SD-17.2 — Financial Planning & Analysis

Business Domain: BD-17 Corporate Services & Resources (Cross-cutting — corporate) · Applies: BOTH

Purpose

Plans and analyses the firm’s own finances. SD-17.2 is the firm’s FP&A capability: it builds the corporate budget and the forecast, produces the management accounts, runs the variance analysis against plan, allocates cost across business lines and funds, analyses the firm’s profitability, and runs the corporate capital planning. It is the firm deciding where its money will go and understanding where it went.

It is not the recording of what happened — that is SD-17.1 Corporate Accounting & Controllership, which keeps the firm’s books. SD-17.1 records the actuals; SD-17.2 plans the future and explains the difference. They run on a different cadence and a different toolset: controllership is a periodic close, FP&A is a continuous planning and analysis loop.

Service Operations

Build the budget and forecast — produce the firm’s annual budget and the rolling re-forecast, including the revenue, cost and headcount plans.
Produce the management accounts — assemble the periodic management accounts and the management-information pack for the governing bodies, on the actuals from SD-17.1.
Run variance analysis — compare actuals against budget and forecast, and explain the variances by driver.
Allocate cost — allocate the firm’s costs across business lines, funds and cost centres, including the cost-of-management apportionment that supports the management-fee economics.
Analyse profitability — analyse profitability by fund, strategy, client and business line, and surface the margin drivers.
Run corporate capital planning — plan the firm’s own capital, working-capital needs and investment in the business.

Inputs and outputs

Inputs: the closed actuals from SD-17.1 Corporate Accounting & Controllership; the fee and carry income from SD-12.11; the headcount and payroll plan from SD-17.6 Talent & Human Capital; the corporate liquidity position from SD-17.3.
Outputs: the budget, the forecast, the management accounts, the variance analysis, the cost allocation and the profitability analysis — consumed by SD-17.1 (the allocation drives accounting entries), SD-17.3 Corporate Treasury, the governing bodies and the firm’s leadership.

Entities

Consumes: the firm’s fee and carry income from SD-12.11; E-01 Legal Entity (the firm’s own entities); the SD-17.1 closed actuals; the SD-17.3 corporate liquidity position; the SD-17.6 headcount and payroll plan.
Owns: the firm’s budget, forecast and management accounts — a process artefact.

Standards

Management-accounting and FP&A practice — the budgeting cycle, the rolling-forecast discipline, the variance-analysis and cost-allocation methods.
The cost-allocation and apportionment conventions consistent with the management-fee economics.

Open extensions

The cost-allocation and apportionment sub-model.
The driver-based budgeting and forecasting sub-model.
The Service-Operation-level input/output contracts with SD-17.1.