The Manchester College

Transcription

1 The Manchester College Financial Regulations

2 The Manchester College Produced by TMC FinRegs v2 1/2012 All rights reserved; no part of this publication may be photocopied, recorded or otherwise reproduced, stored in a retrieval system or transmitted in any form by any electrical or mechanical means, without the prior permission of the copyright owner.

3 Financial Regulations Contents Paragraph 1 Foreword Accounting Policies Budgetary Control Accounting Procedures Audit Computer Security Other Regulations and Procedures Authority Levels Procurement Procurement Ethics and Anti-Bribery Assets, Inventory and Stock Management Appendices A The Manchester College Committee Structure B Terms of Reference: Finance and General Purposes Committee C Terms of Reference: Audit Committee D Terms of Reference: Remuneration Committee E Terms of Reference: Personnel Committee F The Role of the Cost Centre Manager G The Manchester College s Risk Management Policy H Main Features of the Public Interest Disclosure Act 1998 I Accommodation Projects Management and Governance J Fraud and Irregularity and Money Laundering Policy and Guidelines K Insurance Public Liability Cover Expected of Suppliers of Services to the College

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5 1 Foreword Contents of Foreword Paragraphs Terminology Definitions 101 General Provisions Background Status of Financial Regulations Corporate Governance Board of Governors Accounting Officer The Principalship 116 Committee Structure Other Senior Managers with Financial Responsibility Vice Principal Finance 122 Vice Principal Support Services 123 Heads of Department and Cost Centre Managers 124 All Members of Staff 125 Risk Management Anti-Bribery 129 Whistleblowing Code of Conduct Money Laundering

6 Terminology Definitions 101 The following definitions are used in this Manual: Audit Committee Capital Expenditure The College Cost Centre Cost Centre Manager Finance Committee Board of Governors IR *LSC NAO Principal Revenue Expenditure Principalship YPLA SFA The members of the Board of Governors who are on the Audit Committee Expenditure incurred in relation to the acquisition of a fixed asset including payroll costs where appropriate. These items are expected to remain in use for at least three years and have a value of at least 5,000, eg high specification computer hardware and buildings The Manchester College A defined area of College expenditure, which forms part of the total College budget Person responsible for the budgetary control of a cost centre identified in the College Management Structure The members of the Board of Governors who are on the Finance and General Purposes Committee The Board of Governors of The Manchester College Internal requisition for goods or services Learning and Skills Council The National Audit Office Within this document all references to the Principal will apply in his absence to the Deputy Principal This can be either: pay and non-pay expenditure: expenditure incurred in the day to day running of the College or inventory items: expenditure on items which are similar to fixed assets, but have a value of less than 5,000, eg chisels, saws. These items are not consumed and have a life greater than one year The Principalship consists of: the Principal, the Deputy Principal and Vice Principals. Young People s Learning Agency Skills Funding Agency * LSC references to the LSC Financial Memorandom and Audit Code of Practice in this document are correct at time of publication. However, due to changes in funding agencies to SFA/YPLA these documents are likely to be superseded before next publication date. THE MANCHESTER COLLEGE 6

7 General Provisions Background 102 The College is a further education corporation created under the provisions of the Further and Higher Education Act Its structure of governance is laid down in the Instrument and Articles of Government, which may only be amended by application to the Secretary of State for Education. The College is accountable through its Board of Governors, which has ultimate responsibility for the effectiveness of its management and administration. The College is an exempt charity by virtue of the Charities Act The financial memorandum between the LSC and the College sets out the terms and conditions on which grant is made. The Governing Body is responsible for ensuring that conditions of grant are met. As part of this process, the College must adhere to the LSC s Audit Code of Practice from Circular 04/07 (December 2004), which requires it to have sound systems of financial and management control. The Financial Regulations of the College form part of this overall system of accountability. Status of Financial Regulations 104 This document sets out the College s Financial Regulations. It translates into practical guidance the College s broad policies relating to financial control. This document was approved by the Finance and General Purposes Committee on 27 January It applies to any College Investments and Subsidiary and Other Undertakings. 105 These Financial Regulations are subordinate to the College s Instruments and Articles of Government and to any restrictions contained within the College s financial memorandum with the LSC and the LSC s Audit Code of Practice. 7

