Redesigning Processes and Organisation Structures

Report
Appendix 5.1
Redesigning Processes and Organisation
Structures
Version 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.
Record to Report
Process Overview: Purchase to Pay
Supplier and Service Department s Calls & Queries
Purchase to Pay Audit Controls & Stewardship
Purchase
Ordering &
Goods
Receipting
Supplier Master
File Maintenance
•
•
•
•
•
•
New Supplier
identification/request
Align with Preferred
Supplier Initiatives
Supplier database
maintenance
•
•
•
Raise purchase orders
Receipt goods and
services
Make adjustment s and
track outstanding
purchase order
commitments
Amend Supplier Records
Housekeep Supplier
Records
Maintain strong audit
controls to prevent
fraudulent setup
Combined responsibility
SSA responsibility
•
•
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
Reconciliation/AP
Reporting
Payments
Processing
Invoice Processing
•
•
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
Record to Report
Split of Effort: Purchase to Pay
Respective roles of Local Finance and SSA
Effort Split
Local Finance
1. Supplier Masterfile Maintenance
2. Purchase Ordering
100%
3. Goods Receipting.
100%
4. Invoice Processing
SSA
10%
90%
10%
90%
5. Payments Processing
100%
6. AP Reconciliation
100%
7. AP Reporting
100%
8. Supplier Related Queries
9. Control/ Stewardship
5%
95%
Business and SSA equally responsible
• 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.
Buyers
Decide if can setup
new Vendor/ Manage
and update Supplier
database
Treasury
Shared Service
R2R Shared Service
T eam
Suppliers
P2P Shared
ServiceTeam
Goods Receiving
Raise purchase
order & update
commitments in
sy stem
Procurement
Accounts Payable - Procurement Process Map
Goods/ serv ice
receipting
Resolv e
discrepancies and
respond to
queries
Non-compliance
purchasing report
Receiv e & check
phy sical goods
Inv oice receiv ed
with PO ref erence
(scan in sy stem)
Order receiv ed by
supplier
3 way match
Despatch goods/
serv ices
Exceptions
BACS pay ments
Vendor
resolution
Pay ments
reconciliation
Pay ments reports
(standard control
reports)
Pay ment &
remittance
Y ear-end resolv e
outstanding
commitments/
clear suspense
Maintain
Authorisation
Hierarchy
Check f unds
av ailability /
approv e
pay ments f iles
Processed BACS
File (Treasury )
Pay ments
queries
Check
statements f or
old items
Journal
Adjustments
and write-of f s
Respond to
pay ment
queries
Y ear end pay ments
related General
Ledger control
account
reconciliations
Pay ments
elements of VAT
Accounting &
Returns
SLA/ Serv ice
Management
Perf ormance
reporting f or AP
Buy er completes
Pay ment request
f orm on line or
submits inv oice
receiv ed f rom
supplier
Resolv e
discrepancies
Respond to
Pay ments
Queries
Chase emails if
not authorised
Treasury
R2R Shared Service
T eam
Suppliers/
Employees
P2P Shared Service
T eam
Goods Receiving
Procurement
Buyers
Accounts Payable and Staff Expenses (Non-Procurement Channel) Process Map
Goods
phy sically
receiv ed and
checked
Rev iew & process
pay ment request/
inv oice / expense
claim in sy stem
Despatch goods/
serv ices
Validation and online
automated check
against authorisation
limits/ approv ed by
Pay Of f icer
Staf f expenses
claim completed
online
Upload and
Authorise
pay ment f or
bulk uploads
Inputs into AP
Sy stem
BACS or
Cheque
pay ments
Pay ments Run
Transmit bulk
upload f iles f or
pay ment
Pay ments
reconciliation
Pay ments
reports
(standard
control reports)
Respond to
pay ment
queries
Pay ment &
remittance
Y ear-end resolv e
outstanding
commitments/
