The Goals of Finance
1
1.
To simplify finance systems and business processes
2.
To adopt a GAAP (Generally Accepted Accounting Principles) compliant
"single source of truth" in all financial reporting
3.
To build and develop a strong team of high quality professional staff in
finance roles across the University
4.
To develop a responsive, helpful, customer-friendly culture
5.
To improve the quality of financial management and planning,
positioning Finance as the trusted adviser of decision-makers at all
University levels
Stephen Rees
Director of Finance
2
The Way Forward
Janz Reinecke ~ Finance Division
3
Agenda
• The need and support for transformation
• How the transformation is going to happen
• What’s in it for you?
• Our systems
• What are the changes?
• Next steps
• Questions?
4
The need for transformation
NOW
Decision Support:
Distrust of Financial Information
Informal framework
AHEAD
Decision Support:
Customer service focus
High degree of Financial Management
Improved decision making
Stewardship & Compliance:
Confusing rules and inconsistent accounting
treatments
Appointment of Finance Managers
Consistent reporting
Little accountability and ownership
More reliably phased budgets
Transaction Processes:
Transaction Processes:
Journal rework
Offshore purchases are complex and slow
Low degree of automation
5
Stewardship & Compliance:
Reduced number of transfer journals
Procedures performed at an appropriate
level
The support for improvement
• Analysis of project balances shows that approx. 40% of Projects are in deficit
(by value compared to budgets)
• Non-standardised, conflicting reports used for review of Faculty, School and
Divisional financial performance
• Variable ownership and accountability of Faculty and Divisional budgets
across the University
• Inconsistent accounting treatment (non-GAAP) operating across different
levels of the University
• High levels of resource dedicated to journal re-work, reporting dispute and
correction related activities
6
How?
7
Alignment of NS
Financials with
Calumo
Consistent
accounting rules
across all areas
Development of
Customer Service
standards
Finance Managers
supporting areas
of the University
Substituting
Commitment
Control with
active financial
management
Budget model
established on
common platform
to AIFRS
Review of
business
processes which
impact customers
Finance assisting
with
implementation
of improvements
Standard monthly
reporting
framework to
discuss operating
results to budget
Regular review
and discussion on
financial
performance &
forecast position
Ongoing
monitoring of
service quality
through customer
feedback
Clear advice and
quality services to
support the
UNSW community
What’s in it for you?
• Financial information which is meaningful, clear and friendly
• A focus on advice and guidance tailored to the needs of your business
• The removal of non-value add activities (such as removing 100,000 plus budget
transfer journal entries across faculties, elimination of over 2,000 redundant
research reports)
• Reliable management reports aligned to the needs of the business
• Provision of strong finance capabilities embedded into the organisation to
support local decision making
• A more customer-centric service culture across every area of Finance
8
/
Our Systems
Student
Administration
FIMS (Calumo)
NS Financials
General Ledger updates overnight
HRMS / Payroll
Management Reporting
9
n/Vision
New South Solutions (NSS)
NS Financials
Expenses
Asset
Management
Credit Card
eProcurement
Accounts
Payable
Purchasing
Billing
General Ledger
10
Accounts
Receivable
How does this impact you?
• Commitment Control
• Fund Code Reduction
• Chart of Accounts Review
• Reporting
• AIFRS
• Budget Management
11
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Commitment Control
12
Commitment Control
What is Commitment Control?
Commitment Control is used for budgetary control. It refers to the
process of defining and tracking the actual expenses incurred through
each module.
Commitment control blocks a transaction that would cause a pre-set
budget limit to be exceeded.
13
Myths about Commitment Control
14
BELIEFS
EVIDENCE TO THE CONTRARY
Prevents over spending
At 31 Aug 09, in value terms approx 40% of
