appendix 5.1 redesigning processes and organisation structures version 1.0 the following slides...

Appendix 5.1Redesigning Processes and Organisation StructuresVersion 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.

Supplier Reconciliation/AP Reporting

Process Overview: Purchase to Pay

Supplier Master File Maintenance

Purchase Ordering & Goods Receipting Invoice Processing Payments Processing

Purchase to Pay Audit Controls & Stewardship

• New Supplier identification/request

• Align with Preferred Supplier Initiatives

• Supplier databasemaintenance

• Amend Supplier Records• Housekeep Supplier

Records• Maintain strong audit

controls to prevent fraudulent setup

• 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

• Raise purchase orders• Receipt goods and

services• Make adjustment s and

track outstanding purchase order commitments

• 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 and Service Department s Calls & Queries

Record to Report

Combined responsibility

SSA responsibility

Split of Effort: Purchase to Pay

Record to Report

1. Supplier Masterfile Maintenance

2. Purchase Ordering

3. Goods Receipting.

4. Invoice Processing

5. Payments Processing

6. AP Reconciliation

7. AP Reporting

8. Supplier Related Queries

9. Control/ Stewardship

Effort SplitLocal Finance SSA

Respective roles of Local Finance and SSA

• 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.

10%

Business and SSA equally responsible

100%

90%

90%

100%

10%

95%5%

100%

100%

100%

Go

od

s R

ecei

vin

gP

rocu

rem

ent

R2R

Sh

ared

Ser

vice

Te

am

Bu

yers

Accounts Payable - Procurement Process Map

Pay ment &remittance

BACS pay ments

Non-compliancepurchasing report

Resolv ediscrepancies and

respond toqueries

Receiv e & checkphy sical goods

Pay ments reports(standard control

reports)

Inv oice receiv edwith PO ref erence(scan in sy stem)

Tre

asu

ryS

har

ed

Ser

vice

Decide if can setupnew Vendor/ Manageand update Supplier

database

P2P

Sh

ared

Ser

vice

Tea

mS

up

pli

ers

3 way match Exceptions

Processed BACSFile (Treasury )

Pay mentsreconciliation

Order receiv ed bysupplier

Year-end -resolv e

outstandingcommitments/

clear suspense

Respond topay mentqueries

Pay mentselements of VAT

Accounting &Returns

Pay mentsqueries

Checkstatements f or

old items

Raise purchaseorder & updatecommitments in

sy stem

Year end pay mentsrelated GeneralLedger control

accountreconciliations

Goods/ serv icereceipting

Despatch goods/serv ices

Vendorresolution

MaintainAuthorisation

Hierarchy

JournalAdjustments

and write-of f s

SLA/ Serv iceManagementPerf ormance

reporting f or AP

Check f undsav ailability /

approv epay ments f iles

Go

od

s R

ecei

vin

gR

2R S

har

ed S

ervi

ceT

ea

mB

uye

rsAccounts Payable and Staff Expenses (Non-Procurement Channel) Process Map

Pay ment &remittance

BACS orCheque

pay ments

Resolv ediscrepancies

Buy er completesPay ment request

f orm on line orsubmits inv oicereceiv ed f rom

supplier

Pay ments Run

Rev iew & processpay ment request/inv oice / expense

claim in sy stem

Tre

asu

ryP

2P S

har

ed S

ervi

ceT

ea

m

Su

pp

lier

s/E

mp

loye

es

Validation and onlineautomated check

against authorisationlimits/ approv ed by

Pay Of f icer

Upload andAuthorise

pay ment f orbulk uploads


Pay mentsreconciliation

Respond topay mentqueries

Pay mentsQueries

Despatch goods/serv ices

Pro

cure

men

t

Inputs into APSy stem

Transmit bulkupload f iles f or

pay ment

Chase emails ifnot authorised

Respond toPay mentsQueries

Goodsphy sically

receiv ed andchecked

Staf f expensesclaim completed

online

MaintainAuthorisation

Hierarchy

Year-end -resolv e

outstandingcommitments/

clear suspense

Pay mentselements of VAT

Accounting &Returns

Year end pay mentsrelated GeneralLedger control

accountreconciliations

SLA/ Serv iceManagementPerf ormance

reporting f or AP &Staf f Expenses

Check f undsav ailability /

approv epay ments f iles

Pay mentsreports

(standardcontrol reports)

