Financial Regulations

By Frederick Ellis,2014-05-16 09:10
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Financial Regulations

    The Open University

    Financial Regulations Contents and structure

    1. Introduction

    1.1 Purpose and status

    1.2 Application

    1.3 Responsibility for financial matters 1.4 Risk management

    1.5 Audit

    1.6 Code of Conduct

    1.7 Compliance and whistle blowing 1.8 Review and maintenance

    2. Financial management

    2.1 Resource allocation

    2.2 Budgets and budgetary control 2.3 Year end balances

    2.4 Accounting records

    2.5 Coding of financial transactions 2.6 Internal reporting

    2.7 External reporting and statutory returns 2.8 Subsidiary and related undertakings 2.9 Delegation

    3. Income

    3.1 Fees / prices / waivers / discounts 3.2 Grants and contracts

    3.3 Pricing and sale of goods and services 3.4 Invoicing and receipts

    3.5 Debt collection and write-off 3.6 Intellectual property and patents 3.7 Co-Production

    3.8 Fundraising / gifts

    3.9 Funding council income

    4. Expenditure.

    4.1 General

    4.2 Authority to incur expenditure and authorised signatories

    4.3 The ordering, tendering and contracting process

    4.4 EU and other procurement regulations and rules

    4.5 Payment of accounts

    4.6 Use of university credit cards 4.7 Salaries wages and fees

    4.8 Travel and subsistence

    4.9 Hospitality

    4.10 Ex gratia payments

    4.11 Rights

    5. Assets and liabilities

    5.1 Land and buildings

    5.2 Vehicles and plant

    5.3 Equipment and furniture

    5.4 Stocks and stores

    5.5 Losses

    6. Banking and investment

    6.1 Bank accounts

    6.2 Cheques

    6.3 Electronic banking

    6.4 Direct debits

    6.5 Petty cash

    6.6 Treasury management and investments

    6.7 Borrowing

    6.8 Guarantees and indemnities

    7. Others.

    7.1 Insurance

    7.2 Taxation

    7.3 The University seal

    7.4 Power of Attorney

    7.5 Private work

    7.6 Subsidiary and related undertakings

Financial Regulations

1. Introduction

1.1 Purpose and status

    1.1.1 These Financial Regulations have been issued by the Council of The

    Open University as the controlling authority of the University. Council, on

    the advice of Finance Committee, is the body responsible for regulating

    and controlling the finances of the University in accordance with the

    University’s Charter and Statutes and with the requirements of the Further

    and Higher Education Act 1992 and the Financial Memorandum between

    the University and the Higher Education Funding Council for England

    (HEFCE) and any conditions laid down from time to time by HEFCE. 1.1.2 Whilst HEFCE is the main funding provider, the University also receives

    funding from a number of other public and private bodies, including the

    Scottish Higher Education Funding Council (SHEFC), the Higher

    Education Funding Council for Wales (HEFCW), the Training and

    Development Agency for Schools (TDA), UK government departments

    and the European Commission. These regulations are designed to

    facilitate compliance with the appropriate requirements of these other

    funding bodies.

    1.1.3 These Regulations are the basis of the efficient management and control

    of the finances and assets of the University. They set out the rules and

    standards to be followed by all members of staff employed by the

    University in pursuance of their duties and by all committee members. 1.1.4 These Regulations should be read in conjunction with the University’s

    Financial Procedures. The Regulations set down the principles that must

    be followed and the Procedures set down the way in which the principles

    should be applied. The Procedures use the same numbering sequence as

    these Regulations for the same subject areas. 1.2 Application 1.2.1 These Regulations apply to all activities of the University, irrespective of

    source of funding. They shall also apply to any subsidiary or related

    undertakings unless they have adopted their own regulations with the

    approval of the Finance Committee.

    1.3 Responsibility for financial matters

    1.3.1 The University Council has the overall responsibility for the financial

    affairs of the University. The Vice-Chancellor is the University’s chief

    academic and administrative officer and is designated office holder under

    the HEFCE Financial Memorandum.

    1.3.2 Finance Committee oversees and reviews financial matters and makes

    recommendations to Council. The Treasurer is chair of Finance


    1.3.3 In accordance with HEFCE requirements the University has an Audit

    Committee reporting to Council. Audit Committee provides Council with

    independent and authoritative advice on the effectiveness of the Group’s

    (the University and its wholly-owned subsidiaries) arrangements for risk

    management, control and governance. Audit Committee satisfies itself

    and assures Council that satisfactory arrangements are in place to

    promote economy, efficiency and effectiveness.

