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Accounting Procedures and Rules

Category Finance
Type Procedure
Approved by  Chief Financial Officer
Date Procedure Took Effect 1 July 2007
Last Approved Revision 17 June 2011
Sponsor Chief Financial Officer
Responsible Officer Financial Controller
Review Date 1 July 2014

Policy Content

1. Internal Transactions – Use of the 7000 Dissection Range

Each income (credit) dissection in the 7000 dissection range has a corresponding expense (debit) dissection. Transactions should be coded such that these associated income and expense dissection are in balance i.e. credits = debits. There can be NO one-sided 7000 series transactions, apart from (and this is the only exception) internal charging to fixed assets, using the 7399 dissection.

Internal Income (Credit) is a dissection within the range 7100 to 7481

Internal Expenditure (Debit) is a dissection within the range 7511 to 7881.

The difference between these corresponding account codes must always be 400 E.G.

DR to dissection 7775 (Internal General Paid) must have a corresponding
CR to dissection 7375 (Internal General Recovery).

DR to dissection 7531 (Internal Grant Paid) must have a corresponding
CR to dissection 7131 (Internal Grant Recovery).

PLEASE NOTE:
The 7000 series dissections MUST NOT be used when coding Debtors invoices, Creditors invoices and P card transactions.

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2. Internal Transactions - 7000 Dissection Range – Use of sub dissections:

When using the internal transaction dissections (7000 range), you MUST use the sub dissection 71 (transactions within your division) or the sub dissection 72 (transactions between your division and another). No other sub dissections should be used.

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3. Internal Recharging of Expenditure:

Where an expense is incurred by one activity centre and they wish to charge all or part of that expense to another activity centre (which may or may not be in the same division) then the debit and credit should go to the same account in the originator’s ledger. However, where the originating activity centre adds value to the cost before passing it on, the debit and credit should go to the internal income dissection. Please note, you MUST also use the sub dissection 71 (transactions within your division) or the sub dissection 72 (transactions between your division and another).

Marking up is NOT adding value.

Examples – No added value:
Activity centre 10 WF C01 photocopies documents for 10 GF C01.
The WF C01 photocopying costs accumulate in 10 WF C01 3115 00. The journal to charge GF C01 will be:

Debit 10 GF C01 3115 00 $100
Credit 10 WF C01 3115 00 $100

Examples – Added value:
Activity centre 10 WF C01 photocopies documents for 10 GF C01 (in another division) but adds a cover sheet and binds the documents.

The WF C01 photocopying costs accumulate in 10 WF C01 3115 00. The journal to charge GF C01 will be:

Debit 10 GF C01 7775 72 $110
Credit 10 WF C01 7375 72 $110

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4. The use of brackets around figures and minus signs in front of figures:

Operational Income and Expenditure (dissections 1100 to 1999 and 7100 to 7499):

A bracket around a figure, or a minus sign in front of a figure, indicates that the figure is income to the university.

A figure without a bracket around it or no minus sign in front of it indicates that the figure is expenditure to the university.

Balance Sheet Assets (dissections 8100 to 8999) and Liabilities (dissections 9100 to 9999, except carry forwards dissections 9961 and 9962):

A figure without a bracket around it or no minus sign in front of it, indicates the amount is an asset to the university.

A figure with a bracket around it or a minus sign in front of it, indicates the amount is an liability to the university.

Balance Sheet Liabilities - Carry forwards (dissections 9961 and 9962):

A figure in these dissections with a bracket around it or a minus sign in front of it, indicates there ARE (positive) carry forwards available to the activity/department for its use.

A figure in this dissection without a bracket around it or without a minus sign in front of it, indicates there are NO (negative) carry forwards available to the activity/department for its use.

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5. Accounting for Conferences

There are several methods of accounting for conferences, depending on the type and nature of the conference:

a. A conference which is run by the University, is community oriented and is open to members of the public. Any surplus or shortfall belongs to the University.

These conferences should be set up using a K activity e.g. K01.

 

b. A conference which is run by the University and is aimed at university staff, external people, organisations, academics and specialists. Any surplus or shortfall belongs to the University.

These accounts should be set up using a D activity e.g. D01.

 

C. Accounting for a conference which is being run on behalf of another organisation and the surplus or shortfall belongs to that organisation.

All transactions relating to this type of conference must be coded to the balance sheet (dissection 9259 - Agency Clearing Accounts Sundry). This is achieved by requesting FSD to create a conference account e.g. 10.WF.C01.9259.

Amounts coded to the 9259 account must be GST inclusive.

No GST can be claimed by the University on any expenses for the conference, and no GST can be paid on conference income received. If the organisation is registered for GST, then it must account for the GST and any other related taxes itself. The University is obligated to provide a full summary of all transactions to the organisation monthly, so that it may account for its GST collected and paid.

Because the University is acting on behalf of the organisation running the conference, all invoices should be raised using the organisations letterhead or invoice, and must not be processed through Finance1.

To facilitate the payment of conference fees, departments can make use of the University of Otago Credit Card Gateway which provides a mechanism for departments within the University to process credit card payments as a link from their website. It provides a secure mechanism for conference attendees to pay by credit card and ensure compliance with the obligations the University has made to the banks that actually clear the payments. The Gateway is integrated with the University journal accounting system so allows transaction details to appear on departmental accounts. Payments received via the gateway can be credited to the 9259 conference account. Receipts generated must be in the name of the organisation.

If you wish to use this facility, please contact the Cashiers Office:

Ext: 8228

Fax: (03) 479 7658

Email: fsd.cashiers@otago.ac.nz


Cashiers will also need to be informed of the 9259 conference account to be credited.

If a University of Otago department (e.g. Union) supplies goods or services to a 9259 conference, an external AR invoice must be raised by that department (as the conference is regarded as an external conference) via Finance1.

Such invoices should be handled as follows:

When the invoice is received, forward an email request to the FSD Financial Accountant financial.accountant@otago.ac.nz and request an ARADJ journal be prepared for the amount of the AR invoice (GST Inclusive) and attach a copy of the invoice to the email.

The Financial Accountant will credit the debtor (GST Inclusive) and debit the appropriate 9259 conference account (GST Inclusive).

For further information please contact the Financial Accountant:

Ext: 8190

Email: financial.accountant@otago.ac.nz

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6. T Activities

T activities are tagged gifts and bequests (which are not trusts) and are sometimes referred to as "little T's".

T activity balances (which reside in the “Carry Forward – Interest Bearing” dissection 9962) are not required to be maintained permanently, and may be fully expended, provided the original purposes for which the funds were given by the donor are met.

Authorised expenditure should be coded to the appropriate expenditure dissection within the T activity.

The balance brought forward is updated (to the 9962 dissection) in February each year.

For further information please contact the Assistant Accountant:

Ext: 5219

Contact for Further Information

For further information, contact the Financial Accountant, extn 8190 or email brian.cunningham@otago.ac.nz