Service Department Buyers & Authorisers, Goods Receiving, Procurement & Local Finance Departments

Shared ServicesManage supplier base:•Control & maintain suppler database•Supplier set up on ERP•Block suppliers / invoices

Purchase to Pay

Policies

Strategic / tactical procurement

Manage supplier base:•Identify & select suppliers•Define terms•Approve new suppliers•Approve vendor modifications•Catalogues / prices•Monitor supplier performance

Place purchase orders:•Determine requirements•Raise requisition•Approve requisition•Place order (all types)•Notify supplier•Amend / cancel orders

Goods Receipting:•Inspection•GRN raising

Goods Receipting:•Upload GRN to AP for matching

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

Employee expenses:•Receive expense report•Process credit card statements•Check / validate•Raise / progress queries•Notify payment date•Process payments 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

Document scanning and workflow

Authorise Invoices

Validate and authorise expenses

Resolve queries / disputes

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

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

Management information:•Standard financial control reporting•SSC service level reporting

Management Information:•Service Dept Finance analysis

SLA / service management

Financial control:•Maintain / approve authorisation hierarchy•Ensure data accuracy / completeness

Payment / Cash Control:•Approve funds release


Redesigning Processes and Organisation Structures

Sales Order to Cash

Cash Application Processing

Process Overview: Sales Order to Cash

Customer Master File Maintenance

Sales Order Processing

Sales Invoice Processing

Credit Control & AR Reconciliation/

Reporting

Customer to Cash Audit Controls & Stewardship

• New customer request

• Set credit limit criteria & agree exceptions

• Credit Control Assessment

• Customer databasemaintenance

• Amend customer Records

• Housekeep customer records

• Chase debts

• Respond to queries

• Process adjustments within agreed rules/tolerance

• Apply cash against customer account

• Raise sales orders

• Deliver goods and services

• Generate sales invoices

• Despatch invoices

• Issue statements

Customer and Service Department Calls & Queries

Record to Report


SSA responsibility

• Dispute resolution and agree adjustments to debts outside tolerance

• Bad debt provisioning

• Issue reminders

• Deal with legal

• Close AR period

• Run & Issue AR reports

• Process journal adjustments eg bank charges/ write offs

• Bank reconciliations

•Bank cheques

and transmit banking details to SSA to apply to Sales ledger

Split of Effort: Sales/Fees Order to Cash

Record to Report

1. Customer Masterfile Maintenance

2. Sales Ordering

3. Deliver Goods/Service

4. Sales Invoice Processing

5. Credit Control

6. AR Reconciliation /Reporting

7. Cash Application

8. Customer Related Queries




• 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.


90%

100%

10%

95%5%

100%

100%

100%

80%20%

5% 95%

Cas

hie

rs

(Lo

cal)

Cen

tral

D

atab

ase

Sh

ared

S

ervi

ces

Tre

asu

ry

Sh

ared

Ser

vice

s

Ser

vice

Dep

artm

ents

Sales Order to Cash - Income (Debtors) Process Map

If required setupDD/ Giros

(segregationreasons)

Reconciliation ofDebtors (auto

sy stems check)

Debtorreports

Raise Inv oices

Leg

al (

Lo

cal/

Sh

ared

S

ervi

ces)

If required setupnew customer

(all masterf ile setupdone centrally bydatabase team)

Sal

es O

rder

to

Cas

hS

har

ed

Ser

vice

sC

ust

om

ers

Debt Management(Credit Control

Chasing/negotiations with

debtors)

Adjustments/corrections

Customers makepay ment

Bad debtprov isions/ writeof f s determined

Make/respond to

income/debtor related

queries

Income relatedinv oices/receipts

debtor queries

Serv iceDepartments etc

generates requestto raise inv oice

BankReconciliations

Customerresolution

Cash/ cheques/direct bankpay ments

Discuss action topursue debt

Validate agreeadjustments to

inv oices

Cash applicationprocessing

Raise Inv oice onSales Order toCash Sy stem

(sy stem generated)