8 106 The purpose of these Financial Regulations is to provide control over the totality of the College s resources and provide management with assurances that the resources are being properly applied for the achievement of the College s financial objectives: financial viability; achieving value for money and maximising procurement efficiency gains; fulfilling its responsibility for the provision of effective financial controls over the use of public funds; ensuring that the institution complies with all relevant legislation; safeguarding the assets of the College. 107 Compliance with the Financial Regulations is compulsory for all staff connected with the College. A member of staff who fails to comply with the Financial Regulations may be subject to disciplinary action under the College s disciplinary policy. The Board of Governors will be notified of any such breach through the Audit Committee. It is the responsibility of Heads of Department to ensure that their staff are made aware of the existence and content of the College s Financial Regulations. 108 The Finance and General Purposes Committee is responsible for maintaining a continuous review of the Financial Regulations, through the Vice Principal Finance, and for advising the Governing Body of any additions or changes necessary. In addition, Financial Regulations will be comprehensively reviewed every two years. 109 In exceptional circumstances, this committee can authorise a departure from the detailed provisions herein, such departure to be reported to the Board of Governors at the earliest opportunity. 110 The College s detailed financial procedures set out precisely how these regulations will be implemented and are contained in this document or supporting manuals or procedures available from the Finance or HR Departments. THE MANCHESTER COLLEGE 8

9 Corporate Governance Board of Governors 111 The Board of Governors shall be responsible for the following functions:- the determination and periodic review of the educational character and mission of the College and the oversight of its activities; approving the quality strategy of the College; the effective use of resources, the solvency of the College and the safeguarding their assets; approve annual estimates of income and expenditure; the appointment, grading, suspension, dismissal and determination of the pay and conditions of service of the holders of senior posts and the Clerk, including, where the Clerk is to be appointed as, a member of staff, the Clerk s appointment, grading, suspension, dismissal and determination of pay in the capacity of a member of staff; and setting a framework for the pay and conditions of service of all other staff. 9

10 112 The Board of Governors shall not delegate the following functions: the determination of the educational character and mission of the College; the approval of the annual estimates of income and expenditure; the responsibility for ensuring the solvency of the College and for safeguarding College assets; the appointment of the Principal or holder of a senior post; the appointment of the Clerk, (including, where the Clerk is, or is to be, appointed as a member of staff the Clerk s appointment in the capacity of a member of staff); and the modification or revocation of these functions. (i) the Board of Governors may not delegate the consideration of the case for dismissal, and the power to determine an appeal in connection with the dismissal of the Principal, the Clerk or the holder of a senior post, other than to a committee of members of the Board of Governors. (ii) the Board of Governors shall make rules specifying the way which a committee having functions under paragraph (i) shall be established and conducted Accounting Officer 113 The Principal is the College s Accounting Officer and is responsible for ensuring the financial administration of the College s affairs in accordance with the financial memorandum with the LSC. As the Accounting Officer, the Principal may be required to justify any of the College s financial matters to the Public Accounts Committee at the House of Commons. 114 In particular, the Articles of Government 3.(2).(e) charge the Principal with responsibility:... for preparing annual estimates of income and expenditure, for consideration and approval by the Board of Governors, and for the management of budget and resources, within the estimates approved by the Board of Governors. THE MANCHESTER COLLEGE 10

11 115 The Principal shall demonstrate their oversight of financial matters by signing the balance sheet and the statement of corporate governance within the annual financial statements, and appropriate form of the three-year financial forecasts submitted to the SFA/YPLA. The Principalship 116 The day to day management of the College is delegated to the Principal and the Principalship. Committee Structure 117 The Board of Governors has ultimate responsibility for the College s finances, but delegates specific powers and processes to the committees detailed below. These committees are accountable to the Governing Body. Details of the committee structure is included at Appendix A. 118 Finance and General Purposes Committee Responsible for the monitoring of the College s Financial Position and Financial Control Systems. The committee will examine annual estimates and accounts (including the accounting policies upon which they are based) and recommend their approval to the Board of Governors. It will ensure that short-term budgets are in line with those agreed and medium and longer term plans are followed. It is responsible for ensuring that all the financial implications of such medium and longer term plans are taken into account before their approval by the Board of Governors. In addition, it is responsible for considering the College s capital programme before it can be recommended to the Board of Governors for approval. Similarly, it considers and makes recommendations to the Board of Governors on the allocation of Finance between academic and non-academic areas. It will consider any other matters relevant to the financial duties of the Board of Governors and make recommendations accordingly. The committee will also ensure that the Board of Governors has adequate information to enable it to discharge its financial responsibilities. A more detailed extract from the Finance and General Purposes Committee s terms of reference is shown at Appendix B. 11