clear suspense
Maintain
Authorisation
Hierarchy
Check f unds
av ailability /
approv e
pay ments f iles
Processed BACS
File (Treasury )
Y ear end pay ments
related General
Ledger control
account
reconciliations
Pay ments
Queries
Pay ments
elements of VAT
Accounting &
Returns
SLA/ Serv ice
Management
Perf ormance
reporting f or AP &
Staf f Expenses
Purchase to Pay
Strategic / tactical procurement
Authorise Invoices
Policies
Validate and authorise
expenses
Place purchase orders:
•Determine requirements
•Raise requisition
•Approve requisition
•Place order (all types)
•Notify supplier
•Amend / cancel orders
Goods Receipting:
•Inspection
•GRN raising
Financial control:
•Maintain /
approve
authorisation
hierarchy
•Ensure data
accuracy /
completeness
Manage supplier base:
•Identify & select suppliers
•Define terms
•Approve new suppliers
•Approve vendor
modifications
•Catalogues / prices
•Monitor supplier
performance
Resolve queries / disputes
Shared Services
Goods Receipting:
•Upload GRN to AP for
matching
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
Employee expenses:
•Receive expense report
•Process credit card
statements
•Check / validate
•Raise / progress queries
•Notify payment date
•Process payments
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
Document scanning and
workflow
Manage supplier base:
•Control & maintain suppler
database
•Supplier set up on ERP
•Block suppliers / invoices
Payment / Cash Control:
•Approve funds release
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
Management information:
•Standard financial control
reporting
•SSC service level reporting
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
SLA / service
management
SLA / service
management
Management Information:
•Service Dept Finance analysis
Service Department Buyers & Authorisers, Goods
Receiving, Procurement & Local Finance Departments
Redesigning Processes and
Organisation Structures
Sales Order to Cash
Record to Report
Process Overview: Sales Order to Cash
Customer and Service Department Calls & Queries
Customer to Cash Audit Controls & Stewardship
Customer
Master File
Maintenance
Sales Order
Processing
•
New customer request
•
Raise sales orders
•
Set credit limit criteria &
agree exceptions
•
Deliver goods and
services
•
Credit Control
Assessment
•
Customer database
maintenance
•
Amend customer
Records
•
Housekeep customer
records
Combined responsibility
SSA responsibility
Credit Control
& AR
Reconciliation/
Reporting
Sales Invoice
Processing
•
Generate sales
invoices
•
Chase debts
•
Despatch invoices
•
Respond to queries
•
Issue statements
•
Process adjustments
within agreed
rules/tolerance
•
•
Cash
Application
Processing
Apply cash against
customer account
•
•
Process journal
adjustments eg bank
charges/ write offs
•
Bank reconciliations
Dispute
resolution and agree
adjustments to debts
outside tolerance
•Bank cheques
Bad debt provisioning
and transmit
•
Issue reminders
•
Deal with legal
•
Close AR period
•
Run & Issue AR
reports
banking details
to SSA to apply
to Sales ledger
Record to Report
Split of Effort: Sales/Fees Order to Cash
Respective roles of Local Finance and SSA
Effort Split
Local Finance
1. Customer Masterfile Maintenance
SSA
10%
2. Sales Ordering
100%
3. Deliver Goods/Service
100%
4. Sales Invoice Processing
5. Credit Control
100%
20%
6. AR Reconciliation /Reporting
7. Cash Application
8. Customer Related Queries
9. Control/ Stewardship
90%
80%
100%
5%
95%
5%
95%
Business and SSA equally responsible
• 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.
