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Dept. of Education > Administrative Services > Finance, Facilities and Business Strategy Branch > Expenditure ExpenditureThis policy outlines the management practices and processes required to properly certify, control, administer, monitor, classify, and account for expenditure payable and incurred by the Department.
CoverageThis policy applies to all staff involved in accounting for, processing, certifying and incurring expenditure. PolicyIntroduction:Expenditure includes items such as: salaries, payments for goods and services, and rent. Accounting Definition: “Expenses are the consumptions or losses of future economic benefits in the form of reductions in assets and/or increases in liabilities.” – Statements of Accounting Concepts (SAC) 4. Types of ExpenditureThe Department incurs certain expenses which are ‘controlled’, that is, expenses which are incurred in the course of achieving its goals and objectives. Controlled expenses include items such as: payments for goods and services, rent, and leasing of motor vehicles. All school expenses are controlled expenditure, and are paid directly out of school bank accounts. The Department also incurs other expenses incurred through ‘administered’ activities which it has no control over, but rather manages the funds for eligible third party beneficiaries. Administered expenses include items such as: the payment of grants to non-government schools, the accommodation allowance paid to tertiary students and the payment of a number of sundry grants. Expenses controlled by the Department are reported as Operating Expenses in the Department’s Financial Statements, while administered expenses are reported in the notes to the Financial Statements. Recognition of ExpenditureExpenditure for goods and services is recognised and brought to account in the Financial Management Information System (FMIS) as it is incurred, e.g. at the time an invoice is processed, not when it is paid. Expenditure is to be recognised in the Statement of Financial Performance (Operating Statement) and/or in a Business Units/Schools general ledger in their finance system (Finance One/SACS) when, and only when, the following criteria are satisfied:
Classifying ExpenditureExpenditure transactions should be classified and coded in accordance with the established chart of accounts structure applicable to the Finance One or SACS computer applications. The chart of accounts is the means to ensure the proper classification of expenditure transactions for both business unit/school and central office reporting and management purposes. Chart of Accounts - Finance One (Corporate) Information regard the SACS chart of accounts can be found under the FFBS Systems and Reporting web page. Goods and Services Tax (GST)The Department and individual schools are each registered separately with an Australian Business Number (ABN) and also registered for GST purposes. This means that each pays GST on all creditable purchases of goods and services and can claim input tax credits from the Australian Taxation Office (ATO) via a monthly business activity statement. Most expenditure items are taxable, which means that GST has been included in the price of a good or service that has been purchased and an input tax credit will be available. If an expenditure item is "GST-free" this means that no GST has been included in the price of a good or service that has been purchased and there will be no input tax credit available. If an item is "Input Taxed" this means that no GST is charged on the supply and no input tax credit is available on purchases related to the supply. Full details on the impact of GST are available at the following site http://www.education.tas.gov.au/admin/ff/taxgst/default.htm Authorisation of ExpenditurePrior to any funds being expended or commitments made, (i.e. before proceeding with the ordering of goods and services, entering into a contract or lease agreement), it is necessary for the expense to be formally approved by an officer with appropriate delegated authority. All expenditure should be approved within the limits of delegated financial authority. Authorisation must be sought from another officer with the appropriate delegation limit, if expenditure is to exceed an officer’s own delegated limit. All expenditure transactions must be treated as a whole and not be split to meet delegated monetary thresholds. Delegations and Financial Authority Prior to any authorisation being sought, the appropriate delegated officer should first check to see if the good or service being obtained is available through a common use contract. Further information regarding the procurement of good or services through common use contracts can be viewed in the Department’s Procurement policy. A commitment generally refers to the legal obligation the Department has to pay for the goods and services it orders. It is the amount which the Department will be legally bound to pay when the goods and services it has ordered are delivered. The Department generally will make commitments in respect of its available funds by generating purchase orders. Certification for PaymentThe certification for payment is an action which occurs after the appropriate expenditure approval/authorisation has already been obtained. The payment of a commitment via a cheque or electronic funds transfer, by another officer holding delegated authority and/or nominated as a Certifying Officer (refer Delegations Framework), represents the certification and validation process for the payment of that expenditure. The certification of expenditure for payment should be made on the basis that:
