Financial Management Practice Manual
Policy and Procedures
An accountable advance arises when money is paid to an individual or organisation prior to an expense being incurred to cover the anticipated expense. Examples of accountable advances are a petty cash advance and a travel advance.
The University operates on a calendar financial Year (i.e. 1 January to 31 December). For financial reporting purposes there are thirteen (13) periods numbered 1 to 13. Period 0 is used for rollover balances and period 14 is used for end of year audit adjustments.The University’s financial calendar is available on the web at:http://www.jcu.edu.au/office/fabs/general/Calendar.shtml
The chief executive of a department of government declared under the Public Service Act 2008, section 14(1), is the accountable officer of the department (Financial Accountability Act 2009, section 65).The head of a statutory body or agency.For a University this is the Vice-Chancellor.
The accrual basis of accounting recognises the financial effects of transactions or other events in the financial years in which they occur, to the extent that those financial effects can be recognised, irrespective of whether cash has been received or paid.
Accumulated depreciation is the total depreciation calculated for an asset from the date of its purchase to the reporting date. In other words, it is the total estimated consumption of the asset value to a specified date.
A generic term used (by the QLD Government) to describe the various organisational units within government that deliver services. The term includes departments; commercialised business units; shared service providers; statutory bodies and government-owned corporations. For a University an agency is a Faculty or a Division.
The annual report is a report made in writing by the University to the State Minister on the operations of the University for a financial year. The report also contains the annual financial statements.
The requirement for the University to provide an annual report is contained in the Financial Administration and Audit Act and the requirements for the contents of the report are contained in the Financial Management Standard.
This terms means officers who the University has given the authority to approve hospitality and entertainment as set out above.
An asset is an item, tangible or intangible, of continuing value which is owned or controlled by the University.
Generally, an asset is recognised when it is probable that future economic benefits will eventuate from the asset and its cost or value can be reliably measured.
For accounting purposes, assets are normally classified as either current or non-current assets. A current asset is where the future economic benefits will, under normal business circumstances, eventuate within twelve months of the end of the financial year. Non-current assets are those where the full future economic benefits are not likely to eventuate or be consumed within twelve months following the end of the financial year.
Examples of an asset include:
non-capital assets (including Portable & Attractive);
property, plant and equipment; and
Refer to glossary item “Property, Plant & Equipment” for further definitions and recognition thresholds.
Asset Allocation refers to a mix of investment classes, for example, the mix of investments between cash, fixed term bonds, property, equities etc.
Asset Revaluation Surplus
Where an asset’s carrying amount is increased as a result of a revaluation, the increase will be credited directly to equity via the asset revaluation surplus.
However, if the revaluation reverses a previous revaluation decrease that was recognized in the statement of comprehensive income for the same class of asset, the revaluation should be recognized as revenue in the statement of comprehensive income ( to the extent of the previous revaluation decrease) and the balance (if any) will be processed through the asset revaluation surplus.
A bank account is a mechanism which allows for custody of money and the payment of money from that account on the instructions of the holder of the account. It forms a business relationship which involves the reckoning of debit and credit entries (i.e. deposits and withdrawals) through a third party who provides bank account facilities.
A Bank Guarantee allows the customer, suppliers and other third parties a guarantee of payment to secure a contract or leasing arrangement without tying up working capital or affecting other business activities. In effect the bank reduces the loss if the transaction doesn’t go ahead as planned. Bank Guarantees are common in the building, property development, contracting and retailing industries. Bank Guarantees can also be used both for the securing of assets and for cash payments.
The term ‘benefit’ is broadly defined and includes any right, privilege, service or facility but excludes payments of salary or wages, eligible termination payments or contributions to complying superannuation funds.
Best Fare of the Day
The lowest fare available at the time of booking, providing the greatest value to the University. Consideration should be given to cost, class of travel, duration, the flexibility required by the traveller, the nature of the business and any other necessary travel requirements.
Borrowing is the act of accepting an asset (usually money) from an individual or organisation under a contract requiring its return normally with an associated interest charge.
The entering of borrowing arrangements creates a liability of the University. Forms of borrowing include bank overdrafts, granting of covenants, promises, guarantees, indemnities or other encumbrances on the future economic benefits of the University.
Before entering into borrowing arrangements the University is required to ensure that:
the purpose(s) for which the borrowing is being sought has been the subject of an appropriate economic evaluation;
the University has the financial capacity to service the borrowing; and
the various legislative requirements have been met.
A budget represents targets, or estimates of outcomes, planned to be achieved in a period in carrying out the University's mission. It is a financial plan for the period that will allow the University to meet its objectives within the limit of resources available. The budget should be related to longer term financial and strategic plans, but in itself represents only the planned or projected financial results for a particular period.