Serv ice
Departments etc
generates request
to raise inv oice
If required setup
new customer
(all masterf ile setup
done centrally by
database team)
Validate agree
adjustments to
inv oices
Make/
respond to
income/
debtor related
queries
If required setup
DD/ Giros
(segregation
reasons)
Raise Inv oice on
Sales Order to
Cash Sy stem
(sy stem generated)
Legal (Local/
Shared Services)
UpdateSy stem
f or inv oices/
receipts
Reconciliation of
Debtors (auto
sy stems check)
Cash/ cheques/
direct bank
pay ments
Raise Inv oices
Customers make
pay ment
Debt Management
(Credit Control
Chasing/
negotiations with
debtors)
Adjustments/
corrections
Customer
resolution
Treasury Shared
Services
Customers
Sales Order to Cash
Shared Services
Cashiers (Local)
Central Database
Shared Services
Service
Departments
Sales Order to Cash - Income (Debtors) Process Map
Bad debt write
of f s processed
on sy stem
Cash application
processing
Income related
inv oices/
receipts
debtor queries
Make/
respond to
income/
debtor related
queries
Bad debt
prov isions/ write
of f s determined
Discuss action to
pursue debt
Debtor
reports
Bank
Reconciliations
Sales Order to Cash
Strategic customer
decisions
Customer approval and set
up:
•credit limit
•contract
Policies
Contract
management
Set up specific agreements
with customer:
•credit terms
•rent / deposits
•general terms / pay plans
•pricing & discounts
Monitor/sign off financial controls
SSC
Analyse management information
Account closure
Authorisation
Ensure data accuracy /
completeness
Customer set up:
•credit checking
•contract details / changes
•DD authorisation
•Set up on system
Treasury policy
Cash & Bank:
•Receipts processing
•Receipts reconciliation
•Financialcontrols
•Maintain master data
•Internal control reports
Banking
relationships
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
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
Customer maintenance:
•Maintain customer data on
system
•Close account
•System archives
•Automation / bespoke
routines
Initiate invoice /
credit note /
recharge process
Invoicing:
•Raise invoice
•Credit notes / invoice
adjustments
•Issue refunds
•Recharges / refunds
•Issue statements
Maintain paper / doc
image records &
archives
Produce management
information:
SLA / service
management
Query management
Management information:
•Standard SO2C reporting
•SSC service level reporting
Payments & Cash:
•Receive payments
•Allocate cash
Credit control:
•Customer dialogue
•Approve CC actions
•Review CC issues
Produce statutory
information
Service/ Local
Finance
Departments
SLA / service
management
Management Information:
•Service Dept SO2C analysis
Cashiers
Redesigning Processes and
Organisation Structures
Hire to Pay
Record to Report
Process Overview: Hire to Pay
Employee and Service Department s Calls & Queries
Hire to Pay Audit Controls & Stewardship
Employee
Records
Master File
Maintenance
•
•
New employee contract
details
Manager/
Employee
Self Service
•
Changes to existing
employee records
•
•
Employee record
maintenance
•
Amend employee records
•
Housekeep employee
records
•
Maintain strong audit
controls to prevent
fraudulent setup
Payroll
Processing
Submit authorised
employee changes
requests eg
promotions
•
Submit authorised
employee pay
adjustments- eg
overtime, annual
review
•
•
Combined responsibility
SSA responsibility
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
Run Final
authorised gross
to net payroll
Payroll
Reconciliation/
Payroll
Reporting
Payments
Processing
•
Process payroll
payment run
•
Reconcile payroll
accounts
•
Transmit payroll
payments to bank
•
•
Make payroll related
payment deductions
eg PAYE/NI
Issue standard payroll
reports electronically to
service departments
•
Close payroll and
reconcile payroll GL
accounts
Record to Report
Split of Effort: Staff Hire to Pay
Respective roles of Local Finance and SSA
Effort Split
Local Finance
1. Employee Masterfile Maintenance
2. Manager Self Service
100%
3. Employee Self Service
100%
4. Payroll Processing
SSA
10%
90%
10
%
90%
5. Payroll Payments Processing
100%
6. Payroll Reconciliation
100%
7. Payroll Reporting
100%
8. Payroll Related Queries
9. Control/ Stewardship
20%
80%
Business and SSA equally responsible
• 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.