projects over budget
Keeps budget owners below budget
Over 40% of projects are in deficit
Allows more time to spend on Research
type activities and less time managing the
finances
Considerable time is spent on adjusting
misdirected transactions to resolve
commitment control issues
Without Commitment Control there
would be a “spending frenzy”
Commitment Control wasn’t applying to
people related costs (which accounts for 80%
of total costs)
Necessary part of UNSW
Areas of UNSW have operated without
commitment control for some time
Financial performance would go down hill
if not for Commitment Control
Commitment Control ‘budgets’ total $29.7
million above Official UNSW Budget
A very useful tool to assist management
in managing budgets
Commitment Control flags an issue too late
Commitment Control signals issues too late
2500
600
Commitment Control
"detects" expenditure
above budget.
Commitment Control limit set
500
2000
400
300
1500
200
100
1000
0
-100
500
-200
-300
0
-400
Jan
Feb
Mar
Revenue (LHS)
15
Apr
May
Jun
Jul
Total Costs (LHS)
Aug
Sep
Oct
Nov
Net Result (RHS)
Dec
Active budgetary control works better
600
500
Aware throughout the year that
performance is trending below
expectations (budget)...
Shortfall identified much
sooner through active
management of results.
400
300
Corrective action can be
taken sooner to avoid
adverse budget outcome
200
100
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
-100
-200
Net result at end of year below by
same amount as suggested in April
and identified in August.
-300
-400
Net result
16
Budget Net Result
No Commitment Control
• Budget checks will no longer fail
• Processing transactions will be easier (and more accurate)
• Less adjustments will be necessary
• Misdirection of expenditure will be reduced
• Budget management can now actively be performed by the budget
owner
17
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Fund Code Reduction
18
The Challenges
• Size & Complexity
• Combination of organisational structure, project structure (to add a detailed fund
structure - 5 funds grew into about 40 over time)
• Informal rules developed around the use of one fund vs another
• Transfers between fund categories diminished their intended purpose
• Historically balances and different treatments resulted making comparing them
difficult
19
Fund Code Outcomes
Consolidated
Operating
Commercial
Activities
Strategic
Capital
12 codes of 35
remain for 2010
Reduced from 33
codes to just one:
OP001
Remaining 23
codes transferred
to
OP001 and
retired
20
SIR and SPF
codes remain
CPF01
remains
LT001 will stay
until 2011
USG01 codes
retired
Restricted
380 codes
reduced to 180
codes
Maintained for
HERDC purposes
Ongoing review
to identify
further
reductions
/
Chart of Accounts
Review Update
21
Chart of Accounts
Account Names &
Descriptions
•
Large volume of accounts, many with
similar/indistinguishable descriptions making their
use unclear or confusing
•
No clarity on the use of specific accounts such as
contractors, contract services and little clarity on
accounting rules for internal transfers, cost
recoveries, etc
•
What is the process for getting new account
opened? Who do I contact? / Who do I ask for
assistance? Who are communications sent to?
•
Cleanup of old projects, departments and funds
long overdue
Accounting Guidelines
Process Clarity &
Communication
Structural Issues
22
Chart of Accounts
“Chartfield”
Business Unit
Revenue
Accounts
Expenses
Departments
B/Sheet
Funds
Projects
Program
Class
PHASE ONE
(in Finalisation stage)
23
Chart of Accounts
“Chartfield”
Business Unit
Revenue
Accounts
Expenses
Departments
B/Sheet
Funds
Projects
Program
Class
PHASE TWO
(revenue accounts)
24
What are the Revenue account changes?
Accounts Not Used
Account Name
Changes
Redundant Accounts
and redirects
New Accounts
25
71
Accounts
95
Accounts
50
Accounts
15
Accounts
Accounts not used for 2-4 years will be made
inactive
Account Name & detailed description will be
amended to improve clarity & consistency of
revenue allocation
• These accounts will be inactivated
• Historical data to these accounts will not change
• No transfers necessary
New accounts to enhance clarity and consistency
Major changes
