Institute of Education. Financial Regulations

Transcription

1 Institute of Education Financial Regulations The frequency of review: Three years Version number: 2014 Next review date: July 2017 Author of the document: Habte Hagos

2 Institute of Education Financial Regulations Contents Page Foreword 4 Terminology 5 Further Reading 8 General Provision 1. Background 9 2. Status of Financial Regulations 9 Corporate Governance 3. The Council Accounting Officer Committee Structure Staff with Responsibility for Finance Risk Management Whistleblowing Code of Conduct Receiving Gifts or Hospitality 20 Financial Management and Control 11. Financial Planning Financial Control Accounting Arrangements Audit Requirements Treasury Management Income Research Grants and Contracts Third-Stream Activity Intellectual Property Rights and Patents Expenditure Pay Expenditure Assets 53 2

3 23. Funds Held on Trust Other 56 Appendices Appendix 1: The Seven Principles of Public Life 61 Appendix 2: Summary Table of Delegated Authorities 63 3

4 Foreword The Financial Regulations set out the financial policies of the IOE which every member of staff is required to adhere to in the conduct of the Institute s business activities and financial management. The Financial Regulations support the Institute s Strategic Plan and Financial Strategy for 2012/17, the Financial Memoranda between the Higher Education Funding Council for England (HEFCE) and the National College for Teaching and Leadership (NCTL). Funding Councils make it a condition of their grant to the Institute establish and maintain sound system of financial management and control. The Financial Regulations are a core component of this system. Similarly, the HEFCE audit service requires all higher education institutions to have fully documented financial procedures in place. The Funding Council may withhold grant where this cannot be shown to be the case. The HEFCE has further highlighted the need for all institutions to publish financial regulations which govern the conduct of all their financial affairs in its publication The Financial Health of Higher Education Institutions in England: A Report on Good Practice. It is compulsory for all IOE staff to comply with these financial regulations and staff are deemed to have knowledge of the Institute s Financial Regulations. Failure to comply with the financial regulations may result in a disciplinary action and/or dismissal. 4

5 Terminology Owing to the diverse nature of higher education institutions, a wide range of terms are in use for committees, staff and other persons. The following terms relevant to the IOE have been used in this guide. Audit and Risk Committee The Audit and Risk Committee is a sub-committee of Council. It is a committee independent of executive responsibility and advises the Council on issues related to internal and external audit, risk management, financial control and the adequacy of the systems on internal controls. The Committee submits an annual report to Council which, inter alia, comments on the Institute s system of internal control. The terms of reference of the Institute s Audit and Risk Committee may be found on the Institute s website. Budget Holder Members of staff other than the Head of Academic Department/Head of Professional Service/Director of Finance who have been assigned a budget and is accountable to a Pro-Director/Director of Finance Council The Institute Council is ultimately responsible for the affairs of the Institute. The terms of reference of the Institute s Council may be found on the Institute s website. Department For the purposes of the Financial Regulations the term Department includes all academic departments and professional services. Details of all departments may be found on the Institute s website. Director The person with the ultimate executive responsibility for the management of the Institute. 5

6 Director of Finance The chief financial officer of the Institute, accountable to the Pro-Director for Strategy and Organisation. Finance and General Purposes Committee (F&GPC) The F & GPC is a sub-committee of Council. It is independent of executive responsibility and advises Council on budgetary controls, corporate governance, including regulations and financial sustainability. The F & GPC terms of reference may be found on the Institute s website. Funding Council Funding Council refer to the Higher Education Funding Council for England (HEFCE), and/or the National College for Teaching and Leadership (NCTL) Head of Academic Administration Unit (HOAA) The HOAA is responsible for operational issues of all academic departments and oversees a range of areas including finance, HR and RCKT. He/she is accountable to the Pro-Director for Strategy and Organisation. Head of Department (See Also Department ) The Head of an Academic or Support department of the Institute, who is responsible for his/her departmental budget and is accountable to the Dean/Director of Finance. Details of all Heads of Department may be found on the Institute s website. (See comment on budget holder above). Pro-Directors There are four Pro-Directors: the Pro-Director for Academic Development, the Pro-Director for Research and Development, the Pro-Director for Teaching, Quality and Learning Innovation and the Pro-Director for Strategy and Organisation and Institute Secretary (thereafter will be known as the Pro-Director for Strategy and Organisation). The Pro-Directors report to the Director and are responsible for providing thematic leadership across the Institute s academic and administrative activities. 6

7 Pro-Director for Academic Development The Pro-Director for Academic Development of the Institute is responsible for the whole of the academic budget and is accountable to the Director. Pro-Director for Strategy and Organisation The Pro-Director for Strategy and Organisation is responsible to the Director for the effective use of the Institute s resources as a whole and for the delivery of the Institute s operational targets. Senior Leadership Team (SLT) The SLT consists of the Director, the Pro-Directors, the Director of Finance and Heads of Academic Departments. 7

8 Financial Regulations Further Reading For the Institute s supplementary policies and procedures please click here 8

9 General Provisions 1 Background The Institute of Education (hereafter referred to as The Institute ) was established by royal charter. Its structure of governance is laid down in the instruments of its incorporation (charter and statutes). The charter and statutes, which may be found on the Institute s website, can be amended only by the Privy Council. The Institute is accountable through the Council, which has ultimate responsibility for the Institute s management and administration. The Institute is an exempt charity by virtue of the Charities Act and the HEFCE is the principal regulator under the Charities Act The financial memoranda between the HEFCE, the NCTL and the Institute sets out the terms and conditions on which grant is made. The Council is responsible for ensuring that the conditions of the grants are met. As part of this process, the Institute must adhere to the HEFCE Accountability and Audit Code of Practice, which requires it to have sound systems of financial and management control. The Financial Regulations of the Institute form part of this overall system of accountability. 2 Status of Financial Regulations This document sets out the Institute s Financial Regulations. It translates into practical guidance of the Institute s broad policies relating to financial control. This document was approved by the F&GPC on 1 July It applies to the Institute and all its subsidiary undertakings. These Financial Regulations are subordinate to the Institute s charter and statutes and to any restrictions contained within the Institute s financial memorandum with the HEFCE, the NCTL and the HEFCE Accountability and Audit Code of Practice. The purpose of these Financial Regulations is to provide control over the totality of the Institute s resources and provide management with assurances that the resources are being properly applied for the achievement of the Institute s Corporate Plan. The key objectives included in the Financial Strategy are to: 9

10 operating surplus; maintain capacity; financing of development investment; risk management; financial control; Compliance with the Financial Regulations is compulsory for all staff connected with the Institute. This includes fees paid staff. A member of staff who fails to comply with the Financial Regulations may be subject to disciplinary action and/or dismissal under the Institute s disciplinary policy. The Council will be notified of any such breach through the Audit Committee. It is the responsibility of the Pro-Directors/Director of Finance to ensure that their staff are made aware of the existence and content of the Institute s Financial Regulations. The F&GPC is responsible for maintaining a continuous review of the Financial Regulations, through the Director of Finance and for approving any additions or changes necessary. In exceptional circumstances, the F&GPC may authorise a departure from the detailed provisions herein, such departure to be reported to the Council at the earliest opportunity. The Institute s detailed financial procedures set out precisely how these Regulations will be implemented and may be found on the Institute s website. 10

11 Corporate Governance 3 The Council The Council is responsible for the management and administration of the Institute. Its financial responsibilities include: ensuring the solvency of the Institute; safeguarding the Institute s assets; ensuring the effective and efficient use of resources; ensuring that the funds provided by the HEFCE and the NCTL are used in accordance with the terms and conditions specified in the Institute s financial memoranda with those funding bodies; ensuring that financial control systems are in place and are working effectively; ensuring that the Institute complies with the HEFCE Accountability and Audit Code of Practice; approving the Institute s Corporate Plan; approving annual forecasts of income and expenditure and the annual financial statements; and appointing the Institute s internal and external auditors. 4 Accounting Officer The Director is the Institute s Accounting officer responsible for the financial administration of the Institute s affairs. In this capacity, the Director must advise the Council if, at any time, any action or policy under consideration by them appears to the Director to be incompatible with the financial memoranda. If the Council decides nevertheless to proceed, the Director must immediately inform the Chief Executive of the HEFCE in writing. The Director must ensure that annual estimates of income and expenditure are prepared for consideration by the Council and for the management of budgets and resources within the estimates approved by the Council. As the designated officer, the Director may be required to justify any of the Institute s financial matters to the Public Accounts Committee at the House of Commons. 11

