Appendix 5.1 Redesigning Processes and Organisation Structures Version 1.0 The following slides provide an illustration of how finance process and responsibilities might be redesigned on an end-to-end basis and shared between the shared service and the retained corporate function. Although they focus on finance, they provide an illustration of the sort of work that will be needed in redesigning work for any shared service. © CIPFA 2010. Record to Report Process Overview: Purchase to Pay Supplier and Service Department s Calls & Queries Purchase to Pay Audit Controls & Stewardship Purchase Ordering & Goods Receipting Supplier Master File Maintenance • • • • • • New Supplier identification/request Align with Preferred Supplier Initiatives Supplier database maintenance • • • Raise purchase orders Receipt goods and services Make adjustment s and track outstanding purchase order commitments Amend Supplier Records Housekeep Supplier Records Maintain strong audit controls to prevent fraudulent setup Combined responsibility SSA responsibility • • Receive and process invoices Scan invoices and issue for electronic authorisation • EDI Invoice Uploads • Error resolution • • Authorise invoices and inform SSA of reasons for mismatches Discrepancy resolution and process adjustments on system Supplier Reconciliation/AP Reporting Payments Processing Invoice Processing • • Process payment run Transmit payment to Bank • • • • Reconcile supplier statements Analyse debit balances and secure repayment Issue standard AP reports electronically to procurement and service departments Close AP/ GL and reconcile Record to Report Split of Effort: Purchase to Pay Respective roles of Local Finance and SSA Effort Split Local Finance 1. Supplier Masterfile Maintenance 2. Purchase Ordering 100% 3. Goods Receipting. 100% 4. Invoice Processing SSA 10% 90% 10% 90% 5. Payments Processing 100% 6. AP Reconciliation 100% 7. AP Reporting 100% 8. Supplier Related Queries 9. Control/ Stewardship 5% 95% Business and SSA equally responsible • Supplier Masterfile Maintenance-SSA will receive notification from Local Finance for a new supplier to be setup. Amendments to suppliers details received at SSA • Purchase Ordering- Service Departments / procurement raise purchase orders for all Goods & Services • Goods Receipting- Service Departments Receipt Purchase orders and deal with variances where possible • Invoice processing-SSA will receive invoices centrally and scan in for electronic authorisation by Service departments via email. Maximise electronically received invoices and EDI. Discrepancy resolution - jointly resolved with primary onus on purchase orderer to notify when goods receipting ( defined in SLAs) • Payments Processing- automated when PO matches GRN and invoice according to terms & conditions contained in the system. Automated links for transmission to bank for payment by BACS • AP Reconciliation - Integrated system should ensure integrity. Supplier statement reconciliations performed on exception basis • AP Reporting – AP reports available online • Internal/External Supplier Queries- Service departments & suppliers information and queries will be satisfied with secure web online access for uptodate status • Control/Stewardship- SSA will coordinate the external auditing and will provide information when required in coordination with Local Finance. Buyers Decide if can setup new Vendor/ Manage and update Supplier database Treasury Shared Service R2R Shared Service T eam Suppliers P2P Shared ServiceTeam Goods Receiving Raise purchase order & update commitments in sy stem Procurement Accounts Payable - Procurement Process Map Goods/ serv ice receipting Resolv e discrepancies and respond to queries Non-compliance purchasing report Receiv e & check phy sical goods Inv oice receiv ed with PO ref erence (scan in sy stem) Order receiv ed by supplier 3 way match Despatch goods/ serv ices Exceptions BACS pay ments Vendor resolution Pay ments reconciliation Pay ments reports (standard control reports) Pay ment & remittance Y ear-end resolv e outstanding commitments/ clear suspense Maintain Authorisation Hierarchy Check f unds av ailability / approv e pay ments f iles Processed BACS File (Treasury ) Pay ments queries Check statements f or old items Journal Adjustments and write-of f s Respond to pay ment queries Y ear end pay ments related General Ledger control account reconciliations Pay ments elements of VAT Accounting & Returns SLA/ Serv ice Management Perf ormance reporting f or AP Buy er completes Pay ment request f orm on line or submits inv oice receiv ed f rom supplier Resolv e discrepancies Respond to Pay ments Queries Chase emails if not authorised Treasury R2R Shared Service T eam Suppliers/ Employees P2P Shared Service T eam Goods Receiving Procurement Buyers Accounts Payable and Staff Expenses (Non-Procurement Channel) Process Map Goods phy sically receiv ed and checked Rev iew & process pay ment request/ inv oice / expense claim in sy stem Despatch goods/ serv ices Validation and online automated check against authorisation limits/ approv ed by Pay Of f icer Staf f expenses