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Finance(8)

By Eddie Howard,2014-08-07 12:58
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Finance(8)

    Finance

A. ADMINISTRATIVE AND RECORDING PROCEDURES

    1 The Recording of Financial Transactions associated with the Development /

    Delivery of CPD

    i) Financial transactions associated with the development and/or delivery of CPD should be

    recorded via a Short Course (SC) account. This includes transactions associated with any of

    the following:

    ; courses which do not lead to any form of credit or award from the University

    ; courses which lead to credit or an award from an external body (eg a professional

    association)

    ; stand alone academic credit bearing modules (ie those which are

    CATS rated but not part of a full award)

    ; courses which lead to a Certificate or Diploma in Professional Studies

     It does not include:

    ; courses which lead to awards of the University other than a Certificate or Diploma in

    Professional Studies

    ; course development work which is funded by CPD/CVE Development Funds

    ; courses which do not generate fee income directly as a result of the activity.

    If there is any doubt into which category a particular activity falls, please contact the CPD

    team for advice.

    ii) Transactions include the receipt of income and the payment of course expenses such as

    tutor fees, support materials, accommodation, catering.

2 Setting up a SC Account

    Requests for a SC account to be set up should be directed, in the form of a memo, to CPD

    together with a code-based budget (see Section 3 of this chapter). Requests should include

    the proposed name of the account, its purpose and the signatures of the two members of

    staff (one of whom should be nominated account holder) who will be designated signatories

    to, and therefore responsible for, the account.

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3 Responsibility for SC Accounts

    i) All SC accounts require 2 nominated departmental signatures. Signatories should be

    appropriate members of departmental staff who are familiar with all short course activities.

    Either signatory may sign financial transactions with the exception of personal expense

    claims which should always be signed by an authorised signatory more senior than the

    claimant. All signed financial transactions should be sent directly to the Finance Office for

    processing.

    End of scheme balances (credits or losses) are solely the responsibility of the managing

    department, as is invoicing. The Debtors Section in the Finance Office is responsible for the

    collection of income but any bad debts will be charged to the department.

    ii) All SC account holders should submit, to the CPD team, a code based budget (annual

    planning statement) for the forthcoming year. This must be countersigned and dated by the

    Head of Department.

    iii) All SC account holders (i.e. principal signatory) will receive monthly reports, which will be

    generated by the Finance Office. Queries related to these should be directed to the

    Management Accounts section of the Finance Office.

4 Overhead Recovery

    All fee income is subject to a 10% overhead payment. The Finance Office deducts this

    automatically on a quarterly basis from all new income lodged in SC accounts. Fee income

    should be identified by the use (on invoices, cash received vouchers etc) of the analysis

    code FEI. Income intended to cover direct costs which are not integral to course delivery is

    not subject to overhead recovery. Examples of this include payment for overnight

    accommodation or group travel from an airport which the University arranges on behalf of a

    client. It also includes clearly identifiable course sponsorship. Income of this kind should be

    coded THI.

    Any surpluses, after overhead recovery, are retained by the department and should normally

    be transferred from the SC account to an appropriate departmental one.

5 Course Expenditure

    i) Payments to University Staff in Respect of Work carried out under SC Accounts

    Any work carried out in connection with SC account activity is regarded as External

    Professional Activity (Outside Works) by the University and is subject to associated reporting

    procedures.

    Payments to staff who are on the University payroll should be generated through the use of

    form FIN/SALS/501 “Travelling, Subsistence and other Expenses Claim Form”. Income tax

    and National Insurance will be deducted from payments and departments are liable for all

    employment related on-costs.

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    ii) Payments to Non-University Staff in Respect of Work carried out under SC Accounts

    One-off payments should be generated through the use of form FIN/SALS/101FEB99.

    Note that ALL payments for work of this kind are subject to the deduction of tax and national insurance unless the individual can clearly demonstrate that he/she is working under the auspices of a company or is self-employed. This can be done in one of the following ways:

    a) submission of an invoice which clearly shows that payment is to be made to a company

    account

    b) submission of an invoice which clearly shows that the individual is VAT registered

    In the cases of a) and b), the invoice can be authorised and passed to Finance for payment

    c) submission of appropriate documentation from the Liverpool Riverside Tax Office. Documentation from any other tax office (eg that of the individual) is not acceptable. Documentation declaring self-employed status must be accompanied by an invoice and form FIN/SALS/101/FEB99

    Failure to follow these procedures can hold up payments. It is advisable therefore to discuss payment methods with contract staff well in advance of course delivery and to provide full information concerning documentation requirements. The telephone number of the Liverpool Riverside Tax Office is 0151 242 8211.

    Where the contract is a longer-term arrangement, it may be advisable to consider payment through the salary system.

    Detailed enquiries should be directed to the Salaries and Superannuation Section of the Finance Office.

    iii) Payment of External Invoices

    An Invoice Apron, duly authorised, should be attached to the front of invoices and sent directly to the Finance Office for processing.