Update Sy stemf or inv oices/

receipts

Bad debt writeof f s processed

on sy stem

Make/respond to

income/debtor related

queries

Service/ Local Finance Departments

SSC

Policies

Strategic customer decisions

Set up specific agreements with customer:•credit terms•rent / deposits•general terms / pay plans•pricing & discountsCustomer approval and set

up:•credit limit•contract

Customer set up:•credit checking•contract details / changes•DD authorisation•Set up on system

Contract management

Account closure Authorisation

Customer maintenance:•Maintain customer data on system•Close account•System archives•Automation / bespoke routines

Maintain paper / doc image records & archives

Invoicing:•Raise invoice •Credit notes / invoice adjustments•Issue refunds•Recharges / refunds•Issue statements

Initiate invoice / credit note / recharge process

Payments & Cash:•Receive payments•Allocate cash

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

Credit control:•Customer dialogue•Approve CC actions•Review CC issues

Query management

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

Produce management information:

Cash & Bank:•Receipts processing•Receipts reconciliation•Financialcontrols•Maintain master data•Internal control reports

Treasury policy

Banking relationships

Sales Order to Cash

Monitor/sign off financial controls

Analyse management information

Ensure data accuracy / completeness

Produce statutory information

Cashiers

Management information:•Standard SO2C reporting•SSC service level reporting

Management Information:•Service Dept SO2C analysis




Hire to Pay

Payroll Reconciliation/Payroll Reporting

Process Overview: Hire to Pay

Employee Records Master File

Maintenance

Manager/ Employee Self Service

Payroll Processing Payments Processing

Hire to Pay Audit Controls & Stewardship

• New employee contract details

• Changes to existing employee records

• Employee recordmaintenance

• Amend employee records

• Housekeep employee records

• Maintain strong audit controls to prevent fraudulent setup

• Process payroll payment run

• Transmit payroll payments to bank

• Make payroll related payment deductions eg PAYE/NI

• Reconcile payroll accounts

• Issue standard payroll reports electronically to service departments

• Close payroll and reconcile payroll GL accounts

• Submit authorised employee changes requests eg promotions

• Submit authorised employee pay adjustments- eg overtime, annual review

• 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

Employee and Service Department s Calls & Queries

Record to Report


SSA responsibility

• Run Final authorised gross to net payroll

Split of Effort: Staff Hire to PayRecord to Report

1. Employee Masterfile Maintenance

2. Manager Self Service

3. Employee Self Service

4. Payroll Processing

5. Payroll Payments Processing

6. Payroll Reconciliation

7. Payroll Reporting

8. Payroll Related Queries




• 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.

10%


100%

90%

90%

100%

10%

100%

100%

100%

80%20%

Em

plo

yee

Lo

cal H

RT

reas

ury

/ F

inan

ceS

har

ed

Ser

vice

sS

ervi

ce

Man

ager

sPayroll Process Map

Inland Rev enuepay ments

BACS pay rollpay ments

Starters Pack

Pay roll postingsin GL

MSS - Processdetails directly atsource on pay roll

sy stem

DatabaseChanges - newstart joiners inf o

f rom HR etc

One time inputs (access to MSS -

absence, holiday setc

Pay roll Grossto Net reports

Notif ied of starter/check receiv ed

documents/ pay rolldatabase updates/

checks on records egpay rates

Lo

cal

Fin

ance

Maintainorganisation

structure

ESS Changes egchange ofaddress

Pay

roll

Sh

ared

Ser

vice

sE

xter

nal

A

gen

cies

Pay roll processing incinternal reports f or

v alidation

Run posting topay roll

sy stem/ GL


Employ ee pay slips

Pay rollreconciliation

Pay deductionsper agreement eg

union dues

Database updates- Tax codes, courtorders, v oluntarydeductions setup,

self employ edstatus

Serv ice DeptPay roll Related

Cost Centrereports (Finance)

