Financial Management Systems Procedure

Purpose

These procedures provide an introduction to the financial systems of the University of Otago. It covers macro level policy and commentary on legislation and external reporting requirements of the University including output reporting.

Definitions

Content

Requirements of Legislation

For Policy and Procedures

Under the Education Act 1989 (as amended by the Education Amendment Act 1990), the University is defined as a body corporate (s166) with the Council as the governing authority (s165). Power is vested in the Council but any of its functions or powers (except the power to appoint a Chief Executive) may be delegated in accordance with s222 to the Chief Executive, who in turn may delegate to members of staff.

For Funding

The Education Act 1989, under Section 199, provides that a general grant shall be paid based on the use of the equivalent full-time student formula. The grant is given upon the approval of a Statement of Objectives, which sets out the University's objectives for the ensuing three years. These objectives must be consistent with the University Charter (Section 199(3)). The Act allows Councils discretion in applying the grant to achieve the purposes and goals of the Charter.

The Ministry of Education is responsible for allocating the University Grant. The Ministry is subject to the Public Finance Act under which Vote Education is appropriated and distributed. The appropriation to Vote Education is based on output classes and the Ministry must in turn ensure that its expenditure is channelled into these output classes. This along with the University's own requirements to report as a crown entity (refer below) result in the University reporting by outputs such as undergraduate teaching, postgraduate teaching and research etc.

For Reporting

The Education Act (s 203) deems all tertiary institutions to be crown entitiesin terms of the Public Finance Act 1989 (PFA). Section 41 of the PFA requires that Crown Entities prepare financial statements. The form of these statements must comply with Generally Accepted Accounting Practice (GAAP) which in turn is defined in the Financial Reporting Act 1989. GAAP is defined by reference to approved accounting standards and authoritative support within the New Zealand accounting profession.

The Annual Report includes:

• financial statements including a Statement of Financial Performance, Statement of Financial Position, Statement of Cash Flows and Statement of Accounting Policies
• non-financial statements (called a Statement of Service Performance) reporting on the achievement of the targets outlined in the Statement of Objectives approved by Council and presented to the Ministry of Education.

The annual report is subject to audit and audited accounts must be available no later than 4 months after the end of the financial year (31 December).

University Outputs

Section 203 of the Education Act requires that a Statement of Objectives is prepared in accordance with the Part V of the Public Finance Act. Section 41(2)d requires the University to produce a Statement of Objectives specifying the outputs to be produced. The Act defines outputs as "the goods or services that are produced."

The Statement of Objectives is produced annually in consultation with interested parties and covers three consecutive years starting at the year for which it is produced. It must be consistent with the University Charter and its acceptance by the Minister of Education is required prior to the determination of the University's annual grant.

The University defines its outputs as:

Teaching & Learning including:

• Campus Based Teaching & Learning
• Distance Teaching & Learning

Research including:

• Postgraduate Thesis Supervision
• Teaching Related Research
• Project Based Research

Community Services including:

• Community Continuing Education
• Community Cultural Events Community Science Events

Related policies, procedures and forms

• Resource Allocation Policy
• Financial Delegation Policy
• Financial Monitoring and Control Policy
• Accountability, Internal Control and Audit Procedures

Contact for further information

For further information, contact:

Financial Controller
Email financial.controller@otago.ac.nz
Tel +64 3 470 4638