Advice on the BFR3Y

It is approaching the time of year when your budgets will be finalised, and submitted to the ESFA via the Budget Forecast Return (3 year).

This year, however, it will be a little bit different, with the return deadline being delayed until 29 September 2020.

Also linked to the delay, is that the online form now requires less information, and does not need years 2 or 3 populating. 

There are however a few key points and reminders for you. 

Whilst the return itself does not require years 2 or 3, this is a key budgetary process, and future years must be budgeted for in line with the Academies Financial Handbook requirements (2.11). For management to make informed decisions, you must ensure that you are looking ahead to the longer term.

The assumptions used for the preparation of the budget are absolutely key. All assumptions should be clearly documented and we would recommend you record the rationale for each assumption.

For instance, have you relied on the guidance issued by the ASCL, and if not, why not?

Key assumptions should be subject to variance analysis to see what a small change has on your budget.

For instance, pupil numbers, a small change can have a very big impact.

The board should challenge these assumptions, and in particular the pupil numbers given the size of the impact these have on the budget (AFH 2.12).

When completing the online form it will ask for your key assumptions, and we recommend that you record your assumptions around items such as pay grants and pension grants so that the ESFA know what the sector is expecting, and how they have budgeted.

The budget will still need approval by the board.

If there are significant changes to the budget post approval, these will need to be communicated to the ESFA.

Whilst some trusts may want to delay approval of the budget until there is more certainty around some of the assumptions, this must not be done at the expense of having an approved budget in order to make important or critical decisions.

We therefore recommend that the budget is still formally approved and considered by the board as close to the normal timeframe as possible, to allow the autumn plans to be put in place now.

Finally, the return will also ask you to explain the impact of COVID on your finances. This is a good opportunity to highlight any issues that you may have had, or may still be facing. 

Further information and ESFA guidance can be found here.

If you have any queries please contact your usual Bishop Fleming contact.