12 5 Committee Structure 5.1 General The Institute s Council has ultimate responsibility for the Institute s finances. The Council meets at least four times per annum and comprises members of staff and non-executive persons. The membership is laid down by the Statutes of the Institute and the majority of members are non-executive. The roles of the Chairman and the Treasurer are separated from the role of the Chief Executive (the Director). Certain matters required to be especially reserved for the Council for decision are set out by the Statutes of the Institute and under the financial memoranda with the HEFCE and the NCTL. Council determines any further matters to be reserved to Council or its sub-committees and has set these out in its Corporate Governance handbook. The Council determines the ongoing strategic direction of the Institute and approves all major developments. Responsibility for day-to-day operations is delegated to the Director and senior officers who make regular reports to the Council and/or its sub-committees. Non-executive members of the Council are appointed for a period of three years and may be re-appointed for two further periods of three years. The maximum continuous period of appointment is nine years. The Pro-Director for Strategy and Organisation is the Secretary to the Council and is responsible to the Council for ensuring that Council procedures are followed and that applicable rules and regulations are adhered to. The full committee structure may be found on the Institute s website. Council has constituted a range of sub-committees which are responsible to Council either for the discharge of certain functions delegated to them by Council or for reviewing Institute activities and making recommendations to Council in relation to those decisions reserved to Council itself. The following committees are sub-committees of the Council and are formally constituted with terms of reference and comprise mainly lay members of Council. The chairperson of each sub-committee is appointed by Council. 12

13 5.2 F & GPC The F&GPC is chaired by a lay member of Council, the Treasurer, and is responsible to Council for the financial administration of all the Institute's activities, including research grants and contracts, trust funds, halls of residence and catering. The committee meets at least four times per annum and reports regularly to the Council. The F&GPC considers reports from the Meeting of the Senior Leadership Team (SLT) on the Institute's financial position. It also makes recommendations to the Council on budgets, estimates and capital projects in respect of the Institute's plans and is responsible for the Institute s investments. The Committee formulates the Institute's financial regulations. It will consider any other matters relevant to the financial duties of the Council and make recommendations accordingly. The committee will also ensure that the Council has adequate information to enable it to discharge its financial responsibilities. 5.3 Audit and Risk Committee The Institute is required under the HEFCE Financial Memorandum and the Accountability and Audit Code of Practice to appoint an Audit and Risk Committee. The Committee is independent, advisory and reports to the Council. It has the right of access to obtain all the information it considers necessary and to consult directly with the internal and external auditors. The Audit Committee meets at least three times per annum and comprises up to five lay members of Council and co-opted members. The Committee keeps under review the effectiveness of the Institute's arrangements for risk management, systems of internal control and corporate governance. It meets with and reviews the work of internal and external auditors. It considers the auditor s reports together with recommendations for improvement, management's responses and implementation plans. It also considers reports from the HEFCE and the NCTL as they affect the Institute and monitors adherence to regulatory requirements. The Committee is responsible for ensuring that satisfactory arrangements are in 13

14 place to promote value for money by ensuring that systems are operated in an economic, efficient and effective manner. It is also responsible for recommending the annual accounts to Council. Whilst senior officers attend meetings of the Audit and Risk Committee as necessary, they are not members. The Committee may meet with both the external and internal auditors on their own for independent discussion. 5.4 Remuneration Committee The Remuneration Committee, which is chaired by the Chairman of the Institute's Council, comprises of four non-executive members of Council. The committee meets once a year to review and make recommendations to the Council on the remuneration, including pay and other benefits, as well as contractual arrangements for the Director, Professorial, and Senior Management Staff of the Institute. 5.5 Estates Committee The Estates Committee, which meets three times a year, is responsible, inter alia, for the Institute's buildings and for all matters relating to the Estates management of the Institute which do not fall within the terms of reference of other committees. In addition, it is responsible for considering the Institute s capital programme before it can be recommended to the Council for approval. 5.6 Nominations Committee The Nominations Committee, which meets on a needs basis, is responsible for considering and recommending new members to the Council. 14

15 6 Staff with Financial Responsibility 6.1 The Director is the Institute s chief academic and administrative officer. He has delegated to him a range of specific responsibilities by Council. Where matters are not explicitly reserved for decision by Council or one of its sub-committees, Council has determined that they should be deemed to be delegated to the Director. In discharging his responsibilities, the Director is assisted by staff to whom specific responsibilities have been delegated and by the Institute s Senior Leadership Team. 6.2 Senior Leadership Team (SLT) The role of the SLT is to advise the Director on the formulation and review of the Institute s Strategic Plan, the allocation of resources, strategic risk and appetite, strategic oversight of quality assurance and enhancement and options for academic developments. It is responsible for ensuring that all the financial implications of such plans are taken into account before their approval by the Council. The SLT meets weekly and operates within policy laid down by the Council, and where appropriate the Senate, and in co-operation with the F&GPC. The terms of reference for the Meeting of the SLT may be found on the Institute s website. 6.3 Director of Finance The Institute s Financial Strategy is monitored by the Director of Finance, who is responsible to the Director for: evaluating strategic opportunities and managing financial risks; directing financial resources in support of the Corporate Plan; planning future resource needs; managing the Institute s financial resources; and sustaining the Institute s distinctive mission and positioning in the current financial environment. In addition, the Director of Finance is responsible for the financial administration, including: 15

16 developing the Institute s Financial Strategy in support of the Corporate Plan preparing annual capital and revenue budgets and financial plans; preparing accounts, management information, monitoring and control of expenditure against budgets and all financial operations; preparing the Institute s annual accounts and other financial statements and accounts, which the Institute is required to submit to other authorities; ensuring that the Institute maintains satisfactory financial regulations, systems and procedures; providing professional advice on all matters relating to financial policies and procedures; and day-to-day liaison with internal and external auditors in order to achieve efficient processes. The structure of the Finance department, including details of the key contacts, may be found on the Institute s website. 6.4 Heads of Departments The Dean of Doctoral School is responsible to the Pro-Director for Research and Development. Other Heads of Academic Departments are responsible to the Pro-Director for Academic Development. Heads of Professional Services and the Head of Academic Administration are responsible to the Pro-Director for Strategy and Organisation for the areas or activities they control. They are advised by the Director of Finance and the Head of Academic Administration in executing their financial duties. Heads of Departments are responsible for establishing and maintaining clear lines of responsibility within their Departments for all financial matters. Where resources are devolved to budget holders, they are accountable to their Head of Department/Director of Finance for their own budget. Heads of Departments shall provide the Director of Finance with such information as may be required to enable: compilation of the Institute s financial statements; implementation of financial planning; and implementation of audit and financial reviews, projects and value for money 16

17 studies. Heads of Departments must ensure that any agreements negotiated with external bodies cover any legal liabilities to which the Institute may be exposed. Advice on contractual and other legal matters may be obtained through the Pro-Director for Strategy and Organisation. 6.5 All members of staff All members of staff should be aware and have a general responsibility for the security of the Institute s property, for avoiding loss and for due economy in the use of resources. They should ensure that they are aware of the Institute s financial authority limits and the values of purchases for which quotations and tenders are required. They shall make available any relevant records or information to the Director of Finance or his/her authorised representative in connection with the implementation of the Institute s financial policies, these financial regulations and the system of financial control. They shall provide the Director of Finance with such financial and other information as he or she may deem necessary, from time to time, to carry out the requirements of the Council. They shall immediately notify the Director of Finance whenever any matter arises which involves, or is thought to involve, irregularities concerning, inter alia, cash or property of the Institute. The Director of Finance shall take such steps as he or she considers necessary by way of investigation and report. 17

18 7 Risk Management The Institute acknowledges the risks inherent in its business, and is committed to managing those risks that pose a significant threat to the achievement of its business objectives and financial health. Detailed guidance on the level of risk considered to be acceptable/unacceptable by the Institute is set out in a separate Risk Management Strategy, which may be found on the Institute s website. The Council has overall responsibility for ensuring there is a risk management strategy and a common approach to the management of risk throughout the Institute through the development, implementation and embedment within the organisation of a formal, structured risk management process. The Council is advised by SLT and the Audit and Risk Committee in relation to risk. 8 Public Interest Disclosure: Whistleblowing It is a fundamental term of every contract of employment that an employee will faithfully serve her/his employer and not disclose confidential information about the employer s affairs. However, where an individual discovers information which they believe shows malpractice or wrongdoing within the organisation then this information should be disclosed without fear of reprisal. Such disclosures may be made independently of line management. In some circumstances, the Public Interest Disclosure Act 1998 gives legal protection to employees who make disclosures regarding misconduct in the workplace, often colloquially termed whistleblowing, against being dismissed or penalised by their employers as a result of publicly disclosing certain serious concerns. The aim of these legal provisions is to protect employees from unfair treatment (i.e. victimisation and dismissal) for reasonably raising in a responsible way genuine concerns about wrongdoing in the workplace. The Institute welcomes disclosures of this character and always expects that individuals disclosing information will do so internally, within the Institute, using the Institute s Public Interest Disclosure: Whistleblowing Policy and Procedures, which may be found on the Institute s website. 18

19 9 Code of Practice on Conflicts of Interest The Institute is committed to the highest standards of openness, integrity and accountability. It seeks to conduct its affairs in a responsible manner, having regard to the principles established by the Committee on Standards in Public Life (Appendix 1). In order to assist staff in dealing with any potential conflicts of interest a Code of Practice on Conflicts of Interest has been prepared. This Code which may be found on the Institute s website applies to all staff of the Institute, together with members of the Council and those holding honorary or unpaid appointments. It is difficult to provide a comprehensive list of all the potential areas in which conflicts of interest can arise. Those listed below are felt to be those most likely to occur. In the event of any uncertainty, advice should initially be sought from the Pro-Director for Strategy and Organisation, in his or her capacity as Secretary to the Council. Possible conflicts could occur as follows: the use of any of the Institute s facilities to pursue personal business, commercial or consulting or other activities; a personal, or close family, involvement in a company or other commercial enterprise actually or potentially in a contractual relationship with the Institute, where the person concerned has been in any way involved with the negotiations or the placing of the contract; a personal or close family, financial interest in an external organisation which is concerned with work which is closely aligned to an individual s research activities; any attempt to restrict rights governing the timing and content of publications; the holding of executive directorships in external organisations; or the holdings of material shareholdings in organisations trading with, in partnership with, or otherwise closely associated with the Institute; close family members working in, or seeking work in the Institute; and close relationships with other staff or students with whom they may be working. It is the duty of all members of the Institute to disclose actual, potential or perceived conflicts of interest. In particular, no person shall be a signatory to an Institute contract where he or she also has an interest in the activities of the other party. 19

