210226_Paper 1 Budget Monitor

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Fin­ance & Deliv­ery Com­mit­tee Paper | 26/02/2021

CAIRNGORMS NATION­AL PARK AUTHOR­ITY FIN­ANCE & DELIV­ERY COMMITTEE

FOR DIS­CUS­SION

Title: FIN­ANCE MON­IT­OR­ING: 10 MONTHS TO 31 JANU­ARY, 2021 Pre­pared by: DANIEL RAL­PH, FIN­ANCE MAN­AGER DAV­ID CAMER­ON, DIR­ECT­OR OF COR­POR­ATE SERVICES

Pur­pose This paper presents a sum­mary review of income and expendit­ure for the 10 months to 31 Janu­ary, 2021.

Recom­mend­a­tions The Fin­ance & Deliv­ery Com­mit­tee is reques­ted to: a) Note the out­turn for the 10 months to 31 Janu­ary, 2021; b) Note the pro­jec­ted out­turn for the 12 months to 31 March 2021

Exec­ut­ive Summary

1. The ana­lys­is of fin­an­cial pos­i­tion over the 10 months to 31 Janu­ary is con­tained in Annex I. This is a sim­pli­fied man­age­ment account­ing report and fol­lows the format in which the res­ults for the year will be repor­ted in the fin­an­cial accounts.

2. Annex I shows the actu­al pos­i­tion as at 31 Janu­ary 2021, com­pared to a pro­jec­ted pos­i­tion based on a straight line alloc­a­tion of the revised budget for the year over the 10 months. Annex I also con­tains the cur­rent vari­ance of actu­al invoice and expendit­ure at the end of Janu­ary 2021 in com­par­is­on with the budget expect­a­tion for the same period.

3. Actu­al and expec­ted income received from pro­jects off­sets the pro­ject costs incurred to date with the excep­tion of LEAD­ER admin­is­tra­tion costs which are to be reviewed by the year end due to the exten­sion of the LEAD­ER pro­gramme to 31 December

4. The cur­rent small net cost of LEAD­ER admin­is­tra­tion is in line with budget as we estim­ated for some LEAD­ER admin­is­tra­tion costs to be incurred by the Author­ity in ²⁰²⁰⁄₂₁.

5. There are no oth­er excep­tions to report to Com­mit­tee in terms of poten­tial addi­tion­al fin­an­cial con­sequences arising from the Authority’s fin­an­cial stew­ard­ship of extern­ally fun­ded pro­jects at this time.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Fin­ance & Deliv­ery Com­mit­tee Paper | 26/02/2021

1. Salar­ies and Board fees are broadly on budget, with an over­spend of £48k against the budget for the 10 months peri­od of £2.9m. This pos­i­tion excludes any recov­er­ies. Pro­jec­tions to the end of the year on the same basis show an expec­ted out­turn under­spend of £97k due to addi­tion­al vacancy sav­ings from the end of Decem­ber which will exceed budgeted levels by the end of the year, and addi­tion­al fund­ing, now con­firmed, rather late in the fin­an­cial year for Peat­land Res­tor­a­tion staff costs. While we had some expect­a­tion of this fund­ing being secured for peat­land staff, the costs had con­tin­ued to be budgeted for in full as an ele­ment of prudent fin­an­cial man­age­ment pending con­firm­a­tion of the fund­ing position.

2. Core and Oper­a­tion­al Plan expendit­ure remains behind budget, not unex­pec­ted due to the con­tin­ued impact of COV­ID-19 on day to day oper­a­tions impact­ing core expendit­ure, and that Oper­a­tion­al Expendit­ure is tra­di­tion­ally skewed to the last quarter of the fin­an­cial year. Ini­tial adjust­ments to budget to real­loc­ate funds were approved by the Board in June 2020 and these adjust­ments are reflec­ted in Annex I, togeth­er with the late set­tle­ment from Scot­tish Gov­ern­ment for Peat­land Recov­ery costs for the year.

3. Annex I also sets out the spe­cif­ic addi­tion­al and unbudgeted costs of COV­ID-19 related actions taken by the Author­ity, which total £42,647 at the end of January.

4. The final, right hand column of Annex I sets out a pro­jec­ted out­turn for the year. Cur­rent fin­an­cial pro­jec­tions to the end of the year estim­ate a small excess of income over expendit­ure of £22,000 (equi­val­ent to 0.32% of total income under man­age­ment shown in Annex I of £6.833m). The achieve­ment of this out­turn pos­i­tion remains flu­id, and is sup­por­ted with work con­tinu­ing on com­mit­ting budgets. As with pre­vi­ous years, the work­ing assump­tion is that we will man­age the fin­an­cial pos­i­tion as close to a break even pos­i­tion as pos­sible while recog­nising the addi­tion­al work­ing chal­lenges posed in the cur­rent fin­an­cial year by the COV­ID-19 pandemic.

