The University's Financial Framework

Background

The University's Financial Framework is suitable for an organisation of the University's size and complexity, and is a framework which better positions the University to manage anticipated growth over the coming years.

Driven by this anticipated growth, as well as significant growth in income streams (including capital grants) and the increasing significance of the growing capital development program, the University continues to review a number of policies and processes relating to cash management with both external consultants and internal stakeholders.

This is a key component of the University's Making the Difference Strategy, which lists "implanting 5-year financial and capital plans and a rolling 3-year budget framework" as a priority.

The three key elements of the framework are as follows:

• Planning
• Funding
• Governing

Planning

Planning is supported by budget development and financial forecasting. The University has implemented a 3 year rolling budget and forecasting model to support pro-active management of its resources in a time of significant growth. The three year rolling forecast includes a quarterly review cycle in order to ensure that the University is responsive to changing internal and external environments.

Funding

Funding arrangements should recognise that not all funds come from the same source, and that, therefore, the costs and opportunity costs of using those funds are not the same. Funding arrangements are supported by a strong source and application of funds model in the context of the new cash management regimen. This model will recognise the cost of funds for different types of projects and ensure that those costs are allocated appropriately.

Governing

Governance arrangements relate to the processes that underpin access to funding and monitoring of the returns on the use of that funding, both financially and in terms of achieving the University's mission.

These three elements work together in an integrated way to provide an agile planning and funding arrangement.

Why is the Financial Framework in Place?

More rigorous and proactive management of cash reserves will allow the University greater flexibility in the use of funds, allowing it to meet short and medium term obligations and invest strategically to gain maximum return on all assets.

Further, in order to manage the anticipated growth for the University it is critical that the University's financial management processes and cash-flow model adapt.

A rolling three year forecast allows for a more strategic approach in which the University has greater flexibility in the use of its funds, supported by a business case process for access to Strategic Initiatives funding. The forecast model will include top-down and bottom-up budgeting for Schools, Research Institutes, Centres, and Groups as well as business units within the Divisions and any other units within the University.

By adopting this pro-active forecasting approach the University delivers significant financial and operational benefits, including more regular access to funding for strategic projects, a better use of the University's cash holdings, increased financial transparency and accountability, so as to generate an improved financial position over time for the University as a whole.