20 In addition to this general duty of disclosure all members of the Institute s Council and the Senior Leadership Team are required to return an annual declaration of interests to the Pro-Director for Strategy and Organisation in his or her capacity as Secretary to Council. 10 Receiving Gifts or Hospitality It is an offence under the Anti-Bribery Act 2010 for members of staff to accept corruptly any gift or consideration as an inducement or reward for doing, or refraining from doing, anything in an official capacity or showing favour or disfavour to any person in an official capacity. The guiding principles to be followed by all members of staff must be: the conduct of individuals should not create suspicion of any conflict between their official duty and their private interest; and the action of individuals acting in an official capacity should not give the impression (to any member of the public, to any organisation with whom they deal or to their colleagues) that they have been (or may have been) influenced by a benefit to show favour or disfavour to any person or organisation. Members of staff should not accept any gifts, rewards or hospitality (or have them given to members of their families) from any organisation or individual with whom they have contact in the course of their work that would cause them to reach a position whereby they might be, or might be deemed by others to have been, influenced in making a business decision as a consequence of accepting such hospitality. The frequency and scale of hospitality accepted should not be significantly greater than the Institute would be likely to provide in return. If there is any doubt about what is and what is not acceptable in terms of gifts or hospitality, the offer should be declined or advice sought from the Pro-Director for Strategy and Organisation. For the protection of those involved, the Pro-Director for Strategy and Organisation will maintain a register of gifts and hospitality received where the value is in excess of 40. Members of staff in receipt of such gifts or hospitality must notify the Pro-Director for Strategy and Organisation promptly. The Institute s Fraud Response Plan includes the Institute s policy on Receiving Gifts and Hospitality and may be found on the Institute s website. 20

21 Financial Management and Control 11 Financial Planning 11.1 Financial Forecasts The Director of Finance is responsible for preparing annually a rolling five-year financial forecast and plan for approval by the Council on the recommendation of the F&GPC and for their submission to the HEFCE. Financial plans should be consistent with the Corporate Strategy and its supporting strategies Resource allocation Resources are allocated annually by the Council on the recommendation of the Director, advised by the SLT. The Pro-Director for Academic Development/Director of Finance are responsible for the economic, effective and efficient use of resources allocated to them. The Pro-Director for Strategy and Organisation is responsible for the Professional Services VFM Budget preparation The Director of Finance is responsible for preparing each year an annual revenue budget and capital programme for consideration by the SLT and the F&GPC before submission to the Council. The budget should also include cash flow forecasts for the year and a projected year-end balance sheet. The Director of Finance must ensure that detailed budgets are prepared in order to support the resource allocation process and that these are communicated to Heads of Departments/ as soon as possible following their approval by the Council. During the year, the Director of Finance is responsible for submitting revised budgets to the F&GPC for consideration before submission to the Council for approval. 21

22 11.4 Capital Programmes The capital programme includes all expenditure on land, buildings, equipment, furniture and associated costs whether or not they are funded from capital grants or financed from the Institute s own resources including borrowing. Expenditure of this type can only be considered as part of the capital programme approved by the Council. All capital projects must be supported by a business plan which sets out: a demonstration of the proposal s consistency with the Institute s Corporate Plan; details of the market testing and assumptions of the level of business available; details of project and what will be delivered; an outline plan for promoting the project to the identified market and achieving planned levels of business; details of the staff required to deliver, promote and manage the project, together with any staff development or recruitment issues; details of space and other resources required; a financial evaluation of the proposal together with its impact on revenue, surplus and cash plus advice on the impact of possible alternative plans and sensitivity analyses in respect of key assumptions; contingency plans for managing adverse sensitivities; and consideration of taxation and other legislative or regulatory issues. All capital projects are subject to approval: Council over 250,000 Pro-Director: Strategy and Organisation and Director of Finance, on the advice of the Head of Estates up to 250,000 The Council may delegate approvals to sub-committees of Council and details of such delegated authorities may be found on the Institute s website. 22

23 The Director of Finance will also establish procedures for the approval of variations, including the notification of large variations to the funding body, as laid down in HEFCE guidelines. The Director of Finance is responsible for providing regular statements concerning all capital expenditure to F&GPC for monitoring purposes. Following completion of a capital project, a post-project evaluation or final report should be submitted to the F&GPC, including actual expenditure against budget and reconciling funding arrangements where a variance has occurred as well as other issues affecting completion of the project. Post-project evaluations may also need to be sent to the relevant funding body, as laid down in funding body guidelines Overseas activity International activity, will be developed within the Institute s normal planning and control framework, and set in the context of clear objectives expressed within its strategic plan. Activities undertaken in collaboration with other bodies will be governed by the Institute s Collaboration Policy and arrangements for international travel must be undertaken in accordance with the Institute s Travel Policy. Both policies may be found on the Institute s website Major Developments A financial business case must be developed to establish subsidiary companies and/or joint ventures. The business case should be presented to SLT for approval and this will form part of a recommendation to the Council. The Council may delegate approvals to one of its sub-committees and details of such delegated authorities may be found on the Institute s website. The Institute follows the HEFCE Good Practice Guide Appraising Investment Decisions and approved projects will be managed using a standard project management process incorporating: risk assessment to quantify risks, opportunities and controls. This will identify a framework to consider levels of acceptable exposure; 23

24 identification of key performance indicators across the whole range of project activity. These will be reviewed against actual performance; and assessment to ensure that financial outcomes of projects are sufficient to support implementation. The Project Management Policy may be found on the Institute s website. 12 Financial Control 12.1 Budgetary control The control of income and expenditure within an agreed budget is the responsibility of the designated budget holder, who must ensure that day-to-day monitoring is undertaken effectively. Budget holders are responsible to their Head of Department for the income and expenditure appropriate to their budget. Material departures from agreed budgetary targets must be reported immediately to the Director of Finance by the Head of Department concerned and, if necessary, corrective action taken Financial information The budget holders are assisted in their duties by management information provided by the Finance Department. The types of management information available to the different levels of management are described in the detailed financial procedures, together with the timing at which they can be expected. The Director of Finance is responsible for supplying budgetary reports on all aspects of the Institute s finances to the F&GPC on a termly basis. These reports are presented to the Council, which has overall responsibility for the Institute s finances Increases to approved budgets Increases to approved budgets will be first considered by the F&GPC, which will make proposals to the Council, unless they fall within virement arrangements (section 12.4) or delegated approval arrangements: Director over 250,000 24

25 Pro-Director: Strategy and Organisation and Director of Finance up to 250, Virement Where a budget holder is responsible for more than one budget, virement is permitted with the approval of the Head of Department/Director of Finance (should the budget holder be the Head of Department). Virement between budgets held by different budget holders is permitted with the approval of the transferring budget holder and the Head of Department/Director of Finance (same as above) Treatment of year-end balances At the year end, all balances except for RCKT are transferred to IOE-wide retained earnings. At the year end, non-rckt budget holders will not normally have the authority to carry forward balances to the following year unless a specifically approved within approval limits: F&GPC over 250,000 Director up to 250, Accounting Arrangements 13.1 Financial year The Institute s financial year (and that of any subsidiary companies) will run from 1 August to 31 July Basis of Preparation The financial statements are prepared in accordance with the Statement of Recommended Practice: Accounting for Further and Higher Education 2007 and in accordance with applicable accounting standards. They conform to guidance published by the HEFCE and NCTL. 25

26 13.3 Basis of Accounting The financial statements are prepared under the historical cost convention modified by the revaluation of fixed asset investments. The financial statements are prepared on a going concern basis Capitalisation and depreciation Land and buildings will be recorded in the balance sheet at the actual build or acquisition cost, except where they are received as gifts, where they will be recorded at depreciated replacement value. Buildings will be depreciated in equal instalments over their estimated remaining useful life. Land will not be depreciated. Expenditure incurred on repair, refurbishment or extension of existing buildings will not be capitalised unless it can be demonstrated that the resultant value of the building, on the basis of depreciated replacement value, is greater than the current book value. Expenditure incurred on the acquisition of assets and refurbishment of buildings will be recorded in the balance sheet where the acquisition cost per item is 10,000 or more. Assets, except land, will be depreciated over their expected life commencing in the year of acquisition Accounting records The Director of Finance is responsible for the retention of financial documents. These should be kept in a form that is acceptable to the relevant authorities. The Institute is required by law to retain prime documents for six years. These include: official purchase orders; paid invoices; accounts raised; bank statements; copies of receipts; and payroll records, including part-time lecturers contracts. 26

