General Financial Guidelines
in support of the
Financial Policy
Approved by Institutional Management on
19 June 2013 and 21 August 2013
Table of Contents
General Guidelines in support of the Financial Policy
Background and introduction ................................................................................................. 3
Document objectives ............................................................................................................... 3
1
Financial reporting and system management .................................................... 3
1.1
Recording of financial transactions with external parties ................................................3
1.2
Chart of accounts and classification ..................................................................................3
1.3
Retention of financial records .............................................................................................6
1.4
Internal transfers and journals ............................................................................................6
1.5
Departmental internal loans/overdrafts ..............................................................................6
1.6
Month-end procedures .........................................................................................................6
1.7
Balance sheet account reconciliations ..............................................................................6
1.8
Financial reports ...................................................................................................................6
1.9
Financial data integrity .........................................................................................................7
1.10
Confidentiality of financial information ..............................................................................7
1.11
Opening and closing of activities and accounts ...............................................................7
1.12
Accounting for contingencies .............................................................................................7
1.13
Accounting for deferred revenue ........................................................................................7
1.14
Accounting for accruals – revenue and payments ...........................................................7
1.15
NWU business activities recorded in unofficial financial systems .................................8
1.16
Interest on internal account balances ................................................................................8
1.17
VAT transactions ..................................................................................................................8
2
Budgets ................................................................................................................. 8
2.1
Budget operations ................................................................................................................8
2.2
Budget process .....................................................................................................................8
2.3
Budget adjustments and changes ......................................................................................9
3
Revenue and receivables ..................................................................................... 9
3.1
Student fees and student debtors .......................................................................................9
3.2
Sundry Income and Sundry Debtors ............................................................................... 10
3.3
Contract research and contract work .............................................................................. 11
3.4
Sponsorships and donations ........................................................................................... 11
3.5
Cash sales .......................................................................................................................... 11
3.6
Credit card sales ................................................................................................................ 12
4
Inventory ............................................................................................................. 12
5
PROCUREMENT, PAYMENTS AND ACCOUNTS PAYABLE ............................ 12
5.1
Procurement of goods and services ................................................................................ 12
5.2
Quotations/Tenders ........................................................................................................... 13
5.3
Payments for goods and services ................................................................................... 14
5.4
Conflict of Interest ............................................................................................................. 15
General Guidelines in support of the Financial Policy
1
5.5
Domestic and international travel .................................................................................... 15
5.6
Corporate credit card ........................................................................................................ 15
5.7
Staff expense advances .................................................................................................... 15
5.8
Non-salary-related payments to employees ................................................................... 16
5.9
Employee gifts ................................................................................................................... 16
5.10
Gifts from suppliers and vendors .................................................................................... 16
5.11
Personnel Parting Gifts and Functions ........................................................................... 16
5.12
Year-end Functions ........................................................................................................... 16
5.13
Business meals and entertainment ................................................................................. 16
5.14
Donations/sponsorships to external parties................................................................... 17
5.15
Bursaries – external and internal ..................................................................................... 17
5.16
Membership fees ................................................................................................................ 17
5.17
Telephone use .................................................................................................................... 17
5.18
Cell Phones and 3G cards................................................................................................. 17
5.19
Stationery expense ............................................................................................................ 18
5.20
Remuneration and payments to staff members ............................................................. 18
5.21
Income stream 3 activities, projects and project allowances ....................................... 18
6
Assets.................................................................................................................. 18
6.1
Acquisition of assets ......................................................................................................... 18
6.2
Transfer and disposal of assets ....................................................................................... 19
6.3
Recording of property ....................................................................................................... 20
6.4
Physical verification and safeguarding of University assets ........................................ 20
6.5
Depreciation of assets ....................................................................................................... 20
7
Insurance ............................................................................................................ 20
7.1
Insurance Portfolio ............................................................................................................ 20
7.2
Insurance Claims ............................................................................................................... 20
8
Cash handling ..................................................................................................... 21
8.1
Cash collections and handling ......................................................................................... 21
8.2
Petty cash funds ................................................................................................................ 21
9
Bank accounts .................................................................................................... 21
9.1
Authorisation to open/close bank accounts ................................................................... 21
9.2
Authorised signatory ......................................................................................................... 22
9.3
Foreign bank accounts ...................................................................................................... 22
9.4
Deposits into the University's bank account .................................................................. 22
9.5
Reconciliation of bank accounts ...................................................................................... 22
9.6
Unrecognised deposits ..................................................................................................... 22
10
Audits .................................................................................................................. 22
Paragraphs 5.11 and 6.1.6. amended by Institutional Management on 19 February 2014.
General Guidelines in support of the Financial Policy
2
General Guidelines in support of the Financial Policy
Background and introduction
These general financial guidelines apply to all financial activities and transactions at all operational levels
and sections of the University, and must be read in conjunction with all other relevant policies and
procedures.
It is the responsibility of all employees to adhere to this general financial guidelines document. Exceptions
and transgressions must be approved by the appropriate Director: Finance of the specific financial
functionality with a written motivation to support this approval. This guideline is supported by the relevant
legislation applicable to the University as required by the SA government and the SA Revenue Services with
regard to financial activities, transactions and taxes.
Document objectives

Serve as a guide to help employees act in the best financial interest of the University;

Assist managers and employees to assume responsibility and accountability for managing the activities
of the University;

Assist in ensuring the integrity, completeness and accuracy of financial data recorded in the financial
systems of the University;

Assist in establishing a sound control environment for employees and in limiting the risks involved in
performing their financial duties;

Promote compliance with relevant laws, regulations, and accounting and reporting standards; and

Promote consistent financial practices, operational efficiencies and best practice across the University.
1
Financial reporting and system management
1.1
Recording of financial transactions with external parties
All financial transactions with external parties of the NWU must be recorded daily in the financial records of
the NWU upon occurrence, which includes the following:
1.1.1.
Invoicing of students for registration and tuition fees, and all other applicable charges.
1.1.2.
Invoicing of external parties for services rendered, or any other receivables agreement.
1.1.3.
Receipt of money, either by direct transfer into a NWU bank account, or payment received by an
NWU cashier.
1.1.4.
Purchase orders for goods and services to the NWU placed at external suppliers.
1.1.5.
Payments made for either direct expenses or to creditors as a result of the receipt of goods and
services following the issuing of a purchase order.
1.2
Chart of accounts and classification

Chart of Accounts (COA) is the set of tables that defines the coding structures within KFS.

