board finance report december22 2011 by DVfdoh

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									  FINANCE REPORT FOR THE 9 MONTHS TO 31 DECEMBER 2011


PURPOSE

1. To provide the Board with the financial performance of the Care Quality
   Commission for the 9 month period to 31 December 2011 compared to budget.

2. It is intended that the finance report will in future be appended to the Scorecard
   Report that Board receives quarterly, providing the ‘year to date’ financial position

RECOMMENDATION

3. The Board is requested to NOTE the financial results for the 9 month period to 31
   December 2011

BACKGROUND

4. This report contains the routine reporting of financial information

KEY ISSUES

5. Both the Revenue Grant in aid and net expenditure positions are well below
   budget for the month of December and year to date.

                                 Actual           Budget          Variance
                               Year to Date     Year to Date     Year to Date
                                   £m               £m               £m
       Expenditure                 92.7               107.7         15.0
       Fee Income                  -74.2              -72.0          2.2
       Grant in Aid                18.5               35.7          17.2
       Depreciation                 8.7               11.2           2.5
       Net Expenditure             27.2               46.9          19.7

SUMMARY: RECURRING COSTS

6. The recurring costs are analysed by expenditure type (Appendix A).
   The net position (cost less income) shows an under spend of £19.7m against
   budget, comprised of:

                                                                   £m
               i)     A favourable variance on staff costs         8.6
               ii)    A favourable variance on non-staff costs     6.4
               iii)   A favourable variance on depreciation        2.5
               iv)    A favourable variance on income              2.2
                                                                  19.7



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   Favourable variance on staff costs, £8.6m

7. Staff costs are below budget year to date due to the shortfall in staff numbers
   during the year. It was anticipated that we would recover some of the shortfall by
   recruiting the additional Compliance Inspectors but this is taking longer than
   expected resulting in minimal impact in 2011-12. The current under spend is
   therefore anticipated to increase by the year end.

   Due to the seasonal period, the cost for temporary staff is £0.3k lower than the
   previous month

   Favourable variance on non-staff costs, £6.4m

8. Significant variances within this section are:

                              £m
        T&S                   0.7   Budgeted assuming full establishment
        Training              1.4   Internal efficiencies
        Communications        2.2   Delay on Healthwatch and Tranche 5
        Legal Fees            0.4   Spend allocated to 2010-11 provision
        Premises              0.5   Estates rationalisation
        Other                 1.2
                              6.4

   Non staff costs have increased £0.4m month on month and it is anticipated that
   the changes to the compliance model will continue to reduce the non-staff under
   spend in the final quarter of 2011-12

   Favourable variance on depreciation, £2.5m

9. Depreciation is currently under spent due to capital projects commencing later in
   the year than anticipated. The under spend is expected to reduce significantly by
   the year end given the accounting adjustments made for revaluations and
   impairments

   Favourable variance on income, £2.2m

10. The Actual Fee Income reported to date is £74.2m against a budget of £72.0m

   The high level of fee income is down to a greater level of annual income from
   BAU registrations than anticipated.
                                                       Year to
                                                       date £m
               Annual Fee Income Billed
               Social Care                              40.1
               Independent Healthcare                    5.2
               Dentist & Ambulance Service               8.1
               NHS Trusts                               20.4
               Annual Fees Billed                       73.8

               Registration, Variation & Misc Income     0.4

               Total Fee Income                         74.2



                                        Page 2 of 5
   SUMMARY: CAPITAL EXPENDITURE

11. Capital expenditure is currently on budget; with spend to date of £9.3m. Following
    a prioritisation of capital projects CQC is now focusing resources on i) Tranche 5
    registration and ii) Compliance Improvement, following this CQC is expected to
    remain on budget for 2011-12.

   CASHFLOW

12. At the beginning of the 2011/12 financial year the Department of Health
    confirmed that the initial budget cash envelope for CQC is £154.7m. Our fee
    income is budgeted at £92.7m, leaving revenue cash available of £50m and
    capital cash available of £12.0m

   CASH POSITION AT THE END OF DECEMBER 2011

13. An analysis of the cash flow for the financial year is noted at Appendix B

   Given the current under spend; a cash draw down was not required in the month
   of December. The existing cash forecast for this financial year is shown in the
   table below and shows a reduction in grant in aid of £10.0m; however this will
   now be reviewed in light of the shortfalls in compliance recruitment.

