Accounting Instruction No. 2
Financial Regulations Income And Expenditure D4, D5, D6 & D7 apply to this accounting instruction.
1.1The instructions are intended to provide a basic framework for the guidance of officers. However, since circumstances will vary in different services it is recognised that supplementary instructions will need to be issued to deal with specific situations as required.
1.2The procedures laid down in these instructions are to protect the County Council and staff against the effects of misuse and misallocation of income. Any departures from these procedures are likely to remove or reduce this protection. It is considered essential, therefore, that these procedures are followed. Directors and officers designated as being responsible for staff handling income should ensure that such staff are fully aware of and follow the procedures laid down.
1.3All officers have a duty to ensure that all income due to the County Council is collected and banked promptly and without delay.
1.4All sums collected should be banked intact. No payments should be made from sums collected except with the specific approval of the Director–Strategic Finance.
1.5All sums due to the Council shall be collected and paid over in accordance with the debt policy.Gloucestershire Staffnet - Debt Policy
1.6Under an agreement with HMRC and District Audit the minimum period documents need to be retained for is 3 years plus current year for VAT documents only and 6 years plus current for all others.
2.1A minimum of two staff should be involved in opening post.
2.2In the presence of the other post-opening staff the following should be observed: -
2.2.1all cheques and postal orders should be stamped on the back with the receiving Service’s name (including section where relevant).
2.2.2Any deficiency or surplus against the amount indicated on documents enclosed should be clearly noted and initialled.
2.2.3A record should be made of communications purporting to relate to enclosed remittances not in fact received.
2.2.4The envelope and any other evidence should be retained when it is not possible to identify the person sending a remittance.
2.3The remittances should be paid in, either to the bank or to the BSC Financial Administration (BSC FA)– Cashier’s Section as appropriate, as soon as possible and in any case at least weekly unless specific agreement to the contrary has been received in writing from the Director - Strategic Finance.
If a post-dated cheque is received see point 3.
3.1Receipts and other acknowledgements must only be issued on the official stationery controlled and provided by the BSC FA – Cashier’s Section. Requests for receipts shall be made to the BSC FA Cashier’s Section ext.5899 and the recipient shall acknowledge receipt of them by signing and returning the form supplied.
3.2Exceptions to the use of receipts e.g. - where approved licences, certificates or tickets etc. are issued in lieu, will be subject to the agreement of the Director - Strategic Finance.
3.3The form of all receipts, tickets and other documents issued, as an acknowledgement for payment to the County Council will be subject to the approval of the Director - Strategic Finance.
3.4Receipts and other approved acknowledgements for income received must be kept securely at all times by a designated officer. The issue of supplies of receipts or other acknowledgements to the individual officers receiving the income shall be properly recorded by the designated officer.
3.5Receipts or other agreed acknowledgements shall be issued promptly for all income received.
3.6The method of payment e.g. cheque or cash, must be recorded on the receipt where provision exists and the top copy handed to the payee.
3.7Where it is necessary to cancel a receipt, the word 'cancelled' should be clearly written across the face of each copy and the original retained. Where it is not apparent, the reason for cancellation should be stated.
3.8The last receipt used before banking should be identified and the date and amount banked should be recorded on the copy of the receipt.
4.Credit/Debit Card Receipts
4.1The Council is required to operate strict guidelines on how credit/debit card receipts are processed and receipts made by cards should only be processed after following the guidance provided by the BSC FA Shared Services Manager – Payments & Income. Failure to follow these guidelines will result in the facility being removed from that service area. Details of these compliance requirements will shortly be available on staffnet and will be accessible via a link from this Accounting Instruction.
4.2Any service area wishing to introduce arrangements to receive payments by credit/debit card MUST consult with the BSC FA Shared Services Manager – Payments & Income to ensure any system they introduce complies with the Councils requirements.
4.3Receipts for credit or debit card transactions must be kept in accordance with the Council’s guidelines which are issued by the BSC FA Shared Services Manager – Payments & Income.
The following apply where cash registers are in operation.
5.1Where it is necessary to have more than one machine operator every effort should be made to identify who is operating the machine at any particular time as this enables responsibility for errors to be established. It is appreciated that on older or less sophisticated machines this may not be possible.
5.2A sufficient cash float should be available.