claim completed online Upload and Authorise pay ment f or bulk uploads Inputs into AP Sy stem BACS or Cheque pay ments Pay ments Run Transmit bulk upload f iles f or pay ment Pay ments reconciliation Pay ments reports (standard control reports) Respond to pay ment queries Pay ment & remittance Y ear-end resolv e outstanding commitments/ clear suspense Maintain Authorisation Hierarchy Check f unds av ailability / approv e pay ments f iles Processed BACS File (Treasury ) Y ear end pay ments related General Ledger control account reconciliations Pay ments Queries Pay ments elements of VAT Accounting & Returns SLA/ Serv ice Management Perf ormance reporting f or AP & Staf f Expenses Purchase to Pay Strategic / tactical procurement Authorise Invoices Policies Validate and authorise expenses Place purchase orders: •Determine requirements •Raise requisition •Approve requisition •Place order (all types) •Notify supplier •Amend / cancel orders Goods Receipting: •Inspection •GRN raising Financial control: •Maintain / approve authorisation hierarchy •Ensure data accuracy / completeness Manage supplier base: •Identify & select suppliers •Define terms •Approve new suppliers •Approve vendor modifications •Catalogues / prices •Monitor supplier performance Resolve queries / disputes Shared Services Goods Receipting: •Upload GRN to AP for matching Financial Control: •Ensure data accuracy / quality •Maintain authorisation hierarchy •Run / check control a/cs •Perform supplier reconciliations •Invoice control log •Controls in place & operated? •Produce control information •Process corrections, journals & invoices •PO / GRN control •Process vendor queries •Adjust invoices / request credit notes •Process part payments •Produce VAT documentation Employee expenses: •Receive expense report •Process credit card statements •Check / validate •Raise / progress queries •Notify payment date •Process payments Invoice processing: •Receive invoice •Register / enter invoice •Scan invoice •Obtain valid PO number •Match to PO and/or GRN •Query mismatches •Create asset projects •Review for payment •Claim discounts •Release for payment •Copy invoices •Maintain authorisation lists and hierarchies •Issue for authorisation / process pre-authorised invoices •Validate authorisation •Monitor / chase ‘issued’ invoices Document scanning and workflow Manage supplier base: •Control & maintain suppler database •Supplier set up on ERP •Block suppliers / invoices Payment / Cash Control: •Approve funds release Petty Cash processing: •Manage cash float •Check / validate PC requests •Input Miscellaneous processing: •Customer refund requests •Proforma invoices •Acquisitions •Self-billing •Process upfront payments •Process nett-off payments •Process EDI bills,etc. •One-time vendor processing •Commissions •Utilities invoices •Recurring invoices Management information: •Standard financial control reporting •SSC service level reporting Process Payments: •Receive Non-AP payment requests •Cheque requisitions •Upfront payments •Part payments •Reimburse cash •Debt payments •Interest /loan payments •Settle inter-ledger balances •Payroll payments •Foreign currency payments •Run payment proposals •Review payment proposals •Check funds availability •Authorise payment run •Manage local/emergency payments •Generate remittance advices •Recall payments SLA / service management SLA / service management Management Information: •Service Dept Finance analysis Service Department Buyers & Authorisers, Goods Receiving, Procurement & Local Finance Departments Redesigning Processes and Organisation Structures Sales Order to Cash Record to Report Process Overview: Sales Order to Cash Customer and Service Department Calls & Queries Customer to Cash Audit Controls & Stewardship Customer Master File Maintenance Sales Order Processing • New customer request • Raise sales orders • Set credit limit criteria & agree exceptions • Deliver goods and services • Credit Control Assessment • Customer database maintenance • Amend customer Records • Housekeep customer records Combined responsibility SSA responsibility Credit Control & AR Reconciliation/ Reporting Sales Invoice Processing • Generate sales invoices • Chase debts • Despatch invoices • Respond to queries • Issue statements • Process adjustments within agreed rules/tolerance • • Cash Application Processing Apply cash against customer account • • Process journal adjustments eg bank charges/ write offs • Bank reconciliations Dispute resolution and agree adjustments to debts outside tolerance •Bank cheques Bad debt provisioning and transmit • Issue reminders • Deal with legal • Close AR period • Run & Issue AR reports banking details to SSA to apply to Sales ledger Record to Report Split of Effort: Sales/Fees Order to Cash Respective roles of Local Finance and SSA Effort Split Local Finance 1. Customer Masterfile Maintenance SSA 10% 2. Sales Ordering 100% 3. Deliver Goods/Service 100% 4. Sales Invoice Processing 5. Credit Control 100% 20% 6. AR Reconciliation /Reporting 7. Cash Application 8. Customer Related Queries 9. Control/ Stewardship 90% 80% 100% 5% 95% 5% 95% Business and SSA