The main elements of the Chart of Accounts consist of:
o
Chart = Campus
General Guidelines in support of the Financial Policy
3

o
Organization = OU code
o
Account = Activity
o
Object = Account
Each of the above mentioned elements play a role in reporting, workflow or the capturing of
transactions.

A transaction needs three of the above mentioned elements (segments) to be valid and to proceed in
the process: Chart.Account.Object written as follows P.1X12345.2114
1.2.1.
Chart

Accounts and Object Codes are associated with a chart.

The Chart represents the different campuses (a one character code).
1.2.2.
Chart Code
Chart Description
I
Institutional Office
M
Mafikeng Campus
P
Potchefstroom Campus
V
Vaal Triangle Campus
N
North-West University
Organization

The Organization defines the entities representing units at many different levels within the institution.

The Organization represents the Organization Unit (OU) - a unique four-digit code created and
assigned by HR. Organization in KFS will be the same as in HR.
1.2.3.

Account
An account is used to identify a pool of funds assigned to a specific organizational entity for a
specific purpose.

An account has many different attributes associated with it that determine how the KFS allows you to
use that account in transactions. It also has attributes associated with it for reporting purposes.

The account number is a seven-digit code.

An account is unique and is associated with an Organization.
1.2.4.
Account Type Code:
o
The Account Type Code classifies/categorizes the accounts by their nature and according to
certain criteria e.g. 1) conducting research; 2) having a contract.
o
The Account Type Code represents classes of accounts e.g. “S” for all NRF research
accounts.
o
The Account Type Code forms part of the account.
Examples of Account Type Code/Name:
General Guidelines in support of the Financial Policy
4
1.2.5.
Account Type
Code
Account Type Name
Account Type Code Explanation/Criteria
A
OFFICE ADMINISTRATION (SOF 1)
Old G000001 activity. Account where general
office expenses are booked including the salary
expenses of the department.
D
SUBSIDISED RESEARCH
Research that is supported by subsidy/tuition fees
X
EXTERNAL
All third stream income activities which are not
associated with research.
Source of Funds
o
The Source of Funds code indicates the origin of the income on a specific account. It is the
first character of the Account Code.
Values for Source of Funds codes are:
Source of Funds
Code
1.2.6.
Source of Funds Description
1
SUBSIDY/TUITION FEES/ITEA/IREA
2
RESEARCH COUNCILS E.G. NRF, MRC, DST, WRC ETC.
3
EXTERNAL FUNDS - INDUSTRY
4
INVESTMENT INCOME
5
FOREIGN FUNDS
Fund Group Code
o
Fund group defines the control/discretion (“authority”) of the council over the funds in a
specific account.
o
The Department of Higher Education and Training requires fund accounting reports. To
comply with that every account must be assigned to a specific fund.
Examples for Fund Group are:
Fund Group Code
Fund Group Name
Fund Group Explanation
UN
UNRESTRICTED
Funds that may be used for any purpose the council deems
necessary.
DS
DESIGNATED
Funds for which the council stipulates a specific use, thereby
“designating” that funds for that purpose only.
RC
RESTRICTED –
CONTRACT
Funds that are received by the Institution for a specific purpose
and must be used only for that purpose. A contract is involved
which stipulates the benefits deriving from the activity undertaken
will accrue the third party.
RE
RESTRICTED –
DONATIONS
Funds that are received via a donation for a specific purpose and
must be used only for that purpose. There is normally no clause
requiring the institution to accrue any benefits deriving from the
activity to the donor.
PP
FIXED ASSETS FUND
Funds invested in fixed properties, moveable property,
construction and movable assets in progress.
1.2.7.

Object Code
Object Codes represent all income, expense, asset, liability and fund balance classifications that are
assigned to transactions and help identify the nature of the transaction. It is a four-digit code.
General Guidelines in support of the Financial Policy
5