The process of preparing a budget begins with a forecast of those external factors that affect the University. On this basis, the future level of output and development must be decided. Once this decision is made, a budget is developed as a detailed estimate of revenue planned to be earned and costs planned to be incurred in achieving this level of output and development. Normally these budget figures will be incorporated into the accounting system of control, to act as a control mechanism for commitment of funds and as a monitoring device when actual performance deviates from the plan.
The budgetary process, including the preparation of the budget and the monitoring of actual results to budget, is an integral part of a balanced management system. The University is required by legislation to prepare the budget annually which includes all income and expenditure of the University for that year.
Business Unit Funds
Business Unit funds include the income an expenditure of entities operating as Business Units within the University.
Business units are cost recovery operations which typically provide commercial services to the University community (and may also service external clients). Business units are designed to be break-even/profitable entities.
A type of asset that is not easily sold in the regular course of a business's operations for cash and is generally owned for its role in contributing to the business's ability to generate profit. Furthermore, it is expected that the benefits gained from the asset will extend beyond a time span of one year. On a business's balance sheet, capital assets are represented by the property, plant and equipment figure.
Capital improvement involves making significant additions, alterations, renovations or structural changes that extends the useful life or adapts the space for changing needs or standards.It also includes enhancements or improvements to the value and/or performance of the original asset.
Recording of a cost as a capital asset and thus being reflected in the University’s Statement of Financial Position instead of an expense which is reflected in the University’s Statement of Financial Performance.
Cash and Cash Equivalents
Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
A collector is an individual who has been authorised to receive University money. Collectors are normally employees of the University and can only receive money at specified locations.
A commitment is an unenforceable undertaking to incur a future obligation if certain circumstances occur. A commitment may become a liability when the defined circumstances occur and a resultant benefit is received by the University.
Conference and Assisted Travel
Means any approved travel in relation to a Special Studies Program (SSP), professional development program, research, consultancy or other travel activity of any kind (e.g. attendance at a conference) irrespective of the source of the University funds. All personal purpose travel is to be reimbursed so as to avoid incurring an FBT liability.
Consultancy funds represent income from the sale of the University's expertise on a commercial basis. They differ from Research funds in that the client commissioning the work has a strong commercial interest in the outcome and prescribes the scope of the work required relatively precisely. In most cases the client will be directly engaged in commerce or industry as distinct from public institutions, industry associations, funding agencies, etc.
A contingent liability is one that may or may not materialise in the future, for example, a possible lawsuit arising from past events, or a purchase contracted for that may not be fulfilled.
Corporate Credit Card
A Corporate Credit Card is a credit card issued for University purposes and its use is subject to relevant authorities, approval rules, delegations and account expenditures being in accordance with University policy and procedure. It is distinguishable by the imprinting of the James Cook University insignia on the face of the credit card.
A credit card is a device that allows the user to obtain goods or services without the use of cash by charging it through a third party who provides credit.Examples of common credit cards are Mastercard andVisa.
An account card is not a credit card. It is only an arrangement between the buyer and seller to evidence the existence of an account.Examples of account cards are fuel cards and a Myer card.
A creditor is an external party (including an employee) to whom the University owes money. This debt would normally arise as a result of the supply of goods or services prior to receiving payment.
Creditors are often categorised as trade creditors and other creditors based upon the nature of the goods or services supplied.
A debtor is an external party (including an employee) who owes money to the University.
Debtors are often categorised by reference to their relationship to the University. Examples include student debtors, general debtors and research debtors.
In accordance with the provisions of the James Cook University Act 1997, Council resolved to approve the granting of Delegations of Authority to members of the University’s staff. The Delegations Register identifies those University staff who have been granted Delegations of Authority.In granting the delegation the Council directs;
That all delegations must be exercised in line with all James Cook University approved financial, human resource and academic policies and procedures;
Where any delegation is given to the holder of an office as such then, except in so far as the contrary intention appears, the power may be exercised and the duty performed by the person for the time being acting in the office;
In exercising the delegations, officers are subject to the requirements of the Queensland Financial Administration and Audit Act and the Queensland Statutory Bodies Financial Arrangements Act ;
The delegations granted to these officers apply only in respect of operations and functions within the responsibility span of the office exercising the delegation and within budgetary limits, except where stated;
In relation to Restricted funds, delegations must be exercised in accordance with the terms and conditions governing each account;
All delegations are to be exercised under the principle of “one up” authorisation, i.e. an officer cannot exercise delegation in relation to another officer at the same or more senior level, except where stated.
Depreciation is the process of allocating the original cost of an asset over its expected useful life.It is not a means of accumulating funds for asset replacement.
There are various methods used to calculate depreciation for accounting purposes.The most common method is the straight line method.Under this method the cost is allocated evenly (which assumes steady and constant asset consumption) over the asset's useful life.
Since depreciation is only an estimate of the asset's rate of use, it is necessary to periodically review the depreciation rate to ensure it closely approximates the real rate of use.