CompliancePAYE- ,P45,

taxable benef itsreturns, Self

employ ed f ormsetc

Receiv econtractual letters

Respond topay roll queries

Notif ication of changeletters required

Pay rollqueries

Generatecontractual

letters

Employ ee RecordChange

notif ications -Leav ers andRegrades etc

Respond topay roll queries

HR , Service Departments and Local Finance, External Agencies

Shared Services

Hire to PayHuman Resources Policies

Recruitment Hire Requests:•Determine requirements•Raise jobs requisition•Approve job requisition•Applications/ Interviews•Job Offers & Acceptances•Contracts

Authorisation New hire details from Service departments

New Employee Record Processing:•Load New Employee details in payroll system

Payroll processing:•Process payroll changes•Generate payroll run•Review for payment•Copy payslips•Maintain authorisation lists and hierarchies•Validate authorisation•Respond to queries

Document scanning and workflow

Authorise Employee Changes

Resolve queries / disputes

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

Management Information:•Service Dept Payroll analysis



Manager Self ServiceEmployee Self Service

Staff Overtime etc Processing:•Load Overtime details in payroll system•Promotions, changes to hours etc•Annual / periodic changes to salaries

Treasury

Payroll Reconciliations & Reporting:•Reconcile Payroll/ GL•Reconcile Other Payroll Accounts•Make payments to external agencies•Provide external agencies with periodic/ annual returns

Queries from Employees and Service Managers/ Pensioners

Queries from external Parties/ agencies


Record to Report

Reporting

Process Overview: Record to Report

Financial Data Maintenance

Manual Data EntryAutomatedData Entry Reconciliation

Closing

Control & Stewardship

• CoA structure identification/request

• Financial data request Local, Actual, Budget)

• CoA structure maintenance

• Maintain different financial data dimensions

• Finance subsystems criteria maintenance

• Cost codes maintenance

• Closing timetable creation

• Closing timetable validation

• Execute draft close

• Validate draft close/Final adjustments

• Final closing

• Standard reports generation

• Reporting information submission to Local management

• Provision of core financial data and respond to transactional queries

• Cost centre standard management reporting generation

• Standard statutory reporting

• Review & authorise final reports

• Decision support & adhoc management reporting

• Non- standard Journal entry identification

• Standard journal identification

• Journal entry

validation

• Journal entry

posting

• Journal & back up documentation archiving

• Finance subsystems

• Run subsystem cycle

• Provide sub-system information

• Sub-system integrity analysis

• Sub-system entries:

• Interface validation


• Exception accounts analysis

• Discrepancy resolution

• Bank reconciliation

• Validation


Requests for Financial Information

Record to Report


SSA responsibility

Split of Effort: Record to ReportRecord to Report

1. Financial Data Maintenance

2. Manual journals

3. Automated data entry/Recon.

4. Closing

5. Reporting

• Standardreporting

• Adhoc/Mgmt reporting

6. Response to User Queries

7. Stewardship

95%


Respective roles of Business and SSA

• 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.

10%

5%

Business and FSS equally responsible

100%

90%

90%

90% 10%

80%20%

10%

Note that the respective roles of Local Finance and SSA are described only when an interactive relationship exists

95%5%

100%

Seni

or

Man

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Loca

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ared

Serv

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Loca

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orpo

rate

Fina

nce

Serv

ice

Man

ager

sFinal Close Process Map

Prepare CabinetReport when

Finalised

Check f inal positionand make f inal journaladjustments/ ensure

journals rev ese innext period

Produce High lev elv ariance analy sis

f or Seniormanangent

Discuss, makeany changes ,

agree and f inalise

Base DetailedStep by StepTimetable on

CorporateTimetable

Coordinate/ checkreturns/ v alidate audit

trail/ prepare andpost journal entries in

GL

Examine out-turnreport to check if

f urther adjustmentsrequired/ ensure all BS

codes reconciled

Prov ide relev antletters, templates

f or debtor/creditor requests

Complete inf o ondebtors and

creditorsResponse to

Queries

Final rev enue andcapital out-turn

reportSet Timetable

Query anyv ariances/

explanations

Examine each costcentre ensure allaccounted f or/

ensure projects c/fare correctly stated

Produce balancesheet

reconciliationreport f or each

account/ rconcilereports

Produce reports f orMembers/ Gov t/ Stat

Returns/ RO/RA/ S152etc - dif f erent f ormats

Rev iew technicalaspects of

reports and makeav ailable f orconsolidation

Loca

l Fin

ance

Fina

nce

Shar

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rvic

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L Tr

ansa

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ared

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Annual Central Support Recharges Process Map

