Table of Contents i
Table of Contents
General Guidelines in support of the Financial Policy
Background and introduction 3
Document objectives 3
1 Financial reporting and system management 3
1.1 Recording of financial transactions with external parties 3
1.2 Chart of accounts and classification 3
1.3 Retention of financial records 6
1.4 Internal transfers and journals 6
1.5 Departmental internal loans/overdrafts 7
1.6 Month-end procedures 7
1.7 Balance sheet account reconciliations 7
1.8 Financial reports 7
1.9 Financial data integrity 7
1.10 Confidentiality of financial information 8
1.11 Opening and closing of activities and accounts 8
1.12 Accounting for contingencies 8
1.13 Accounting for deferred revenue 8
1.14 Accounting for accruals – revenue and payments 8
1.15 NWU business activities recorded in unofficial financial systems 8
1.16 Interest on internal account balances 9
1.17 VAT transactions 9
2 Budgets 9
2.1 Budget operations 9
2.2 Budget process 9
2.3 Budget adjustments and changes 9
3 Revenue and receivables 10
3.1 Student fees and student debtors 10
3.2 Sundry Income and Sundry Debtors 11
3.3 Contract research and contract work 11
3.4 Sponsorships and donations 12
3.5 Cash sales 12
3.6 Credit card sales 12
4 Inventory 12
5 PROCUREMENT, PAYMENTS AND ACCOUNTS PAYABLE 13
5.1 Procurement of goods and services 13
5.2 Quotations/Tenders 13
5.3 Payments for goods and services 15
5.4 Conflict of Interest 15
5.5 Domestic and international travel 16
5.6 Corporate credit card 16
5.7 Staff expense advances 16
5.8 Non-salary-related payments to employees 16
5.9 Employee gifts 16
5.10 Gifts from suppliers and vendors 17
5.11 Personnel Parting Gifts and Functions 17
5.12 Year-end Functions 17
5.13 Business meals and entertainment 17
5.14 Donations/sponsorships to external parties 17
5.15 Bursaries – external and internal 17
5.16 Membership fees 18
5.17 Telephone use 18
5.18 Cell Phones and 3G cards 18
5.19 Stationery expense 18
5.20 Remuneration and payments to staff members 19
5.21 Income stream 3 activities, projects and project allowances 19
6 Assets 19
6.1 Acquisition of assets 19
6.2 Transfer and disposal of assets 20
6.3 Recording of property 20
6.4 Physical verification and safeguarding of University assets 21
6.5 Depreciation of assets 21
7 Insurance 21
7.1 Insurance Portfolio 21
7.2 Insurance Claims 21
8 Cash handling 22
8.1 Cash collections and handling 22
8.2 Petty cash funds 22
9 Bank accounts 22
9.1 Authorisation to open/close bank accounts 22
9.2 Authorised signatory 23
9.3 Foreign bank accounts 23
9.4 Deposits into the University's bank account 23
9.5 Reconciliation of bank accounts 23
9.6 Unrecognised deposits 23
10 Audits 23
Paragraphs 5.11 and 6.1.6. amended by Institutional Management on 19 February 2014.
General Guidelines in support of the Financial Policy
Background and introduction
These general financial guidelines apply to all financial activities and transactions at all operational levels and sections of the University, and must be read in conjunction with all other relevant policies and procedures.
It is the responsibility of all employees to adhere to this general financial guidelines document. Exceptions and transgressions must be approved by the appropriate Director: Finance of the specific financial functionality with a written motivation to support this approval. This guideline is supported by the relevant legislation applicable to the University as required by the SA government and the SA Revenue Services with regard to financial activities, transactions and taxes.
Document objectives
· Serve as a guide to help employees act in the best financial interest of the University;
· Assist managers and employees to assume responsibility and accountability for managing the activities of the University;
· Assist in ensuring the integrity, completeness and accuracy of financial data recorded in the financial systems of the University;
· Assist in establishing a sound control environment for employees and in limiting the risks involved in performing their financial duties;
· Promote compliance with relevant laws, regulations, and accounting and reporting standards; and
· Promote consistent financial practices, operational efficiencies and best practice across the University.
