Financial Policies and Procedures Manual

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Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 [Insert Name of Public Sector Agency] Financial Policies and Procedures Version Number: Approved by: Date approved: Date Reviewed: Date of effect: Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Table of Contents Objective 1 1 Revenue 2 2 Cash Handling 5 3 Bank Accounts 8 4 Cash Flow Forecasting 10 5 Procurement/Purchasing 12 6 Expenditure 15 7 Payroll 19 8 Physical and Intangible Assets 24 9 Reconciliations 28 10 Administration of Discretionary Financial Benefits 30 11 Treasury 34 12 General Ledger 37 13 [insert area] 39 14 Templates 40 Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Objective 1 Objective Public Sector Agencies must establish and maintain documented policies and procedures to set out requirements for complete and accurate processing of authorised transactions. Policies and procedures have different purposes: • Policies -the overall plan, principle or guidelines for financial transactions processing or financial management activities • Procedures -the methods or steps ('how to') that are undertaken to ensure that policy requirements are enforced or administered Whilst not mandatory to have separate statements of policy and procedure, the different intents of policies and procedures are more clearly articulated if they are separately identified. The policies and procedures for financial administration and management should incorporate, the following: • Legislation under which the Public Sector Agency operates • Public Sector Agency financial management structure • Chart of accounts of the Public Sector Agency • Policy and procedure details for areas of financial management covered by the Standing Directions of the Minister for Finance (the Directions), including use of information technology related to financial management, where appropriate • Standard forms to be used in financial management, and • A list of exemptions obtained from the Minister for Finance and all relevant supporting documentation. Policies should be ratified by the Responsible Body or other delegate approved by the Responsible Body. Procedures should be ratified by the Chief Finance and Accounting Officer(CFAO). There should be sound control over policies and procedures to ensure only authorised up to date versions are in use at any point in time. There should be a process for periodic review of financial management policies and procedures (at least every two years, or more frequently at the discretion of the Responsible Body). The review should be designed to continuously improve the policies and procedures and reflect changes in the business/operations, technologies and best practice trends in financial management. Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Revenue 2 1 Revenue Public Sector Agencies must implement and maintain an effective internal control framework over revenue transaction processing and management to ensure that revenue is completely and accurately identified, recorded and collected. Accounts Receivable • Revenue shall be recognised on an accrual basis and promptly recorded in the general ledger • Invoices for goods and services shall be raised promptly following provision of those goods or services using the standard Tax Invoice [insert reference to where this is found], terms and conditions of payment [insert terms and conditions may be included here e.g.: payment within xx days of receipt of invoice] • Fees and charges shall be in accordance with the approved schedule of fees and charges • GST shall be charged on goods and services in accordance with taxation legislation requirements • A register of outstanding receivables balances that ages the outstanding balances and is used by management to monitor and follow up on overdue debtors must be maintained. An analysis of aged debtors must be reported to the CFAO, or a delegate of the CFAO, on a [insert frequency] basis. • Receipts shall be promptly allocated against revenue Credit Notes • Credit notes shall only be raised to correct transactions relating to an incorrect accounts receivable balance and/or charge • Credit notes should be authorised in accordance with delegations of authority Bad Debts • The writing off of bad debts shall be performed in accordance with the Delegations of Authority and [insert any relevant legal requirements, if applicable] • The recoverability of debts shall be reviewed on a [insert frequency of review] basis by [insert appropriate senior level of authority] Introduction Policy Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Revenue 3 [insert text here] Finalise invoice details Finalise details of invoice through manual recording /or in Finance System Raise invoice [insert position e.g. Finance Officer] to complete invoice manually /raise invoice on Finance System using approved price list [insert reference/link to price list and template invoice] Request for invoice Sign request to raise invoice and obtain approval from [insert approver position] Accounts Receivable Send original to debtor/client and retain copy on file (electronic or hardcopy) Match payment to invoice Payment for invoice may be received in cash, cheque, direct credit, EFT, credit card etc (Refer to Cash Handling Policy for controls