Recharges prov idedto each serv ice

department

Agreed raw dataused to calculate

recharges

Process allrechargesacross the

serv ice

Generaterecharges

Activ ity Data f orRecharge

Calculations

Query handling onrecharges

Uploaded budget

Initial v alidation f orreasonableness

Notif y whenrechargesprocessed

Rechargesprov ided f or

budget

Share withFinance Deptsand make any

changes

Final rechargesv alidated and

agreed

Upload budgetswhen agreed

Process actualsat y earend

Control/ rev iewbudgets v s actual

to ensurebalanced across

council

Service Departments and Local Finance, External Agencies

SSC

Record to Report

Policies

Capital and Other Financing

Chart of Accounts maintenance:•Add cost centres•Add account codes•Rearrange CoA

Chart of Accounts maintenance:•Approve changes to structure

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

Posting Approval:•Approve journals•Approve sales adjustments•Approve allocations & recharges

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?

Period End reporting:•Flash reporting•Standard management reports & Data extracts•KPIs•Corporate reporting•Consolidation•Capital reporting•Statutory data / information•VAT reporting•Tax reporting

Management reporting:•Reporting commentaries•Analysis & dissemination of results

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

External Returns

Management & Financial controls:•Balance sheet reconciliations•Control / validate data from feeder systems•Manual controls•Reviews•Treasury

Management & Financial controls:•Review / approve Balance sheet reconciliations•Reviews•Internal audit•Co-ordinate external audit process

Business Intelligence

Produce Analysis Data:•Standard reporting packs•Standard performance data

Business Analysis & Review:•Challenge vs budget/ f’cast•Decision support•Accounting judgement•Risk analysis•Capital appraisals

Budget & Forecast •Agree budgets•Maintain Forecasts

Period End Processing:•Determine / publish cut-offs

Annual/ periodic reporting


Budgeting & Planning

Prepare Budget & Forecasting Packs

Process Overview: Budgeting & Planning(including Capital Projects)

Budgeting & Planning

Preparation

Budgeting & Planning Assumpti

ons & Inputs

Budget & Forecast Data Processing & Iterations

Generate Budget & Forecast Reports

Control & Stewardship

• 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

• Generate & Issue version for review

• Review ,identify and notify changes

• Finalise Reports ready for sign off including standard commentary

• Finalise commentary & signoff final version

• Budget, forecast capex report generation

• 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

• 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

• 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

Finalise Outputs

Requests for Budgeting & Planning (including Capex) Information

Record to Report

Local responsibility

SSA responsibility

Split of Effort: Budgeting & Planning (including Capital Projects)

Record to Report

1. Planning & Preparation

2. Provide Assumptions

3. Data Entry & Processing

4. Iterations

5. Reporting

• Standard “rules based” reporting

• Adhoc analysis reporting

6. Response to User Queries

7. Stewardship

95%



• 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.

5%

Local Finance & SSA equally responsible

100%

80%

90% 10%

80%20%

50%

Note that the respective roles of Local Finance and FSS are described only when an interactive relationship exists

95%5%

100%

50%

20%

Fina

nce

Shar

edSe

rvic

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hief

Exe

cutiv

e/Se

nior

D

irec

tora

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orpo

rate

Fin

ance

Loca

lSe

nior

M

anag

emen

tLo

cal

Lead

M

embe

rsFinancial Strategy and Planning Process Map

Discussed withLead Members f or

Serv ice Depts

Process andAgree Base

Budget

Meeting with LeadMembers f or

Serv ice Depts f orApprov al

BudgetConsultation

process completeready f or

preparation stage

Discussion onOv erall FinancePlan gaps and

how gaps are tobe distributed

between depts

Apportionedbetween div isions

with targets

Set expectations/assumptions eg

inf lation, prudentialindicators (borrowing

within limits) andrev enue f undinggaps/ capital exp

lev els

Decide onapportionment/

balancing priorities

Discussions &adjustments f or

inf lation etc

Cash Limits set byCorp Finance &Dept Finance

Prepare report toInclude in Council

ManagementBoard (CMB)

