeting is a organizational plan expressed in
a monetary format.
Budgeting is process that outlines an
Purpose of Budgeting
Provides a benchmark for evaluating performance against financial goals and objectives.
Helps an organization allocate financial resources between various operating groups.
Communication tool used to expresses financial goals and objectives of the organization.
Helps an organization to authorize the use of financial resources within the organization.
Definitions of Financial Forecasting
Forecasting is an estimation of future financial
outcomes for an organization.
Forecasting is process of estimation using
current and historical information to predict
financial results.
Forecasting is a process of identifying the
expected financial position of organization.
Purpose of Forecasting
Useful tool that provides information to make intelligent business decisions.
Helps to identify unexpected issues; therefore, allowing timely corrective action.
Helps to identify awareness of potential opportunities.
Useful communication tool used to express expected/anticipated financial results.
Differences Between Budgeting and Forecasting
Budgeting is a financial plan that is produced a year or more in advance and identifies desired results (goals and objectives) .
Forecasting is an estimation of expected results within a given year.
Note the difference: budgets are financial plans with desired results; where as, forecasts are predictions of expected results.
Financial Responsibilities of the
Budget Owner
Are individuals who are authorized to approve and incur expenses under a Department Identification (DeptID).
Are responsible for the effective and efficient allocation and use of financial resources.
Are responsible for preparing plans and budgets for their areas as outlined by the annual planning and budgeting schedule.
Are for responsible preparing forecasts for their areas of responsibilities as outlined by the annual forecasting
Types of Budget Owners
at the U of C
DeptID Budget Owners: are individuals who are responsible for a functional operating area within a faculty/unit.
Project Budget Owners: are individuals who are responsible for managing a project this may include:
Principal Investigators of a research project and Project Managers of capital/non-capital projects.
Types of Budgets at the U of C
Annual Operating Budgets: are completed for all
functional faculty/units (including capital) as part of the annual institutional plan submitted to the Minister of Alberta Education and Technology (AET).
Project Budgets: are budgets that estimate the costs of an entire project that may span several years and are
completed before the start of a project. Project budgets may include: Major Capital Projects, Internal Projects, and Research Projects.
Differences Between Operating Budgets and
Project Budgets
Project budgets are prepared for the entire life of a
project; whereas, annual operating budgets are usually only completed for a single future year.
Project budgets are used to control and report in detail individual project costs; whereas, annual operating
budgets are completed for the institution, faculty/unit and deptID’s.
Only the corresponding annual costs of a project are included in the yearly operating budget.
Key Budgeting Terminology Used at the U of C
Full Time Employee (FTE): is a measure used to quantify the number of full-time staff employed in an organization.
Full Load Equivalent (FLE): is a measure used to quantify the number of full-time students attending the university.
Budget Guidelines: are guidelines used to communicate the
requirements (including budget parameters) of the annual financial planning process.
Budget Envelope: is the budgeted amount that is allocated to a faculty/unit.
FHOBO – Funds held on behalf of others (third party entities). Budget and Forecast Models: are the institutional models used to
Financial Planning Timelines at the
U of C
March 15th Annual Institutional Plan and Budget Submitted to AET July to October Prepares Budget Guidelines, Updates Budget Models, and Issues Budget Envelope October to End of November Faculty/Units Complete and Submit their Budget and Annual Plans. December to January Vice Presidents and Executive Leadership Reviews of Budget and Business Plans January to February Budget and Business Plan Approved by the Board of Governors /other committees Ongoing Financial Management (Forecasting and Variance Analysis)Annual Forecast and Analysis Timelines
at the U of C
From May - February the university prepares monthly institutional forecasts that includes Year-to-Date (YTD) analysis of actual results compared with the budget.
Quarterly the forecast and YTD analysis is used in the Financial Report Package provided to Executive
Management, Audit Committee and the Board of Directors.
At year-end the analysis completed by the faculty/unit is used in preparing the institutional Annual Report.
Role of Financial Planning and Analysis (FP&A)
Coordinate the budgeting and forecast processes at the university.
Prepare monthly, quarterly, and annual institutional reports.
IS
2and the Introduction of the Partner Role
• Increase the level and consistency of service from IT, HR, and Finance.
• Increase the level of compliance with internal and external policy and procedures.
• Decrease the costs of administrative services through an integrated delivery model.
• Central delivery of transactional services including : Accounts Payable, Accounts Receivable, Supply Chain Management, and General Ledger Support.
• Provide local support for operational analysis, planning, budgeting.
Introduction of Finance Partner Role
Finance Partner Role Supporting the Budget Owner:
• Can be characterized as an “enabling” function to support and assist budget owners with their financial management
responsibilities.
• Provides a link to central finance for the faculty/unit they support.
• Monitors and assists with the delivery of financial services to the faculty/unit and finds solutions to new challenges.
• Provides financial reporting support and analysis.
• Manages all significant financial issues for the faculty/unit.
Introduction of Finance Partner Role
Finance Partners Financial Planning Responsibilities:
• Supports faculty/unit with developing budgets/forecast and completing operational analysis.
• Facilitates faculty/unit’s review and approval of annual plans, budgets, and forecasts.