over money received) Enter details of payment into Finance System and match against invoice Receive payment Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Revenue 4 [insert text here] Complete a credit note authority. Attach appropriate documentation supporting the credit to the authority Completion of credit note authority Process credit note on the financial system Processing of credit note Credit Notes Match credit note to the relevant invoice Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Cash Handling 5 2 Cash Handling Public Sector Agencies must implement and maintain an effective internal control framework over cash handling and banking so that cash from all sources is completely and accurately identified, banked and recorded in the financial records. Cash Receipting • Control shall be established over all cash, cheque, EFT and credit card remittances • Cash, cheques and incoming monies should only be collected at approved locations and by delegated personnel • Cash and cheques should be adequately secured • Where possible, duties of cash handling, preparation of daily reconciliations and transfer of cash should be the responsibility of different employees • Banking is to be performed on a [insert timeframe e.g.: weekly basis] at a minimum • Cash and incoming monies received are to be promptly recorded in the general ledger Petty Cash • Petty cash is to be used for minor, urgent items of expenditure. It should not be used in situations in which it is possible to raise a purchase order, or to reimburse personal expenditure incurred by staff • The individual items which have been purchased should not exceed [insert amount, for example $100] • Petty cash should be stored in a secure manner. No more than two individuals should have access to the float • Petty cash floats may only be established upon the written approval of the [insert relevant personnel] • When petty cash has been depleted by approximately 75%, or at a minimum once a week, an amount sufficient to reimburse the petty cash to the float amount should be requested • The value of the petty cash float should be no more than [insert amount, for example $1,000] • Balances may be subject to periodic surprise counts by an independent person Policy Introduction Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Cash Handling 6 [insert text here] Cash Receipting Complete a receipt from a pre-numbered book/cash register when “cash” is received. Disburse one copy to the customer, where applicable, and file one copy Prior to banking, perform a reconciliation between cash to be banked and receipts records. Preparer to sign reconciliation as prepared. [insert position of Finance Officer equivalent] to sign reconciliation as reviewed Security of cash Secure all cheques and cash received until banking day. Enter cash receipt details through manual book keeping or Finance System, matching to relevant invoice where relevant Production of receipt Reconciliation of cash Banking to be performed by an officer independent of the officer performing reconciliation Banking Attach bank deposit slip to cash receipt reconciliation Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Cash Handling 7 [insert text here] Petty Cash [insert position of Petty Cash Officer equivalent] reviews petty cash request form for appropriate approval, and then disburses the required amount of cash. The recipient signs for the cash. Cash advances [insert frequency] Reconcile petty cash Prepare a reconciliation between receipts issued, petty cash book balance and petty cash float amount. Sign and date the reconciliation/petty cash book to verify the reconciliation is correct. Independent person countersigns reconciliation. Approval of Replenishment An appropriate financial delegate authorizes the replenishment request. Replenishment is processed through Accounts Payable process Individual fills out a petty cash request form, attaches supporting documentation as required and submits form to [insert position of Cost Centre manager equivalent] for approval. Request for Petty Cash Record details of cash advance in a petty cash book including: • Name and signature of claimant • Amount disbursed • Date Place the petty cash request form and supporting documentation in the petty cash till Petty Cash Book Replenishment of petty cash fund When petty cash float reaches [insert amount] attach petty cash vouchers to a request for payment to top up float. Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Bank Accounts 8 3 Bank Accounts Public Sector Agencies must implement and maintain an effective internal control framework over the establishment and management of bank accounts to ensure balances are accurately reflected in the financial records and bank accounts are operated efficiently and effectively. • Bank accounts shall only be opened with express written authorisation in accordance with the Delegations of Authority • Bank accounts shall only be closed with express written authority in accordance with the Delegations of Authority • There shall be at least two signatories to every bank account in accordance with the Delegations of Authority • A Public Sector Agency must have as few banking institutions and bank accounts as practicable. The number of bank accounts and institutions used for banking should be reviewed at least annually by