Prov ideinf ormation toLocal Finance

Seni

or

Dir

ecto

rate

Loca

lFi

nanc

e Sh

ared

Serv

ices

Cor

pora

te F

inan

ceLo

cal

Mem

ber

sSe

rvic

e M

anag

ers

Budget Preparation Process Map

Reports toMembers

Finalagreedsav iings

etc

Apply % tocategoriesof income/

expenditure

Budget booksproduced/ rate

leaf let based oncalculations and

publication

Set detailedBudget Timetable

Set targets f orsav ings

Prov ided withpressures &redirections

determine f ocus ofspend- identif y

f urther sav ings) - Noof iterations

Firstiteration of

budget

Prepare basebudget in

excel (usingdownload

f rom GL asstarting point)

Look into way s tof ind sav ings/ howcan be achiev ed

Forecast ofestimates to

conf irmcorrect

Budgetextract toupload toGL and

reconcile

Kept in loop -giv en reports atend of process

Generateov erall

corporatetimetable

Identif ypressures and

redirections

Inf lationelements/cash limits

Majorv ariances-

and how theyare to bef unded

Calculatesalary andother costestimates

Manualtransf er to

spreadsheetwith cost

centre

Adv ise of anyspecial

adjustments

Furtheriterationsof budget

untilf inalised

Macro f orindiv idual

budgetholdersbef ore

uploadedinto GL

When budgetf inalised receiv ed

in Corporate

Seni

or

Man

agem

ent

Loca

lFi

nanc

e Sh

ared

Serv

ices

Cor

pora

te F

inan

ceLo

cal

Bud

get

Hol

ders

Budget Monitoring Process Map

Prepare CabinetReport when

Finalised (alsoprov ide to lead

members-summary tailored

v ersion)

Prepare summarysheet f or whole dept

plus commentary ,key ing in ov erspend/

underspend

Final AgreedSummary Position

(plus v ariancescommentary )

Summary includedf or discussion as

part of Regularmeetings

Run Month-end Close.Prepare Template (exp bycategory ) to help serv icedepts with commentary

eg action plans toaddress ov erspendetc

Receiv ecompleted

prof orma withadjustments/

f orecasts

If not agreed f urtherv alidation/ analy sis/

discussion. If agreedprov ide to BudgetHolders & Senior

Management

Rev iew of content-Queries ,

Validation andAdjustments

( also any j/e inGL)

Budget Holdersreceiv e latestreport f rom GL

Latest budget,actual spend andprojection(monthly

return) av ailableonline- analy sed

and adjusted

Response toQueries

Summary includedf or discussion as

part of Regularoperationalmeetings

SummaryTemplate

submitted toCorporate

Directorate meet withbudget holders tov alidate and checkv ariances bef ore

submission

Other detailedanaly sis egsalaries by

indiv idual exp todate prov ided byFinance per SLA

Budget inf oprov ided as part

of Regularmeetings

SSC

Compile historic (actual) financial data

Budgeting & Forecasting

Set budget parameters & assumptions:•Inflation•Targets•Exchange rates•Timescales•Strategic assumptions

Budget /forecasting control:•Maintain budget parameters /budget holders, etc.•Manage controls•Manage budget workflows

Compile public sector relevant data eg funding sources

Compile overhead data

Compile next forecast (actuals to-date + forecast to end of year )

Approve?

Upload final budget to budget system

Regular reporting: forecasts vs. budgets

Management reporting:

Analysis & interpretation

Compile historic (actual) data

Business Intelligence

Business Analysis & Review:•Budget/ forecast challenge•Judgement•Risk analysis

Compile “initial version” of budget using defined assumptions.

Update initial budget to produce “various iterations”

Review

Approve?

Update forecast to produce next forecast

Review

Upload approved forecast to budget/forecast system

Applies to all types of budgets

Service Departments and Local Finance/ Corporate Finance


Treasury Management

Split of Effort: Treasury Mgt

Record to Report

1. Annual cash flow forecast

2. Maintain a daily cash flow forecast

3. Maintain the daily cash position

4. Treasury policy & strategy

5. Capital financing

6. Short term borrowing

7. Long term borrowing

8. Debt management

9. Investments

20%

Effort SplitLocal Finance SSC

Respective roles of Business and SSC

• 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.

