Accounting Procedures and Rules

Purpose

This Procedure sets out the expected process pertaining to the capturing of specific accounting principles.

Organisational Scope

This Procedure applies to users of Finance One, in particular, those whose access involves posting to the ledgers.

Content

1. Internal Transactions – Use of the 7000 Dissection Range

1. 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 dissections are in balance (i.e., credits = debits). There can be no one-sided 7000 services transactions, apart from (and this is the only exception) internal charging to fixed assets, using the 7399 dissection.
2. Internal Income (credit) is a dissection within the range 7100 to 7499.
3. Internal Expenditure (debit) is a dissection within the range 7500 to 7899.
4. The difference between the two credit and debit account codes must always be 400, for example:
   1. DR to dissection 7775 (Internal General Paid) must have a corresponding
      CR to dissection 7375 (Internal General Recovery).
   2. 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 Debtor invoices, Creditor Invoices and P Card transactions.

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

1. When using the internal transaction dissections (7000 range) you must use the sub dissection 70 (transactions within your Cost Centre), 71 (transactions within your division), or 72 (transactions between your division and another). No other sub dissections should be used.

3.Internal Recharging of Expenditure

1. 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, the sub dissection 70 (transactions within your Cost Centre), 71 (transactions within your division), or 72 (transactions between your division and another) is also required to complete the transaction.
2. Marking up is not adding value.
   1. Example – 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
   2. Example – 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

4.Internal Recharging of Expenditure

1. Operational Income and Expenditure (dissections 1100 to 7999):
   1. A bracket around a figure, or a minus sign in front of a figure, indicates that the figure is income to the University.
   2. A figure without a bracket around it or no minus sign in front of it indicates that the figure is expenditure to the University.
2. Balance Sheet Assets (dissections 8100 to 8999) and Liabilities (dissections 9100 to 9899):
   1. A figure without a bracket around it or not minus sign in front of it, indicates the amount is an asset to the University.
   2. A figure with a bracket around it or a minus sign in front of it, indicates the amount is a liability to the University.
3. Balance Sheet Equity (dissections 9900 to 9999):
   1. 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 Centre/department for its use.
   2. A figure in these dissections 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 Centre/department for its use.

5.Accounting for Conference

1. There are several methods of accounting for conferences, depending on the type and nature of the conference:
   1. 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 accounts should be set up using a K activity (e.g., K01).
   2. 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).
   3. 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 the Financial Accountant to create a conference account.
   • Amounts coded to the 9259 account must be GST inclusive.
   • The University may not claim GST on any expenses for the conference and should not declare GST on conference income received. If the other 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 fully summary of all transactions to the organisation monthly, so that it may appropriately account for its GST claims and declarations.
   • Because the University is acting on behalf of the organisation running the conference, all invoices should be raised using the organisation's letterhead, and must not be processed through Finance One.
   • 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 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.
   • Cashiers will also need to be informed of the 9259 conference account to be credited.
   • If you wish to use this facility, please contact:
     The Cashiers Office
     Tel +64 3 479 8228
     Email cashiers@otago.ac.nz
   • If a University of Otago department (e.g. University Union) supplies goods or services to a 9259 conference, the department should request, via current processes, that an external AR invoice be raised via Finance One and income should be coded to an external income code (as the conference is regarded as an external conference). The department should further request that Revenue Management create an ARADJ journal for the amount of the AR invoice ( GST inclusive). The adjustment will credit the debtor (GST inclusive) and debit the appropriate 9259 conference account (GST inclusive). For further information, contact the Revenue Management Accounts Receivable team on receivables@otago.ac.nz
   • The final amount owed by the University to the other organisation is paid through Accounts Payable by way of a “Non-Staff Reimbursement” payment (contact: accounts@otago.ac.nz for further guidance on this process of payment). GST should be # N/A . This AP payment should debit the 9259 account which should clear the balance.

6.T Activities (little T’s)

1. T activities are tagged gifts and bequests, which are not Trusts, and are generally known as “little T’s”.
2. 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.
3. Authorised expenditure should be coded to the appropriate expenditure dissection within the T activity.
4. The balance brough forward is updated (to the 9962 dissection) in period 1 and occurs in February each year.
5. For further information, please contact:
   The Financial Accountant Email financial.accountant@otago.ac.nz

Contact for further information

For further information, contact:

The Financial Accountant
Email financial.accountant@otago.ac.nz