1 Financial reporting and system management
1.1 Recording of financial transactions with external parties
All financial transactions with external parties of the NWU must be recorded daily in the financial records of the NWU upon occurrence, which includes the following:
1.1.1. Invoicing of students for registration and tuition fees, and all other applicable charges.
1.1.2. Invoicing of external parties for services rendered, or any other receivables agreement.
1.1.3. Receipt of money, either by direct transfer into a NWU bank account, or payment received by an NWU cashier.
1.1.4. Purchase orders for goods and services to the NWU placed at external suppliers.
1.1.5. Payments made for either direct expenses or to creditors as a result of the receipt of goods and services following the issuing of a purchase order.
1.2 Chart of accounts and classification
· Chart of Accounts (COA) is the set of tables that defines the coding structures within KFS.
· The main elements of the Chart of Accounts consist of:
o Chart = Campus
o Organization = OU code
o Account = Activity
o Object = Account
· Each of the above mentioned elements play a role in reporting, workflow or the capturing of transactions.
· A transaction needs three of the above mentioned elements (segments) to be valid and to proceed in the process: Chart.Account.Object written as follows P.1X12345.2114
1.2.1. Chart
· Accounts and Object Codes are associated with a chart.
· The Chart represents the different campuses (a one character code).
Chart Code / Chart DescriptionI / Institutional Office
M / Mafikeng Campus
P / Potchefstroom Campus
V / Vaal Triangle Campus
N / North-West University
1.2.2. Organization
· The Organization defines the entities representing units at many different levels within the institution.
· The Organization represents the Organization Unit (OU) - a unique four-digit code created and assigned by HR. Organization in KFS will be the same as in HR.
1.2.3. Account
· An account is used to identify a pool of funds assigned to a specific organizational entity for a specific purpose.
· An account has many different attributes associated with it that determine how the KFS allows you to use that account in transactions. It also has attributes associated with it for reporting purposes.
· The account number is a seven-digit code.
· An account is unique and is associated with an Organization.
1.2.4. Account Type Code:
o The Account Type Code classifies/categorizes the accounts by their nature and according to certain criteria e.g. 1) conducting research; 2) having a contract.
o The Account Type Code represents classes of accounts e.g. “S” for all NRF research accounts.
o The Account Type Code forms part of the account.
Examples of Account Type Code/Name:
Account Type Code / Account Type Name / Account Type Code Explanation/CriteriaA / OFFICE ADMINISTRATION (SOF 1) / Old G000001 activity. Account where general office expenses are booked including the salary expenses of the department.
D / SUBSIDISED RESEARCH / Research that is supported by subsidy/tuition fees
X / EXTERNAL / All third stream income activities which are not associated with research.
1.2.5. Source of Funds
o The Source of Funds code indicates the origin of the income on a specific account. It is the first character of the Account Code.
Values for Source of Funds codes are:
Source of Funds Code / Source of Funds Description1 / SUBSIDY/TUITION FEES/ITEA/IREA
2 / RESEARCH COUNCILS E.G. NRF, MRC, DST, WRC ETC.
3 / EXTERNAL FUNDS - INDUSTRY
4 / INVESTMENT INCOME
5 / FOREIGN FUNDS
1.2.6. Fund Group Code
o Fund group defines the control/discretion (“authority”) of the council over the funds in a specific account.
o The Department of Higher Education and Training requires fund accounting reports. To comply with that every account must be assigned to a specific fund.
Examples for Fund Group are:
Fund Group Code / Fund Group Name / Fund Group ExplanationUN / UNRESTRICTED / Funds that may be used for any purpose the council deems necessary.
DS / DESIGNATED / Funds for which the council stipulates a specific use, thereby “designating” that funds for that purpose only.
RC / RESTRICTED – CONTRACT / Funds that are received by the Institution for a specific purpose and must be used only for that purpose. A contract is involved which stipulates the benefits deriving from the activity undertaken will accrue the third party.
RE / RESTRICTED – DONATIONS / Funds that are received via a donation for a specific purpose and must be used only for that purpose. There is normally no clause requiring the institution to accrue any benefits deriving from the activity to the donor.
PP / FIXED ASSETS FUND / Funds invested in fixed properties, moveable property, construction and movable assets in progress.
1.2.7. Object Code
· Object Codes represent all income, expense, asset, liability and fund balance classifications that are assigned to transactions and help identify the nature of the transaction. It is a four-digit code.
