This section explains how budgets are used within the University. It details those activities for which budgets are formally created and monitored in the University Finance System (UFS). It also provides guidance on the main issues that should be considered when preparing a budget for any activity.
On this page:
- Using budgets to monitor the University income and expenditure
- How to budget for other non-Chest activities such as Trading
- Budget phasing
- What happens to budgets at the end of the financial year?
Using budgets to monitor the University income and expenditure
It has already been established that budgets are an important method through which to monitor and control actual versus planned activity. However, to carry this out effectively it is important to spread the budget across the months of the financial year in a realistic manner. This is known as ‘phasing’ the budget. Appropriate phasing of the budget allows for meaningful comparison between actual and planned activity.
How to budget for other non-Chest activities such as Trading
The primary consideration when budgeting for a non-Chest activity is to ensure that expenditure does not exceed the funds available. Therefore, the best place to start when budgeting for a non-Chest activity is to calculate the income available.
The process for preparing a non-Chest budget is as follows:
- Estimate annual income available
- Calculate cost of planned expenditure
- Allow for overheads on stipends if applicable. (Please refer to the Budgeting for Chest overhead recovery income section for more details)
- Compare income available to planned expenditure to ensure funds available are sufficient
The Monitoring and controlling expenditure against income section provides guidance on how to monitor and control expenditure where there is no formal budget in UFS.
Budget phasing
By budget phasing we mean how the budget has been split across the months of the financial year.
Staff costs should consider the timings of known University-wide uplifts and any others where practical.
Non-staff costs should be phased according to the best information available which may include patterns of actual expenditure in previous years.
Failure to phase budgets accurately prevents meaningful financial analysis at institutional, School and University level.
What happens to budgets at the end of the financial year?
Unlike most ‘for-profit’ organisations, funds allocated but unspent at the end of a financial year may in some cases (subject to rules) be carried forward in reserves for use in subsequent years. This allows institutions and Schools the flexibility to plan activities and expenditure in the medium-term with confidence.
The rules on how under-spends and over-spends against budget are treated at the year-end are set centrally. Where budgets are devolved to the School/Institution, any underspends or overspends are carried forward to the next financial year. For Schools and non-School institutions, Chest Stipends and Wages are devolved, i.e. under-spends and over-spends are retained by the School or non-School institution. This exercise is performed by the Central Research and Accounting team after the July accounting period is closed to institutions as part of the year-end process.
For all institutions, Chest non-staff costs, source of funds AAAA, is fully devolved, so over- or under-spends against budget may be carried forward to the next financial year. Please note that the Schools and the UAS have local policies for their constituent institutions or UAS Divisions, and these will determine how over or under-spends are managed.