    6 Course Income

    i) Invoices

    Departments should raise their own invoices in respect of course fees. This should be done via the standard University invoice pro-forma which should be sent to the Finance Office. The nominated short course account will be credited immediately. It is the responsibility of Debtors Section (Finance Office) to chase payment but bad debts will be charged to the department (see 3.i above).

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ii) Cheque Income

    Income from external organisations, which is paid by cheque should be lodged directly with

    the Cash Office together with a Cash Received Voucher.

iii) Cash Income

    Payment by cash should be lodged with the Cash Office using a Cash Received Voucher.

iv) Internal Transfers

    Course fees in respect of attendance by internal staff should be collected via an Internal

    Supply Form (ISF).

    NB It is advised that departments retain copies of all documentation related to financial

    transactions in case of queries.

B. COSTING AND PRICING

    Normally CPD courses should be self-financing. This means that they should cover all direct

    and indirect costs including the 10% institutional overhead payment.

1 Advice on Costs

i) Hidden Costs

    When drawing up a budget for a course, it is important to identify all costs associated with

    development, promotional and delivery activities. Some costs are easily identifiable in that a

    visible payment or cash transfer is generated, for example via an invoice or ISF form. Other

    costs are less visible. These include the use of resources such as stationery from a central

    departmental store or the time of centrally funded support staff such as secretaries.

    Providers could view it as advantageous to ignore these hidden costs - thereby cutting the

    overall cost of the activity. However, in the long run it is essential to have an accurate picture

    of how much it actually costs your department to run a particular event, even if some costs

    are “notional” only and money is not actually transferred out. This information is essential to

    making informed decisions about which CPD activities to pursue. A course, which is only

    partially costed may mistakenly show a healthy surplus. This could mean devoting time and

    energy to an activity, which could be better spent developing new projects.

ii) Fixed and Variable Costs

    It can be helpful to divide costs into those which are “fixed” and those which are “variable”.

    Fixed costs are those which are unavoidable, irrespective of the number of participants who

    attend the course. They include teaching, administration and promotional costs. Variable Chapter 3 CPD Support Pack, Revised 02/04 - 4 -

    costs are those which vary according to the number of participants e.g. catering, course

    support packs (handouts), exam fees etc.

    Dividing costs into fixed and variable helps to determine a course’s break-even point. This

    specifies the number of fees that you must generate to cover all your costs. See the worked

    example, which follows at the end of this chapter. Please note that the figures used in the

    example are illustrative only and you should substitute your own figures based upon the local

    context.

iii) Institutional Overhead

    All courses which are run under a SC account are liable for a 10% overhead contribution.

    This amount must be regarded as a non-negotiable variable cost and included in all costing

    exercises. 10% of all new income in SC accounts is deducted on a quarterly basis by the

    Finance Office. (See also Section 4).

2 Advice on Pricing

i) Factors Influencing Price

    The price of a course must take into account two key factors its cost to run and the market

    at which it is aimed.

ii) Using cost as the baseline

    The price of a CPD course must always be set at a level which enables all direct and indirect

    costs to be met i.e. the course must be totally self-financing. This is why accurate costing is

    essential and the projected participation rate as accurate as possible.

iii) The market target audience and competitors

    Systematic market research is an important tool in establishing price (see also Chapter 9 on

    Marketing). Analysis of courses in a) the same or related subject areas and b) of courses on

    different topics but targeted at the same audience gives an idea of what the market will bear.

    Information can be found from a number of different sources competitor’s prospectuses,

    brochures and leaflets, the Internet, telephone surveys.

iv) Market perception

    Price is also often a regarded as a measure of quality. Too low a price can sometimes lead

    to a misconception in the market place about the worth of an event - “If it’s only ?xxx, it can’t

    be that good!”

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v) Loss Leaders

    Pricing a course at a rate which does not cover its costs or which does not generate a cash

    surplus is often justified by the potential for further, and possibly lucrative, work from the

    same target organisation(s) and the consequent need to build goodwill and market

    knowledge. This is a legitimate tactic but should be used only where there are sound

    opportunities to make up lost revenue. Loss leading should be a conscious decision whose

    financial implications are quantified at the outset.

C. VAT

    Under current legislation, VAT (Value Added Tax) is not charged on CPD activities.

D. SOURCES OF FINANCE

1 CPD/CVE Development Funds

    CPD can provide small amounts of pump priming funds to assist in the development of the

    University’s CVE/CPD provision. The aim of the funds is to help the University to develop

    and adapt its educational provision in order to meet the learning needs of people at work.

    Further information is available from CPD.

2 The Teaching and Learning Fund

    Although not specifically directed at the the development of CPD courses, the Teaching and

    Learning Fund may provide a source of funding where proposed activity meets current

    priority areas. These are:

    ; Development of the Virtual Learning Environment

    ; Widening Participation

    ; Generic Skills Development

    ; Innovation in Learning, Teaching and Assessment Practice

    ; Development Work with Learning and Teaching Support Networks (LTSNs).

    Further information is available from http://www.liv.ac.uk/PAD/teach_learn_awards.htm

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