Object Codes are specific to a chart and a fiscal year and contain several attributes throughout KFS
for financial reporting at the detail and consolidated levels.
1.3
Retention of financial records
Financial records must be maintained in compliance with regulatory requirements and University policy.
Please refer to the File plan and Disposal Schedule for the retention of records available on Intranet.
1.4
1.4.1.
Internal transfers and journals
Any internal transfer of funds (Service Billing) as well as journals must be supported by proper
electronically scanned documentation. The department whose funds are debited must authorise the
transaction in terms of the approved Schedule of Authorisation Levels available on the intranet. A
motivation must be given why such a Service Billing (transfer) is appropriate.
1.4.2.
Journals must be limited as far as possible, and the use of the Service Billing electronic document
must be used for all internal transactions.
1.4.3.
If recurring journals take place on a regular basis, a system must be put in place to ensure
completeness and accuracy of transactions.
1.4.4.
Internal services rendered between divisions will be settled with a
Service Billing electronic
document. No official invoice must be generated on the debtors system. No VAT is charged among
internal divisions for services rendered.
1.5
1.5.1.
Departmental internal loans/overdrafts
The allocation of additional funds on a budget is not allowed except in extreme circumstances, where
the Executive Director: Finance and Facilities or his authorised delegate has to approve it.
1.5.2.
Overspending on accounts must be managed by the responsible director or manager of the relevant
department/division/unit, who must ensure that the overspend is corrected.
1.6
Month-end procedures
Managers are responsible to review their financial transactions on a monthly basis to ensure the accuracy
and completeness of financial information and allocations. Any deviations should be corrected and reported
to Financial Systems and Reporting where appropriate, within 5 working days after the previous month end,
before the official month-end procedures on the Financial System are performed.
1.7
Balance sheet account reconciliations
Monthly reconciliations for all balance sheet accounts must be done and fully documented, reviewed and
approved by the responsible manager of the department/division/unit.
1.8
Financial reports
1.8.1.
The financial year-end of the University is on 31 December.
1.8.2.
Annual financial statements of the University must be prepared, as required, using International
Financial Reporting Standards.
General Guidelines in support of the Financial Policy
6
1.8.3.
Audited financial statements must be published annually.
1.8.4.
Financial management information is available electronically per cost centre/activity to all
management staff and can be extracted from the official financial records of the University.
1.9
1.9.1.
Financial data integrity
Each department/division/unit must establish and implement procedures to ensure financial data
integrity.
1.9.2.
All new managers as well as financial and administrative personnel must receive financial system
training supplied by the Finance Department. Every director/dean/manager must ensure that the staff
member(s) responsible for their finances receive training as well as the associated manual(s) on the
financial system of the University.
1.9.3.
The allocation of a transaction should represent its true nature. A complete list of all types of
possible allocations (objects) is available on request from Financial Reporting and Systems to
ensure proper allocation.
1.10 Confidentiality of financial information
All financial information of the University is classified as confidential. Financial figures disclosed to external
parties must be authorised by a director or higher and should be in terms of all legislation, e.g Protection of
Personal Information (POPI) Act.
1.11 Opening and closing of accounts and objects
All accounts and objects in the official financial system of the University must be opened and closed by the
appropriate Director: Finance or his/her delegated person at the request and with the authorisation of a
relevant responsible person for that specific account.
1.12 Accounting for contingencies
Contingencies are potential liabilities not recorded, which the University may have to account for or disclose
in its financial statements. If a department/division/unit is aware of contingencies at year-end they must be
reported to Financial Reporting and Systems Management.
1.13 Accounting for deferred revenue
Deferred revenue consists of funds that are received for goods and/or services which have not yet been
provided.
Since it is generally expected that the University will perform or deliver these goods and/or
services within the next accounting period, these advances should be recorded as current liabilities on the
University’s balance sheet. If a department/division/unit is aware of deferred revenue not deferred at yearend they must report it to Financial Reporting and Systems Management.
1.14 Accounting for accruals – revenue and payments
Receivables and payables (income and expenditure) are accrued as part of year-end procedures.
As
various services are rendered or goods are received before 31 December, but the effects thereof have not
yet been recorded in the financial records of the University, a provision must be made to report the
transaction in the correct accounting period. Where a department/division/unit is aware of accruals not
General Guidelines in support of the Financial Policy
7
recorded in the financial system at year-end, it must be reported to Financial Reporting and Systems
Management.
1.15 NWU business activities recorded in unofficial financial systems
1.15.1. The use and implementation of all unofficial financial systems must be approved in advance by the
Director: Financial Reporting and Systems Management.
1.15.2. Account managers must ensure that the results of University-related business activities recorded in
unofficial financial systems be journalised into the official University financial system as part of their
month-end procedure. All University-related transactions must be represented in the monthly
reporting.
1.16 Interest on internal account balances
The accumulated funds of Income Stream 3 activities will bear interest monthly at an interest rate
equal to 50% of the bank’s prime rate. Overspent activities will have to pay interest monthly at an
interest rate equal to the prime rate.
1.17 VAT transactions
1.17.1. When opening a new account, the VAT category will be determined by Tax Services.
Income
objects specifically related to VAT transactions can only be changed / added in proper consultation
with Tax Services.
1.17.2. VAT is automatically calculated by the financial system.
1.17.3. A Tax Manual with regard to the handling of VAT in the university environment is available on the
intranet or can be requested from Tax Services.
2
Budgets
2.1
Budget operations
2.1.1.
All income streams should be properly budgeted for on an annual basis.
2.1.2.
The budget must be structured in accordance with the organisational and financial reporting structure
of the University, and should distinguish between all income streams for the main categories of
income, operating expenses, staff expenditure and capital purchases.
2.1.3.
The budget should also indicate spending against reserves carried forward from previous years per
income stream and per category (operating expenses, staff expenditure and capital purchases).
2.1.4.
The budgetary department/division/unit must incorporate in its budget the general assumptions and
objectives set by the Institutional Budget Committee (appointed by the Institutional Management
Committee under the chairmanship of the Executive Director: Finance and Facilities), as well as the
strategic objectives of the University (according to the Institutional Plan). They must also take into
account faculty/school/departmental needs and plans.
2.2
2.2.1.
Budget process
A financial plan of the University (budget) for the next year must be approved annually by the
University Council ("Council") at the recommendation of the Finance Committee.
General Guidelines in support of the Financial Policy
8
2.2.2.
Each department/division/unit is responsible for compiling its own budget.
2.2.3.
The Executive Director: Finance and Facilities is responsible for coordinating and consolidating the
budgets into a single University budget, and for obtaining approval from Council of the next year’s
budget.
2.3
Budget adjustments and changes
2.3.1.
Approved budgets must be strictly adhered to (overspending is not permitted).
2.3.2.
When the budget allocations per budgetary department/division/unit have been passed to the
financial system, they may not be changed. Any adjustment to allocations can only be effected by
the Management Accounting Services Department upon approval of the Chief Director: Finance.
2.3.3.
No adjustments or changes may be made to the bottom line of the budget except with the prior
approval of the Executive Director: Finance and Facilities.
2.3.4.
General control and checking of budget variances are to be executed on all the income,
remuneration expense, capital expense and operational expense levels.
2.3.5.
Each department/division/unit may internally reallocate their approved budget allocations (with the
necessary approval of their management), with the following exceptions:
3

Approved operating costs may not be re-allocated to staff costs.

Funds approved for capital costs may not be reallocated to operating expenses or staff costs.