the CFAO. • Bank accounts shall be reconciled on at least a [insert frequency] basis • A register of bank accounts and facilities should be maintained. [insert text here] Policy Procedure Introduction Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Bank Accounts 9 [insert text here] Request for bank account to be opened to be raised. Obtain relevant written authorisation from [insert position/title] Request to Create Bank Account Open account with financial institution Open Bank Account Authorisation Register details of account on template account register/general ledger system. Assign an appropriate financial delegate to continuously monitor the account, raising critical matters to appropriate senior management on a timely basis. Monitoring Registration Opening a Bank Account Request for bank account to be closed with supporting documentation/reason for closure. Obtain relevant written authorisation from [insert position/title of relevant approver] Request to Close Bank Account Send closure notification to financial institution Close Bank Account Authorisation Delete/freeze the detail of the account on template account register/general ledger system. Delete/freeze bank account on G/L Closing a Bank Account Transfer existing balance of the account to another bank account. Stop/change any direct debit/credit payments that relate to the bank account Transfer bank balance Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Cash Flow Forecasting 10 4 Cash Flow Forecasting Public Sector Agencies must implement and maintain an effective internal control framework over cash flow forecasting and cash flow management to ensure cash deficits and surpluses can be effectively managed. • An annual budget estimate should be prepared to generate long-term strategic forecasts which will be used to plan for significant cash flows and any contingencies. • On an ongoing basis short-term tactical and operational forecasts shall be prepared to provide detailed estimates of the cash flows expected and if immediate cash flow requirements can be met. • Cash forecasts shall be regularly compared (at least monthly) against actual cash flows, updated as required and reported to the CFAO. [insert text here] Rollout Analyse historical performance for revenue and expenditure trends across the year. Using the information from the strategic objectives, project revenue and expenditure to create an annual budget estimate. Obtain approval from [insert position/title] and present to the responsible body for discussion and approval. Creation of an Annual Budget Estimate Authorisation Annual Budget Estimate Rollout/communicate the budget estimate to all relevant staff Policy Procedure Introduction Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Cash Flow Forecasting 11 [insert text here] Ongoing Forecasts Using the annual budget estimate as a base, and using the most up to date information on the financial position, prepare detailed forecast for the next [insert frequency] Create regular ongoing forecast Analyse the forecast to ensure adequate funding strategies are in place to maintain liquidity. Obtain approval from CFAO Approval Analyse forecast & funding strategy Analyse Forecasts Compare the cash forecasts against the actual results and analyse the reason for any variances. Update future cash flows where applicable. Compare cash forecast to actual for analysis Present the cash flow variance analysis for approval to [insert position/title] Approval of variance analysis Report the cash flow variance analysis and forecast to [insert position/title] Reporting Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Procurement/Purchasing 12 5 Procurement/Purchasing Public Sector Agencies must implement and maintain an effective internal control framework over procurement activities to ensure procurement of goods or services is authorised in accordance with business needs and within a documented framework of procurement policies and procedures. • All purchases shall be made in accordance with the Victorian Government Purchasing Board Guidelines • Thresholds shall be specified as to the level of quotes and other documentation required to support “value for money” associated with purchases • Tendering requirements are in place • Wherever possible, purchases will be made in accordance with a preferred supplier list • Purchase orders shall be raised for all purchases of goods and services prior to the initiation of a purchase transaction with the supplier. Exceptions may occur, for urgent needs, designated suppliers, and when general government purchasing cards are used • All purchase requisitions/orders must be approved in accordance with the Delegations of Authority • Where relevant, legally binding purchase documents are in place and approved e.g.: contracts for supplies of services/goods etc. These are subject to independent scrutiny i.e.: legal review, where applicable. [insert text here] Introduction Policy Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Procurement/Purchasing 13 Goods received by another department Agree goods received to the delivery docket. Forward the delivery docket to Accounts Payable. Accounts Payable match delivery docket to the invoice. Prepare a purchase requisition and obtain authorisation from an appropriate financial delegate. Refer Victorian Government Purchasing