The main changes to the BFR 2023 form have been confirmed as:
- included additional help text as a result of feedback and queries raised last year
- pre-populated the opening balances using data from your accounts return 2021/22 this year
- new validation for the GAG income v pupil numbers reported to help improve data quality
- repositioned pupil numbers (line 999), showing this on the front of the form before the revenue section
As with any organisation, academies must carefully manage their budgets to ensure the efficient allocation of resources. Developing a detailed budget that aligns with the academy's goals and priorities is crucial. By forecasting income and expenditure using realistic projections based on historical data, known changes and sound assumptions, academies can proactively plan and make informed decisions to optimise their financial performance.
Key budget forecasting considerations:
- Income: Academies generate income from various sources, such as government grants and additional funding streams, such as partnerships with local businesses, fundraising initiatives, and grants for specific projects. It is essential to analyse the projected income and assess its impact on the budget forecast. Has the academy identified any additional income streams that need to be included in the budget and has the budget reflected the impact of any non-recurrent funds received in the current/prior year?
- Expenditure: Expenses include staffing, facilities maintenance, educational resources, and other operational costs. A thorough review of expenditure patterns allows academies to identify potential savings and allocate funds strategically.
- Reserves: Building and maintaining adequate financial reserves are essential for academies. Reserves act as a buffer for unexpected expenses and help ensure long-term financial stability. The ESFA provides guidelines on reserve levels and encourages academies to establish appropriate policies for managing and replenishing their reserves. As a general rule of thumb, we suggest that revenue reserves should cover at least 4 weeks’ working capital requirements.
Financial management best practices:
In order to monitor, adapt and deliver the budget, consider:
- Financial controls: Implementing effective financial controls helps prevent overspending and ensures transparency and accountability. Regular monitoring of financial transactions, timely reporting, and periodic internal (as well as external) audits contribute to sound financial management.
- Cost efficiency measures: Identifying cost-saving opportunities without compromising the quality of education is difficult but not impossible. This may involve exploring collaborations with other academies, leveraging purchasing power, and optimising energy usage.
- Staff training: Equipping academy staff with financial management skills enhances budgeting and forecasting capabilities. Training programs can help staff and trustees understand financial terminology, interpret financial reports, and make informed decisions regarding budget allocation.
- Seek expert guidance: The ESFA can be contacted with specific queries and also run meetings via Microsoft Teams where you can raise queries. Academies may also benefit from seeking other expert guidance from external sources if there is a need for training or interim support to undertake the budget forecast return.
Budgeting and forecasting for academies requires a holistic approach that considers income streams, expenditure planning, financial reserves, and best practices in financial management. Continuous monitoring, regular reviews, and adaptability are key to success.
The next step
If you have any further questions regarding this insight, please contact Thomas Devonshire.
