The Budgetary Cycle - Revenue Forecast

Description:
A Revenue Forecast is a realistic summary of anticipated income from all sources including federal government departments, provincial ministries, community-based royalties, trusts and foundations, and private agreements.

Purpose:
The Revenue Forecast serves two purposes. First it creates a summary of anticipated revenues from which programs control receipt of funds (see Appropriations & Program Work Plans). Secondly, the Revenue Forecast is one of the key components in the Expenditure and Variance Reports.

Process:
The Revenue Forecast (see Revenue Forecast Template), completed by the Financial Controller, is developed from information from a number of sources and documents including:

  1. Funding Agreements with Federal and Provincial governments such as Indian and Northern Affairs, Health Canada, Human Resources and Development, Industry Canada, Solicitor General, Heritage Canada, Canada Mortgage & Housing Corporation, and others as applicable

  2. Band-owned businesses

  3. Housing rentals income

  4. Royalties

  5. Special project funding

  6. Gaming

  7. Bank loans

  8. Investments

  9. Provincial monies (if applicable)

For ongoing program funding, the Financial Controller should start with the funding provided in the year preceding the Revenue Forecast and adjust those levels in accordance with the escalation factors included in the funding agreements. If escalation factors are not known, then the previous fiscal year funding levels should be used.

For project funding, the Revenue Forecast should only include committed project funding. Throughout the fiscal year, if additional projects are approved, the Revenue Forecast and the Appropriations can be adjusted accordingly. For income funding, (rentals, royalties, investments, etc.) the Revenue Forecast should include any known increases or decreases to the previous year's income. Band-owned businesses present a unique problem for fiscal planning. The insistence of the Department of Indian Affairs on a consolidated audit (that is, an audit which requires all operations of the Band to be put together in a summary audit and one bottom line) means that Band-owned businesses often represent a wild-card in determining the First Nation's year-end position (see Audit). It is critical therefore that, in addition to Fiscal Planning Calendar activities as they relate to programs, that regular reports be required from Band-owned businesses. For purposes of the Revenue Forecast, a very conservative approach is best-in other words, discount revenue expectations from Band-owned businesses.

Timing:
The Revenue Forecast should be completed for the upcoming fiscal year in February. Throughout the fiscal year and in conjunction with Expenditure and Variance Reports, the Revenue Forecast should be updated. The Revenue Forecast should be completed in spreadsheet form (see Revenue Forecast Template) and presented to the Chief, Councillors and Program Directors prior to the Priorization phase of the Planning Cycle.