Reallocations across different sources of funds are not allowed.
Revenue and receivables
3.1
3.1.1.
Student fees and student debtors
No student will be allowed to register for academic purposes unless all outstanding amounts for the
previous year have been paid in full and the required registration fee has been paid prior to or during
the registration period.
3.1.2.
If a student’s studies are financed by means of a bursary or loan, written proof thereof must be
submitted at registration to obtain the necessary extension for payment.
3.1.3.
When first-year students apply for admission to a residence, an application fee as well as an amount
to confirm a reserved place in a residence will be payable.
3.1.4.
Students will only be allowed to move into University residences if their boarding deposits have been
paid.
3.1.5.
The balance of tuition and boarding fees are payable in equal monthly instalments as specified on
the monthly statements, within 30 days from the date of the account, with a final payment to be
settled in full by 31 July. Interest will be charged on overdue accounts.
3.1.6.
All other fees levied against the account of a student are to be paid within 30 days.
3.1.7.
Should the fees not be paid by the predetermined dates in the paragraphs above, the University may
resort to one or more of the following measures:
 Deactivation of the University identity card;
General Guidelines in support of the Financial Policy
9
 refusal of class admission;
 refusal of admission to the examination;
 non-issuing of examination results, diploma or degree certificate;
 refusal of registration as student;
 refusal of participation in any graduation ceremony;
 exclusion from a University residence; and
 handing over to the University lawyers' collection agencies for purposes of collecting the
debt.
3.1.8.
Student debt that has not been collected by March of the following year must be transfered to the
Shared Services department for further action. Authority for this transfer lies with the Director:
Finance at each campus.
3.1.9.
North-West University staff with permanent and fixed-term appointments with full benefits are entitled
to a discount with regard to tuition fees on the terms contained in the University’s Conditions of
Employment. Temporary staff and fixed-term appointments without benefits are excluded.
3.1.10. If a credit balance arises on a student account, the student has to apply in the prescribed manner for
payment of the credit amount per electronic funds transfer. No credit will be paid out in cash. All
payments of credit balances to students are to be checked and approved by the appropriate campus
Director: Finance or approved delegate.
3.2
3.2.1.
Sundry Income and Sundry Debtors
In the generation of IS3 (income stream 3) income, no goods must be supplied or service rendered
by an employee of the NWU without at least one of the following:
(a) a finalised and duly authorised agreement with the receiver of the goods or service, clearly
stipulating the payment terms and conditions.
(b) an official order from the customer clearly stipulating the details of the goods or services
required and the amount.
3.2.2.
An invoice recording the amount due must be entered into the official financial system of the NWU as
soon as the compensation for the delivery of the goods of services by the NWU becomes due. Only
invoices as generated by the official financial system of the NWU are acceptable, and the manual
generation of invoices is strictly forbidden.
3.2.3.
Credit notes against sundry debtor accounts must be supported by proper motivation and
documentation, must be approved by the head of the appropriate operating unit and can only be
processed by the appropriate campus financial department.
3.2.4.
.
3.2.5.
No staff member may contractually bind the University to him / herself, or a business in which he /
she or a family member has an interest, to perform any work for the University against payment,
unless the requirements of the Policy on Conflicts of Interest have been met.
General Guidelines in support of the Financial Policy
10
3.2.6.
Outstanding debtors must be evaluated and followed up monthly. Irrecoverable debt must be written
off with the approval of the relevant Director: Finance. If appropriate, legal action must be instituted
against the irrecoverable debtors.
3.2.7.
At year-end the balances of all debtor accounts are verified with account holders as part of the yearend procedure. It must be coordinated with Internal Audit before accounts are mailed at the end of
the financial year.
3.3
Contract research and contract work
Contract work refers to routine analyses and tests, consultation services, etc. and includes research
partnerships with industry, the state or other private organisations. The following applies:
3.3.1.
These services must be administered in terms of paragraph 3.2. above.
3.3.2.
All contracts must adhere to the requirements as specified in the Schedule of Authorisation Levels
as approved by Council.
3.3.3.
The responsibility to manage these contracts in the academic environment is vested in the relevant
academic director.
3.3.4.
The nature of the contract work may not clash with the policy, guidelines, procedures, interests and
ethical standards of the University.
3.3.5.
No staff member may contractually bind the University to him- / herself, or a business in which he /
she or a family member has an interest, to perform any work for the University against payment,
unless the requirements of the Policy on Conflicts of Interest have been met.
3.3.6.
3.4
3.4.1.
All income must be paid into an official bank account of the University.
Sponsorships and donations
The level of acceptance of donations and sponsorships are regulated by the Schedule of
Authorisation Levels as approved by Council
3.4.2.
Sponsorships and donations must be recognised as income against the appropriate object code for
this specific type of income when the money is actually received.
3.4.3.
A tax certificate will be issued by the department assigned with this responsibility in recognition of the
income at the request of the fund provider. All requirements as stipulated in section 18.A.4 of the
Income Tax Act must be complied with before a tax exemption certificate is issued.
3.4.4.
Donations of property and assets exceeding R3 000 (excluding money) must also be entered in the
fixed assets register of the University at fair market value and be included in the insurance portfolio
of the University(Also refer to Paragraph 6.1.2).
3.5
3.5.1.
Cash sales
In cases where cash registers or other point-of-sale devices are used for the recording of cash sales,
these transactions must be recorded in the official financial records of the NWU by the end of each
month. (Also refer to Paragraph 8.)
General Guidelines in support of the Financial Policy
11
3.6
Credit card sales
3.6.1.
Departments/divisions/units that wish to start accepting credit card transactions must first coordinate
with Financial Administration (Institutional) regarding banking and other procedures.
3.6.2.
All contracts regarding the rental and use of credit card facilities must be recorded in a central
reference register at Financial Administration (Institutional).
4
Inventory
4.1
All consumables or trade goods used by the NWU on a regular basis that are obtained in bulk must
be controlled by use of the inventory system within the financial system of the NWU.
4.2
Inventory is valued at the lower of cost or net realisable value. The cost of inventory is determined by
the following methods:




Central warehouse, trade, cafeteria and residence inventories are stated at the average
purchase price.
Fuel inventories are calculated according to the FIFO method.
Printed publications are stated at the weighted average purchase price.
Veterinary health is stated at the weighted average purchase price.
4.3
Reconciliation between the inventory figure on the financial system, the subsystem (where relevant)
and physical inventory must be done at least quarterly at the end of March, June, September and
December each year, but preferably monthly.
4.4
Any write-offs or adjustments exceeding R5 000 to bring the physical count in line with the financial r
ecords of the NWU must be approved by the appropriate Director: Finance.
4.5
Departments must identify slower-moving items in their inventory and consider reducing the supply
of these items by such methods as:



5
Return to the original vendor.
Discounted pricing to promote removal from inventory.
Smaller purchase quantities in future.
PROCUREMENT, PAYMENTS AND ACCOUNTS PAYABLE
5.1
5.1.1.
Procurement of goods and services
The purchasing of any goods or services required by the NWU is regulated by the Procurement
Policy and the supporting Schedule of Authorisation Levels approved by Council.
5.1.2.
The Schedule of Authorisation Levels determines the requirements for authorisation of various
financial transactions as well as the procedural requirements regarding quotations and tenders for
these transactions.
5.1.3.
In terms of the Procurement Policy, the acquisition of all goods and/or services of the NWU must be
done or facilitated by the centralised Procurement Department.
5.1.4.
Exceptions from the required procedures as prescribed by the Schedule of Authorisation Levels
can only be approved by the Director: Financial Administration. These exceptions include, but are
not limited to, the following:
(a) The proposed supplier is the sole supplier of the specific product in South Africa.
(b) The proposed supplier has not submitted the lowest or best quotation or tender.
(c) Due to unforeseen circumstances, the time-related urgency of the purchase requires that the
tender process be abandoned.
General Guidelines in support of the Financial Policy
12
5.1.5.
Purchase orders for all goods and services may only be issued to suppliers by the centralised
Purchasing Department. The use of the University’s centralised purchasing service is mandatory,
unless specific alternative arrangements have been agreed with the Purchasing Officer.
5.1.6.
No goods or services may be ordered if there are not sufficient funds available in the account to
cover the order.
5.1.7.
No staff member may contractually bind the University to him- / herself, or a business in which he /
she or a family member has an interest, to perform any work for the University against payment,
unless the requirements of the Policy on Conflicts of Interest have been met.
5.2
5.2.1.
Quotations/Tenders
All purchases/expenses are subject to the requesting of quotations/tenders according to amounts
reflected in the Schedule of Authorisation Levels before a purchase order for the supply of
goods/services may be issued. Exceptions may only be approved by the Director: Financial
Administration of his / her next higher line management.
5.2.2.
“Closed Tenders”, as referred to in the Schedule of Authorisation Levels, are tenders where three
or more selected qualifying suppliers are invited to tender for the supply of a specified need or
service.
5.2.3.
“Open Tenders” as referred to in the Schedule of Authorisation Levels, are tenders where all
suppliers are invited by way of an advertisement in the media to tender for the supply of a specified
need or service.
5.2.4.
All tenders must either be done or facilitated by the Procurement Department.
5.2.5.
The standard NWU tender documentation as evaluated and approved by the Legal Department must
be used in all tenders requested by the NWU. Exceptions may only be approved by the Procurement
Department in conjunction with the Legal Department.
5.2.6.
The following rules will apply during the opening and evaluation of tenders received:
(a) Tenders are to be opened in the presence of a representative of the Internal Audit Department,
who will certify the list of all tenders received.
(b) During the opening of the tenders, the total tender amount of each tender shall be announced to
all present, but it must be specifically pointed out that the tendered amounts are subject to
change due to calculation errors or partial omission of specific sections.
(c) If only one or two tenders are received after three or more suppliers have been requested to
tender, these tender(s) may be accepted on condition that the tendered amount is judged
reasonable. In the case of “Closed Tenders”, written feedback explaining the reasons are
required from the suppliers who had been invited but chose not to tender.
(d) Late, faxed or emailed tender submissions will not be accepted unless both the internal audit
and the procurement staff agree in writing that the late, faxed or emailed submission will have
no negative influence on the fairness or transparency of the process.
General Guidelines in support of the Financial Policy
13
(e) If a submitted tender does not include all documentation as requested in the tender request, this
tender may still be evaluated, but may not be awarded before the required documentation has
been satisfactorily received.
(f)
If needed, the deliverables on an awarded tender may be increased, on condition that the
original tendered deliverables have not yet been completed.
(g) Obvious calculation errors on tenders may be corrected. However, if these corrections have an
influence on the allocation of the tender, a written agreement in respect of the correct or
adjusted tender amount must be obtained from the tenderer.
(h) Tenders will be adjudicated using a system which awards points on the basis of:
If the lowest tender received is less than R1 million:
 The tendered price and quality criteria (80%)
 Equity ownership (16%)
 Local Enterprises (4%)
If the lowest tender received exceeds R1 million:
 The tendered price and quality criteria (90%)
 Equity ownership (8%)
 Local Enterprises (2%)
(i)
If the tender with the highest number of points is not awarded the contract, the reasons for this
decision must be provided in full and approved by the next higher level of approval.
5.3
5.3.1.
Payments for goods and services
All payments to the University’s official suppliers for the provision of goods and services are centrally
processed by the Creditors Department in accordance with the payment terms as negotiated by the
Purchasing Officer. Payments may only to be processed after:
(a) An official purchase order has been issued by the Procurement Department
(b) An electronic goods received voucher (Receiving) has been authorised on the financial system
by the department/division/unit concerned, or on the original signature of an authorised staff
member.
(c) A valid VAT invoice has been received from the supplier.
5.3.2.
Other payments, known as ad hoc or sundry payments, will be made upon receipt of an electronic
Disbursement Voucher, duly authorised in terms of the Schedule of Authorisation Levels. These
payments include the following types of expenditure:
(a) Payment of municipal accounts, telephone accounts and tax-related expenditure.
(b) Payments to staff for the reimbursement of valid University expenses.
(c) Expense advances to staff.
(d) Payments in terms of an approved contract of the University.
(e) Payment of credit balances on debtors' accounts.
(f) Payments to one-off suppliers of goods and services.
5.3.3.
All payments must be supported by electronic copies of the original relevant documentation. The
requirements of prevailing VAT legislation must be adhered to at all times. The original
documentation must be filed in the prescribed manner at the source of the electronic capturing.
5.3.4.
The requestor and manager approving the payments have the responsibility to ensure that the goods
or services were delivered satisfactorily.
General Guidelines in support of the Financial Policy
14
5.3.5.
5.4
5.4.1.
Two of the authorised signatories must approve all electronic payments.
Conflict of Interest
Conflict of interest arises when an employee is in a position to influence University business,
research or other decisions in ways that could lead to any form of direct and/or indirect gain for the
employee or the employee’s family, or give improper advantage to others in the University’s
environment.
5.4.2.
In terms of Section 34 (4) (b) of the Higher Education Act, 1997, an employee must notify the
university of any conflict or possible conflict before the university procures goods or services from the
employee.
5.4.3.
In terms of Section 34 (5) of the Higher Education Act, 1997, no employee may conduct business,
directly or indirectly, with the University, that entails of may entail a conflict of interest with the
University, unless these transactions have been approved by the Council of the University. These
approvals by the Council must be recorded in the Conflict of Interest Register. Refer to the Policy
on Conflict of Interest.
5.4.4.
Authorised approvers of University business transactions cannot approve their own documents or
transactions and documents or transactions payable to their immediate supervisor, the supervisor’s
business or the supervisor’s immediate family. In this case an independent person on a higher level
of the University’s hierarchy should authorise and approve the transaction.
5.4.5.
In terms of Section 34 (6) of the Higher Education Act, 1997, an employee may not contract on
behalf of the University with himself/herself or any entity in which he/she has a direct or indirect
financial or personal interest
5.5
Domestic and international travel
This expense is regulated by the Guidelines and Tariffs regarding Subsistence and Travelling Costs as
approved by the Institutional Management.
5.6
5.6.1.
Corporate credit card
Corporate credit cards are only available on request and must be approved by the Executive Director
Finance and Facilities.
5.6.2.
Any expense paid with a corporate credit card must be for business purposes of the University only.
Private use of the corporate card is not allowed.
5.6.3.
All original invoices/documentation supporting credit card expenses must be handed in at Financial
Administration at each month end.
5.7
5.7.1.
Staff expense advances
Staff expense advances may be granted for instances where a staff member incurs an expected
future University expense, but the exact amount or documentation is not yet available.
5.7.2.
Staff expenditure advances will be paid upon receipt of a electronic Prepayment Disbursement
Voucher duly authorised in terms of the Schedule of Authorisation Levels, and must be accounted
for by way of submission of valid expenditure documentation by the return date as specified.
General Guidelines in support of the Financial Policy
15
5.7.3.
If the advance is not accounted for by the return date as specified, the University reserves the right
to deduct the unaccounted advance amount from the salary of the staff member.
5.8
Non-salary-related payments to employees
Any payments to employees for services other than their salaries, except where an employee incurred
expenditure on behalf of the University, will be done via the payroll system operated by the Human Capital
department, and the necessary employee's tax will be accounted for.
5.9
5.9.1.
Employee gifts
It is not allowed for any funds to be spent on gifts for employees in recognition for work or non-workrelated achievements or events. However, this excludes the sending of flowers or similar tokens of
congratulations or condolences to staff following birth, hospitalisation, death, etc.
5.9.2.
This token may not exceed R500. All other amounts will be subject to income tax.
5.10 Gifts from suppliers and vendors
The staff member is required to inform his/her managerial superior in writing of any gifts received from
University-related suppliers or parties with a monetary value exceeding R500. Where there is doubt as to the
item's monetary value, such an item must be declared.
5.11 Personnel Parting Gifts and Functions
5.11.1 If the value of a parting gift to a staff member leaving the employment of the NWU exceeds R500, it
will be included in the taxable income reported by the Human Capital Department to the Receiver of
Revenue.
5.11.2 Parting gifts and/or functions may only be given to staff leaving the permanent employment of the
University. Staff on a temporary employment contract with the NWU is not entitled to a parting gift.
5.12 Year-end Functions
5.12.1. Year-end functions are those annual social occasions presented by a departmental manager as a
gesture of thanks to staff for a year’s hard work, and they usually involve the spouses.
5.12.2. Each account bearing salary costs may annually spend a maximum of R400 per staff member plus
R400 per spouse/partner on year-end functions (all related costs included).
5.12.3. This allocated amount is the maximum per annum for all income streams, and underutilisation in one
year cannot be carried over to the next year.
5.12.4. Senior managers with multiple accounts bearing salary costs may at their own discretion partially or
in total pool these funds.
5.12.5. This allocation is to cover the cost of all activities and refreshments associated with the year-end
function.
5.12.6. All staff members of a department must be invited to attend. Exclusion of certain staff members is
not allowed.
5.12.7. It is not allowed to hold year-end functions under the pretence of a “bosberaad”, planning session,
team building, etc.
5.12.8. This allocated amount may be supplemented by way of contributions from staff members.
5.13 Business meals and entertainment
Business meals are defined as meals taken with students, colleagues or other external University-related
parties during which specific business discussions take place. It will be reimbursed based on reasonable
actual costs.
General Guidelines in support of the Financial Policy
16
5.14 Donations/sponsorships to external parties
Donations/sponsorships to external parties must be approved by persons at the level of director or higher,
and must be communicated to the relevant marketing or corporate affairs department.
5.15 Bursaries – external and internal
5.15.1. All bursaries must be coordinated and paid out by the Bursaries Office and must comply with tax
rules and regulations. Only bursary-related transactions may be posted against student accounts.
This system may not be utilised for any other purposes (e.g. refunds of expenses, remunerations,
donations to students).
5.15.2. Bursaries received from external funders should be paid into the bursaries bank account for
distribution to the relevant students.
5.15.3. A Bursary Transfer electronic document must be used for transfers of funds to the Bursaries Office
and is subject to specific procedures and budget arrangements.
5.16 Membership fees
Payment of membership fees due to professional bodies are only allowed if the position held within the
University structure requires it. However, ITEA and IREA funds may be utilised for this purpose.
5.17 Telephone use
5.17.1. A private code for personal calls must be arranged and these costs will be deducted monthly from
the staff remuneration.
5.18 Cell Phones and 3G cards
5.18.1. Staff who continuously require the use of a cell phone or 3G card during the execution of their
University duties, or who need to be available for contact at any time, may apply for a cell phone
allowance. This application must be fully motivated and approved by the Director or next higher level
in the specific line management.
5.18.2. Staff receiving a cell phone allowance are obliged to obtain a cell phone and/or 3G card at own cost,
and to make the cell phone number available to colleagues and business associates upon request.
5.18.3. The cell phone allowance will be fully taxed by the Receiver of Revenue, and staff are advised to
consult with their tax practitioner before applying.
5.18.4. Staff on Peromnes Grades 1 to 3 will not qualify for the cell phone or 3G card allowance, but will
receive official University cell phones. These cell phones and 3G cards will be contracted, supplied
and paid for by the University.
5.18.5. The following standard cell phone allowances are applicable to all other staff:
Peromnes Grades 4 and 5
- R1,200 per month
Peromnes Grades 6 and 7
- R1,000 per month
Peromnes Grades 8 and lower - R750 per month
A standard 3G card allowance of R500 per month will be available upon authorisation by the Director
or next higher level to all staff on Peromnes Grades 4 and lower.
General Guidelines in support of the Financial Policy
17
These standard allowances may by increased or decreased per individual case following a
motivation and a minimum approval level of dean/chief director.
5.18.6. If the actual official cost on occasion exceeds the allotted allowance, staff may claim the excess back
by following the normal claims procedure and submitting supporting documentation. If the allowance
is exceeded on a regular basis, it may be increased with the appropriate approval.
5.19 Stationery expense
5.19.1. If stationery requirements are available in the campus stationery stores, it is compulsory to obtain
these requirements from the stationery store.
5.19.2. All stationery may only be ordered or procured for the official purposes of the University.
5.20 Remuneration and payments to staff members
5.20.1. It is compulsory to process all payments in respect of services rendered to the University by staff
members through the Human Capital System. (Refer to Human Capital on the intranet for specific
policy, procedures and rules in this regard.)
5.20.2. This excludes the payment of staff members to reimburse travel, subsistence and other expenses
incurred by staff members on behalf of the University.
5.21 Income stream 3 activities, projects and project allowances
5.21.1. The aim of income stream 3 activities and projects is to generate a surplus at an acceptable return
on investment for the University. If this is not the case, the reasons for the loss-generating activity
must be communicated in writing to the Institutional Management Accounting Services Department.
5.21.2. Before commencement of any income stream 3 activity or project which includes any surplus-sharing
with staff members or external parties, a detailed contract must be entered into. This contract must
conform with the requirements as stipulated in paragraph 3 of the Schedule of Authorisation
Levels.
5.21.3. All direct and indirect costs must be taken into account to determine the net surplus of the activity or
project.
5.21.4. A surplus-sharing partnership contract where the external party share exceeds 50% must be
approved by a dean/vice-rector/director: finance. Staff must ensure that external parties do not enter
into surplus-sharing agreements with the University for the purpose of using the University name
whilst the University is at risk.
6
Assets
6.1
6.1.1.
Acquisition of assets
All requisitions for the purchase of assets must be created against an appropriate asset account (see
chart of accounts under paragraph 1.2 above) and must be within the approved budget.
6.1.2.
Purchase of movable items with a unit cost price/value of more than the amount as determined by
Council from time to time and a useful life of more than one year will be capitalised as fixed assets
and recorded in the fixed assets register.
General Guidelines in support of the Financial Policy
18
6.1.3.
The guidelines regarding the capitalisation of immovable property and the recognition thereof in the
Fixed Assets Register are as follow:
(a)
Initial, attributable costs regarding the erection of a new building will be capitalised when the
cost can be measured reliably and it is probable that future economic benefits associated with
the building will flow to the University. These costs may include interest (where external funding
is used and the recognition criteria are met), air-conditioning, carpeting, computer network
cabling, access control, etc.
(b)
Subsequent costs giving rise to actual improvements to existing buildings will only be capitalised
when it is probable that future economic benefits, exceeding the originally estimated
performance standard of the existing asset, will flow to the University. The carrying amount of
replaced parts will be derecognised.
(c)
Subsequent costs regarding routine repair and maintenance will not be capitalised. These costs
may include costs regarding fixtures that will not be removed from the building when being
vacated and that do not meet the requirements as stated in 6.1.3 (e). Fixtures may consist of
air-conditioning, carpeting, computer network cabling, access control, etc.
(d)
Infrastructure costs (e.g. outdoor sport facilities, roads, paving, etc.) will be treated accordingly.
Initial costs of new developments will be capitalised when these costs meet the recognition
criteria for an asset. Subsequent costs regarding routine upgrading, repair and maintenance
will not be capitalised. Relocating costs of existing infrastructure will also not be capitalised.
6.1.4.
The purchase of land and buildings is subject to the authorisation of Council.
6.1.5.
The purchase of office furniture is regulated by the Guideline i.r.o. office furniture, and exceptions
may only be approved by the Director: Financial Administration.
6.1.6.
The acquisition of all goods and/or services relating to Information Technology (IT) in any form, being
computer hardware or software, including any device that may be connected to or loaded onto such
IT equipment, must first be consulted with the Institutional Information Technology department of the
University, and must be approved in writing by the head of said IT department or his/her delegate.
The following exceptions are allowed:
(a) Personal computers, laptops, notebooks or similar devices for individual use, only if such
equipment is compliant with NWU technical standards as published and amended form time to
time;
(b) Software supplied or pre-approved by the Institutional IT department.
6.2
6.2.1.
Transfer and disposal of assets
All disposals of movable assets must be authorised as stipulated in the Schedule of Authorisation
Levels and done in cooperation with Asset Management. The process must be fair and transparent,
preferably using a tender basis.
Exceptions may only be approved by the Director: Financial
Administration, or his/her superiors.
6.2.2.
No sale/disposal, exchange, transfer, move or writing-off of assets may take place without
consultation with Assets Management, and it must be recorded in the central assets register of the
University.
General Guidelines in support of the Financial Policy
19
6.2.3.
The disposal of fixed property (land and buildings) is further subject to the approval of the Minister of
Higher Education and Training, and the Council.
6.3
Recording of property
6.3.1.
All assets in excess of the rand amount as stipulated in paragraph 6.1.2 above will be capitalised
