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Financial Management Practice Manual - Guidance Template Introduction

Financial Management Practice Manual Guidance Template for Hospital Foundations

Introduction

Office of Health Statutory Agencies – Queensland Health


Introduction

In Queensland, Hospital Foundations (Foundations) are statutorily obliged to have a Financial Management Practice Manual (FMPM) in place to efficiently, effectively and economically manage their financial recourses.

An FMPM describes the business management systems that work in synergy to support the overall financial wellbeing of an organisation. These systems can include, but are not limited to, the management of revenue, expenses, assets, liabilities and more.

The differences between Foundations in terms of their size, business model, turnover and financial complexity means a “one-size-fits-all” approach to developing a FMPM is unsuitable. This is further compounded by the multifaceted legislative and regulatory obligations that an FMPM must also support for Foundations. In addition, as it is not uncommon for a robust FMPM to consist of hundreds (if not thousands) of pages, the considerable workload in developing such a manual is often prohibitive for those organisations with limited spare business capacity.

To address these issues, the Office of Health Statutory Agencies within Queensland Health has developed a Guidance Template to assist the Foundations in the development of their own FMPM. A working group of Foundation CEOs and government officers from Queensland Health, Treasury and the Queensland Audit Office provided input to its development to ensure the document would be relevant to the business of Hospital Foundations.

Modelled on the financial management methods of a range of public sector entities, this document provides questions, prompts and directions to guide the development of a financially sound and robust FMPM.

This document allows for the adoption of well established fundamental business and financial management processes while supporting Foundations to develop original and creative business management practices. This is designed to ensure Foundations’ continued competitiveness in a complex and continually evolving public sector and charitable business environment.

Most likely, the core business accounting processes and procedures will already exist within the management of a Foundation, and will simply be required to be recorded. This document will ensure all relevant business management system documentation can be stored in a single business resource.

After many months and hundreds of hours, the Financial Management Practice Manual - Guidance Template is provided to the Hospital Foundations of Queensland for their use.


How to use the Guidance Template

This document is designed to make the process of developing a Financial Management Practice Manual (FMPM) as simple and direct as possible.

The guidance template is divided into 10 chapters and provided as nine (9) separate documents as per the table below:

Chapter Topic Page Ref.

Chapters 1 & 2 Introduction & Financial Management 1

Chapter 3 Financial Management Framework 29

Chapter 4 Financial Reporting 53

Chapter 5 Income Management 63

Chapter 6 Expense Management 77

Chapter 7 Asset Management 153

Chapter 8 Liability Management 199

Chapter 9 Equity Management 227

Chapter 10 Taxation Management 233

Not all parts of the guide will be relevant to all Foundations, however they may provide a reference point if the business of the Foundation changes in the future.

Each document is based on the structure identified below.

0.1 Heading (and Sub-headings)

Tips and Links box

This box contains tips, links, and information to assist in completing the sections.

When you have completed the section, delete the box.

Icons are used to refer Manual developers to different types of additional information, as indicated in the legend below.

TIP: Tips will often provide the author with options or directions not indicated elsewhere.


Black text in the section body indicates that this content can be included as is. Grey text and questions accompanied by a blue target symbol indicate where specific content should be developed.

The structure remains consistent throughout the document and consists of a number of components. These include:

Heading and Sub-headings

Tips and Links box

Black Text

Grey Text

Icons.

The heading and sub-headings indicate the topics or subjects discussed in the following sections.

The Tips and Links box contains information considered appropriate and useful to the author. This box includes reference to relevant legislative and regulatory requirements and hyperlinks to key documents and general supporting information. The contents of this box will support and inform the author in documenting the responses to the questions in the Grey text component.

This box is designed to be deleted once the author has completed developing each section.

The Black text contains wording and information that may be directly inserted into an FMPM.

The Grey text is the most important component of each section. This text contains questions and prompts for the author to answer and is designed in such a way that answering these questions will generally result in the development of a robust FMPM for a Foundation.

Should the grey text require information regarding a specific business process which a Foundation does not currently have, this can act as a prompt for development of this business system if considered relevant.

The Icons provide a visual prompt to indicate a range of issues for the author to note throughout the template. Their meanings are outlined below:

Hyperlink to relevant documentation – This icon will appear where a hyperlink to a document has been provided to the author. Hyperlinks can be included within body of the finalised document.


Mandatory (legislated) requirement – This icon will appear where there is a legislated requirement for an FMPM to address this issue.

Further details regarding the legislation making this a mandatory requirement will be included within the Tips and Links box.

Question for consideration – This icon indicates that the Foundation is required to make a decision on the approach it wants to take regarding a particular issue. Options will be provided in most cases.

Tip for drafting – This icon indicates useful information that will assist the author in the development of an FMPM and any supporting business processes and documentation.

Questions to be answered – This icon will appear where there are questions for the author to answer.

Prepared by: Jesse Lee

Title: Senior Policy Officer

Unit: Office of Health Statutory Agencies Version no: 1.2

Version date: October 2012

Status: Final


This page is intentionally left blank.

Financial Management Practice Manual - Guidance Template Chapters 1 & 2 – Introduction & Financial Management

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Financial Management Practice Manual

Chapters 1 & 2

Introduction & Financial Management

Guidance Template Office of Health Statutory Agencies – Queensland Health


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Document control sheet

Contact for enquiries and proposed changes

If you have any questions regarding this document or if you have a suggestion for improvements, please contact:

Office of Health Statutory Agencies

Email: [email protected]

Telephone: 3234 1228

Version history

Version no. Date Changed by Nature of amendment

1.0 July 12 Jesse Lee Final draft

1.1 October 12 James Ronan Financial Policy Review

1.2 October 12 Jesse Lee Final


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Contents

1 Introduction ............................................................................................ 5

1.1 Foundation Background ........................................................................... 5

1.2 Financial Management Practice Manual Background .............................. 5 1.2.1 Level 1 - Financial management instructions ................................................................... 6 1.2.2 Level 2 - Financial management instructions ................................................................... 6 1.2.3 Level 3 - Financial management instructions ................................................................... 6 1.2.4 Level 4 - Financial management instructions ................................................................... 7 1.2.5 Level 5 - Financial management instructions ................................................................... 7 1.2.6 Purpose and Scope ............................................................................................................ 7 1.2.7 Availability of the manual................................................................................................. 7 1.2.8 Training............................................................................................................................. 7 1.2.9 Compliance ....................................................................................................................... 7 1.2.10 Financial Legislation......................................................................................................... 7 1.2.11 Formatting......................................................................................................................... 7

1.3 How to use this Manual ............................................................................ 8 1.3.1 Page Numbering................................................................................................................ 8 1.3.2 Glossary of Terms and Abbreviations .............................................................................. 8 1.3.3 Forms and Schedules ........................................................................................................ 8

1.4 Exemption or Deviation from Policy ......................................................... 8 1.4.1 Policy Change ................................................................................................................... 8 1.4.2 Request for Exemption or Deviation ................................................................................ 8

1.5 Amendments History ................................................................................ 9 1.5.1 Recording of Amendments ............................................................................................... 9 1.5.2 Custodian of the Manual ................................................................................................... 9 1.5.3 Review of the FMPM........................................................................................................ 9

2 Financial management......................................................................... 10

2.1 General Responsibilities......................................................................... 10 2.1.1 Overview......................................................................................................................... 10 2.1.2 Financial Management Principles ................................................................................... 10 2.1.3 Employees in Charge ...................................................................................................... 10 2.1.4 Financial Policy Responsibility ...................................................................................... 10

2.2 Organisational Structure and Reporting Relationships........................... 11

2.3 Delegations and Authorisations.............................................................. 11 2.3.1 Background and Policies................................................................................................. 11 2.3.2 Obtaining and Reviewing Delegations ........................................................................... 12 2.3.3 Financial Delegations...................................................................................................... 12

2.4 Conduct and Ethics ................................................................................ 13 2.4.1 Code of Conduct ............................................................................................................. 13 2.4.2 Making an Official Misconduct Complaint .................................................................... 14 2.4.3 Conflicts of Interest......................................................................................................... 14 2.4.4 Confidential Information................................................................................................. 14 2.4.5 Right to Information and Information Privacy................................................................ 14 2.4.6 Frequent Flyer and Fly Buy Points ................................................................................. 15 2.4.7 Unclaimed Property ........................................................................................................ 15

2.5 Gifts and Benefits ................................................................................... 15 2.5.1 Definition of Gifts and Benefits...................................................................................... 15


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2.5.2 Legislative Requirements................................................................................................ 16 2.5.3 Reportable Threshold...................................................................................................... 16 2.5.4 Responsible Employee for Valuation of Gifts ................................................................ 16 2.5.5 Ownership of Reportable Gifts and Benefits .................................................................. 16 2.5.6 Gifts and Benefits Received............................................................................................ 16 2.5.7 Gifts and Benefits Made ................................................................................................. 17 2.5.8 Register of Gifts and Benefits ......................................................................................... 17

2.6 Registers Required ................................................................................ 18

2.7 Risk Management .................................................................................. 19 2.7.1 Risk Management Objectives ......................................................................................... 19 2.7.2 Risk Management Principles and Policies ...................................................................... 19 2.7.3 Risk Management Process .............................................................................................. 19

2.8 Security and Specific Controls ............................................................... 20 2.8.1 Responsibility ................................................................................................................. 20 2.8.2 General Security Considerations..................................................................................... 20 2.8.3 Access to Premises.......................................................................................................... 20 2.8.4 Security of Money........................................................................................................... 21 2.8.5 Equipment Loan by the Foundation................................................................................ 21 2.8.6 Equipment Loaned to the Foundation ............................................................................. 21

2.9 Internal Controls..................................................................................... 21 2.9.1 Overview......................................................................................................................... 21 2.9.2 Design of Internal Controls............................................................................................. 22 2.9.3 Adequate Controls .......................................................................................................... 23 2.9.4 General Ledger Controls................................................................................................. 23 2.9.5 Subsidiary Ledger Control Accounts .............................................................................. 23 2.9.6 Suspense Accounts.......................................................................................................... 24 2.9.7 Journal Adjustments........................................................................................................ 24 2.9.8 Segregation of Duties...................................................................................................... 24 2.9.9 Electronic Signatures ...................................................................................................... 24

2.10 Internal Audit .......................................................................................... 25 2.10.1 Overview......................................................................................................................... 25 2.10.2 Objectives ....................................................................................................................... 25 2.10.3 Scope............................................................................................................................... 25 2.10.4 Internal Audit Reports..................................................................................................... 25 2.10.5 Relationship with Queensland Audit Office ................................................................... 25 2.10.6 Audit Committee and Risk Management Committee ..................................................... 26

2.11 External Audit ......................................................................................... 26 2.11.1 External Audit Requirements.......................................................................................... 26

2.12 Corporate Governance........................................................................... 27

2.13 Performance Monitoring ......................................................................... 27 2.13.1 Overview......................................................................................................................... 27 2.13.2 Reporting and Timetables ............................................................................................... 28


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1 Introduction

1.1 Foundation Background

See section 6 of the Hospital Foundations Act 1982.

Hospital Foundations are established through section 6 of the Hospital Foundations Act 1982, which sets out the requirements for the establishment of a body corporate under this Act. – Provide a brief background of the Foundation.

– Provide a brief outline of the key purpose of the Foundation and how is it achieved.

– Provide a brief outline of the Foundation’s key activities.

– State the charitable status of the Foundation as provided by the Australian Taxation Office. For example, health promotion charity, charitable institution, charitable fund, public benevolent institution, deductable gift recipient.

1.2 Financial Management Practice Manual Background

The legislative requirements for an FMPM are set out in sections 15 & 16 of the Financial and Performance Management Standard 2009. Section 16 states that each accountable officer of a department and each statutory body must prepare and maintain a financial management practice manual for use in the financial management of the department or statutory body.

These requirements place the responsibility on Foundations as statutory bodies to develop resource management systems to efficiently, effectively and economically manage the financial resources. The systems required include:

Revenue

Expense

Asset

Cash

Liability

Contingency

Financial information

Risk

These resource management systems must be reviewed regularly to ensure relevancy under section 15 of the Financial and Performance Management Standard 2009. When developing these resources management systems and the FMPM, Foundations must have regard to the Financial Accountability Handbook, in particular the Financial Management Practice Manuals chapter.

The complexity of a Foundation’s resource management is considerable as there are five levels of financial management instructions. These instructions include the legislation, regulation, policies/guides/documents, FMPM, and business unit financial management policies and procedures.


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The FMPM is the fourth layer of financial management instructions for a Foundation.

The different levels of financial management instructions are outlined in the subsections below:

1.2.1 Level 1 - Financial management instructions

Applicable Acts:

o Auditor-General Act 2009 o Financial Accountability Act 2009 o Integrity Act 2009 o Public Sector Ethics Act 1994 o Public Interest Disclosure Act 2010 o Public Records Act 2002 o Right to Information Act 2009 o Statutory Bodies Financial Arrangements Act 1982 o Statutory Bodies (Superannuation Arrangements) Act 1994


Applicable Regulation and other Subordinate Legislation:

o Auditor-General Regulation 2009 o Financial Accountability Regulation 2009 o Financial and Performance Management Standard 2009 o Hospital Foundations Regulation 2005 o Statutory Bodies Financial Arrangements Regulation 2007


Applicable Policies, Guidelines, documents:

o Queensland Treasury’s Policies and Guidelines including o A Guide to Risk Management o Financial Accountability Handbook o Financial Management Tools o Statutory Body Guide o Investment Policy Guidelines for Statutory Bodies o Financial Reporting Requirements o Audit committee guidelines - improving accountability and

performance o Other Policies and Guidelines – For more visit the Queensland

Treasury’s Financial and Economic Policy Knowledge Centre. o [insert foundation name here] Foundation’s Code of Conduct o Crime and Misconduct Commission Policies o Queensland Audit Office Better Practice Guides o Australian Accounting Standards o Department of the Premier and Cabinet Policies and Guidelines

o Agency Planning Requirements o Annual report requirements for Queensland government agencies o A Guide to the Queensland Government Performance Management

Framework o Other Policies and Guidelines – For more visit the Department of the

Premier and Cabinet’s Publication page. o Accounting standards and interpretations issued by the Australian Accounting

Standards Board


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[insert foundation name here] Foundation Financial Management Practice Manual


[insert foundation name here] Foundation’s procedures and work instructions (link to documents if required)

1.2.6 Purpose and Scope

See section 16 of the Financial and Performance Management Standard 2009.

– Identify the purpose of the FMPM

– Identify the scope of financial activities the FMPM will govern

1.2.7 Availability of the manual


– Identify who the Manual will be made available to.

– Identify how the Manual will be made available.

– Identify how, where, and when the Manual can be accessed, and by whom.

– Will it be in electronic/hardcopy format?

1.2.8 Training


Link to Foundation’s training documentation.

– Identify who will be trained in the use of this Manual.

– Identify how training will be made available.

– Identify whether there will be regular training updates e.g. annually?

– Identify how training on any amendments will be undertaken.

1.2.9 Compliance

This Manual is prepared in accordance with Financial Management Instruction Levels 1, 2 and 3 referred to in section 1.2 - Financial Management Practice Manual Background.

1.2.10 Financial Legislation

Relevant legislation for this Manual is referred to in section 1.2 - Financial Management Practice Manual Background.

1.2.11 Formatting

TIP: This assists when reviewing, redrafting and amending this Manual in the future.

– Describe the preferred formatting for this Manual.


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1.3 How to use this Manual This section outlines the preferences for page numbering, the glossary and terms of abbreviations, and a list of the forms and schedules mentioned throughout this Manual.

1.3.1 Page Numbering

This Manual has been separated into relevant chapters with page numbers beginning in each chapter.

1.3.2 Glossary of Terms and Abbreviations

TIP: These can be included in this Manual or in a separate document.

– Outline where the glossary of terms and abbreviations will be.

– Identify where the Appendix/ces for this Manual can be found.

– If the Appendix/ces are to be attached, state where they are attached. If the Appendix/ces are not to be attached, state where they can be located.

1.3.3 Forms and Schedules

TIP: These can be included in this Manual or in a separate document.

– Outline the management of forms and schedules mentioned in this Manual.

– State where the forms and schedules can be located.

1.4 Exemption or Deviation from Policy This section outlines the policies and procedures relating to the management of policy changes within this Manual and the process for requesting exemptions and deviations from the requirements set by this Manual.

1.4.1 Policy Change

– Outline the process of amending policies, practices and guideline statements within this Manual.

– How are the mandatory amendments managed (legislation change, government directives, AASB directives etc)?

– What is the approval process for amendments?

– Who approves the amendments?

– What are the processes that inform staff of amendments?

– What training for staff is provided for amendments?

1.4.2 Request for Exemption or Deviation

TIP: It is considered best practice for requests of exemption or deviations from this Manual to be recorded in an appropriate Register (refer to Section 2.6).


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– Outline the process to request an exemption or deviation from directions in this Manual.

– What criteria must be met for an exemption or deviation to be considered?

– What is the approval process for the exemption or deviation? Who approves this?

1.5 Amendments History This section outlines the requirements for the maintenance and upkeep of this Manual. In particular, this section describes the policies and procedures for reviewing of this Manual, the recording of any amendments and the responsibilities of the Manual’s custodian.

1.5.1 Recording of Amendments

TIP: This section will assist when amending this Manual in the future.

– Outline the requirements for recording amendments to this Manual.

– State who is responsible for the recording of amendments to this Manual.

– State what information must be captured for the amendment.

– State where are the amendments recorded e.g. on the document control sheet.

1.5.2 Custodian of the Manual

– Define who is the custodian of the Manual? Is the custodian: position or individual based? Is the ultimate custodian the CEO (or equivalent) with responsibilities delegated to another?

– Is the custodian responsible for amending/upkeep/maintenance for this Manual?

– What happens in the event of the custodian ceasing employment at the Foundation? Or being absent for a significant time?

1.5.3 Review of the FMPM

TIP: Section 15 of the Financial and Performance Management Standard 2009 requires the resource management systems be reviewed regularly. It is beneficial to review any relevant sections in this Manual.

– Define when this Manual is to be reviewed, i.e. annually?

– Who is responsible for the review? Do staff have input to the review?

– How are staff advised of any changes/amendments?

– Describe the training provided to staff following amendments to this Manual resulting from review.


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2 Financial management The Financial Management Chapter covers the broader areas of general financial management and ethical topics that do not readily fall into any of the other more specific sections or Chapters.

2.1 General Responsibilities

2.1.1 Overview

This section outlines the key financial management principles utilised and defines who is responsible for the financial policy of the Foundation. This section also outlines some key requirements and responsibilities of those staff in managerial positions.

2.1.2 Financial Management Principles

Further information can be found in Queensland Treasury’s Financial Management Tools.

– Outline the key financial management principles for the Foundation.

– What are the principles that govern how functions/duties are performed by staff?

– How are the principles reviewed? How often? Who is responsible?

– How are staff made aware of any changes? What training is provided to staff on changes?

Will the Foundation develop its own or adopt existing principles?

2.1.3 Employees in Charge

TIP: Existing documented responsibilities can be incorporated. Alternatively, these can be placed in a referenced document or appendix/ces.

– What are the responsibilities of managers or employees in charge in relation to this Manual?

– What are the manager/s’ responsibilities to the Foundation?

– What are the Foundation’s responsibilities to the managers?

2.1.4 Financial Policy Responsibility

– Who is responsible for the financial policies? Is it the CEO (or equivalent), CFO or another “appropriate person”?

– State what the responsibilities are, i.e. do they include the development, review, interpretation, analysis and amendment of existing financial policies?

– What are the provisions for delegating this responsibility?

– Who can relieve the duties of the responsible person?


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2.2 Organisational Structure and Reporting Relationships

TIP: Ensure the Organisational Structure of the Foundation includes all sub-committees and equivalents.

Link to the Organisational Structure of the Foundation.

– What is the Organisational Structure of the Foundation?

– Demonstrate how the reporting relationships are incorporated into the organisational structure.

– Demonstrate how the reporting relationships are appropriate, efficient and effective.

– How are delegations reflected in the Organisational Structure?

How does the Foundation manage absence of employees in relation to reporting relationships?

Can the reporting relationships be delegated?

2.3 Delegations and Authorisations

This section outlines the delegations and authorisations within this Manual. Included in this section are existing delegations and the policies, processes and procedures for their review and amendment.

2.3.1 Background and Policies

See sections 63 & 64 of the Hospital Foundations Act 1982.

The Minister can delegate certain powers to an officer of the Department, and the body corporate may delegate their powers to someone from the Foundation.

– State what delegations exist for the Foundation.

– Who approves the delegations? What is the process for approving delegations?

– What responsibilities can and can’t be delegated?

– What operations can be delegated? Does this include sign-off of financial documents?

– What are the Foundation’s policies and controls over delegation of responsibilities?

– What are the special payment delegations for giving gifts and benefits? (include these in Section 2.5.7 - Gifts and Benefits Made).

– State why there are stringent policies relating to the delegation of procurement or cash management responsibilities.

– Where does the ultimate responsibility remain? With the delegator or delegate?


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2.3.2 Obtaining and Reviewing Delegations

– Who reviews and evaluates the existing delegations?

– How are new delegations created, renewed, reviewed, amended?

– Who approves any amendments or creation of new delegations, i.e. the CEO (or equivalent), CFO?

– How do amendments to delegations need to be reflected in the Organisational Structure?

2.3.3 Financial Delegations

Section 64 of the Hospital Foundations Act 1982 permits a Foundation’s board to delegate its powers (other than the power to make rules) to a member or employee of the Foundation.

While the Chairperson is ultimately responsible for the financial management of a Foundation, responsibilities for the management of the Foundation’s financial practices may be delegated to other staff. This requires delegations to play a key role in the efficient, effective and economical management of the finances of the Foundation.

Financial delegations are used as a method to ensure approval for expenses and financial procedures are only undertaken by those with appropriate authority to do so.

Foundations must comply with the Financial Accountability Handbook (see Volume 3, Information Sheet 3.4 – Delegations) and the Financial Management Tools (see Information Sheet 2.3 - Internal Controls Accountability Framework and Information Sheet 4.1 - Monitoring/Assessment of Internal Controls).

– Provide an outline of the Foundation’s financial delegation practices.

– What is the purpose of the Foundation’s financial delegations? How do financial delegations benefit the Foundation?

– What are the objectives and principles of the Foundation’s financial delegations?

– How is financial delegation within the Foundation undertaken? Who is responsible?

