PURPOSE

This policy details Global Leadership Institute’s (GLI) principles and procedures to establish decisions, directions and precedents which act as a reference for financial reporting and are the basis from which the Institutes accounting procedures are determined.

 

Definitions

All accounting definitions within this document are in accordance with Australian Accounting Standards.

 

Principles

· GLI acknowledges that proper guidelines to accounting and financial management are key to mitigating fraud.

· GLI funds must only be expended on goods and services for the purpose of the Institute.

· All items that are purchased using the funds from GLI are the property of the Institute unless there is an agreement in writing to the contrary associated with a particular contract.

· All financial transactions must be properly documented and accurately recorded in a timely manner and in accordance with the governing laws and legislations including the policies and procedures of GLI.

· All staff and students of GLI are to act in an ethical and honest manner in all aspects of procurement and financial expenditure involving GLI funds.

· All the users of GLI property must treat it with care and consideration, in accordance with manufacturer instructions, OH&S laws and relevant procedures of the Institute.

· All staff and students of GLI are required to comply with this policy and related procedures. Failure to do so may result in disciplinary actions and / or withdrawal of privileges, services and facilities.

 

Roles and Responsibilities

· The President is responsible for the implementation and accuracy of the data to be presented to the Governing Board.

· The Finance Manager is responsible for the creation and maintenance of the GLI accounts.

· The President, Registrar and Finance Manager are responsible for the ensuring that the policy is implemented across all departments of the Institute.

 

Scope

Whole Institute

Key Stakeholder

All staff and students

Proceedure

Accounting and Financial Management Procedure

· The Institute recognises that accounting and financial management procedures are essential to mitigate fraud.

· This procedure is designed to assist with understanding the various accounting and financial management procedures that are adopted at GLI.

· This procedure ensures proper accounting standards and systems and other records are maintained in accordance with the required laws and legislations.

· The financial statements constitute a general-purpose financial report which has been prepared in accordance with Australian Accounting Standards, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board.

· The financial statements have been prepared on the accrual basis of accounting using the historical cost convention, except for certain assets and liabilities which, as noted are measured at fair value.

 

Non-current assets

· The Institute takes all reasonable steps to ensure that the assets recorded in the assets module of the finance system are correct.

· For annual financial statement purposes, only capitalised assets are included.

· Tangible Assets – The Institute’s accounting policy is that purchases of assets with a cost, and with a useful life of more than 12 months, are capitalised as tangible assets.

 

Intangible assets

· The Institute’s accounting policy is to amortise such assets over useful life of 10 years.

 

Registrar and Finance Manager will arrange for an annual stock take of assets:

 

· Verify the existence of the assets listed at least up to the value threshold (80% or 100% depending on the cycle);

· Identify any changes to asset records;

· Identify any capital assets held that are not on the list.

 

The Registrar will provide a statement verifying the assets held and advising any changes and will update the assets register to reflect the results of the stock take. The Institute uses a straight-line depreciation method to record the assets depreciation and amortisation, on an annual basis.

 

Recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and Goods and Services Taxes (GST).

 

Revenue is recognised as follows:

 

Fees and Charges

Revenue from Tuition fees and charges are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

 

Cash

For the purposes of the Statement of Cash Flows, cash includes cash at current bank accounts and term deposit bank accounts.

 

Receivables

Accounts receivable include amounts due from students for tuition fees, and other enrolment related services and reimbursements due. Accounts receivables are recognised at the amounts receivable as they are due for settlement no more than 90 days from the date of recognition. Accounts receivables do not carry any interest.

 

Payables

Payables, including accruals not yet billed, are recognised when the Governing Board becomes obliged to make future payments as a result of a purchase of assets or services. Accounts payable are not interest bearing and are stated at their nominal value. Unearned revenue is also recognised as current liability.

 

EMPLOYEE BENEFITS

Remuneration

The Institute pays its employees based on their contracts and reviews annually. Academic staff will be managed by the academic board and will normally be covered by professional indemnity and public liability insurances.

 

Annual Leave

Annual leave benefit is recognised at the reporting date in respect to employees’ services up to that date and is measured at the nominal amounts expected to be paid when the liabilities are settled.

 

Long Service Leave

The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision for employee benefits and is measured at the nominal amounts expected to be paid when the liability is settled. The liability for long service leave falling due more than 12 months after the reporting date is recognised in the provision for employee benefits and is measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.

 

On-Costs

On-costs arising from employee benefit obligations, when the Institute has a present legal or constructive obligation as a result of past events, including payroll tax and worker’s compensation, are recognised together with employee benefits costs when the obligations to which they relate are recognised as liabilities and expenses. It is more likely than not that an outflow of resources will be required to settle the on-cost obligation and the expected costs are accrued over the period of employment using the present value of the on-cost obligation at the reporting date.

 

Superannuation

The Institute contributes to a superannuation fund on behalf of its employees at a rate of 9.5% of their salaries and wages. It will increase as required by regulatory changes.

 

Foreign Currency Translation

Transactions in currencies other than Australian Dollars are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date.

 

Taxation

The Institute’s income tax is prepared and lodged by an outside accountancy firm and audited by auditing firm.

 

Accounting Transaction Procedures

Accounting transactions and financial reports follow the Australian and International Accounting Standards. Processing of transactions is performed using recognised accounting software

 

Financial Management System

Xero is used for company’s accounting records; hardcopy records are also retained and stored in locked filing cabinets. The Institute’s accounting transactions are daily managed and monitored by its CPA qualified accountant. To separate accounting duties, at least two people are allowed to access Xero and two people to manage the cash accounts.

 

Auditing Arrangements

The Institute’s annual report will be audited by a registered auditing firm every year.

 

Budget Monitoring

The monthly report will be compared with the budget. If there is a significant difference, the Governing Board will be informed and they will advise on any necessary adjustment.

 

Fraud Detection and Prevention

The Institute has strict internal control system to detect and prevent fraud. The detailed control processes include:

 

Use a system of checks and balances to ensure no one person has control over all parts of a financial transaction.

· Require purchases, payroll, and disbursements to be authorised by a designated person.

· Separate handling (receipt and deposit) functions from record keeping functions (recording transactions and reconciling accounts).

· Separate purchasing functions from payables functions.

· Ensure that the same person isn’t authorised to write and sign a cheques.

· When opening mail, endorse or stamp cheques “For Deposit Only” and list cheques on a log before turning them over to the person responsible for depositing receipts. Periodically reconcile the incoming cheque log against deposits.

· Require supervisors to approve employees’ time sheets before payroll is prepared.

· If electronic transfer option has not been chosen, then require pay cheques to be distributed by a person other than the one authorising or recording payroll transactions or preparing payroll cheques.

 

Reconcile institute’s bank accounts every month.

· Require the reconciliation to be completed by an independent person who doesn’t have bookkeeping responsibilities or cheque signing responsibilities, or require supervisory review of the reconciliation.

· Examine cancelled cheques to make sure vendors are recognised, expenditures are related to institute business, signatures are by authorised signers, and endorsements are appropriate.

· Examine bank statements and cancelled cheques to make sure cheques are not issued out of sequence.

· Initial and date the bank statements or reconciliation report to document that a review and reconciliation was performed and file the bank statements and reconciliations.

Restrict use of the Institute credit cards and verify all charges made to credit cards or accounts to ensure they were business-related.

· Limit the number of agency credit cards and users.

· Establish a policy that credit cards are for business use only; prohibit use of cards for personal purposes with subsequent reimbursement.

· Set account limits with credit card companies or vendors.

· Inform employees of appropriate use of the cards and purchases that are not allowed.

· Require employees to submit itemised, original receipts for all purchases.

· Examine credit card statements and corresponding receipts each month, independently, to determine whether charges are appropriate and related to agency business.

Provide Governing Board oversight of institute operations and management. Governing Board will:

 

· Monitor the institute’s financial activity on a regular basis, comparing actual to budgeted revenues and expenses.

· Require an explanation of any significant variations from budgeted amounts.

· Periodically review the check register or general ledger to determine whether payroll taxes are paid promptly.

· Document approval of financial procedures and policies and major expenditures in the board meeting minutes.

· Require independent auditors to present and explain the annual financial statements to the Governing Board and to provide management letters to the Board.

· Participate in the hiring/approval to hire consultants including approving the independent auditors.

 

Prepare all fiscal policies and procedures in writing and obtain council approval. Include policies and/or procedures for the following:

· cash disbursements

· attendance and leave

· expense and travel reimbursements

· use of agency assets

· purchasing guidelines

· petty cash

· conflicts of interest

 

Ensure that the Institute assets such as vehicles, computers, equipment, and other resources are used only for official business.

· Examine expense reports, credit card charges, and telephone bills periodically to determine whether charges are appropriate and related to institute business.

· Maintain vehicle logs, listing the dates, times, mileage or odometer readings, purpose of the trip, and name of the employee using the vehicle.

· Periodically review the logs to determine whether usage is appropriate and related to institute business.

· Maintain an equipment list and periodically complete an equipment inventory.

 

Protect petty cash funds and other cash funds.

· Limit access to petty cash funds. Keep funds in a locked box or drawer and restrict the number of employees who have access to the key.

· Require receipts for all petty cash disbursements with the date, amount received, purpose or use for the funds, and name of the employee receiving the funds listed on the receipt.

· Reconcile the petty cash fund before replenishing it.

· Limit the petty cash replenishment amount to a total that will require replenishment at least monthly.

· Keep patient funds separate from petty cash funds.

 

Protect cheques against fraudulent use.

· Prohibit writing cheques payable to cash.

· Deface and retain voided cheques.

· Store blank cheques in a locked drawer or cabinet, and limit access to the cheques.

· Require that cheques are to be signed only when all required information is entered on them and the documents to support them (invoices, approval) are attached.

· Require two signatures on cheques above a specified limit Governing Board. Require board member signature for the second signature above a higher specified limit (Ensure that blank cheques are not pre-signed.)

· Mark invoices “Paid” with the cheques number when cheques are issued.

· Enable hidden flags or audit trails on accounting software.

 

Protect cash and cheques collections.

· Ensure that all cash and cheques received are promptly recorded and deposited in the form originally received.

· Issue receipts for cash, using a pre-numbered receipt book.

· Conduct unannounced cash counts.

· Reconcile cash receipts daily with appropriate documentation (cash reports, receipt books, mail tabulations, etc.)

· Centralise cash receipts whenever possible.

 

Avoid or discourage related party transactions.

· Require that a written conflict of interest and code of ethics policy is in place and that it is updated annually.

· Require that related party transactions be disclosed and be approved by the Governing Board.

· Require competitive bidding for major purchases and contracts.

· Discourage the hiring of relatives and business transactions with institute.