equally responsible • Customer Masterfile Maintenance-SSA will receive notification from Local Finance for a new customer to be setup. Amendments to customer details received at SSA • Sales Ordering- Service Departments raise sales orders for all Goods & Services • Deliver Goods/Services Service Departments deliver goods & services –system to trigger sales invoices • Sales Invoice Processing-SSA will generate invoices centrally and despatch electronically or via automatic mailroom. • Credit Control – Debt chasing with automated scheduling software. Clear rules based escalations process for dispute resolution. Automated bad debt provisioning and write-offs within tolerance. Electronic links with legal to effectively chase old debts • AR Reconciliation - Integrated system should ensure integrity. Customer statement reconciliations available online • AR Reporting – Make AR DSO and aged debt reports available online • Customer Related Queries- Service departments & suppliers information and queries will be satisfied with secure web online access for up to date status • Control/Stewardship- SSA will coordinate the external auditing and will provide information when required in coordination with Local Finance. Serv ice Departments etc generates request to raise inv oice If required setup new customer (all masterf ile setup done centrally by database team) Validate agree adjustments to inv oices Make/ respond to income/ debtor related queries If required setup DD/ Giros (segregation reasons) Raise Inv oice on Sales Order to Cash Sy stem (sy stem generated) Legal (Local/ Shared Services) UpdateSy stem f or inv oices/ receipts Reconciliation of Debtors (auto sy stems check) Cash/ cheques/ direct bank pay ments Raise Inv oices Customers make pay ment Debt Management (Credit Control Chasing/ negotiations with debtors) Adjustments/ corrections Customer resolution Treasury Shared Services Customers Sales Order to Cash Shared Services Cashiers (Local) Central Database Shared Services Service Departments Sales Order to Cash - Income (Debtors) Process Map Bad debt write of f s processed on sy stem Cash application processing Income related inv oices/ receipts debtor queries Make/ respond to income/ debtor related queries Bad debt prov isions/ write of f s determined Discuss action to pursue debt Debtor reports Bank Reconciliations Sales Order to Cash Strategic customer decisions Customer approval and set up: •credit limit •contract Policies Contract management Set up specific agreements with customer: •credit terms •rent / deposits •general terms / pay plans •pricing & discounts Monitor/sign off financial controls SSC Analyse management information Account closure Authorisation Ensure data accuracy / completeness Customer set up: •credit checking •contract details / changes •DD authorisation •Set up on system Treasury policy Cash & Bank: •Receipts processing •Receipts reconciliation •Financialcontrols •Maintain master data •Internal control reports Banking relationships Credit control: •Dunning / chasing activities •Monitor credit status •Agree escalation actions with service departments •credit suspend/stop •Payment plans •Legal referral •Referral to collections agency Management & financial control: •Ensure data quality/accuracy •Ensure timeliness of billing •Financial Controls operated •Update GL from SL •Reconcile control a/cs •Produce control info. •Produce customer statements •Process corrections, journals, etc. •VAT documentation Customer maintenance: •Maintain customer data on system •Close account •System archives •Automation / bespoke routines Initiate invoice / credit note / recharge process Invoicing: •Raise invoice •Credit notes / invoice adjustments •Issue refunds •Recharges / refunds •Issue statements Maintain paper / doc image records & archives Produce management information: SLA / service management Query management Management information: •Standard SO2C reporting •SSC service level reporting Payments & Cash: •Receive payments •Allocate cash Credit control: •Customer dialogue •Approve CC actions •Review CC issues Produce statutory information Service/ Local Finance Departments SLA / service management Management Information: •Service Dept SO2C analysis Cashiers Redesigning Processes and Organisation Structures Hire to Pay Record to Report Process Overview: Hire to Pay Employee and Service Department s Calls & Queries Hire to Pay Audit Controls & Stewardship Employee Records Master File Maintenance • • New employee contract details Manager/ Employee Self Service • Changes to existing employee records • • Employee record maintenance • Amend employee records • Housekeep employee records • Maintain strong audit controls to prevent fraudulent setup Payroll Processing Submit authorised employee changes requests eg promotions • Submit authorised employee pay adjustments- eg overtime, annual review • • Combined responsibility SSA responsibility Receive and process pay changes on payroll system Run gross to net payroll • Make adjustments • Error resolution • Authorise payroll and inform SSA of changes/ adjustments on system Run Final authorised gross