Board Guidelines if relevant. Obtain purchase price via verbal quote, written quote, or tender in accordance with purchasing policies Initiating the purchase Price agreement Create a purchase order through the financial system. Forward a copy of purchase order/confirmation to original purchaser. Obtain authorisation for purchase order in accordance with Delegation of Authority Send purchase order to nominated supplier Creation of purchase order Notification of supplier Goods are received by the Purchasing Department. Enter the purchase order number onto the system. Receipt the quantity of each item detailed on the purchase order in the accounting system Purchasing Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Procurement/Purchasing 14 [insert text here] Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Expenditure 15 6 Expenditure Public Sector Agencies must implement and maintain an effective internal control framework over expenditure transaction processing and management to ensure that disbursements (including but not limited to grants, capital expenditure, salaries and wages, and other recurrent expenditure) are appropriately authorised and incurred in accordance with business needs, and captured in the financial records. [insert text here] • Invoices shall be matched to purchase orders where possible • Differences between purchase order and invoice amounts greater than xx% or $xx shall be authorised by a financial delegate • All expenditure shall be appropriately approved in accordance with the delegation of authority • A system will be established to pay all debts as and when they are due and payable and to ensure early payment discounts are fully utilised where appropriate • Cheque stationary should always be kept in a safe or other secure location and removed only for cheque processing • Cheque signatories should undertake a reasonableness review of the payments to be made • Cheque signatory should be independent of employees responsible for processing invoices • Changes to masterfile data should be approved and limited to selected personnel • An expenditure policy should be reflective of current Australian Accounting Standards. As a result, the recognition of expenditure should be on an accrual basis. • Procedures shall be created to include the following expenditure types: o Capital Expenditure o Travel o Hospitality o Personal Expense reimbursement o Gifts o Employee Advances o Petty cash o Purchasing Card Rules for Use and Administration issued by the Department of Treasury and Finance o Contingent Liabilities o Introduction Policy Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Expenditure 16 [insert text here] Invoice received by Purchasing Enter details of goods received in . Date stamp invoice. Forward invoice to Accounts Payable. Accounts Payable to obtain relevant authorisation for invoice. Accounts Payable to check cost centre noted on invoice to ensure it agrees with delivery location for the goods Enter purchase order number into to bring up details. Match price, quantity, and invoice number into Invoice received by Accounts Payable Check to ensure the goods have been receipted in If goods not receipted in , send invoice to the ordering department Ordering dept. to sign invoice to acknowledge receipt of goods. Send invoice back to Accounts Payable for processing If price and quantity on Purchase Order do not agree to invoice by more than or <$X>, send invoice back to purchasing area to address. Additional authorisation should be obtained from authorising officer. Invoice Processing Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Expenditure 17 Release appropriate invoices in to be paid. Obtain approval if the invoices are ‘okay’ to be paid from delegated authority Release of invoices Prepare a journal to update the General Ledger in Produce the ‘Payments’ report for invoices. Perform a reasonableness check of this report. Reasonableness (check of payments) Update of General Ledger Authorisation Payment by cheque Obtain appropriate cheque signature for all cheques. Disburse cheques to suppliers. Payment by EFT Prepare ‘batch’ of EFT payment to be made within Accounting Accounts Payable module. Batch to be approved by delegated finance authority before electronic payment. Disburse remittance advice to suppliers (if required) Payment Payment Review of changes Masterfile Changes to Accounts Payable Ensure all requests for changes are authorised by an appropriate accounts payable officer Update the change in Update of Change Produce the amendment report Receipt of requests for changes to masterfile data Appropriate senior officer to review the amendment report and sign as evidence of review Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Expenditure 18 [insert text here] Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Payroll 19 7 Payroll Public Sector Agencies must implement and maintain an effective internal control framework over financial transaction processing for employee expenses and for employee expense management to ensure that salaries, wages and other employee costs (including full-time, part-time and casual employees) are authorised and paid accurately, efficiently, and in a timely and secure manner. [insert text here] Payroll Processing: • Adequate segregation of duties should be maintained over the