Local Finance
Treasury/ Finance
Shared Services
External Agencies
Payroll Shared
Services
Employee
Local HR
Service
Managers
Payroll Process Map
Employ ee Record
Change
notif ications Leav ers and
Regrades etc
MSS - Process
details directly at
source on pay roll
sy stem
Database
Changes - new
start joiners inf o
f rom HR etc
Maintain
organisation
structure
Starters Pack
Notif ied of starter/
check receiv ed
documents/ pay roll
database updates/
checks on records eg
pay rates
One time inputs (
access to MSS absence, holiday s
etc
ESS Changes eg
change of
address
Notif ication of change
letters required
Respond to
pay roll queries
Employ eepay slips
Pay roll processing inc
internal reports f or
v alidation
Run posting to
pay roll
sy stem/ GL
BACS pay roll
pay ments
Database updates
- Tax codes, court
orders, v oluntary
deductions setup,
self employ ed
status
Pay roll
reconciliation
Pay deductions
per agreement eg
union dues
Pay roll postings
in GL
Pay roll Gross
to Net reports
Receiv e
contractual letters
Pay roll
queries
Inland Rev enue
pay ments
Generate
contractual
letters
Respond to
pay roll queries
Processed BACS
File (Treasury )
Serv ice Dept
Pay roll Related
Cost Centre
reports (Finance)
Compliance
PAY E- ,P45,
taxable benef its
returns, Self
employ ed f orms
etc
Hire to Pay
Authorise Employee Changes
Human Resources
Policies
Resolve queries / disputes
Recruitment Hire Requests:
•Determine requirements
•Raise jobs requisition
•Approve job requisition
•Applications/ Interviews
•Job Offers & Acceptances
•Contracts
Authorisation New
hire details from
Service departments
Staff Overtime etc
Processing:
•Load Overtime details
in payroll system
•Promotions, changes
to hours etc
•Annual / periodic
changes to salaries
Payroll processing:
•Process payroll changes
•Generate payroll run
•Review for payment
•Copy payslips
•Maintain authorisation lists
and hierarchies
•Validate authorisation
•Respond to queries
Payroll Reconciliations &
Reporting:
•Reconcile Payroll/ GL
•Reconcile Other Payroll
Accounts
•Make payments to external
agencies
•Provide external agencies
with periodic/ annual returns
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
Queries from
Employees and Service
Managers/ Pensioners
Manager Self Service
Shared Services
New Employee Record
Processing:
•Load New Employee
details in payroll
system
Document scanning and
workflow
Employee Self Service
Treasury
SLA / service
management
SLA / service
management
Queries from external
Parties/ agencies
Management Information:
•Service Dept Payroll analysis
HR , Service Departments and Local Finance, External Agencies
Redesigning Processes and
Organisation Structures
Record to Report
Record to Report
Process Overview: Record to Report
Requests for Financial Information
Control & Stewardship
Financial
Data
Maintenance
•
CoA structure
identification/request
•
Non- standard Journal
entry identification
•
Financial data request
Local, Actual, Budget)
•
Standard journal
identification
•
Journal entry
•
•
CoA structure
maintenance
Finance subsystems
criteria maintenance
•
Cost codes maintenance
•
•
•
•
Journal entry
posting
•
Finance subsystems
•
validation
Maintain different
financial data dimensions
•
Automated
Data Entry
Reconciliation
Manual
Data Entry
•
Journal & back up
documentation
archiving
Combined responsibility
SSA responsibility
Reporting
•
•
Run subsystem
cycle
Closing timetable
creation
Standard reports
generation
•
•
Provide sub-system
information
Closing timetable
validation
•
Execute draft close
Reporting information
submission to Local
management
•
Validate draft
close/Final
adjustments
•
Provision of core
financial data and
respond to transactional
queries
•
Final closing
•
Cost centre standard
management reporting
generation
•
Standard statutory
reporting
•
Review & authorise final
reports
•
Decision support &
adhoc management
reporting
Sub-system integrity
analysis
Sub-system entries:
•
Interface validation
•
Error resolution
•
Exception accounts
analysis
•
•
Closing
Discrepancy
resolution
Bank reconciliation
•
Validation
•
Error resolution
Record to Report
Split of Effort: Record to Report
Respective roles of Business and SSA
Effort Split
Local Finance
1. Financial Data Maintenance
SSA
10%
2. Manual journals
20%
3. Automated data entry/Recon.
5%
4. Closing
90%
80%
95%
10
%
90%
5. Reporting
100%
• Standardreporting
100%
• Adhoc/Mgmt reporting
6. Response to User Queries
7. Stewardship
10
%
90%
5%
95%
Business and FSS equally responsible
Note that the respective roles of Local Finance and SSA are described only when an
interactive relationship exists
• 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.