to net payroll Payroll Reconciliation/ Payroll Reporting Payments Processing • Process payroll payment run • Reconcile payroll accounts • Transmit payroll payments to bank • • Make payroll related payment deductions eg PAYE/NI Issue standard payroll reports electronically to service departments • Close payroll and reconcile payroll GL accounts Record to Report Split of Effort: Staff Hire to Pay Respective roles of Local Finance and SSA Effort Split Local Finance 1. Employee Masterfile Maintenance 2. Manager Self Service 100% 3. Employee Self Service 100% 4. Payroll Processing SSA 10% 90% 10 % 90% 5. Payroll Payments Processing 100% 6. Payroll Reconciliation 100% 7. Payroll Reporting 100% 8. Payroll Related Queries 9. Control/ Stewardship 20% 80% Business and SSA equally responsible • Employee Masterfile Maintenance-SSA will receive notification from HR for a new employee to be setup. Amendments to employees details updated via employee self service • Manager Self Service - Service Departments submit employee changes eg promotions online • Employee Self Service – Employees make changes online eg address / bank details • Payroll processing-SSA will receive payroll changes from service departments electronically online. After gross to net payroll run, submitted electronically to authorised individuals for sign off • Payroll Payments Processing- automated when electronic authorisation received. Automated links for transmission to bank for payment by BACS • Payroll Reconciliations- Integrated HR system with Finance should ensure integrity. Payroll reconciliations performed on exception basis with automated checks • Payroll Reporting – Payroll reports available online in secure environment • Employee Payroll Queries- Service departments & employees information and requests/ queries will be satisfied with secure web online access • Control/Stewardship- SSA will coordinate the external auditing and provide information when required in coordination with Local Finance. Local Finance Treasury/ Finance Shared Services External Agencies Payroll Shared Services Employee Local HR Service Managers Payroll Process Map Employ ee Record Change notif ications Leav ers and Regrades etc MSS - Process details directly at source on pay roll sy stem Database Changes - new start joiners inf o f rom HR etc Maintain organisation structure Starters Pack Notif ied of starter/ check receiv ed documents/ pay roll database updates/ checks on records eg pay rates One time inputs ( access to MSS absence, holiday s etc ESS Changes eg change of address Notif ication of change letters required Respond to pay roll queries Employ eepay slips Pay roll processing inc internal reports f or v alidation Run posting to pay roll sy stem/ GL BACS pay roll pay ments Database updates - Tax codes, court orders, v oluntary deductions setup, self employ ed status Pay roll reconciliation Pay deductions per agreement eg union dues Pay roll postings in GL Pay roll Gross to Net reports Receiv e contractual letters Pay roll queries Inland Rev enue pay ments Generate contractual letters Respond to pay roll queries Processed BACS File (Treasury ) Serv ice Dept Pay roll Related Cost Centre reports (Finance) Compliance PAY E- ,P45, taxable benef its returns, Self employ ed f orms etc Hire to Pay Authorise Employee Changes Human Resources Policies Resolve queries / disputes Recruitment Hire Requests: •Determine requirements •Raise jobs requisition •Approve job requisition •Applications/ Interviews •Job Offers & Acceptances •Contracts Authorisation New hire details from Service departments Staff Overtime etc Processing: •Load Overtime details in payroll system •Promotions, changes to hours etc •Annual / periodic changes to salaries Payroll processing: •Process payroll changes •Generate payroll run •Review for payment •Copy payslips •Maintain authorisation lists and hierarchies •Validate authorisation •Respond to queries Payroll Reconciliations & Reporting: •Reconcile Payroll/ GL •Reconcile Other Payroll Accounts •Make payments to external agencies •Provide external agencies with periodic/ annual returns Process Payroll Payments: •Process Gross to Net •BACs processing •Cheques raised •Authorise payment run •Manage local/emergency payments •Generate payslips •Recall payments Management information: •Standard payroll reporting •SSC service level reporting Queries from Employees and Service Managers/ Pensioners Manager Self Service Shared Services New Employee Record Processing: •Load New Employee details in payroll system Document scanning and workflow Employee Self Service Treasury SLA / service management SLA / service management Queries from external Parties/ agencies Management Information: •Service Dept Payroll analysis HR , Service Departments and Local Finance, External Agencies Redesigning Processes and Organisation Structures Record to Report Record to Report Process Overview: Record to Report Requests for Financial Information Control & Stewardship Financial Data Maintenance • CoA structure identification/request • Non- standard Journal entry identification • Financial data request Local, Actual, Budget) • Standard