· Object Codes are specific to a chart and a fiscal year and contain several attributes throughout KFS for financial reporting at the detail and consolidated levels.
1.3 Retention of financial records
Financial records must be maintained in compliance with regulatory requirements and University policy. Please refer to the File plan and Disposal Schedule for the retention of records available on Intranet.
1.4 Internal transfers and journals
1.4.1. Any internal transfer of funds (Service Billing) as well as journals must be supported by proper electronically scanned documentation. The department whose funds are debited must authorise the transaction in terms of the approved Schedule of Authorisation Levels available on the intranet. A motivation must be given why such a Service Billing (transfer) is appropriate.
1.4.2. Journals must be limited as far as possible, and the use of the Service Billing electronic document must be used for all internal transactions.
1.4.3. If recurring journals take place on a regular basis, a system must be put in place to ensure completeness and accuracy of transactions.
1.4.4. Internal services rendered between divisions will be settled with a Service Billing electronic document. No official invoice must be generated on the debtors system. No VAT is charged among internal divisions for services rendered.
1.5 Departmental internal loans/overdrafts
1.5.1. The allocation of additional funds on a budget is not allowed except in extreme circumstances, where the Executive Director: Finance and Facilities or his authorised delegate has to approve it.
1.5.2. Overspending on accounts must be managed by the responsible director or manager of the relevant department/division/unit, who must ensure that the overspend is corrected.
1.6 Month-end procedures
Managers are responsible to review their financial transactions on a monthly basis to ensure the accuracy and completeness of financial information and allocations. Any deviations should be corrected and reported to Financial Systems and Reporting where appropriate, within 5 working days after the previous month end, before the official month-end procedures on the Financial System are performed.
1.7 Balance sheet account reconciliations
Monthly reconciliations for all balance sheet accounts must be done and fully documented, reviewed and approved by the responsible manager of the department/division/unit.
1.8 Financial reports
1.8.1. The financial year-end of the University is on 31 December.
1.8.2. Annual financial statements of the University must be prepared, as required, using International Financial Reporting Standards.
1.8.3. Audited financial statements must be published annually.
1.8.4. Financial management information is available electronically per cost centre/activity to all management staff and can be extracted from the official financial records of the University.
1.9 Financial data integrity
1.9.1. Each department/division/unit must establish and implement procedures to ensure financial data integrity.
1.9.2. All new managers as well as financial and administrative personnel must receive financial system training supplied by the Finance Department. Every director/dean/manager must ensure that the staff member(s) responsible for their finances receive training as well as the associated manual(s) on the financial system of the University.
1.9.3. The allocation of a transaction should represent its true nature. A complete list of all types of possible allocations (objects) is available on request from Financial Reporting and Systems to ensure proper allocation.
1.10 Confidentiality of financial information
All financial information of the University is classified as confidential. Financial figures disclosed to external parties must be authorised by a director or higher and should be in terms of all legislation, e.g Protection of Personal Information (POPI) Act.
1.11 Opening and closing of accounts and objects
All accounts and objects in the official financial system of the University must be opened and closed by the appropriate Director: Finance or his/her delegated person at the request and with the authorisation of a relevant responsible person for that specific account.
1.12 Accounting for contingencies
Contingencies are potential liabilities not recorded, which the University may have to account for or disclose in its financial statements. If a department/division/unit is aware of contingencies at year-end they must be reported to Financial Reporting and Systems Management.
1.13 Accounting for deferred revenue
Deferred revenue consists of funds that are received for goods and/or services which have not yet been provided. Since it is generally expected that the University will perform or deliver these goods and/or services within the next accounting period, these advances should be recorded as current liabilities on the University’s balance sheet. If a department/division/unit is aware of deferred revenue not deferred at year-end they must report it to Financial Reporting and Systems Management.
1.14 Accounting for accruals – revenue and payments
Receivables and payables (income and expenditure) are accrued as part of year-end procedures. As various services are rendered or goods are received before 31 December, but the effects thereof have not yet been recorded in the financial records of the University, a provision must be made to report the transaction in the correct accounting period. Where a department/division/unit is aware of accruals not recorded in the financial system at year-end, it must be reported to Financial Reporting and Systems Management.