20%

80%

Overall

80%

80%

80%

80%20%

80%


80%20%

80%

80%

20%

20%

20%

20%

20%

Tre

asu

ry

Mg

tS

har

ed

Ser

vice

sB

ank

Co

rpo

rate

F

inan

ceL

oca

lS

ervi

ce

Dep

tTreasury Process Map

Daily consolidatedreport

"Predictor" Forecastmodel - known sourcesof income/ expenditure/judgement on patterns

of expenditure

Cas

hie

rsS

ervi

ce

Dep

t

Daily cash f lowsheet

Daily and f orecastcash f low plan-

"Predictor"

Make decisionbased on cash

def icit or surplus

Drawdown or lendmoney (may borrow

f or capital andreported to corp

f inance)

Reconcile topredictor & check

v ariance OK/giv es assurance

Interest budgetreport v ariance(rules based on

Treasury strategy )

Inv estments Flashupdate-v iew on

where holdinv estments and

any problems

Treasury reportsupplied to Cabinet

Tre

asu

ry

Mg

tS

har

ed

Ser

vice

sB

ank

Co

rpo

rate

F

inan

ceL

oca

lS

up

pli

ers

Banking Process Map

ElectronicStatement

Reconcile to FundHolders

Oth

er F

inan

ceS

har

ed

Ser

vice

sC

ash

iers

L

oca

lS

ervi

ce

Dep

tB

ud

get

Ho

lder

s

Download &f ormat statements

Post cheques intosy stem

Details receiv edf rom Cashiers

Send out BACS / orcheque pay ments

f iles

ExpensesPostings into

sy stem

BACS / OtherElectronic Pay ments

Expenditure -analy sed,

checked andcoded

Postings intosy stem

Income Postingsinto sy stem

CHAPS pay ments/currency

Deal with BACSrejects

Report-monthlyTreasury update(serv ice lev els/

KPIs)

Treasury Report

Statements receiv edf rom Treasury / Income

details- code & postinto GL

Cheques printedand despatched

or BACSremittances

receiv ed


Internal Audit

Split of Effort: Internal Audit

Record to Report

1. Review of internal controls

2. Management audits/reviews

3. External audit

4. Internal audit strategy

5. Internal audit reports

6. Systems auditing

7. Computer auditing

8. Contract auditing

9. Fraud & corruption

90%

Effort SplitLocal Finance SSC

Respective roles of Business and SSC

• Review of internal controls- SSC to undertake audit tests to assess and evaluate strength of internal controls. 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.

• External audit- SSC to liaise with external audit in compliance with the audit code of practice and managed audit requirements. Involvement of the client in ensuring an effective managed audit process is essential.

• Internal audit strategy- SSC to undertake a risk needs assessment to inform the audit strategy and to produce an annual audit plan. The Section 151 will undertake a detailed review of this work.

• Internal audit reports- SSC to draft all internal audit reports in compliance with the agreed format, content and timescales.

• Systems auditing- SSC to undertake a risk based approach to systems audits including testing and reviewing controls as well as providing a professional opinion on the 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

• Fraud & corruption- Bringing to the attention of the Section 151 Officer any primae facie evidence of fraud and corruption

10%

80%

90%

90%

90%

90%

90%


90%

10%

20%

90%

10%

10%

10%

10%

10%

10%

Process ERP Application Architecture: Total Finance

SSC ERP System

Actual Journal Data

Invoices

Payroll Systems

Payroll

Payments

AP

GL

Budgeting Data

Reporting Database

Consolidated Data

Budget Data

FA

Billing

Collection

AR

Workflow

• 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

Budgeting Systems

Record to Report

SSCInterface

PO

P.O. Receipts

FA

CoA

Bens/Allow

Housing

Data Extracts

Ctax

Services

Council Tax

Other Systems

appendix 5.1 redesigning processes and organisation structures version 1.0 the following slides...

Documents

system supplier

supplier statements

supplier related queries

purchase orderer

shared service

finance process

ssa of reasons

process invoices scan