payroll function where possible • Timesheets shall be completed and approved as required by the terms and conditions of employment • All overtime must be approved prior to being worked • Accruals for all aspects of payroll must be recognised at the end of each month or on an annual basis if appropriate • Payroll costs must be recorded in the general ledger on a monthly basis and the general ledger must be reconciled to the payroll monthly • There shall be segregation of duties between responsibilities for updating the masterfile data and reviewing and approving payroll details Leave: • Leave entitlement balances and corresponding liabilities must be recorded and monitored with a view to ensuring they are minimised at all times to avoid any significant impact upon cash flow. New employees: • All appointments must be made in accordance with approved Delegations of Authority • Each employee must be identified by a unique employee payroll number • Authorised employee data must be promptly and accurately recorded on the payroll system to ensure that valid payments are made to bonafide employees Terminated employees: • All employee terminations must be appropriately authorised • Payroll system must be updated on a timely basis to reflect employee terminations Introduction Policy Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Payroll 20 • All assets and equipment belonging to must be returned, preferably prior to the final payout Payroll Information: • Information regarding an employee’s commencement, leave, performance reviews and termination must be kept on the employee file. • Employee files must be kept in a secure area, access to the secure area should be in line with appropriate segregation of duties. • All payroll reports and other sensitive employee information should also be kept in a secure area. Commission on Payroll Deductions (if applicable) • Commission must not be charged on taxation, superannuation or other mandatory deductions. • Any commission which is collected must be brought to account as revenue. • In the case of health insurance: o The Deputy Secretary, Budget and Financial Management, DTF determines the commission payable on contributions other than contributions to Medibank o Medibank Private determines the commission payable on contributions to Medibank, and o Each Public Sector Agency must arrange with the health insurance funds (including Medibank) to collect the commission annually. • In the case of any other deductions, the Accountable Officer must determine the rate of commission. [insert text here] Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Payroll 21 Produce payroll summary reports (specify which ones) listing the payments to be made to each employee. Report to be reviewed by an officer not involved in the preparation of the report to ensure that changes/alterations have gone through, and that correct salaries are reflected before processing of EFT. Enter details of time and attendance records (i.e. casual/part-time employees) into the Payroll System based on appropriately approved documentary evidence. Verify accuracy of input independently if possible by agreeing source timesheets and changes to details on the system. Accuracy of input Run exception reports for employees who have not entered a timesheet. Update any exceptions Input by Payroll Officers Payroll Details report Processing Payroll Process exceptions Transfer EFT funds to the bank. Funds to be transferred by an employee independent of the employee closing off the system. Agree total from confirmation report to EFT report produced through payroll system. Transmission of funds Print pay slips Update of general ledger Upload payroll file into general ledger. Perform a reconciliation between payroll system and the general ledger at the end of each month Produce EFT report and file EFT report Produce general ledger posting summary after each payroll . Close off payroll system and run audit reports. Independent review if possible. Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Payroll 22 Changes to Payroll Masterfile Data The following changes to standing data may be made: • Personal details (including bank details) • Remuneration • Superannuation, deductions and allowances • Changes to normal pay • Leave The standard form detailing changes to masterfile data such as salary increases, promotions, and new employee standing data and terminations are approved by [insert position/title]. Other details can be changed via a written request from the employee Approval of masterfile changes Personnel changes and audit report to be reviewed by an appropriate senior finance officer Review of input Types of masterfile changes Creation of position Employee's manager to complete the standard new employee form and obtain authorisation signed in accordance with delegations of authority New Employees Collect additional documentation for personnel records. This will include: • Recruitment declaration form • Personal details and New Starter form • Superannuation form • Tax File Number form • Employee declaration • Bank account details • Offer of employment (which includes specification on salary) • Acceptance of offer signed by employee Personnel information Details input into the payroll system. Input of position into the system Verification of changes Details to be checked by