– Describe how the financial delegation practices are developed and maintained.

– Describe how the Foundation ensures financial delegations are recorded in the delegations register where appropriate. See Section 2.6 – Registers Required.

– How often does the Foundation review its financial delegations? Who is responsible for this?

– Describe the link between the financial delegation management practices and the Financial Delegations Register.

– Describe how the Foundation’s financial delegation management supports the business internal controls (refer to Chapter 2).

– Does the Foundation allow delegations to contractors or consultants? Is so, are there additional controls?

– How does the Foundation ensure there is appropriate segregation of duties for financial delegations?


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2.4 Conduct and Ethics

This section outlines the Foundation’s conduct and ethics requirements. These include the Foundation’s Code of Conduct, making official complaints and the ethical treatment and use of information.

2.4.1 Code of Conduct

TIP: The Code of Conduct can be incorporated into the Manual. Alternatively, it can be placed in a referenced document or appendix/ces.

Link to the Foundation’s Code of Conduct documentation.

– State how the Foundation’s Code of Conduct complies with the four ethical principles and the wider requirements of the Public Sector Ethics Act 1994 for a Code of Conduct. The four ethical principles include:

o Integrity and impartially

o Promoting the public good

o Commitment to the system of government

o Accountability and transparency.

– Who is required to comply? Employees, volunteers, contractors?

If the Foundation does not have its own Code of Conduct approved by the Minister, is it willing to adopt an approved Code of Conduct from another entity?

2.4.1.1 Code of Conduct Training

See section 21 of the Public Sector Ethics Act 1994.

– Identify who will be trained on the Code of Conduct

– Identify how training for the code will made available.

– Identify how training on any amendments will be undertaken

– How often is the training held?

2.4.1.2 Code of Conduct Review and Evaluation

– How often is the Code of Conduct reviewed?

– Who is responsible for the review?

– What happens when amendments are made to the Code of Conduct? Is there training on the amendments?

2.4.1.3 Code of Conduct Reporting

Section 23 of the Public Sector Ethics Act 1994 outlines the Code of Conduct reporting requirements for the Foundation.

Each annual report must include details of the action taken to comply with the following sections of the Public Sector Ethics Act 1994:


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– Section 15 (Preparation of codes of conduct)

– Section 21 (Education and training)

– Section 22 (Procedures and practices of public sector entities).

– How does the Foundation report on the Code of Conduct?

2.4.2 Making an Official Misconduct Complaint

All complaints are to be managed in accordance with the Public Interest Disclosure Act 2010.

– What are the policies and procedures for dealing with official (or suspected) financial misconduct?

– Who can make complaints? How can complaints be made?

– How are complainants protected from retaliation and reprisals?

2.4.3 Conflicts of Interest

See section 6 of the Public Sector Ethics Act 1994.

Link to the Foundation’s Conflict of Interest policy/ies.

– How are conflicts of interest determined by the Foundation? Are these reflective of potential versus actual conflicts? Financial versus other? Criminal?

– Who determines the conflict?

– How are criminal conflicts of interest managed?

– Who can notify of a conflict of interest?

2.4.4 Confidential Information

See Schedule 3 of the Information Privacy Act 2009 for the Information Privacy Principles.

Link to the Foundation’s policies on Confidential Information.

– What does the Foundation consider Confidential Information?

– Who is covered by Foundation’s policies on Confidential Information? State how they comply with the Information Privacy Principles.

– Who administers these policies? How are they enforced? How are they reviewed?

– Is training offered for managing confidential information?

2.4.5 Right to Information and Information Privacy

TIP: The Information Privacy Act 2009 generally governs access and amendment applications for documents that relate to the applicant’s personal information. This Act also provides a set of rules which govern the handling of personal information.

TIP: The Right to Information Act 2009 governs access applications for documents that are considered non-personal in nature as they relate to the applicant.

Link to the Foundation’s Publication Scheme and associated policies.

– How does the Foundation comply with the Information Privacy Act 2009?


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– How are applications made under these Acts managed by the Foundation?

– How does the Foundation’s Publication Scheme that meets the requirements of s21 of the Right to Information Act 2009?

2.4.6 Frequent Flyer and Fly Buy Points

– What is the Foundation’s policy on purchase rewards programs?

– What happens to the purchase reward program points? Are they considered an acceptable cost reduction method?

– Who can benefit from the rewards?

– Does this cover corporate cards with a rewards system built in?

If the Foundation retains ownership of purchase reward program points, are they used for official purposes?

2.4.7 Unclaimed Property

– What are the Foundation’s policies on unclaimed property?

– Does the value of the unclaimed property affect the policy? If so, what is the threshold value, and who determines it?

2.5 Gifts and Benefits

Provide a link to the Foundation’s Code of Conduct relating to gifts and benefits.

Link to Section 2.4.3 Conflict of Interest.

– Outline who must comply with this section, i.e. all staff, contractors, volunteers?

– Define who people must contact if they are unsure of these policies

– What are the purpose and objectives of the gifts and benefits policies?

– Is training provided on the gifts and benefits policies?

– Does the policy include gifts between staff?

– What are the specific policies on cash and cash equivalents, vouchers, credits and similar gifts and benefits?

2.5.1 Definition of Gifts and Benefits

TIP: The Public Service Commission has developed a policy and directive that relates to gifts and benefits (PSC Guideline Gifts and Benefits). It may be of use when developing the Foundation’s gifts and benefits policy.

– What is the Foundation’s definition of a gift and/or benefit?

– What is not included in the Foundation’s definition of a gift and/or benefit?

– How are “samples” managed under the gifts and benefits definition?


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2.5.2 Legislative Requirements

TIP: While there are no specific legislative requirements, it is considered good practice to have a comprehensive set of policies and procedures to govern how the Foundation manages gifts and benefits.

2.5.3 Reportable Threshold

– What is the reportable threshold for a gift or benefit?

– Is the reportable threshold reliant on the “retail value”?

– How are multiple gifts received from a single provider during the Financial Year managed?

– How long after receiving a gift should it be reported?

– If the value of a gift is significant, is additional insurance required?

2.5.4 Responsible Employee for Valuation of Gifts

– Who determines the value of gifts and benefits?

– If a value cannot be easily obtained, what is the process of obtaining a value?

– Describe the Foundation’s policy on gifts of cultural or historical value.

– What occurs when gifts have been over/undervalued (either accidentally or on purpose)?

– What if a gift significantly increases/decreases after it has been reported?

2.5.5 Ownership of Reportable Gifts and Benefits

– Who retains ownership of gifts and benefits?

– Who retains ownership of a cultural or historical gift?

– When gifts (not cultural or historical) can be retained by staff, does the value of the gift affect whether approval is required? What if the gift is given to the CEO (or equivalent) of the Foundation?

– How can gifts and benefits be used? Are there parameters for their use?

– How can gifts and benefits be disposed of?

2.5.6 Gifts and Benefits Received

Link to the Foundation’s gifts and benefits Register.

– What are the standards for gifts and benefits for staff in different positions, i.e. procurement staff versus other staff?

– If gifts and benefits be are retained by the Foundation, how are they financially accounted for?

– How does the Foundations differentiate between a gift and a donation? What process is used to determine this difference?


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Are bequests and other donations to be considered outside the scope of this section?

2.5.6.1 Receiving of gifts and benefits

TIP: The principles from section 6 of the Public Sector Ethics Act 1994 apply here.

TIP: The receipt of a gift or benefit should not be involved in any impending purchase decision.

– What considerations must be had prior to accepting gifts and benefits?

– What is the Foundation’s “Decision Making Matrix” for accepting gifts and benefits?

– What are the policies on gifts and benefits offered to family members of staff?

– What are the policies on gifts and benefits offered to staff from management and other employees within the Foundation?

– How are “Third-Party” subsidies reported and accounted for?

– How are “indirect” gifts and benefits reported, i.e. discounted goods and services or use of property, equipment etc?

– How are Fringe Benefits Tax implications managed for gifts and benefits?

2.5.7 Gifts and Benefits Made

2.5.7.1 Approval

– What is the approval process for giving gifts and benefits? Who approves the gifts and benefits made?

– What is the prescribed value for giving gifts? Who can approve giving gifts over this value?

– How are gifts given accounted for?

2.5.7.2 Gifts or Benefits to Employees

– What are the policies on purchasing or providing gifts and benefits to/for Foundation staff?

– Who approves these purchases if available?

– What is considered appropriate gifts and benefits for staff, i.e. flowers, wreaths and/or cards?

– What is considered an appropriate purpose for gifts and benefits?

2.5.8 Register of Gifts and Benefits

TIP: Further information can be found in the Gifts and Benefit Register example page.

– What are the policies on registering gifts and benefits?

– Where is the gifts and benefits Register kept? Who is responsible for the maintenance and upkeep of the Register?

– What is to be recorded in the gifts and benefits Register?


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– What, if any, declarations are required prior to any inclusions in the gifts and benefits register? What are the forms for any declarations?

2.6 Registers Required

TIP: For further information on what information should be included within specific registers, refer to the HHS FMPM chapter 2.6 and all subsections. The following list includes examples of registers a Foundation may include in a FMPM and in the management of their business. These include:

– Accountable Advance Register

– Accountable Forms Register

– Bank Account Register

– Loaned Asset register

– Cab Charge Card Register

– Cab Charge Docket Books and eTicket Register

– Capital Commitment Register

– Cheque Register

– Consultancies Register

– Corporate Purchasing Card Register

– Financial Delegations Register

– Entertainment Register

– Exemption from FMPM Register

– Fuel Card Register

– Gifts and Benefits Register

– Goods & Services Provided or Received at Below Fair Value Register

– Grants Application Register

– Guarantees and Indemnities Register

– Investment Register

– Lease Register

– Legal Documents Register

– Litigation Register

– Loans Payable and Receivable Register

– Losses Register

– Money and Property Received Register

– Non-Current Assets Register

– Overseas Travel Register

– Parking Fines Register

– Procedures Manual Revision Register

– Reproduced Accounting Record Register

– Special Payments Register.

– What are the purpose and functions of the Foundation’s registers?

– Who is responsible for the developing, maintaining and utilising registers?


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– What is to be recorded in the registers?

– Outline who must comply with this section, i.e. all staff, contractors and/or volunteers?

– Where are the registers published?

– What are the record keeping requirements for the Foundation’s registers?

2.7 Risk Management

Further information on Risk Management can be found in the Queensland Treasury publication A Guide to Risk Management.

TIP: There are Legislative obligations to have a risk management system. See section 15 in the Financial and Performance Management Standard 2009 and section 61 in the Financial Accountability Act 2009.

– Is there a Risk Management Committee? What is their make-up?

– Outline who must comply with this section, i.e. all staff, contractors and/or volunteers?

– Who is responsible or the overall risk management of the Foundation?

– How is risk management built into all aspects of the Foundation’s business operations?

– How is risk management monitored, reviewed, and evaluated in the Foundation?

2.7.1 Risk Management Objectives

See s28 in Financial and Performance Management Standard 2009.

– What are the objectives of risk management for the Foundation?

– What does the risk management system of the Foundation Provide for?

– How is risk management continually improved?

– What is the Foundation’s risk management aiming to achieve?

2.7.2 Risk Management Principles and Policies

– What are the principles of risk management for the Foundation?

– What are the policies of risk management for the Foundation?

– Who is responsible for the risk management principles and policies? Is it the CEO? Can responsibility be delegated?

– How/when are these principles reviewed? How often? Who is responsible?

– How/When are these policies reviewed? How often? Who is responsible?

– How are staff made aware of any changes? Is there training provided on changes?

2.7.3 Risk Management Process

– What are the risk management process/es of the Foundation?


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– Who is responsible for the risk management process/es? CEO? Can responsibility be delegated?

– Are these processes reviewed? How often? Who is responsible?

2.8 Security and Specific Controls

This section outlines the Foundation’s security and other specific controls. These include the Foundation’s security for cash and other valuables, access to the premises and the Foundation’s equipment.

2.8.1 Responsibility

TIP: The materiality of whatever is being secured may make a difference to the policies, procedures and practises of security. Refer to AASB 1031 - Materiality.

– What are the Foundation’s policies, practices and controls to deal with security?

– What needs to be secured? Assets, cash, liabilities, investments, expenses etc?

– Who is responsible for the developing the security and other policies of the Foundation? The CEO? Can this be delegated?

– Who is responsible for the security of the Foundation? The CEO? Can this be delegated?

– What are this person’s overall responsibilities regarding security and controls?

– What responsibilities are there for cash, physical assets, access to buildings, physical locks and storage etc?

– How do these responsibilities interact with operational unit’s procedures?

– How does the materiality of items being secured affect these responsibilities?

2.8.2 General Security Considerations

– How are monies and properties held in trust recorded? Are they in a specific register, separate from Foundation assets?

– What considerations are required for physical security of assets? Not just from theft, but access, environmental impact, hazards?

– What considerations are required for information security? How is the safe/lockbox managed? Is it required? Who knows the combination/keys? What is stored? When must the combination/keys be changed?

– What considerations are required for keys of the premises? Who has them, how often are they replaced, must not be able to be duplicated etc?

– Responsibility of employees if/when weakness is Foundation security considerations are discovered?

– General security considerations to be included.

2.8.3 Access to Premises

– Who has access to the Foundation’s premises?


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– How is access different during business hours and outside of business hours?

2.8.4 Security of Money

Those positions responsible for the security and custody of monies including all forms of payment – refer to Chapters 5 & 6.

– Who is responsible for the security of money? The CEO? Can this be delegated?

– What are the policies/procedures for the security of money?

– Is public money managed differently than Foundation money?

– How is money secured overnight?

– Are these processes reviewed? How often? Who is responsible?

2.8.5 Equipment Loan by the Foundation

– What equipment can be loaned by the Foundation? For what purpose?

– What approvals are required? Where is this registered?

– Is there a duty of care from the borrower?

2.8.6 Equipment Loaned to the Foundation

– What equipment can be loaned to the Foundation? For what purpose?

– What approvals are required? Where is this registered?

– What is the duty of care of the Foundation regarding equipment loaned?

2.9 Internal Controls

This section outlines the Foundation’s internal controls for financial management. Included is the design of the Foundation’s internal controls and mechanisms to ensure the controls are adequate. This section also outlines details regarding ledger control, suspense accounts, and journal adjustments.

2.9.1 Overview

Control objectives form part of the mandatory internal control structure as outlined in section 8 of the Financial and Performance Management Standard 2009. The Financial Accountability Act 2009 defines internal controls as methods adopted within an entity to:

– Safeguard its assets

– Check the accuracy and reliability of its accounting information

– Secure compliance with the prescribed requirements that apply to the entity.

Refer to Financial Accountability Handbook - Volume 2, Information Sheet 2.3 - Internal Controls and the Financial Management Tools - Information Sheet 4.1 - Monitoring/Assessment of Internal Controls for advice on the following:

– Concepts and objectives of ’internal control’

– Internal controls accountability framework

– Responsibility for internal controls

– Associated control environments, information systems and control procedures


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– Reasonable assurance principle in determining internal controls.

– Provide an outline of the Foundation’s corporate internal controls.

– What is the purpose of the Foundation’s corporate internal controls? How do the corporate internal controls benefit the Foundation?

– What are the objectives and principles of the corporate internal controls?

– How are the corporate internal controls for the Foundation managed? Who is responsible?

– Describe how the corporate internal controls are developed and maintained.

– How often does the Foundation review its financial delegations? Who is responsible for this?

– Who can approve the Foundation’s corporate internal controls? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How does the Foundation ensure its corporate internal controls:

o Play an integral part in ensuring accountability

o Are cost-effective and appropriate for the transactions involved

o Support the efficient, effective and economical operation of the Foundation.

– Provide an outline of the Foundation’s organisational structure.

– What is the purpose of the Foundation’s organisational structure? How does the organisational structure support the corporate internal controls?

– How often is the organisational structure reviewed and amended? Who is responsible for this? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Section 2.6 – Registers Required)?

– How do the Foundation’s risk management policies apply?

– How is a clear audit trail maintained for the Foundation’s corporate internal controls?

2.9.2 Design of Internal Controls

Refer to Information Sheet 4.1 - Monitoring and Assessment of Internal Controls and Volume 3: Designing Internal Controls of the Financial Accountability Handbook for further information.

TIP: Refer to section 8 of the Financial and Performance Management Standard 2009 for further information relating to the:

– Designing a system of internal controls

– Elements of internal control structures and control environments

– Issues that must be accommodated by operational units.

– How are the Foundation’s systems for internal controls designed?

– What are they designed to ensure? What is their purpose?

– How do they support the Foundation’s corporate goals, objectives etc?


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– How are the internal controls evaluated?

– Who is responsible for the design, maintenance and amendments of the internal controls?

– Describe the separation of responsibilities of staff members

2.9.3 Adequate Controls

Refer to Financial Accountability Handbook - Volume 2, Information Sheet 2.3 – Internal Controls and the Financial Management Tools - Information Sheet 4.1 - Monitoring/Assessment of Internal Controls.

TIP: Adequate cost-effective systems of internal control and reporting must be established and maintained by line management within each of the operational units to ensure that prescribed requirements are complied with and practices and procedures are operating in accordance with requirements as set out in this FMPM and relevant procedural manuals achieve:

– Effective, efficient and economical management of resources

– Accomplishment of the network’s strategic goals

– Accounting transactions are not duplicated or inappropriately processed;

– Incorrect accounting transactions are identified, rejected and corrected in a timely manner.

– What are considered adequate controls for the Foundation? How will the controls be determined adequate?

– How do these controls support/link/assist risk management?

– How are adequate controls built into the business procedures?

– What are the responsibilities for staff?

– What are conditions on electronic signatures?

2.9.4 General Ledger Controls

– What are the general ledger controls of the Foundation?

– Who is responsible for the general ledger controls (review, evaluation, amendment)?

– How are the ledgers balanced/reconciled?

– What are the (if any) mandatory built in mechanisms in the ledgers? For example, reporting of any backdated transactions etc.


2.9.5 Subsidiary Ledger Control Accounts

– What are the subsidiary ledger controls of the Foundation?

– How are the subsidiary ledger controls used?

– Who is responsible for the subsidiary ledger controls (review, evaluation, amendment)?

– What are the Foundation’s subsidiary control Accounts?



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2.9.6 Suspense Accounts

Refer to the section 5.6 Revenue Management and 5.7 Receipting of Funds of this manual for more detailed requirements in relation to suspense receipts.

– What are the suspense accounts for the Foundation?

– Is there a timeframe to clear suspense accounts? Are there reporting requirements for lengthy use of suspense accounts?


2.9.7 Journal Adjustments

TIP: See also Section 3.10.4 Financial Records Management – Journal Entries for more information on this topic.

– What are the procedures for journal adjustments?

– Who can undertake journal adjustments? What are the safeguards?

– What are the obligations when undertaking journal adjustments?

– Who is responsible for controlling the journal adjustments (review, evaluation, amendment)?

2.9.8 Segregation of Duties

Segregating staff duties is an effective method of supporting the Foundation’s mandatory internal control structure requirements outlined in section 8 of the Financial and Performance Management Standard 2009.

TIP: Segregation of duty requirements are documented throughout this Manual. For information on specific procedures and practices, refer to relevant sections for detailed information.

– Provide an outline of the Foundation’s segregation of duties policies.

– What is the purpose of the segregation of duties policies? How do the segregation of duties policies benefit the Foundation?

– What are the objectives and principles of the segregation of duties policies?

– How are the segregation of duties policies for the Foundation managed? Who is responsible?

– Describe how the segregation of duties policies are developed and maintained.


2.9.9 Electronic Signatures

– Provide an outline of the Foundation’s electronic signatures policies.


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2.10 Internal Audit

2.10.1 Overview

Internal audits are not mandatory requirements for statutory bodies. However, Foundations must establish an internal audit function if directed to by the Minister or if the Foundation considers the function appropriate.

If a Foundation does have internal audit functions, then the following subsections are to be utilised.

Refer to Information Sheet 2.9 - Internal Audit of the Financial Accountability Handbook for further information.

Refer to section 8 & sections 29-35 of the Financial and Performance Management Standard 2009 for more information on Internal Audits.

– “When, How, Who, Why” are internal audits undertaken?

– Who is responsible for ensuring internal audits are undertaken?

– Does the Foundation have an internal audits committee?

– What is the charter of internal audit function?

2.10.2 Objectives

– What are the objectives of internal audits? Who is responsible for these objectives? Can they be amended by the CEO (or equivalent)?

– What does an internal audit provide advice on?

– What is the outcome of an internal audit?

2.10.3 Scope

– What is the scope of the internal audits? Does the scope include: operations, financial management, information management, compliance, accountability, etc?

– Who determines the scope? Can the scope be amended? By whom? CEO?

2.10.4 Internal Audit Reports

Refer to sections 32-33 of the Financial and Performance Management Standard 2009 for more information on Internal Audits.

– Who are the internal audit reports given to?

– How are the draft internal audit reports given?

– What are the responsibilities once the internal audit report is received?

– What is contained within the internal audit reports?

2.10.5 Relationship with Queensland Audit Office

TIP: Internal auditors will generally consult on a regular basis with Queensland Audit Office (QAO) representatives to:

- Minimise unnecessary duplication of audit work

- Maximise the efforts of any audit activity.


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TIP: Internal auditors should cooperate with QAO representatives, and make available to them their working papers, audit reports, management responses, and annual audit plans and other documents required by the QAO.

Refer to Section 2.11 - External Audit Requirements for further information.

– Describe the relationship between the Foundation and the Queensland Audit Office

2.10.6 Audit Committee and Risk Management Committee

Audit committees are not mandatory for Foundations. If established, Foundations must refer to Audit committee guidelines improving accountability and performance. Refer to section 35 of the Financial and Performance Management Standard 2009 for more information on Audit Committees, and section 28 for more information on Risk Management.

TIP: For information regarding the functions and core duties, relationships with management and external audit, qualifications and membership requirements for the committee, reference should be made to the audit committee charter.

Audit Committee

– Does the Foundation have an audit committee? If so, what are their terms of reference? Who are they?

– What is the purpose of the audit committee?

Risk Management Committee

– Does the Foundation have a risk management committee? If so, what are their terms of reference? Who are they?

– What is the purpose of the risk management committee?

– State how these committees comply with the audit committee guidelines - improving accountability and performance document.