1.3.4 Strategic Planning and Resources Committee (SPRC) recommends to

    Council the distribution of resources within the University on the basis of

    its strategic direction and requirements. 1.3.5 The Finance Director is responsible for the financial management,

    reporting and controls of all activities within the University and Group. 1.3.6 Planning and Resource Officers are responsible for the allocation of

    resources within their area of responsibility and for directing corrective

    action in the use of resources as required. 1.3.7 Budget holders are responsible for the use and control of the resources

    allocated to them.

    1.4 Risk management

    1.4.1 The University 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. 1.4.2 Audit Committee advises Council on policy on risk management and

    reviews the effectiveness of the arrangements for managing and

    monitoring identified key risks. The principles of risk management shall be

    embedded in the University’s operational and approval procedures.

    Heads of Units are responsible for risk management within their units. 1.5 Audit 1.5.1 The University’s internal audit function is responsible for providing an

    objective and independent appraisal and assurance on all the Group’s

    activities, financial and otherwise. In particular, assurance on the

    arrangements for risk management, control, governance and value for

    money is delivered to the Council and the Vice-Chancellor, through the

    Audit Committee. The head of internal audit has unfettered access to the

    Audit Committee.

    1.5.2 While Audit Division has a review and reporting role, responsibility for

    internal control rests fully with line managers who shall ensure that

    appropriate and adequate arrangements exist without reliance on audit


    1.5.3 Audit activity shall comply with the requirements of the “Audit Code of

    Practice” issued by HEFCE and be consistent with other relevant

    statements of professional good practice. 1.5.4 External auditors are appointed by the University’s Council on the

    recommendation of Audit Committee.

    1.6 Code of Conduct

    1.6.1 The University is committed to the highest standards of openness,

    integrity and accountability and seeks to conduct its affairs having regard

    to the principles established by the Committee on Standards in Public Life. 1.6.2 The University is a public body within the terms of the Public Bodies

    Corruption Act 1899 under which the soliciting and receiving by and

    promising and giving of gifts and awards to staff of the University in order

    to affect their duty to the University is forbidden. The Prevention of

    Corruption Act 1916 construes the giving and receiving of any gift or other

    inducement in connection with a contract as corruption, unless proved


1.6.3 All members of committees and all staff must declare an interest which

    could affect, or which could be perceived to affect, their judgement in

    making decisions in their work for the University. “Interest” includes

    financial involvement in a third party held by a committee member or

    member of staff, his or her spouse, partner, children, parents or other

    immediate family.

    1.6.4 Members of Council and Council Committees and Officers of the

    University are required to disclose interests in the University’s register of

    interests maintained by the University Secretary and to ensure that entries

    relating to them are kept up to date.

    1.7 Compliance and whistleblowing

    1.7.1 Compliance with the Financial Regulations is compulsory for all University

    employees, and non-compliance may be considered a disciplinary matter.

    1.7.2 When staff or students raise concerns about any reasonable suspicions

    they may have concerning irregularities in the running of the University or

    of activities of colleagues within the University, this should be handled

    within the policy and guidance set down by the University in its Public

    Interest Disclosure policy statement.

    1.8 Review and maintenance

    1.8.1 These Financial Regulations shall be effective from 1 January 2006. It is

    the responsibility of the Finance Director to maintain a continuous review

    of the Regulations and to seek to update them periodically through

    Council approval on the advice of Finance Committee. The Finance

    Director shall ensure that these Regulations and any changes are

    communicated to Heads of Units.

    2. Financial Management

    2.1 Resource allocation 2.1.1 The Council approves the overall budget for the Group on the

    recommendation of the Finance Committee taking into account the

    agreed strategic plan and financial strategy of the University. SPRC

    advises Council on the allocation of resources among activities.

    2.1.2 The Finance Director is responsible for operating a resource allocation

    model to assist the Vice-Chancellor’s Executive in setting financial

    parameters for Unit budgets.

    2.1.3 Budget holders are responsible for preparing activity plans and financial

    plans within the agreed planning parameters. The Vice-Chancellor, with

    the help of the Vice-Chancellor’s Executive, is responsible for generating

    resource allocation proposals based on these plans for approval by SPRC

    and Finance Committee.