Oth­er Fin­ance Matters

1. The accounts for the year to 31 March 2021 were laid before Scot­tish Par­lia­ment in Decem­ber. The final accounts laid were as draf­ted and presen­ted for audit and as approved by the Audit and Risk Com­mit­tee at its meet­ing in Septem­ber 2020.

2. The audit for the year to 31 March 2021 is sched­uled for late June, with an ini­tial plan­ning ​“vis­it” sched­uled for late April. The audit will again be car­ried out remotely by Grant Thornton. This is the fifth year Grant Thornton have acted as the Authority’s aud­it­or and the term has been exten­ded by a fur­ther year due to the COV­ID 19 pan­dem­ic. The Audit and Risk Com­mit­tee con­tin­ues to have over­sight of the extern­al audit process.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Fin­ance & Deliv­ery Com­mit­tee Paper | 26/02/2021

Fin­ance Mon­it­or­ing for 10 Months to 31 Janu­ary Oth­er Resource Income

1. The move­ments from 31 Octo­ber are:

	31 Octo­ber £	31 Janu­ary £	Move­ment £
Oth­er income	28,470	33,450	+4,980
Oper­a­tion­al plan	43,034	179,725	+136,691
Pro­ject activ­ity costs
LEAD­ER	66,617	90,829	+24,212
T&G LP	320,788	505,473	+184,685
Caper­cail­lie (Devel­op­ment phase)	19,256	19,256
Caper­cail­lie (Deliv­ery phase)	36,707	73,017	+36,310
Great Place Badenoch	25,188	43,928	+18,740
Staff costs recovered	190,089	219,295	+29,206
	730,149	1,164,973	+434,824

Board and Staff Costs

1. With the excep­tion of the LEAD­ER, all pro­ject staff costs, have either been recovered or will be recovered in full for the 10 months. Staff costs relat­ing to sea­son­al rangers are not repor­ted in the staff costs line but as a sea­son­al ranger cost with­in the oper­a­tion­al plan line for Vis­it­or Ser­vices for man­age­ment account­ing pur­poses and covered by that budget. These staff costs will be reclas­si­fied in the fin­an­cial accounts pur­poses at the year-end.

2. Move­ment on run­ning costs:

	31 Octo­ber £	31 Janu­ary £	move­ment £
Oth­er board and staff costs	57,936	79,391	+21,455
Facil­it­ies costs	204,957	306,234	+101,277
Cov­id costs	35,631	42,647	+7,016
IT & professional	60,622	108,003	+47,381
	359,146	536,275	+177,129

Oth­er Board and Staff Costs

1. Costs related to Board and staff costs con­tin­ue to be lower than budget due to con­tin­ued home work­ing. Costs con­tin­ue to be incurred on the leased car fleet, and motor vehicle insur­ance, and ongo­ing HR and training.

Facil­it­ies Costs/​IT and Pro­fes­sion­al Costs

1. Many of the facil­it­ies costs are con­sidered ​“fixed”: rent, rates, and util­it­ies costs. Redec­or­a­tion and wider facil­it­ies work required under con­di­tions of lease is now planned to be car­ried out before the end of the fin­an­cial year.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Fin­ance & Deliv­ery Com­mit­tee Paper | 26/02/2021

1. Cov­id related costs con­tin­ue to increase: costs which would not have oth­er­wise been incurred but for cov­id, such as addi­tion­al IT kit to sup­port dis­persed work­ing — tele­phony head­sets, cord­less key­boards and mice sets, port rep­lic­at­ors for des­ig­nated hot desk (all to min­im­ise the risks of cross con­tam­in­a­tion); PPE (masks and san­it­iser) and also move­able sol­ar powered signs for use round the park which account for £21,240 of the costs incurred and were taken out of use in late Octo­ber. Down­turn in oth­er budget lines have provided resource cov­er for these addi­tion­al COV­ID-19 related costs.

Oper­a­tion­al Plan

1. Oper­a­tion­al plan spend is usu­ally skewed to the last quarter of the fin­an­cial year with this year being no excep­tion and fur­ther exacer­bated by delays in many pro­ject deliv­ery and invest­ment plans as a con­sequence of COV­ID-19. Heads of Ser­vice have reviewed budgeted spend for the year and the emphas­is is now on turn­ing planned spend into actu­al spend.

Non-Cash

1. Non-cash budget pro­vi­sion from Scot­tish Gov­ern­ment provides for depre­ci­ation of assets and oth­er account­ing pro­vi­sions made neces­sary by the Authority’s oper­a­tions. The budget alloc­ated for ²⁰²⁰⁄₂₁ by Scot­tish Gov­ern­ment is £320,000. This includes the ​“depre­ci­ation” of leased assets covered by IFRS 16, the adop­tion of which has been post­poned for anoth­er fin­an­cial year, until ²⁰²¹⁄₂₂. No reduc­tion to the alloc­a­tion has been made and it is expec­ted be reduced before the end of the fin­an­cial year.

2. Cur­rent pro­jec­tions for ²⁰²⁰⁄₂₁, based on assets in use at the begin­ning of the fin­an­cial year, pro­posed cap­it­al spend, with no abnor­mal charges or write downs for diminu­tion in value, are for a full year depre­ci­ation charge of £147,000.

