Finance Forum September 2012

Agenda University Financial Forecasts (CP) Changes in the Finance Office (MR) Finance Training (GH) Pensions Developments (GH) Systems Developments (MR)

Scope of Financial Forecasts 5 year forecasts Forecast for last year 2011/12 Budget for this year 2012/13 Plan for 2013/14, 2014/15, 2015/16 Include college plans Submitted to HEFCE

What is a Financial strategy? Have enough money to meet our strategic objectives Bring in enough income to –Pay for stuff we need to operate –Pay for stuff we need to grow

Financial strategy Generate sustainable and sufficient surplus to support research and teaching mission – move over planning period from 2% to 5% Incorporate high priority developments Have in place appropriate and prudent loan portfolio Maintain prudent cash flow - measure moved from low point of one month payroll cost to two month minimum

Operating surplus trend

Projections of income

Expenditure assumptions New investments in posts, ITS (to support IT Strategy), PGR Scholarships, Careers Service and Library Contingencies around student recruitment, future HEFCE cuts, pressure on research contribution and general fund Cost control through post freeze and through VERVES / possible redundancies

£35 million £17 million £10 million £13 million Capital investments

Continued investment in the estate: - –4 big schemes –Research Centres (£5m) –Indicative schemes for MSB and Attenborough Funded by surplus and £45m of new borrowing

Risks and opportunities Key risks –Further HEFCE cuts –Home / EU recruitment –Overseas recruitment –Other income –Cost control not achieved –Interest rates –Competitive position Opportunities –AAB  ABB –Overseas recruitment –Fundraising –REF 2014

Summary We continue to have a strong position Challenges ahead in respect of income growth and cost control We are continuing to invest Good opportunities in the medium term

Any questions

Changes in the Finance Office

Finance Office Plan Customers Controls

The Division Finance Office Enterprise and Business Development Office Sports and Recreation (except for Estates items)

The Senior Management Team Director of Finance (Martyn Riddleston) Deputy Director of Finance - Financial Operations (Gary Hague) Acting Assistant Director of Finance – Financial Reporting (Carol Prokopsyzyn) Head of Enterprise and Business Development (Caroline Quest) Assistant Director of IT (Liz Bailey) Also within ITS + Director of Sports and Recreation (Colin Hide)

Finance Office Plan Customers Controls

A robust control environment –Appropriate to size and nature of UoL –Focus on high level controls –Constructive (and challenging) relationship with auditors Thorough compliance –Accurate, first time –Review, and planned well in advance of deadline Customers Controls

Customers Efficient and customer focussed processes / systems –Avoid waste –Minimise hand-offs –Think from perspective of the customer Professional guidance and advice –A professional, up-to-date team –Best practice within the sector Customers Controls

Our people We seek to: - –Work as one team –Provide a supportive working environment –Encourage staff development –Demonstrate professional and ethical approach –Celebrate achievement

Changes to structure Financial Services become Financial Operations Accounting Services become Financial Reporting Treasury moves into Financial Reporting Tax moves into Financial Operations

Finance Training 1.Introduction to Finance. Next course in November. Run through staff development in usual way (x2 per year) 2.Staff Induction Programme. Finance Roadshow for new starters (x3 per year) 3.Finance within Blackboard. Developing short guides within the courses area Complete and loaded Guide to completing expense claim forms VAT Introduction to Finance In development Introduction to Procurement Introduction to SAP (development of info on ITS site) Budgetary management Financial Regulations 4.Specific Issues. Bribery Act. Mike Newton and Internal Auditors. Open session. Now doing specifics – Residences and Catering, Estates and Colleges 5.SAP Purchase Orders (x3 per year) 14 th September. Invoice verification etc. Linda Stirk and Michelle Pond in Staff Development

Pensions Developments

Auto-Enrolment Government committed to ensuring pensions available to workers Employers required to auto-enrol into an eligible pension scheme Both USS and FriendsLife are eligible schemes Requires existing workers not in eligible schemes to be assessed:- –Eligible jobholders (key group) –Non-eligible jobholders (also important) –Entitled (also important) Defined by age and qualifying earnings. Different treatment for each group Starting date for University – 1 st April 2013 Also have to assess and auto-enrol new starters from 1 st April 2013

Eligible jobholders Qualifying earnings £8,105 and £42,475 Aged between 22 and SPA Have to be automatically enrolled Non-eligible jobholders Qualifying earnings £5564 and £8,105 Age between 16 and 74 Have the right to opt in and employees are required to make contributions Entitled workers Qualifying earnings up to £5564 Aged between 16 and 74 Have the right to join, but employer does not have to contribute

Present arrangements USS is in effect an auto-enrolment Scheme as it is, but must adopt the requirement routines FriendsLife. Open to all staff in grades 1 to 5. Self-initiated membership. Must operate the auto-enrolment process for eligible jobholders

No barriers to be placed in the way Those auto-enrolled have a month to opt out (thereafter membership not compulsory) Then re-enrolled 3 years later (and thereafter), but can then opt out Complex process and number of decisions to be made Large numbers. Staff holding contracts of employment through HR and not in a pension scheme USS (Grade 6 and above) 148 – of which 116 are eligible for auto-enrolment FriendsLife (Grades 1-5) 1533 – of which 403 are eligible for auto-enrolment

Further complexities around fees payroll. Part of HR Systems Thinking Initiative Discussions on-going with FriendsLife about terms and IT process Communication process – late 2012 Assessments – starting January 2013 Impact on costs. Provision made in 2012 Financial Forecasts

Systems Developments SAP Authorisations – now complete HR / Finance Systems Thinking – make me a member of staff –Currently focussed on the recruitment process –Flow of starters through the process Future projects –Purchase to payment cycle –Legislative changes (Auto-Enrol and RTI) –More work on Salary Sacrifice (inc for sport)

Any questions