    2.1.4 The allocation of resources to units should be consistent with the

    University’s strategic plans. 2.2 Budgets and budgetary control

    2.2.1 Heads of units, as budget holders, are responsible for the resources

    allocated to them. Budget holders are responsible for making themselves

    aware of, and observing, the conditions accepted by the University

    relating to sources of funding. This paragraph applies equally to staff that

    have aspects of budgets and budgetary control delegated to them by their

    head of unit.

2.2.2 Budget holders are responsible for the proper use of the budgets made

    available to them, ensuring economy, efficiency and effectiveness. 2.2.3 Budget holders, on the advice of Finance Division, shall maintain records

    and systems adequate to ensure proper management of the resources

    under their control and are required to adhere to the requirements as set

    out in these Regulations and the Financial Procedures. 2.2.4 Budget holders must not authorise or incur expenditure that will cause

    their overall budget to be exceeded.

    2.2.5 If a budget holder considers that the Unit cannot operate within the

    agreed budget for that Unit, reference should be made immediately to the

    Unit Accountant and Planning and Resource Officer for guidance. 2.2.6 Council delegates authority to the Vice-Chancellor to increase or

    decrease individual units’ budgets exceptionally during the year in the

    light of operational and financial circumstances at the time, which shall be

    reported to the next meeting of Finance Committee. Any change should

    be authorised and processed in accordance with the Financial Procedures. 2.2.7 Budget holders may vire resources from one budget cost heading to

    another within their control. Virement shall not result in an overall increase

    in the budgets for the unit as a whole. Any virement from non-staff to staff

    budgets requires the approval of the relevant Planning and Resource

    Officer and the Finance Director.

    2.2.8 If a budget holder appears not to be taking steps to avoid overspending

    the Finance Director, after consulting the relevant Planning and Resource

    Officer, may give notice that the budget holder shall not incur or authorise

    further expenditure until adequate evidence has been given that

    appropriate action is being taken to protect the University’s financial


    2.2.9 Budget holders must ensure that resources earmarked for specific

    initiatives and projects should be utilised only for those initiatives and

    projects in accordance with the conditions attaching to the allocation. 2.3 Year end balances

    2.3.1 Any budget overspends are carried forward in their entirety and Units are

    responsible for planning to clear any negative accumulated budget

    balances (ABBs) within a reasonable timescale. 2.3.2 Positive budget balances may be carried forward at financial year end in

    ABBs subject to rules determined by Finance Committee with regard to

    carry forward levels, cumulative balances and forecasting accuracy. The

    rules are set out in the Financial Procedures. 2.4 Accounting records

    2.4.1 The Finance Director under the authority of the Finance Committee shall

    determine the accounting conventions, financial systems, routines,

    accounting records and any other matter relevant to the proper operation

    of the Finance Division and the financial recording and reporting function

    of the University. The Finance Director is responsible for ensuring that

    such arrangements are compliant with the requirements of any statute or

    requirement of any statutory or funding body. 2.4.2 The Finance Director shall on request be provided with all information

    requested that is necessary for the proper financial accounting of the


    2.4.3 Proper records of the University’s commitments, receipts and payments

    and income and expenditure shall be maintained in appropriate media.

    Such records shall be retained for a minimum period of six years or a

    greater time as laid down by statute or condition of funding. Financial and

    related records shall be kept in a safe place appropriate to their sensitivity.

    Records in electronic form shall be backed up regularly with the copy kept

    in a location where loss of the original and the copy is extremely unlikely. 2.4.4 Both the Finance Director and the relevant budget holder have

    responsibility for maintaining and retaining appropriate records and

    relevant documentation to meet the requirements of statutory bodies. 2.5 Coding of financial transactions

    2.5.1 Financial control and management are placed in jeopardy if incorrect

    accounting codes are attached to income or expenditure, or if coding is

    delayed after the transaction date. Budget holders and their nominees

    must take care to code income and expenditure accurately and in a timely


    2.5.2 All paperwork or other methods of authorising financial transactions must

    have a correct code applicable to the transaction and unit otherwise it

    cannot be processed. The authorisation of a financial transaction shall

    be capable of being uniquely identified by original signature or another

    means approved by the Finance Director.

