Now that academies have submitted their budget forecast return outturn, what’s next? It’s the perfect time to start planning for your budget forecast return three-year (BFR3Y) – the next step in academy trust budgetary reporting. These three-year forecasts will be due for submission before the 30th July 2019. So, what can we expect?
What are budget forecast returns?
Last year was the advent of a new three-year forecast, rather than the typical one-year projection of previous years. This involved submitting a detailed budget for the current financial year of 2019-2020 and summarising your predicted budgets for the next two fiscal years.
It can be easy to view this initiative as an annoyance or yet another hoop to jump through, but in reality, this is an excellent opportunity for trusts to get on top of their strategic budgetary planning. Many trusts will already produce detailed forecasts, but this provides a cogent reason for trusts to further invest in their forecasting process and potentially their supporting software.
Why do we need BFRs?
The Education and Skills Funding agency (ESFA) are looking to gain a greater understanding of academy forecasting, but more than that, they want proof that trusts are planning strategically.
Amidst increasing public scrutiny of MATs, this data may be used as proof of proper handling of public funds to appease taxpayers – evidenced by the fact that the ESFA is publishing a September list of trusts that have missed deadlines for two or more annual financial returns in any year.
What will this year’s BFR involve?
This year’s reports will once again involve three-year forecasting and will reopen on 18th June 2019. Bear in mind that your forecasts must be recalculated and resubmitted each year; you can’t expect to recycle last year’s reports and get away with it.
Many changes were made last year, so it is likely that little will be changed for next year’s forms. This means you can get ahead of the curve and start planning now. It’s always a scramble to put these reports together, so anything you can prepare to help ease that burden is huge.
It will be particularly important to focus on your overall net surplus or deficit for each year over the forecast period. While you will have to make some assumptions and your budgets are likely to change, this is a great opportunity to have a deep delve into your trust finances.
Important: National Funding Formula
National Funding Formula has been delayed until 2021, so you won’t need to factor this into your detailed 2019-2020 budget; keep in mind that it may even be delayed further, as this wouldn’t be the first time this has happened.
However, you may need to check that your 2020-2021 and 2021-2022 summary figures make sense in the lens of the new National Funding Formula, which can throw these figures into doubt.
The future of trust budget reporting
In the future, the government will look to automate the reporting process to ease the burden on both trusts and the DfE. As a first step, the government has published a standardised chart of accounts as part of an effort to provide consistency in reporting for all academies.
At the moment, its use is on a voluntary basis, but in the future, this may become mandatory as the DfE encourages all trusts to automate their financial processes.
Getting ahead of the curve
The best way to get ahead of the curve is to implement the right processes and tools for the job ahead of time. You can greatly simplify your annual reporting process by adopting a single ledger financial management system.
PS Financials’ unified ledger software has been built from the ground up to meet the needs of multi-academy trusts and has robust reporting facilities that make budgeting less of a burden. It exists at the forefront of trust finance process automation and is used more than any other FMS within the academy trust sector.
If you’d like to discover an easier way to manage your trust’s financial reporting, visit the PSF website to find out more.