an independent employee for accuracy Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Payroll 23 [insert text here] Obtain copy of resignation letter if termination is initiated by employee Employee’s manager completes and signs employee termination form Completion of termination form Ensure the termination form has been authorised by an appropriate delegated authority Calculate Termination Pay Resignation letter Payroll officer to calculate termination pay. Termination pay authorised by appropriate senior finance officer Provide termination pay following receipt of signed termination checklist Authorisation of termination form Terminated Employees Pay out Other Reference: Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Physical and Intangible Assets 24 8 Physical and Intangible Assets Public Sector Agencies must implement and maintain an effective internal control framework for asset management to ensure that assets are identified, recorded accurately and accounted for in accordance with Australian Accounting Standards. [insert text here] General • A capital item is defined as an item greater than [insert $] which will not normally be replaced in one year • All non current assets shall be recorded on a fixed asset register which is reconciled with the general ledger on a quarterly basis • The fixed asset register should contain the following details: o cost o supplier o description o additions (including date) o disposals (including date) o depreciations o written down value o location o asset serial number o asset reference number • A register of portable and attractive assets (i.e.: assets that are not capitalised but are valuable in nature) shall be maintained • Assets shall be kept in secure custody and used for authorised purposes only • Records and details must be maintained in relation to contingent assets as required for Public Sector Agency needs, and to satisfy accounting standards and disclosure requirements • Records and details for intangible assets must be sufficient to ensure compliance with accounting standards and disclosure requirements, in addition to any operational needs of the business. Additions • The acquisition cost of non current assets must include the purchase consideration plus any costs incidental to the acquisition • Purchases must be authorised in accordance with delegations manual (if applicable) Introduction Policy Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Physical and Intangible Assets 25 Depreciation • Newly acquired assets shall be depreciated from the date of acquisition, while constructed assets should be depreciated from the start of the month following completion of works • Depreciation rates: Item Rate % Buildings [%] Motor vehicles (after residual) [%] Computer software (major) [%] Furniture and fittings [%] Equipment (admin & technical) [%] [insert others as required] [%] Revaluation of Non Current Assets • Non current assets should be revalued on a [insert] basis at a minimum • All revaluations must be sufficiently documented including appropriate approvals for changes to asset values in accordance with financial delegations. Disposals • Assets shall be retired or “scrapped” where there is no demonstrated future use for those assets and there is no possibility of sale • Disposals and their impact on profit Transfer of assets • All transfers of assets should be authorised by an appropriate senior officer and recorded in the asset records Asset Stocktakes • Assets shall be physically verified counted on [insert basis and frequency] [insert text here] Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Physical and Intangible Assets 26 Asset Management Appropriate Senior Management should review the justification and budget for the purchase of an asset Purchase of Asset Obtain appropriate approval for purchase – refer purchasing policy and procedures Determine whether purchase should be capitalised or expensed Entry onto Fixed Asset Register Record asset in the fixed asset register and general ledger Depreciate the asset, based on approved depreciation rates Depreciation of Assets On a [insert frequency] basis, assess the value of the asset. Determine whether an asset revaluation would be appropriate Asset revaluations Asset Additions Stocktakes Fixed Asset Register Listing Print a copy of the fixed assets register For each asset listed, determine its physical existence (this can be done via barcoding etc) For assets which cannot be physically verified, prepare a journal entry to remove the asset from the general ledger and the fixed asset register. Ensure appropriate authorisation is obtained Verification of existence Journal Entry Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Physical and Intangible Assets 27 [Insert text here] Disposal of Assets At the end of the asset’s useful life, disposal may be considered. Complete asset disposal form. Obtain authorisation for disposal from appropriate Manager Process the disposal through the fixed asset register and general ledger and calculate the profit/loss of the asset on disposal Asset Disposals Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Reconciliations 28 9 Reconciliations Public Sector Agencies must implement and maintain procedures to ensure that reconciliations are completed and reviewed in a timely manner to ensure the accuracy of the