    2.6 Internal Reporting

    2.6.1 The Finance Director will publish a forecast timetable each year setting

    out the dates by which budget holders must prepare as accurately as

    possible a financial forecast of income and expenditure projected to the

    end of the financial year. The projection shall be accompanied by a

    commentary by the budget holder identifying the reason behind any

    significant variation from the budget or previous forecast. 2.6.2 Budget holders must also report to their Unit Accountant any significant

    changes in forecast income and expenditure as they become aware and

    not wait until the next forecasting period. 2.6.3 The Finance Director will consolidate forecasts of income and expenditure,

    together with actual income and expenditure, assets and liabilities and

    cash flows for each quarter, and report to Senior Management and

    Finance Committee in as timely manner as the committee timetable

    allows. The Finance Director will identify issues relating to the current

    financial year and to future years

    2.6.4 The Finance Director is responsible for providing information to budget

    holders on the actual receipts and payments incurred to the end of the

    previous month. Budget holders shall be entitled to financial information

    from the Finance Director concerning their budgets. 2.7 External reporting and statutory returns

    2.7.1 The Finance Director is responsible for co-ordinating and submitting any

    financial forecasts or reports required by external bodies, such as funding

    councils and grantors. The Finance Director will consult committees or

    senior colleagues as appropriate before making such submissions. 2.7.2 Special initiative funding often requires a financial statement accounting

    for activity. It is the responsibility of the grant recipient to ensure such a

    report is submitted. The unit accountant shall assist with the preparation

    of financial data, and the report must be approved by the Finance Director

    or nominee before submission.

    2.7.3 The Finance Director is responsible for preparing audited financial

    statements for approval by Finance Committee and Council, drawn up in

    accordance with the relevant accounting standards and within the

    timetable set down by the Funding Council and Companies Acts 2.7.4 The Finance Director is responsible for the timely submission of all

    finance-related statutory returns to the proper agencies. 2.8 Subsidiary and related undertakings

    2.8.1 Subsidiary and related undertakings, which include companies and trusts,

    shall operate under these financial management requirements, except

    where the requirements of the Companies Act or Accounting Standards or

    the Charities Statement of Recommended Practice take precedence. The

    Directors of such companies must ensure that information is supplied in

    accordance with University reporting requirements. 2.8.2 The Finance Director is responsible for ensuring that the accounts of

    subsidiary and related undertakings are prepared, audited and

    consolidated into the group financial statements. The Finance Director

    shall ensure that the requirements to submit financial statements to

    Companies House are complied with within the deadlines. 2.8.3 The Finance Director is responsible for maintaining a record of the

    financial requirements for each trust fund and for ensuring any specific

    requirements are complied with.

    2.8.4 The Finance Director shall be informed of any fund that is not an official

    fund of the University which is controlled wholly or in part by a member of

    staff in relation to their function in the University. 2.9 Delegation 2.9.1 Subject to the agreement of the Finance Director, budget holders may

    delegate the role of budget co-ordination and/or authority to incur

    expenditure within their budgets but shall remain accountable for control

    of income and expenditure.

    2.9.2 The Finance Director may refuse to accept a delegate as an appropriate

    or fit person to be authorised as a signatory in relation to any particular

    budget or budgets, or remove approval from a person who is already

    acting as a delegate.

    2.9.3 Any such appointment or removal of a delegate shall be communicated in

    writing in accordance with the requirements of the Finance Director. 3. Income

3.1 Fees, waivers and discounts

    3.1.1 SPRC recommends to Council University policy and guidelines on course

    fees, having taken account of the comments of the Academic Board and

    Senate. SPRC subsequently approves course fees on behalf of Senate

    and Council in the context of the agreed policy and guidelines. SPRC may

    delegate approval to PVC (SPEA) between meetings. 3.1.2 No fee shall be waived or partially waived except under a scheme

    approved by the Finance Director under the authorisation of SPRC. The

    Director, Students shall have authority to grant discretionary waivers on a

    basis approved by the Finance Director. The Director, Students may also

    grant fee waivers exceptionally in response to student complaints.

    Members of staff may be allowed a fee waiver in line with approved


    3.1.3 Fee discounts are exceptional. They may be given in accordance with

    schemes identified for specific purposes, which must have the prior

    approval of the Finance Director and be reviewed periodically. 3.2 Grants and contracts

    3.2.1 All bids for grants and contracts (research and non-research) shall be

    prepared in accordance with the University’s set procedure for their

    compilation and submission (see Financial Procedures). No submission

    shall be made or commitment entered into before the completion of this

    approval procedure.