5.3Refunds should not be made through the cash register even if such a facility is available. Any necessary refunds should be made via the Imprest Account, if appropriate, or the normal payments system.
5.4The use of the void facility should be controlled. When it is necessary to void an entry the customer receipt must be retained and the action authorised by the supervisor.
5.5Any necessary manual alterations to the till roll must be agreed with the supervisor and initialled by the operator and the supervisor.
5.5.1The cashing of personal cheques in the income collected is strictly prohibited.
5.6If considerable amounts of cash are accumulated it is advisable to transfer bulk amounts to the safe. Any transfers should be agreed by the cashier and the supervisor.
5.7At the close of business each day all income collected must be transferred to the safe (or other secure container if a safe is not provided), if not being banked. The empty cash till drawer should be left open to prevent damage in the event of a burglary.
5.8The clearing/reconciliation of the machine total and income collected should follow a definite procedure: -
5.9Completed till rolls must be retained, dated and carefully stored for possible audit inspection.
6.Security of Cash
See Accounting Instruction No. 3
7.1Every transfer of monies from one member of staff to another should be acknowledged by the issue of a receipt or, in appropriate cases, by signatures in cash accounting records.
7.2Cash must not be transferred between staff by internal post systems or similar means in circumstances where it is not in the personal custody of an officer who has signed for it after checking the amount handed over.
8.1Payments to the bank must be made at least weekly and more frequently when the insurance limits as laid down in Accounting Instruction No. 3 - Security of Cash, are exceeded. Exceptions to this rule should only be made after specific agreement in writing by the Director - Strategic Finance.
8.2It is important to bank income promptly as it is an HMRC requirement to account for the VAT element at the time it is received at the establishment. Further details can be found in the guide – VAT – A guide to Accounting for VAT on Income”, available on Staffnet A-Z (V forVAT), or from the VAT Officers on (01452) 425882 / 426416.
8.3The bankings must be made using the official paying-in book supplied by the BSC FA – Cashiers Section and it is emphasised that all income received to the date of banking must be deposited intact.
8.4The VAT markers used for income are: “AT” for the standard rate of 20%,“A8” for the standard rate of 15%, “A1” for the standard rate of 17.5%, “A2” for the 5%, rate “A3” for zero rate, “A0” for exempt income and “A4” for income which is non-business/outside the scope of VAT. If you are not sure which VAT rate to use, contact the VAT Officers on (01452) 425882/426416 for advice.
8.5Attention is drawn to the instructions printed on the cover of the paying-in book and the following points which are also relevant: -
8.5.1There is a legal requirement in the Accounts and Audit Regulations 1996 that, in the case of each cheque paid in a reference (such as the receipt number or the name of the debtor) which will connect the cheque with the debt shall be entered on or attached to the paying-in slip. In most cases, therefore, the receipt number should be entered against the amount.
8.5.2Entries in the amount column should be written on the same line as the SAP accounting code of income shown.
8.5.3Figures in the amount column should be entered clearly with the pounds and pence in the appropriate column. Single pence should be prefixed by "0" e.g. 8 pence should be written "08". The £ prefix and p suffix are not required.
8.6IT IS ESSENTIAL that security precautions are followed when taking money to the bank and at any time when staff or the money are in any way at risk. All staff responsible for this duty must study Accounting Instruction No. 3 - Security of Cash.
8.7Cheques should be either banked or taken to Cashiers. They MUST NOT be sent by internal post.
8.8 The Establishment or Service name and a contact name MUST be entered on the back of the cheque before it is paid into a bank or the Cashier’s Section.
9.1Cash payments for small debts i.e. under £25, should be encouraged as it avoids additional administrative work in recording the debt, issuing the debtor account and ensuring that the account is paid. Also other means of collecting low value debts should be explored, e.g. stamps/tokens which the client purchases in advance and presents at the time the service is provided. Another option is to raise one invoice for a longer period rather than regularly raising low value invoices. For further advice on collecting low value debts, contact the BSC FA – Income Team ext.5899.