journal identification • Journal entry • • CoA structure maintenance Finance subsystems criteria maintenance • Cost codes maintenance • • • • Journal entry posting • Finance subsystems • validation Maintain different financial data dimensions • Automated Data Entry Reconciliation Manual Data Entry • Journal & back up documentation archiving Combined responsibility SSA responsibility Reporting • • Run subsystem cycle Closing timetable creation Standard reports generation • • Provide sub-system information Closing timetable validation • Execute draft close Reporting information submission to Local management • Validate draft close/Final adjustments • Provision of core financial data and respond to transactional queries • Final closing • Cost centre standard management reporting generation • Standard statutory reporting • Review & authorise final reports • Decision support & adhoc management reporting Sub-system integrity analysis Sub-system entries: • Interface validation • Error resolution • Exception accounts analysis • • Closing Discrepancy resolution Bank reconciliation • Validation • Error resolution Record to Report Split of Effort: Record to Report Respective roles of Business and SSA Effort Split Local Finance 1. Financial Data Maintenance SSA 10% 2. Manual journals 20% 3. Automated data entry/Recon. 5% 4. Closing 90% 80% 95% 10 % 90% 5. Reporting 100% • Standardreporting 100% • Adhoc/Mgmt reporting 6. Response to User Queries 7. Stewardship 10 % 90% 5% 95% Business and FSS equally responsible Note that the respective roles of Local Finance and SSA are described only when an interactive relationship exists • Financial Data Maintenance- SSA will receive notification from Local Finance and update chart of accounts/financial data dimensions accordingly. • Manual Data entry - Business submits journal request/proposal and journals are entered and posted by FSS. If desired, some designated users from Local Finance will be able to post journal entries directly into GL. • Automated data entry- SSA will validate interfaces and will solve discrepancies together with Local Finance • Closing- SSA will create closing timetable & coordinate closing activities. SSA will perform close procedure, Local Finance will review and validate balance of the accounts • Reporting- For local management reporting: SSA will provide financial data to the businesses and they will develop their own customised reports.with BI tools SSA will only provide and design standard reports for Local Finance .SSA will prepare local statutory reporting for review and signoff locally. • User Queries- Local Finance & service departments w ll request information from the SSA based on the general ledger data and the SSA will run the queries when necessary. • Stewardship- SSA will coordinate the external auditing and will provide information when required in coordination with Local Finance. Prov ide relev ant letters, templates f or debtor/ creditor requests Base Detailed Step by Step Timetable on Corporate Timetable Management Local Finance Shared Services Service Managers Final Close Process Map Examine each cost centre ensure all accounted f or/ ensure projects c/f are correctly stated Complete inf o on debtors and creditors Coordinate/ check returns/ v alidate audit trail/ prepare and post journal entries in GL Response to Queries Check f inal position and make f inal journal adjustments/ ensure journals rev ese in next period Examine out-turn report to check if f urther adjustments required/ ensure all BS codes reconciled Produce High lev el v ariance analy sis f or Senior manangent Produce balance sheet reconciliation report f or each account/ rconcile reports Produce reports f or Members/ Gov t/ Stat Returns/ RO/RA/ S152 etc - dif f erent f ormats Discuss, make any changes , agree and f inalise Senior Local Corporate Finance Query any v ariances/ explanations Set Timetable Final rev enue and capital out-turn report Prepare Cabinet Report when Finalised Rev iew technical aspects of reports and make av ailable f or consolidation GL Transational Shared Services Local Finance Finance Shared Services Service Managers Annual Central Support Recharges Process Map Activ ity Data f or Recharge Calculations Initial v alidation f or reasonableness Notif y when recharges processed Agreed raw data used to calculate recharges Recharges prov ided to each serv ice department Generate recharges Share with Finance Depts and make any changes Query handling on recharges Final recharges v alidated and agreed Process all recharges across the serv ice Process actuals at y earend Recharges prov ided f or budget Uploaded budget Upload budgets when agreed Control/ rev iew budgets v s actual to ensure balanced across council Record to Report Chart of Accounts maintenance: •Approve changes to structure Capital and Other Financing Policies Posting Approval: •Approve journals •Approve sales adjustments •Approve allocations & recharges Management & Financial controls: •Review / approve Balance sheet reconciliations •Reviews •Internal audit •Co-ordinate external audit process SSC Processing & Posting: •Maintain & allocate profiles •Journals - create & post •Uplifts / uploads •Accruals & prepayments •API/ interface management •EDI interface management •Banking system/ sales adjustments •Banking transactions •Other GL interfaces •Allocations & recharges •Journal Adjustments Budget & Forecast maintenance: •Load budgets & forecasts into GL •Maintain Forecasts Period End Processing: •Close ledgers, sub ledgers and feeder systems •GL close and roll-over •Re-open sub-ledgers •Prior period postings? Chart of Accounts maintenance: •Add cost centres •Add account codes •Rearrange CoA Management & Financial controls: •Balance sheet reconciliations •Control / validate data from feeder systems •Manual controls •Reviews •Treasury Period End reporting: •Flash reporting •Standard management reports & Data extracts •KPIs •Corporate reporting •Consolidation •Capital reporting •Statutory data / information •VAT reporting •Tax reporting Quarterly / Half-Year / Year-end reporting: •Flash reporting •Standard management reports & Data extracts •KPIs •Corporate reporting •Consolidation •Capital reporting •Statutory data / information •VAT reporting •Tax reporting Produce Analysis Data: •Standard reporting packs •Standard performance data Budget & Forecast •Agree budgets •Maintain Forecasts Business Analysis & Review: •Challenge vs budget/ f’cast •Decision support •Accounting judgement •Risk analysis •Capital appraisals Period End Processing: •Determine / publish cut-offs External Returns Business Intelligence Annual/ periodic reporting Service Departments and Local Finance, External Agencies Management reporting: •Reporting commentaries •Analysis & dissemination of results Redesigning Processes and Organisation Structures Budgeting & Planning Record to Report Process Overview: Budgeting & Planning (including Capital Projects) Requests for Budgeting & Planning (including Capex) Information Control & Stewardship Budgeting & Planning Assumpti ons & Inputs Budgeting & Planning Preparation • • • Decide on budget process & timetable for completion • Notify service depts of their key requirements & commitments Set framework for Capex Project Process • • • Prepare timetable and instructions • Liaise with budget / capex holders for any changes and issue instructions, assist with queries • Provide assumptions and framework for budgets, forecasts and capex related projects Maintain budgeting & planning models Process changes to assumptions and calculations in models Validate assumptions Provide impact assessment to budget / capex holders Budget & Forecast Data Processing & Iterations • Budgeting & Capex System • Input data • Generate outputs • Error identification & resolution Identify changes required & notify/ assist with error resolution Process changes & iterations Identify changes required and agree final version Local responsibility SSA responsibility Finalise Outputs Generate Budget & Forecast Reports Prepare Budget & Forecasting Packs • Generate & Issue version for review • Budget, forecast capex report generation • Review ,identify and notify changes • • Finalise Reports ready for sign off including standard commentary Load information in core reporting / BI systems etc for comparison against actuals/ for tracking purposes • Respond to queries • Standard periodic reporting • Adhoc analysis via BI tools • Finalise commentary & signoff final version Record to Report Split of Effort: Budgeting & Planning (including Capital Projects) Respective roles of Local Finance and SSA Effort Split Local Finance 1. Planning & Preparation SSA 50% 2. Provide Assumptions 20% 3. Data Entry & Processing 5% 4. Iterations 20% 50% 80% 95% 80% 5. Reporting 100% • Standard “rules based” reporting 100% • Adhoc analysis reporting 6. Response to User Queries 7. Stewardship 10% 90% 5% 95% Local Finance & SSA equally responsible Note that the respective roles of Local Finance and FSS are described only when an interactive relationship exists • Budgeting & Planning Preparation - SSA will receive notification from Local Finance of framework approach and Local Finance / SSA will jointly liaise with service departments in planning etc • Provide Assumptions – Local Finance provide assumptions and SSA updates to models with these changes in assumptions • Data Entry & Processing- SSA will process the data and validate/ solve certain discrepancies together with Local Finance. • Iterations- Local Finance will review and request changes. SSA will process these changes • Reporting- For local reporting: SSA will provide standard rules based reports. With BI tools local Finance can generate adhoc reports locally • User Queries- Local Finance & service departments will request information from the SSA where elements are under their control • Stewardship- SSA will be responsible for quality of data processing and generating outputs and Local Finance will be responsible for the overall final agreement and signoff of figures and commentary. Members Financial Strategy and Planning Process Map Senior Management Local Corporate Finance Local Finance Shared Services Chief Executive/ Senior Directorate Lead Meeting with