• Develops faculty/unit’s financial models for budgeting/forecasting and inputs required data into the Enterprise Planning Models.
• Assists the faculty/unit with allocating financial resources by working with managers to set financial targets.
• Addresses special financial reporting requests and information queries for the faculty/unit they support.
• Completes quarter-end and year-end closings for faculty/unit.
Finance Partner – Operational Supporting Role
Finance Partners Financial Operational Responsibilities:
• Supports the university's internal control framework.
• Identifies, reports, and communicates key performance indicators for the faculty/unit.
• Assists the faculty/unit with business analysis for new initiatives.
Capital Budgeting Introduction
Buildings and equipment purchased with University of Calgary or research funds are property of the University of Calgary.
The University has liability under these codes: building codes, fire
codes, health and safety codes, animal care standards, and hazardous materials rules and regulations.
Experts in these topics reside in Campus Planning (CP) and Project Management Office (PMO); therefore, they are involved in major space allocation, equipment purchase or change decisions.
Purpose of Capital Budgeting
To identify, assess and plan for the capital needs of the institution
To ensure the long-term goals and objectives goals of the university are realized.
Types of Capital
Books and collections
Capital Software
Furnishing & Equipments
Detailed account description listing can be located at the Financial Service website.
Capital Budgeting -Advisory
It is important to advise the Project Management
Office (PMO) of any equipment that will be occupying the space during the project quoting process, so that equipment needs such as power, water and/or
sewage, venting, cooling or structural support for
weight bearing can be assessed and included in the quote.
Major Capital Project
Costs equal to or greater than $5,000 incurred for new building construction, building renovation, site
improvements.
Facilities Management and Development is responsible for major capital project budgeting.
Minor Capital Projects
Includes faculty/units Initiatives
This process identified and captured for the upcoming business Planning cycle with a view to upcoming research requirements, enrollment changes, and hiring.
Provides a framework for assessing the impact of new capital
expenditures on the operating budget, as well as providing a system for accounting for the capital resources of the institution.
Finance Partners to work with their faculties/units, Campus Planning and Project Management Office to determine their capital
requirements for the year and budget them accordingly.
Introduction to U of C’s
Budgeting and Forecasting
Models
Budget and Forecast Model Used at the U of C
The university uses Cognos Enterprise Planning (EP) a web-based application for the: Salary Budget Model, Master budget Model, and the Forecast and Analysis Model.
Finance Partners are responsible for entering data into the models and the results can be viewed at the
department, faculty/unit and at an institutional level.
Advantages to using a database for data entry and reporting include: data integrity, data reliability,
consistency of calculating data, and the ease of consolidating data.
Salary Budget Model
The salary model is a tool that allows the user (Finance
Partners) to calculate their annual salary budgets in a consistent manner across campus.
The model is populated with data from the Human Capital
Management (HCM), to ensure that most recent salary information is captured.
Salary increases and benefit calculations are automated
within the model including: calculations for salary
components such as 3/9 salary splits for academics ( July 1st increases), merit and across-the-board increases
The model distributes the budgeted salaries monthly and
calculates FTE’s
The model has ability to budget lump sum amounts for groups
such as sessionals and casual staff with an automatic FTE calculations
Master Budget Model
The Master Budget Model allows for all of the
institution’s faculty/units to enter their budget into a single database.
The model is linked to the Salary Budget Model in order for it to retrieve budgeted salary information.
The model is capable of reporting financial information at department, faculty/unit and at an institutional level.
Forecast and Analysis Model
The Forecast and Analysis Model allows all of the institution’s faculty/units to enter their forecast and variance analysis into a single database.
The Model is based on a rolling forward forecasting
method that combines YTD actual with estimates of the remaining periods for the year to arrive at a forecast.
The model is capable of reporting financial information at department, faculty/unit and an institutional level.
Responsibilities of the Finance Partner, Budget
Holder and FP&A
The Finance Partner is responsible for entering the data into the models, reviewing and validating financial information for the faculty/unit they support.
Budget Holders are responsible for reviewing and validating information entered into the models for their DeptIDs.
FP&A is responsible for consolidating and verifying the
information, ensuring the accuracy of calculations, populating the models with relevant data, and maintaining the models by
Overview of Internal Financial
Reporting
Internal Financial Reporting
Currently the university is in the process of reviewing internal reporting procedures and delivery methods for end users.
Internal Reporting Categories: • Transaction Reporting:
• Help user to verify that transactions have been processed correctly • GL Department Detail or Finance Analysis reports
• Functional Area Reporting (Department ID’s, Program, and Internal Code):
• Help user confirm that entries process correctly and manage issues around these specific types of entries
Internal Financial Reporting
Report Categories Continued:• Year end Projection Reporting:
• Provide budget owner with understanding of expected year end financial position
• Facilitate understanding and proactive decision making • New Remaining Budget report
• Variance and Trend Analysis Reporting:
• Allow user to compare actual to expected (Budgeted or forecast) revenue and expenditures
• Facilitate understanding and proactive decision making • New Variance and Trend reports
Contact Information
Financial Planning and Analysis Contact: [email protected]
Finance Partner Contact List: http://www.ucalgary.ca/is2project/isd/partners
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