2.11 External Audit

2.11.1 External Audit Requirements

The Foundation is required to be externally audited annually. Refer to section 30 of the Auditor-General Act 2009 for information on public sector audits

Refer to Information Sheet 2.8 - External Audit of the Financial Accountability Handbook for further information.

TIP: The Auditor-General of Queensland is required by legislation to audit each year the financial accounts of all public sector entities and to provide independent reports to the Queensland Parliament. The Queensland Audit Office assists the Auditor-General in discharging his/her legislated responsibilities.

– “When, How, Who, Why” are external audits undertaken?

– Does the Foundation use other external auditors?

– Who is the key contact in the Foundation for the Queensland Audit Office?

– Who is responsible to the Queensland Audit Office? Is it the CEO (or equivalent)? Can this be delegated?


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– Describe staff responsibilities in relation to the Queensland Audit Office or other external auditors?

– What is the scope of external audits, i.e. operations, financial management, information management, compliance, accountability etc?

– What is the process for managing audit findings?

2.12 Corporate Governance

This section describes the corporate governance of the Foundation. It includes the purpose, objectives and principles of the Foundation’s corporate governance.

The Foundation is required to have a governance framework. Refer to section 7 of the Financial and Performance Management Standard 2009.

Refer to Volume 2: Governance of the Financial Accountability Handbook for further information.

Refer to the Public Sector Ethics Act 1994 for key concepts and principles to be included.

TIP: Queensland Health’s principles of governance could be used as a guide. These principles include:

- Accountability

- Transparency/ Integrity

- Stewardship

- Efficiency

- Leadership.

Governance is aimed at achieving organisational goals and objectives, and can be described as the set of responsibilities and practices, policies and procedures used to provide strategic direction, ensure objectives are achieved, manage risks and use resources responsibly and with accountability. Good public sector governance provides adequate accountability to its many stakeholders, including taxpayers, and encourages performance improvement while meeting control and compliance requirements.

– Describe the corporate governance structure of the Foundation?

– What are the principles of corporate governance for the Foundation? How are they applied? How are staff made aware?

– Does the corporate governance capture all sub-committees etc?

– How does the corporate governance of the Foundation assist in meeting its compliance obligations? Objectives, goals, purpose etc?

2.13 Performance Monitoring

This section describes the performance monitoring of the Foundation. This section also outlines the required reporting and their timeframes.

2.13.1 Overview

The Foundation is required to have performance monitoring. Refer to Division 3 of the Financial and Performance Management Standard 2009.

Refer to the document A Guide to the Queensland Government Performance Management Framework for further information.


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– What is performance monitoring for the Foundation? What is its purpose?

– Who is responsible for performance monitoring in the Foundation?

– How is performance monitoring managed in the Foundation?

– How does it comply with A Guide to the Queensland Government Performance Management Framework?

2.13.2 Reporting and Timetables

Refer to sections 12 & 13 of the Financial and Performance Management Standard 2009.

Reference should be made to chapter 4.3 Reporting Requirements.

– What are the performance monitoring reporting responsibilities, i.e. quarterly, annually? Are these set in a timetable for staff?

– What is the reporting focussed on?

– Who is responsible? Who determines these responsibilities?

Financial Management Practice Manual - Guidance Template Chapter 3 – Financial Management Framework

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Chapter 3

Financial Management Framework



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Version history






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Contents

3 Overview..................................................................................................... 32

3.1 Financial Management Framework............................................................. 32

3.2 Performance Management Framework........................................................ 32 3.2.1 Performance Monitoring........................................................................................................ 33 3.2.2 Performance Evaluation......................................................................................................... 33

3.3 Planning....................................................................................................... 34 3.3.1 Strategic Planning .................................................................................................................. 34 3.3.2 Operational Planning ............................................................................................................. 35 3.3.3 Enabling Planning (optional) ................................................................................................. 35

3.4 Asset Strategic Planning.............................................................................. 35 3.4.1 Asset Strategic Planning Process ........................................................................................... 36

3.5 Workforce Planning...................................................................................... 36 3.5.1 Workforce Planning Objectives ............................................................................................. 37

3.6 Information Technology Strategy ................................................................. 37

3.7 Budget Preparation and Monitoring ............................................................. 37 3.7.1 Budget Cycle.......................................................................................................................... 38 3.7.2 Budget Preparation Process ................................................................................................... 38 3.7.3 Budget Preparation policies and Objectives .......................................................................... 39 3.7.4 Budget Preparation Strategic Overview................................................................................. 39 3.7.5 Post Budget Adjustment or variation ..................................................................................... 39

3.8 Financial Information Management System................................................. 40

3.9 Financial Information Technology Controls.................................................. 41 3.9.1 Financial IT System - Access and Security ........................................................................... 42 3.9.2 Financial IT System - Software ............................................................................................. 43 3.9.3 System Development and Audit ............................................................................................ 43 3.9.4 Contingency Planning............................................................................................................ 43 3.9.5 Back Up and Recovery .......................................................................................................... 44 3.9.6 Computer Viruses .................................................................................................................. 44

3.10 Financial Records Management .................................................................. 44 3.10.1 Retention and Disposal of Financial Records ........................................................................ 45 3.10.2 Accountable Forms ................................................................................................................ 46 3.10.3 Working Papers...................................................................................................................... 47 3.10.4 Journal Entries ....................................................................................................................... 48

3.11 Employee Records Management................................................................. 49 3.11.1 New Personnel and Authorisation ......................................................................................... 50 3.11.2 Payroll Records...................................................................................................................... 50 3.11.3 Leave Records........................................................................................................................ 51 3.11.4 Termination of Employment.................................................................................................. 51


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3 Overview

3.1 Financial Management Framework

Link to the Foundation’s financial management framework (if a separate document).

See section 4 of the Public Sector Ethics Act 1994 for the Public Sector Ethics Principles.

TIP: Section 61 of the Financial Accountability Act 2009 can provide assistance when developing this Framework.

TIP: The Queensland Government's financial management framework can provide guidance on how to develop the Foundation’s Financial Management Framework.

– Provide an outline of the core elements of the financial management framework for the Foundation i.e. planning, principles, budgeting, performance management, monitoring.

– Describe the various phases of the financial management framework, i.e. planning and development, utilisation and monitoring, review and evaluation etc.

– How does the financial management framework assist the Foundation in meeting its strategic objectives and goals?

– Describe the governance principles of the financial management framework. How do they align with other core principles, i.e. the public sector ethics principles?

3.2 Performance Management Framework

Sections 11-13 of the Financial and Performance Management Standard 2009 requires statutory bodies to:

- have a Performance Management Framework

- have systems in place to obtain information about performance

- report on performance.

Link to the Foundation’s Performance Management Framework (if separate document).

Statutory bodies must have regard to A Guide to the Queensland Government Performance Management Framework.

See section 4 of the Public Sector Ethics Act 1994 for the Public Sector Ethics Principles

TIP: Sections 7 & 8 of the Financial and Performance Management Standard 2009 can provide assistance when developing this Framework.

TIP: Section 61 of the Financial Accountability Act 2009 can provide assistance when developing this Framework.

– Provide an outline of the performance management framework for the Foundation.

– Describe how the financial management framework and the performance management framework work together for the Foundation.

– How does the performance management framework assist the Foundation in meeting its strategic objectives and goals?


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– Describe the various phases of the performance management framework i.e. planning and development, utilisation and monitoring, review and evaluation etc. How does the performance management framework support whole-of-government strategic directions?

– Describe the governance of the performance management framework. (Refer to the ‘Governance of the Performance Management Framework’ chapter of the document A Guide to the Queensland Government Performance Management Framework.

– List the stakeholders (committees, groups, etc.) involved in the planning and development, utilisation and monitoring, review and evaluation of the performance management framework.

3.2.1 Performance Monitoring

Foundations are required to have systems in place to obtain information about performance.

Sections 12 & 13 of the Financial and Performance Management Standard 2009 require Foundations to have systems to ensure they achieve the objectives of the Strategic Plan, and deliver on the services in their Operational Plan. Foundations must also have systems that provide performance information to the statutory body every 3 months and to the Minister annually.

– How does the Foundation monitor its performance? What is the purpose of performance management?

– Who is responsible for performance monitoring in the Foundation?

– Describe the performance indicators used for monitoring. How are these determined? Who is responsible for their development, review, etc?

– Describe the systems that monitor performance against the objectives of the Strategic Plan.

– Describe the systems that monitor performance against the deliverables of the Operational Plan.

– How is the information produced by the monitoring systems used?

3.2.2 Performance Evaluation

The systems for evaluating the achievement of the Foundation’s objectives are required to assess specific elements. See section 14 of the Financial and Performance Management Standard 2009.

TIP: The timing of performance evaluations can be linked with the Performance Monitoring information provided every 3 months as in Section 3.2.1 – Performance Monitoring.

– How does the Foundation evaluate its performance?

– Who is responsible for the performance evaluation?

– Describe the indicators used for the performance evaluation. How are these determined? Who is responsible for their development, review, etc?

– When are performance evaluation undertaken?

– Describe the systems that evaluate the Foundation’s performance against its strategic objectives and goals.

– Describe the systems that evaluate its performance against the deliverables of the Operational Plan.


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– How is the information produced by the evaluation systems used?

3.3 Planning

Foundations are required to have Strategic and Operational Plans. Foundation must also have systems to ensure they achieve the objectives of the Strategic Plan, and deliver on the services outlined in their Operational Plan. See sections 9 & 12 of the Financial and Performance Management Standard 2009.

Foundations must have regard to the Agency Planning Requirements document in developing both the Strategic and Operational Plans.

Link to the Foundation’s Strategic and Operational Plans (if separate documents).

– Provide an outline of the Strategic and Operational Plans for the Foundation. What are these plans used for? What are the benefits of these plans? How do they work together?

– Describe any other plans (enabling plans) that support the achievement of the Operational and Strategic Plans, i.e. Workforce Plans, Resource Plans, Information and Communication Technology (ICT) Plans, Asset Plans etc.

– Who is responsible for developing, reviewing, amending the Foundation’s plans?

The following sub-sections provide an overview of the relationship between the Foundation’s Strategic and Operational Plans and how they are used by the Foundation.

3.3.1 Strategic Planning

Link to the Foundation’s Strategic Plan. Refer to Agency Planning Requirements.

Strategic planning is the process whereby the Foundation identifies the objectives and strategic goals it will pursue in order to deliver on its purpose. The strategic planning process allows the Foundation to determine the underpinning values that guide its activities on a daily basis.

Section 9 of the Financial and Performance Management Standard 2009 requires the Foundation to develop a Strategic Plan covering a period of four years. However, the strategic plan is updated annually (or at any time required) to address issues such as:

changes to environmental conditions

progress against stated objectives

new or altered policy directions

identified risks and challenges.

The Strategic Plan is the Foundation’s principal planning document that is supported by all other plans, including its Operational Plan (and enabling plans if developed). The Operational Plan sets out specific activities that will be put in place by the Foundation in order to deliver the Strategic Plan’s objectives, and enabling plans identify how the resources required to deliver the Strategic Plan will be provided.

The Foundation’s performance management framework outlines how the Foundation monitors and reports on its performance against the strategic goals.


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3.3.2 Operational Planning

Link to the Foundation’s Operational Plan. Refer to Agency Planning Requirements.

TIP: The operational plan(s) should outline how the Foundation will contribute to delivering its services over a year to support the delivery of objectives within the allocated budget.

Operational planning is where the Foundation translates the Strategic Plan into specific activities in order to deliver outcomes towards its strategic objectives and goals.

Section 9 of the Financial and Performance Management Standard 2009 requires the Foundation to develop an Operational Plan covering a period of one year.

The Operational Plan describes in detail the activities and services that will guide Foundation business over the one year period. This establishes a link between its strategic goals and day-to-day operations, thus ensuring the operational objectives support the strategic objectives.

3.3.3 Enabling Planning (optional)

Link to the Foundation’s enabling plans.

Enabling plans support the Foundation’s Strategic and Operational Plans by managing specific areas of the Foundation’s operations and governance, with a focus on achieving the overarching strategic objectives and goals.

Enabling plans also identify how the resources required to deliver the Strategic Plan will be provided.

The Foundation has developed the following enabling plans:

– What are the enabling plans for the Foundation, i.e. Workforce Plans, Resource Plans, Information and Communication Technology (ICT) Plans, Asset Plans etc?

– Where are these plans found? Who is responsible for these plans?

3.4 Asset Strategic Planning

Asset strategic planning is not a mandatory requirement but is widely regarded as best practice and considered a key function within legislated asset management. See sections 15 & 23 of the Financial and Performance Management Standard 2009.

Foundations must have regard to Non-Current Asset Policies for the Queensland Public Sector, the Property Tenure Government Land Policy, the Queensland’s Project Assurance Framework and the Queensland’s Value for Money Framework.

Further details on the broader topic of Asset Management can be found in Chapter 7.

Foundations must have regard to the Statutory Body Guide, in particular Guide Sheet 4 – Evaluating and reviewing significant physical assets when developing an Asset Strategic Plan.

Link to the Foundation’s Asset Strategic Plan (if a separate document).

TIP: Asset strategic planning is considered a key “enabling” planning process, as asset planning can assist the Foundation achieve its objectives and strategic goals.

Asset strategic planning is a process designed to ensure the best use of the Foundation’s assets in the delivery of services. It is a dynamic process involving analysis and direction setting for the:


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investment

maintenance

operation

disposal of capital assets.

Asset strategic planning is a key activity for the Foundation which, along with other enabling planning, contributes to the achievement of the Foundation’s strategic objectives and goals.

– Does the Foundation have policies relating to asset strategic planning? What do they cover? Where can they be found? Who is responsible for these?

– What are the objectives of the Foundation’s asset strategic plan? Who develops them? How are they determined, reviewed and amended?

– How is the Foundation’s performance against these objectives monitored and evaluated?

– Describe the system that monitors the Foundation’s performance against the objectives outlined within the asset strategic plan.

3.4.1 Asset Strategic Planning Process

The Foundation is required to undertake an evaluation if the cost of acquiring, maintaining or improving a physical asset is considered significant. See section 23 of the Financial and Performance Management Standard 2009. This requirement must be considered in the planning process.

TIP: Include members of the Foundation responsible for financial and planning activities in the asset strategic planning process.

– How often is asset strategic planning undertaken? How often are the plans reviewed?

– What is the process for the Foundation’s asset strategic planning? Who is responsible?

– What period do the asset strategic plans cover?

– How does the asset strategic plans assist the Foundation achieve its strategic objectives and goals?

– Describe the link between the asset strategic plans and the Foundation’s budget.

3.5 Workforce Planning

Foundations are required to ensure the “employment of qualified and competent officers”. See section 8 of the Financial and Performance Management Standard 2009.

Foundations have a requirement to ensure their operations are carried out “efficiently, effectively and economically” and to undertake appropriate planning and budgeting. See section 61 of the Financial Accountability Act 2009 and section 15 of the Financial and Performance Management Standard 2009.

Link to the Foundation’s Workforce Plan (if a separate document).

The Foundation undertakes workforce planning to identify the workforce required to carry out its duties. Workforce plans work in conjunction with other enabling plans to assist the Foundation to achieve its strategic objectives and goals.

The Foundation has a responsibility to ensure the employment of qualified and competent staff to undertake the duties of the Foundation.


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Workforce planning provides managers with a framework for making informed staffing decisions in line with the Foundation’s mission, Strategic Plan and budgetary resources.

– What is the process for developing, reviewing and amending the Workforce Plan? Who is involved? Who approves this plan?

3.5.1 Workforce Planning Objectives

TIP: The workforce planning objectives should be included in the Foundation’s Workforce Plan.

– What are the key objectives of workforce planning for the Foundation?

– How are these objectives determined, reviewed and amended? Who determines the objectives?

– How do the objectives of workforce planning align with the objectives and goals of the Foundation’s Strategic Plan?

– How do the objectives of workforce planning align with the deliverables of the Foundation’s Operational Plan?

3.6 Information Technology Strategy

While not explicitly mandatory, an Information Technology (IT) Strategy is considered good practice. However, Foundations are required to have a financial information management system. See section 15 of the Financial and Performance Management Standard 2009. Part of this system may include an IT Strategy.

This Strategy must also ensure the Foundation’s operations are carried out “efficiently, effectively and economically”. See section 61 of the Financial Accountability Act 2009 and section 15 of the Financial and Performance Management Standard 2009.

The Foundation must adhere to the Financial Information Management requirements set out in section 27 of the Financial and Performance Management Standard 2009. These include:

- the mandatory principles within Information Standard 31 and Information Standard 40

- Queensland Government Enterprise Architecture 2.0

- Public Records Act 2002.

Link to the Foundation’s IT Strategy (if a separate document).

– What is the process for developing, reviewing and amending the Foundation’s IT Strategy? Who is involved? Who approves this plan?

– What are the principles of the IT Strategy?

– How does the IT Strategy assist the Foundation in achieving its strategic objectives and goals?

3.7 Budget Preparation and Monitoring


It is the process of allocating resources to meet demands and achieve desired outcomes.


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The Queensland Government's Financial Management Framework may provide guidance on how the Foundation’s budget preparation processes can be developed.

TIP: The Foundation’s budget will be a separate set of documents. This section will discuss the policies, procedures and requirements for the preparation of the Foundation’s budget.

TIP: A budget calendar can assist a Foundation in budget preparation.

– Describe how the budget for the Foundation is determined. Who determines this?

– Describe how the budget affects the financial and performance management frameworks.

– Describe how the budget affects the Strategic and Operational Plans.

– Describe how the budget ensures key activities, liabilities, resources, functions and other expenses are adequately planned for.

– List the key stakeholders involved in the preparation and monitoring of the Foundation’s budget.

– How is the budget monitored? What systems are in place to monitor the budget? What is done with the information these systems provide?

3.7.1 Budget Cycle

The Queensland Government's Financial Management Framework may provide guidance on how the Foundation’s budget cycle can be developed.

TIP: Foundations are advised to develop a budget cycle process that adheres to section 8 of the Financial and Performance Management Standard 2009.

– Describe the budget cycle of the Foundation. When is the budget set? What does the budget cycle achieve? Who determines the budget cycle?

– Is the budget cycle related to the financial year or calendar year?

– When can funds be allocated in the budget cycle, i.e. build, mid-year review and end-of-year adjustments? Who can approve these?

– When are budget reviews built into the budget cycle? What are their objectives? Who is responsible for the reviews?

3.7.2 Budget Preparation Process

TIP: It is important that the process for preparation of the Foundation’s budget is robust and ensures the budget is able to achieve the objectives set for it.

The budget process is the method by which the Foundation: articulates its fiscal imperatives and principles

sets the strategic direction of its finances over the medium term

establishes and communicate its resource allocation decisions for the fiscal year

reports on actual services and service standards of the previous year.

– What is the process for preparing the Foundation’s budget? Who is involved in budget preparation? How often is this undertaken?

– How are the financial priorities determined for the budget? Who determines these?


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– What are the key considerations when preparing the budget?

– Who approves the budget?

– How does the budget assist the Foundation achieve its strategic objectives and goals?

– How does the budget support the Strategic Plan (and other plans) of the Foundation?

– Describe the linkages between budget preparation and the Foundation’s planning, monitoring and reporting cycles.

3.7.3 Budget Preparation policies and Objectives


The Queensland Government's financial management framework may provide guidance on how the Foundation’s budget preparation objectives can be developed.

Link to the Foundation’s budget preparation policies (if separate documents).

– What are the objectives of the Foundation’s budget preparation process?

– Who determines the objectives? Who approves these objectives?

– How do these preparation objectives assist the Foundation in achieving its strategic objectives and goals?

– What are the Foundation’s policies relating to budget preparation? How do they support the objectives of the preparation?

– What is the purpose of these policies? What do they achieve?

– Who is responsible for development, approval and amendment of these policies?

3.7.4 Budget Preparation Strategic Overview

TIP: The Strategic Overview requirements relate primarily to government departments. They are however considered good practice and Foundations may benefit by undertaking activities to develop a strategic overview of the budget preparation process.

Further information can be found in the LHHN FMPM.

– What is the strategic overview of budget preparation used for?

– How are the strategic overview requirements determined? Who determines these?

– What does the strategic overview of budget preparation identify?

– How does the strategic overview demonstrate the:

o Funding mix of the Foundation?

o Funding and resource pressures, i.e. lower than expected donations?

o Priority directions due to resource and funding implications?

3.7.5 Post Budget Adjustment or variation

Link to the Foundation’s Post Budget Adjustment policies (if separate documents).


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– What are the Foundation’s policies on post budget adjustments or variations?

– What circumstances does the Foundation consider require post budget adjustments or variation?

– Who determines if a post budget adjustment or variation is required? Who approves the adjustments?

– How are variations to the budget considered? Who is responsible for this? What are the criteria required to vary a budget?

3.8 Financial Information Management System Legislation requires foundations to have a financial information management system in place to efficiently, effectively and economically manage the Foundation’s financial information. Financial information management is primarily achieved through Information Technology (IT) based systems.

This system must provide for recording, storing, keeping, retrieving and destroying the Foundation’s financial information. In addition, this system must also:

Align with the Queensland Government Enterprise Architecture 2.0, including the mandatory principles (namely the Information Standard 31 and Information Standard 40)

Comply with the Public Records Act 2002

Must be secure.

Before introducing or significantly changing a financial information management system, Foundations must consult with:

Head of internal audit (if applicable)

The authorised auditor

The person responsible for the Foundation’s financial administration.

See sections 15 & 27 of the Financial and Performance Management Standard 2009.

Foundations must also comply with the Information Privacy Act 2009. This generally governs access and amendment applications for documents that relate to the applicant’s personal information. This also provides a set of rules which govern the handling of personal information.

In addition, Foundation’s must also comply with the Right to Information Act 2009. This governs access applications for documents that are considered non-personal in nature.

– Provide an outline of the financial information management system.

– Describe how IT is incorporated in the management of the Foundation’s financial information.

– What is the purpose of the Foundation’s financial information management? How does it benefit the Foundation?

– What are the objectives and principles of the Foundation’s financial information management?

– How is financial information management undertaken? Who is responsible?

– Describe how the Foundation’s financial information management practices are developed and maintained.

– How often does the Foundation review its financial information management practices? Who is responsible for this?


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– Describe how the business internal controls (refer to Chapter 2) of the Foundation support proper and effective financial information management.

– Who can approve amendments to the financial information management system? Can this be delegated? If so, is this delegation of authority recorded in a Delegations Register (see Chapter 2)?

