/ Finance

FINANCIAL REGULATIONS

May 2013

I N D E X

Page
1. / General / 1
2. / Financial Administration / 1
3. / Budgeting / 1
4. / Payroll / 2
5. / Purchasing / 2
6. / Payments / 2
7. / Income / 3
8. / General Ledger / 3
9. / External Audit / 3
10. / Internal Audit / 4
11. / Capital Assets / 7
12. / Bank Accounts / 8
13. / Borrowing / 8
14. / Petty Cash Imprest / 8
15. / Physical Stocktake / 8
16. / Fraud / 9
17. / Collaborative Provision / 9
18. / Educational Projects & Partnerships / 10
Appendices
Appendix 1 / - / Finance Department Organisation Chart / 11
Appendix 2 / - / Budget Holders / 12

1. GENERAL

The Regulations set out the rules to be followed in respect of all transactions carried out on behalf of the College (and its subsidiary trading companies, Kingsway Consulting Ltd and Optime Support Limited).

The Regulations will be issued on approval of the Corporation and amendments thereto be similarly treated.

The Principal is the Chief Accounting Officer of the College and the Executive Director of Finance is responsible to the Principal and the Corporation to ensure that the regulations are adhered to and operating correctly.

2. FINANCIAL ADMINISTRATION

With direct responsibility to the Principal and the Corporation, the Executive Director of Finance will lead the financial administration of the College.

The Finance Team is as shown on the finance organisation chart (see Appendix 1).

The Finance Department will be responsible for ensuring that the Financial Regulations and Procedures are adhered to.

3. BUDGETING

The Principal and the Executive Director of Finance will be responsible to the Corporation for preparing and setting the Annual Budget. The Corporation must give approval of the budget before it is implemented.

The Executive Director of Finance will be responsible for ensuring that the preparation, setting, implementation and monitoring of the budget are in accordance with Section 2 of the Financial Procedures Manual, conform with good accounting practice and fully meet the requirements of the Learning and Skills Council and its successor organisations.

To achieve this, the Executive Director of Finance will liaise with the Principal, College Management Team and any other budget holders.

Discussions will be held and recorded to determine the anticipated levels of income from all sources and the funding required to ensure that the provision for students/capital funding and all other known and anticipated expenses are met.

Having considered all these aspects, the budget will be set and devolved down to budget holders who will be informed in writing of their budgets for the ensuing year.

The Management Accountant will prepare monthly Management Accounts. The Executive Director of Finance will present these to the Senior Management Team and circulate them to the Corporation Board. The Executive Director of Finance will prepare and present a narrative commentary upon the Management Accounts for each Corporation Board meeting. Other than budget virements, changes to and updates of the budget will be approved by the Corporation.

4. PAYROLL

The payroll function of the College will by authority of the Corporation be under Contract to East Riding of Yorkshire Council Payroll Section (hereafter called the Bureau). (Contract will be due for review 1st April 2014).

Standing data amendments and transaction data input to the system will be under the direction of the Deputy Principal who has responsibility for Personnel and Payroll and will require his/her authorisation (or delegated to the HR Manager) before being submitted to the Bureau.

The Bureau will be responsible for the gross to net calculations, salary payments via BACS, the completion of all PAYE and NI returns and supplying the College monthly with all the completed payroll data.

The Management Accountant will be responsible for ensuring that regular (monthly) payments of PAYE and NI deductions are made. The Management Accountant will further be responsible for ensuring that all relevant data from the Bureau is reconciled with the input data before it is input onto the General Ledger system monthly to ensure correct accounts are prepared.

The Bureau will be responsible for preparing the annual statutory returns for PAYE/NI which will be forwarded to the Management Accountant for reconciliation and signing before being sent on to HM Revenue & Customs.

5. PURCHASING

The Principal and Executive Director of Finance will be responsible for ensuring that purchase orders, contracts and tender documents are authorised, raised and followed up in accordance with items 3 to 3.7 of the Financial Procedures Manual.