27 Members of staff should ensure that retention arrangements comply with any specific requirements of funding organisations such as the EU and regional development agencies. Additionally, for auditing and other purposes, other financial documents should be retained for three years or as determined by the HEFCE or the NCTL. All retention arrangements must comply with the Freedom of Information Act Public access The Institute s financial statements may be found on the Institute s website. Under the terms of the Freedom of Information Act 2000, any person may make a written request for financial information concerning the Institute's operations. The Act requires the Institute to respond to any such request within 20 working days, although there are a number of exemptions (including cases where the information requested is already in the public domain). The Act enables the Institute to turn down certain requests if they think it will cost them more than 450 ( 600 for a central government organisation) to deal with.. If a request is received, an appropriate fee will be charged at the discretion of the Pro-Director for Strategy and Organisation. Information on Freedom of Information Act Requests may be found on the Institute s website Taxation The Director of Finance is responsible for advising Heads of Departments/, in the light of guidance issued by the appropriate bodies and relevant legislation as it applies, on all taxation issues, to the Institute. Therefore, the Director of Finance will issue instructions to Departments/ on compliance with statutory requirements including those concerning VAT, PAYE, national insurance, corporation tax and import duty. Guidance on taxation may be found on the Institute s website. 27

28 The Director of Finance is responsible for maintaining the Institute s tax records, making all tax payments, receiving tax credits and submitting tax returns by their due date as appropriate. 14 Audit Requirements 14.1 General External auditors and internal auditors shall have authority to: access the Institute premises at reasonable times; access all assets, records, documents and correspondence relating to any financial and other transactions of the Institute; require and receive such explanations as are necessary concerning any matter under examination; require any employee of the Institute to account for cash, stores or any other Institute property under his or her control; and access records belonging to third parties, such as contractors, when required. The Director of Finance is responsible for drawing up a timetable for final accounts purposes and will advise staff and the external auditors accordingly. The financial statements should be reviewed by the Audit Committee and, on the recommendation of the Audit and Risk Committee; they will be submitted to the Council for approval External audit The appointment of external auditors will take place annually and is the responsibility of the Council on the advice of the Audit and Risk Committee. The primary role of external audit is to report on the Institute s financial statements and to carry out such examination of the statements and underlying records and control systems as are necessary to reach their opinion on the statements and to report on the appropriate use of funds. Their duties will be in accordance with advice set out in the HEFCE Accountability and Audit Code of Practice and the Auditing Practices Board s statements of auditing standards. The external auditor will have direct access to the Institute s Council, Director, Chair of F&GPC and Chair of Audit 28

29 Committee Internal audit The internal auditor is appointed by the Council on the recommendation of the Audit and Risk Committee. The Institute s financial memoranda with the HEFCE and the NCTL require that it has an effective internal audit function, and duties and responsibilities must be in accordance with advice set out in the HEFCE Accountability and Audit Code of Practice. The main responsibility of internal audit is to provide the Council, the Director and senior management with assurances on the adequacy of the internal control system. The internal audit service remains independent in its planning and operation but will have direct access to the Council, Director and Chair of the Audit and Risk Committee. The terms of reference of the internal audit may be found on the Institute s website. The internal auditor will also comply with the Auditing Practices Board s auditing guideline Guidance for Internal Auditors Fraud and corruption It is the duty of all members of staff, management and the Council to notify the Pro-Director for Strategy and Organisation immediately whenever any matter arises which involves, or is thought to involve, irregularity, including fraud, bribery, corruption or any other impropriety. The Pro-Director for Strategy and Organisation should, as soon as practicable (and within 24 hours if possible), convene a meeting of the Director of Finance, Internal Auditor and Director of Human Resources to decide on the action to be taken. Based on the advice of this group, the Pro-Director for Strategy and Organisation will decide on the action to be taken. The Anti-Fraud Strategy, the Anti-bribery and Anti-corruption polices together with the Fraud Response Plan may be found on the Institute s website Value for money It is a requirement of the Institute s financial memoranda with the HEFCE and NCTL 29

30 that the Council is responsible for delivering value for money from public funds. Through the Audit and Risk Committee the Council keeps under review its arrangements for managing all the resources under its control, taking into account guidance on good practice issued from time to time by the HEFCE, the NCTL, the National Audit Office, the Public Accounts Committee or other relevant bodies. As part of its strategic management process the Institute constantly and consistently seeks to improve the financial performance of its activities without damaging academic objectives. This is achieved through a regular process of formal review of all academic and support areas with reports to the QA/QE and Audit and Risk Committees. The Institute s Value for Money Strategy and procedures may be found on the Institute s website Other auditors The Institute may, from time to time, be subject to audit or investigation by external bodies such as the HEFCE, NCTL, National Audit Office, European Court of Auditors and HM Revenue and Customs. They have the same rights of access as external and internal auditors. 15 Treasury Management The Council has agreed the terms of Reference for the Institute s Investment Committee and F&GPC review these annually. This includes: 15.1 Investment Management The Council has agreed aims and objectives and powers and restrictions governing the Institute s cash management and long-term investments. F&GPC will: be responsible to and to report to the Council for all investments; recommend to the Council the appointment of investment managers to undertake the day-to-day management of the Institute's investments in accordance with agreed policy; formulate and to keep under review the policy governing the Institute's investments, including the Powers and Restrictions 30

31 receive regular reports from the investment managers and to keep their performance under review. Where urgent action is required, the Director of Finance is empowered to act on behalf of the Committee, subject to the written authorisation of the Director. Such action shall be reported to the next meeting of the F&GPC Borrowing requirements The Institute follows the HEFCE Good Practice Guide Borrowing in the Higher Education Sector. In undertaking borrowing the Institute expects to borrow at no more than one per cent over base rate on variable loans, and will aim for margins considerably better than this. The Institute has reviewed sector norms and set a maximum level of borrowing and total debt outstanding at 20 per cent of turnover. All borrowing will be approved by F&GPC and where total debt exceeds 10% of turnover, borrowing will be referred to Council by F&GPC Appointment of bankers and other professional advisers The Council is responsible for the appointment of the Institute s bankers and other professional financial advisers (such as investment managers) on the recommendation of the F&GPC. Consideration shall be given on a regular basis by the F&GPC to competitively tendering the service Banking arrangements The Director of Finance is responsible, on behalf of the F&GPC, for liaising with the Institute s bankers in relation to the Institute s bank accounts. Only the Director of Finance may open or close a bank account for dealing with the Institute s funds. All bank accounts shall be in the name of the Institute. All cheques and automated transfers (such as BACS or CHAPS) drawn on behalf of the Institute must be signed in the form approved by the F&GPC. 31

32 For payments not exceeding 20,000 one signatory from either of the following lists is required: A Director of Finance Deputy Director of Finance Financial Accountant B. Director Pro-Director for Academic Development Pro-Director for Research and Development Pro-Director for Strategy and Organisation Pro-Director for Teaching, Quality and Learning Innovation Chair of the Council Chair of F&GPC For payments between 20,000 and 100,000 and standing orders/direct debits, two signatories are required from either the A or B list. For payments greater than 100,000 and standing orders/direct debits, two signatories are required from List B. The Director of Finance is responsible for ensuring that all bank accounts are subject to regular reconciliation and that large or unusual items are investigated as appropriate. 16 Income 16.1 General Levels of charges for tuition, contract research, services rendered, goods supplied and rents and lettings are determined by procedures approved by the F&GPC. 32

33 The Director of Finance is responsible for: ensuring that appropriate procedures are in operation to enable the Institute to receive all income to which it is entitled; approving all receipt forms, invoices, tickets or other official documents in use and electronic collection systems; prompt collection, security and banking of all income received; ensuring that all grants notified by the HEFCE and the NCTL and other bodies are received and appropriately recorded in the Institute s accounts; and ensuring that all claims for funds, including tuition fees, research grants and contracts are made in a timely manner Maximisation of income It is the responsibility of all staff to ensure that revenue to the Institute is maximised by the efficient application of agreed procedures for the identification, collection and banking of income. In particular, this requires the prompt notification to the Director of Finance of sums due so that collection can be initiated Receipt of cash, cheques and other negotiable instruments All monies received within Departments/from whatever source must be recorded by the Department /on a daily basis together with the form in which they were received, for example cash, cheques and other negotiable instruments. All monies received must be paid to the Cashier promptly, and in accordance with the financial procedures. The custody and transit of all monies received must comply with the requirements of the Institute s insurers. All sums received must be paid in and accounted for in full, and must not be used to meet miscellaneous expenses or be paid into a petty cash float. Personal or other cheques must not be cashed out of money received on behalf of the Institute Receipts by credit or debit card The Institute may only receive payments by debit or credit card using procedures approved by the Director of Finance. 33