– How does the Foundation ensure it complies with the consultation requirements prior to introducing or significantly changing its financial information management system?

– Describe how the financial information management system complies with the Queensland Government Enterprise Architecture 2.0 and the Public Records Act 2002

– How does the Foundation ensure its financial information management system is secure? What provisions and controls are in place to achieve security?

– How often are the financial information management systems and practices of the Foundation reviewed? Who is responsible for this? When is it undertaken?

– How does financial information management assist in achieving the objectives and goals in the Foundation’s Strategic Plan and deliverables in its Operational Plan?

– How does the Foundation ensure there is appropriate segregation of duties for managing the financial information management system?


– How is a clear audit trail maintained for the financial information management system?

3.9 Financial Information Technology Controls

Control objectives form part of the mandatory internal control structure as outlined in section 8 of the Financial and Performance Management Standard 2009.

For more information on internal controls refer to Financial Accountability Handbook - Volume 2, Information Sheet 2.3 - Internal Controls and the Financial Management Tools - Information Sheet 4.1 - Monitoring/Assessment of Internal Controls.

– What controls are in place to support a strong and effective internal IT system? For example:

o Prevention of potential breaches of the financial IT systems and databases

o Provision of accurate and timely reporting on financial and operational matters

o Compliance with regulatory requirements

o Using risk management processes to secure data integrity

o Internal and external audit functions assisted by Computer Assisted Audit Techniques.

– What functions do the financial IT internal controls activities incorporate? For example:

o Data integrity assurance

o Data completeness assurance

o Applications are tested ensuring they correctly accept, manipulate, store and provide data and information


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o Security and access procedures are in place to regulate the operation of an IT system.

– Describe how the Foundation’s financial IT system meets both the business needs of the Foundation while complying with the legislated requirements.

– What are the responsibilities of the Foundation’s financial IT system manager? For example

o Financial IT operations, maintenance and policy direction

o Development and implementation of appropriate processes to validate new processes, applications and upgrades

o Ensuring a financial IT system’s capacity restraints are identified and rectified

o Identification of external risks

o Development of appropriate mitigation strategies.

– What controls are in place to ensure privacy of the financial IT system? For example:

o Consistency with provisions of the Information Privacy Act 2009 the Right to Information Act 2009, and other relevant legislation or regulations

o Blocking, reporting and actioning any attempted or unauthorised access to the department’s database

o Ensuring that confidential information is not accessible to other than authorised users in the event of theft or damage to portable financial IT items e.g. laptops, mobile phones etc.

3.9.1 Financial IT System - Access and Security

– How is access to the financial IT system managed?

– How is security of the Financial IT system managed?

– What are the objectives and principles for access and security of the Foundation’s financial IT system?

– How does the Foundation ensure that security measures for protection from vandalism, theft, loss, unauthorised access and disaster, are developed and maintained?

– Describe how the access and security practices for the financial IT system are developed and maintained. When are they reviewed? Who is responsible for this?

– Who can approve access to the financial IT system? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Does the Foundation allow for remote access to the financial IT system? If so, what are the security controls for this?

– Is system access recorded? How is it recorded? What is the information used for?

– Who is responsible for managing user identifications and user login codes? What restrictions on their access are in place?

– Are there different levels of financial IT system access for staff? For example, the finance manager has a higher level of system access. Who can approve the increase or decrease of security level access?


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– What are the key functions of the financial IT system security?

o Ensuring user password systems conform to current industry standards

o Requiring users to change passwords at regular intervals

o Using up-to-date anti-virus software and firewall applications

o Reviewing, updating and documenting hardware and software applications to aid in the timely recovery of IT functions in the event of partial or total system failure.

– How are unused accounts with access to the financial IT system managed? How often are they reviewed? Is there a timeframe for their disabling after access is ceased?

– How does the Foundation ensure there is appropriate segregation of duties for managing access to the financial IT system?


– How is a clear audit trail maintained for security and access to the financial IT system?

3.9.2 Financial IT System - Software

– How does the Foundation manage the software for the financial IT system? Who is responsible for this?

– Who is responsible for the installation and maintenance of the financial IT system software?

– How is software managed if it is part of a leased asset (see Chapters 6 and 7)?


– How is a clear audit trail maintained for the financial IT system software?

3.9.3 System Development and Audit

– How does the Foundation manage development and audit of the financial IT system?

– What are the objectives and principles of system development and audit?

– How does the Foundation ensure that the required consultation is undertaken during the specification and development phases of new additions or significant upgrades to the financial information management system?

– Who can approve financial IT system development and audit? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?


– How is a clear audit trail maintained for financial IT system development and audit?

3.9.4 Contingency Planning

– How does the Foundation manage contingency planning for the financial IT system? Who is responsible for this? How is this achieved?


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– What events does the Foundation have contingencies for? For example: storms, sabotage, fraud, hardware failure. How are these (and other) situations individually planned for?

– Who is the custodian of critical information systems and/or data? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?


– How is a clear audit trail maintained for contingency planning for the financial IT system?

3.9.5 Back Up and Recovery

– How does the Foundation manage back up and recovery of the financial IT system? Who is responsible for this?

– What is the purpose of having back up and recovery procedures for the financial IT system?

– How is back up and recovery of the financial IT system undertaken? Who is responsible?

– How often does the Foundation require vital financial IT system data to be backed up?

– Is back up and recovery data for the financial IT system required to be stored off-site? If so, where is it stored? Who is responsible for this?

– Does the Foundation test back up and recovery data for the financial IT system? If so, how often is this undertaken?


– How is a clear audit trail maintained for back up and recovery of the financial IT system?

3.9.6 Computer Viruses

– How does the Foundation defend the financial IT system against computer viruses? Who is responsible for this?

– Does the Foundation use a specific anti-viral program? If so, what is it?

– What are the procedures if a virus is found on the Foundation’s computer network?


– How is a clear audit trail maintained for defending the financial IT system against viruses?

3.10 Financial Records Management Financial records, regardless of their form (physical or electronic), are to be maintained consistent with a Foundation’s records management, security, privacy and access requirements.

Privacy of financial records is to be consistent with the Australian Government National Privacy Principles and Queensland’s Information Privacy Act 2009. Public access to financial records is to be consistent with the Queensland Government’s Right to Information Act 2009.

When managing financial records, Foundations should also apply the financial information management requirements set out in section 27 of the Financial and Performance Management Standard 2009. These include:

- Mandatory principles within Information Standard 31 and Information Standard 40


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- Queensland Government Enterprise Architecture 2.0

- Public Records Act 2002.

TIP: The Information Privacy Act 2009 generally governs access and amendment applications for documents that relate to an applicant’s personal information. The Act also provides a set of rules which govern the handling of personal information.

The Right to Information Act 2009 governs access applications for documents that are considered non-personal in nature as they relate to the applicant.

– Provide an outline of the financial records management practices of the Foundation.

– What is the purpose of financial records management? How do they benefit the Foundation?

– What are the objectives and principles of the Foundation’s financial records management?

– How is financial records management for the Foundation undertaken? Who is responsible?

– Describe how the Foundation’s financial records management complies with the legislated requirements.

– Describe how the financial records management practices of the Foundation are developed and maintained.

– How often does the Foundation review its financial records management practices? Who is responsible for this?

– Describe the link between the financial records management practices and the financial reporting requirements (see Chapter 4)

– Describe how the financial records management policies and practices support the Foundation’s internal business controls (refer to Chapter 2).

– How are financial records created for the Foundation?

– Who can create financial records? Can this be delegated? If so, is this delegation of authority recorded in the Delegations Register (see Chapter 2)?

– How does the Foundation ensure its financial records are safeguarded and that only authorised staff have access? How does this comply with the Foundation’s security and specific controls (see Chapter 2)?

– How does the Foundation ensure there is appropriate segregation of duties for financial records management?


– How is a clear audit trail maintained for the Foundation’s financial records management?

3.10.1 Retention and Disposal of Financial Records

Foundations are required to comply with the provisions set out in the Public Records Act 2002. When developing a retention and disposal schedule, Foundations must comply with Information Standard 31 as published by the Queensland Government Chief Information Officer.

TIP: Foundations can have their permanent records stored by the State Archivist. See the website for further details.


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– Provide an outline of the retention and disposal schedule for the Foundation’s financial records.

– What is the purpose of the retention and disposal schedule for the Foundation’s financial records? How does it benefit the Foundation?

– What are the objectives and principles of the retention and disposal schedule for the Foundation’s financial records?

– How is the retention and disposal schedule for the Foundation’s financial records managed? Who is responsible?

– Describe how the Foundation’s retention and disposal schedule complies with the legislated requirements.

– Describe how the retention and disposal schedule is developed and maintained. How often is it reviewed? Who is responsible for this?

– How does the Foundation ensure its financial records are retained for the required timeframes?

– How does the Foundation ensure records are only disposed of in accordance with the retention and disposal schedule? Who can approve the disposal of records? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Does the Foundation manage “vital” records? For example, records essential to reconstruct and continue the operational functions of the Foundation in the event of a disaster. If so, how are they managed differently to general financial records?

– What details are kept upon the destruction and disposal of records? For example:

o Disposal authorisation

o Destruction certificate(s)

o File/document number(s)

o File series

o File title(s)

o Date range(s)

o Disposal date.


– How is a clear audit trail maintained for the retention and disposal of the Foundation’s financial records?

3.10.2 Accountable Forms

Accountable forms are defined as any documents that have value, or potential value, and can be used either as evidence of our having fulfilled a commitment or to obtain a future benefit. Accountable forms are typically pre-numbered in a sequence.

– How does the Foundation manage accountable forms? Who is responsible?

– What does the Foundation consider an accountable form? For example:


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o Purchase orders

o Cheque books and cheque forms (system generated cheques)

o Delivery notes

o Credit notes

o Credit requests

o Cab charge vouchers and eTickets

o Annual payment summaries for employees

o Official receipts.

– How does the Foundation ensure the storage and issue of accountable forms is strictly controlled?

– Are there additional responsibilities relating to the management of accountable forms? For example, staff involved with supplies of accountable forms are responsible for:

o Maintenance and security of registers of accountable forms

o Acknowledgment of accountable forms received

o Security of unused accountable forms

o Recording issue of accountable forms to authorised officers and ensuring acknowledgment of receipt of such forms

o Ensuring correct usage of all accountable forms

o Ensuring proper destruction of accountable forms, where appropriate.

– Does the Foundation undertake a stock-take of accountable forms? How often is this undertaken? If discrepancies are found, how are these investigated?

– Does the Foundation keep a register of accountable forms? If so, is this recorded in the Foundations registers (see Chapter 2)? What must the register indicate? For example:

o Serial numbers of forms received, including date of receipt and origin details

o Serial numbers of forms issued/transferred to authorised officers

o Serial numbers of unused forms returned

o Stocks of unused forms on hand.

– How does the Foundation ensure there is appropriate segregation of duties for the management of accountable forms?


– How is a clear audit trail maintained for the management of accountable forms?

3.10.3 Working Papers

– How does the Foundation manage working papers? Who is responsible?

– How does the Foundation ensure that all values in the accounting records and financial reports are able to withstand scrutiny, are explainable, and supported by documentation?


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– Describe how the working papers support the Foundation’s financial reports. Describe how the working papers are provided to the Queensland Audit Office for auditing.

– What are the details that working papers must show? For example:

o Title

o Period of review

o Date of preparation

o By whom prepared

o By whom reviewed and/or approved

o Cross-references to and from other papers or schedules

o All assumptions employed

o All calculations unless they are obvious

o File date and location.

– Describe the format of working papers, for example, a lead schedule with detailed supporting papers.

– Who can develop and/or approve working papers? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How does the Foundation organise its working papers? How are they indexed? Who is responsible for this? How often is the indexing system reviewed?

– Does the Foundation require photocopies to be taken of original supporting documents and/or working papers? If so, what documents does this apply to? For example: contracts of sale, loan agreements, and letters of confirmation.

– How does the Foundation ensure that all assumptions contained in working papers provide sufficient explanation so the nature and purpose of the transactions that the working papers relate to are understood?

– What is the segregation of duties for the management and approval of working papers?


– How is a clear audit trail maintained for the Foundation’s working papers?

3.10.4 Journal Entries

– How does the Foundation manage its journal entries? Who is responsible?

– What is the purpose of journal entries? How do they benefit the Foundation?

– Who can approve journal entries? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– What details must journal entries show? For example:

o Name of the Foundation’s business unit (if applicable)

o Business Unit code (if applicable)

o Effective date

o Date entered


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o Name and position of enterer

o Date signed

o Approving staff member name and details

o Explanation of the transaction

– How does the Foundation ensure the narrative of journal entries is sufficient to enable an independent reader, unfamiliar with the transaction, to understand the nature of the transaction at a later point in time?

– Describe the relationship between the Foundation’s journal entries, working papers and supporting documentation. Describe how they work together to support the Foundation.

– What is the segregation of duties for the management and approval of journal entries?


– How is a clear audit trail maintained for the Foundation’s journal entries?

3.11 Employee Records Management Employee records management is a vital component of the Foundation’s human resources management.

Employee records, by nature, hold private and confidential information and should be treated in accordance with the Information Privacy Principles. See schedule 3 of the Information Privacy Act 2009.

TIP: Foundations should link employee records management practices to their policies on confidential information.

– Provide an outline of the employee records management practices of the Foundation.

– What is the purpose of employee records management? How does it benefit the Foundation?

– What are the objectives and principles of employee records management?

– How is employee records management achieved? Who is responsible?

– Describe how the employee records management practices of the Foundation are developed and maintained. How often are these reviewed? Who is responsible for this?

– Describe the link between the employee records management practices and the financial reporting requirements (see Chapter 4).

– How does the Foundation ensure its employee records are safeguarded and only authorised staff have access? How does this comply with the Foundation’s security and specific controls (see Chapter 2)?

– How does the Foundation ensure its staffing levels are aligned with the requirements of the operational plan (see Chapter 3)?


– How is a clear audit trail maintained for the Foundation’s employee records management?


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3.11.1 New Personnel and Authorisation

– How does the Foundation engage new personnel? Who is responsible?

– Who can authorise new personnel? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Who can create new personnel/employee records? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Does the Foundation allocate an employee number to new personnel? How is this undertaken? Who is responsible for this?

– How does the Foundation ensure new personnel records are provided to payroll to ensure new staff are paid?


– How is a clear audit trail maintained?

3.11.2 Payroll Records

– How does the Foundation ensure all employee payroll records are kept up to date?

– Does the Foundation require ‘documentary evidence’ to amend and update staff records?

– How does the Foundation ensure it retains payroll records for the appropriate timeframe? For example seven years or permanently.

– What type of information does the Foundation store in the employee payroll records? For example:

o Employee number (payroll number)

o Name in full

o Address

o Date of birth

o Gender

o Date commenced/finished

o Cost classification

o Standard hours

o Employment status: temporary/permanent

o Rate per hour, fortnight and/or per annum

o Banking details

o Tax details - file number, rates, rebates

o Benefits details including salary sacrifice items

o Leave entitlements

o Details of authorised deductions.

– Does the Foundation require all employee records to be kept in the same file? Can employee records be separated into different categories for convenience? For example:


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staff leave details are kept together in a single file, or staff payroll details are in a single payroll file.


– How is a clear audit trail maintained for employee payroll records?

3.11.3 Leave Records

– How does the Foundation manage leave records of employees?

– Does the Foundation require copies of certain leave forms to be included in an employee’s records? For example, sick leave, annual leave, long service leave and leave without pay.

– How often does the Foundation generate leave entitlement reports? For example: fortnightly, monthly or quarterly?

– What details are recorded in leave entitlement reports? For example:

o Employee’s name

o Payroll number

o Types of leave available

o Amount of leave available.

– Who can approve this report? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– What is this report used for? How does it assist the Foundation in its financial reporting responsibilities?


– How is a clear audit trail maintained for employee leave records?

3.11.4 Termination of Employment

– How does the Foundation manage the termination of employees?

– Who can terminate employees?

– How does the Foundation ensure the payroll system is advised of an employee’s termination in a timely manner? Who is responsible for this?

– What does the Foundation require to occur prior to a terminated employee’s final payroll payment? For example:

o Return of any Foundation property, credit cards, security keys etc.

o Final determinations as to past entitlements

o Full recovery of any past overpayments, where considered feasible.

– Describe the process for determining the correct severance pay for a terminated employee. How is this calculated? Who is responsible for this?

– What is the process if a terminated employee has been paid post-termination? Who is responsible for this?


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– How does the Foundation ensure that all termination payments are supported by work papers showing verified calculations?


– How is a clear audit trail maintained for the termination of employees?

Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting

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Chapter 4

Financial Reporting



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Version history






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Contents

4 Financial Reporting ................................................................................... 56

4.1 Overview...................................................................................................... 56

4.2 Chart of Accounts ........................................................................................ 56

4.3 Reporting Entities......................................................................................... 57 4.3.1 Specific Definitions used in this section ................................................................................ 57

4.4 Reporting Requirements .............................................................................. 58 4.4.1 Monthly Reporting................................................................................................................. 58 4.4.2 Annual Financial Statements ................................................................................................. 58 4.4.3 Cash Reporting....................................................................................................................... 59

4.5 Annual Reports ............................................................................................ 59 4.5.1 Annual Report Content and Timing....................................................................................... 60

4.6 Audit Reports – Internal and External .......................................................... 60 4.6.1 Internal Audit Reports............................................................................................................ 61 4.6.2 External Audit Reports .......................................................................................................... 61


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4 Financial Reporting

4.1 Overview

Foundations have requirements relating to the preparation, certification and tabling of annual financial statements. See sections 61 & 62 of the Financial Accountability Act 2009.

Foundations (including those newly formed) must comply with specific requirements regarding the preparing and timing of delivery of their annual financial statements. See sections 43 to 45 of the Financial and Performance Management Standard 2009.

Key documents regarding the financial reporting requirements of Foundations include the Financial Accountability Handbook particularly Information Sheet 5.1 & 5.2 and the Financial Management Tools. In addition, Part B of the Financial Reporting Requirements for Queensland Government agencies (including Accounting Policy Guidelines) outlines the Minimum Reporting Requirements for a Foundation.

TIP: Ensure the Foundation is always up to date with key documents contained within the “Level 3 - Financial management instructions” mentioned in Chapter 1. This includes Financial Reporting Requirements issued by Queensland Treasury and Trade and interpretations issued by the Australian Accounting Standards Board and any relevant Australian Accounting Standards.

– Provide an outline of the financial reporting of the Foundation. What is the objective of the Foundation’s financial reporting?

– What are the principles for financial reporting by the Foundation?

– Describe how the financial reporting practices of the Foundation meet the legislated requirements.

– How is the financial reporting for the Foundation achieved? Who is responsible? When is it undertaken?

– Describe the core activities related to the financial reporting for the Foundation, i.e. planning, budget setting, monitoring, analysis, reporting, auditing, lodging?

– How does the financial reporting of the Foundation assist it in achieving the objectives and goals in its Strategic Plan and the deliverables in its Operational Plan?

– How is the financial reporting of the Foundation used to indicate the Foundation’s performance throughout the financial year?

4.2 Chart of Accounts

Link to (or include) the Foundation’s Chart of Accounts.

A list of the foundation’s accounts is called the general ledger Chart of Accounts (CoA). The purpose of preparing a CoA is to keep the financial affairs organised by sorting transactions into groups, which are called ‘accounts’.

– What is the purpose of the chart of accounts? What are they used for? Who is responsible for their maintenance, review etc?


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– Describe how the accounts in the chart of accounts are categorised? Are they organised into accounting classes? If so, what are those classes?

– Where can the Chart of Accounts be located?

4.3 Reporting Entities

The Foundation is a reporting entity as defined by within the Statement of Accounting Concepts 1. It should therefore prepare general purpose financial statements in accordance with the Statement of Accounting Concepts 2 and any relevant Australian Accounting Standards or Australian Accounting Standards Board Interpretations produced by the Australian Accounting Standards Board.

Foundations should also have regard to the Financial Reporting Requirements for Queensland Government agencies (including Accounting Policy Guidelines) for further information.

If the Foundation controls another entity, the annual financial statements must reflect a consolidation with the controlled entity’s financial statements.

– Is the Foundation a sole reporting entity? If not, are the other reporting entities controlled by the Foundation? If other entities are required to be reported on, they should be noted here.

– Describe how the Foundation’s financial reporting complies with the requirements indicated above for reporting entities.

4.3.1 Specific Definitions used in this section

The Foundation should include additional definitions considered appropriate for their business and remove those not applicable.

Associated Entity is an entity, including an unincorporated entity such as a partnership, over which the Foundation has significant influence and which is neither a subsidiary nor an interest in a joint venture. Refer to AASB 128 - Investments in Associates and Joint Ventures for specific information. Capacity means the ability or power, either direct or indirect that is exercisable as a result of: trusts; relevant agreements; and/or historical practices whether or not these are legally enforceable. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, according to AASB 128 - Investments in Associates and Joint Ventures. Economic Entity means a group of entities comprising the parent entity and each of its subsidiaries or controlled entities. Entity means any legal, administrative or fiduciary arrangement, or organisational structure or other party having the capacity to deploy scarce resources in order to achieve objectives. Refer to AASB 101 - Presentation of Financial Statements. Reporting Entity means an entity, including an economic entity, for which there are expected to be users who rely on general purpose financial reports for information about that


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entity, where such information is useful for making and evaluating decisions about the allocation of resources. Refer to section 9 of the Financial Accountability Act 2009 for further clarification of the definition of a statutory body.

4.4 Reporting Requirements

Foundation should have regard to the Financial Reporting Requirements for Queensland Government agencies (including Accounting Policy Guidelines) for further information.

Link to the Foundation’s financial reporting calendar (if applicable).

– Describe the Foundation’s general reporting requirements.

– Who is responsible for the development, review and evaluation of these requirements? How are staff made aware of any changes?

– How does the Foundation ensure it is made aware of any mandatory changes to the reporting requirements, i.e. AASB amendments, Treasury amendments etc?

– Does the Foundation have a financial reporting calendar? If so, where is this kept? Who is responsible for it?

4.4.1 Monthly Reporting

Regular reporting is a vital component of a sound Internal Control Structure for the Foundation.

– Describe the Foundation’s monthly reporting requirements.

– What does the Foundation report on monthly?

– What are the Foundation’s internal reporting policies and processes?

– How are these reports compiled? Who is responsible? What is done with the information provided by the monthly reporting?

– Who is responsible for the Foundation’s monthly reporting? How can the requirement for these reports change?