• Naming convention has been developed
• Redirects / Redundant accounts
• Changes to existing coding practice
• Reference guides have been created for Revenue Accounts
(to compliment the existing guide for Expenses)
26
Naming convention
27
Redirect Example – Teaching Income
2009
0903
Fees Non Award Student Activity
0909
Fees Non Award Local Misc.
0910
Fees Non Award Math Skills
0911
Fees Voluntary Subjects
0913
Fees Continuing Education
28
2010
0911
Teaching – Cont Ed’n Subjects
0913
Teaching – Cont Ed’n Courses
What do you need to do?
 Identify accounts that are applicable to you and ensure the transactions that
are allocated to these accounts are applicable under the revised user
guidelines, if not establish what the appropriate account is
 Identify if any of the accounts you use are listed to be redirected and ensure
any concerns are addressed
 Review information on the www.fin.unsw.edu.au
 Remember that the Chart of Accounts Review is a work in progress and we
welcome user feedback
29
CoA Website
www.fin.unsw.edu.au
30
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Reporting
31
Reporting – The Challenges
• Reports disconnected between total Faculty / Division balances and
project related balances
• Unclear from reports what was excluded and how reconciles to other
reports
• Context biased towards funds & project balances rather than
organisation structure (department)
• Project level budget values not at a level which can be used to manage
specific expense categories
• Abundance of project codes largely due to Commitment Control
• Needed informative reports on what we spend our revenue on
32
Reporting - 2009
NSF
No Executive Reporting
Executive Reporting
Faculty / Division reports
Faculty / Division reports
No student revenue allocated
No budget detail by account type
Project level detail
One line budget
33
Calumo
Student revenue allocated
Budget at summary account level
No project reports
Reporting - 2010
NSF
Executive Reporting
Calumo
Executive Reporting
Faculty / Division reports
Student revenue allocated
AIFRS basis
Comparisons against budget
Faculty / Division reports
Aligned with NS Financials
Project level detail
Comparison to budget at account
level
Ownership at Faculty / Division
levels
34
No project reports
New nVision Reports
Report ID:
?????
Scope Nam e:
ALL ACCOUNTS
UNSW
Financial Statement
Jul-09
Actuals and
Accrue_Add
Aligned with
Calumo
$'000
LOGO
July 09 (Month)
UNSW Total
Costs
People Cost
Academic
General
Other people's cost
Actual
Budget
Variance
July-09 YTD
Jul 08 YTD
Actual
Budget
Actual
Variance
FY 2009 Forecast
Forecast
Budget
Variance
33.7
29.6
1.1
33.4
27.8
0.5
(0.3)
(1.8)
(0.6)
202.3
170.6
2.9
204.1
170.1
3.2
1.8
(0.5)
0.3
341.0
663.5
4.8
368.1
301.3
4.3
355.0
293.8
5.4
(13.1)
(7.5)
1.1
Total people cost
Other Costs
Scholarship expenses
Contract & consulting services
Entertainment
Marketing
Overheads
Repairs and maintenance
Consumables
Travel
Equipment non capital
Other expenses
Internal expense
Interest expense
64.4
61.7
(2.7)
375.8
377.4
1.6
1,009.3
673.7
654.2
(19.5)
4.7
5.3
0.3
0.2
0.8
3.2
3.8
2.7
3.6
4.3
10.7
0.2
4.5
6.3
0.3
0.6
1.2
2.1
3.2
2.3
2.2
6.6
2.9
0.1
(0.2)
1.0
0.4
0.4
(1.1)
(0.6)
(0.4)
(1.4)
2.3
(7.8)
(0.1)
32.3
35.5
2.4
3.5
7.4
19.1
19.0
14.9
13.2
42.6
29.5
2.5
31.5
44.4
2.0
4.4
8.6
14.8
22.3
16.3
15.5
45.9
20.6
0.8
(0.8)
8.9
(0.4)
0.9
1.2
(4.3)
3.3
1.4
2.3
3.3
(8.9)
(1.7)
49.8
70.4
4.4
8.6
12.0
29.6
34.2
29.8
26.4
64.8
46.4
5.2
58.6
71.1
4.5
7.5
13.9
29.1
36.4
26.8
24.7
83.4
39.0
5.3
54.0
76.1
3.4
7.5
14.8
25.4
38.2
28.0
26.5
78.7
35.3
1.4
(4.6)
5.0
(1.1)
0.9
(3.7)
1.8
1.2
1.8
(4.7)
(3.7)
(3.9)
Total other costs
Transfer from Reserves
39.8
(0.1)
32.3
(7.5)
0.1
221.9
-
227.1
-
5.2
-
381.6
-
400.3
1.0
389.3
-
(11.0)
(1.0)
TOTAL COSTS
104.1
94.0
(10.1)
597.7
604.5
6.8
1,390.9
1,075.0
1,043.5
(31.5)
24.2
(3.9)
48.3
110.9
42.2
55.1
6.0
106.5
67.8
101.7
Result before depreciation
Depreciation
Operating Result
35
Accounting Period: 7
7.1
6.8
(0.3)
50.4
47.3
(3.1)
83.6
88.5
81.1
(7.4)
17.1
(10.7)
27.8
60.5
(5.1)
65.6
(77.6)
18.0
(13.3)
31.3
New nVision Reports
Reports available from early 2010
Executive
Faculty /
Division
School /
Unit
Project
F1_Standard Financial Statement (P&L)