It is the responsibility of each budget holder to ensure that he/she has funds available from their budget allotment before requisitioning goods or services.

It is the responsibility of the Management Accountant to report commitment accounting records. It is the responsibility of Budget Holders to ensure the commitments records are accurate and up-to-date (for example, by authorising purchase orders and invoices without delay and ensuring that any cancelled orders are deleted).

Purchasing goods and contracts for service level agreements of over £50,000 (exclusive of VAT) will require approval of the Corporation Board before an order is issued.

6. PAYMENTS

Payment of accounts will be as per Section 3.6 to 3.8 of the Financial Procedures Manual.

It is the responsibility of the Finance Assistant to prepare schedules of payments for review by the Management Accountant and approval by the Executive Director of Finance. Once approved, payments to purchase ledger creditors will be made via internet banking or by cheque where creditors so request.

The VAT control account records will be reconciled by the Management Accountant on a monthly basis prior to preparation of the quarterly VAT returns.

The Management Accountant has the responsibility of ensuring that accurate VAT records are maintained and that payments are made on time so as not to incur fines or penalties.

The Management Accountant will ensure that all standing data is input correctly into the opening purchase ledger and will include Name, Address and payment terms of the relevant suppliers.

7. INCOME

The College (and its subsidiary trading companies) income will be generated from the sources outlined in Sections 4.2 to 4.13 of the Financial Procedures Manual in addition to funding from the Learning and Skills Council and its successor organisations.

The Heads of the relevant income generating areas will be responsible for ensuring that the laid down procedures for recording and receiving income are met and ensuring that all relevant activities are invoiced on completion of a course or other contract period.

It is the responsibility of the Finance Assistant to comply with the Regulations in respect of invoice and credit note generation, the batching, batch checking and posting of invoices.

It is the responsibility of the Finance Assistant to comply with the Regulations relating to receipt and recording of cash, compliance with credit limits and chasing up outstanding debts.

The Management Accountant will ensure that all procedures are being complied with by the means of regular and spot checks on all systems.

Where a bad debt becomes apparent the Executive Director of Finance is authorised by the Corporation to approve amounts of up to £1,000 to be written off. Larger values require consent of the Corporation Board.

The Management Accountant will ensure that all standing data on customers is input correctly into the opening sales ledger.

8. GENERAL LEDGER

The Management Accountant is responsible for ensuring compliance with Sections 6.1 to 6.3 in the Financial Procedures Manual.

The Management Accountant and Finance Assistant will regularly (weekly and/or monthly) review bank reconciliations, sales and purchase ledger control balances, journal transactions and petty cash balances.

9. EXTERNAL AUDIT (FINANCIAL RECORDS)

As authorised by the Corporation, this work will be carried out by Baker Tilly. They have responsibility for ensuring that all the College's records are kept and maintained in line with good accounting practices and comply with the policies of the Corporation and the terms and conditions laid down by the Learning and Skills Council, its successor organisations and other regulatory bodies.

They will be responsible for reporting on the annual accounts and highlighting any material shortfalls or errors with the accounts or accounting systems. They will report annually to the Corporation and the Learning and Skills Council and its successor organisations on their findings following the audit. They will, by means of a Management Letter, report on items they consider to be non compliant or where systems may be improved.

They will meet directly with the Corporation where they consider the need arises to advise them on matters of greater concern.

There will be liaison with the Internal Auditors to agree plans of work and to avoid duplication of effort.

The external auditors will have the right of access to all the records of the College in pursuance of their duties.

The person leading the External Audit Service is accountable to the Principal and the Corporation through the Audit Committee for the performance of the service. The External Auditors will report to the Corporation via the Audit Committee on an annual basis their findings and recommendations in the form of a Management Letter and other reports deemed appropriate.

10. INTERNAL AUDIT

As authorised by the Corporation, RSM Tenon have been contracted to undertake this work.