34 16.5 Collection of debts The Director of Finance should ensure that: debtor s invoices are raised promptly on official invoices, in respect of all income due to the Institute; invoices are prepared with care, recorded in the ledger, show the correct amount due and are credited to the appropriate income account; any credits granted are valid, properly authorised and completely recorded; VAT is correctly charged where appropriate, and accounted for; monies received are posted to the correct debtors account; swift and effective action is taken in collecting overdue debts, in accordance with the protocols noted in the financial procedures; and outstanding debts are monitored and reports prepared for management. Only the Director of Finance can implement credit arrangements and indicate the periods in which different types of invoice must be paid. Any subsequent changes must be submitted to the F&GPC for approval. Requests to write off individual debts in excess of 10,000 must be referred by the Head Department in writing to the Director of Finance for submission to the F&GPC for consideration. Debts below this level may be written off with the permission of the Director of Finance Student fees The procedures for collecting tuition and residence fees must be approved by the Director of Finance. He or she is responsible for ensuring that all student fees due to the Institute are received. Unless approved by the Director any student who has not paid an account for fees or any other item owing to the Institute shall not receive the certificate for any degree, diploma or other qualification awarded by the Institute until all outstanding debts have been cleared. Such students shall be prevented from re-enrolling at the Institute and from using any of the Institute s facilities unless appropriate payment terms and conditions have been agreed in writing with the Director of Finance. 34

35 16.7 Student loans and bursaries Appropriate records will be maintained to support all transactions involving student loans and bursaries and information on this activity will be provided to the Director of Finance on request. The Institute holds funds to support cases of student hardship. These funds may be considered in three categories: Funds disbursed on behalf of third parties (for example HEFCE Access Funds and NCTL bursaries). These funds will be allocated by the Institute s Welfare Officer in accordance with the criteria laid down by the appropriate funder. The Welfare Officer will report annually on the usage of these funds to the Director of Finance. Endowment Funds will be allocated in accordance with the criteria laid down by the appropriate trust deed. The Director of Finance will report annually on the usage of these funds to the F&GPC. Institute Funds will be allocated in accordance with criteria laid down by the Student Support Committee. The Welfare Officer will report annually on the usage of these funds to the Student Support Committee. 17 Research Grants and Contracts 17.1 General Where approaches are to be made to outside bodies for support for research projects or where contracts are to be undertaken on behalf of such bodies, it is the responsibility of the Head of Academic Department to ensure that the financial implications have been appraised by the Head of Academic Administration (HOAA) in consultation with the Head of Research and Consultancy Services. This will include obtaining a set of grant terms and conditions from each organisation providing funding to enable appropriate monitoring of compliance. 35

36 The Head of Research and Consultancy Services is responsible for ensuring that every formal application for a grant is examined and shall ensure that there is adequate provision of resources to meet all commitments. He or she should ensure that the full economic cost of research contracts is established. The research agreement must be in line with the Institute s policy with regard to indirect costs and other expenses and taking account of different procedures for the pricing of research projects depending on the nature of the funding body. Research grants and contracts shall be accepted on behalf of the Institute by the following officers within the approval limits: To be reviewed and signed off by the Director of Finance before they are formally approved by the Pro-Director for Research and Development and the Pro-Director for Strategy and Organisation for contracts in excess of 100,000 Head of Research and Consultancy Services, Head of Academic Departments and Head of Academic Administration up to 100,000; and Research and Consultancy Managers (central and academic), up to 25,000 The Head of Research and Consultancy Services shall maintain all financial records relating to research grants and contracts and shall initiate all claims for reimbursement from sponsoring bodies by the due date. Each grant or contract will have a named principal investigator or grant holder and will be assigned to a specific budget holder. Control of pay and non-pay expenditure will be contained within the budget centre. The head of the budget centre may delegate day-to-day control of the account to a supervisor or grant holder, but any overspend or under-recovery of overheads is to be the clear responsibility of the budget centre with any loss being a charge on Academic Department funds Recovery of indirect costs Indirect costs will be charged to research activity at the appropriate rate as identified by the Transparency Review Costing/transparency 36

37 The Institute has agreed to adopt the principles of the Transparent Approach to Costing (TRAC) on costing and pricing for research as recommended by the Joint Costing and Pricing Steering Group (JCPSG). Staff undertaking research activity will maintain the records specified by the Head of Research and Consultancy Services to enable compilation of returns to the funding body that meet the requirements of the Transparency Review Grant and contract conditions Many grant-awarding bodies and contracting organisations stipulate conditions under which their funding is given. In addition, there are often procedures to be followed regarding the submission of interim or final reports or the provision of other relevant information. Failure to respond to these conditions often means that the Institute will suffer a significant financial penalty. It is the responsibility of the named supervisor or grant holder to ensure that conditions of funding are met. Any loss to the Institute resulting from a failure to meet conditions of funding is the responsibility of the budget holder, and will be charged against Academic Department funds. 18 Third-Stream Activity The Institute s Corporate Plan includes the objective of giving broadly equal priority to each of the Institute s core activities: teaching, research and third-stream activity. To achieve this objective the Institute provides third-stream activities with the same level of priority as other core activities. Third-stream activities include: consultancy, non-award-bearing teaching and other services rendered (all activities which are not teaching, research and consultancy). All staff with relevant expertise are encouraged to undertake third-stream activity where this delivers benefits to the Institute advances the professional development of the staff involved and promotes the reputation of the Institute as a place of education, scholarship and research. 37

38 All third-stream activity must be costed and priced in accordance with the Institute s Costing and Pricing Policy, which may be found on the Institute s website. Staff must also have approval for all third-stream activity from their Head of Academic Department and the organiser will be accountable to the Head of Academic Department. All third-stream activity must be governed by appropriate formal agreements, which shall be accepted on behalf of the Institute by its officers in accordance with the limits set out in Consultancy is one type of third-stream activity and the Institute s Consultancy Policy may be found on the Institute s website. 19 Intellectual Property Rights and Patents 19.1 General Certain activities undertaken within the Institute including research and consultancy may give rise to ideas, designs and inventions which may be patentable. These are collectively known as intellectual property. Any contract regarding commercial exploitation of intellectual property rights will be negotiated by the Institute as part of the contractual process. Ownership of intellectual property rights under external funding contracts should be negotiated as part of the contractual process and can only be agreed on behalf of the Institute by the Pro-Director for Academic Development, Pro-Director for Research and Development, Head of Research and Consultancy Services, Director of Finance, Director and the Pro-Director for Strategy and Organisation. RCKT managers may sign contracts of less than 25k in value. The Institute s Code of Practice relating to Intellectual Property, Research Results and Computer Software may be found on the Institute s website Patents The F&GPC is responsible for establishing procedures to deal with any patents accruing to the Institute from inventions and discoveries made by staff in the course of their research. 38

39 19.3 Intellectual property rights In the event of the Institute deciding to become involved in the commercial exploitation of inventions and research, the procedures contained in the Code of Practice relating to Intellectual Property, Research Results and Computer Software should be applied. 20 Expenditure 20.1 General The Director of Finance is responsible for making payments to suppliers of goods and services to the Institute Scheme of delegation/financial authorities The Heads of Departments are responsible for purchases within his or her Department/. Purchasing authority may be delegated to named individuals within the Department. In exercising this delegated authority, budget holders are required to observe the Institute s financial procedures, purchasing policy and tendering policy, which may be found on the Institute s website. For expenditure on goods/services (inclusive of purchase orders, manual requisitions and supplier invoices) costing: under 2,000 The budget holder (if not Head of Department) may authorise the purchase; from 2,000 to 5,000 In addition to the budget holder, the Head of Academic Administration or Head of Department must countersign to authorise the purchase; under 5,000 The Head of Department may authorise the purchase; from 5,000 to 20,000 In addition to the budget holder, the Head of Department and a Pro-Director or Finance Director must countersign to authorise the purchase. 39

40 Expenditure on a single item in excess of 20,000 shall require the approval of the Head of Department, Pro-Director, Director of Finance and one other A/B List signatory. Expenditure on items in excess of 100,000 shall require the approval of the Head of Department, Pro-Director, Director of Finance and two B List signatories. Similarly this group of authorised signatories should also sign any contracts where there is no tangible financial value such as non-discourse agreement, pre-tender declarations and deeds. Expenditure on items in excess of 100,000 which are not part of an approved budget will require the approval of the F&GPC. (Note: all amounts include VAT) A list of staff with approval authorities over 2,000 together with sample signatures will be maintained by the Finance Department. A budget holder/ Head of Academic Administration/ Head of Department / Director of Finance are not authorised to commit the Institute to expenditure without first reserving sufficient funds to meet the purchase cost Procurement The Institute requires all budget holders, irrespective of the source of funds, to obtain supplies, equipment and services at the lowest possible cost consistent with quality, delivery requirements and sustainability, and in accordance with sound business practice. Factors to be considered in determining lowest cost are noted in the Purchasing Policy and Tendering Policy, which may be found on the Institute s website. The Head of Contracts and Procurement is responsible to the Director of Finance for: ensuring that the Institute s Purchasing Policy and Tendering Policy is known and observed by all involved in purchasing for the Institute; 40