F2_Summary Financial Statement (P&L)


F3_Summary Financial Statement Fund Grp

Report name







P2_Life to date Project report


P3_Project results summary - Dept/Fund




F4_Detailed Financial Statement (P&L)
F5_Trial Balance
D1_Project results (Dept Summary)

D2_Summary P&L by Dept

P1_Standard Project P&L

“Old” nVision reports still available
36


AIFRS
37
AIFRS
Australian International Financial Reporting Standards
www.aasb.com.au (Australian Accounting Standards Board)
www.iasb.org (International Accounting Standards Board)
38
Accounting Manual
New/Updated Policies:
Financial Reporting
Foreign Currency Translation
Taxes
Inventories
Intangible Assets
Property, Plant & Equipment
Impairment of Assets
Non-current Assets held for Sale and Discontinued Operations
Investments in Associates and Joint-Ventures
Investments and Other Financial Assets
Leases
Payables and Borrowings
Trade Receivables
Provisions and Employee Benefits
Revenue Recognition
39
/
AIFRS
Student Fees
Government Grants
Revenue
Research
Employee Costs
Other
40
Revenue – Teaching & Learning
Student Fees
Government Grants
2009
2010
Revenue recognised on
CASH basis
&
End of year accrual
Revenue recognised
based on ACTUAL
student enrolments
(accrued as earned)
DEEWR revenue
allocated to Faculties in
Calumo not in NS
Financials
DEEWR revenue
allocated to Faculties in
NS Financials, then
reported in Calumo
Revenue
Research
Employee Costs
Other
41
www.fin.unsw.edu.au
Student related income in NS Financials
Student Fees
Government Grants
UNSW
2009
2010
600m
Sum of
below
(600m)
Revenue
MED
Nil
150
SCI
Nil
220
Research
Employee Costs
ARTS
Nil
230
etc…
…
…
Other
42
Same
balances
in NS
Financials
& Calumo
Split
down to
School
level
Derived
from
Student
Financial
System
www.fin.unsw.edu.au
Research
Student Fees
Government Grants
2009
2010
Coding to limited set of
specific accounts at
Faculty level
Coding to relevant
income accounts
Re classification of
grants based on the
nature at Central
No reclassification
required
Monthly
deferral/accrual at
Central level
Monthly
deferral/accrual at
Faculty level
Revenue
Research
Employee Costs
Other
43
www.fin.unsw.edu.au
Expenses – Employee costs
44
2009
2010
Student Fees
Annual leave:
Government Grants
Charged to Faculties when
taken;
Charged to Central when
entitlement accrues
No charge when taken;
Charged to Faculties when
entitlement accrues
Revenue
Salary / wages that would
otherwise be charged to S&W
account, charged to AL expense
Standard charge for Annual
Leave based on statutory rate of
20 days per year per employee
Research
Highly variable Annual Leave
expense from period to period
More constant Annual Leave
expense from period to period
Employee Costs
Related on-costs not reflected in
Faculty / Division results
On-costs reflected in Faculty /
Division results
Other
Low level of transparency
More transparency for Faculties
and Divisions
Annual leave:
www.fin.unsw.edu.au
Other
Student Fees
Government Grants
Area
Computers, Motor
vehicles , Other
Plant & Equipment
Revenue
Research
45
Capital/ Construction
projects
Employee Costs
IT expenditure
capitalisation
Other
Contingent Assets &
Liabilities
2010
• All asset acquisitions
through POs to enable
capture of 'accruals' &
'commitments' info
• Tagging & Stocktake
performed for assets
costing $5,000 or more
More formalised and
collaborative 'capital
assessment‘ process in order
to capture additional costs of
a capital nature
Better guidance embodied in
the procedure
www.fin.unsw.edu.au
Other
Student Fees
Area
2009
Government Grants
Revenue
Commitment
Research
Employee Costs
Leasing
Arrangements
2010
• Purchase2010
Orders to be
raised prior to purchase
• Material contracts should
to be entered into as a
collaboration between
Facilities Management,
Procurement, Legal and
Research office (for
research contracts)
Encouraged use of Lease
Register functionality within
NS Financials.
Other
46
www.fin.unsw.edu.au
Moving towards AIFRS
2009
R
E
V
E
N
U
E
E
X
P
E
N
S
E
47
2010
Student Fees
Not at Faculty level
At Faculty/School/Division level
Government Grants
Not at Faculty level
At Faculty/School/Division level
Research
Not at Faculty level
At Faculty/School/Division level
Investment Income
Not at Faculty level
Not at Faculty level
Expenses
Not at Faculty level
At Faculty/School/Division level
Finance Costs
Not at Faculty level
Not at Faculty level
Employee Costs
Not at Faculty level
At Faculty/School/Division level
Impairment
Not at Faculty level
Not at Faculty level
/
Budget Management
48
Impact on Budgeting
Commitment Control
Minimal impact on UNSW’s formal budget
setting process
Budgeting