    3.2.2 The relevant budget holder has responsibility for ensuring proper financial

    control, monitoring of expenditure, preparing claims and compliance with

    the terms of the grant or contract, but may delegate authority to the

    named grant/contract holder. The Finance Division will provide pricing,

    costing, legal and accounting support and will raise all invoices. 3.2.3 Any loss to the University resulting from a failure to meet conditions of

    funding, tax legislation or arising from exchange rate differences is the

    responsibility of the budget holder and will be charged to their budgets. 3.2.4 Contracts shall be signed only by the Vice-Chancellor, University

    Secretary, Finance Director, Head of Contract Services, Contracts

    Manager or such other person approved by the Finance Director. 3.2.5 The University is not prepared to administer personal research grants.

    3.3 Pricing and the sale of goods and services

    3.3.1 All supplies of goods or services shall be either against the University’s

    standard Terms and Conditions of Sale or against an individual contract

    signed by the Finance Director or a person nominated for the purpose. 3.3.2 All proposed contracts shall be on financial terms no less favourable than

    are required by the standards approved by SPRC for that class of contract.

    The terms of any contract shall be approved by the Finance Director or a

    person nominated for the purpose before any commitment is made or

    resources committed.

    3.3.3 The Financial Procedures set out arrangements for the recovery of both

    direct and indirect costs and the need to price according to market forces. 3.3.4 The financial arrangements for any other income-generating activity (e.g.

    conferences) shall be checked with the relevant Unit Accountant to

    ensure it is adequately priced, collection arrangements are appropriate

    and legal and tax implications are considered. 3.4 Invoicing and receipts

    3.4.1 University sales invoices may only be issued under the authority of the

    Finance Director. Units must not issue their own invoices. 3.4.2 Invoice requests must be submitted to the Finance Division as soon as

    possible within the terms of the sale, accompanied by details of the


3.4.3 Any income received should be recorded on a daily basis and banked

    intact into an official University account as soon as possible and in

    accordance with the directions of the Finance Director. No payments shall

    be made directly out of cash received.

    3.4.4 All receipts, forms, invoices, official documents used and electronic

    collection systems must have the prior approval of the Finance Director.

    Arrangements for receipts by debit or credit card must be under

    procedures approved by the Finance Director. 3.5 Debt collection and write-off

    3.5.1 The Director, Students is responsible to the Finance Director for the

    collection of fees under the delegated authority of the Finance Director.

    Any decision whether to pursue recovery of a fee debt may only be made

    under this authority.

    3.5.2 The Director, Students (for fee debts) and the Finance Director (all debts)

    are responsible for establishing and implementing effective and efficient

    debt collection procedures, including reference to legal agents and the


    3.5.3 Budget holders shall inform the Finance Director immediately of any

    information which might affect recovery of sums due. 3.5.4 The Finance Director has authority to write off debts to an individual value

    up to ?10,000. Any higher amount must be approved by Finance


    3.5.5 The award of any degree, diploma, certificate of completion or any other

    qualification to any student in arrears shall be subject to the arrangements

    agreed between the Finance Director and the Director, Students. These

    arrangements also cover acceptance of registration from students

    currently in arrears with the University or its subsidiaries. 3.6 Intellectual property and patents

    3.6.1 Intellectual property (IP) in course materials is dealt with in contracts of

    employment; all other IP arising from research, enterprise or citizenship

    activities is covered in the guidance issued by the Intellectual Property

    Management Office.

    3.6.2 Any interest in IP rights or patents shall not be disposed of except by a

    contract in accordance with paragraph 3.2.4. 3.7 Co-Financing, Co-Production and Co-Publication

    3.7.1 When third parties are involved with the production and publication of

    course materials, the financial and contractual arrangements for such

    activities shall be in accordance with the policies and procedures set by

    the Finance Director.

    3.8 Fund-raising and gifts received

    3.8.1 Fund-raising initiatives should only be undertaken with the approval of

    and under the guidance of the Director of Development, who shall consult

    the Finance Director on the appropriate accounting treatment for the


    3.8.2 The Finance Director is responsible for maintaining financial records of

    gifts, benefactions and donations, advising on the conditions of their use

    and initiating claims for recovery of tax where appropriate.

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