Lead Members f or Serv ice Depts f or Approv al Discussion on Ov erall Finance Plan gaps and how gaps are to be distributed between depts Apportioned between div isions with targets Set expectations/ assumptions eg inf lation, prudential indicators (borrowing within limits) and rev enue f unding gaps/ capital exp lev els Decide on apportionment/ balancing priorities Discussions & adjustments f or inf lation etc Process and Agree Base Budget Cash Limits set by Corp Finance & Dept Finance Prepare report to Include in Council Management Board (CMB) Prov ide inf ormation to Local Finance Discussed with Lead Members f or Serv ice Depts Budget Consultation process complete ready f or preparation stage Managers Budget Preparation Process Map Service Finance Shared Services Directorate Local Set detailed Budget Timetable Senior Corporate Finance Local M emb er s Forecast of estimates to conf irm correct Look into way s to f ind sav ings/ how can be achiev ed Generate ov erall corporate timetable Prov ided with pressures & redirections determine f ocus of spend- identif y f urther sav ings) - No of iterations Final agreed sav iings etc Prepare base budget in excel (using download f rom GL as starting point) Apply % to categories of income/ expenditure Inf lation elements/ cash limits Calculate salary and other cost estimates Major v ariancesand how they are to be f unded Manual transf er to spreadsheet with cost centre Identif y pressures and redirections Kept in loop giv en reports at end of process Set targets f or sav ings When budget f inalised receiv ed in Corporate Macro f or indiv idual budget holders bef ore uploaded into GL Adv ise of any special adjustments First iteration of budget Further iterations of budget until f inalised Budget extract to upload to GL and reconcile Budget books produced/ rate leaf let based on calculations and publication Reports to Members Corporate Finance Local Senior Management Local Finance Shared Services Budget Holders Budget Monitoring Process Map Budget Holders receiv e latest report f rom GL Run Month-end Close. Prepare Template (exp by category ) to help serv ice depts with commentary eg action plans to address ov erspendetc Latest budget, actual spend and projection(monthly return) av ailable online- analy sed and adjusted Receiv e completed prof orma with adjustments/ f orecasts Response to Queries Prepare summary sheet f or whole dept plus commentary , key ing in ov erspend/ underspend Directorate meet with budget holders to v alidate and check v ariances bef ore submission Rev iew of content -Queries , Validation and Adjustments ( also any j/e in GL) Other detailed analy sis eg salaries by indiv idual exp to date prov ided by Finance per SLA Final Agreed Summary Position (plus v ariances commentary ) Summary included f or discussion as part of Regular meetings Budget inf o prov ided as part of Regular meetings If not agreed f urther v alidation/ analy sis/ discussion. If agreed prov ide to Budget Holders & Senior Management Summary included f or discussion as part of Regular operational meetings Summary Template submitted to Corporate Prepare Cabinet Report when Finalised (also prov ide to lead memberssummary tailored v ersion) Budgeting & Forecasting Set budget parameters & assumptions: •Inflation •Targets •Exchange rates •Timescales •Strategic assumptions Review Update initial budget to produce “various iterations” Approve? SSC Compile public sector relevant data eg funding sources Management reporting: Analysis & interpretation Compile “initial version” of budget using defined assumptions. Compile overhead data Compile historic (actual) data Budget /forecasting control: •Maintain budget parameters /budget holders, etc. •Manage controls •Manage budget workflows Upload final budget to budget system Regular reporting: forecasts vs. budgets Compile historic (actual) financial data Compile next forecast (actuals to-date + forecast to end of year ) Upload approved forecast to budget/forecast system Update forecast to produce next forecast Review Approve? Service Departments and Local Finance/ Corporate Finance Business Intelligence Business Analysis & Review: •Budget/ forecast challenge •Judgement •Risk analysis Redesigning Processes and Organisation Structures Treasury Management Record to Report Split of Effort: Treasury Mgt Respective roles of Business and SSC Effort Split Local Finance 1. Annual cash flow forecast 4. Treasury policy & strategy 80% 20% 20 % 80% 20% 6. Short term borrowing 20% 7. Long term borrowing 20% 9. Investments 80% 20% 5. Capital financing 8. Debt management 80% 20% 2. Maintain a daily cash flow forecast 3. Maintain the daily cash position SSC 80% 80% 80% 20% 80% 20% 80% Overall Note that the respective roles of Local Finance and FSS are described only when an interactive relationship exists • Annual Cash Flow Forecast- SSC is liaise with relevant service managers to produce draft forecast for detailed review and follow-up by client • Daily cash flow forecast- maintain up to date with reference to actual cash flows and anticipated changes. Client to monitor and to be involved by