– Is the Foundation’s monthly reporting requirements used to assess progression on the goals in its Strategic Plan and deliverables in its Operational plan?

4.4.2 Annual Financial Statements

Foundations have requirements relating to the preparation, certification and tabling of annual financial statements. Foundations must also have regard to the minimum standards set out in the Financial Reporting Requirements for Queensland Government agencies (including Accounting Policy Guidelines), and the ‘prescribed accounting standards’ when preparing annual financial statements. See sections 59 & 61-62 of the Financial Accountability Act 2009.

Foundations must comply with specific requirements regarding the preparation and timing of delivery of their annual financial statements. Foundations must have their annual financial statements audited as required by the Auditor-General Act 2009. The audit report must be completed no later than two months after the end of the financial year to which the statements relate. See sections 43-45 of the Financial and Performance Management Standard 2009.


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Foundations must also have regard to Financial Accountability Handbook - Information Sheet 5.2, Financial Management Tools - Information Sheet 5.2 and the Non-Current Asset Policies for the Queensland Public Sector in preparing their annual financial statements.

Annual Financial Statements are part of the Performance Management Framework (public reporting) discussed in Chapter 3.2.

TIP: Ensure the Foundation is always up to date with key documents contained within the “Level 3 - Financial management instructions” mentioned in Chapter 1.

– Provide an outline of the annual financial statements of the Foundation. What is the objective and purpose of these statements?

– What is the timeline and work schedules for preparation of the financial statements?

– Who is responsible for developing, reviewing and approving the annual financial statements of the Foundation?

– Describe how the annual financial statements of the Foundation meet the legislated requirements.

– Describe the link between the Foundation’s annual financial statements and its Performance Management Framework.

– Describe the core activities related to the annual financial statements the Foundation, i.e. preparation, analysis, reporting, auditing and lodging.

– What procedures are in place to ensure the annual financial statements of the Foundation are prepared, audited and lodged on time?

4.4.3 Cash Reporting

A Foundation is required to have a cash management system to efficiently, effectively and economically manage its financial resources. See section 15 of the Financial and Performance Management Standard 2009.

Foundations should have regard to the Cash Management Handbook for Departments and Agencies produced by Queensland Treasury.

– What are the Foundation’s practices for cash reporting? How often is cash reported on – daily, weekly, monthly etc?

– Who is responsible for cash reporting?

– What controls and security is in place for cash management?

4.5 Annual Reports

Foundations are required to prepare an annual report and provide this report to the Minister. See section 63 of the Financial Accountability Act 2009 and section 49 of the Financial and Performance Management Standard 2009.

TIP: Annual reports are part of the Performance Management Framework (public reporting) discussed in Chapter 3.2. Refer to Financial Management Tools Information Sheet 5.5 – Annual Reports and the Annual Report Requirements for Queensland Government Agencies for guidance material.

– Provide an outline of the annual report of the Foundation. What is the objective and purpose of the report?


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– Describe how the annual report of the Foundation meets the legislated requirements.

– Describe the core elements of the annual report of the Foundation.

– How is the annual reporting for the Foundation achieved? Who is responsible? How is it undertaken?

– Describe how the annual report assists the Foundation in achieving the objectives and goals in its Strategic Plan and the deliverables in its Operational Plan?

– Describe the link between the Foundation’s annual report and its Performance Management Framework.

– How is the annual report of the Foundation used to indicate the Foundation’s overall performance throughout the financial year?

4.5.1 Annual Report Content and Timing

Foundations must have regard to the Annual report requirements for Queensland Government agencies when developing their annual report, in particular, Part A – Minimum Content Requirements and section 23 – Timeframes (approval and tabling process).

Foundations must include specific content in their annual report and must have it tabled in the Legislative Assembly within three months after the end of the financial year. See sections 49 & 50 of the Financial and Performance Management Standard 2009.

– When is the Annual Report due for completion?

– Who is responsible for developing, reviewing, publishing and approving the Annual Report of the Foundation?

– Describe the process that ensures the Foundation’s annual report is provided to the Minster within the required timeframe? Who is responsible for this process?

– How is the content of the annual report determined? Who is responsible for this?

– Describe how the content of the Foundation’s annual report meets the requirements set out in the Annual report requirements for Queensland Government agencies document.

4.6 Audit Reports – Internal and External

Internal audits are not mandatory requirements for Statutory Bodies.

Conversely, Foundations are required to be externally audited annually. Refer to section 30 of the Auditor-General Act 2009 for information on public sector audits.


TIP: Further information on the internal and external audit requirements can be found in Chapter 2, sections 2.10 and 2.11. It is recommended to keep a Register of Audit Findings as per Financial Management Tools Information Sheet 4.5 (inclusive of internal and external audit findings.

– Who are the audit reports provided to?

– What levels of confidentiality are required for these reports?


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4.6.1 Internal Audit Reports

Refer to sections 32-33 of the Financial and Performance Management Standard 2009 for more information on Internal Audits.

TIP: If Internal Audits or not undertaken by the Foundation, it should be noted here.

– Who is responsible for responding to the internal audit reports?

– What is the response if a recommendation is accepted or rejected?

– How is the report stored? How are the responses stored?

4.6.2 External Audit Reports

Refer to section 30 of the Auditor-General Act 2009 for information on Public Sector Audits.


Foundations are required to consider the Auditor-General’s report at the first ordinary meeting after the financial statements have been certified. See section 46 of the Financial and Performance Management Standard 2009.

Where ‘significant’ recommendations are not adopted, the Auditor-General may include details in a report to Parliament (refer to Information Sheet 4.5 - Audit Findings and Resolution).

– Who is responsible for responding to the external audit reports?

– Is there a Register of Audit Findings? If so, who maintains it?

– What is the response if a recommendation is accepted or rejected? Rejection of external audit recommendations must be clearly documented.

– What is the timeframe for responding to recommendations?

– How is the report stored? How are the responses stored?


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Financial Management Practice Manual - Guidance Template Chapter 5 – Income Management

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Chapter 5

Income Management



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Version history




1.2 October 12 Deborah McLaughlin

Final


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Contents

5 Income Management ................................................................................. 66

5.1 Overview...................................................................................................... 66

5.2 Control Objectives........................................................................................ 66

5.3 Types of Income .......................................................................................... 67 5.3.1 Leased Assets......................................................................................................................... 68

5.4 Income Identification .................................................................................... 68 5.4.1 Definition and Recognition of Income................................................................................... 69 5.4.2 Revenue Recognition ............................................................................................................. 70

5.5 Revenue Recovery ...................................................................................... 70 5.5.1 Recovery Management .......................................................................................................... 70

5.6 Revenue Management................................................................................. 71 5.6.1 Revenue Objectives ............................................................................................................... 72 5.6.2 Invoicing ................................................................................................................................ 72

5.7 Receipting of Funds ..................................................................................... 73 5.7.1 Bank Deposits ........................................................................................................................ 73 5.7.2 Reconciliation of Receipts ..................................................................................................... 74 5.7.3 Dishonoured Cheques ............................................................................................................ 74

5.8 Revenue Retention ...................................................................................... 74 5.8.1 Revenue Risk Categories ....................................................................................................... 75

5.9 Transfers and User Charging....................................................................... 75 5.9.1 Objectives .............................................................................................................................. 75 5.9.2 Procedures.............................................................................................................................. 75

5.10 Grants Receivable and Received................................................................. 76 5.10.1 Objectives .............................................................................................................................. 76 5.10.2 Procedures.............................................................................................................................. 76

5.11 Loss Recovery ............................................................................................. 76 5.11.1 Objectives .............................................................................................................................. 76 5.11.2 Procedures.............................................................................................................................. 76


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5 Income Management

5.1 Overview

Foundations have legislated requirements to manage any income generated and make rules relating to the use of income. See sections 12, 50 & 73 of the Hospital Foundations Act 1982.

Key documents regarding a Foundation’s income management include the Financial Accountability Handbook (notably Volume 3, Information Sheet 3.5 – Revenue Systems) and the Financial Management Tools Information Sheet 3.5.

– Provide an outline of the income management practices of the Foundation.

– What are the objectives and principles of the Foundation’s income management?

– How is income management for the Foundation achieved? Who is responsible? How is it undertaken?

– What is the purpose of income management for the Foundation?

– Describe how income management, revenue management and user charging work together for the benefit of the Foundation.

– Describe how the income management practices of the Foundation meet the legislated requirements.

– Describe how the business internal controls (refer to Chapter 2) of the Foundation support proper and effective income management.

– Describe the core activities related to income management (including user charging), i.e. identifying, collecting, managing, assessing, invoicing, recording and reporting etc. Who is responsible for these activities? How are they undertaken?

– How is the income management of the Foundation reviewed? Who is responsible for this? When is it undertaken?

– How does income management assist the Foundation in achieving the objectives and goals in its Strategic Plan and deliverables in its Operational Plan?

– How is income management used to assist and report on the Foundation’s financial performance throughout the year?

– Does the Foundation manage any revenue that is tied to a certain activity, for example, if a bequest is to be used for a sole specific purpose like research or purchasing an item? If so, what is this revenue? What controls are there over this revenue?

5.2 Control Objectives

While not explicitly mandatory, control objectives form part of the mandatory internal control structure as outlined in section 8 of the Financial and Performance Management Standard 2009.

– What are the control objectives for the income management of the Foundation? For example:


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o Ensure income is from legitimate operations

o Revenue earned is banked into the correct accounts

o Financial responsibility for tasks is assigned appropriately

o Adequate records and audit trails are maintained

o Accurate information is available for reporting purposes

o Outstanding payments are followed up

o Gains and losses are promptly recorded

o Amounts receivable are recorded when payments are receipted

o Income is safeguarded from loss

o Adequate segregation of duties for income management, especially around receiving / depositing cash functions

o Processes and procedures are documented

– What are these controls objectives used for? What do they aim to provide for the Foundation?

– Describe how the control objectives support the Foundation to efficiently, effectively and economically manage its financial resources, in particular, its income and revenue management.

– Who is responsible for these controls? How/when are they reviewed?

5.3 Types of Income

Key documents regarding revenue management include the Financial Accountability Handbook (notably Volume 3, Information Sheet 3.5 – Revenue Systems) and the Financial Management Tools.

Discuss each type of income in its own sub-section.

TIP: Types of income may include the revenue from a café or car park, rent from premises, regular donations etc. Include details about the systems in place that assist the Foundation to identify all types of income.

– Outline the types of income of the Foundation and discuss them in separate sub-sections. Types of income may include:

o Fees and charges

o Grants

o Donations/Bequests

o Commercial income

o Fundraising

o Investment income

o Interest earned

o Rental/lease income

o Proceeds from sales


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o Royalties.

– Describe the link between the income generated for the Foundation and the reporting obligations outlined in Chapter 4.

– Describe the link between gifts to the Foundation and obligations outlined in Chapter 2.

– Are cash donations treated differently?

– How is each type of income for the Foundation accounted for? Who ensures income is allocated to the appropriate general ledger account?

– Describe the procedures that ensure income is receipted and banked accurately and on a timely basis.

– Describe the procedures that ensure income that is gifts and benefits is documented in the appropriate register on a timely basis.

– Who is responsible for the follow-up of outstanding income for the Foundation? How is this undertaken?

– What are the investment policies of the Foundation? Who is responsible for these?

– What are the objectives and principles of the Foundation’s investment policies? Who is responsible for these?

– What are the Foundation’s policies on settlement by credit card?

5.3.1 Leased Assets

TIP: Additional aspects of leased assets may be covered in Chapter 7 – Asset Management when developed.

– Is the Foundation the lessor of any asset?

– Who ensures the income generated from a leased asset is accounted for and reported on?

– Are the revenue recovery principles and processes in Section 5.5 Revenue Recovery and 5.5.1 Recovery Management applicable?

5.4 Income Identification

Foundations must have systems that identify types of income, see sections 17 & 18 of the Financial and Performance Management Standard 2009.

Foundations must adhere to any relevant Australian Accounting Standards or Australian Accounting Standards Board Interpretations produced by the Australian Accounting Standards Board for the purposes of income identification.

– How are income types identified by the Foundation? Who is responsible for the identification of income?

– What systems are in place to ensure the Foundation is kept up-to-date with the AAAB definitions for income identification?


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5.4.1 Definition and Recognition of Income

TIP: Include additional definitions considered appropriate and remove those not applicable.

Income

Income is defined in Australian Accounting Standard AASB 118 Revenue to encompass both revenue and gains.

Revenue arises in the course of an entity’s ordinary activities, that is, from the sale of goods, the rendering of services, and the receipt of interest royalties and dividends. The revenue associated with these activities is identified as output revenue, user charges, grants and contributions.

Gains represent other items that meet the criteria of income, but do not represent physical income, i.e. cash, for example, on disposal or revaluation of physical assets, and are reported net of expenses for each transaction.

Revenue

Revenue is specifically defined in AASB 118 Revenue as “the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity, other than increases relating to contributions from equity participants.”

Revenue must be recognised only when:

It is probable that future economic benefits will flow to the entity

These benefits can be measured reliably without undue bias or error

There has been a transfer of risks and rewards of ownership

Revenue includes, but is not limited to:

o Sale of goods

o Rendering of services, for example, patient fees and charges

o Investment income

o Property rental

o Insurance compensation

o Royalties transfer payments

o Reciprocal transfers - including user charges.

Where cash is received or an invoice is raised by an operational unit before the goods and/or services have been provided, or a particular period of time to which the payment relates has not yet elapsed, the receipt is treated as a prepayment and revenue is recognised in accordance with the requirements of AASB 118 Revenue.

Gains

Gains can be defined simply as all other items of income that cannot be classified as revenue.

Gains are dealt with in a number of Australian Accounting Standards, for example, a gain or loss may arise from:


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Non-current assts held for sale. See AASB 5 Non-current Assets Held for Sale and Discontinued Operations

Disposal of property, plant and equipment. See AASB 116 Property, Plant and Equipment

Changes in exchange rates. See AASB 121 The Effects of Changes in Foreign Exchange Rates

Change in the fair value of financial instruments. See AASB 139 Financial Instruments: Recognition and Measurement

Revaluation of investment property: AASB 140 Investment Property.

Such gains and losses are recognised on a net basis, that is, proceeds less the carrying amount and/or selling costs.

5.4.2 Revenue Recognition

TIP: Revenue should be recognised as soon as a legal entitlement occurs. Invoices are to be raised as soon as possible after the completion of the service or in accordance with contract conditions.

– Describe how effective revenue recognition assists the Foundation in meeting its legislative requirements for a revenue management system and compliance with the Australian Accounting Standards.

– What are the Foundation’s principles, policies and practices that assist it to manage revenue recognition?

– What are the key elements in revenue recognition for the Foundation, i.e. appropriate receipting, recording, controlling and banking procedures?

– Who is responsible for ensuring this occurs?

5.5 Revenue Recovery

TIP: A Foundation is required to have a system to efficiently, effectively and economically manage its financial resources and a system to write off debt in a timely manner. Revenue recovery is considered a part of this system.

– How does the Foundation undertake revenue recovery? Who is responsible for the recovery of revenue?

– What are the principles, processes and policies for revenue recovery?

– How does the Foundation account for un-received income? Does it provide aging information on outstanding accounts, for example, 30 days, 60 days and 90 days?

– Describe how the Foundation’s internal controls and risk management reduce the requirement for revenue recovery.

5.5.1 Recovery Management

A Foundation has legislated requirements in relation to managing and recording losses. See section 22 of the Financial and Performance Management Standard 2009.


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TIP: Losses are required to be recorded in the Losses Register as indicated in Chapter 2. Litigation actions are required to be recorded in the Litigation Register as indicated in Chapter 2.

– How does the Foundation use the aging information on accounts receivable to forward collection notices?

– What is a permitted timeframe for an account receivable to be late on payment? Who determines this?

– What is the Foundation’s recovery schedule of action? For example:

o Issue invoice or other charge advice - immediate

o Statement of account - end of month

o Formal written reminder notice - 60 days

o Formal letter of demand - 75 days

o Legal action triggered - expiration of period in formal letter of demand.

– Who determines the Foundation’s recovery schedule of action?

– What details are required in the letter of demand?

– What is the process for follow-up action to collect outstanding accounts? For example:

o Re-issue of invoice

o Issue of a reminder notice

o Final notice indicating the intention to proceed with legal action

o Determination of legal proceedings or debt written off.

– What are the requirements for writing off a debt? Who approves this?

5.6 Revenue Management

A Foundation is required to have a revenue management system to efficiently, effectively and economically manage its financial resources. This system is required to have specific functions relating to revenue management. See sections 15 & 17of the Financial and Performance Management Standard 2009.


Revenue is defined in Section 5.4.1.

– What are the Foundation’s requirements for controls over the generation of revenue? How are these controls maintained and reviewed? Who is responsible for these?

– What do these controls cover, i.e. authorisation, valuation, recording and documentation of revenue?

– State how the Foundation’s revenue management policies assist it in achieving the objectives and goals in its Strategic Plan and deliverables in its Operational Plan.

– How are the Foundation’s risk management principles and practices applied to revenue management?


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– How does data and information collected on the revenue management of the Foundation meet the reporting requirements outlined in Chapter 4?

5.6.1 Revenue Objectives


TIP: Revenue objectives can assist the Foundation in meeting its legislated requirement to have a revenue management system to efficiently, effectively and economically manage its financial resources.

– What are the Foundation’s revenue objectives? What are they used for? What do they aim to provide for the Foundation?

– How do the revenue objectives support the Foundation to meet the legislated requirements to efficiently, effectively and economically manage its financial resources?

– What are the objectives for the Foundation’s revenue management? For example:

o Chargeable revenue is properly identified, valued, charged, collected, waived or written-off where necessary, subject to proper authority, and recorded on a timely basis, and is correctly classified

o Charges on credit are promptly followed up and overdue debts recovered

o Invoices raised are properly processed and charged to creditors’ or cash sale accounts

o Credit notes are kept to a minimum, and are issued only for valid refunds

o Adequate audit trails are maintained

o Potential sources of revenue have been identified.

– Who is responsible for determining these objectives? How are the objectives reviewed?

5.6.2 Invoicing

TIP: Refer to the Australian Taxation Office requirements that affect certain types of invoices.

– What does the Foundation use invoicing for?

– What are the principles, processes and policies for invoicing?

– Is a separation of duties required for the Foundation’s invoicing?

– How are the Foundation’s risk management principles and practices applied to invoicing?

– What is the Foundation’s policy on progressive billing? Is it encouraged when goods and/or services are supplied in separate stages?

– Does the Foundation utilise credit notes? How are they used? What are the controls over credit notes?

– How does the Foundation determine appropriate taxes for various invoices?


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5.7 Receipting of Funds

Receipting of funds may be covered by more than one legislated business management system especially when cash is involved. These systems may include revenue management, user charging and cash management and financial information management. See sections 15-18 & 24 of the Financial and Performance Management Standard 2009.

Key documents regarding receipting of funds include the Financial Accountability Handbook (notably Volume 3, Information Sheet 3.5 – Revenue Systems), Financial Management Tools Information Sheet 3.5 and the Cash Management Handbook for Departments and Agencies.

TIP: Provide a link between the security and specific controls in Chapter 2 and the financial reporting requirements in Chapter 4 if necessary.

– How does the Foundation undertake the receipting of funds? Who is responsible? How is this linked to the Foundation’s reporting requirements in Chapter 4?

– What are the physical safeguards for official receipts and documentation?

– What are the specific procedures where cash is involved, i.e. receipting, recording, banking etc? What is the process for receiving cash by mail?

– What specific documentation is used for the receipting of funds, i.e. receipt books or other official documentation? Where are these kept?

– How are cheques managed? Are there specific procedures for these? What is the process for receiving cheques by mail?

– What is the segregation of duties for receipting of funds?

– How does the Foundation manage the receipting of funds to assist in any internal (if required) and external audits?

– If copies of cheques or receipts are made, are they marked to indicate they are copies?

– How are cash collections to be receipted, recorded and deposited? How are the cash collection receipts and bank acknowledgements of deposits balanced?

– What are the Foundation’s policies on the timeliness of providing receipts? Is there a specific time frame to provide these?

5.7.1 Bank Deposits

Proper procedures and processes for the banking of deposits can assist the Foundation in a number of its required business management systems. These include revenue, cash, financial information and risk management. See section 15 of the Financial and Performance Management Standard 2009.

TIP: Banking deposits containing cash may require additional procedures for the management and security of cash for deposit.

– What are the Foundation’s policies and procedures for bank deposits? Who is responsible for these?

– How often are bank deposits undertaken?

– What additional security is provided when making bank deposits of materiality?

– Where are the bank’s acknowledgements of deposits stored? Where are they recorded?


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– What is the segregation of duties for bank deposits and recording?

5.7.2 Reconciliation of Receipts

Proper reconciling of receipts can assist the Foundation in a number of required business management systems. These include revenue, cash, financial information and risk management. See section 15 of the Financial and Performance Management Standard 2009.

– How is the reconciliation of receipts undertaken? Who is responsible for this?

– Who approves the reconciliation?

– How often is the reconciliation of receipts undertaken?

– Are there specific processes required for the reconciliation of receipts?

– What is the segregation of duties for the collection and reconciliation of receipts?

5.7.3 Dishonoured Cheques

TIP: Effectively managing dishonoured cheques is vital to assist the sound financial management of the Foundation.

– What are the Foundation’s policies and procedures for dishonoured cheques? What do these policies and procedures aim to achieve?

– Who is responsible for these policies and procedures? How are these reviewed?

– How is the Foundation advised of a dishonoured cheque?

– Where are details of dishonoured cheques recorded? Is there a register for these details?

– How are any additional charges due to dishonoured cheques managed?

– Are goods and/or services stopped when a dishonoured cheque has been provided?

5.8 Revenue Retention

Revenue retention is considered a key component of a sound revenue management system. The retention of revenue streams is vital to the continuation of a Hospital Foundation and can ensure dependable revenue in the future.

See sections 15 & 17-18 of the Financial and Performance Management Standard 2009.

– What are the Foundation’s policies for revenue retention? What do these policies aim to achieve?

– How does the Foundation aim to continue or increase revenue retention? How does the Foundation manage a revenue stream that is declining, or at risk of declining?

– Does the Foundation manage “tied funds”? If so how are they managed?

– How does the Foundation report on revenue retention? Who is responsible for this reporting?