                 Cash Position     Budget   Forecast
                     2011-12         £m        £m
               Revenue              142.7    132.7
               Fee Income           -92.7     -92.7
               DH Cash Grant         50.0      40.0

               Capital              12.0      12.0
               DH Cash Grant        12.0      12.0

               Total Cash Grant     62.0      52.0

CONCLUSION

14. The financial position at end of December shows that CQC is well below budget
    expenditure and cash limits agreed with the Department of Health at the
    beginning of the year.

   The previous forecasted outturn anticipated a £10.0m under spend for 2011-12,
   however this assumed an increase in staff costs in quarter four for the additional
   posts created as part of the compliance review. This is now not expected to
   significantly impact the financial outturn for 2011-12; therefore a revised forecast
   will be conducted in January to identify the anticipated outturn.


Appendices

Appendix A - Revenue Expenditure Report - Actual v Budget
Appendix B - Cash Flow Position

John Lappin

Director of Finance and Corporate Services


                                      Page 3 of 5
15h February 2012

  APPENDIX A

                                             CARE QUALITY COMMISSION - FINANCE
                                                Nine Months to 31st December 2011

                                Revenue Finance Report - Actual v Budget
  Year to Date Revenue Expenditure by Cost Type

                                              December 2011                 Nine Months to 31st December 2011      2011/12
                                   Actual        Budget     Variance         Actual      Budget      Variance      Budget
                                   £'000's       £'000's     £'000's         £'000's      £'000's     £'000's       £'000s

  Staff Costs
  Salaries                          7,015         8,045       1,030          62,264        72,599        10,336     96,723
  Temporary Staff                    325           304         (21)           5,510         3,742        (1,769)     4,681
  Total Staff Costs                 7,340         8,350       1,010          67,774        76,341         8,567    101,403

  Non-Staff Costs
  Other Staff Related Costs          408           764          355           5,201         7,538         2,337     9,940
  General Office Expenses            318           212         (106)          1,958         2,064          106      2,747
  Communications                     265           315           49           2,109         4,356         2,247     5,627
  Consultancy/Legal Fees             233           125         (108)           690          1,125          435      1,500
  IT&C                              1,435          940         (495)          8,887         8,437         (451)    11,191
  Premises                           629           646           17           5,663         6,184          521      8,123
  Other Costs                         27           181          153            426          1,626         1,200     2,168
  Total Non-Staff Costs             3,316         3,183        (133)         24,935        31,330         6,396    41,297

  Total Revenue Costs              10,656        11,533        876           92,709        107,671       14,962    142,700

  Fee Income                       (7,117)       (5,166)      1,950          (74,236)      (72,023)       2,213    (92,700)

  Grant in Aid                      3,539         6,366       2,827          18,473        35,648        17,175    50,000

  Depreciation                       972          1,250        278            8,739        11,250         2,511    15,000

  Total Net Expenditure             4,512         7,616       3,105          27,212        46,898        19,685    65,000


  Note
  Actual and budget figures are shown in accounting format which means fee income is shown in brackets ( ).
  Variance figures in brackets signify an adverse result.




                                                      Page 4 of 5
APPENDIX B

                          CARE QUALITY COMMISSION - FINANCE
                                Nine Months to 31/12/2011

                                    CASH FLOW POSITION
                                          Cash Actual   Cash Budget   Cash Variance
                                            £000s          £000s         £000s

Opening Cash Balance (1 April 2011)         16,366                       16,366

Less
Recurring Revenue Expenditure              (92,709)      (107,671)       14,962
Net Movement in Debtors/Creditors           (1,928)                      (1,928)
                                           (94,637)      (107,671)       13,034

Less
Capital Expenditure                         (9,321)       (9,317)          (4)
Movement in Creditors                        (131)                        (131)
                                            (9,452)       (9,317)         (135)

Add
Fee Income Billed                           74,236        72,023          2,213
Net Movement in Debtors/Creditors          (12,494)                     (12,494)
                                            61,742        72,023        (10,281)

Sub Total                                  (25,981)       (44,965)       18,984

Grant Drawn Down from DH                    34,400        44,965        (10,565)

Cash Position End December                   8,419           0            8,419




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