Prov ide relev ant
letters, templates
f or debtor/
creditor requests
Base Detailed
Step by Step
Timetable on
Corporate
Timetable
Management
Local
Finance Shared
Services
Service
Managers
Final Close Process Map
Examine each cost
centre ensure all
accounted f or/
ensure projects c/f
are correctly stated
Complete inf o on
debtors and
creditors
Coordinate/ check
returns/ v alidate audit
trail/ prepare and
post journal entries in
GL
Response to
Queries
Check f inal position
and make f inal journal
adjustments/ ensure
journals rev ese in
next period
Examine out-turn
report to check if
f urther adjustments
required/ ensure all BS
codes reconciled
Produce High lev el
v ariance analy sis
f or Senior
manangent
Produce balance
sheet
reconciliation
report f or each
account/ rconcile
reports
Produce reports f or
Members/ Gov t/ Stat
Returns/ RO/RA/ S152
etc - dif f erent f ormats
Discuss, make
any changes ,
agree and f inalise
Senior
Local Corporate
Finance
Query any
v ariances/
explanations
Set Timetable
Final rev enue and
capital out-turn
report
Prepare Cabinet
Report when
Finalised
Rev iew technical
aspects of
reports and make
av ailable f or
consolidation
GL Transational
Shared Services
Local Finance
Finance Shared
Services
Service
Managers
Annual Central Support Recharges Process Map
Activ ity Data f or
Recharge
Calculations
Initial v alidation f or
reasonableness
Notif y when
recharges
processed
Agreed raw data
used to calculate
recharges
Recharges prov ided
to each serv ice
department
Generate
recharges
Share with
Finance Depts
and make any
changes
Query handling on
recharges
Final recharges
v alidated and
agreed
Process all
recharges
across the
serv ice
Process actuals
at y earend
Recharges
prov ided f or
budget
Uploaded budget
Upload budgets
when agreed
Control/ rev iew
budgets v s actual
to ensure
balanced across
council
Record to Report
Chart of Accounts
maintenance:
•Approve changes to
structure
Capital and
Other Financing
Policies
Posting Approval:
•Approve journals
•Approve sales adjustments
•Approve allocations &
recharges
Management & Financial
controls:
•Review / approve Balance
sheet reconciliations
•Reviews
•Internal audit
•Co-ordinate external audit
process
SSC
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
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?
Chart of Accounts
maintenance:
•Add cost centres
•Add account codes
•Rearrange CoA
Management & Financial
controls:
•Balance sheet
reconciliations
•Control / validate data from
feeder systems
•Manual controls
•Reviews
•Treasury
Period End reporting:
•Flash reporting
•Standard management
reports & Data extracts
•KPIs
•Corporate reporting
•Consolidation
•Capital reporting
•Statutory data / information
•VAT reporting
•Tax reporting
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
Produce Analysis Data:
•Standard reporting packs
•Standard performance
data
Budget & Forecast
•Agree budgets
•Maintain Forecasts
Business Analysis &
Review:
•Challenge vs budget/ f’cast
•Decision support
•Accounting judgement
•Risk analysis
•Capital appraisals
Period End Processing:
•Determine / publish cut-offs
External Returns
Business Intelligence
Annual/ periodic reporting
Service Departments and Local Finance, External Agencies
Management reporting:
•Reporting commentaries
•Analysis & dissemination
of results
Redesigning Processes and
Organisation Structures
Budgeting & Planning
Record to Report
Process Overview: Budgeting & Planning
(including Capital Projects)
Requests for Budgeting & Planning (including Capex) Information
Control & Stewardship
Budgeting
& Planning
Assumpti
ons &
Inputs
Budgeting &
Planning
Preparation
•
•
•
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
•
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
Budget &
Forecast Data
Processing &
Iterations
•
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
Local responsibility
SSA responsibility
Finalise Outputs
Generate
Budget &
Forecast
Reports
Prepare
Budget &
Forecasting
Packs
•
Generate & Issue
version for review
•
Budget, forecast capex
report generation
•
Review ,identify and
notify changes
•
•
Finalise Reports ready
for sign off including
standard commentary
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
•
Finalise commentary &
signoff final version
Record to Report
Split of Effort: Budgeting & Planning
(including Capital Projects)
Respective roles of Local Finance and SSA
Effort Split
Local Finance
1. Planning & Preparation
SSA
50%
2. Provide Assumptions
20%
3. Data Entry & Processing
5%
4. Iterations
20%
50%
80%
95%
80%
5. Reporting
100%
• Standard “rules based” reporting
100%
• Adhoc analysis reporting
6. Response to User Queries
7. Stewardship
10%
90%
5%
95%
Local Finance & SSA equally responsible
Note that the respective roles of Local Finance and FSS are described only
when an interactive relationship exists
• 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.