Travel to any destination within Australia and its territories.
Employees are defined under the Fringe Benefits Tax Assessment Act 1986 as current, future or former employees. Associates are also included and these would include relatives of employees and employees of related entities (e.g. JCU Univet Pty Ltd, Unicare Pty Ltd).
Employee entitlements are those financial obligations of the University to employees which result from Federal and State industrial agreements, Enterprise Bargaining Agreements or legislation. Some examples of employee entitlements include accrued salary payments, accrued long service leave, annual recreation leave, sick leave, maternity leave and employer funded superannuation schemes.
For accounting purposes, employee entitlements may or may not be reflected in the financial statements. Refer to the accounting policies contained in Appendix B for further information as to when employee entitlements are recognised for accounting purposes.
From time to time, the University may participate in events or enter into arrangements which provide the opportunity to host and extend entertainment (which may or may not involve the provision of hospitality) to invited guests.
Examples of such entertainment include:
hosting in ‘corporate boxes’ at sporting or cultural events; or
hosting at functions such as special dinners, receptions, performances or other major events being conducted either on or off campus.
In the private sector, "equity" is the ownership by shareholders or other owners in the net assets of an enterprise at any time. Net assets means all assets after deduction of all liabilities (assets - liabilities = equity).
As a public institution the University does not have shareholders or owners. Therefore, equity notionally represents the net worth of the University owned by the State Government on behalf of the community as a whole.
An expenditure is the amount of cash paid for goods and services. It is not a measure of the consumption of the goods or service. For example, an expenditure can be made to purchase an expense item (e.g. payment of salary owed to an employee) or a capital item (e.g. purchase of a building).
Expenses represent the cost of goods and services consumed in the process of fulfilling the University's objectives. They are measured by the amount of an asset used (e.g. depreciation) or the amount of a liability incurred (e.g. creditor's amount).
There are two common methods of expense recognition for accounting purposes. These are the cash basis and the accrual basis. Under the cash basis, the expense is recognised in the accounts when the cash is paid. Under the accrual basis, the expense is recognised when the benefit arising from the goods or services is received. The University is required by government legislation to adopt the accrual accounting method.
For accounting purposes, expenses are normally classified by their nature such as salaries, electricity charges and taxes.
Examples of expenses include:
salary owed to staff for time worked as an employee of the University;
payroll tax owed to the Government as a result of employing staff; and
purchase cost of stationery.
Expense Management System
The online system utilised to request, approve, reimburse and acquit travel expenses.
Faculty funds are the balance of all University funds that are subject to ongoing faculty control except research funds. Faculty funds include faculty operating funds, enterprise accounts, tied grants, service funds and consultancy funds.
A financial delegate is one to whom Council has delegated financial powers under Section 11 of the James Cook University Act. Refer to Appendix A – Delegations Register.
Refer to glossary items "Property, Plant and Equipment" and "Capital Asset".
Flexible remuneration is the option to convert gross salary to alternative benefits, for an eligible employee, in line with Clause 40 of The Enterprise Agreement.
A fringe benefit is a benefit provided by an employer (or associate of an employer), in respect of employment, to an employee (or associate of the employee).A fringe benefit can be viewed as a type of “payment” to or for an employee but is different to salary or wages.
Full Fee Paying Funds
Full fee paying funds are the University’s income from tuition fees paid by students.The University currently has overseas (international) and postgraduate domestic full fee paying students. Full fee paying tuition fees are distributed to Organisational Units pro rata to their teaching load for the students concerned.
Fund Managers are designated external entities appointed under contract to manage the University’s investment portfolio to meet its investment objectives.
Gain or Loss on Asset Disposal
The gain or loss on disposal of an asset is the difference between the proceeds received from the asset's disposal and the written down value of the asset. The proceeds may be nil if the asset is destroyed.
A gain on disposal represents an income to the asset's owner. A loss on disposal is the equivalent of an expense to the asset's owner.
Granting Of Credit
The granting of credit is the provision of goods or services to any external party without requiring immediate payment. When the good or service is provided by the University before payment is received, an account receivable comes into existence (i.e. a debt is owed to the University).
A heritage asset is one which the owner or user has a statutory obligation to preserve. For example, places listed under the Queensland government's Heritage Buildings Protection Act are heritage assets.
“Hospitality” is defined as:
the provision of meals or refreshments to persons who are visiting the University or other off-campus locations for business reasons;
the organisation of other functions which further the objectives of the University; or
the entertainment of individuals at special events conducted on University grounds or other locations.
The expectation is that, in the majority of cases, this will occur at venues on University campuses, although the provision of hospitality off campus or at a staff member’s home is not precluded.
However, hospitality should not be a substitute for business meetings, which would ordinarily be conducted in the workplace.
Impairment is the decline in the future economic benefits or service potential of an asset, over and above the use reflected through depreciation. When assessing for impairment, the decline in future economic benefits occurs due to changes in technology or obsolescence, rather than usage of the asset (Where usage of the asset affects the future economic benefits, the useful life of the asset is adjusted and the depreciation charge reflects this).
In general, an asset is impaired when its recoverable amount is less than its carrying amount.Any excess of the asset’s carrying value over its recoverable amount is transferred to the asset revaluation surplus. The excess of the asset’s carrying value over the asset revaluation surplus for that class of asset is expensed to the statement of comprehensive income.
Infrastructure assets are basic installations and facilities not specifically part of other assets such as buildings.
Examples of infrastructure assets include:
roads, carparks, paths;
sewage systems and water reticulation systems;
lighting and signs; and
Insurance is a contract for compensation between an insurance company (the insurer) and the insured party (e.g. the University). If an event specified in the contract occurs and the University suffers a loss, the insurer agrees to pay compensation to the University. Usually the compensation is not paid unless the loss is greater than an agreed minimum which is known as the "excess."
The maximum amount of compensation is related to the loss that is incurred, up to an agreed limit which may be based on the value of the property lost. For example, an asset may be insured for original cost or replacement cost. The amount of the insurance claim equals the amount by which the insured value is greater than the excess.
Asset X is insured for replacement cost
Replacement cost at time of loss $5,000
If a complete loss of asset X occurs, the maximum amount of the insurance claim would be $3,000. ($5,000 - $2,000)
Insurance claims are based on the occurrence of a specified event and not the individual losses arising from the event. For example, a lightning strike (a specified event) may damage several pieces of equipment throughout the University. In such a case, one claim for all assets damaged would be submitted with one excess.
When it is realised that a loss which is insured by an insurance policy has occurred, a claim must be submitted to the insurance company within a specific period of time. Failure to submit a claim within the required period may negate the University's ability to receive compensation for the loss.
The claim is then assessed by the insurance company. In this assessment process, the insurance company may conduct a physical inspection of the damaged asset or environment. Once the insurance company has finalised its assessment, it informs the University of the amount of compensation that it is willing to pay for the loss. The amount may be the full amount of the claim or a lower amount depending upon the insurance company's assessment of the claim.
Some examples of events which may be insured:
fire, earthquake, cyclone;
Some common types of insurance include:
third party liability;
general loss, damage or theft; and
An intangible asset is an asset that does not have tangible, physical substance but the beneficial ownership of which entitles the owner to future economic benefits.
Intellectual property (including but not limited to patents, trademarks, copyright) expected to bestow a future economic benefit is an intangible asset.
Other examples of intangible assets are as follows:
business names; and
An internal charge is a fee for a good or services that is levied upon one Organisational Unit by another Organisational Unit.
a fee for use of the Advanced Analytical Centre's equipment; and
a charge for the use of a University vehicle.
An internal charge is appropriate where a cost centre approach to financial management is used, as it is in the University. However, a charge by one Organisational Unit to another Organisational Unit is, in reality, only a transfer of funds within the University and must be eliminated when accounting for the income and expenditure of the University as a whole.
Travel to any destination outside Australia and its territories
Inventory is a physical stock of goods and property held for future use.
It may include items that are:
held for sale in the ordinary course of business;
in the process of production for sale; or
materials, consumable stores and supplies used in the production of goods or services.
For accounting purposes, inventory may or may not be recognised in the accounts. Refer to the accounting policies contained in Appendix B for future information as to when an inventory is recognised for accounting purposes.
Refer to glossary item "Official Store".
An investment represents a financial asset purchased with an expectation of earning a profit and is purchased with funds excess to the immediate requirements of the University.
Common types of investments are as follows:
deposits with banks and other approved financial institutions;
bills of exchange;
Government and Semi-government securities;
stocks and shares of corporations; and
units in property and trusts.
Investments are often categorised as short, medium and long term based on their maturity date. Short term investments are normally those maturing in less than 180 days. Medium term are those maturing in less than one year and long term are those maturing after one year.
Investments are also classified as liquid or non-liquid. Liquidity is a measure of the ease with an investment can be converted into cash. A liquid investment has a readily available market and can be converted into cash easily without discounting the investment's value. A non-liquid investment, is one for which a buyer cannot be readily found or the selling price would have to be decreased significantly to attract a buyer.
All investments have an element of risk associated with them. Investments are also classified by the degree of risk that they contain. The risk associated with an investment is normally proportional to the expected return from the investment.
KPI – Key Performance Indicator
A high level Performance Indicator generally at University wide level.It shows information for an important aspect of the University’s overall operation.
KPM – Key Performance Measure
A high level Performance Indicator generally at University wide level.It measures an important aspect of the University’s overall operation, and can usually be benchmarked against other organisations within the same industry.
A lease is an agreement conveying certain rights for use of an asset from the owner (known as the lessor) to the user (known as the lessee) in return for a series of payments made by the lessee to the lessor. Normally the arrangements are formally documented by way of a lease agreement signed by both the lessor and lessee.
Leasing can be used as an alternative financing method for acquiring the benefits of the asset to avoid full payment at the time of acquisition. The periodic lease payments for the asset include both a principle and interest component.
For accounting purposes, a lease is classified as either an operating lease or a finance lease. The difference is based on who effectively retains substantially all the risks and benefits of ownership of the leased property. In an operating lease, the lessor retains the risks and benefits and in a finance lease, the lessee receives the risks and benefits of ownership. Refer to the accounting policies contained in Appendix B for further information as to the specific accounting treatment for each type of lease.
The Lease Custodian is the employee within the University who is directly responsible for the administration of leasing arrangements including compliance with the lease agreement.
A leasehold improvement is an asset owned or controlled by the University that is affixed to another asset which is leased by the University. The leasehold improvement is an integral part of the leased asset and could not be separated from the leased asset without losing significant value.
A liability is a legal obligation to pay in the future as a result of a past transaction or event. As such, it is a debt owed by the University.
For accounting purposes, liabilities are normally classified as either current or non-current liabilities. A current liability is where full payment is likely to be required under normal business circumstances within twelve months of the end of the financial year. Non-current liabilities are those where full payment is not likely to be required within twelve months following the end of the financial year.
Examples of liabilities include:
amounts owing to creditors who have supplied goods and services (commonly known as accounts payable);
money received where there is an obligation to provide future benefit or in default to refund the money (examples include grants received in advance, funds held on behalf of other parties and bond money held for accommodation);
unpaid employee entitlements such as accrued annual leave and long service leave; and
borrowings, debt servicing, lease agreements and other financial arrangements.
A loan represents money provided to an individual or organisation for a specified period for an approved purpose with the expectation of its return and usually with an associated interest charge. Loans differ from accountable advances since loan funds are used for the purposes of the borrower rather than University purposes. Accountable advances are used for University purposes.
For these purposes a loss includes:
a decrease in economic benefit to the University because of an unauthorised act or omission in relation to an asset;
a loss of or deficiency in money or the property of the University;
a loss arising out of the wilful destruction, theft, condemnation, obsolescence, deterioration of, or damage to, the property of the University other than normal wear and tear;
an irrecoverable overpayment, debt written off and waiver of claim or right to claim;
an expenditure made without lawful authority; and
a loss of money due to failure to assess and levy revenue and other amounts receivable.
Losses do not include:
provisions for doubtful debts,
periodic inventory adjustments, nor
the consequences of events such as floods, bush fires, cyclones or similar events.
A material loss of University property means:
a) if the property is money, a loss of more than $500; or
b) for other property, a loss valued by the Head of the Organisational Unit at more than $500.
Major Project Funds
Major project funds form part of the operating funds of the University.They are funds which are utilised for specific capital expenditure and “roll up” to operating funds in the University’s equity. These funds are not under the discretionary control of individual Organisational Units or researchers.
Management Information System
A management information system provides to authorised people in a timely manner information relating to the University's operations. It is normally a centralised data base that allows consistency in the information being presented. There are various types of management information systems in the University, one of which is the financial management information system.
In developing and maintaining a management information system, the needs of the users of the information must be considered. The users of the University's financial management information system include organisational units, internal and external auditors, state and federal governments, external granting organisations, creditors and benefactors.
Materiality is a concept relating to the importance/significance of an amount, transaction or discrepancy.It is a matter of professional judgement influenced by the characteristics of the entity and the perceptions as to who are, or are likely to be, the users of the financial statements, and their information needs.
Miscellaneous funds are basically anything that does not fit within the other five fund pools. Typically miscellaneous funds include income and expenditure associated with:
Services provided where there is no contract/consultancy agreement
Funds held on behalf or for the benefit of another organisation/group (i.e. conference accounts, student fundraising accounts (student groups).
A non-capital asset is a physical asset that is below the accounting limit for recognition as a capital asset in the accounts. It is not controlled in the central capital asset register since it costs less than the approved limit. This does not mean that the asset does not have value, but only that it is not cost effective to account for its consumption over more than one financial year.
Refer to Portable and Attractive Items.
Non Research Contracts and Consultancies and Funds
Non-research contacts and consultancies are received from industry/external corporate entities.The funds are generated by the provision of consultancy services (fee for service).The contract/consultancy agreement specifies the outcomes/deliverables and outlines any special conditions governing the use of the funds.
The effects or impacts that an agency (Faculty / Division) seeks to have on its clients and stakeholders. Objectives should deliver the agency business direction and align with the whole of government direction, and collectively, agencies’ objectives should deliver the whole of government (and University) direction.
An official store is inventory at one specified location as determined by the Director, Financial and Business Services.
Refer to glossary item "Inventory".
Official University Business
For the purpose of this document, "Official University Business" means any approved work related to employment at the University or in connection with the official functions of the University irrespective of the source of funds including:
representation of James Cook University in an official capacity
attendance at a conference or seminar in a field relevant to the traveller’s expertise
participation in community service; for example, as an examiner, adviser, unpaid consultant or presenter of seminars or lectures in an official capacity
attendance as a member of governmental/external organisations in an official capacity
consultation or work with colleagues on research, project or teaching development (e.g. Special Studies Program)
use of specialist equipment or facilities where these are not available at the work place
All personal purpose travel is to be reimbursed to avoid incurring an FBT liability.
One Up Authorisation
A financial delegate or nominee cannot approve claims for travel or personal reimbursement (either through a petty cash voucher or payment request forms) for a staff member who has either the same level of, or a higher delegation. For example, an Administrative Officer cannot authorise such claims for the Head of School neither can a Head of School authorise such claims for another Head of School norfor an Executive Dean.
OPT – Operational Performance Target
A Performance Indicator generally at a Faculty or Divisional level.It is a measurable target that gives information on the operations of the Faculty or Division, and forms a core component in operational performance management.
A plan that sets out how the agency (Faculty / Division) plans to deliver its services over the next year. It also includes service standards that allow the accountable officer to assess performance in delivering services.
Operating funds are that part of the University's total equity which are held or utilised for the University's general purpose and which are not under the discretionary control of individual Organisational Units or researchers.Operating funds also are not subject to restricted use or conditions on use.
An organisational unit is a discrete operating unit within the University to which operating responsibility can be associated. It includes schools, faculties, offices, divisions, colleges and other unincorporated University enterprises.
The University’s financial controls and reporting occur at organisational unit level.This is the lowest level to which Council acknowledges financial delegations and the main unit of periodic management reporting.Council approves the establishment of and alterations to Organisational Units and the organisational structure.The Deputy Vice-Chancellor approves all other changes.
For administrative purposes, the University uses a four digit code to label its organisational units. The code is also known as an “orgu”.The orgu has embedded logic to convey the hierarchical structure of the University.The first three digits define the organisational unit, and the fourth defines a lower level in the structure which includes disciplines and units.
X X X X
Forth digit indicates which discipline or unit
Third digit indicates which school, office, college or other unincorporated enterprise
Second digit indicates which faculty or division
First digit indicates a faculty (6) division (8)or corporate (9)
For the purpose of this document, “Overseas Travel” means any travel in connection with Official University Business/Conference and Assisted Travel as defined in this glossary, irrespective of whether or not any personal leave is taken in conjunction with such travel, where the destination is outside Australia and its territories.
Petty Cash Custodian
The Petty Cash Custodian is the employee in the Organisational Unit who has been authorised to make payments from a petty cash fund and who is directly responsible for the administration of the fund.
Petty Cash Float
A petty cash float represents money provided to pay for minor University expenditure on a cash basis rather than raising a purchase order through the normal purchasing process. Usually the types of expenditure allowed to be paid by petty cash funds are restricted as to purpose and amount. Petty cash floats are held by Custodians and may also commonly be known as imprest funds.
A (QLD Government term) which Measures the extent to which the outcomes achieved by an agency (Faculty / Division) or University are meeting their objectives in their strategic (University) Plan or Operational Plan.
Considered to be the system, which integrates organisational strategic management, performance information, evaluation, performance measurement, monitoring, assessment and reporting
Performance Management Framework (PMF)
The PMF is designed to improve the analysis and application of performance information to support accountability, inform policy development and implementation and deliver value to stakeholders.The PMF ensures a clear line of sight between planning, results and reporting.
Portable and Attractive Item
Portable and attractive items are non-consumable items that:
have a value below the University’s capitalisation threshold (this threshold is between $2,000 and $4,999); and
are susceptible to theft or loss due to their portable nature and attractiveness for personal use or resale.
Portable and Attractive items are required to be recorded on the Portable & Attractive Register and maintained by the Head of each Organisational Unit.
Non-capital assets with a value less than $2,000 may be recorded on the Portable & Attractive Register in accordance with the Organisational Unit policy.
Regardless of value, the following non-capital assets must be included on the Portable & Attractive Register:
computer hardware (including laptops & CPUs);
audio visual equipment;
all electronic devices (including digital cameras & mobile phones);
tools of the trade (including microscopes, power tools, label printers, stethoscopes); and
art works and other cultural and heritage assets.
A prepayment represents funds paid in advance of receiving the goods or services to which the payment relates. The goods or services may be received at one future point in time or continually over a period of time in the future.
Some common types of prepayments are:
booking fees for seminars and conferences;
rental of equipment for a specific period (refer also to glossary item "Leases");
subscriptions and memberships;
rates paid on land owned by the University;
charges for maintenance agreements; and
goods or services where substantial savings can be made by paying in advance.