12 119 Audit Committee Colleges are required by their financial memorandum with the LSC and by the LSC s Audit Code of Practice to appoint an Audit Committee. The committee is independent, advisory and reports to the Board of Governors. It has the right of access to obtain all the information it considers necessary and to consult directly with the Internal and Financial Statements Auditors. The committee is responsible for identifying and approving appropriate performance measures for internal and financial statements audit and for monitoring their performance. It must also satisfy itself that satisfactory arrangements are in place to promote economy, efficiency and effectiveness. A more detailed extract from the Audit Committee s terms of reference is shown at Appendix C. The audit requirements of the College are set out in the LSC s Audit Code of Practice. 120 Remuneration Committee Consideration of senior management s pay and conditions is the responsibility of the Remuneration Committee. It has the power to make recommendations to the Board of Governors on their remuneration, including pay and other benefits, as well as contractual arrangements. A more detailed extract from the Remuneration Committee s terms of reference is shown at Appendix D. 121 Personnel Committee The Personnel Committee gives detailed consideration to a wide range of staffing and industrial relation matters and the terms of reference of the Committee are set out in Appendix E. Senior Managers with Financial Responsibility Vice Principal Finance 122 Financial management is controlled by the Vice Principal Finance, who is responsible to the Principal for: preparing annual capital and revenue budgets and financial plans; preparing accounts, and monitoring and control of expenditure against budgets; preparing the College s annual accounts and other financial statements and accounts which the College is required to submit to other authorities; ensuring that the College maintains satisfactory financial systems; providing professional advice on all matters relating to financial policies and procedures. THE MANCHESTER COLLEGE 12

13 Vice Principal Support Services 123 Day to day administration are controlled by the Vice Principal Support Services, who is responsible to the Principal for: production of management information facilitating financial monitoring auditors achieving efficient processes. Heads of Department and Cost Centre Managers 124 Heads of Department and Cost Centre Managers are responsible to the Principal or Deputy Principal for financial management for the areas or activities they control. They are advised by the Vice Principal Finance in executing their financial duties. The Vice Principal Finance will also supervise and approve the financial systems operating within their departments, including the form in which accounts and financial records are kept. Heads of Department are responsible for establishing and maintaining clear lines of responsibility within their department for all financial matters. Where resources are devolved to budget holders, they are accountable to their Head of Department for their own budget. Heads of Department shall provide the Vice Principal Finance with such information as may be required to enable: compilation of the College s financial statements; implementation of financial planning; implementation of audit and financial reviews, projects and value for money studies. 13

14 All Members of Staff 125 All members of staff should be aware of and have a general responsibility for the security of the College s property, for avoiding loss and for due economy in the use of resources. They should ensure that they are aware of the College s financial authority limits (see Section 8) and the values of purchases for which quotations and tenders are required (see Section 9). They shall make available any relevant records or information to the Vice Principal Finance and the Vice Principal Support Services or their authorised representative in connection with the implementation of the College s financial policies, these Financial Regulations and the system of financial control. They shall provide the Vice Principal Finance and Vice Principal Support Services with such financial and other information as they may deem necessary, from time to time, to carry out the requirements of the Board of Governors. Further details on the role and responsibilities of a Cost Centre Manager are provided at Appendix F. They shall immediately notify the Vice Principal Finance whenever any matter arises which involves, or is thought to involve, irregularities concerning, inter alia, cash or property of the College. The Vice Principal Finance shall take such steps as he considers necessary by way of investigation and report. Risk Management 126 The College 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. The day to day management of risk is undertaken by the Risk Management Group. Details of the process in determining significant risk is set out in Appendix G and all documents and procedures are accessible via Staff Intranet > Documents > Finance > Risk Management. The Board of Governors has overall responsibility for ensuring there is a risk management strategy and a common approach to the management of risk throughout the College through the development, implementation and embedment within the College of a formal, structured risk management process. THE MANCHESTER COLLEGE 14