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5.8.1 Revenue Risk Categories

TIP: Revenue risk categories can assist the Foundation in managing revenue retention and increasing revenue in the future.

Revenues that would have signfiicant impact on the foudantions if ceased (for example donations) could be considered high risk. This is because a significant propotion of revenue is donations, which are reliant on “disposable income” of individuals and/or businesses.

Revenues considered high risk could be managed more “actively” than low risk revenues (car parking charges, hosptial TV rentals, etc) which may be considered consistent.

– Does the Foundation have risk categories for revenue retention? If so, describe them.

– What are the Foundation’s policies for revenue risk categories? What do these policies aim to achieve?

– How are these categories determined? Who is responsible for determining these categories?

– Are those revenue streams with a higher/lower risk category managed differently? If so, how?

5.9 Transfers and User Charging

A Foundation is required to have specific functions relating to user charging. See section 18 of the Financial and Performance Management Standard 2009.


User Charging refers to when the Foundation provides goods or services that it is paid for.

– Provide an outline of user charging for the Foundation.

– Describe how user charging meets the Foundation’s legislative requirements.

– Outline the policies, procedures and principles for user charging by the Foundation?

– How do these policies, procedures and principles work together to benefit the Foundation?

– Who is responsible for determining user charging? How/when is this reviewed?

– How is user charging reported on? Who is responsible for this?

5.9.1 Objectives

– Outline the objectives of the Foundation’s user charging.

– Who is responsible for developing/reviewing these objectives?

– Describe how these objectives assist the Foundation in achieving the objectives and goals in its Strategic Plan and deliverables in its Operational Plan.

5.9.2 Procedures

– Outline the procedures for the Foundation’s user charging.

– Who is responsible for developing/reviewing these procedures?


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5.10 Grants Receivable and Received

Key documents regarding revenue management include the Financial Accountability Handbook (notably Volume 6: Grant Management).

– Provide an outline of what grants are provided to, or by, the Foundation.

– Outline the policies, procedures and principles for the grants provided to, or by, the Foundation? Who is responsible for these?

– Describe how grants are accounted for.

– Describe how grants are used by the Foundation to assist it in achieving the objectives and goals in its Strategic Plan and deliverables in its Operational Plan.

– How are grants reported? Who is responsible for this?

5.10.1 Objectives

– Outline the objectives of grants provided to, or by, the Foundation.


– Describe how these objectives assist the Foundation in achieving the objectives and goals in its Strategic Plan and deliverables in its Operational Plan.

5.10.2 Procedures

– Outline the procedures for receiving or providing grants by the Foundation.


5.11 Loss Recovery

A Foundation has legislated requirements in relation to managing and recording losses. See section 22 of the Financial and Performance Management Standard 2009.

Losses should be recorded in the Foundation’s Loss Register, see Chapter 2.

– Provide an outline of the loss recovery of the Foundation.

– Outline the policies, procedures and principles of loss recovery by the Foundation. Who is responsible for these?

– Describe how loss recoveries are accounted for.

5.11.1 Objectives

– Outline the objectives for loss recoveries for the Foundation.


5.11.2 Procedures

– Outline the procedures for loss recoveries for the Foundation, including reporting.


Financial Management Practice Manual - Guidance Template Chapter 6 – Expense Management

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Chapter 6

Expense Management



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Version history




1.2 October 12 Deborah McLaughlin

Final


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Contents

6 Expense Management ............................................................................... 82

6.1 Overview...................................................................................................... 82

6.2 Control Objectives........................................................................................ 83

6.3 Definition and Recognition of Expenses ...................................................... 84

6.4 Expense Accrual .......................................................................................... 84

6.5 Prepayments................................................................................................ 85

6.6 Impairment Losses....................................................................................... 85

6.7 Authorisation of Expenses ........................................................................... 85

6.8 Purchasing................................................................................................... 87 6.8.1 Delegation of Authority to Perform Purchasing, Incur Expenditure and Sign Contracts ...... 88 6.8.2 Contract Performance Guarantee ........................................................................................... 88 6.8.3 Contract Disclosure................................................................................................................ 92 6.8.4 Purchase approval .................................................................................................................. 92 6.8.5 Prohibition on Splitting of Contracts or Orders ..................................................................... 93 6.8.6 Objectives of Purchasing Function ........................................................................................ 93 6.8.7 Purchase Order Management and Approval Process ............................................................. 93 6.8.8 Purchase Requisitions ............................................................................................................ 94 6.8.9 Purchase via Tender............................................................................................................... 95 6.8.10 Purchase Order Issue and Dispositions.................................................................................. 95 6.8.11 Work Order ............................................................................................................................ 96 6.8.12 Procurement Policies and Procedures .................................................................................... 97 6.8.13 Staff Purchases....................................................................................................................... 97 6.8.14 Cancellation of Purchase Orders............................................................................................ 97 6.8.15 Internal Controls on Purchasing............................................................................................. 98

6.9 Goods Receiving.......................................................................................... 98 6.9.1 Segregation of Duties............................................................................................................. 98 6.9.2 Delivery of Goods.................................................................................................................. 99 6.9.3 Services Rendered and Progress Claims................................................................................ 99 6.9.4 Internal Control on Goods Receiving .................................................................................... 99

6.10 Processing and Payment ........................................................................... 100 6.10.1 Matching Invoices to Orders................................................................................................ 101 6.10.2 Invoice Processing and Approval ........................................................................................ 101 6.10.3 Adjustment Notes................................................................................................................. 102 6.10.4 Duplicated Invoices ............................................................................................................. 102 6.10.5 Invoice Cancellation before Payment .................................................................................. 102 6.10.6 Processing Payments............................................................................................................ 103 6.10.7 Recording of Payments ........................................................................................................ 104 6.10.8 Payment Terms .................................................................................................................... 105 6.10.9 Discounts ............................................................................................................................. 105 6.10.10 Production of Cheques......................................................................................................... 105 6.10.11 Signing of Cheques .............................................................................................................. 107 6.10.12 Electronic Funds Transfer.................................................................................................... 107 6.10.13 Rounding.............................................................................................................................. 108

6.11 Credit Cards............................................................................................... 108 6.11.1 General Policies ................................................................................................................... 109 6.11.2 Credit Card Limits ............................................................................................................... 110

6.12 Employee Expenses .................................................................................. 110


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6.12.1 Employee Payment and Allowances.................................................................................... 111 6.12.2 Time and Attendance Records ............................................................................................. 112 6.12.3 Payroll Deductions............................................................................................................... 112 6.12.4 Payroll Disbursement........................................................................................................... 113 6.12.5 Pay Verification, Certification and Advice.......................................................................... 113 6.12.6 Returned and Unclaimed Pays ............................................................................................. 114 6.12.7 Payroll Bank Account .......................................................................................................... 114 6.12.8 Payroll Calculations ............................................................................................................. 115 6.12.9 Payroll Overpayments.......................................................................................................... 115 6.12.10 Payroll Reconciliations ........................................................................................................ 116 6.12.11 Payroll Control..................................................................................................................... 116 6.12.12 Personal Expenses................................................................................................................ 117 6.12.13 Accountable Advances......................................................................................................... 117 6.12.14 Payments following the death of an employee .................................................................... 118 6.12.15 Salary Sacrifice Arrangements ............................................................................................ 119 6.12.16 Other Payments.................................................................................................................... 119 6.12.17 Foreign Currency Requirements .......................................................................................... 119

6.13 Salary Sacrifice Arrangements................................................................... 119 6.13.1 Common Matters relating to Salary Sacrifice...................................................................... 120

6.14 Consultants................................................................................................ 120 6.14.1 Definition of Consultant ...................................................................................................... 122 6.14.2 Specification of Requirements ............................................................................................. 122 6.14.3 Evaluation of Consultants’ Performance ............................................................................. 123 6.14.4 Annual Reporting................................................................................................................. 123

6.15 Contractors ................................................................................................ 123 6.15.1 Taxation Requirements ........................................................................................................ 123

6.16 Hire and Leasing........................................................................................ 124 6.16.1 Leases................................................................................................................................... 124 6.16.2 Recording of Leases............................................................................................................. 125 6.16.3 Lease Vs Buy ....................................................................................................................... 125 6.16.4 Finance Leases ..................................................................................................................... 126 6.16.5 Operating Leases.................................................................................................................. 126

6.17 Repairs and Maintenance .......................................................................... 126 6.17.1 Repairs and Maintenance Objectives................................................................................... 127 6.17.2 Repairs and Maintenance Defined ....................................................................................... 128

6.18 Special Payments ...................................................................................... 128 6.18.1 Disclosure Requirements ..................................................................................................... 129

6.19 Travel Expenses ........................................................................................ 129 6.19.1 Travel Authorisation and Reporting .................................................................................... 130 6.19.2 Travel Allowances ............................................................................................................... 131 6.19.3 Air Travel............................................................................................................................. 131 6.19.4 Motor Vehicle Travel........................................................................................................... 131 6.19.5 Use of Car Hire, Taxi & CabCharge and other.................................................................... 132 6.19.6 Accommodation................................................................................................................... 132

6.20 Business Meetings, Official Functions and Hospitality ............................... 133 6.20.1 Criteria for determining expenditure.................................................................................... 133 6.20.2 Defining Official Function and Hospitality ......................................................................... 134 6.20.3 Claims and Reimbursement ................................................................................................. 134 6.20.4 Receiving Hospitality........................................................................................................... 135

6.21 Telephone.................................................................................................. 135 6.21.1 Foundation account.............................................................................................................. 135 6.21.2 Reimbursement of Personal Accounts ................................................................................. 135


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6.22 Insurance ................................................................................................... 135 6.22.1 GST on Premiums................................................................................................................ 136 6.22.2 Duty on Premiums ............................................................................................................... 136 6.22.3 Insurance Settlements .......................................................................................................... 136 6.22.4 Making Insurance Settlement Claims .................................................................................. 137 6.22.5 Employee’s Loss.................................................................................................................. 137 6.22.6 General Liability .................................................................................................................. 137 6.22.7 Workers’ Compensation ...................................................................................................... 137

6.23 Loss of Assets............................................................................................ 137 6.23.1 Definition of a Loss ............................................................................................................. 138 6.23.2 Losses of Property and Public or Other Moneys ................................................................. 139 6.23.3 Legally Unavoidable Payments ........................................................................................... 139 6.23.4 General Reporting Requirements......................................................................................... 139 6.23.5 Losses caused by Fraud, Theft or Official Misconduct ....................................................... 140 6.23.6 Specific Categories .............................................................................................................. 140 6.23.7 Accounting Treatment ......................................................................................................... 141

6.24 Other Expenses ......................................................................................... 141 6.24.1 Club Membership and Professional Membership ................................................................ 142 6.24.2 Subscriptions........................................................................................................................ 142 6.24.3 Freight .................................................................................................................................. 142 6.24.4 Staff Amenities .................................................................................................................... 142 6.24.5 Christmas Expenditure......................................................................................................... 142

6.25 Recurrent and Non-Recurrent Expenditure................................................ 143 6.25.1 Recurrent Expenditure ......................................................................................................... 143 6.25.2 Non-Recurrent Expenditure ................................................................................................. 143

6.26 Grants, Subsidies and Grant Project Funding............................................ 144 6.26.1 Definitions ........................................................................................................................... 145 6.26.2 Process and Program Design ............................................................................................... 145 6.26.3 Approval and Administration .............................................................................................. 146 6.26.4 Management and Evaluation of Funding Agreements......................................................... 147 6.26.5 Ownership of Assets ............................................................................................................ 148 6.26.6 Control of Payments ............................................................................................................ 149 6.26.7 Financial Accounting and Reporting ................................................................................... 149 6.26.8 Sponsorships ........................................................................................................................ 150 6.26.9 Surplus and Deficit .............................................................................................................. 150


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6 Expense Management

6.1 Overview

Legislation requires foundations to have an expense management system in place to efficiently, effectively and economically manage financial resources and provide value for money. This system must provide for promptly identifying, approving, managing and recording expenses, and the timely paying of expenses.

Expense management systems must also encompass:

Recording of special payments

Loss from office or misconduct

Other losses.

See sections 15 & 18-22 of the Financial and Performance Management Standard 2009.

Foundations also have requirements to notify the Crime and Misconduct Commission of any official misconduct, including in relation to expense management. See sections 38 & 39 Crime and Misconduct Act 2001.

Key documents regarding expense management include Information Sheet 3.6 - Expense Management found in the Financial Accountability Handbook and Financial Management Tools (including Information Sheet 2.3 - Internal Controls Accountability Framework and Information Sheet 4.1 - Monitoring/Assessment of Internal Controls).

Other key documents include the

State Procurement Policy - Department of Housing and Public Works

Queensland Ministerial Handbook (see section 4.1 Expenditure – Allowable) - Department of the Premier and Cabinet

General Guidelines for Personal Expenses and the Use of Credit Cards by Public Service Employees - the Office of the Public Service Commissioner.

Expense management systems must also consider Goods and Services Tax requirements for certain expenses. Refer to the Australian Taxation Office.

Section 59 of the Financial Accountability Act 2009 requires a Foundation’s adherence to relevant Australian Accounting Standards, titled “prescribed accounting standards” issued by the Australian Accounting Standards Board. To assist, the Accounting Policy Guidelines are used to clarify which standards and interpretations are applicable to the current reporting period. These guidelines are produced as part of the Financial Reporting Requirements for Queensland Government agencies.

Sound expense management can only be achieved when developed in conjunction with other sound business controls. Expense management is closely linked to the Foundation’s Financial Management and Performance Management Framework (see Chapter 3) and Financial Reporting (see Chapter 4) including the Asset and Liability Management in Chapters 7 & 8.

TIP: Expense management involves a number of processes, including tendering, requisitions, purchase orders, goods receipt and payment. There are also a number of payment methods available, such as cash, cheque, corporate card and electronic funds transfer. Systems need to be designed to adequately manage each of these.

Critical to effective expense management is the system of processes and controls confirming that the goods and services paid for by the Foundation when received are according to the order, price, quantity and quality, and payments are authorised only by the appropriate staff.

A clear audit trail needs to be considered for all transactions.

– Provide an outline of the expense management system.


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– What is the purpose of expense management?

– What are the objectives and principles of the expense management system?

– Describe how the expense management practices meet the legislated requirements.

– Describe the core activities related to expense management. For example identifying, approving, managing, recording, and timely paying of expenses. Who is responsible for these activities? How are they undertaken?

– How does expense management assist the Foundation in achieving the objectives and goals in its Strategic Plan and the deliverables in its Operational Plan?

– Describe how the Foundation’s business internal controls (refer to Chapter 2) support proper and effective expense management.

– How is expense management reviewed? Who is responsible for this? When is it undertaken?

6.2 Control Objectives

While not explicitly mandatory, control objectives form part of the mandatory internal control structure as outlined in section 8 of the Financial and Performance Management Standard 2009.

Foundations must comply with the Financial Management Tools, in particular, Information Sheet 3.12 Commitments and Contingencies, Information Sheet 2.3 - Internal Controls Accountability Framework and Information Sheet 4.1 - Monitoring/Assessment of Internal Controls.

– What are the control objectives for the expense management system? What do they ensure? For example:

o Processes of approval and control are in place ensuring expenditure incurred is lawful and legitimate Foundation expenditure

o Expenditure is approved by authorised employees in accordance with:

- Budgetary constraints

- Statutory and/or contractual requirements

- Financial delegations.

o Operational responsibility is assigned for the identification and management of expenditure consistent with the Foundation’s Strategic Plan and financial management obligations

o Competitive and ethical acquisition arrangements are observed, including those required by the State Procurement Policy

o Expense payments are in accordance with payment terms, conditions, and utilising discounts

o Economy in the acquisition and use of assets, goods and services is achieved

o Transactions are promptly identified and accounted for enabling relevant internal and external reporting and accountability requirements to be satisfied

o Transactions are supported by readily accessible records and documentation and audit trails are maintained


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o Segregation of duties exists in approving, ordering, accepting and paying for assets, goods and services

o Adequate controls exist in processing and accounting for expenses.

– Who is responsible for these controls? How/when are they reviewed?

– How do the control objectives support the Foundation in meeting its legislative obligations to identify, approve, manage and record its expenses? (See section 19 of the Financial and Performance Management Standard 2009.)

6.3 Definition and Recognition of Expenses

TIP: Include additional definitions considered appropriate and remove those not applicable.

As stated in the Australian Accounting Standards Board (AASB) pronouncement, Framework for the Preparation and Presentation of Financial Statements: “the definition of expenses encompasses losses as well as those expenses that arise in the course of ordinary activities of the entity”.

Expenses

Expenses that arise in the course of the ordinary activities of the entity include, for example, cost of sales, wages, salaries, rental charges and depreciation. They usually take the form of an outflow or depletion of assets, or incurrence of liabilities that result in decreases in equity.

Losses

Losses on the other hand, represent other items that meet the definition of expenses and may, or may not, arise in the course of the ordinary activities of the entity. Losses represent decreases in economic benefits and as such they are no different in nature from other expenses - refer to section 6.18 - Loss of Assets.

The Framework further identifies:

“Expenses are recognised in the income statement when a decrease in future economic benefits related to a decrease in an asset or an increase of a liability, which means, in effect, that recognition of expenses occurs simultaneously with the recognition of an increase in liability or a decrease in assets”.

An expense must be recognised only when:

It is probable that a consumption or loss of resources has occurred

The expense can be valued or estimated reliably, without undue bias or error.

6.4 Accruing for Expenses

– What are the policies on accruing for expenses?

– What expenses are often accrued for? For example:

o Temporary staff/contractors

o Rent (if paid in arrears)

o Telecommunication charges


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o Insurance

o Credit card expenditure billed one month in arrears.

6.5 Prepayments

– What are the policies on accounting for prepayments? Are approvals required for prepayments? If so, who can approve them?

– What are the principles and practices for prepayments? For example, sound cash management.

– How does the Foundation utilise prepayments as part of expense management?

– What expenses can be covered by prepayments? For example, goods and/or services before they are received.

– What approvals/delegations are required for prepaid expenses? For example, prepayments valued under $5,000 can be approved through the regular approval channels, whereas prepayments over $5,000 require a higher level of financial delegation approval? (Note: recording and accounting procedures should be consistent regardless of value).

– How does the Foundation ensure a clear audit trail is maintained?

6.6 Impairment Losses

An impairment loss is defined by the Australian Accounting Standards Board as “the amount by which the carrying amount of an asset or a cash generating unit exceeds its recoverable amount”.

Foundations are required to provide recognition of impairment losses in the Statement of Comprehensive Income, see AASB 136 - Impairment of Assets.

The Non-Current Asset Policies for the Queensland Public Sector (Queensland Treasury and Trade) are mandatory for statutory bodies.

– How does the Foundation’s identify impairment losses? How is impairment loss accounted for and reported?

– What are the principles for managing impairment losses?

– How does the Foundation ensure assets are reviewed for impairment and not carried (financially accounted for) at more than their recoverable amount?

– Do the Foundation’s policies for impairment losses apply to current and non-current assets? (e.g. out-of-date stock, obsolete inventory).

6.7 Authorisation of Expenses

Proper authorisation of expenses can be assisted by a Foundation’s sound internal control structure as required by legislation. See section 8 of the Financial and Performance Management Standard 2009.

Authorisation of expenses should be managed in accordance with the Foundation’s risk management policies. See Chapter 2.


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TIP: Authorisation of expenses can also be supported and managed through a number of business management policies and procedures, for example: risk management, financial delegations and segregation of duties.

Authorising of expenses and purchasing (see section 6.8 - Purchasing) are closely related business activities that may share many polices, principles and procedures.

– How is the authorisation of expenses managed?

– What are the policies, principles and procedures for the authorisation of expenses?

– How do the Foundation’s risk management policies apply to authorisation of expenses?

– How is a clear audit trail maintained for the authorisation of expenses?

– How do the authorisation of expenses procedures comply with the objectives of the State Procurement Policy? For example to:

o Advance the priorities of the Government

o Achieve value for money

o Ensure probity and accountability for outcomes.

– Who can provide approvals and authorise expenses? Where are these approvals documented and recorded?

– Do different financial delegations have various value thresholds for approval?

– How does the Foundation ensure staff members with authority to approve expenditure only do so within their delegation? What controls are in place to assist this?

– Are recurrent and non-recurrent expenditure managed differently? If so, how? This can be further explained in Section 6.26 - Recurrent and Non-Recurrent Expenditure.

– How is authorisation of expenses managed in relation to contracts? Can authorisation of expenses for periodic payments be granted at commencement, thus reducing the need for authorising each payment?

– What controls are in place for reimbursements to staff? For example, reimbursements of expenses incurred themselves for either office or personal purposes. Who can authorise these?

– What other requirements for authorisation of expenses are in place? For example, before giving approval, delegated employees must be confident that the expenditure is:

o For an authorised official purpose

o Properly documented

o Able to withstand scrutiny by:

- Internal auditors, refer to Chapter 2.10 - Internal Audit

- External auditors, refer to Chapter 2.11 - External Audit

- Crime and Misconduct Commission

- Any court with applicable jurisdiction

- Any other external body with a legal right to inspect associated records


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o Appropriate, reasonable and supported by evidence capable of demonstrating these qualities when that evidence is scrutinised, that is, it must be publicly defensible

o Are there special allowances for authorising expenditure related to Christmas? See section 6.21 - Business Meetings, Official Functions and Hospitality and Section 6.25.5 - Christmas Expenditure.

6.8 Purchasing

Purchasing is a key component of a Foundation’s expense management system and all purchasing must be conducted in accordance with the State Procurement Policy.

Key documents regarding purchasing include Information Sheet 3.6 - Expense Management found in the Financial Accountability Handbook and the Financial Management Tools.

TIP: Purchasing and Authorising of Expenses (see section 6.7- Authorisation of Expenses) are closely related business activities that may share many polices, principles and procedures.

– How is purchasing managed?

– What do the purchasing policies apply to, i.e. goods, equipment and services?

– What are the policies, principles and procedures for managing purchases?

– How do the Foundation’s risk management policies apply to purchasing?


– Describe how the policies, principles and procedures for authorisation of expenses and purchasing work together to benefit the Foundation?

– How does the Foundation ensure purchases are carried out in compliance with the objectives of the State Procurement Policy to:



o Ensure probity and accountability for outcomes

– What approvals are required prior to purchasing being undertaken? Who can approve purchases?

– What practices and safeguards are in place to ensure staff members with authority to purchase only do so within their delegation?