3. Scot­tish Gov­ern­ment have awar­ded an addi­tion­al £10,000 as non-cash to cov­er the move­ment on the hol­i­day pay accru­al. This accru­al places a value on flexi/​TOIL and untaken hol­i­day at the year end.

Grant-in-Aid

1. Grant-in-aid has been drawn down as ori­gin­ally pro­filed and £5,015,000 has been drawn down to 31 Janu­ary. £4,528,000 has been alloc­ated as ​“Resource” fund­ing with the remain­ing £487,000 as ​“Cap­it­al” fund­ing which is used for the pur­chase of assets or as cap­it­al grants. £40,000 of the cap­it­al fund­ing has now been alloc­ated to spend on assets which will be cap­it­al­ised in the fin­an­cial statements.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Fin­ance & Deliv­ery Com­mit­tee Paper | 26/02/2021

Pro­jects

Tomin­toul & Glen­liv­et Land­scape Partnership

1. Amounts received/​due from the Nation­al Lot­tery Her­it­age Fund (NLHF) in the cur­rent year are:

Quarter ended	£	Received
30 June (claim 14)	158,023	16/10/2020
30 Septem­ber (claim 15)	79,276	08/12/2020
31 Decem­ber (claim 16)	130,710	o/​s *

• Not all the amount claimed will be paid out imme­di­ately due to NLHF retain­ing the final 10% of the grant award until the pro­jec­ted has been closed. A final claim will be made before the close of the pro­ject, which is now 31 May because of both COV­ID 19 and weath­er con­di­tions which as delayed to plant­ing of wood­land. The 10% bal­ance of fund­ing will be released fol­low­ing review and con­firm­a­tion of the final clam and final report for the pro­gramme. Reg­u­lar update meet­ings have been held with NLHF and there is a good level of under­stand­ing between the Author­ity and this major fun­der of the programme

1. Costs will con­tin­ue to be incurred for at least anoth­er 6 weeks as the remain­ing final pro­jects complete,

LEAD­ER

1. The LEAD­ER Pro­gramme has now been exten­ded until 31 Decem­ber 2021. Claims have remained at a low level and with many claims now being set to be pro­cessed into the next fin­an­cial year. At the 31 of Janu­ary only I claim remains due from Scot­tish Gov­ern­ment of £12,722 which will remove pre­vi­ously sig­ni­fic­ant debt­or bal­ances from our year-end bal­ance sheet and hence resolve a pri­or audit risk high­lighted by extern­al auditors.

2. The exten­sion of the pro­ject to 31 Decem­ber has led to a reapprais­al of the admin­is­tra­tion claims which had pre­vi­ously been recog­nised as recov­er­able in the year, though no form­al claim had been made to Gov­ern­ment. Claims for admin­is­tra­tion are capped at 25% of pro­ject fund­ing. Delays to the com­mit­ment of some pro­jects res­ults in the require­ment to delay some admin claims until adequate pro­ject deliv­ery expendit­ure is con­firmed and the admin costs can con­sequently fall with­in this 25% cap. The status of admin­is­tra­tion claims will be kept under review until the year end, with no over­all adverse impact on the Authority’s under­ly­ing fin­an­cial pos­i­tion expec­ted, oth­er than a slightly extend impact to cash flow.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Fin­ance & Deliv­ery Com­mit­tee Paper | 26/02/2021

Great Place Badenoch

1. Activ­ity remains at a low level and will pick up later in the year as the pro­ject nears completion.

2. Amounts due from the NLHF since last mon­it­or­ing paper are:

Quarter ended	£	Received
30 Septem­ber (claim 10)	10,475	02 12 2020
31 Decem­ber (claim 11)	17,063	11 02 2021

Caper­cail­lie Framework

1. The first claims for the Deliv­ery phase have now been made and received as follows:

Quarter ended	£	Received
30 Septem­ber (claim 1)	33,771	25 01 2021
31 Decem­ber (claim 2)	44,019	02 02 2021

Out­turn Pos­i­tion ²⁰²⁰⁄₂₁

1. As noted above the emphas­is in the last 6 weeks of the fin­an­cial year is to turn planned expendit­ure into actu­al expendit­ure. The pro­jec­ted out­turn for the year, cur­rently an under­spend of £22,000, is based on requis­i­tions lodged with fin­ance and oth­er planned spend.

2. To achieve an accept­able out­turn in a very dif­fi­cult year all budget lines con­tin­ue to be mon­itored on a daily basis, in con­junc­tion with close work­ing with Heads of Ser­vice and oth­er key staff, to ensure that the planned object­ives for the year are met. It remains the inten­tion to return an out­turn as close as is pos­sible to break even in what has been, and will con­tin­ue to be, a chal­len­ging year.

Daniel Ral­ph danielralph@​cairngorms.​co.​uk Dav­id Camer­on davidcameron@​cairngorms.​co.​uk

16 Feb­ru­ary, 2021