41 advising on matters of Institute purchasing policy and practice; advising and assisting Departments/where required on specific purchases; developing appropriate standing supply arrangements on behalf of the Institute to assist budget holders in meeting their value for money obligations; vetting all orders of 5,000 (inc.vat) or more before they leave the Institute, with sample vetting of orders below this amount; the drafting and negotiation of all large-scale purchase contracts undertaken by the Institute, in collaboration with the responsible Department; ensuring that the Institute complies with EU regulations on public purchasing policy; and managing the list of preferred suppliers Purchase orders The ordering of goods and services shall be in accordance with the Institute s detailed Purchasing Procedures and Tendering Procedures. Official Institute orders must be placed for the purchase of all goods or services unless specifically exempted by the Director of Finance. In exceptional circumstances, urgent orders may be given orally, but must be confirmed by an official purchase order endorsed confirmation order only not later than the following working day. It is the responsibility of the Director of Finance (through the Institute s Head of Contracts and Procurement) to ensure that all purchase orders refer to the Institute s Procurement Conditions of Contract Waiver The Director or the Director of Finance may waiver the requirements of the procedure except where the legislative rules of public procurement apply i.e. purchases made over the European Union threshold circa 172,514/E207,000 (this figure is dependent on /Euro exchange rate and is subject to a bi-annual update). The formal tendering and quotation procedures may be waived in the following cases. 41

42 Where the supply is proposed under special arrangements negotiated by the Institute in which event the said special arrangements must be complied with; or The timescale genuinely precludes competitive tendering. Failure to plan the work properly is not justification for single tender; or Specialist expertise is required and is available from only one source; or The task is essential to complete the project, AND arises as a consequence of a recently completed assignment and engaging different consultants for the task would be inappropriate; or There is a clear benefit to be gained from maintaining continuity with an earlier project. However in such cases the benefits of such continuity must outweigh any potential advantage to be gained by competitive tendering; or Where provided for in the Capital Investment Manual. The request to waiver the IOE Standing Orders / Financial Regulations must be submitted on a Waiver of Tender Procedure Form. The form is available from the Procurement Department, who will provide advice and guidance on the legitimacy of each request for a single Tender / Quotation Tenders and quotations Heads of Departments and delegated budget holders must comply with the Institute s Tendering Procedures which are applicable as follows: under 5,000 the budget holder should purchase from the list of Institute preferred suppliers, or use his/her discretion to decide whether or not to obtain quotations, but value for money must always be obtained; from 5,000 to 20,000 the budget holder should purchase from the list of Institute preferred suppliers or through the London Universities Purchasing Consortium (LUPC), or other consortia approved by the F&GPC details of which may be found on the Institute s website, or by obtaining at least three competitive quotations; over 20,000 all items will require at least three competitive tenders; the award of contracts over 100,000 which are not part of an approved budget shall be reported to the F&GPC. 42

43 Only partnership/consortia arrangements for the supply of goods or services specifically approved by the F&GPC or Council will fall outside these arrangements for tenders and quotations Post-tender negotiations Post-tender negotiations (i.e. after receipt of formal tenders but before signing of contracts) with a view to improving price, delivery or other tender terms can be entered into, provided: it would not put other tenderers at a disadvantage; and it would not affect their confidence and trust in the Institute s tendering process. In each case, a statement of justification should be approved by the Director prior to the event, showing: background to the procurement; reasons for proposing post-tender negotiations; and demonstration of the improved value for money. All post-tender negotiations should be reported to the F&GPC Building contracts Building contracts are the responsibility of the Estates Committee and are administered by the Institute s Director of Estates. Proposals will normally be initiated by the Director of Estates in respect of planned replacements, general improvement schemes, space planning or in response to requests from Departments/. A rolling Estates Strategy must be approved by the Council on the recommendation of the Estates Committee at least every five years and an annual report shall be submitted to the Estates Committee. The terms of reference for the Estates Committee may be found on the Institute s website. 43

44 Consultants may be appointed if a project is too large or too specialised to be undertaken within the Estates and Facilities Department s existing resources. Appointments shall be subject to tendering and other procedures where appropriate. Proposals shall be presented in the form of costings or investment appraisals for consideration by Estates Committee. Investment appraisals should comply with HEFCE guidance EU regulations The Head of Contracts and Procurement is responsible for ensuring the Institute complies with its legal obligations concerning EU procurement legislation. EU procurement regulations apply to written contracts for all forms of procurement, purchase or hire (whether or not hire purchase) with a total value exceeding a threshold value. Different thresholds apply depending on whether the procurement is for services, supplies or works. The Head of Contracts and Procurement will advise Heads of Departments on the thresholds that are currently in operation. A breach of these EU regulations may be actionable by a supplier or potential supplier. It is the responsibility of Heads of Departments to ensure that their members of staff comply with EU regulations by notifying the Head of Contracts and Procurement of any purchase that is likely to exceed the thresholds. This will need to be done well in advance in order to permit advertisements in journals such as the Official Journal of the European Community (OJEC). The Head of Contracts and Procurement is also required to submit to the HEFCE annually details on expenditure which exceeds the threshold. (Copies of the relevant documentation falling into this category must be provided by Heads of Departments to the Head of Contracts and Procurement Receipt of goods All goods shall be received at designated receipt and distribution points. They shall 44

45 be checked for quantity and/or weight and inspected for quality and specification. A delivery note shall be obtained from the supplier at the time of delivery and signed by the person receiving the goods. All goods received shall be entered onto an appropriate goods received document or electronic receipting system on the day of receipt. If the goods are deemed to be unsatisfactory, the record shall be marked accordingly and the supplier immediately notified so that they can be collected for return as soon as possible. Where goods are short on delivery, the record should be marked accordingly and the supplier immediately notified Payment of invoices The procedures for making all payments shall be in a form specified by the Director of Finance. The Director of Finance is responsible for deciding the most appropriate method of payment for categories of invoice. Payments to UK suppliers will normally be made by BACS transfer each week. In exceptional circumstances the Director of Finance will prepare a BACS transfer or manual cheque for urgent payments. Heads of Departments are responsible for ensuring that expenditure within their Departments does not exceed funds available. Suppliers shall be instructed by the budget holder to submit invoices for goods or services to the Finance department and not to the Department. Care must be taken by the budget holder to ensure that discounts receivable are obtained. Payments will only be made by the Finance Department against invoices that have been certified for payment by the appropriate Head of Department or budget holder. All goods and services require an official order unless specifically exempted by the Director of Finance. Payments will only be made against invoices that can be matched to a receipted order. 45

46 Certification of an invoice or receipting of an order will ensure that: where appropriate, an entry has been made on a Stores record or Department/inventory; an appropriate cost centre is quoted Staff reimbursement The Institute s purchasing and payments procedures are in place to enable the majority of non-pay supplies to be procured through the creditors system without staff having to incur any personal expense. However, on occasion, staff may incur expenses and are entitled to reimbursement. All expense claims must be submitted on an online form through Technology 1 Financials (T1F) or on the appropriate paper form and be supported by all appropriate backing documentation. The Director of Finance will from time to time issue guidance on claiming expenses. Current guidance available on the website includes the Institute s policies on travel and telephone expenses Goods and services in excess of 250 must not normally be purchased as reimbursable expenses. Staff fees must never be paid by an individual and reclaimed as expenses. All claims must be authorised by the appropriate budget holder whose authorisation indicates that the expenses have been correctly and necessarily incurred on behalf of the Institute and form part of an approved budget. The claimant must not authorise his/her own expenses. Expense claims for Heads of Departments must be approved by one of the following; the Director, the Pro-Director for Strategy and Organisation, the Pro-Director for Academic Development or the Director of Finance. Expense claims for the Director must be approved by Chair of Council. 46

47 In exceptional circumstances where such purchases by staff are planned, the Director of Finance and the relevant Head of Department/Head of may jointly approve cash advances to staff that are going to incur expenditure on the Institute s behalf. Upon completion of the travel or project to which the advance relates, within 21 days a final account must be prepared to demonstrate how the advance was disbursed and any unspent balance repaid. Under no circumstances will a second advance be approved when the final accounting for an earlier advance to an individual is still outstanding, and failure to account for any advance will result in full amount being recovered in full from the member of staff Institute credit cards and purchase cards Where appropriate, the Director or the Director of Finance may approve the issuing of Institute credit/procurement cards to senior staff. Such credit cards shall be used for the payment of valid business goods and expenses only and the misuse of such cards shall be grounds for disciplinary action. The Director of Finance will be responsible for setting in place a system to monitor the use of Institute credit/procurement cards and account for expenses charged through them Petty cash In exceptional circumstances the Director of Finance shall make available to Departments/such imprest as he or she considers necessary for the disbursements of petty cash expenses. However, it is important for security purposes such petty cash imprest floats are kept to a minimum. Requisitions for reimbursements must be sent to the Finance Department, together with appropriate receipts or vouchers, before the total amount held has been expended, in order to retain a working balance pending receipt of the amount claimed. The member of staff granted a float is personally responsible for its safe-keeping. The float must be kept in lockable petty cash box must be kept locked in a secure place in compliance with the requirements of the Institute s insurers when not in use and will be subject to periodic checks by the Head of Department/Director of Finance or another person nominated by him or her. 47