Procurement of Goods and ServicesIt should be accepted practice that purchases for goods and services should be made through the use of official purchase orders. Purchase order books are available via email request to procurement@education.tas.gov.au Purchase orders are the means by which business units and schools should manage their expenditure commitments. Purchase orders should be created either by using the departmental financial systems, Finance One (Corporate Office) or SACS (Schools), or by manually preparing an official departmental order form. Once the purchase order is completed the order must be authorised by a person with appropriate delegated financial authority. The purchase of goods and services can also be initiated from one of the following types of transactions:-
Generally, any decision to commit funds, i.e. proceed with the ordering of goods and services, should only be taken when;
Further information regarding the procurement of goods and services can be found in the Department’s Procurement Policy. Process for Engaging ConsultantsProcess for Engaging Consultants (Goods and Services) Entertainment ExpenditureThe Department’s Entertainment Expenditure policy that outlines the departmental requirements and approval process for entertainment related expenses, including the purchase of alcohol. Accounts Payable (Creditors)Accounts Payable (Creditors) are amounts owed by the Department to another organisation or individual. Generally, these are amounts for goods and services received or contributions owing by the Department. Accounts Payable are recognised when goods and services are received or the amount owing is assessed. Payments to creditors are to be only made on the basis of the supply of one of the below-mentioned documents, and not on unsupported creditor statements. Records of payments to creditors are to be recorded by Accounting Operations/Schools in a Creditors Ledger in Finance One (Corporate Office) or SACS (Schools). New creditor accounts are to be created directly from creditor invoices or from requests received from Business Unit Managers prior to them entering purchase order commitments. Creditor Invoices Creditor tax invoices (and non tax invoices) verify departmental expenditure for goods and services authorised by way of an official purchase order or, in accordance with an applicable contractual arrangement. Invoices should be matched against related orders, acquitted against a goods receipt document, and be duly authorised for payment to occur. Direct Invoicing An invoice may be paid without the raising of a purchase order or a matching process occurring in the following circumstances:
The signature of an officer holding an appropriate delegated authority on the original invoice is sufficient for the payment of these to occur. Credit NotesCredit notes represent credit given to the Department by a creditor in respect of a current or previous claim or payment made by that creditor. They authorise the Department to reduce its payment to a creditor in respect of an invoice awaiting payment or a future invoice. Any credit note received by a Business Unit/School should be forwarded promptly for processing. The signature of an officer holding an appropriate delegated authority on the credit note is sufficient for the credit to occur. Corporate Office: Any credit note received by a Business Unit should be forwarded promptly to Accounting Operations (Accounts Payable) for processing. Schools: Any credit note received by a school should be loaded by the administrative officer into SACS and matched against the appropriate creditor’s account. Procedures on how to enter credit note details into SACS can be found in the Credit Notes from Suppliers document. Air & Sea TravelAll air and sea travel expenditure is to be approved prior to being booked, paid and undertaken. When an employee, including a school-based employee, is travelling intrastate, interstate or overseas, an Application for Air and Sea Travel Warrant must be submitted for approval by the relevant delegated officer to the relevant Deputy Secretary. Approval of the application ensures insurance coverage for the employee. Payment can be made via a Corporate MasterCard, quoting the relevant card number and cardholders name over the telephone. Employee Related ExpensesOther types of payment require a payment request to be raised and approved by an officer holding delegated authority. These usually represent an employee claim for services rendered or reimbursement of expenses. Receipts must be provided to verify reimbursements.