Prepayments may be initially recorded as assets or as expenses. If they are recorded as assets, they are subsequently expensed as the goods or services are consumed. The decision as to how they are initially recorded is based on the materiality of the item and the administrative cost of accounting for the prepayment.
Property, Plant and Equipment
The University owns or controls a range of physical assets and uses them to achieve its objectives. If they are expected to have a useful life of more than one year, they may be accounted for as property, plant and equipment (also known as capital assets or fixed assets).
Plant and Equipment is deemed to be disposed of should any of the following events occur.The plant and equipment is:
Sold (including auction and tender);
Transferred to another Organisation.
Within the University, Plant and Equipment includes any:
Software *; or
Other Plant and Equipment
with a useful life of more than one year.
For administrative purposes, physical assets costing less than the capitalisation threshold is usually treated as expenses as outlined in the Policies and Procedures.
Property, plant and equipment are usually categorised to allow for easy visual identification and provide the necessary information to compare, evaluate and manage those assets. The major categories of these assets used in the University are:
Construction in Progress;
Leasehold Improvements; and
Plant and Equipment:
Other Plant and Equipment;
Computer Equipment and Software;
Library Collection; and
Definitions of all categories and classifications are provided in:
Non-Current Asset Policies for the Queensland Public Sector;
Minimum Asset Information Requirements for Non-Current Assets for the Queensland Public Sector.
Refer also to the glossary item “Software” for when Software is considered to be Property, Plant and Equipment
Real property is property that includes land, buildings anything affixed to the land including infrastructure. Real property only includes those structures that are affixed to the land, not those which can be removed, such as equipment.
Reasonable Travel Expenses
Reasonable travel expenses are legitimate travel expenses which must be incurred to conduct Official University Business effectively.
Receipting is a mechanism which allows for the collection and custody of money at a location that are designated Receipting Locations.
A receipting location is where monies are received and receipted directly into one of the University’s online systems (Financial Management System or Student Management System).As well as the larger central receipting locations for debtors and students receipting locations have been established for areas where high volumes of receipting transactions occur such as the various clinics on campus (Speech, Physiotherapy, Psychology, etc.).
Repairs & Maintenance
Repairs & Maintenance involves restoring an item to its normal operating condition or to prevent further deterioration and service interruption.This includes minor improvements that enhance appearance but do not change the functionality of the asset.Payments of this nature should be expensed during the year.
Research funds include the net balance of all funds received by the University from external parties to undertake specific research projects or for general research by specific researchers.
Restricted funds include the net balance of all trust funds, conditional bequests and donations (including prize donations) and any other funds that are held subject to strict use conditions or capital maintenance requirements.
The University's restricted funds are subject to strict fund accounting rules and are held in a separate investment common pool. They are dealt with under the provisions of the James Cook University Act which imposes strict conditions on their investment. They will have interest distributed in accordance with the provisions of that Act. They are segregated from the University's normal operations and are always fully backed by cash or external investments. No fund in this group is allowed to run into a deficit position or be otherwise subsidised from any other fund.
Revenue is an inflow or other enhancement of an asset or decrease in a liability from delivering or producing goods or services, receiving grants, donations and bequests, or other activities.
There are two common methods of revenue recognition for accounting purposes. These are the cash basis and the accrual basis. Under the cash basis, revenue is recognised in the accounts when cash is received. Under the accrual basis, revenue is recognised when it is earned or when the University obtains control over the income irrespective of whether cash is received or not. The University is required by government legislation to adopt the accrual basis of accounting.
The use of revenue can be restricted in some way by the contributor. For example, an organisation giving a research grant to the University may require that the money be spent only on a specific project and that the grant be fully acquitted after the project is finished.
For accounting purposes, revenue is normally categorised by its source such as a government grant, a fee charged for services rendered, a donation or investment income.
Examples of revenue include:
grants from the government to fund current operating activities;
grants from an individual or organisation to fund a specific research project;
upfront payment of HECS by a student on enrolment;
tuition charges to a full fee paying student;
library or parking fines; and sales of University publications.
A University credit card issued to an employee to facilitate the purchase of low value goods and services on behalf of the University. It is used as a cost effective and efficient alternative to the existing purchasing and invoicing process for low value goods and services. The usage of the purchasing card is governed by the FMPM Policy on Purchasing Cards.
A salary advance is a type of accountable advance. It represents money given to an employee at a time prior to the required payment date. It is not a discharge of an existing obligation.
The Senior Executive of the University is defined as the Vice-Chancellor and the members of the Vice-Chancellor’s Advisory Committee.
Services funds are used to accumulate income of a discretionary nature earned by an Organisational Unit from a variety of sources other than research grants. They may include profits on consultancy activities, publications or conferences and sundry unrestricted donations. They form part of Organisational Unit resources.