48 Standard Institute petty cash books are supplied by the Finance Department and must be used for recording all imprest accounts. At the end of the financial year a certificate of the balances held should be completed by the member of staff responsible for the float and counter-signed by the Head of Department Other payments Payments for maintenance and other items to students on behalf of sponsoring organisations shall be made on the authority of the Director of Finance, supported by detailed claims approved by the Head of Department Late payment rules The Late Payment of Debts (Interest) Act 1998 was introduced to give small businesses the right to charge interest on late payments from large organisations and public authorities. Key points are: small businesses can charge interest on overdue invoices; interest is chargeable on sales; the rate of interest is currently 8% per annum above the official daily rate of the Bank of England; the Act also applies to overseas organisations; and the Institute can be sued for non-payment. In view of the penalties in this Act, the Council requires that invoices must be paid in accordance with agreed credit terms Project advances The Director of Finance and the relevant Head of Department may jointly approve cash advances for projects carried out away from the Institute where cash expenditure may be unavoidable. Other forms of payment will be expected to be used wherever possible, i.e. an official purchase order and subsequent payment. 48

49 Receipts or paid invoices will be retained for all sums expended in this way. Upon completion of the project to which the advance relates, within one month a final account must be prepared to demonstrate how the advance was disbursed and any unspent balance repaid. Under no circumstances will a second advance be approved when the final accounting for an earlier advance to a project or individual is outstanding Giving hospitality Staff entertaining guests from outside bodies at lunch time should normally use the Institute s catering facilities. Where this is not possible, the reasons must be stated on the claim form for reimbursement. All hospitality must be approved in advance by the Head of Department/ HOAA/ Director of Finance. Details of location, date, cost, numbers entertained and reason must be given. The limit of acceptable expenditure for entertaining guests is 40 per head and must not include more than 10 per head for alcohol. Where hospitality is provided for groups mainly consisting of members of the Institute this must be approved in advance by one of the Director, Pro-Director for Strategy and Organisation or the Director of Finance Where hospitality is provided for groups mainly consisting of members of the Institute, purchase of alcohol should be excluded from reimbursement claims unless specifically approved in advance by one of the Director, Pro-Director for Strategy and Organisation or the Director of Finance. 21 Pay Expenditure 21.1 Remuneration policy All Institute staff will be appointed to the salary scales approved by the Council and in accordance with appropriate conditions of service. All letters of appointment must be issued by the Human Resources Department. The Council will determine what other benefits are to be available, the basis of their provision (contributory or not) and the staff to whom they are to be available. 49

50 Salaries and other benefits for senior management will be determined by the Remuneration Committee set up by the Council Appointment of staff All contracts of service shall be concluded in accordance with the Institute s approved personnel practices and procedures, and all offers of employment with the Institute shall be made in writing by the Human Resources Department. Budget holders shall ensure that the Director of Finance and the Human Resources Department are provided promptly with all information they may require in connection with the appointment, resignation or dismissal of employees Salaries and wages The Director of Finance is responsible for all payments of salaries and wages to all staff including payments for overtime or services rendered. All timesheets and other pay documents, including those relating to fees payable to external examiners, visiting lecturers or researchers, will be in a form prescribed or approved by the Director of Finance. The Director of Human Resources will be responsible for keeping the Director of Finance informed of all matters relating to personnel for payroll purposes. In particular these include: appointments, resignations, dismissals, supervisions, secondments and transfers; absences from duty for sickness or other reason, apart from approved leave; changes in remuneration other than normal increments and pay awards; and information necessary to maintain records of service for superannuation, income tax and national insurance. The Director of Finance is responsible for payments to non-employees and for informing the appropriate authorities of such payments. All casual and part-time employees will be included on the payroll. The Director of Finance shall be responsible for keeping all records relating to payroll including those of a statutory nature. 50

51 All payments must be made in accordance with the Institute s detailed payroll procedures which may be found on the Institute s website and comply with HM Revenue and Customs regulations Superannuation schemes The Council is responsible for undertaking the role of employer in relation to appropriate pension arrangements for employees. The Director of Finance is responsible for day-to-day superannuation matters, including: paying contributions to USS and SAUL schemes; and preparing the annual return to USS and SAUL schemes; The Director of Human Resources is responsible for administering eligibility to pension arrangements and for informing the Finance Department when deductions should begin or cease for staff Travel, subsistence and other allowances All claims for payment of subsistence allowances, travelling and incidental expenses shall be completed in a form approved by the Director of Finance. Claims by members of staff must be supported by appropriate backing documentation and authorised in accordance with Section 20.2, the Scheme of delegation/ financial authorities. In the case of Heads of Departments expenses should be authorised by the Director, or a Pro-Director. The certification by the budget holder/ Academic Admin Manager/ Head of Department/ HOAA/ Director/ Pro-Director or the Director of Finance shall be taken to mean that: the allowances are properly payable by the Institute from an approved budget; consideration has been given to value for money in choosing the mode of transport, etc; and 51

52 arrangements for travel by the Director or member of the Council shall be approved by the Chairman of the Council. Arrangements for travel by the Chairman of Council shall be approved by the SLT Overseas travel All arrangements for overseas travel must be in accordance with the Travel Policy, which may be found on the Institute s website. Any approvals required must be obtained in advance of committing the institution to those arrangements or confirmation of any travel bookings. Where spouses, partners or other persons unconnected with the Institute intend to participate in a trip, this must be clearly identified in advance. Where the extra cost of this travel is outweighed by benefits to the Institute, agreement to the reimbursement of the expected costs should be obtained in advance of travel Allowances for members of the Council Claims for members of the Council will be authorised by the Pro-Director for Strategy and Organisation. Claims for meeting attendance will be based on standard amounts for each individual, but only reasonable expenses can be reimbursed Severance and other non-recurring payments Severance payments shall only be made in accordance with relevant legislation and under a scheme approved by the Council on the recommendation of the F&GPC. Professional advice should be obtained where necessary. No amounts shall be expended that exceed the budget allocated for the purpose and all such payments shall be authorised by the Chairman of Council or Chair of F&GPC. All calculations will be checked by the Director of Finance. All matters referred to an employment tribunal shall be notified to the SLT at the earliest opportunity in order that budget provision may be made as necessary. All determinations of tribunals must be similarly notified. 52

53 22 Assets 22.1 Land, buildings, fixed plant and machinery The purchase, lease or rent of land, buildings or fixed plant can only be undertaken with authority from the Council and with reference to funding body requirements where exchequer-funded assets or exchequer funds are involved Fixed asset register The Director of Finance is responsible for maintaining the Institute s register of land, buildings, fixed plant and machinery. Heads of Departments will provide the Director of Finance with any information he or she may need to maintain the register. All assets purchased with funds held by the Institute remain the property of the Institute, subject to specific contractual arrangements with funders Inventories Heads of Departments are responsible for maintaining inventories, for all plant, equipment, furniture and stores in their departments with a value in excess of 1,000. The inventory must include items donated or held on trust. Inventories must be checked at least annually as described in the institution s detailed financial procedures. When transferring equipment, etc between Departments a transfer record must be kept and the inventories amended accordingly Stocks and stores Departments are responsible for establishing adequate arrangements for the custody and control of stocks and stores within their Departments. Stocks and stores of a hazardous nature should be subject to appropriate security checks. 53

54 Those Heads Departments whose stocks require valuation in the balance sheet must ensure that stock-taking procedures are in place, have the approval of the Director of Finance and that instructions to appropriate staff within their Departments are issued in accordance with guidance issued by the Director of Finance Safeguarding assets Heads of Departments are responsible for the care, custody and security of the buildings, stock, stores, furniture, cash, etc under their control. They will consult the Director of Finance in any case where security is thought to be defective or where it is considered that special security arrangements may be needed. Assets owned by the Institute shall, so far as is practical, be effectively marked to identify them as Institute property Personal use Assets owned or leased by the Institute shall not be subject to personal use without proper authorisation Asset disposal Disposal of equipment and furniture must be in accordance with procedures agreed by the F&GPC and contained in the Institute s detailed Financial Procedures. Disposal of land and buildings must only take place with the authorisation of the Council. Funding body consent may also be required if exchequer funds were involved in the acquisition of the asset All other assets Heads of Departments are responsible for establishing adequate arrangements for the custody and control of all other assets owned by the Institute, whether tangible (such as stock see above) or intangible (such as intellectual property including electronic data. 54

55 23 Funds Held on Trust 23.1 Gifts, benefactions and donations The Director of Finance is responsible for maintaining financial records in respect of gifts, benefactions and donations made to the Institute and initiating claims for recovery of tax where appropriate Student welfare and access funds The Director of Finance will prescribe the format for recording the use of student welfare funds. Records of access funds will be maintained according to funding body requirements Trust funds The Director of Finance is responsible for maintaining a record of the requirements for each trust fund and for advising the F&GPC on the control and investment of fund balances. The F&GPC is responsible for ensuring that all the Institute s trust funds are operated within any relevant legislation and the specific requirements for each trust. They will also be responsible for investment of fund balances Voluntary funds The Director of Finance shall be informed of any fund that is not an official fund of the Institute which is controlled wholly or in part by a member of staff in relation to their function in the Institute. The accounts of any such fund shall be audited by an independent external person and shall be submitted with a certificate of audit to the appropriate body. The Director of Finance shall be entitled to verify that this has been done. 55