9.2Wherever possible services should be paid for in advance or at the time of supply. However in certain cases it is inappropriate for the Council to receive cash at the time a service is rendered or goods are supplied by the Council. In these approved circumstances an invoice (the “debtor account”) is sent to the person or organisation (the “debtor”). Invoices which include VAT must be raised within 2 months of the goods being taken or the service being performed. An invoice should only be raised if goods are vatable and the invoice is payable immediately. BSC FAmust be advised immediately payment is received so an adjustment can be made to the code the income has been paid into. For further information, see the guide –VAT – A guide to Accounting for VAT on Incomeavailable on Staffnet A-Z (V for VAT) , or for further information pleasecontact the VAT Officers on (01452) 425882 / 426416.
9.3If the supply of goods or services is to a GCC employee and it is a VATable supply then an invoice must be raised and normal debt recovery procedures must be applied. If it is a salary overpayment an invoice should not be raised (see Accounting Instruction 13) unless they have left GCC employment. In cases where they have left GCC employment, an invoice must be raised. All invoices raised must contain the appropriate VAT marker - see 8.4.
9.4When goods or services are being supplied on credit, the credit worthiness of the person or organisation would be determined in appropriate cases. The Director - Strategic Finance can obtain references from the bank named by the person or organisation if details are supplied in writing and written authorisation has been obtained from the person or organisation.
9.5Invoice request document pads CT119 are supplied by the BSC FA – Cashiers Section ext. 5899 (see Example 1).
9.6These pads must be kept securely by a designated officer and a record maintained of pads issued to individual members of staff.
9.7The top copy should be sent to the clerk responsible for inputting information into the Accounting system.
9.8BSC FA will control and monitor the process of automatic debt recovery as outlined in the debt policyGloucestershire Staffnet - Debt Policy.
-keeping the service, which raised the invoice, informed of progress.
9.8.1The service to which the income is due may become involved in the recovery process at various stages, if for example the debtor queries or disputes the invoice. When the standard recovery procedures have been completed, the client service may wish to:
(i)chase the debtor further themselves;
(ii)ask for the debt to go to the Director of Law and Administration for legal recovery action, (this option may incur additional costs);
(iii) give written authority for the debt to be written off. (See write off procedures in the debt policy).
9.9The payment of debtor accounts should normally be sent direct to the BSC FA – Cashiers Section and this should be encouraged on all occasions.
9.10If payment is inadvertently tendered at an establishment, a receipt should be issued and the debtor account number clearly stated on the receipt. The payment should be banked as soon as possible using the normal paying-in slip provided by the BSC FA – Cashiers Section. It is MOST IMPORTANT that the invoice number is entered in full in the space provided for the general ledger code on the paying-in slip and the amount paid shown separately against this number in the amount column (see Example2). Cheques must not be forwarded to BSC FA – Cashiers Section in the internal post. Cancellations of, or adjustments to, debtor accounts shall be authorised by a senior officer (or their designated substitute) and not the person who originally raised the debtor invoice/s. An official credit note request CT121 should be completed and signed by the initiator and authorised by the senior officer who should be satisfied as to the reason for cancelling or adjusting each account. Once authorised the request document should then be input to SAP to create an on-line credit note. The carbon copy of the CT121 should be kept in the book for future audit review.
9.11Invoices to ex-employees for costs incurred during employment should be raised by the employing service to ensure consistency in debt recovery procedures. For full instructions see the debt policy.
9.12In exceptional circumstances instalments can be agreed with a debtor if no alternative exists. Before offering or agreeing instalments for debts over £500, advice should be sought from the Income (x5899).
10.Post Dated Cheques
Occasionally a post-dated cheque may be received in payment of an outstanding invoice. This should never be suggested as a means of payment, but if one is received it should be sent immediately to the BSC FA - Cashiers Section who will hold it until the date shown on the cheque, when it should be banked as normal. The receiving section should also immediately update the recovery history part of the debtors system, to show a post-dated cheque has been received.
If a receipt is requested, one should not be issued until the date the cheque is valid. The BSC FA - Cashiers Section would issue the receipt.
The receipt of a post-dated cheque does not necessarily preclude further recovery action.
11.Training and Access Control
Contact the SAP Support Team on ext. 5999 for all training and access control needs.
12.Firms in Liquidation
Claims will be sent to the liquidator by BSC FA. Any invoices outstanding for the company in liquidation will be written off. Should a dividend be paid at a later date, this will be coded as cash to the relevant service.