financial records. Reconciliations: • All transactions shall be allocated to appropriate cost centre codes • Reconciliations should be performed for the following accounts at the frequency specified: o Insert account details insert frequency o Insert account details insert frequency o Insert account details insert frequency o Etc, etc • All general ledger reconciliations should be maintained in a folder. This folder should contain a checklist (in front) listing all reconciliations required to be performed. Each month, this checklist should be signed off as evidence that the reconciliation has been performed and reviewed • Reconciliations between the general ledger and subsidiary ledger records should be performed regularly, in accordance with the above schedule [insert text here] General ledger is closed off at month end Consult reconciliations checklist (or equivalent) to identify reconciliations to be completed for the month Identify reconciliation requirements Prepare reconciliations using standard templates and signed off Perform reconciliations Reconciliation Process Reconciliations reviewed, with evidence of review and date prepared and reviewed Review reconciliations Introduction Policy Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Reconciliations 29 [insert text here] Planning for an Effective Grant Program: • Establish the need for a financial benefit program, ensuring a clearly defined objective and a business case which analyses the need for the program are documented and alternate effective means of achieving the program objective are considered including exploring alternative sources of funding in terms of a loan or Commonwealth or private funding etc. • Establish performance measures which determine the outcome and effectiveness of a financial benefit program, ensuring relevant and meaningful performance measures and indicators are in place at the commencement of the program. • Financial benefit program management resource limitations and other financial risks associated with the program shall be identified and mitigated through a documented financial risk management strategy at the planning stage. • At the operational stage of a program, a sound performance information system that focuses on continuously identifying and treating emerging financial risks will be available as a management tool. • The design of the value for money financial benefit program shall include the best mix of funding sources, the identification of efficient administrative support costs, (where appropriate) the use of on-line financial benefit application, appraisal and management systems (to streamline the application and selection process, reduce administrative costs and increase the transparency of discretionary financial benefit administration) and strategies to manage relationships and cooperatively streamline and reduce duplication of effort. Selection of Projects: • Provide guidance and information on eligibility and appraisal criteria with application forms • To achieve transparency and effective selection of financial benefit recipients the design of a financial benefit program needs to include evidence based selection criteria. • Document reasons for decisions and maintain records of deliberations • Adequate separation of duties between the appraiser of applications, approval of offers and making financial benefit payments must be maintained Introduction Policy Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Administration of Discretionary Financial Benefits 31 • Make grant offers and advise unsuccessful applicants as soon as possible Management of Funding Agreement: • The design of funding agreements shall include clearly defined terms and conditions to facilitate effective outcomes and minimise ongoing monitoring effort. • The management of agreements shall include procedures for monitoring payments, recipient organisations and progress of outcomes as well as arrangements for financial accountability through effective financial benefit acquittal. Managing the Review: • Procedures shall test the adequacy of performance information and evidence of the quality, efficiency and effectiveness of a program, as well as, whether the program achieved the outcome it was designed to achieve. • Either through tailored public performance reports or through disclosure in budget papers and/or Departmental annual reports the results of the program will be reported to the Parliament and the public. Acquittals: • Procedures shall be developed and provided to all individuals involved in the grant process to ensure that the process of acquitting grants is understood and effectively implemented • Documentation shall be obtained at the end of the grant period from the recipient of the grant to verify that the grant money was used in accordance with the terms and conditions of the grant. Documentation may include a certificate or statement of compliance from the responsible officer of the recipient organisation and financial statements covering the grant period. Depending on the risk of the project an audit may be required on the financials of the recipient. • A reconciliation shall be completed that compares grant money paid against grant money approved. If a difference arises, recovery of grant money will be processed under the normal Accounts Payable/Accounts Receivable