56 23.5 Funds held by the Institute All funds held by the Institute belong to the Institute, with the exception of funds held in trust. 24 Other 24.1 Insurance The Director of Finance is responsible for the Institute s insurance arrangements, including the provision of advice on the types of cover available. As part of the overall risk management strategy all risks will have been considered and those most effectively dealt with by insurance cover will have been identified. This is likely to include important potential liabilities and provide sufficient cover to meet any potential risk to all assets. This portfolio of insurances will be considered and approved by the F&GPC on an annual basis. The Director of Finance is responsible for effecting insurance cover as determined by the F&GPC. He or she is therefore responsible for obtaining quotes, negotiating claims and maintaining the necessary records. He or she shall maintain a register of all insurances affected by the Institute and the property and risks covered. He or she will also deal with the Institute s insurers and advisers about specific insurance problems. Heads of Departments must ensure that any agreements negotiated within their Departments with external bodies cover any legal liabilities to which the Institute may be exposed. The Director of Finance advice should be sought to ensure that this is the case. Heads of Departments must give prompt notification to the Director of Finance of any potential new risks and additional property and equipment that may require insurance and of any alterations affecting existing risks. Heads of Departments must advise the Director of Finance immediately of any event that may give rise to an insurance claim. The Director of Finance will notify the Institute s insurers and, if appropriate, prepare a claim in conjunction with the Head of Department for transmission to the insurers. 56

57 The Head of Department is responsible for keeping suitable records of all plant which is subject to inspection by an insurance company, and for ensuring that inspection is carried out in the periods prescribed. He or she is also responsible for ensuring that any action required in the inspection reports is carried out promptly. All staff using their own vehicles on behalf of the Institute shall maintain appropriate insurance cover for business use. Members of Institute staff should not sign any disclaimer or indemnity documents relating to activities involving outside bodies (e.g. LEA s or schools) but should refer these to the Director of Finance. The Institute s insurances do not cover loss or damage to personal property and members of staff should satisfy themselves that any possessions they bring to the Institute are adequately insured Companies and joint ventures In certain circumstances it may be advantageous to the Institute to establish a company or a joint venture to undertake services on behalf of the Institute. Any member of staff considering the use of a company or a joint venture should first seek the advice of the Director of Finance, who should have due regard to guidance issued by the HEFCE or the NCTL. The Council is responsible for approving the establishment of all companies or joint ventures and the procedure to be followed in order to do so. This will have regard to any guidance provided by the HEFCE or the NCTL. It is the responsibility of the Council to establish the shareholding arrangements and appoint directors of companies wholly or partly owned by the Institute. The directors of companies where the Institute is the majority shareholder must submit, via the F&GPC, an annual report to the Council. They will also submit business plans or budgets as requested to enable the F&GPC and the Council to assess the risk to the Institute. The Institute s internal and external auditors shall also be appointed to such companies. 57

58 Where the Institute is the majority shareholder in a company, that company s financial year shall be consistent with that of the Institute Security Keys to safes or other similar containers are to be carried on the person of those responsible at all times. The loss of such keys must be reported to the Director of Finance immediately. The Director of IT Services shall be responsible for maintaining proper security and privacy of information held on the Institute s computer network. Appropriate levels of security will be provided, such as passwords for networked PCs together with restricted physical access for network servers. Information relating to individuals held on computer will be subject to the provisions of the Data Protection Act The Pro-Director for Strategy and Organisation is the Institute s nominated Data Protection Officer and will ensure compliance with the Act and the safety of documents. The Institute s Computer Security Policy is available on the website. The Pro-Director for Strategy and Organisation is responsible for the safekeeping of official and legal documents relating to the Institute. Signed copies of deeds, leases, agreements and contracts must, therefore, be forwarded to the Pro-Director for Strategy and Organisation. All such documents shall be held in an appropriately secure location and copies held at a separate location Students Union The Students Union is a separate legal entity from the Institute but is recognised to fulfil a valuable role in relation to the Institute s students. Subject to any constraints imposed by the HEFCE and NCTL, the Council shall determine the level of grant to be paid annually to the Students Union. The Council requires the Union to provide for information details of its proposed budget to assist in determining the appropriate level of grant. 58

59 The Students Union is responsible for maintaining its own bank account and financial records and preparing its own annual financial statements. In accordance with an agreement between the Institute and the Students Union, the Union will provide monthly statements of income and expenditure to the Pro-Director for Strategy and Organisation and the F&GPC for information purposes only. At year end the Students Union financial statements will be audited by an appropriately qualified firm of auditors and will be presented to the F&GPC for information. In accordance with an agreement between the Institute and the Students Union, the Institute s internal auditor shall have access to records, assets and personnel within the Students Union in the same way as other areas of the Institute Use of the Institute s seal The Common Seal shall be kept securely by the Pro-Director for Strategy and Organisation. Where a deed or document requires the Institute s seal, it must be sealed by the Institute Pro-Director for Strategy and Organisation or, in his or her absence, the Director of Finance Provision of indemnities Any member of staff asked to give an indemnity, for whatever purpose, should consult the Director of Finance before any such indemnity is given Delegation of duties Where an officer is absent from the Institute he/she must inform the Director of Finance in writing (including ) of his/ her named delegates for the period of the absence. In the absence of the Director of Finance the Deputy Director of Finance must be informed. 59

60 Appendix 1 The Seven Principles of Public Life from the Report of the Committee for Standards in Public Life (The Nolan Report) Selflessness Holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their families or their friends. Integrity Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that may influence them in the performance of their official duties. Objectivity In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit. Accountability Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office. Openness Holders of public office should be as open as possible about all their decisions and the actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands. 60

61 Honesty Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest. Leadership Holders of public office should promote and support these principles by leadership and example. 61

62 Institute of Education Appendix 2 Financial Regulations Summary Table of Delegated Authorities Area of Responsibility (Section Reference ) Receiving Gifts or Hospitality (Section 10) Approval of Capital Programmes (Section 11.4) Financial Limits Responsibility Delegated To Action Gifts and hospitality received more than 40 up to 250,000 over 250,000 All members of Staff Notify the Pro-Director: Strategy & Organisation promptly of gifts or hospitality received Director, Pro-Director: Strategy and Organisation and Director of Finance on the advice of the Head of Estates Council Correct approval obtained Increases to Approved Budgets (Section 12.3) up to 250,000 over 250,000 Pro-Director: Strategy and Organisation and Director of Finance Director Director Correct approval obtained Treatment of Year End Balances up to 250,000 over 250,000 Director F&GPC Correct approval obtained (Section 12.5) Capitalisation of Assets in the Balance Sheet acquisition cost per item is 10,000 or more. Director of Finance Capitalise assets 62

63 (Section 13.4) Payment Authorisation (Section 15.4) up to 20,000 between 20,000 and 100,000 greater than 100,000 One signatory from either the A or B list Two signatories are required from either the A or B list Two signatories are required from List B Correct approval obtained Write off of Bad Debts (Section 16.5) Less than 10,000 Over 10,000 (See A & B lists on Page 33) Director of Finance F&GPC Correct approval obtained Research Grant and Contract Approval and in excess of 100,000 Pro-Director of Research and Development, Director of Finance, and Pro-Director: Strategy & Organisation Correct approval obtained Third Stream Contract Approval (Sections 17.1 & 18) up to 100,000 Heads of Academic Departments, Head of Research & Consultancy Services and Head of Academic Administration Unit up to 25,000 Research and Consultancy Managers (central and academic) 63

64 Expenditure Authorisation (Section 20.2) under 2,000 from 2,000 to 5,000 Budget holder (if not Head of Department) In addition to the budget holder, Head of Academic Administration or Head of Department must countersign to authorise the purchase Correct approval obtained under 5,000 Head of Department from 5,000 to 20,000 single item in excess of 20,000 single item in excess of 100,000 single item in excess of 100,000 (not part of an approved budget) In addition to the budget holder, the Head of Department and a Pro-Director or Finance Director must countersign to authorise the purchase Head of Department, a Pro-Director, Director of Finance and one other A/B List signatory Head of Department, a Pro-Director, Director of Finance and two B List signatories F&GPC. Purchase Order Vetting (Section 20.3) 5,000 or more Head of Contracts and Procurement Vetting of orders Tenders and Quotations (Section 20.6) under 5,000 from 5,000 to 20,000 Purchase from the list of Institute preferred suppliers List of Institute preferred suppliers or through the London Correct process followed 64

65 Authorisation of Staff Expenses (Section 20.12) over 20,000 contracts over 100,000 Less than 250 Over 250 Universities Purchasing Consortium (LUPC), or other consortia approved by the F&GPC or by obtaining at least three competitive quotations At least three competitive tenders F&GPC Budget holder Goods and services in excess of 250 must not normally be purchased as reimbursable expenses. Correct approval obtained An individual cannot authorise his/ her own expenses Giving Hospitality (Section 20.18) All hospitality Entertaining guests expenditure less than 40 per head and must not include more than 10 per head for alcohol Hospitality provided for groups mainly consisting of members of the Institute Approved in advance by the Head of Department/HOAA/ Director of Finance Approved in advance by the Head of Department/HOAA/Director of Finance Approved in advance by one of the Director, Director of Finance /Pro-Director: Strategy & Organisation Correct approval obtained (In all cases details of location, date, cost, numbers entertained and reason to be provided) Inventories (Section 22.3) Departmental plant, equipment, furniture and stores with a value in excess of 1,000. Head of Department are responsible for maintaining inventories Maintain Inventory Note: All amounts are inclusive of VAT. 65