Software includes all computer software developed in house or purchased.Software in Progress is software being developed and is in an unfinished state.Generally software is considered to be an intangible asset.
Determining the classification of computer software as property, plant & equipment or as an intangible depends on whether the tangible or intangible element is more significant.For example, computer software for a computer controlled machine tool that cannot operate without that specific software is an integral part of the related hardware and it is treated as property, plant & equipment.The same applies to the operating system of a computer.
When the software is not an integral part of the related hardware, computer software is treated as an intangible asset where it meets the asset recognition threshold ($100,000), otherwise it is expensed.
A concise document used by an agency to describe its vision, purpose, objectives and performance indicators.This direction must align with the whole of government direction (objectives for the community, priorities and strategies).A Strategic Plan has a longer term, broad outlook.E.g.: The University Plan is a Strategic Plan.
Strategic planning is a cyclical process through which an appropriate desired future position is determined in the light of relevant environmental factors, and identifies the means by which it is to be achieved.
The primary purpose of strategic planning is to provide a clear statement of the direction the University is to take over a specified number of years.
The plan indicates specific University goals and objectives, and identifies key performance indicators to enable achievement to be measured. The plan is not intended to address issues at an operational level but should provide a planning focus for rational determination of management policies and strategies in accordance with the existing workforce and financial resource allocations.
The way in which the government or an agency, University (Faculty / Division) intends to pursue its objectives and deliver its services.
Strategies included in an agency’s strategic plan would generally be longer term ‘strategic’ strategies that are pursued over a number of years.
Strategies included in an agency’s operational plan(s) would generally be shorter term ‘operational’ strategies that are pursued over a year or less timeframe.
A student debtor is a student of the University who has not paid in full all or any monies owing in respect of:
student services and amenities fees;
student loan repayments;
overpayments to the student; and
any other fees and charges payable to the University.
A person continues to be a student debtor notwithstanding that the person has ceased to be a student of the University.
Sub-receipting is a mechanism which allows for the collection and custody of money at a location, other than the designated Receipting Locations.
Sub-receipting is also used for those times when the Financial or Student Management System is unavailable for the designated Receipting locations use.
Surplus funds are the funds available in the cash portfolio that arise from surplus working capital.
A suspense account is a general ledger account in which transactions are temporarily recorded pending a determination as to how they shall finally be recorded.
Suspense accounts differ from deposit accounts and accountable advances since their ultimate clearance depends on the determination of the appropriate accounting treatment.
Examples of some types of transactions that would be recorded in suspense accounts are as follows:
when monies are received and the recipient is unsure what account code will be used to record the monies, they will be credited to a collection's suspense account until the information is ascertained;
when expenses are incurred on behalf of an outside body, the expense would be debited to a suspense account in the name of that body until such time as an invoice is raised to charge the outside body with the applicable costs;
when many transactions are to be recorded in the general ledger, it may be most cost efficient to temporarily import the transactions into a suspense account and then distribute the amounts to the applicable accounts at a later time; and
proceeds from the disposal of an asset may be placed in a suspense account until the gain or loss on sale is calculated and then recorded.
A system appraisal is an evaluation of the University's financial systems.Systems appraisals provide a continuous improvement mechanism to help ensure that systems remain the most appropriate, cost effective and relevant for the University’s operations.It is required to be conducted by the Financial Management Standard.
A legally levied contribution from which Commonwealth and/or State revenue is derived from taxpayers.James Cook University and its controlled entities are, by virtue of Section 50-5 of the Income Tax Assessment Act 1997, exempted from the liability to pay income tax.However, the Fringe Benefits Tax Assessment Act 1986 imposes the liability to pay Fringe Benefit Tax (FBT).
The University is registered for Goods and Service Tax (GST).The University charges GST and claims input tax credits where applicable.GST is not a cost to business but a tax on private consumption.
The university is also exposed to some State taxes (e.g. Pay-roll Tax)
Travel allowances are set amounts that are payable to cover the cost of meals, domestic accommodation and incidental costs of travelling.
Is the “Strategic Plan” for the University.
The use code makes up the final four characters of the JCU Account Number.Use Codes denotes what the transaction is representing, e.g. salaries, travel, equipment purchases, donation income.
Written Down Value of Assets
Written down value is the value of an asset as recorded in the accounting records calculated by subtracting the accumulated depreciation from the purchase price of the asset and is intended to be an accounting estimate of the current "worth" of the asset.
Year-end refers to the end of a 12 month period / end of the financial year which for the University is the 31st December.
For enquiries in relation to this Glossary please contact email@example.com
Director, Financial and Business Services
Executive Director, Finance and Resource Planning
Date for next review:
Date notification sent by Approval Authority to firstname.lastname@example.org
Susan Kinobe last updated this page on 9 May 2013.