(i) The role of Internal Audit is to provide management with an objective assessment of whether systems and controls are working properly. It is a key part of a college's internal control system because it measures and evaluates the adequacy and effectiveness of other controls so that:

(a) the Corporation and senior management can know the extent to which they can rely on the whole control system; and

(b) individual managers can know how reliable the systems and controls for which they are responsible for.

Scope

(ii) The work of the Internal Audit Service shall embrace the whole internal control system of the College including all its activities, funded from whatever source. The Internal Audit Service will consider the adequacy of systems and controls necessary to secure propriety, economy, efficiency and effectiveness in all areas. It will seek to confirm that management have taken the necessary steps to achieve these objectives.

(iii) It is not within the remit of the Internal Audit Service to question the appropriateness of policy decisions. However, the Internal Audit Service is required to examine the management arrangements of the College by which such decisions are made, monitored and reviewed.

The Internal Audit Service may also conduct any special reviews requested by the Corporation, Audit Committee or Principal provided such reviews do not compromise their objectivity, independence or achievement of their plan to audit the internal control system.

Responsibilities

(iv) The person leading the Internal Audit Service is required to give an annual opinion to the Corporation, through the Audit Committee, on the adequacy and effectiveness of the College's internal control system and the extent to which they can rely on it.

(v) In order to provide the required opinion, the Internal Audit Service will undertake a programme of work over a cycle authorised by the Corporation on the advice of the Audit Committee, to achieve the following objectives:

(a) to review and appraise the soundness, adequacy and application of accounting, financial and other controls;

(b) to ascertain the extent to which systems of control ensure compliance with established policies and procedures;

(c) to ascertain the extent to which the assets and interests entrusted to or funded by the College are properly controlled and safeguarded from losses of all kinds;

(d) to ascertain that accounting and other information is reliable as a basis for the production of accounts and other returns;

(e) to ascertain the integrity and reliability of financial and other information provided to management including that used in decision making; and

(f) to ascertain that systems of control are laid down and operate to achieve the most economic, efficient and effective use of resources.

Standards and Approach

(vi) The Internal Audit Service's work shall be performed in accordance with the requirements of the Learning and Skills Council and its successor organisations, standards for internal audit promulgated by HM Treasury, and have regard to the Government Internal Audit Manual and the Auditing Guideline 'Guidance for Internal Auditors'.

(vii) In achieving its objectives the Internal Audit Service should:

(a) identify all systems and controls on which management proposes to rely and plan to review them over a cycle;

(b) evaluate such systems and controls, identify inappropriate or inadequate controls, and recommend improvements in procedures or practices;

(c) ascertain that systems and controls have been established and are working to achieve the most economic, efficient and effective use of resources;

(d) draw attention to any apparently uneconomical or otherwise unsatisfactory results flowing from management's decisions, practices or policies; and

(e) liaise with external auditors, and with the Learning and Skills Council (and its successor organisations) Audit Service.

Independence

(viii) The Internal Audit Service has no executive role, nor does it have any responsibility for the development, implementation or operation of systems. It may provide advice, however, on control and related matters, subject to the need to maintain objectivity and to resource constraints.

(ix) The Audit Committee will advise the Corporation on all matters concerning internal control. Within the College, responsibility for internal control rests fully with management who should ensure that appropriate and adequate arrangements exist without reliance on the College's Internal Audit Service. In order to preserve the objectivity and impartiality of the Internal Auditor's professional judgement, responsibility for implementing audit recommendations rests with management.

Access

(x) The Internal Audit Service has rights of access to all the College's documents, records, information and assets which it considers necessary to fulfil its responsibilities.

Reporting

(xi) The person leading the Internal Audit Service has a direct right of access to the Chairman of the Audit Committee and the Principal. He/she should submit an audit needs assessment, a strategic audit plan, an annual audit plan and an annual report to the Corporation for approval following consultation with the Executive Director of Finance (or equivalent), the Principal and consideration by the Audit Committee.