PURPOSE

This policy details Global Leadership Institute’s (GLI) principles and processes for financial management and fraud prevention.

SCOPE

Whole Institute

PRINCIPLES

GLI ensures that:

• accounting standards and systems and other records are maintained in accordance with required laws and legislations;
• 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;
• financial statements are 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;
• GLI funds are only expended on goods and services for the purpose of the Institute;
• all items purchased using GLI funds are the property of the Institute unless otherwise agreed in writing;
• all financial transactions are properly documented and accurately recorded in a timely manner and in accordance with relevant laws and legislations;
• a protected amount account is maintained in adherence to the Fees, Payment, and Tuition Assurance Policy;
• all staff, contractors, and students of GLI are to act in an ethical and honest manner in all aspects of procurement and financial expenditure involving the Institute’s funds;
• best practices are implemented to detect and prevent fraud;
• there is zero tolerance of fraud and that all reported incidents of alleged fraud are investigated
• a financial risk management and mitigation strategy is implemented for the prevention, identification, and management of fraud
• all instances of suspected fraudulent or corrupt conduct exposed are investigated;
• the management, discipline, or facilitation of the prosecution of those responsible for substantive fraud are prosecuted as appropriate.

GLI defines fraud any dishonest activity causing actual or potential loss to any person or entity including theft of money or the property of other employees or people external to the Institute and where deception is used immediately before or immediately following the activity. The deliberate falsification, destruction, concealment, or use of falsified documentation intended for use for a normal purpose or the improper use of information or a position for personal benefits.

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

PROCEDURES
PROCEDURES FOR FINANCIAL MANAGEMENT
Non-current assets

• GLI 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: purchases of assets with a cost and with a useful life of more than 12 months are capitalised as tangible assets.
• GLI amortises intangible assets over a useful life of 10 years.
• GLI arranges for an annual stock take of assets to:
  • verify the existence of 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.

GLI produces 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 based on 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 includes 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 Governing Board becomes obliged to make future payments because 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

GLI pays its employees based on their contracts and reviews annually. Academic staff are managed by the Academic Dean and are normally 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 GLI has a present legal or constructive obligation because 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

GLI contributes to a superannuation fund on behalf of its employees at a rate of 10.5% 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

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

GLI’s annual report is 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, Governing Board is informed and advises on any necessary adjustment.

FINANCIAL MANAGMENET FOR FRAUD PREVENTION AND DETECTION

Governing Board has oversight of GLI’s financial management through Finance and Budget Committee. The terms of reference for Finance and Budget Committee are listed in the Governing Board Standing Committees Terms of Reference Policy. GLI’s internal controls to detect and prevent fraud are outlined below.

Checks and balances

GLI uses a system of checks and balances to ensure no one person has control over all parts of a financial transaction. This includes:

• purchases, payroll, and disbursements authorised by a designated officer;
• separate handling (receipt and deposit) functions from record keeping functions (recording transactions and reconciling accounts);
• separate purchasing functions from payables functions;
• requiring supervisors to approve employees’ time sheets before payroll is prepared.

Monthly reconciliation of bank accounts

This includes:

• requiring the reconciliation to be completed by an independent person who does not have bookkeeping responsibilities or require supervisory review of the reconciliation;
• examining bank statements to make sure they are not issued out of sequence;
• initialling and dating the bank statements or reconciliation report to document that a review and reconciliation was performed and file the bank statements and reconciliations.

Use of credit cards

This includes:

• restricting the use of GLI credit cards and verifying all charges made to credit cards or accounts to ensure they are GLI business-related;
• limiting the number of agency credit cards and users;
• setting account limits with credit card companies or vendors;
• informing employees of appropriate use of the Institute’s credit cards and purchases that are not allowed;
• requiring employees to submit itemised, original receipts for all purchases;
• independently examining credit card statements and corresponding receipts each month to determine whether charges are appropriate and related to agency business.

GLI assets

This includes:

• examining expense reports, credit card charges, and telephone bills periodically to determine whether charges are appropriate and related to the Institute’s business;
• maintaining an equipment list and periodically complete an equipment inventory.

Petty cash

This includes:

• limiting access to petty cash funds, keeping funds in a locked box or drawer, and restricting the number of employees who have access to the key;
• requiring 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;
• reconciling the petty cash fund before replenishing it;
• limiting the petty cash replenishment amount to a total that will require replenishment at least monthly.