Year-end 2022-23 – budget management
We are now nearing the end of the 2022-23 financial year, so please make sure you check your IPSA work is up-to-date and that budget positions are as you’d expect.
If you carry out some checks prior to 31 March it will help to reduce the risk of overspending.
We will be publishing guidance that focuses on four key areas to consider during the year-end period.
The first of these is budget management.
Why budget management is important
Managing and keeping track of your budget and spending is essential to making the most of your provision. Having a knowledge of what you have spent – and are likely to spend – during a year can help you to control resources and meet your objectives.
Understanding your available budget and projecting your spending will help ensure that value for money is obtained.
Key considerations when managing your budgets
The things you need to include when undertaking budget management are:
Income: this is the total amount of budget assigned – for example, your Office Costs Budget. It is also, however, considering whether any repayments are going to be made to the budget – for example, any sub-let payments.
Costs: this is what you intend to spend your budget on and how much you anticipate this will cost.
Outcomes: consider what the desired outcome of using your budget is. This will help inform you about the likely costs. Consider how much flexibility you’ll likely have in your budget, and ensure that anticipated costs do not take you over budget.
Risks: sound budget management should include a consideration of risks.
Keeping track of costs
Keeping track of costs throughout the year is essential to good budget management.
Because IPSA Online does not present real-time data, maintaining a spreadsheet outside of the system that keeps track of your spending against a budget is important.
At the start of each financial year – forecast your spending against various expense categories (for example, stationery and printing, or bought-in services) – and then each month list your actual spending against these forecasts, noting the variance between your forecasted and actual spending.
Forecasting spending
When forecasting your spending against a budget, consider the difference between fixed and variable costs.
A fixed cost is one that remains the same regardless of usage – for example, rent or council tax.
A variable cost is one that changes with the level of activity – for example, stationery and printing, or equipment purchases.
You can use the previous year's spending to forecast actual spending against expense categories. Using this will help you reflect on whether the spending was typical, or down to certain factors unlikely to reoccur this year.
It could also help you understand any new factors that might need to be considered this year.
IPSA Online – Budget v Expenditure Report
Your IPSA Online dashboard includes an overview of your budgets and spending in the Budget v Expenditure Report.
The Report shows your budget and spending data as a bar chart, and as a table that lists the raw figures.
In the bar chart, your budget allocated is represented as a green column, your spending against the budget is a blue column, and your remaining budget is an orange column.
When added together, the blue and orange columns total the figure in the green column.
IPSA Online – Business Costs Breakdown Report
The best IPSA Online report for monitoring your spending against budgets is by the Link to Reports function listed on your Budget v Expenditure Report table. This appears directly below the bar charts on your dashboard.
This is the Business Costs Breakdown (This Row) Report.
To access this report, scroll to the final column of the Budget v Expenditure Report, select Link to Reports, and then choose Select Link on the budget row you want to view.
Then select Business Costs Breakdown (This Row) from the dropdown list. This Report displays all items currently marked against the selected budget.
This includes any claims, payment card lines, direct payments, payroll costs, and credit notes that have been posted on the system.
IPSA Online – Analyzer tool
When you are looking for patterns and trends, the Analyzer tool is a quick and user-friendly way of analysing your data.
You can select this function within the Business Costs Breakdown Report.
To use the Analyzer tool, you need to select some data points to analyse. you can do this using the Values, Distribution, and Groups dropdown lists.
Step one
Use the Select values dropdown under "1. Select values" to select the only option available to you – Amount.
Because this is a financial analysis tool, the main focus of any analysis you conduct must be the spending data (the amount spent).
Step two
If you only want to see how much you have spent against each expense type, select Expense Type (T) from the Select dimensions dropdown under "2. Distribute over".
The dropdown under "2. Distribute over" contains all the column headings in the Business Costs Breakdown Report, so there are also other options to choose from depending on what you want to analyse.
If this is the only data you need, don't select any dimensions under "3. Group by".
Step three
The closest thing we have to an Office Costs Modelling Report is to select From/Supply Month as your option under "3. Group by".
This distributes spending by supply month for those expense types you are required to enter information for.
There are, however, many expense types for which we don’t ask for this level of detail.
It is possible, therefore, that you may actually find selecting Period (T) under "3. Group by" to be more useful.
This analyses the data according to the month in which the claims were approved.
Managing your business costs webinar
For more information about managing your budgets, please attend one of our Managing your business costs webinars.
Register to attend the webinar.
If you would like any more information, please let us know.
You can also visit our Year-end 2022-23 guidance page, where you can find: