UHI MILLENNIUM INSTITUTE
FINANCIAL REGULATIONS
CONTENTS
TERMINOLOGY .............................................................................................. 3
FINANCIAL REGULATIONS........................................................................... 5
A
GENERAL PROVISIONS...................................................................... 5
Background ..................................................................................................... 5
Status of Financial Regulations...................................................................... 5
B
CORPORATE GOVERNANCE ............................................................. 7
Board of Governors ......................................................................................... 7
Designated Officer ........................................................................................... 7
Committee Structure ....................................................................................... 8
Other Senior Managers with Financial Responsibility .................................. 9
Risk Management .......................................................................................... 11
Public Interest Disclosure ............................................................................. 12
Code of Conduct ............................................................................................ 12
Conflicts of Interest ....................................................................................... 13
Receiving Gifts or Hospitality ....................................................................... 13
C
FINANCIAL MANAGEMENT AND CONTROL ................................... 15
Financial Planning ......................................................................................... 15
Financial Control ........................................................................................... 17
Accounting Arrangements ............................................................................ 19
Audit Requirements....................................................................................... 21
Treasury Management................................................................................... 24
Income ............................................................................................................ 26
Research Other Grants and Contracts ......................................................... 29
Other Income-Generating Activity ................................................................ 31
Intellectual Property Rights and Patents ..................................................... 33
Expenditure.................................................................................................... 34
Pay Expenditure ............................................................................................ 39
Assets ............................................................................................................ 42
Funds Held on Trust ...................................................................................... 43
Other............................................................................................................... 44
APPENDICES................................................................................................ 47
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TERMINOLOGY
AUDIT COMMITTEE
A committee independent of executive responsibility, which advises the governing
body on issues related to internal audit, external audit and financial control. It is
required to issue an annual report to the governing body which, inter alia, comments
on the institution’s system of internal control.
BUDGET HOLDER
The member of staff who has been assigned his or her own budget (other than a
head of department) and is accountable to their head of department for it.
DIRECTOR OF FINANCE AND PLANNING
The chief financial officer of the institution and designated in the Regulations as the
“Director of Finance”.
FUNDING BODY
This refers to the Scottish Higher Education Funding Council or to other bodies
providing specific grants.
BOARD OF GOVERNORS
The Board of Governors is the governing body of UHI Millennium Institute. It governs
in accordance with the Memorandum and Articles of Association of UHI Millennium
Institute and is committed to exhibiting best practice in all aspects of corporate
governance. The Board also forms the Board of Directors of UHI Millennium Institute.
The Board has sought to conform to the principles set out in the ‘Guide for Members
of Governing Bodies of Scottish HEIs’ issued by SHEFC in March 1999, and has built
into its Articles of Association the seven principles of public life.
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HEADS OF DEPARTMENT
A member of staff who is the head of an academic or non-academic
department/section of the institution and who is responsible for the management and
budget of the whole department. The structure of Departments/Sections of the
institution is approved from time to time by the Board of Governors.
PRINCIPAL
The Principal has the ultimate executive responsibility for the management of the
institution.
SECRETARY
The Secretary is head of administration. All governors have access to the Secretary
to UHI, who is the Clerk to the Board and responsible to the Board for ensuring that
the Board complies with the requirements of the Funding Council, relevant legislation
and governance processes and procedures.
EXECUTIVE MANAGEMENT GROUP
This group comprises the Principal, Secretary and the Heads of the Departments of
the Executive Office of UHI.
STAFF
The term “staff” is used in this document to refer only to direct employees of UHI.
Where the text refers to staff at academic partners this will be specified in the text.
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FINANCIAL REGULATIONS
A
GENERAL PROVISIONS
Background
UHI Millennium Institute shall be conducted in accordance with the Further and
Higher Education Act, any relevant regulations, orders or directions made by the First
Minister or the Scottish Executive and, subject thereto, in accordance with the
provisions of this Schedule and any Regulations made in pursuance thereto.
The institution is a Company limited by Guarantee and not having a share capital. It
is a higher education institution designated by the Scottish Ministers under the
provisions of the Further and Higher Education (Scotland) 1992(a) Act. Its structure
of governance is laid down in the Memorandum and Articles of Association, which
may be amended by its members with the approval of the UHI Foundation. The
institution is accountable through its Board of Governors, which has ultimate
responsibility for the effectiveness of its management and administration.
The institution is a charity recognized by the Inland Revenue.
The financial memorandum between the funding body and the institution sets out the
terms and conditions on which teaching, research and other grants are made. The
Board of Governors is responsible for ensuring that conditions of grant are met. As
part of this process, the institution must adhere to the funding body’s audit code of
practice, which requires it to have sound systems of financial and management
control. The financial regulations of the institution form part of this overall system of
accountability.
Status of Financial Regulations
This document sets out the institution’s financial regulations.
It translates into
practical guidance the institution’s broad policies relating to financial control. This
document was approved by the Board of Governors on 30 June 2004. It applies to
the institution and all its subsidiary undertakings.
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These financial regulations are subordinate to the institution’s Memorandum and
Articles of Association and to any restrictions contained within the institution’s
financial memorandum with the funding body and the funding body’s audit code of
practice.
The purpose of these financial regulations is to provide control over the totality of the
institution’s resources and provide management with assurances that the resources
are being properly applied for the achievement of the institution’s strategic plan and
business objectives:
o
financial viability
o
achieving value for money
o
fulfilling its responsibility for the provision of effective financial controls over
the use of public funds
o
ensuring that the institution complies with all relevant legislation
o
safeguarding the assets of the institution.
Compliance with the financial regulations is compulsory for all staff connected with
the institution.
A member of staff who fails to comply with the financial regulations
may be subject to disciplinary action under the institution’s disciplinary policy. It is
the responsibility of heads of department to ensure that their staff are made aware of
the existence and content of the institution’s financial regulations.
The Finance and General Purposes Committee is responsible for maintaining a
continuous review of the financial regulations, through the Director of Finance, and
for advising the Board of Governors of any additions or changes necessary.
In exceptional circumstances, the Finance and General Purposes Committee may
authorise a departure from the detailed provisions herein, such departure to be
reported to the Board of Governors at the earliest opportunity.
The institution’s detailed financial procedures set out precisely how these regulations
will be implemented and are contained in a separate manual which is available in all
departments.
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B
CORPORATE GOVERNANCE
Board of Governors
The Board of Governors is responsible for the management and administration of the
institution. Its financial responsibilities are to:
o
ensure the solvency of the institution
o
safeguard the institution’s assets
o
ensure the effective and efficient use of resources
o
ensure that the funds provided by the funding body are used in accordance
with the terms and conditions specified in the institution’s financial
memorandum with the funding body
o
ensure that financial control systems are in place and are working effectively
o
ensure that the institution complies with the funding body’s audit code of
practice
o
approve the institution’s strategic plan
o
approve annual estimates of income and expenditure and the annual financial
statements
o
appoint the institution’s internal and external auditors.
Designated Officer
The Principal is the institution’s designated officer responsible for the financial
administration of the institution’s affairs. In this capacity, the Principal must advise
the governing body if, at any time, any action or policy under consideration by them
appears to the Principal to be incompatible with the financial memorandum. If the
governing body decides nevertheless to proceed, the Principal must immediately
inform the chief executive of the funding body in writing. The Principal must ensure
that annual estimates of income and expenditure are prepared for consideration by
the governing body and for the management of budgets and resources within the
estimates approved by the governing body. As the designated officer, the Principal
may be required to justify any of the institution’s financial matters to a committee of
the Scottish Assembly.
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Committee Structure
The Board of Governors has ultimate responsibility for the institution’s finances, but
delegates specific powers and processes to the committees detailed below. These
committees are accountable to the governing body.
A diagram depicting the
committee structure is included at Appendix A.
The Executive Board
The Executive Board shall, subject to the overall authority and approval of the Board
of Governors, and the autonomy of the Academic Council in academic matters,
consider and determine any matter concerned with the planning, development and
operation of the UHI Millennium Institute as may be delegated to the Executive Board
by the Board of Governors.
The Executive Board may establish with the approval of the Board of Governors such
sub-committees as it shall deem necessary for the transaction of its business.
Finance and General Purposes Committee
Monitoring of the institution’s financial position and financial control systems is
undertaken by the Finance and General Purposes Committee. The committee will
examine annual estimates and accounts (including the accounting policies upon
which they are based) and recommend their approval to the governing body. It will
ensure that short-term budgets are in line with agreed longer-term plans and that
they are followed. It will consider any other matters relevant to the financial duties of
the Board of Governors and make recommendations accordingly. The committee will
also ensure that the governing body has adequate information to enable it to
discharge its financial responsibilities. A more detailed extract from the Finance and
General Purposes Committee’s terms of reference is shown at Appendix B.
Audit Committee
Institutions are required by their financial memorandum with the funding body and by
the funding body’s audit code of practice to appoint an audit committee.
The
committee is independent, advisory and reports to the governing body. It has the
right of access to obtain all the information it considers necessary and to consult
directly with the internal and external auditors. The committee is responsible for
identifying and approving appropriate performance measures for internal and
external audit and for monitoring their performance. It must also satisfy itself that
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satisfactory arrangements are in place to promote economy, efficiency and
effectiveness. A more detailed extract from the Audit Committee’s terms of reference
is shown at Appendix C. The audit requirements of the institution are set out in the
funding body’s audit code of practice.
Remuneration Committee
The
Remuneration
Committee
is
responsible
for
reviewing
and
making
recommendations to the governing body on:
o
the terms and conditions of the holders of senior posts (as defined in the
Articles of Association of UHI).
o
annual salary settlements and staff pay evaluation, taking cognisance of
salary settlements in academic partner institutions.
The Committee is authorised to determine all matters delegated to it and to consider
and advise the Board of Governors on all other matters within its terms of reference.
The Committee is authorised to obtain independent professional advice and to
secure the attendance of non-members with relevant experience and expertise, if it
considers this necessary.
Other Senior Managers with Financial Responsibility
The Secretary
The Secretary is responsible to the Principal for the management of the Director of
Finance.
Day-to-day financial administration is controlled by the Director of Finance, who is
responsible to the Secretary for:
o
preparing annual capital and revenue budgets and financial plans
o
preparing
management
information,
for
monitoring
and
controlling
expenditure against budgets and all financial operations
o
preparing the institution’s annual accounts and other financial statements and
accounts which the institution is required to submit to other authorities
o
ensuring that the institution maintains satisfactory financial systems
o
providing professional advice on all matters relating to financial policies and
procedures
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o
day-to-day liaison with internal and external auditors in order to achieve
efficient and effective processes.
Heads of Department
Heads of Department are responsible to the Secretary for financial management for
the areas or activities they control. They are advised by the Director of Finance in
executing their financial duties.
The Director of Finance will also supervise and
approve the financial systems operating within their departments, including the form
in which accounts and financial records are kept.
Heads of Department are
responsible for establishing and maintaining clear lines of responsibility within their
department for all financial matters.
Where resources are devolved to budget
holders, they are accountable to their head of department for their own budget.
Heads of Department shall provide the Director of Finance with such information as
may be required to enable:
o
compilation of the institution’s financial statements
o
implementation of financial planning
o
implementation of audit and financial reviews, projects and value for money
studies.
All Members of Staff
All members of staff should be aware and have a general responsibility for the
security of the institution’s property, for avoiding loss and for due economy in the use
of resources.
They should ensure that they are aware of the institution’s financial authority limits
and the values of purchases for which quotations and tenders are required.
Authorisation limits are detailed in the institution’s financial procedures.
They shall make available any relevant records or information to the Director of
Finance or an authorised representative in connection with the implementation of the
institution’s financial policies, these financial regulations and the system of financial
control.
They shall provide the Director of Finance with such financial and other information
as he or she may deem necessary, from time to time, to carry out the requirements of
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the governing body.
They shall immediately notify the Director of Finance whenever any matter arises
which involves, or is thought to involve, irregularities concerning, inter alia, cash or
property of the institution. The Director of Finance shall take such steps as he or she
considers necessary by way of investigation and report.
Risk Management
The institution acknowledges the risks inherent in its business, and is committed to
managing those risks that pose a significant threat to the achievement of its business
objectives and financial health.
The Board of Governors has overall responsibility for ensuring there is a risk
management strategy and a common approach to the management of risk
throughout the institution through the development, implementation and embedment
within the organisation of a formal, structured risk management process. The Risk
Management Policy is attached at Appendix D.
In line with this policy, the governing body requires that the risk management strategy
and supporting procedures include:
o
the adoption of common terminology in relation to the definition of risk and
risk management
o
the establishment of institution-wide criteria for the measurement of risk,
linking the threats to their potential impact and the likelihood of their
occurrence together with a sensitivity analysis
o
a decision on the level of risk to be accepted, together with tolerance levels
expressed in terms of measurable outcomes (see above)
o
a decision on the level of risk to be covered by insurance
o
detailed regular review at department or support function level to identify
significant risks associated with the achievement of key objectives and other
relevant areas
o
development of risk management and contingency plans for all significant
risks, to include a designated ‘risk owner’ who will be responsible and
accountable for managing the risk in question
o
regular reporting to the governing body of all risks above established
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tolerance levels
o
an annual review of the implementation of risk management arrangements
The strategy and procedures must be capable of independent verification.
Heads of Department must ensure that any agreements negotiated within their
departments with external bodies cover any legal liabilities to which the institution
may be exposed. The Secretary’s advice should be sought to ensure that this is the
case.
Public Interest Disclosure
This is the disclosure by an employee (or other party) about malpractice in the
workplace. Such disclosure may be about crime, civil offences (including negligence,
breach of contract, etc), miscarriage of justice, danger to health and safety or the
environment and the cover-up of any of these. It does not matter whether or not the
information is confidential and the disclosure can extend to malpractice occurring in
the UK and any other country or territory.
Normally, any concern about a workplace matter at the institution should be raised
with the relevant member of staff’s immediate line manager or head of department.
However, the institution recognises that the seriousness or sensitivity of some issues,
together with the identity of the person the member of staff thinks may be involved,
may make this difficult or impossible. A member of staff may, therefore, make the
disclosure to one of the individuals designated in UHI’s Public Interest Disclosure
policy which is attached in Appendix E.
Code of Conduct
The institution is committed to the highest standards of openness, integrity and
accountability in accordance with the principles established by the Committee on
Standards in Public Life (formerly known as the Nolan Committee).
Members of the Board of Governors, senior management or those involved in
procurement are required to disclose interests in the institution’s register of interests
maintained by the Secretary. They will also be responsible for ensuring that entries
in the register relating to them are kept up to date regularly and promptly, as
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prescribed in the financial procedures.
In particular, no person shall be involved in setting up, monitoring or managing an
institution contract where he or she also has an interest in the activities of the other
party.
Conflicts of Interest
Members of the Board of Governors, the Academic Council, and the Executive Board
of UHI and members of their respective committees and sub-committees are
expected to abide by UHI’s Conflict of Interest Policy set out in Appendix F.
Receiving Gifts or Hospitality
It is an offence under the Prevention of Corruption Act 1906 for members of staff to
accept corruptly any gift or consideration as an inducement or reward for doing, or
refraining from doing, anything in an official capacity or showing favour or disfavour
to any person in an official capacity. The guiding principles to be followed by all
members of staff must be:
o
the conduct of individuals should not create suspicion of any conflict between
their official duty and their private interest
o
the action of individuals acting in an official capacity should not give the
impression (to any member of the public, to any organisation with whom they
deal or to their colleagues) that they have been (or may have been)
influenced by a benefit to show favour or disfavour to any person or
organisation.
Thus, members of staff should not accept any gifts, rewards or hospitality (or have
them given to members of their families) from any organisation or individual with
whom they have contact in the course of their work that would cause them to reach a
position whereby they might be, or might be deemed by others to have been,
influenced in making a business decision as a consequence of accepting such
hospitality.
The frequency and scale of hospitality accepted should not be
significantly greater than the institution would be likely to provide in return.
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When it is not easy to decide between what is and what is not acceptable in terms of
gifts or hospitality, the offer should be declined or advice sought from the Secretary
or the Director of Finance. Guidance on acceptable hospitality is contained in the
detailed financial procedures. For the protection of those involved, the Secretary will
maintain a register of gifts and hospitality received where the value is in excess of the
limits defined in UHI’s detailed financial procedures. Members of staff in receipt of
such gifts or hospitality are obliged to notify the Secretary promptly.
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C
FINANCIAL MANAGEMENT AND CONTROL
Financial Planning
The Director of Finance is responsible for preparing annually a rolling five-year
financial plan for approval by the governing body on the recommendation of the
Finance and General Purposes Committee and for preparing financial forecasts for
submission to the funding body.
Financial plans should be consistent with the
strategic plans and estates strategy approved by the governing body.
Budget Objectives
The Board of Governors will, from time to time, set budget objectives for the
institution. These will help the Director of Finance in preparing his or her more
detailed financial plans for the institution.
Resource Allocation
Resources are allocated annually by the Board of Governors on the recommendation
of the Finance and General Purposes Committee and the executive board, and on
the basis of the above objectives.
Heads of department are responsible for the
economic, effective and efficient use of resources allocated to them.
Budget Preparation
The Director of Finance is responsible for preparing each year an annual revenue
budget and capital programme for consideration by the Finance and General
Purposes Committee prior to submission to the Board of Governors. The Director of
Finance must ensure that detailed budgets are prepared in order to support the
resource allocation process and that these are communicated to heads of
department as soon as possible following their approval by the Board of Governors.
During the year, the Director of Finance is responsible for submitting revised budgets
to the Finance and General Purposes Committee for consideration before
submission to the Board of Governors for approval.
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Major Expenditure Programmes
Major expenditure programmes include all expenditure on the purchase of land and
buildings, major equipment, software and furniture expenditure and associated costs
whether or not they are funded from capital grants or capitalised for inclusion in the
institution’s financial statements. Expenditure of this type can only be considered as
part of the major expenditure programme approved by the Board of Governors.
The Director of Finance will establish protocols for the inclusion of projects in the
major expenditure programme for approval by the Board of Governors. These will
set out the information that is required for each proposed project as well as the
financial criteria that they are required to meet. They are set out in the detailed
financial procedures.
The Director of Finance will also establish procedures for the approval of variations,
including the notification of large variations to the funding body, as laid down in
funding body guidelines.
The Director of Finance is responsible for providing regular statements concerning all
capital expenditure to Finance and General Purposes Committee for monitoring
purposes.
Following completion of a capital project, a post-project evaluation or final report
should be submitted to the Finance and General Purposes Committee including
actual expenditure against budget and reconciling funding arrangements where a
variance has occurred as well as other issues affecting completion of the project.
Post-project evaluations may also need to be sent to the relevant funding body, as
laid down in funding body guidelines.
Overseas Activity
In planning and undertaking overseas activity, the institution must have due regard to
the relevant guidelines issued by the funding body (See Appendix G)
Other Major Developments
Any new aspect of business, or proposed establishment of a company or joint
venture, should be presented for approval to the Board of Governors (with prior
review by the Finance & General Purposes Committee and Executive Board, where
appropriate). (See Appendix G).
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Financial Control
Budgetary Control
The control of income and expenditure within an agreed budget is the responsibility
of the designated budget holder, who must ensure that day-to-day monitoring is
undertaken effectively. Budget holders are responsible to their head of department
for the income and expenditure appropriate to their budget.
Further details are
contained in the financial procedures manual.
Significant departures from agreed budgetary targets must be reported immediately
to the Director of Finance by the head of department concerned and, if necessary,
corrective action taken.
Financial Information
The budget holders are assisted in their duties by management information provided
by the Director of Finance. The types of management information available to the
different levels of management are described in the financial procedures manual,
together with the timing at which they can be expected.
The Director of Finance is responsible for supplying budgetary reports on all aspects
of the institution’s finances to the Finance and General Purposes Committee on a
regular basis. The relevant extracts from the overall position are reported to other
committees as required from time to time. These reports are presented to the Board
of Governors, which has overall responsibility for the institution’s finances.
Changes to the approved budget
Changes proposed to the approved budget will be first considered by the Finance
and General Purposes Committee, which will make proposals to the Board of
Governors.
Virement
Major virement between budget heads requires the approval of the Principal or
Secretary on the advice of the Director of Finance. Any agreed adjustment will be
incorporated into future reports to the Finance and General Purposes Committee and
the Board of Governors.
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Treatment of year-end balances
At the year end, budget holders will not have the authority to carry forward a balance
on their budget to the following year.
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Accounting Arrangements
Financial year
The institution’s financial year will run from 1 August until 31 July the following year.
Basis of accounting
The consolidated financial statements are prepared on the historical cost basis of
accounting and in accordance with applicable accounting standards.
Format of the financial statements
The financial statements are prepared in accordance with the Statement of
Recommended Practice Accounting for Further and Higher Education, subject to any
specific requirements of the funding body, and in accordance with the provisions of
the Companies Act 1985.
Capitalisation and depreciation
New land and buildings will be recorded in the balance sheet at actual build or
acquisition cost, except where they are received as gifts, where they will be recorded
at depreciated replacement value. Buildings will be depreciated in equal instalments
over their estimated remaining useful life. Land will not be depreciated.
Expenditure incurred on repair, refurbishment or extension of existing buildings will
not be capitalised unless it can be demonstrated that the resultant value of the
building, on the basis of depreciated replacement value, is greater than the current
book value.
Expenditure incurred on the acquisition of assets other than land and buildings will be
recorded in the balance sheet where the acquisition cost per item is £1,000 or more.
Assets may be revalued form time to time.
Accounting records
The Director of Finance is responsible for the retention of financial documents.
These should be kept in a form that is acceptable to the relevant authorities.
The institution is required by law to retain prime documents for six years. These
include:
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o
official purchase orders
o
sales invoices
o
paid invoices
o
bank statements
o
payroll records
The head of LIS will make appropriate arrangements for the retention of electronic
records.
Members of staff should ensure that retention arrangements comply with any specific
requirements of funding organisations such as European funding bodies.
Additionally, for auditing and other purposes, other financial documents should be
retained for three years or as determined by the funder.
Public access
Under the terms of the Charities Act 1993, the Board of Governors is required to
supply any person with a copy of the institution’s most recent financial statements
within two months of a request. The Act enables the Board of Governors to levy a
reasonable fee and this will be charged at the discretion of the Director of Finance.
The institution will also make a summary available on the institution’s website.
Taxation
The Director of Finance is responsible for advising heads of department, in the light
of guidance issued by the appropriate bodies and relevant legislation as it applies, on
all taxation issues, to the institution. Therefore the Director of Finance will issue
instructions to departments on compliance with statutory requirements including
those concerning VAT, PAYE, national insurance, corporation tax and import duty.
The Director of Finance is responsible for maintaining the institution’s tax records,
making all tax payments, receiving tax credits and submitting tax returns by their due
date as appropriate.
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Audit Requirements
General
External auditors and internal auditors shall have authority to:
o
access institution premises at reasonable times
o
access all assets, records, documents and correspondence relating to any
financial and other transactions of the institution
o
require and receive such explanations as are necessary concerning any
matter under examination
o
require any employee of the institution to account for cash, stores or any
other institution property under his or her control
o
access records belonging to third parties, such as contractors, when required.
The Director of Finance is responsible for drawing up a timetable for final accounts
purposes and will advise staff and the external auditors accordingly.
Following consideration by the Finance and General Purposes Committee, the
financial statements should be reviewed by the Audit Committee.
On the
recommendation of the Finance and General Purposes and Audit Committees they
will be submitted to the Board of Governors for approval.
External audit
The appointment of external auditors will take place annually and is the responsibility
of the members of the UHI Millennium Institute. The Board of Governors will be
advised by the audit committee.
The primary role of external audit is to report on the institution’s financial statements
and to carry out such examination of the statements and underlying records and
control systems as are necessary to reach their opinion on the statements and to
report on the appropriate use of funds. Their duties will be in accordance with advice
set out in the funding body’s audit code of practice and the Auditing Practices
Board’s statements of auditing standards.
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Internal audit
The internal auditor is appointed by the Board of Governors on the recommendation
of the Audit Committee.
The institution’s financial memorandum with the funding body requires that it has an
effective internal audit function and their duties and responsibilities must be in
accordance with advice set out in the funding body’s audit code of practice. The
main responsibility of internal audit is to provide the Board of Governors, the Principal
and senior management with assurances on the adequacy of the internal control
system.
The internal audit service remains independent in its planning and operation but has
direct access to the governing body, Principal and chair of the Audit Committee. The
internal auditor will also comply with the Auditing Practices Board’s auditing guideline
Guidance for Internal Auditors.
Fraud and corruption
It is the duty of all members of staff, management and the Board of Governors to
notify the Secretary immediately whenever any matter arises which involves, or is
thought to involve, irregularity, including fraud, corruption or any other impropriety.
The Secretary shall immediately invoke the fraud response plan which is set out in
Appendix H.
Value for money
It is a requirement of the financial memorandum that the Board of Governors of the
institution is responsible for delivering value for money from public funds. It should
keep under review its arrangements for managing all the resources under its control,
taking into account guidance on good practice issued from time to time by the
funding body, the National Audit Office, the Public Accounts Committee or other
relevant bodies.
Internal audit is to have regard to value for money in its programme of work. This will
be used to enable the audit committee to refer to value for money in its annual report.
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Other auditors
The institution may, from time to time, be subject to audit or investigation by external
bodies such as the funding body, Audit Scotland, European Court of Auditors, HM
Customs and Excise and the Inland Revenue. They have the same rights of access
as external and internal auditors.
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Treasury Management
Treasury Management Policy
The Finance and General Purposes Committee is responsible for approving a
treasury management policy statement (based on CIPFA’s Treasury Management in
the Public Services: Code of Practice together with cross-sectoral guidance and
sector-specific guidance) setting out a strategy and policies for cash management,
long-term investments and borrowings. This will require compliance with funding
body rules regarding approval for any secured or unsecured loans that go beyond the
general consent levels set out in the financial memorandum.
The Finance and
General Purposes Committee has a responsibility to ensure implementation,
monitoring and review of such policies.
All executive decisions concerning borrowing, investment or financing (within policy
parameters) shall be delegated to the Director of Finance and an appropriate
reporting system set up.
All borrowing shall be undertaken in the name of the
institution and shall conform to any relevant funding body requirements. The Director
of Finance and their staff are required to act in accordance with CIPFA’s Code of
Practice.
The Director of Finance will report to the Finance and General Purposes Committee
in each financial year on the activities of the treasury management operation and on
the exercise of treasury management powers delegated to him or her.
Appointment of bankers and other professional advisers
The Board of Governors is responsible for the appointment of the institution’s
bankers and other professional financial advisers (such as investment managers) on
the recommendation of the Finance and General Purposes Committee.
Banking arrangements
The Director of Finance is responsible, on behalf of the Finance and General
Purposes Committee, for liaising with the institution’s bankers in relation to the
institution’s bank accounts and the issue of cheques. All cheques shall be ordered
on the authority of the Director of Finance, who shall make proper arrangements for
their safe custody.
Subject to the approval of the Finance and General Purposes Committee, only the
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Director of Finance may open or close a bank account for dealing with the
institution’s funds. All bank accounts shall be in the name of the institution or one of
its subsidiary companies.
All cheques drawn on behalf of the institution must be signed in the form approved by
the Finance and General Purposes Committee.
All cheques must be manually
signed by an authorised signatory. Details of authorised persons and limits shall be
provided for in the institution’s detailed financial procedures.
All automated transfers on behalf of the institution, such as BACS or CHAPS, must
be authorised in the appropriate manner and on the basis approved by the Finance
and General Purposes Committee.
The guiding principles to be followed by all
members of staff are detailed in the finance manual
Details of authorised persons and limits shall be provided for in the institution’s
detailed financial procedures.
The Director of Finance is responsible for ensuring that all bank accounts are subject
to regular reconciliation and that large or unusual items are investigated as
appropriate.
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Income
General
The Director of Finance is responsible for ensuring that appropriate procedures are in
operation to enable the institution to receive all income to which it is entitled. All
receipt forms, invoices, tickets or other official documents in use and electronic
collection systems must have the prior approval of the Director of Finance.
Levels of charges for contract research, services rendered, goods supplied and rents
and lettings are determined by procedures approved by the finance committee, and
are approved by the Board of Governors.
The Director of Finance is responsible for the prompt collection, security and banking
of all income received.
The Director of Finance is responsible for ensuring that all grants notified by the
funding body and other bodies are received and appropriately recorded in the
institution’s accounts.
The Director of Finance is responsible for ensuring that all claims for funds, including
research grants and contracts, are made by the due date.
Maximisation of income
It is the responsibility of all staff to ensure that revenue to the institution is maximised
by the efficient application of agreed procedures for the identification, collection and
banking of income. In particular, this requires the prompt notification to the Director
of Finance of sums due so that collection can be initiated.
Receipt of cash / cheques
All cheques and cash received by post must be recorded and banked as soon as
possible after receipt and in accordance with a timetable prescribed by the Director of
Finance and set out in financial procedures. The custody and transit of all monies
received must comply with the requirements of the institution’s insurers. The payingin book should record the details of the payment including date, payer, items paid
and amount.
All sums received must be paid in and accounted for in full, and must not be used to
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meet miscellaneous expenses or be paid into the petty cash float. Personal or other
cheques must not be cashed out of money received on behalf of UHI.
Receipts by credit or debit card
UHI may only receive payments by debit or credit card using procedures approved by
the Director of Finance.
Internet receipts
Any member of staff wishing to arrange for payment to be made to UHI by the
internet should seek guidance from the Director of Finance at an early stage.
Collection of debts
The Director of Finance should ensure that:
o
debtor invoices are raised promptly on official invoices, in respect of all
income due to the institution
o
invoices are prepared with care, recorded in the ledger, show the correct
amount due and are credited to the appropriate income account
o
any credits granted are valid, properly authorised and completely recorded
o
VAT is correctly charged where appropriate, and accounted for
o
monies received are posted to the correct debtors account
o
swift and effective action is taken in collecting overdue debts, in accordance
with the protocols noted in the financial procedures
o
outstanding debts are monitored and reports prepared for management.
Only the Director of Finance can implement credit arrangements and indicate the
periods in which different types of invoice must be paid. These are approved by
Finance and General Purposes Committee from time to time.
Requests to write off debts in excess of the limits specified in the detailed financial
procedures must be referred in writing to the Director of Finance for submission to
the finance committee for consideration. Debts below this level may be written off
with the permission of the Director of Finance.
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Student fees
The procedures for collecting tuition and residence fees from UHI students, operated
by UHI and UHI’s Academic Partners must be approved by the Finance and General
Purposes Committee.
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Research Other Grants and Contracts
General
Research can be defined as original investigation, undertaken to gain new
knowledge and understanding, which may be directed towards a specific aim or
objective. It can use existing knowledge in experimental development to produce
new or substantially improved materials, devices, products and processes including
design and construction.
It excludes routine testing and analysis of materials,
components and processes.
The term ‘research grant’ is restricted to research projects funded by the UK
research councils, charities and the higher education funding bodies.
All other externally financed research projects are classified as ‘research contracts’.
Where approaches are to be made to outside bodies for support for projects or where
contracts are to be undertaken on behalf of such bodies, it is the responsibility of the
head of department to ensure that the financial implications have been appraised by
the Director of Finance.
This will include obtaining a set of grant terms and
conditions from each organisation providing funding to enable appropriate monitoring
of compliance.
The Director of Finance is responsible for examining every formal application for
grant and shall ensure that there is adequate provision of resources to meet all
commitments. The Director of Finance should ensure that the full cost of projects
and contracts is established. The agreement must be in line with the institution’s
policy with regard to indirect costs and other expenses and taking account of different
procedures for the pricing of projects depending on the nature of the funding body.
Grants and contracts shall be accepted on behalf of the institution by the Secretary.
The Director of Finance shall maintain all financial records relating to grants and
contracts and shall initiate all claims for reimbursement from sponsoring bodies by
the due date.
Each grant or contract will have a named supervisor or grant holder and will be
assigned to a specific budget holder.
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Control of pay and non-pay expenditure will be contained within the budget centre.
The head of the budget centre may delegate day-to-day control of the account to a
supervisor or grant holder but remains responsible for delivery to budget target.
Recovery of overheads
Overheads will be charged to research activity whether or not the funding
arrangements permit full recovery.
Costing/transparency
The institution has agreed to adopt the principles on costing and pricing
recommended by the Joint Costing and Pricing Steering Group (JCPSG).
Staff undertaking research and project activity will maintain the records specified by
the Director of Finance to enable compilation of returns to the funding body which
meet the requirements of the Transparency Review.
Grant and contract conditions
Many grant-awarding bodies and contracting organisations stipulate conditions under
which their funding is given. In addition, there are often procedures to be followed
regarding the submission of interim or final reports or the provision of other relevant
information. Failure to respond to these conditions often means that the institution
will suffer a significant financial penalty.
It is the responsibility of the named
supervisor or grant holder to ensure that conditions of funding are met.
Any loss to the institution resulting from a failure to meet conditions of funding is the
responsibility of the budget holder.
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Other Income-Generating Activity
Private consultancies and other paid work
Staff are not permitted to engage in other paid work without the written consent of the
Principal or Secretary. Such consent will not be unreasonably withheld and if given
will be subject to the other paid work not having an adverse effect on the duties of
your post with UHI and not conflicting with the interests of UHI.
European Union (EU) and other matched funding
Any such project requires the approval of the Secretary prior to any commitment
being entered into. Such approval shall be dependent upon the relevant head of
department being able to demonstrate that eligible matching funds are available and
that the project is financially viable by the application of the institution’s costing and
pricing policy.
Individual applications shall be the subject of a report by the Secretary to the Finance
and General Purposes Committee which will set out, amongst other things, the
potential risks generated by the project.
If the institution sub-contracts such work to external providers, including academic
partners, the relevant head of department shall ensure that:
o
this is on the basis of a written contract which allows for full audit access to
detailed records
o
appropriate monitoring procedures are in place to ensure that the outputs are
achieved and the provision is of suitable quality
o
payments are only made against detailed invoices.
Profitability and recovery of overheads
All other income-generating activities must be self-financing or surplus-generating
unless it is intended that a new course is to be launched as a loss leader. If that is
the case, the reason for it must be specified and agreed by the head of department
and the Director of Finance.
Other income-generating activities organised by members of staff must be costed
and agreed with the Director of Finance before any commitments are made.
Provision must be made for charging both direct and indirect costs in accordance
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with the institution’s costing and pricing policy, in particular for the recovery of
overheads.
Deficits
Any unplanned deficits incurred on other income-generating activities will be charged
to departmental funds.
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Intellectual Property Rights and Patents
General
Certain activities undertaken within the institution including research and consultancy
may give rise to ideas, designs and inventions which may be patentable. These are
collectively known as intellectual property.
Patents
The Finance and General Purposes Committee is responsible for establishing
procedures to deal with any patents accruing to the institution from inventions and
discoveries made by staff in the course of their research or for any intellectual
property assigned in whole or part to UHI.
Intellectual property rights
In the event of the institution deciding to become involved in the commercial
exploitation of inventions and research, the matter should then proceed in
accordance with the intellectual property procedures issued by the institution and
contained in the institution’s detailed financial procedures.
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Expenditure
General
The Director of Finance is responsible for making payments to suppliers of goods
and services to the institution.
Scheme of delegation/financial authorities
The head of department is responsible for purchases within his or her department.
Purchasing authority may be delegated to named individuals within the department.
In exercising this delegated authority, budget holders are required to observe the
purchasing policies and financial procedures.
The Director of Finance shall maintain a register of authorised signatories and heads
of department must supply him or her with specimen signatures of those authorised
to certify invoices for payment (for paper-based systems).
Under procedures agreed by the Director of Finance, central control shall be
exercised over the creation of requisitioners and authorisers and their respective
financial limits (for electronic systems).
The Director of Finance must be notified immediately of any changes to the
authorities to commit expenditure.
Heads of department and budget holders are not authorised to commit the institution
to expenditure without first reserving sufficient funds to meet the purchase cost.
Authorisation limits are detailed in the financial procedures manual.
Procurement
The institution requires all budget holders, irrespective of the source of funds, to
obtain supplies, equipment and services at the lowest possible cost consistent with
quality, delivery requirements and sustainability, and in accordance with sound
business practice.
The Director of Finance is responsible for:
o
ensuring that the institution’s purchasing policy is known and observed by all
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involved in purchasing for the institution
o
advising on matters of institution purchasing policy and practice
o
advising and assisting departments where required on specific departmental
purchases
o
developing appropriate standing supply arrangements on behalf of the
institution to assist budget holders in meeting their value for money
obligations
o
ensuring that the institution complies with EU regulations on public
purchasing policy.
Purchase orders
The ordering of goods and services shall be in accordance with the institution’s
financial procedures manual.
Tenders and quotations
The ordering of higher value goods and services shall be in accordance with the
institution’s financial procedures.
Post-tender negotiations
Post-tender negotiations (ie after receipt of formal tenders but before signing of
contracts) with a view to improving price, delivery or other tender terms can be
entered into, provided:
o
it would not put other tenderers at a disadvantage
o
it would not affect their confidence and trust in the institution’s tendering
process.
In each case, a statement of justification should be approved by the Secretary prior
to the event, showing:
o
background to the procurement
o
reasons for proposing post-tender negotiations
o
demonstration of the improved value for money.
All post-tender negotiations should be reported to the Finance and General Purposes
Committee.
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Contracts
Only the Principal and the Secretary of UHI Millennium Institute, or nominees
authorised by the Principal or Secretary, are authorised to enter into contracts on
behalf of the institution. Contracts arising out of normal recurrent trading activities
shall be signed by the Principal or Secretary or authorised nominees.
Other
contracts including but not limited to the sale and purchase of major assets, major
capital works, borrowing monies etc. shall be signed by two members of the Board of
Governors including the Principal, and by the Secretary of the Board.
Building contracts are the responsibility of the Board of Governors.
Consultants may be appointed if the project, as determined by the Board of
Governors, is too large or too specialised for the institution’s resources.
Appointments shall be subject to tendering and other procedures where appropriate.
Proposals shall be presented in the form of costings or investment appraisals
prepared in conjunction with the Director of Finance as appropriate for Board of
Governors consideration.
Investment appraisals should comply with appropriate
funding body guidance.
Following consideration by the Finance and General Purposes Committee, and
approval by the Board of Governors, submissions should be forwarded to the funding
body where appropriate. If the required agreement is secured from the funding body,
funding body procedural rules should be followed. Funding body guidance on best
practice should be followed even when funding body approval is not required.
The achievement of value for money will be an objective in the letting of all contracts.
Conditions of contract for the purchase of goods will be followed as described in the
institution’s financial procedures manual.
EU regulations
The Director of Finance is responsible for ensuring the institution complies with its
legal obligations concerning EU procurement legislation.
EU procurement
regulations apply to written contracts for all forms of procurement, purchase or hire
(whether or not hire purchase) with a total value exceeding a threshold value.
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The Director of Finance will advise heads of department on the thresholds that are
currently in operation. A breach of these EU regulations is actionable by a supplier
or potential supplier.
It is the responsibility of heads of department to ensure that their members of staff
comply with EU regulations by notifying the Director of Finance of any purchase that
is likely to exceed the thresholds. This will need to be done well in advance in order
to permit advertisements in journals such as the Official Journal of the European
Union. (OJEU). Copies of the relevant documentation falling into this category must
be provided by heads of department to the Director of Finance.
Receipt of goods
Goods shall be checked on receipt and, if deemed to be unsatisfactory, the supplier
shall be notified immediately so that they can be collected for return as soon as
possible.
Where goods are short on delivery, the supplier should be notified
immediately. A record should be kept of all discrepancies and action taken.
Payment of invoices
The procedures for making all payments shall be in a form specified by the Director
of Finance, who is responsible for deciding the most appropriate method of payment
for categories of invoice.
Suppliers should be instructed by the budget holder to submit invoices for goods or
services to the finance department.
Care must be taken by the budget holder to ensure that discounts receivable are
obtained.
Payments will only be made by the Director of Finance against invoices that have
been certified for payment by the appropriate head of department or budget holder.
Staff reimbursement
The institution’s purchasing and payments procedures are in place to enable the
majority of non-pay supplies to be procured through the creditors system without staff
having to incur any personal expense.
However, on occasion, staff may incur
expenses, most often in relation to travel, and are entitled to reimbursement.
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Staff reimbursement should be in accordance with the institutions financial
procedures manual.
Institution credit cards
Where appropriate, the Secretary or the Director of Finance may approve the issuing
of institution credit cards to staff. Such credit cards shall be used for the payment of
valid business expenses only, and the misuse of such cards shall be grounds for
disciplinary action. The Director of Finance will be responsible for setting in place a
system to monitor the use of institution credit cards and account for expenses
charged through them.
Petty cash
The use of petty cash should be in accordance with the institution’s financial
procedures manual.
Other payments
Payments for maintenance and other items to students on behalf of sponsoring
organisations shall be made on the authority of the Director of Finance, supported by
detailed claims approved by the head of department.
Late payment rules
The Late Payment of Debts (Interest) Act 1998 was introduced to give small
businesses the right to charge interest on late payments from large organisations and
public authorities.
In view of the penalties in this Act, the Board of Governors
requires that invoices must be paid when due unless in dispute.
Giving hospitality
The procedure to be followed when granting hospitality is detailed in the institution’s
financial procedures.
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Pay Expenditure
Remuneration policy
The Director of Finance is expected to maintain adequate controls over the payroll
system.
Institution staff will be appointed to the salary scales or to individual salaries
approved by the remuneration committee and in accordance with appropriate
conditions of service. All letters of appointment must be issued by the Secretary.
Salaries and other benefits for all staff will be determined by the remuneration
committee set up by the governing body.
Staff may only be added to the payroll by the Personnel Officer or the Secretary
provided that written “authorisation to appoint” has been received from the Secretary.
The Secretary can only authorise appointments if the funding for the post has been
approved within the budget or within project funding and if the post has been filled
according to normal institutional process. Any alteration to annual salary requires an
instruction from the Personnel Officer provided that prior written approval is given by
the Secretary, except that where the Secretary’s salary is the subject of the
instruction, authorisation must come from the Principal and where the Principal’s
salary is the subject, authorisation must come from the Chair of the Board of
Governors.
Appointment of staff
All contracts of service shall be concluded in accordance with the institution’s
approved personnel practices and procedures and all offers of employment with the
institution shall be made in writing by the Secretary. Budget holders shall ensure that
the Director of Finance and the Personnel Officer are provided promptly with all
information they may require in connection with the appointment, resignation or
dismissal of employees.
Salaries and wages
The Director of Finance is responsible for all payments of salaries and wages to all
staff including payments for overtime or services rendered. All pay documents will be
in a form prescribed or approved by the Director of Finance.
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The Personnel Officer will be responsible for keeping the Director of Finance
informed of all matters relating to personnel for payroll purposes.
The Director of Finance is responsible for payments to non-employees and for
informing the appropriate authorities of such payments. All part-time employees will
be included on the payroll.
The Director of Finance shall be responsible for keeping all records relating to payroll
including those of a statutory nature.
All payments must be made in accordance with the institution’s detailed payroll
financial procedures and comply with Inland Revenue regulations.
Superannuation schemes
The Board of Governors is responsible for undertaking the role of employer in
relation to appropriate pension arrangements for employees.
The Director of Finance is responsible for day-to-day superannuation matters,
including:
o
paying contributions to various authorised superannuation schemes
o
preparing the annual return to various superannuation schemes
The Personnel Officer is responsible for administering eligibility to pension
arrangements and for informing the Director of Finance when deductions should
begin or cease for staff.
Travel, subsistence and other allowances
Incurring and reclaiming expenditure should be in accordance with the institution’s
financial procedures manual.
Overseas travel
Prior approval by the Secretary is required before committing the institution to
expenditure in respect of overseas travel.
Severance and other non-recurring payments
Severance payments shall only be made in accordance with relevant legislation and
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under a scheme approved by the Board of Governors through the Remuneration
Committee. Professional advice should be obtained where necessary. All such
payments shall be authorised by the Principal and calculations checked by the
Director of Finance. Amounts paid should be declared in the financial statements.
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Assets
Land, buildings, fixed plant and machinery
The purchase and lease of land, buildings and assets involving major expenditure
can only be undertaken with authority from the Board of Governors and with
reference to funding body requirements where exchequer-funded assets or
exchequer funds are involved.
Fixed asset register
Fixed assets will be accounted for, and recorded, in accordance with the institution’s
financial procedures manual.
Safeguarding assets
Heads of department are responsible for the care, custody and security of the
buildings, stock, stores, furniture, cash, etc under their control. They will consult the
Secretary in any case where security is thought to be defective or where it is
considered that special security arrangements may be needed.
Assets owned by the institution shall, so far as is practical, be effectively marked to
identify them as institution property.
Personal use
Assets owned or leased by the institution shall not be subject to personal use without
proper authorisation.
Asset disposal
Disposal of equipment will be in accordance with the institution’s financial procedures
manual.
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Funds Held on Trust
Gifts, benefactions and donations
The Director of Finance is responsible for maintaining financial records in respect of
gifts, benefactions and donations made to the institution and initiating claims for
recovery of tax where appropriate.
Student welfare and access funds
The Director of Finance will prescribe the format for recording the use of student
welfare funds.
Records of access funds will be maintained according to funding body requirements.
Trust Funds
The Director of Finance is responsible for maintaining a record of the requirements
for each trust fund and for advising the Finance and General Purposes Committee on
the control and investment of fund balances.
The Finance and General Purposes Committee is responsible for ensuring that all
the institution’s trust funds are operated within any relevant legislation and the
specific requirements for each trust. They will also be responsible for investment of
fund balances.
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Other
Insurance
The Director of Finance is responsible for the institution’s insurance arrangements.
Insurance cover should be in accordance with the institution’s financial procedures
manual.
All staff using their own vehicles on behalf of the institution shall maintain appropriate
insurance cover for business use.
Companies and joint ventures
In certain circumstances it may be advantageous to the institution to establish a
company or a joint venture to undertake services on behalf of the institution. Any
member of staff considering the use of a company or a joint venture should first seek
the advice of the Director of Finance, who should have due regard to guidance
issued by the funding body.
The Board of Governors is responsible for approving the establishment of all
companies or joint ventures and the procedure to be followed in order to do so. This
will have regard to any guidance provided by the funding bodies and arrangements
for monitoring and reporting on the activities of these.
It is the responsibility of the Board of Governors to establish the shareholding
arrangements and appoint directors of companies wholly or partly owned by the
institution.
The directors of companies where the institution is the majority shareholder must
submit, via the Finance and General Purposes Committee, an annual report to the
governing body. They will also submit business plans or budgets as requested to
enable the committee to assess the risk to the institution. The institution’s internal
and external auditors shall also be appointed to such companies.
Where the institution is the majority shareholder in a company, that company’s
financial year shall be consistent with that of the institution.
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Security
Keys to safes or other similar containers shall be securely kept by those responsible
at all times. The loss of such keys must be reported to the Secretary immediately.
An officer shall be responsible for maintaining proper security and privacy of
information held on the institution’s computer network. Appropriate levels of security
will be provided, such as passwords for networked PCs together with restricted
physical access for network servers.
Information relating to individuals held on
computer will be subject to the provisions of the Data Protection Act 1998. A data
protection officer shall be nominated to ensure compliance with the Act and the
safety of documents.
The Secretary is responsible for the safekeeping of official and legal documents
relating to the institution. Signed copies of deeds, leases, agreements and contracts
must, therefore, be forwarded to the Secretary. All such documents shall be held in
an appropriately secure, fireproof location and copies held at a separate location.
Students’ Association
The Students’ Association is a separate legal entity from UHI but is recognised to
fulfil a valuable role in relation to the institution’s students.
Subject to any constraints imposed by the funding body, the Board of Governors
shall determine the level of grant to be paid annually to the Students’ Association.
The Board of Governors requires the Association to provide for information details of
its proposed budget to assist in determining the appropriate level of grant.
The Students’ Association is responsible for maintaining its own bank account and
financial records and preparing its own annual financial statements.
In accordance with an agreement between UHI and the Students’ Association, the
Association will provide monthly statements of income and expenditure to the
Director of Finance and the Finance and General Purposes Committee for
information purposes only.
At year end the Students’ Association financial statements will be audited by an
appropriately qualified firm of auditors and will be presented to the Finance and
General Purposes Committee for information.
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In accordance with an agreement between the institution and the Students’
Association, the institution’s internal auditor shall have access to records, assets and
personnel within the Students’ Association in the same way as other areas of the
institution.
Use of the institution’s seal
Where a deed or document requires the institution’s seal, it must be sealed by the
Secretary or, in his or her absence, the Director of Finance, in the presence of a
member of the governing body.
The Secretary is responsible for submitting a report to each meeting of the Board of
Governors detailing the use of the institution’s seal since the last meeting.
Provision of indemnities
Any member of staff asked to give an indemnity, for whatever purpose, should
consult the Director of Finance before any such indemnity is given.
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Appendices
Appendix A
Committee Structure
Appendix B
Finance & General Purposes Committee: Terms of Reference
Appendix C
Audit Committee: Terms of Reference
Appendix D
Risk Management Policy
Appendix E
Public Interest Disclosure Policy
Appendix F
Conflict of Interest Policy
Appendix G
SHEFC Related Documents
Appendix H
Fraud Response Plan
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