and recorded in the fixed assets register of the University.
6.3.2.
The University must maintain a detailed register of all land, buildings and fixed plant with proof of
ownership, title deeds or custody agreements. All property records will be kept on register by Fixed
Asset Management and the relevant legal document will be kept by the Legal Office.
6.4
Physical verification and safeguarding of University assets
6.4.1.
Upon registering an asset in the fixed assets register, the staff member who requested the purchase
of the asset is registered as the custodian of the asset. This custodian has the responsibility to
ensure that the University asset in his/her possession is safeguarded to the best of his/her ability.
6.4.2.
With the approval of the head of department/division/unit, the custodianship may be transferred to
another staff member, and this must be adjusted in the assets register.
6.4.3.
Assets Management must at least every second year request all custodians to confirm the physical
existence of all assets under his/her care. Assets Management will do spot-checks to verify the
accuracy of these confirmations.
6.5
Depreciation of assets
6.5.1.
Depreciation will be written off over the useful life of the asset and will be done in terms of
International Financial Reporting Standards and the accounting policy that forms part of the financial
statements.
7
Insurance
7.1
Insurance Portfolio
The University has a comprehensive insurance portfolio which covers most risks associated with universities.
These include:
7.1.1.
Fire and Theft Policy, which covers all assets and consequential losses against fire, theft and
associated perils.
7.1.2.
Motor Fleet Policy, which includes damage to hired vehicles.
7.1.3.
Public Liability Policy.
7.1.4.
Professional Liability Policy.
7.1.5.
Various personal accident policies.
7.1.6.
Commercial Crime Policy.
7.1.7.
Directors and Management Responsibility Policy.
7.2
7.2.1.
Insurance Claims
It is compulsory for staff to report all losses of assets and possible third party claims against the
University to the Insurance Department immediately when the staff member becomes aware of it.
General Guidelines in support of the Financial Policy
20
7.2.2.
The claim must be reported to the insurers immediately.
7.2.3.
All excess payments will be for the account of the specific department/faculty/operating unit where
the loss occurred.
8
Cash handling
8.1
Cash collections and handling
8.1.1.
All cash and cheques received on behalf of the University must be acknowledged by the issuing of
an official University receipt and must be deposited into an official University bank account on the
first business day after receipt thereof.
8.1.2.
For all monies received in cash by University personnel other than directly at the cashiers, a nonofficial sequentially numbered receipt must be issued. This will be replaced by an official receipt
when depositing the cash at the cashiers on the first business day after receipt thereof.
8.1.3.
Money that will be kept overnight must be placed in a safe that complies with the requirements of the
University’s insurers. Information regarding these requirements is available from the Insurance
Department of the University.
8.1.4.
Cashiers and personnel receiving cash on behalf of the University are responsible for all cash
shortages, but cash surpluses are for the account of the University.
8.1.5.
No cash expenses may be paid from any cash collected on behalf of the University by a
department/division/unit prior to paying in such cash at the cashier.
8.2
Petty cash funds
8.2.1.
The cash on hand, or the balance on the ABSA BICOS card facility, plus supporting documentation
must equal the petty cash float at all times.
8.2.2.
Petty cash must be kept in safe custody by an independent staff member, or the pin of the ABSA
BICOS Card must be kept secret at all times.
8.2.3.
Petty cash may only be used for small reimbursements and not as an operating fund to pay vendors
for goods and services, employee salaries, wages, loans or advances.
8.2.4.
Misuse of a petty cash fund may lead to the withdrawal of this facility for the specific
department/faculty/unit and possible disciplinary action against the guilty staff member.
9
Bank accounts
9.1
9.1.1.
Authorisation to open/close bank accounts
Council is responsible for the appointment of the University’s main bankers at the recommendation
of the Finance Committee. The appointment will be reviewed from time to time.
9.1.2.
No bank account may be opened or used by any faculty/school/outside fund/club/ association etc. in
which the University has an interest without the approval of the Executive Director Finance and
Facilities.
General Guidelines in support of the Financial Policy
21
9.1.3.
All bank accounts, with the exception of the two main bank accounts used by Financial
Administration for the centralised payment process, must only be for receipt of monies by the
University (deposit accounts).
9.2
9.2.1.
Authorised signatory
All electronic transfers of funds must be approved by two authorised staff members of the University.
The Executive Director Finance and Facilities may authorise any person whom he deems fit to be an
authorised signatory with the banks.
9.2.2.
Before approval of electronic transfers, the authorized staff members must to the best of their ability
ensure that the requirements of the Schedule of Authorization Levels have been adhered to.
9.3
Foreign bank accounts
The same rules as mentioned above are applicable to these bank accounts.
9.4
9.4.1.
Deposits into the University's bank account
No money or funds to which the University has a claim may be deposited in any other bank account
except an official bank account of the University.
9.4.2.
It is the responsibility of each personnel member who requests a direct deposit into the bank account
to ensure that all the details or identification of the deposit are explicitly and fully disclosed so that
the deposit can be timeously identified and allocated to the correct object code.
9.5
9.5.1.
Reconciliation of bank accounts
All bank accounts of the University must be reconciled with the financial records of the University on
a monthly basis. These have to be checked and signed off by the responsible accountant or
manager.
9.5.2.
No reconciling item may remain unallocated on the bank reconciliation for a period exceeding three
months.
9.6
9.6.1.
Unrecognised deposits
Unrecognised deposits will be transferred to a suspense object code and will await information from
the person who requested the deposit to identify and approve such deposit to be transferred to the
relevant department/division/unit, or to be allocated to the correct object code.
9.6.2.
Amounts not claimed and proven will stay in the suspense object code of the University for a period
of three years. On approval of the Executive Director Finance and Facilities this money will then be
transferred to the accumulated profits of the University and treated as other income.
10 Audits
10.1.
If other external audit services are required by divisions, these should be coordinated with the Chief
Director of Institutional Finance.
General Guidelines in support of the Financial Policy
22
Original details: Errol Earle(10935746) SHARE/ NWU Home/ Financial documentation\4Pr-4_General Guidelines in support of the Financial Policy_e.docm
10 March 2014
File reference: 4Pr-4
General Guidelines in support of the Financial Policy
23