exception • Daily cash position – SSC will maintain the cash balance within pre-defined parameters. • Treasury policy & strategy SSC to obtain expert advice and advise the Section 151 Officer on all aspects of policy, strategy, implementation and monitoring. • Capital financing - SSC to advise the Section 151 officer on the financing of the Council’s capital expenditure. To include evaluation of the various financing options. • Short /long term borrowing – SSC to undertake the necessary short term borrowing as part of maintaining the short term cash position. Also to ensure that long term borrowing arrangements are in place in accordance with the requirements of the capital financing strategy. • Debt management – SSC to report to the Section 151 Officer on opportunities for debt re-scheduling in order to minimise future costs of borrowing. • Investments - SSC to advise the Section 151 Officer and have arrangements in place for maximising the Councils investment opportunities. Drawdown or lend money (may borrow f or capital and reported to corp f inance) Daily consolidated report Daily and f orecast cash f low plan"Predictor" "Predictor" Forecast model - known sources of income/ expenditure/ judgement on patterns of expenditure Daily cash f low sheet Reconcile to predictor & check v ariance OK/ giv es assurance Interest budget report v ariance (rules based on Treasury strategy ) Make decision based on cash def icit or surplus Corporate Finance Local Service Dept Cashiers Treasury Mgt Shared Services Bank Service Dept Treasury Process Map Inv estments Flash update-v iew on where hold inv estments and any problems Treasury report supplied to Cabinet Banking Process Map Bank Suppliers Cheques printed and despatched or BACS remittances receiv ed BACS / Other Electronic Pay ments Treasury Mgt Shared Services Electronic Statement Expenditure analy sed, checked and coded Cashiers Local Details receiv ed f rom Cashiers Statements receiv ed f rom Treasury / Income details- code & post into GL Send out BACS / or cheque pay ments f iles Other Finance Shared Services Deal with BACS rejects CHAPSpay ments/ currency Report-monthly Treasury update (serv ice lev els/ KPIs) Post cheques into sy stem Corporate Finance Local Reconcile to Fund Holders Service Dept Budget Holders Download & f ormat statements Treasury Report Income Postings into sy stem Expenses Postings into sy stem Postings into sy stem Redesigning Processes and Organisation Structures Internal Audit Record to Report Split of Effort: Internal Audit Respective roles of Business and SSC • Review of internal controls- SSC to undertake audit tests to assess and evaluate strength of internal controls. Local Finance SSC Evaluate the extent to which the Council facilitates good practice in managing risk. • Management reviews- Undertake reviews and examine the extent to which performance and best value reviews are incorporated into business processes. 10% 90% 1. Review of internal controls • External audit- SSC to liaise with external audit in compliance with the audit code of practice and managed 90% 2. Management audits/reviews 10% audit requirements. Involvement of the client in ensuring 10% 3. External audit an effective managed audit process is essential. 90% • Internal audit strategy- SSC to undertake a risk needs 10% 4. Internal audit strategy 90% assessment to inform the audit strategy and to produce an annual audit plan. The Section 151 will undertake a 90% 5. Internal audit reports 10% detailed review of this work. 10% 6. Systems auditing • Internal audit reports- SSC to draft all internal audit 90% reports in compliance with the agreed format, content and 90% 10% 7. Computer auditing timescales. • Systems auditing- SSC to undertake a risk based 90% 8. Contract auditing 10% approach to systems audits including testing and reviewing 20% 80% controls as well as providing a professional opinion on the 9. Fraud & corruption adequacy, effectiveness and reliability of the system. • Computer auditing- Specialist work undertaking an assessment of the adequacy of controls in a complex environment • Contract auditing- SSC to undertake tests in compliance with standing orders and financial regulations Note that the respective roles of Local Finance and FSS are described only when an • Fraud & corruption- Bringing to the attention of the Section 151 Officer any primae facie evidence of fraud and interactive relationship exists corruption Effort Split Record to Report Process ERP Application Architecture: Total Finance • Manual journal entry proposals and financial data updates will be sent to SSC using workflow • Where local budgeting systems exist, a standard capability to load budget balances into the GL will be provided • The ability to extract data will be provided for local management reporting purposes SSC Interface Council Tax Ctax Other Systems Services Payroll Systems Payroll Bens/Allow Housing Data Extracts SSC ERP System Invoices FA CoA FA Budgeting Systems Budget Data Billing Collection AR Workflow Actual Journal Data Budgeting Data Payments AP P.O. Receipts GL Reporting Database PO Consolidated Data