Quarter 2, 3 and 4 Resource Returns 2017-18
Issue date:
Deadline:
Reference:
Summary:
FAO:
29 September 2017 16 October 2017 SFC/CI/07/2017
The Quarter 2, 3 and 4 resource returns will be used by the Scottish Funding Council (SFC) to monitor the sector’s adherence to revenue and capital resource budgets.
Directors of Finance of Scotland’s colleges (incorporated colleges only) Further
information: Contact: Andrew Millar / Dorothy Carson
Job title: Assistant Director / Senior Financial Analyst Department: Finance
Tel: 0131 313 6538 / 0131 313 6607
Email: [email protected] / [email protected]
Scottish Funding Council Apex 2 97 Haymarket Terrace Edinburgh EH12 5HD T 0131 313 6500
Quarter 2, 3 and 4 resource return 2017-18
Purpose of the Return
1. The Quarter 2, 3 and 4 resource returns will be used by the Scottish Funding Council (SFC) to monitor the sector’s adherence to resource and capital
budgets. Sector level information is sent to the Scottish Government and then onto HM Treasury for consolidation into its Online System for Accounting and Reporting (OSCAR).
2. The timing of the quarterly reports and their submission dates to SFC are as follows:
Quarter 2 - 16 October 2017.
Quarter 3 - 22 January 2018.
Quarter 4 (1) - 19 February 2018.
Quarter 4 (2) - 19 March 2018.
Quarter 4 (3) - 16 April 2018.
Returns are based on the April to March financial year and it is critical that colleges adhere to the return dates shown above.
3. This call for information covers all remaining resource returns due in the financial year 2017-18. Updates will only be sent out in quarters 3 and 4 if there is a change in the guidance.
Purpose of the annual resource budget pro-formas
4. Colleges are part of the Central Government accounting and budgeting regime and subject to the same expenditure controls as SFC and other Government bodies. The expenditure scored in SFC’s resource return is the actual
expenditure incurred by colleges (rather than the grant paid out). Colleges are allocated an annual resource expenditure budget and it is imperative that the net expenditure incurred in the financial year is within this Resource
Departmental Expenditure limit (RDEL) or Capital Departmental Expenditure limit (CDEL) limit.
5. Net expenditure is defined as total expenditure less non-SFC income. For UHI colleges, other income will include the SFC HE grants as these are accounted for separately in the SFC resource return.
6. Each college has an agreed budget from SFC and this represents the net expenditure limit against which the college will be monitored during the financial year.
7. Where colleges will be using grant in aid to fund their loan repayments, the net RDEL expenditure will be adjusted to reflect this amount.
8. Colleges with subsidiaries that are incorporated within the college accounts must report the group position in this return.
Cash budget for priorities (formerly net depreciation cash)
9. Details of the proposed approach for addressing the cash budget for priorities for 2017-18 and beyond will be communicated to the sector following
Ministerial consideration. We hope to be in a position to communicate this to the sector in the near future, however for immediate planning purposes, please assume that the current agreed priorities will continue over this financial year.
These priorities are student support, loan repayments and the cost of the 2015-16 pay award.
10. Colleges should reflect the forecast use of the cash budget for priorities (equivalent to net depreciation) in Table 4 of Annex A1. This table must be completed by all colleges. Colleges should give a brief description of any items included as “Other”, proposals for which will be considered on a case by case basis by SFC.
Annual Resource Budget and Resource Return format 11. Annex A contains the following documents:
Quarter 1 resource return (Annex A1).
Annual Budget return (Annex A2).
Cash reconciliation sheet (Annex A3).
12. The annual budget spreadsheet Annex A2 automatically updates the resource return Annex A1.
13. Detailed guidance for completion of each line of the return is given in Annex B.
Annual Budget
14. Colleges will receive individual spreadsheets with pre-populated annual budget figures taken from the June 2017 resource returns. SFC recognises that June 2017 budget figures may have changed substantially so colleges can now update the annual budgets as required but these cells will be locked in subsequent returns.
15. Colleges need only fill in the monthly profile figures for each line (marked in blue on the spreadsheet) and the totals for year to date and annual totals will be automatically entered on the resource return.
Completing the Quarterly resource return
16. Colleges should complete the Actual year to date column and the Forecast outturn column, both of which are highlighted in blue.
17. Detailed guidance for completion of each line of the return is given in Annex B.
18. Following implementation of Financial Reporting Standard 102 (FRS 102), the treatment of certain items in the financial statements will not necessarily be mirrored in the resource returns. This is addressed more fully in the guidance at Annex B but, should colleges have specific queries not covered in the guidance, they should contact SFC as soon as possible.
19. Colleges should reflect all expenditure to date and forecast for the year including expenditure incurred on European Social Fund (ESF) projects even though the funding allocation may not yet be reflected in the SFC budget figures.
20. In completing the return, the following points should be noted:
SFC income is not included in the body of the return as this is not relevant in monitoring the net expenditure budget. Any in-year movement in SFC funding will require colleges to update the net expenditure budget lines accordingly.
A cash drawdown table is included (Table 1). This will include actual cash drawdown to date and forecast drawdown compared to the total cash available per the allocation letter. Explanations are required for major variances forecast.
A comparison of net expenditure to SFC budget is included in Table 2 for RDEL and Table 3 for CDEL in Annex A1. Table 2 deducts loan
repayments / provisions from the total budget to reflect the expected underspend from using grant in aid for balance sheet (i.e. non-RDEL) items.
Table 4 should reflect the planned use of 2017-18 cash budget for priorities.
National Bargaining
21. The impact of National Bargaining pay costs should be fully reflected in the return.
Non-Profit Distributing (NPD) projects
22. A line has been added to the RDEL resource return for colleges to enter the amount of unitary charge paid directly by the college.
23. The unitary charge element directly funded by SFC is now accounted for in the SFC resource return as a separate ring-fenced budget. This expenditure should not be included in the net expenditure return.
24. The unitary charge element paid by the college representing a repayment of borrowing should be excluded from the net expenditure table and deducted in Table 2 as a loan repayment (outwith budgeting).
25. The depreciation charged on NPD assets should be excluded from the resource return.
26. Guidance on the accounting and resource treatment of NPD payments was issued in August 2015 to those colleges with NPD projects. If colleges have specific questions on this, they should contact SFC.
Capital Disposals
27. The proceeds of sale of an asset represent the net book value of the asset plus a surplus or loss on sale. The proceeds equivalent to net book value should be credited to CDEL. The surplus or loss on sale should be credited / debited to RDEL.
28. In some instances, the proceeds of sale of assets will be surrendered by the college. A new line has been added to the RDEL and CDEL resource sections of the spreadsheet to account for proceeds of asset sales which are due to be surrendered. The amount surrendered should first be offset against the surplus on sale in RDEL (line 12 in Annex A) and any surrendered proceeds in excess of the surplus figure should be recorded in CDEL (line 26 in Annex A).
Cash Reconciliation sheet
29. A cash reconciliation sheet (Annex A3) has been added to enable a comparison of cash movements over the financial year with the position shown on the resource return. This additional request has been considered necessary
because some colleges have shown large reductions in cash balances over the year whilst recording balanced RDEL / CDEL positions. Whilst this may be attributable to working capital movements, the significant movements do require further explanation.
Returns
30. The completed return should be sent to [email protected] by Monday 16 October 2017.
Further information
31. Should you have any queries on the return or any contents of the guidance, please contact Dorothy Carson (tel: 0131 313 6607 email: [email protected]) or Andrew Millar (tel: 0131 313 6538; email: [email protected]).
Lorna MacDonald Director of Finance
