As part of the planning process for the Trust’s ‘Towards 2010’ process, they have prepared a ten-year finance model (LTFM) which includes projections of cost improvement plan (CIP) targets. This also identifies which savings are non-recurrent and which are recurrent and gives narrative explanation for this classification. The percentage of CIP delivery planned via non-recurrent means is minimal.
Budgets are uploaded to the General Ledger following approval of the Trust's summary budget by the Trust Board. Each month, the Financial Performance Report contains appendices showing changes to budget at Trust and divisional level starting with the budgets originally approved by the Board. All budgets are held at a cost centre and expense code level on a period basis and reported at an aggregated level for divisional, trust wide or other level as appropriate for summary information. Financial reports are produced from Month one.
The Trust Scheme of Delegation delegates responsibility to budget holders to manage their own budgets. Guidance on managing budgets and the key elements of the Scheme of Delegation are published in the budget book, which is posted on the Trust's intranet. Budgets are set on a combined top down, bottom up approach with the latter taking into account developments and changes identified by divisions and incorporating financial effects in the Trust's overall budget – subject to the constraints (worked on a top down basis) of meeting financial targets and delivering Trust objectives.
Action plans to address material variances are developed at different levels according to the nature and scale of the issue. Adverse variances may be reviewed at any of the following: Divisional Review Meetings, Finance and Performance Management Committee or Financial Management Board.
The enhanced financial performance report includes a summary of activity information and increased information on pay costs, for example analysis of use of agency staff.
Trust policy on virement is covered within SFIs and Scheme of Delegation supplemented by internal procedures on budget changes. Summary budget changes (showing specific significant values) are reported monthly on a Trust wide and divisional basis to the Finance and Performance Management Committee.
The review of variances and actions varies depending on the scale of the issue - high level issues reported to FPC and Board and other issues through the divisional review process and divisional management teams.
Board and Finance and Performance Management Committee reports focus on high level issues which will, or could, materially affect the Trust's or a division's financial performance. The report covers forecast outturn for key financial performance indicators as well as the summary I and E performance. Red/amber/green scoring is used for current period and year-to-date key indicators.
Non recurrent budgets are specifically identified and established solely to address non-recurrent funding sources or other non-recurrent changes or developments. They are removed at the start of the subsequent year's financial planning process and not carried into the following year's budget. On CIPs, all schemes are identified as recurrent or non recurrent and divisions are required to make good any full year effects of non recurrent schemes in the following year as part of initial setting of the CIP.