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Carry Forward Balances Policy

Category Finance
Type Policy
Approved by  Vice-Chancellor
Date Policy Took Effect 12 July 2004
Last Approved Revision 1 June 2008
Sponsor Chief Financial Officer
Responsible Officer Budget Accountant
Review Date 31 August 2012

Policy Content

1.0 Purpose

The purpose of this policy is to provide a mechanism to reward good financial management in the Academic Division Cost Centres.

2.0 Definition

Carry forward balances are equity accounts (dissection 9961) held by qualifying Activity Centres in the Academic Divisions. This includes activity types A, C, D, K, M, N and S. Externally funded accounts (P, Q and E), Research Committee Accounts in Academic Divisions (R) and Trust Accounts (T) are not covered by this Policy. Service Divisions and Central Committees do not qualify for carry forward balances unless special approval is granted by the Vice-Chancellor.

3.0 Creation of Carry Forward Balances

Carry forward balances are created in two circumstances:

  1. When an Activity Centre's budget allocation is under or over spent a carry forward is created and is the difference between the actual results and the budgeted results. The amount budgeted for use or creation of a carry forward is included in determining the amount carried forward.
  2. When an Activity Centre that does not receive a budget allocation makes a surplus or deficit. The carry forward is the actual surplus or deficit.

Carry forwards will be calculated by Financial Services Division after 31 December each year. Increases or decreases in carry forwards will be added to or deducted from dissection 9961 in every qualifying Activity Centre.

4.0 Expenditure of Carry Forward Balances

The expenditure of carry forward balances must comply with the University's Financial Delegations Policy and the Schedule of Delegations.

At no time must the aggregated carry forward balances of a Cost Centre be in deficit or forecasted or budgeted to go into deficit without the written approval of the Vice-Chancellor.

5.0 Limits on Carry Forward Balances

The total of a Division's carry forward balances at 31 December each year must not exceed 10% of the Division's following year’s funding allocation.

Divisions in breach of the 10% rule are required to produce a plan showing how the excess is to be used and the plan approved by the Vice-Chancellor.

Notes (not part of the policy):

Activity Centres in Service Divisions and/or Central Committees seeking permission to apply the Carry Forward Policy should apply in the first instance to the Chief Operating Officer.

Cost Centres seeking approval for an accumulated carry forward deficit should apply to the Pro Vice-Chancellor in the first instance. The Pro Vice-Chancellor in turn should refer the request to the Chief Operating Officer.

Divisions will be advised if the 10% rule is breached and will be required to present a carry forward reduction plan to the Chief Operating Officer.

Contact for Further Information

For further information, contact the Budget Accountant, extn 8794 or email brita.fields@otago.ac.nz