process [insert text here] Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Administration of Discretionary Financial Benefits 32 Application Process Application received and assessed Approval Application received & assessed against approved criteria Application is approved by [insert position/title]. If application is not approved rejection letter is sent to the applicant detailing why. Letter is sent to applicant confirming the grant has been successful Grant amount is raised and approved as per Accounts Payable procedures Grant money is sent to applicant. Letter sent Raise grant Payment Grant acquittal received Reconciliation Reconciliation discrepancy Acquittal Process Grant acquittal received Grant money paid is reconciled to grants approved. Identify any discrepancies. Grant money owed to applicant Refund owed from applicant Grant money paid as per standard Accounts Payable process Refund collected as per standard Accounts Receivable process Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Administration of Discretionary Financial Benefits 33 [insert text here] Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Treasury 34 11 Treasury [insert text here] • The purpose of investments is to ensure that optimum return is gained from surplus cash. These investments must therefore be easily converted to cash on short notice to ensure liquidity • Short term investments (less than 365 days) must achieve returns on best available rates, with no more than [insert amount] invested in any one bank, or one institution at a time. Appropriate investments for short term funds include • Long-term investment (exceeding 365 days) should reduce investment risk by limiting the exposure to any one asset sector, and maintaining a diversified portfolio of assets. The following types of investments may be appropriate • The investment limit is [insert amount] • All investments must be approved in accordance with the Delegations of Authority Manager • Treasury investment performance shall be reviewed by [insert appropriate senior level of authority e.g.:< Responsible Body> on a [insert frequency] basis [insert text here] Introduction Policy Procedure Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Treasury 35 Prior to an investment being undertaken: -Ensure investment type meets requirements of defined policy approved by Responsible Body e.g.: equities, bonds, fixed interest etc -Ensure adequate evidence of analysis of suitability of investment e.g.: credit rating from a rating agency such as Standard & Poors, or Moody’s Investment to be approved using investment form and signed by delegated authority [insert position/title] Assessment of potential investments Approval Make investment arrangements with financial institution Record investment in the general ledger in accordance with applicable accounting standards Update the investment register with the following information: • Amount invested • Name of institution, if it is not a bank, the credit rating of the institution • Date of lodgment • Term and interest rate • Type of investment • Source of funding • Net increase/earnings received Accounting for investments Updating the investment Recognise investment revenue as income in the general ledger when earned Recognition of investment revenue Perform quarterly/monthly reconciliation between general ledger and investment statements As part of the monthly reporting process, detail investments, amount invested, terms, returns and market value Monthly reporting Reconciliation process Confirmation on an annual basis for audit requirements Audit requirements Investments Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Treasury 36 [insert text here] Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 General Ledger 37 12 General Ledger [insert text here] [insert text here] Journals: • Transfers of account balances should be performed by journal entry, enabling an audit trail • All changes to the general ledger shall be approved by an appropriate officer and an audit trail should be maintained • All journal updates to the general ledger should be reviewed and authorised by the appropriate senior finance officer prior to posting • All journal updates should be supported by appropriate documentation [insert text here] Policy Procedure Introduction Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 General Ledger 38 [insert text here] General Journal Process Identification of needs for journal entry Supporting documentation Complete a standard journal form. This should detail the following: • position/title of individual processing the journal • reason for the journal • general ledger /analysis codes impacted • signature of individuals processing the journal Attach relevant supporting documentation to journal form Enter journal into the system Appropriate finance officer to authorise journal on-line or via a summary report Post journal to general ledger Input journal Authorisation Posting of Journal Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 [insert area] 39 13 [insert area] [insert text here] [insert text here] [insert text here] [insert text here] Introduction Policy Procedure Other References Supplementary material to be used as guidance only FMCF supplementary material: Financial policies & procedures v2/Nov2005 Templates 40 14 Templates [insert templates here]