Members
Financial Strategy and Planning Process Map
Senior
Management
Local
Corporate Finance
Local
Finance Shared
Services
Chief Executive/
Senior Directorate
Lead
Meeting with Lead
Members f or
Serv ice Depts f or
Approv al
Discussion on
Ov erall Finance
Plan gaps and
how gaps are to
be distributed
between depts
Apportioned
between div isions
with targets
Set expectations/
assumptions eg
inf lation, prudential
indicators (borrowing
within limits) and
rev enue f unding
gaps/ capital exp
lev els
Decide on
apportionment/
balancing priorities
Discussions &
adjustments f or
inf lation etc
Process and
Agree Base
Budget
Cash Limits set by
Corp Finance &
Dept Finance
Prepare report to
Include in Council
Management
Board (CMB)
Prov ide
inf ormation to
Local Finance
Discussed with
Lead Members f or
Serv ice Depts
Budget
Consultation
process complete
ready f or
preparation stage
Managers
Budget Preparation Process Map
Service
Finance Shared
Services
Directorate
Local
Set detailed
Budget Timetable
Senior
Corporate Finance
Local
M emb er s
Forecast of
estimates to
conf irm
correct
Look into way s to
f ind sav ings/ how
can be achiev ed
Generate
ov erall
corporate
timetable
Prov ided with
pressures &
redirections
determine f ocus of
spend- identif y
f urther sav ings) - No
of iterations
Final
agreed
sav iings
etc
Prepare base
budget in
excel (using
download
f rom GL as
starting point)
Apply % to
categories
of income/
expenditure
Inf lation
elements/
cash limits
Calculate
salary and
other cost
estimates
Major
v ariancesand how they
are to be
f unded
Manual
transf er to
spreadsheet
with cost
centre
Identif y
pressures and
redirections
Kept in loop giv en reports at
end of process
Set targets f or
sav ings
When budget
f inalised receiv ed
in Corporate
Macro f or
indiv idual
budget
holders
bef ore
uploaded
into GL
Adv ise of any
special
adjustments
First
iteration of
budget
Further
iterations
of budget
until
f inalised
Budget
extract to
upload to
GL and
reconcile
Budget books
produced/ rate
leaf let based on
calculations and
publication
Reports to
Members
Corporate Finance
Local
Senior
Management
Local
Finance Shared
Services
Budget Holders
Budget Monitoring Process Map
Budget Holders
receiv e latest
report f rom GL
Run Month-end Close.
Prepare Template (exp by
category ) to help serv ice
depts with commentary
eg action plans to
address ov erspendetc
Latest budget,
actual spend and
projection(monthly
return) av ailable
online- analy sed
and adjusted
Receiv e
completed
prof orma with
adjustments/
f orecasts
Response to
Queries
Prepare summary
sheet f or whole dept
plus commentary ,
key ing in ov erspend/
underspend
Directorate meet with
budget holders to
v alidate and check
v ariances bef ore
submission
Rev iew of content
-Queries ,
Validation and
Adjustments
( also any j/e in
GL)
Other detailed
analy sis eg
salaries by
indiv idual exp to
date prov ided by
Finance per SLA
Final Agreed
Summary Position
(plus v ariances
commentary )
Summary included
f or discussion as
part of Regular
meetings
Budget inf o
prov ided as part
of Regular
meetings
If not agreed f urther
v alidation/ analy sis/
discussion. If agreed
prov ide to Budget
Holders & Senior
Management
Summary included
f or discussion as
part of Regular
operational
meetings
Summary
Template
submitted to
Corporate
Prepare Cabinet
Report when
Finalised (also
prov ide to lead
memberssummary tailored
v ersion)
Budgeting &
Forecasting
Set budget parameters &
assumptions:
•Inflation
•Targets
•Exchange rates
•Timescales
•Strategic assumptions
Review
Update initial budget to
produce “various iterations”
Approve?
SSC
Compile public sector
relevant data eg funding
sources
Management reporting:
Analysis & interpretation
Compile “initial version” of
budget using defined
assumptions.
Compile overhead data
Compile historic (actual)
data
Budget /forecasting control:
•Maintain budget
parameters /budget
holders, etc.
•Manage controls
•Manage budget workflows
Upload final budget to
budget system
Regular reporting: forecasts
vs. budgets
Compile historic (actual)
financial data
Compile next forecast
(actuals to-date + forecast
to end of year )
Upload approved forecast
to budget/forecast system
Update forecast to produce
next forecast
Review
Approve?