– What are the procedures if the Foundation is made aware of purchases that contravene the policies, principles and procedures for managing purchases?

– How does the Foundation ensure that all purchases are recorded and properly documented?

– What are the policies for cash-on-delivery purchases?

– Are Standing Offer Arrangements for suppliers of goods and/or services used? If so, where are the details of these kept?

– Who approves the Standing Offer Arrangements? Who reviews them?


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6.8.1 Delegation of Authority to Perform Purchasing, Incur Expenditure and Sign Contracts

Key documents regarding the delegations for this chapter include the Information Sheets 3.4 - Delegations and 3.6 - Expense Management found in the Financial Accountability Handbook.

Foundations should also consider Information Sheet 3.6 - Expense Management in the Financial Management Tools.

Delegations of authority to perform purchasing can be recorded in the Financial Delegations Register (see Chapter 2).

TIP: The delegations of authority to perform purchasing, incur expenditure and sign contracts are closely related business activities that may share many interdependent polices, principles and procedures.

– State what delegations of authority to perform purchasing, incur expenditure and sign contracts exist.

– Who approves these delegations? What are the processes involved to approve these delegations?

– What are the policies, principles and procedures for delegation of authority to perform purchasing, incur expenditure and sign contracts? Who is responsible for these? How are they reviewed?

– What purchasing authorities can and can’t be delegated? Are there value thresholds for purchases where authority cannot be delegated?

– What authorities to incur expenditure can and can’t be delegated? Are there value thresholds for purchases where authority cannot be delegated?

– What contract signing authorities can and can’t be delegated? Are there value thresholds for purchases where authority cannot be delegated?

– Describe how the delegations to sign contracts work in conjunction with the requirements set out in sub-section 6.8.2 - Contract Performance Guarantee.

– What practices and safeguards are in place to ensure staff members with delegated authority only undertake decisions within their delegation?

– How does the Foundation ensure a clear audit trail is maintained for all delegations, and all activities undertaken through those delegations?

– Are these delegations noted in the Foundation’s Financial Delegations Register as outlined in Chapter 2?

– How do the Foundation’s risk management policies apply to these delegations?

6.8.2 Contract Performance Guarantee

Foundations are required to develop and implement a contract performance guarantee system. The following sub-sections provide guidance for Foundations to develop an appropriate system. The information below can be used as a reference and Foundations can adopt, amend or remove if not applicable. Refer to sections 36 - 41of the Financial and Performance Management Standard 2009.

Legislative requirements

A Contract Performance Guarantee (CPG) is defined as a security given by a contractor, or for a contractor, for the performance of one or more of the contractor’s obligations under a contract.


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The CPG system provides the policies, principles and practices for:

Determining which contracts must provide for the contractor to give security for the performance of the contract

Management of the CPGs for the Foundation.

In addition, the CPG system provides for:

Circumstances in which a CPG will be obtained

Determining any entitlement to interest where the CPG is a monetary security deposit

Assessing, at least quarterly, the ongoing need for, and adequacy of, existing CPGs

Each contract where a CPG is given by an approved security provider to include a condition that, if the security provider stops being an approved security provider, the contractor gives, or arranges the giving of the following:

o A monetary security deposit

o Security by an approved security provider.

A CPG is:

Given by a contractor, or for a contractor, by an approved security provider

In a form, and for an amount, that the Foundation is satisfied provides sufficient and suitable security for the performance of the contractor’s obligations under the contract to which the guarantee relates.

The CPG system ensures the Foundation becomes aware as soon as practicable after a security provider who has given a CPG stops being an approved security provider.

The CPG provides the benefits to the Foundation that are:

Irrevocable and unconditional

Payable on demand and without reference to another person

Available until all obligations secured by the guarantee have been performed.

When a security given is not a monetary security, and the provider of the CPG is no longer an approved security provider, the Foundation gives notice to the contractor to provide within 30 days, a monetary security deposit or secure an approved security provider.

– Describe how the Foundation’s contract performance guarantee system meets the legislative requirements outlined above.

– Who is responsible for the upkeep of this system? How often is it reviewed?

Assessment of Risk

– Describe how the Foundation undertakes an assessment of risk for a contract guarantee system?

– What are the key risks to the Foundation that a CPG will mitigate?

– Who is responsible for determining the risks for the CPG?

Other Factors

Other factors to be considered are contained in the table below.


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Aspect to Consider

Purpose or Reason

Severity of the risk Who will suffer if the contract fails?

Is a failsafe available to provide backup?

Value of the contract How material will the potential loss be?

Is the loss covered by the contractor’s insurance?

Duration of the contract The longer the term, there may be greater risk to the

Foundation in the event of failure.

Extent of other works in progress Other works may drain funds required for the project or

contract under review. Contract funding is typically not

isolated.

Form of guarantee offered Bank guarantee may be lowest risk, but may tie up

contractor’s funds.

By whom is the guarantee given Third party may be preferable because of the

independence and lack of potential gain to be derived in

withholding payment.

Conditions on the guarantee Financial guarantee must be unconditional; it must be

irrevocable

Is interest to be paid? Interest should not be offered. The party may instead

provide a bank guarantee with the deposit, on which

interest will be earned.

Knowledge of the contractor Do we have a history of the contractor based on prior

dealings?

Has the contractor’s business structure

changed since the previous dealing?

There may have been a change in structure to create

limited liability such as moving from partnership to

company.

Debt structure may have changed, adding to or reducing

the business risk.

Is the guarantor an approved security

provider?

May need to seek an alternative. Only approved providers

are permitted. See s87 of the Financial and Performance

Management Standard 2009.

Is a prepayment involved? Can the prepayment be avoided?

Is the cost of avoiding it excessive?

If “yes” - A guarantee must be obtained.

Conditions of Guarantee

– What conditions, if any, does the Foundation attached to a financial guarantee?

– Describe how the Foundation determines what conditions, if any, are to be attached to a financial guarantee.

– How does the Foundation ensure a CPG is not removed too soon, or too late, after it has served its purpose? What mechanisms are in place to enable this?


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– How does the Foundation ensure a CPG is not “time” based, and is based on performance against the contract deliverables?

Factors for consideration

– What are the situations where a guarantee must be considered? For example:

o Whenever a prepayment is required

o If a financial review of the contractor’s business indicates some degree of instability

o If the legal structure of the contractor company indicates it has limited share capital

o If the contractor has limited expertise, experience or resources to perform the contract itself, for example, it is a distributor and is relying on products to be supplied by a third party or a parent company

o If the contractor has several projects underway and the contractor’s cash flow is stretched

o Equipment is needed urgently or for a very specific or specialised purpose

o If creation, preservation and backup of data is required, and that data is either difficult to recreate or is essential to services

o Major or severe disruption to the business has occurred including:

- New board of directors

- New parent entity

- Re-financing or a change in the gearing or leverage of the business

- Business interruption

o When quality assurance is absent (note that the presence of a quality assurance system does not in itself mean that a guarantee is not required).

– What are the situations where a guarantee should not be considered? For example:

o Short-term, one-off supply of relatively low-importance/low risk/low-cost equipment

o Supply of non-critical, generally replaceable equipment or consumable items

o General consultancies

o Sufficient other influence exists, for example:

- Other contracts that may be awarded

- Other business that may be discontinued

- Contractor has a sound financial position.

– How does the Foundation ensure that when a guarantee is not used, the reasons are recorded?


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How much

– How much cover should the CPG provide for? Should it cover the entire contract?

6.8.3 Contract Disclosure

Foundations are required to publish details of all awarded ‘reportable” contracts and Standing Offer Arrangements that meet or exceed the value of $10,000 on the Queensland Government eTender website. See the Chapter 4 of the State Procurement Policy.

– What procedures are in place to ensure the requirements for contract disclosures are met? Who is responsible for this?

– Describe the link between the contract disclosure requirements, and the financial reporting requirements outlined in Chapter 4.

– How does the Foundation remain aware of the current obligations for contract disclosure? What mechanisms are in place to ensure this occurs?

6.8.4 Purchase approval

Good purchase approval policies and procedures form part of any sound internal control structures for a Foundation and can assist the Foundation in managing a number of legislative requirements. These include: Expenses Special payments Unacceptable loss management Risk Financial information. See sections 8, 19 - 22, 27& 28 of the Financial and Performance Management Standard 2009.

Foundations must also consider Information Sheet 3.6 - Expense Management in the Financial Management Tools.

– What are the policies for purchasing approval? Who is responsible for these?

– How do the purchasing approval policies and procedures assist security and fraud management?

– Describe the procedures for approving purchasing. Where are these recorded? Who can approve purchasing?

– What are the purchasing approval policies and procedures for goods or services that are on a standing offer arrangement?

– How does the Foundation ensure purchase approvals are carried out in compliance with the objectives of the State Procurement Policy?

– What segregation of duties is in place for purchase approvals?

– How does the Foundation ensure purchasing approval is only given to appropriate staff?

– How does the Foundation ensure purchasing approval is only given by appropriate staff?

– Describe the link between purchasing approval and the Foundation’s financial delegations in Chapter 2. Describe the link between purchasing approval and delegations of authority to perform purchasing, incur expenditure and sign contracts mentioned in Section 6.8.1 - Delegation of Authority to Perform Purchasing, Incur


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Expenditure and Sign Contracts. How do the risk management policies apply to purchase approval?

6.8.5 Prohibition on Splitting of Contracts or Orders

TIP: Prohibiting the splitting of contracts or orders ensures proper approval processes are followed.

The splitting of orders is dicouraged, however the final decision remains with the Foundation.

– What are the Foundation’s policies on the splitting of contracts or orders? What are the justifications for these?

– If splitting is acceptable, who can approve the contract or order payments to be split?

– How is the splitting of contracts or orders reported on financially?

6.8.6 Objectives of Purchasing Function

TIP: Having sound internal controls can support the Foundation’s purchasing functions.

– What are the objectives for the purchasing function? For example, to:

o Ensure goods and services are purchased on a value-for-money basis

o Communicate a delegation of authority for the commitment of funds for goods and services to maintain ethical and legal business practices and to avoid conflicts of interest within the procurement cycle

o Enhance opportunity for Queensland and Australian suppliers of goods and services, specifically local business and industry

o Promote purchasing practices which conserve resources, save energy, minimise waste, protect human health and maintain environmental quality and safety.

– What is the purpose of the purchasing objectives? What do they aim to provide?

– How do the objectives for purchasing comply with the principles embodied in the State Procurement Policy?

– Who is responsible for these objectives? How/when are they reviewed?

6.8.7 Purchase Order Management and Approval Process

Sound purchase order management and approval processes provide security for expense management. These processes can assist in effectively managing expenses, special payments, unacceptable loss management, financial information management and risk.

Purchase orders form a key component of expense management practices. Robust policies and practices are required to ensure purchase orders are managed properly. In addition, purchase orders must be recorded and stored in accordance with the Financial Information Management legislative requirements. See sections 19 & 27of the Financial and Performance Management Standard 2009. Also consider Information Sheet 3.6 - Expense Management in the Financial Management Tools.

– What are the methodology and procedures for procuring goods and services? For example:

o Requisitioning of goods and services by the operational units requiring them


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o Issuing of a purchase order

o Receiving goods and services

o Payment to the supplier, on receipt of goods or on account.

– What are the policies, principles and procedures for managing and approving purchase orders? Where is this approval process documented?


– How is the management and approval of purchase orders in compliance with the objectives of the State Procurement Policy?

– What segregation of duties is in place for managing and approving purchase orders?

– Does the Foundation require purchase orders to be prepared and approved prior to ordering goods or services?

– Are purchase orders required whenever goods or services are supplied on credit?

– What information is required to be included in a purchase order? Who is responsible for this documentation? How/when is it reviewed?

– How are outstanding purchases managed?

– How is recurrent expenditure managed? For example, goods and services purchased by use of a credit card, CabCharge Card or Fuel Card.

– How are contracts dealt with under the purchase order management policies and procedures?

– How do the Foundation’s risk management policies apply to the management and approval of purchase orders?

– Describe the different delegations involved in the Foundation’s approval process for purchases. For example:

o Financial delegation approves expenditure, commits funds

o Procurement delegation approves purchases and enters contracts.

6.8.8 Purchase Requisitions

– Are purchase requisitions utilised? If so, what are they used for?

– What are the policies, principles and procedures for the management of purchase requisitions?

– How are purchase requisitions created?


– How are purchase requisitions managed in compliance with the objectives of the State Procurement Policy?

– What segregation of duties is in place for managing purchase requisitions?

– What controls are in place to ensure staff with appropriate financial delegation are approving and creating purchase requisitions?

– What information is required to be included in a purchase requisition?


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– What is the approval process for purchase requisitions?

– How are outstanding purchase requisitions managed?

– What are the requirements for purchase requisitions where a standing offer arrangement is in place?

– How do the risk management policies apply to purchase requisition management?

6.8.9 Purchase via Tender

– Does the Foundation make purchases via tender?

– If the Foundation does make purchases via tender, what are the policies, principles and procedures for this?

– Are estimates required prior to invitations for tenders being issued?

– How does the Foundation ensure purchases via tender are managed in compliance with the objectives of the State Procurement Policy?

– What is required to ensure a clear audit trail of the tendering process is maintained?

– What information and documentation is required to be included in recordkeeping?

– How do the risk management policies apply to purchases via tender?

6.8.10 Purchase Order Issue and Dispositions

– Does the Foundation issue purchase orders? If so, what are they issued for?

– What information is required to be included in a purchase order? For example:

o Purchase order number

o Date

o Name and address of the supplier

o Supplier catalogue number of the item if applicable

o Description of the item

o Unit of measure

o Quantity ordered

o Unit price/rate

o Discount percentage, if applicable

o Total value

o Signature of authorised employee

o Purchasing employee/group contact details

o Delivery instructions and date

o Name and address of business unit to which the invoice is to be delivered.

– What are the policies, principles and procedures for how purchase orders are issued? Who is responsible for these?



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– How are purchase orders managed in compliance with the objectives of the State Procurement Policy?

– What segregation of duties is in place for issuing purchase orders?

– Are purchase orders required to be raised for ALL goods and services? If not, what purchases are excluded? For example, utility payments for expenses for electricity, water, telephones, travel.

– How are purchase orders raised? What is their approval process?

– What controls are in place to ensure staff with appropriate financial delegation are approving and raising purchase orders?

– How are outstanding purchase orders managed?

– What are the requirements for purchase orders where a standing offer arrangement is in place?

– How are purchase orders recorded and reported on? Who is responsible for this?

– How is the Inclusion and exclusion of GST managed for raising purchase orders? Refer to Chapter 10.

– How do the risk management policies apply to purchase order management?

– Do purchase order dispensations apply? If so, how?

– Is there a requirement to use purchase orders where a written agreement/contract is in place?

– Are there times when purchase orders are not required? For example:

o Goods and/or services charged to a corporate card (must not include assets)

o Transactions meeting the criteria of ‘recurrent expenditure’ - refer to section 6.26 - Recurrent and Non-recurrent Expenditure

o Petty cash purchases

o Where a contract exists and is regarded as the order for the services

o Where it is considered not cost effective, for example ‘low value purchases’

o When a purchase order is impossible to raise - out of hours emergency

o Where a vendor online requisitioning system is available for end users to requisition supplies such as stationery and uniforms.

6.8.11 Work Order

Work orders can be covered by the Asset Management - Chapter 7.

– Does the Foundation utilise work orders? If so, what are they used for?

– What information is required to be included in a work order?

– What are the policies, principles and procedures for how work orders are issued? Who is responsible for these?

– What segregation of duties is in place for issuing work orders?

– What is the approval process for work orders?


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– How are work orders recorded and reported on? Who is responsible for this?

– How do the risk management policies apply to the management of work orders?

6.8.12 Procurement Policies and Procedures

– Where are procurement polices and procedures kept? How are staff able to access them?

– What format are they kept in? Are they electronic or hard copy?

– Who is responsible for their upkeep and maintenance?

– What training is provided to staff regarding the procurement policies and procedures?


– How are the procurement policies and procedures managed in compliance with the objectives of the State Procurement Policy?

– How do the risk management principles apply to the procurement policies and procedures?

6.8.13 Staff Purchases

Employee purchases where an employee uses the Foundation’s purchasing power to buy goods for personal use, whether at a discount or not, are strictly not permitted. This restriction applies to the use of Foundation purchase orders and to the use of corporate credit cards.

6.8.14 Cancellation of Purchase Orders

– How is the cancellation of purchase orders managed?

– What are the policies, principles and procedures for how to cancel purchase orders? Who is responsible for these?

– What is considered a reasonable timeframe for cancellation of a purchase order to be provided to the supplier of goods or services?

– Can purchase orders be cancelled once goods or services have been commenced or are in transit? What if the order is partially filled?

– How is the cancellation of purchase orders managed if they were raised in error? What is the process to remedy this?

– What is the process for managing the cancellation of a purchase order that was raised through a work order? Is the work order cancelled also?

– How are cancelled purchase orders financially accounted for?


– How are resulting postage and/or re-stocking fees managed? Can compensation be offered to the supplier if purchase orders are cancelled once goods are delivered or services have begun?


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6.8.15 Internal Controls on Purchasing

A Foundation is required to have internal control structures for the best management its finances. This includes having controls on purchasing. These controls should form part of the required expense management system. See sections 8 & 19 of the Financial and Performance Management Standard 2009.

The internal controls on purchasing should be managed in accordance with a risk management system and in accordance with the State Procurement Policy.

Key documents regarding purchasing include Information Sheet 3.6 - Expense Management found in the Financial Accountability Handbook as well as Financial Management Tools, in particular, Information Sheet 3.12 Commitments and Contingencies, Information Sheet 2.3 - Internal Controls Accountability Framework and Information Sheet 4.1 - Monitoring/Assessment of Internal Controls.

– What are the policies, principles and practices for the Foundation’s internal controls on purchasing? Who is responsible for these?

– How do the internal controls on purchasing assist in security and fraud management?

– What segregation of duties is in place to assist the internal controls on purchasing? For example, are purchasing and accounting separated from dispatch and receiving?

– Describe the internal controls on purchasing. Where are these recorded?


– What controls are in place for manual purchase orders? For example:

o Are they pre-numbered?

o Are they accounted for each quarter?

o Are the matched with invoices?

o Are they verified against purchase orders?

– What are the controls on duplicate invoices? What mechanisms are in place to ensure that invoices are not paid twice? See 6.10.5 - Duplicate Invoices.

6.9 Goods Receiving

– How is receiving of goods managed? What is the importance of managing goods received?

– What are the policies, principles and procedures for managing the receiving of goods?


– How do the risk management policies apply to the receiving of goods?

– What are the objectives of the goods receiving function? For example:

o Ensure goods and services are received in good order and condition

o Ensure goods and services meet quantity and quality specifications

o Ensure payment does not occur for goods or services not received, or received in poor condition.

6.9.1 Segregation of Duties

– Describe the segregation of duties for the receiving of goods.


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– Are the receiving functions separated from the purchasing, accounting and inventory functions?

– If these functions are not separated, what safeguards are in place to minimise risk?

– How do the risk management principles apply to the segregation of duties for the receiving of goods?

6.9.2 Delivery of Goods

– What are the policies, principles and procedures for how delivery of goods is managed? Who is responsible for these?

– How is the delivery of goods recorded and reported on? Who is responsible for this?

– What physical security is provided for the delivery of goods?

– What is the process for receiving a delivery of goods? For example:

o Inspection for accurate quantities

o Inspection to ensure goods are in acceptable condition

o Supplier contacted immediately in regard to any variation between actual quantity and quantity stated

o Purchasing employees advised if quantities delivered differ to quantities ordered.

– Is preparation of a receiving record or another form of evidence for documenting receipt of merchandise required? If so, who is responsible for this? Where are these reports stored?

– What are the processes if the goods received are in poor condition? What details are recorded? Who is responsible for this?

– What are the processes if only partial delivery is received?


6.9.3 Services Rendered and Progress Claims

– What are the policies, principles and procedures for how payment for services rendered and progress claims are managed? Who is responsible for these?

– What approvals are required for payment of services rendered and progress claims?

– Can the approval of these payments be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– What is the segregation of duties for payment of services rendered and progress claims?

6.9.4 Internal Control on Goods Receiving

The Foundation is required to have internal control structures for the best management its finances. This includes having controls on the receiving of goods. These controls should form part of the required expense management system. See sections 8 & 19 of the Financial and Performance Management Standard 2009.

Foundations should have regard to the Financial Management Tools, in particular, Information Sheet 3.12 Commitments and Contingencies, Information Sheet 2.3 - Internal Controls Accountability Framework and Information Sheet 4.1 - Monitoring/Assessment of Internal Controls.


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– What are the policies, principles and practices for internal controls on the receiving of goods? Who is responsible for these?

– How do the internal controls on the receiving of goods assist in security and fraud management?


– Are the goods received required to be cleared by the receiving business unit? If not, who is authorised to clear the payment for delivery of goods?

– How often are goods and invoice receipts reconciled e.g. monthly?

6.10 Processing and Payment

Processing and payments are a key component of a Foundation’s expense management system. These must be conducted in accordance with the State Procurement Policy.

Effective management of processing and payments will form part of the mandatory internal control structure as outlined in section 8 of the Financial and Performance Management Standard 2009.


– How are processing and payments managed?

– What are the policies, principles and procedures for managing processing and payments?

– What verifications are required prior to any payment for goods and services? For example:

o Vendor's invoice

o Purchase authorisation notice

o Purchase order

o Delivery confirmation.

– Are trade credits used? If so, are they established within trading terms with individual suppliers?

– What are the processes when a liability to pay has arisen? What information is required so payment can occur?

– What authorisation must be obtained for payment prior to the invoice/claim being processed? See section 6.7 - Authorisation of Expenses.


– How are purchases are carried out in compliance with the objectives of the State Procurement Policy to:



o Ensure probity and accountability for outcomes?

– How do the Foundation’s risk management policies apply to processing and payments?


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6.10.1 Matching Invoices to Orders

– What are the policies, principles and procedures for matching invoices to orders? Who is responsible for these?

– What documents are required to undertake the matching of invoices to orders? For example: purchase order, receipt of goods acknowledgement, invoice?

– Are there exemptions to this requirement in regard to Purchase Order Dispensations? For example:

o Utilities charges - electricity, phone

o Government taxes

o Employee expense reimbursements

o Rent, lease or loan payments

o Subscriptions for professional journals and similar publications

o Invoices for which a purchase order has not been issued, or that are subject to another form of contractual arrangement.

