UKC

The company I work for has fully expended there CAPEX budget for the year, but we still whish to purchase some items that would normally be capitalised. We have undersepnt in other areas of the budget - are there mechanisms by which we can transfer funds into the CAPEX budget for this financial year?

In reply to Dr.S at work:

It's only a budget. You simply decide internally to reallocate your resources.

The accounts show what is actually spent.

In reply to Skyfall:

well thats what I would think - however our accounts guys seem remarkably rigid!

In reply to Dr.S at work:

I'm not an accountant but do a lot of the basic book-keeping stuff where I work. My understanding is below, but worth checking with someone more specialist!

It is correct that you can't overspend the capex budget (from an accounting point of view), but it's fine to shift revenue into it. The difference is that you don't normally do this via a standard virement (ie just pick up the funds and plonk them where needed) - normal practice is to spend the money from revenue and gain it as income in the capital pot.

You create a revenue expenditure line called 'revenue contribution to capital' or 'direct revenue financing of capital purchases', vire the spare funds to that centre/line, and then spend the money against it. That is then entered into your capex cost centre as matching income.

You can do this as you go along as amendments to the budget, which can help to track things properly across the year. Or you can just do it at the end of the year to balance the cap headings as an accounting tidy-up before closing the books.

In reply to hamsforlegs:

That's your internal budgeting/accounting system, completely self imposed. That's sinply how your company likes to run your own management system. Other companies will have different budgeting systems, or almost none! Your company could decide what to do on a completely different basis and then record it appropriately in the year end statutory accounts (which do have formal requirements and are the only bit which is a requirement as such).

I own a business and also happen to be an accountant of sorts.

In reply to Dr.S at work:

Yes you can.

Your accountants are probably fretting unnecessarily about the auditors or their normal practice being changed. I don't know why some finance people seem to think that they're the gatekeepers of the business rather than enablers to make things happen.

(Speaking as a finance person)

In reply to Babika:

Cheers all - very helpful, now how to frame the "are you sure thats right..." conversation....

In reply to Dr.S at work:

As far as I am concerned you can easily switch it around, unless you have some form of public sector constraint.

I would not give a fig about what accountants think, they should not be controlling the company, its what the owners etc think/do/want that is the overriding factor.

In reply to neilh:

Ah yes, the fact that it's a company owned by a university may complicate the rules a bit.

In reply to Dr.S at work:

As per Skyfall a budget is a budget doesn't matter. If you go over it all you did was go over the budget its internal reporting only so largely irrelevant nothing to stop you overspending on the budget....apart from if your company has rules about who has the authority to exceed the budget.

If the capex budget for the year has been set by senior mgmt, then Finance will probably be taking the view that if you want to go over that this year you need to get the additional capex spend approved by senior mgmt.

In reply to Skyfall:

Makes sense to me!
Can see that it makes no difference unless you're part of a larger entity that is managing overall capital allocations.