Fund Codes
Reporting

Reporting
49
Minimal impact; budgets prepared at
summary fund levels
Fund codes that have been reclassified
as operating will be re-mapped
Monthly management reports and nVision
reports will contain consistent data;
reconciliation no longer required
The Way Forward
STANDARD MANAGEMENT REPORTING
CALUMO
NSF Budget
OFFICIAL
UNSW
BUDGET
OFFICIAL
UNSW
BUDGET
UNSW
Faculty /
Division
Schools
Supplementary
Projects
Ledger
Projects
OPTIONAL
(part of budget
process)
50
/
Ongoing Support Network
51
University Services - Tania Maiolo
Facilities - Michelle Hardy
CoFA - Betty Romero (acting)
FASS - Urania Stamios
Engineering - Robert Young
Donate UNSW - Kevin Lee
Medicine - Tony Gardner
Science - Darren Parkinson
ASB - Robert Owens
ADFA - Mark Van Poppel
* FBE – TBA (contact Kelvin Hui)
* Law – TBA (contact Rajinder Cullinan)
Next Steps
• 1st of a series of informational briefings
• Reports are under development for release in early 2010
• Frequently Asked Questions to follow on website
• Future sessions are envisaged targetted at the specific needs
of individual faculties / divisions
• Accounting Manual (including procedures)
• Get to know your Finance Managers
• Evaluation form
52
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Any Questions?
Grant Cooley
Please start your questions
with:
DEPUTY DIRECTOR OF FINANCIAL CONTROL
1. Your name
2. Your Faculty / Division
3. Your role
53
Handouts
54
•
AIFRS details summary
•
2010 nVision Report Wuick Reference Guide
•
•
•
•
•
CoA Quick Reference Guide – Expense Accounts
CoA Quick Reference Guide – Revenue Accounts
CoA Revenue Accounts Summary of changes
CoA Revenue Accounts Detailed list of changes
Expense Accout Detailed list of changes
•
Customer Service Charter
•
Web Page
•
Who Can Help
/