15 127 In line with this policy, the Board of Governors requires that the risk management strategy and supporting procedures include: the adoption of common terminology in relation to the definition of risk and risk management; the establishment of College-wide criteria for the measurement of risk, linking the threats to their potential impact and the likelihood of their occurrence together with a sensitivity analysis; a decision on the level of risk to be accepted, together with tolerance levels expressed in terms of measurable outcomes; a decision on the level of risk to be covered by insurance (see Section 7); detailed regular reviews at department or support function level to identify significant risks associated with the achievement of key objectives and other relevant areas; development of risk management and contingency plans for all significant risks, to include a designated risk owner who will be responsible and accountable for managing the risk in question; regular reporting to the Board of Governors of all risks above established tolerance levels; an annual review of the implementation of risk management arrangements. The strategy and procedures must be capable of independent verification. 128 Heads of Department must ensure that any agreements negotiated within their departments with external bodies cover any legal liabilities to which the College may be exposed. The Risk Management Group s advice must be sought to ensure that this is the case. 129 Anti Bribery Under the Bribery Act 2010, Bribery is a criminal offence for both individuals and commercial organisations and can be punished with imprisonment of up to 10 years or unlimited fines. The College Board of Governors has agreed a college Anti-Bribery Policy which can be located in Staff Intranet > Policy > Anti-Bribery. It it essential that Managers bring the content of these new documents to the attention of staff throughout the college. 15

16 Whistleblowing 130 Whistleblowing in the context of the Public Interest Disclosure Act is the disclosure by an employee (or other party) about malpractice in the workplace. A whistleblower can blow the whistle about crime, civil offences (including negligence, breach of contract, etc), miscarriage of justice, danger to health and safety or the environment, and the cover-up of any of these. It does not matter whether or not the information is confidential and the whistleblowing can extend to malpractice occurring in the UK and any other country or territory. 131 Normally, any concern about a workplace matter at the College should be raised with the relevant member of staff s immediate Line Manager or Head of Department. However, the College recognises that the seriousness or sensitivity of some issues, together with the identity of the person the member of staff thinks may be involved, may make this difficult or impossible. 132 A member of staff may, therefore, make the disclosure to one of the staff designated for this purpose, for example the Vice Principal Support Services. If the member of staff does not wish to raise the matter with this person, or with the Principal, Deputy Principal, Vice Principal Finance or the Chair of the Board of Governors, it may be raised with the Chair of the Audit Committee. 133 The full procedure for whistleblowing is set out in the College s Whistleblowing Policy, which is available through the HR Department. Further details of the Public Interest Disclosure Act are set out at Appendix H. Code of Conduct 134 The College 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 (formerly known as the Nolan Committee), The College expects that staff at all levels will observe the principles of its code of conduct, laid down by the Committee on Standards in Public Life for those holding public office namely: 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 of other material benefits for themselves, their family or their friends; THE MANCHESTER COLLEGE 16

17 Integrity holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might 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 the decision and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interests clearly demands; 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. These principles apply to all aspects of public life. The Standards Committee has set them out here for the benefit of all who serve the public in any way. A copy of the College Code of Conduct is issued to members of the Board of Governors and members of staff with significant financial responsibilities. Access to the full document which is a practical guide and reference document can be gained from the Clerk to the Board of Governors. 135 Additionally, members of the Board of Governors, senior management or those involved in procurement are required to disclose interests in the College s register of interests maintained by the Clerk to the Board of Governors. They will also be responsible for ensuring that entries in the register relating to them are kept up to date regularly and promptly, as prescribed in the financial procedures. The Clerk to the Board of Governors will pass a copy of the register of interests to the Head of Finance annually as it is updated, and a copy of amendments as they occur. 136 In particular, no person shall be a signatory to a College contract where he or she also has an interest in the activities of the other party. 17

18 Money Laundering 137 Money laundering is a concept whereby the origin of the proceeds of criminal conduct is disguised by converting the proceeds, through a cycle of transactions, into financial assets which appear to have legitimate origins. Revised guidance on the new money laundering regime in the UK has been issued by the Consultative Committee of Accountancy Bodies (CCAB). 138 Two pieces of UK legislation were introduced, the Proceeds of Crime Act 2002 and the Money Laundering Regulations Clearly there is potential for colleges to be used to convert proceeds of criminal conduct into legitimate/clean money. Consequently, colleges have to do the following: appoint a Money Laundering Reporting Officer (MLRO); train employees on their responsibilities under the new legislation and how to recognise suspicious transactions; establish appropriate internal reporting procedures; establish a system of retaining client records for five years; verify the identity of new clients and maintain evidence of identification; report suspicions of money laundering to the MLRO (who if necessary will report to the Serious Organised Crime Agency (SOCA). THE MANCHESTER COLLEGE 18