All staff related expenditure is to be authorised by the Principal/Business Unit Manager in accordance with the Department’s Delegations and Administrative Authorities framework, and the General Conditions of Service Awards. Employees are entitled to travel reimbursement to cover the costs associated with work related travel. Further information relating to employee travel can be found on the Department’s web site by key word search or from the HRMB site. Claims for all travel expenses and allowances are made using the Travel Advance or Reimbursement of Expenses claim form. When claiming a travel advance, all anticipated costs should be claimed based on planned travel arrangements in order to avoid the need to submit a “top-up” claim when travel has been completed. Where practicable, any out-of-pocket expenses should be claimed at the time the next travel claim form is submitted, rather than submitting a small separate claim. In the event that changes are made to travel arrangements following payment of a travel advance, it may be necessary to repay the advance in full or in part. If this situation arises, the claimant should contact Accounting Operations for advice. Corporate Office travel advance applications should be forwarded to Accounting Operations, where possible, at least five working days prior to the designated travel. Accounting Operations is to process payments for travel on a daily basis. All travel advance payments are to be made via EFT. Cash ManagementGeneral Controls
Cheque Payments
Electronic Funds Transfer (EFT) PaymentsBusiness Units (Corporate Office) are encouraged to make all payments via EFT where possible, as such, cheque payment runs are undertaken much less frequently than EFT payment runs. Inter and Intra Agency PaymentsAll payments between DoE business units and schools as well as payments to other government agencies, are to be made by the stated due dates. Payments should always be made via EFT unless special circumstances exist which require a cheque payment. Note: Schools are not able to make payments via EFT as this option is not currently available through SACS. PrepaymentsTreasurer’s Instruction 521 generally does not allow the Department to make pre-payments for goods and services which have not been provided. Exception to this rule is where a deposit or payment in advance is unavoidable because it is a condition of a contract. Payments in advance are limited to travel tickets, subscriptions, rentals, licence and registration fees, insurance, application fees and deposits that are normally prepaid. In abnormal circumstances where prepayments not covered by the above are required, the Secretary or delegate must give prior approval to the payment and certify that the payment in advance is necessary and unavoidable because of the nature or conditions of the contract. Bank Drafts/Telegraphic TransfersOverseas subscriptions and invoices normally require payment in a foreign currency. Foreign currency payments are arranged through a department banker (Westpac or Commonwealth) via a bank draft or telegraphic transfer. An Overseas Draft or Telegraphic Transfer requisition form is required to be completed for each transaction. The form is then sent via facsimile to the bank. For Corporate Office, payment is to be made by direct debit from the appropriate Department of Education account. For schools, payment is to be made via cheque, and must be made on the day the transfer is requested. Accountable FormsAccountable forms are particular types of forms that require safeguarding due to their potential value or negotiability. Accountable forms include items such as: cheque books, pre-printed cheque stationary, receipt books, and purchase orders. All accountable forms are to be stored in a secure location with access limited to authorised staff only. All accountable forms are to contain a series of consecutive numbers. A register of accountable forms is to be maintained which keeps a record of all accountable forms, their issue and their use. JournalsGenerally, expenditure journals are utilised for the purposes of correcting mis-postings to the general ledger or as a mechanism for internal charging between business units. Corporate Office: Where a Business Unit requires a journal to be prepared, a request is to be sent to the Senior Finance Officer, Finance and Procurement Services (FPS). To ensure efficiency in processing, the request should where possible be sent via email to: (finserv@education.tas.gov.au). Where it is not practical to attach supporting documentation to journal requests (i.e. requests sent electronically via email), the initiating Business Unit is to securely store and file the supporting documentation. Journal requests that have been generated within FPS are to have supporting documentation attached. Journal requests are to:
Journal requests are to be authorised by a person in a position with appropriate delegated authority, in accordance with the Department’s Delegations and Administrative Authorities Framework. Where a journal request is from a person in a position without the appropriate delegated authority, FPS should seek verification from a person with the appropriate delegated authority. When processing journal requests, FPS is to attach all requests to payment vouchers for supporting documentation. Officers involved in the preparation of journals, are not to be involved in the posting of journals in Finance One. Journal Transfer Request Guidelines Schools: Journals processed should be fully supported by appropriate documentation and be authorised by an appropriate officer. Preparation and processing of school related journals in SACS guidelines. References
Internal Controls / Responsibilities
Monitoring of ComplianceThese procedures will be subject to internal audit, external audit and performance audits. Related Topics
Forms
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