Service Departments and Local Finance/ Corporate Finance
Business Intelligence
Business Analysis &
Review:
•Budget/ forecast challenge
•Judgement
•Risk analysis
Redesigning Processes and
Organisation Structures
Treasury Management
Record to Report
Split of Effort: Treasury Mgt
Respective roles of Business and SSC
Effort Split
Local Finance
1. Annual cash flow forecast
4. Treasury policy & strategy
80%
20%
20
%
80%
20%
6. Short term borrowing
20%
7. Long term borrowing
20%
9. Investments
80%
20%
5. Capital financing
8. Debt management
80%
20%
2. Maintain a daily cash flow forecast
3. Maintain the daily cash position
SSC
80%
80%
80%
20%
80%
20%
80%
Overall
Note that the respective roles of Local Finance and FSS are described only
when an interactive relationship exists
• 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.
Drawdown or lend
money (may borrow
f or capital and
reported to corp
f inance)
Daily consolidated
report
Daily and f orecast
cash f low plan"Predictor"
"Predictor" Forecast
model - known sources
of income/ expenditure/
judgement on patterns
of expenditure
Daily cash f low
sheet
Reconcile to
predictor & check
v ariance OK/
giv es assurance
Interest budget
report v ariance
(rules based on
Treasury strategy )
Make decision
based on cash
def icit or surplus
Corporate Finance
Local
Service Dept
Cashiers
Treasury Mgt
Shared Services
Bank
Service Dept
Treasury Process Map
Inv estments Flash
update-v iew on
where hold
inv estments and
any problems
Treasury report
supplied to Cabinet
Banking Process Map
Bank
Suppliers
Cheques printed
and despatched
or BACS
remittances
receiv ed
BACS / Other
Electronic Pay ments
Treasury Mgt
Shared Services
Electronic
Statement
Expenditure analy sed,
checked and
coded
Cashiers Local
Details receiv ed
f rom Cashiers
Statements receiv ed
f rom Treasury / Income
details- code & post
into GL
Send out BACS / or
cheque pay ments
f iles
Other Finance
Shared Services
Deal with BACS
rejects
CHAPSpay ments/
currency
Report-monthly
Treasury update
(serv ice lev els/
KPIs)
Post cheques into
sy stem
Corporate Finance
Local
Reconcile to Fund
Holders
Service Dept
Budget Holders
Download &
f ormat statements
Treasury Report
Income Postings
into sy stem
Expenses
Postings into
sy stem
Postings into
sy stem
Redesigning Processes and
Organisation Structures
Internal Audit
Record to Report
Split of Effort: Internal Audit
Respective roles of Business and SSC
• Review of internal controls- SSC to undertake audit
tests to assess and evaluate strength of internal controls.
Local Finance
SSC
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.
10%
90%
1. Review of internal controls
• External audit- SSC to liaise with external audit in
compliance with the audit code of practice and managed
90%
2. Management audits/reviews
10%
audit requirements. Involvement of the client in ensuring
10%
3. External audit
an effective managed audit process is essential.
90%
•
Internal audit strategy- SSC to undertake a risk needs
10%
4. Internal audit strategy
90%
assessment to inform the audit strategy and to produce an
annual audit plan. The Section 151 will undertake a
90%
5. Internal audit reports
10%
detailed review of this work.
10%
6. Systems auditing
• Internal audit reports- SSC to draft all internal audit
90%
reports in compliance with the agreed format, content and
90%
10%
7. Computer auditing
timescales.
•
Systems auditing- SSC to undertake a risk based
90%
8. Contract auditing
10%
approach to systems audits including testing and reviewing
20%
80%
controls as well as providing a professional opinion on the
9. Fraud & corruption
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
Note that the respective roles of Local Finance and FSS are described only when an • Fraud & corruption- Bringing to the attention of the
Section 151 Officer any primae facie evidence of fraud and
interactive relationship exists
corruption
Effort Split
Record to Report
Process ERP Application Architecture: Total Finance
• 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
SSC
Interface
Council Tax
Ctax
Other Systems
Services
Payroll Systems
Payroll
Bens/Allow
Housing
Data
Extracts
SSC ERP System
Invoices
FA
CoA
FA
Budgeting Systems
Budget
Data
Billing
Collection
AR
Workflow
Actual
Journal
Data
Budgeting
Data
Payments
AP
P.O.
Receipts
GL
Reporting
Database
PO
Consolidated
Data

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