19 2 Accounting Policies Contents of Accounting Policies Paragraphs Fundamental Principles SFA/YPLA Guidelines 201 Accounting Policies 202 Standard Accounting Practice 203 Accounting Period 204 Income General 205 SFA/YPL Funding: Revenue/Capital Allocation Grants Course Fees Catering Miscellaneous Expenditure General 224 Apportionable Expenditure Payroll Capital Investment 229 Borrowing Fixed Assets, Inventory Items and Stock See Section 11 Treasury Management and Investment

20 Fundamental Principles SFA/YPLA Guidelines 201 The accounting policies adopted by the College should at all times conform with the SFA/YPLA guidelines. These guidelines are summarised within the Statement of Recommended Practice: Accounting for Further and Higher Education (SORP) effective from 1 August Accounting policies are stated within Financial Reporting Standard 18 (FRS18). The SORP incorporates the basic accounting concepts and generally accepted standard accounting practice. Accounting Policies 202 The FRS requires accounting policies to be consistent with accounting standards, Urgent Issues Task Force (UITF) abstracts and companies legislation. Where this constraint allows a choice, the FRS requires an entity to select whichever of those accounting policies is judged to be most appropriate to its particular circumstances for the purpose of giving a true and fair view. An entity should judge the appropriateness of accounting policies to its particular circumstances against the objectives of: relevance; reliability; comparability; and understandability. Standard Accounting Practice 203 Best accounting practice is governed by guidelines issued by the Accounting Standards Board (ASB). These guidelines are contained in Financial Reporting Standards (FRSs) and Statements of Standard Accounting Practice (SSAPs) which the College s accounting policies should comply with at all times. Accounting Period 204 The College s accounting period is defined as: Financial year 1 August to 31 July THE MANCHESTER COLLEGE 20

21 Income General 205 Income will be accounted for under the accruals concept as it is earned and only if there is a reasonable certainty that it will be received. SFA/YPLA Funding 206 The main allocation from SFA/YPLA funding is by way of grant directly associated to targeted performance, allocated for the year ending 31 July. Accordingly no apportionment, between years will be required, although the annual financial statements will need to recognise any cash received in advance of the following year, or not received in respect of the year just ended. 207 For Management Accounts purposes the SFA/YPLA funding will be based on the assessment to grant entitlement equally apportioned to each month of the accounting year. The College s ability to receive such funding will be based upon an assessment of activity levels to achieve target or a level below target. 208 The SFA/YPLA also provides funding for specific purposes which may or may not require separate accounting for reporting purposes. Grants 209 Funding from external organisations such as the European Social Fund (ESF) is obtained periodically throughout the financial year and is secured on a bid basis only. 210 Such income will be recognised over the period of the course or activity to which it specifically relates. 211 The financial statements will need to recognise any cash received in advance of the following year or not received in respect of the year just ended. 212 For Management Accounts purposes, accounting for such funding in the early months of a calendar year is extremely difficult. Consequently any assessment of likely incomes must, of necessity, be based upon the continuous review of the status of bids and outcomes whilst exercising the concept of prudence. 21

22 213 Income for Management Accounts purposes will be based on the assessment of activity for each calendar year taking into account the period to which the activity relates, apportioned on a monthly basis. Course Fees 214 The College derives course income from the following main areas: courses funded by Training Providers funded by the SFA/YPLA; courses funded by individuals and/or with HE institutions (HE franchised courses); vocational courses funded by home students or home sponsors; vocational courses funded by overseas students or sponsors; academic courses (A Levels/GCSEs/Access) funded by home students or home sponsors; academic courses (A Levels/GCSEs/Access) funded by overseas students or sponsors. 215 Such course income is deemed to accrue over the period of the course. At the financial year-end, a proportion of unbilled courses will need to be accrued for courses overlapping the year-end. For Management Accounts purposes, income will be taken as it is deemed to accrue over the period of the course. 216 In addition, a proportion of courses billed or cash received in advance of the course will need to be deferred for courses overlapping the year-end. 217 The Board of Governors through the Finance and General Purposes Committee shall annually review and set course fees. The Board of Governors through the Finance and General Purposes Committee shall also annually review and set the criteria for determining College remission of fees including the criteria for Principal s or Deputy Principal s discretion, which shall be the only form of discretion. 218 The Board of Governors, in respect of the above, shall endeavour to strike a balance between those in need and the budgetary impact of changes on the College s financial position. THE MANCHESTER COLLEGE 22