– What approvals are required for matching invoices to orders?

– Can this process or its approvals be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– What is the segregation of duties for matching invoices to orders?


6.10.2 Invoice Processing and Approval

– How is invoice processing undertaken and managed?

– What are the policies, principles and procedures for approving invoices? Who is responsible for these?

– What is the process to approve an invoice?


– Who can approve invoices? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How are invoices accompanied with approved purchase orders managed? Does this differ from invoices not accompanied with purchase orders?

– What processes are involved to ensure invoices are not paid twice? For example: the requirement to stamp paid invoices? See 6.10.5 - Duplicate Invoices.

– Are General Purchase Vouchers utilised for unsupported invoices?

– How are purchase order prices and quantities checked to verify the amount charged?

– What information must be prepared for the authorised staff member to approve invoices? For example:

o Charge rates or price are in accordance with the order or contract

o Calculations, extensions and additions are correct


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o Goods or services have been received and are satisfactory according to the order

o Approved orders and evidence of the receipt of goods has been sighted

o General ledger, tax and cost centre code/s have been checked.

– How are adjustments/credit notes from suppliers processed? (This may also be covered in Section 6.10.3 - Adjustment Notes.)

– How do the Foundation’s risk management policies apply to invoice approval?

– How are tax requirements taken into consideration? Refer to Chapter 12.

6.10.3 Adjustment Notes

– What are the policies, principles and procedures to manage adjustment/credit notes? Who is responsible for these?

– How are adjustment/credit notes financially accounted for?

– How are adjustment/credit notes recorded and reported on?

– Who is authorised to approve adjustment/credit notes?

– Are adjustment/credit notes accepted or are refunds required from certain suppliers?


– What are the tax implications for adjustment/credit notes? How are they managed?

6.10.4 Duplicated Invoices

– What are the policies, principles and procedures for how duplicate invoices are managed? Who is responsible for these?

– What are the major risks of duplicate invoices? How are these risks addressed?


– What controls are in place to ensure instances of duplicate invoices are kept to a minimum? For example, stamping invoices to indicate they are paid or are a copy.

– Who is authorised to determine if a duplicate invoice is a genuine copy of the original invoice? How is this invoice marked? Where are these details recorded?

– How can a questionable invoice be checked to see status of payment?

– Who is responsible for assessing possible duplicate invoices?

– How do the Foundation’s risk management policies apply to duplicate invoices?

– How do the Foundation’s recordkeeping practices support the management of duplicate invoices?

6.10.5 Invoice Cancellation before Payment

– What are the policies, principles and procedures for managing invoices cancelled before payment? Who is responsible for these?

– Are cancelled invoices processed through Accounts Payable?

– How are invoices cancelled before payment recorded? Are they documented as cancelled with the reason included?


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6.10.6 Processing Payments

Processing of payments forms a key component of an expense management system. In addition, the Foundation is required to have internal control structures for the management of its finances. See section 8 & 19 of the Financial and Performance Management Standard 2009.

Foundations should have regard to the Financial Management Tools, in particular, Information Sheet 3.12 Commitments and Contingencies, Information Sheet 2.3 - Internal Controls Accountability Framework and Information Sheet 4.1 - Monitoring/Assessment of Internal Controls.

Expense management systems must also consider Goods and Services Tax (GST) requirements for certain expenses. Refer to the Australian Taxation Office.

– What are the policies, principles and procedures for how payments (including one-off payments) are processed? Who is responsible for these?

– What are the procedures if the Foundation is made aware of processing of payments that contravene the policies, principles and procedures?

– Who can approve the processing of payments? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– What steps are involved to approve the processing of payments?

– How is a clear audit trail maintained for payments processed?

– How does the processing of payments comply with the objectives of the State Procurement Policy?

– What is the timeframe for posting payments into the general ledger? Is this required as soon as practicable? - Refer to section 6.4.7 - Recording of Payments. What controls are in place to ensure transactions are recognised and treated correctly when posted on the general ledger?

– Is there a value threshold where additional approvals are required for the processing of payments? Do different financial delegations have various value thresholds for approval?

– How does the Foundation ensure staff members with authority to process payments only do so within their delegation? What controls are in place to assist this?

– What is the process if a payment has been made in error? Either in value or to a recipient?

– How do the Foundation’s risk management policies apply to processing payments?

– Are cheques to remain ‘undrawn” until the receipt of goods and supply of services? Are there exceptions to this? For example subscriptions? See section 6.10.10 - Production of Cheques.

– What are the procedures when an original invoice/claim has been lost or destroyed before payment? Is a duplicate required prior to payment? Duplicate invoices should be managed in accordance with the requirements set out in 6.10.4 - Duplicate Invoices.

– How does the Foundation manage the tax requirements for invoices?

– What is the process when an invoice is received after it has been paid? How is the supplier notified of previous payment? How/when is the invoice returned? Are


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adjustment/credit notes used in this instance? Refer to 6.10.3 - Adjustment Notes if required.

– Does the Foundation have a system in place where one or more staff must verify and certify accordingly on each voucher/transaction record that:

o Total amount of the purchase has been approved by an employee with authorised financial delegation as required by 6.7 - Authorisation of Expenses, with approval included in supporting documentation

o General ledger account/s and cost centre/s to be charged are valid and appear to be reasonable

o Supporting evidence is included stating that the assets, goods and/or services concerned have been provided in accordance with the associated order/contract

o Payment (or part thereof) in respect of this obligation has not previously been made

o GST has been properly accounted for and coded in accordance with the Foundation’s tax codes

o Payment is arithmetically correct (see section 6.10.13 - Rounding) and in accordance with rates as per the related order/contract/standing offer arrangement. Are exceptions to this? If so, how are they managed?

o Other checks, for example, documentation of goods received on consignment or other evidence of their dispatch or delivery, have been carried out to verify the legitimacy of the payment?

6.10.7 Recording of Payments

Recording of payments is a key requirement of an expense management system. It is pivotal to the financial integrity of the system that a robust mechanism for the recording of payments is in place.

Sound recording of payment processes can address a number of statutory requirements including having sound internal control structures, the need for revenue, cash, financial information, liability and risk management systems See section 8, 15, 17, 19, 24 & 25, 27 & 28 of the Financial and Performance Management Standard 2009.

Key documents regarding the recording of payments include Information Sheet 3.6 - Expense Management found in the Financial Accountability Handbook and the Financial Management Tools. In addition, Foundations should have regard to Information Sheet 2.3 - Internal Controls Accountability.

The recording of payments procedures assist the Foundation in meeting the relevant tax obligations for certain payments. Refer to the Australian Taxation Office.

TIP: Robust reporting of payment systems assist when undertaking both internal/external financial audits and can be used to mitigate instances of fraud.

– What are the policies, principles and procedures for how the recording of payments is managed? Who is responsible for these?

– What are the procedures if the Foundation is made aware of recording of payments that contravenes the policies, principles and procedures?

– What is the process to confirm the accuracy of the payments recorded?

– How are payment transactions recorded? Are they recorded against the relevant general ledger accounts and within associated subsidiary systems?


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– Explain the relationship between the recording of payments and the chart of accounts.

– How is a clear audit trail maintained for payments recorded?

– How does the Foundation ensure its recording of payments assists it to comply with the objectives of the State Procurement Policy?

– What delegations/approvals are required?

– What is the process if a payment has been recorded in error? Either in value or by payer/payee?

– How do the risk management policies apply to recording of payments?

– How does the recording of payment processes ensure duplicate invoices are effectively managed? Duplicate invoices should be managed in accordance with the requirements set out in 6.10.4 - Duplicate Invoices.

– What is the process to record payments that have been cancelled or reversed? Who is authorised to record cancelled or reversed payments? How is this documented? Are adjustment/credit notes used in this instance? Refer to 6.10.3 - Adjustment Notes if required.

– What is the rounding convention utilised for the recording of payments? How does it support the requirements set out in section 6.10.13 - Rounding?

6.10.8 Payment Terms

– What are the terms for payment?

– What is the expected timeframe for payments to be made? For example, 14/21/30/60/90 days after receipt of goods and or services (except where contractual conditions are different)?

– If specific payment terms are required, where are these recorded? Are they included on the purchase order?

6.10.9 Discounts

– How are discounts for purchases managed?

– Does the Foundation encourage the exploitation of economies of scale?

– How are discounts accounted for and recorded?

– How is a clear audit trail maintained for discounts?

6.10.10 Production of Cheques

Key documents relating to the production of cheques include Information Sheet 3.6 - Expense Management found in the Financial Management Tools. In addition, Foundations should have regard to Information Sheet 2.3 - Internal Controls Accountability.

– What are the policies, principles and procedures for the production of cheques? Who is responsible for these?

– What are the procedures if the Foundation is made aware of production of cheques that contravenes the policies, principles and procedures?


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– Who can approve the production of cheques? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– What steps are involved to approve the production of cheques?

– How is a clear audit trail maintained for cheque production?

– How do the practices utilised for the production and use of cheques comply with the objectives of the State Procurement Policy?

– How does the Foundation ensure that appropriate approvals are obtained?

– What information is recorded when a cheque is produced? For example:

o Name of the recipient

o Date of production

o Amount paid

o The Foundation as payer

o Purpose of the payment

o Signature of authoriser.

– What is the process if a cheque is produced in error? Either in value or to a recipient?

– Are cheques to remain ‘undrawn” until the receipt of goods or supply of services? Are there exceptions to this? For example subscriptions?

– What are the procedures when an original cheque has been lost or destroyed before being banked by the recipient? Is a duplicate required prior to payment? Is the cheque cancelled?

– What is the process to cancel/reverse a cheque? Who is authorised to cancel/reverse a cheque? Where is the reason for cancellation kept?

– What records are maintained of cheque production? For example the Cheque Register (see Chapter 2). What must be included:

o Date of printing of the cheque(s)

o Number of valid cheques printed

o Cheque numbers that were voided if any

o Cheque numbers that were used for valid cheques

o System validation stating the number of valid cheques printed, the total value of those cheques etc?

– What controls are in place to reduce the likelihood of fraud using cheques? For example are they:

o Numbered sequentially

o Labelled "NOT NEGOTIABLE - ACCOUNT PAYEE ONLY"

o Addressed to a company rather than an individual

o Not bankable to “CASH”?

– How do the Foundation’s risk management policies apply to the production of cheques?


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– How are breaks in the sequence of cheque numbers or other irregularity managed? Are they investigated immediately and recorded? If so, who investigates this and where are the findings recorded?

6.10.11 Signing of Cheques

Key documents regarding purchasing include Information Sheet 3.6 - Expense Management found in the Financial Management Tools.

In addition, Foundations should have regard to Information Sheet 2.3 - Internal Controls Accountability.

– What are the policies, principles and procedures for the signing of cheques? Who is responsible for these?

– What are the procedures if the Foundation is made aware of signing of cheques that contravenes the policies, principles and procedures?

– Who can sign cheques? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How is a clear audit trail maintained for signed cheques?

– What are the controls and security for signed and unsigned cheques? For example:

o Reconciliation of cheque runs with system reports/batch header totals

o Procedures that effectively manage cancelled or spoilt cheques

o ‘Manual’ cheques signed by authorised persons only, at least two signatories.

6.10.12 Electronic Funds Transfer

Key documents regarding purchasing include Information Sheet 3.6 - Expense Management found in the Financial Management Tools. In addition, Foundations should have regard to Information Sheet 2.3 - Internal Controls Accountability.

– What are the policies, principles and procedures for electronic funds transfers? Who is responsible for these?

– Describe how these are similar to procedures in 6.10.6 - Processing Payments.

– What are the procedures if the Foundation is made aware of electronic funds transfers that contravene the policies, principles and procedures?

– Who can electronically transfer funds? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How is a clear audit trail maintained for electronic funds transfers?

– What is the process if an electronic funds transfer payment has occurred in error? Either in value or by payer/payee?

– Is there a value threshold where additional approval is required for electronic funds transfers?

– How do the Foundation’s risk management policies apply to recording electronic funds transfers?

– What requirements are unique to electronic funds transfers? For example:


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o Obtain written agreement from payees for transfers to occur

o Record their correct BSB and bank account numbers

o Forward advice of each transfer to each entity i.e. remittance advice

o Ensure electronic funds transfers transactions are reported similarly to cheque payments. This may be similar to requirements in 6.10.10 - Production of Cheques.

6.10.13 Rounding

The Foundation uses the following rounding principles.

Rounding principles are sourced from the guideline ‘The Withdrawal of Copper Coins’ released initially by the Prices Surveillance Authority, now part of the Australian Competition & Consumer Commission.

The rules of rounding in dealing with small change in transactions differ according to the form of payment.

Cash transactions

The rounding for cash transactions are as follows:

1 & 2 cents – rounded DOWN to the nearest 10

3 & 4 cents – rounded UP to the nearest 5

6 & 7 cents – rounded DOWN to the nearest 5

8 & 9 cents – rounded UP to the nearest 10

EFTPOS transactions

Where it is elected to pay a transaction by way of cheque, credit card or EFTPOS it is not necessary to round the total value of the transaction – note the payroll exception below.

Payroll Overpayment

Where an employee has been overpaid by one or two cents, this value can be rounded down. Three and four cent overpayments can be rounded up to the nearest five cents. Any amount above five cents will be deemed to be an overpayment for the purposes of rounding in the payroll system.

6.11 Credit Cards Systems to manage credit card use form part of a Foundation’s expense management system. The use of these cards must comply with the State Procurement Policy.


TIP: Purchasing and the Authorising of Expenses (see section 6.7) are closely related business activities that may share many polices, principles and procedures.

All of a Foundation’s corporate, travel, entertainment and other types of credit cards are referred to collectively as “credit cards” in this chapter.

– What are the policies, principles and procedures for the use of credit cards? Who is responsible for these?


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– What are the procedures if the Foundation is made aware of credit card activities that contravene the policies, principles and procedures?

– Who can undertake credit card activities? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How is a clear audit trail maintained for credit card use?

– What is the process if a credit card payment has occurred in error? Either in value or by payer/payee?

– Is there a value threshold where additional approval is required for credit card payments?

– How do the Foundation’s risk management policies apply to credit card use?

– Outline what restrictions govern the use of credit cards. For example, what they can/can’t be used for.

– Are there categories of credit cards? For example, corporate cards, travel cards or entertainment cards?

– What are the policies on the use of purchase reward programs for credit cards?

6.11.1 General Policies

TIP: A credit card must not be used to make a purchase where the supplier/merchant has not quoted an Australian Business Number (ABN), and the purchase value is greater than $75 excluding GST. This is because transactions great than $75, without an ABN provided, require the withholding of 46.5% for taxation purposes as required by the Taxation Administration Act 1953. Credit cards do not provide the functionality to withhold the required amount for taxation purposes.

– Is there a credit card (corporate purchase card) register? What information is stored? See Chapter 2.

– What are the prerequisites for staff to hold a corporate credit card?

– What is the single transaction limit for credit card procurements? For example $3,000 per transaction. Do different financial delegations have different transaction limits?

– How are the credit cards embossed? Do they contain the user’s or the Foundation’s name?

– What are the requirements for using fuel cards? Do they require a log book entry or odometer reading? Can a corporate credit card be used to purchase fuel?

– What are the restrictions on the use of the travel and/or entertainment credit cards? For example:

o Additional approvals for use

o Senior management use only

o Staff travelling overseas

o Staff undertaking minor purchases

o Repayment requirements.

– Are there specific conditions of use of the Foundation’s credit cards? For example:


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o Individual and monthly transaction limits are imposed on a corporate card; no limits apply to the travel and/or entertainment card

o Use of credit card facilities restricted to staff only in accordance with Foundation policies and procedures governing the use of that card

o Staff must aware of responsibilities associated with the use of the credit card before being issued with the card

o Transactions are to be undertaken in accordance with approved financial and procurement delegations

o Minimal number of required travel and entertainment accounts are to be opened with the credit organisation

o Arrangements entered into allow individual card limits to be applied and provide security against unauthorised use

o The credit organisation has to provide the Foundation with access to details of purchase transactions and monthly balances

o Statements must be reconciled and coded for data entry immediately upon receipt

o Persons using credit cards obtain or will otherwise maintain particulars of each use of the credit card including supporting invoices and dockets etc., which are attached to the credit card transaction record for the purposes of substantiating the official use of the card and settlement of the account within the settlement period

o Cards may not be used to purchase goods or services other than those for which the card is intended

o Cards must not be lent to other persons

o Cards must be kept in a secure location when not in use

o Cards are not to be used to purchase items for personal consumption or use.

– What are the procedures if a tax invoice is not held and GST has been charged on a credit card purchase?

– What are the procedures for settlement of the liability created with the credit organisation?

– What are the procedures for a lost or stolen credit card? Is the card holder liable? What timeframe is required for the notification of a lost card?

6.11.2 Credit Card Limits

– What are the limits of credit cards transactions for day to day purchasing?

– What is the maximum monthly credit value available?

– Do these limits vary according to, card holder, financial delegation, car category, etc.?

6.12 Employee Expenses – What are the policies, principles and procedures for managing employee expenses? Who

is responsible for these?


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– What are the procedures if the Foundation is made aware of employee expenses that contravene the policies, principles and procedures?

– How do the Foundation’s risk management policies apply to the management of employee expenses?

– How is a clear audit trail maintained for employee expenses?

– How are employee expenses managed? For example:

o Payroll payments are made in accordance with the requirements of applicable Acts, industrial awards or agreements, contracts of employment and superannuation scheme provisions

o Internal controls ensure the integrity of each payroll in terms of data entry, authorisations, calculations and payments (see Chapter 2)

o Payments are made in accordance with 6.10.6 - Processing Payments

o Payments are promptly posted to the expense accounts

o A segregation of duties is observed for the processing of employees’ expenses and payments

o Regular reconciliations are performed to ensure all amounts are completely transferred to, and treated correctly in, the General Ledger.

o The Foundation’s risk management policies apply to the management of employee expenses. This includes verification that payments are made to real people and for hours actually worked (including other determining factors). A clear audit trail is maintained for the management of employee expenses

o Primarily, payroll payments are made by direct deposit or electronic funds transfer. Payment is by cheque only if electronic payment is unavailable.

– What is the process if an employee provides incorrect banking details, or the payment is rejected by the bank?

– How are unclaimed wages managed?

– How are taxation requirements adhered to for employee expenses? See Chapter 10 - Taxation Management for information relating to payroll tax, Pay As You Go (PAYG) tax deduction and remittance, and Fringe Benefits Tax (FBT) recording.

– Are there irregular payments that require additional authorisation? For example:

o Recreation leave

o Higher duties allowance

o Meal allowances

o Overtime.

– Can the Foundation provide payment to employees outside prescribed relevant industry awards? If so, who can approve these?

6.12.1 Employee Payment and Allowances

– What are the payments and allowances provided by the Foundation? How are these determined? Where are they documented?


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– Who can approve changes to employee payments and allowances? Is it the CEO or the Board?

– How does the Foundation ensure that staff payments and allowances comply with the relevant industrial instrument for leave payments?

– What are the procedures for payments while an employee is absent?

6.12.2 Time and Attendance Records

– How are staff required to record their hours of attendance?

– Are core hours of service required?

– Are flexible work arrangements offered to staff?

– Is there a work roster system? If so, who is responsible for managing this? Is this provided to staff seven days prior to the period it refers to?

– How are roster variations managed? How is payroll advised of variations to rosters?

– How is unplanned leave managed? For example: short term Sick Leave, Flood Leave, Family Leave, etc. Are there special requirements for these? For example, leave applications, medical certificates and other relevant documentation.

– How is unpaid leave managed?

– Is there a period of sick leave that requires a medical certificate? How can other leave be used if a person is away due to sickness?

– Is overtime available? Is so, what are the procedures to approve overtime? What controls are in place to ensure overtime is only worked when required?

6.12.3 Payroll Deductions

– Describe how the Foundation manages payroll deductions.

– Is authorisation required in writing prior to any deductions taking place? Where are the forms stored?

– What are the deductions permitted and what approvals are required? For example:

o PAYG tax

o Superannuation contributions

o Child support

o Higher Education Contributions Scheme

o Garnishee arrangements.

– How is a clear audit trail maintained for payroll deductions?

Deduction Authorisation

– Describe how the Foundation manages deduction authorisations.

– Is a written authority for payroll deductions required for each pay run, or can a single authority span a certain timeframe?

– How are superannuation deductions managed? For example:


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o Deductions are made in accordance with the requirements of the schemes employees are a part of

o Deductions are supported by an on-line reconciliation of the payment.

– How are salary sacrifice deductions managed? For example deductions must only be actioned when authorised documentation has been provided.

Disbursement of Deductions

– Describe how the Foundation manages disbursement of deductions.

– Are external deductions posted directly to those entities? For example, payment to multiple bank accounts and union fees.

– What external deductions require posting into suspense accounts? For example:

o Personal superannuation

o Garnishee payments

o Australian Defence Force.

– How are deductions managed where the vendor requires on-line reconciliation? For example the Australian Taxation Office.

6.12.4 Payroll Disbursement

– Describe how the Foundation manages the disbursement of employee expenses. For example:

o Disbursements are electronic transfers by default

o Full audit trails must be produced.

– What information are electronic transfers required to contain? For example:

o Employee’s payroll number

o Name and account number

o Branch-State-Bank number

o Net pay amount

o Branch identification of the financial institution.

– How are payment disbursements by cheque managed? What is the process? How does this comply with the requirements set out in sub-sections 6.10.10 - Production of Cheques, 6.10.11 - Signing of Cheques and 6.19.1 - Disbursement by Cheque?

– What are the procedures if payroll disbursements are done in error?

– Define the segregation of duties for payroll disbursements.

6.12.5 Pay Verification, Certification and Advice

– Describe how the Foundation manages pay verification and certification. What systems are in place to verify that payroll payment amounts are correct?

– Describe how the Foundation manages pay advices.

– How are pay advices provided? Are they electronic or manual?


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– What information must a pay advice contain? For example:

o Salary/wages paid

o Relevant pay period

o Information required under the Industrial Relations Act 1999.

– How is a clear audit trail maintained for pay verification, certification and advice?

6.12.6 Returned and Unclaimed Pays

TIP: A returned pay occurs when a direct credit intended for an employee’s bank account is unsuccessfully processed and is therefore credited back to the bank account from which the credit was initiated. This will usually happen because either the BSB (bank-state-branch) number or the account number has been incorrectly quoted.

– Describe how the Foundation manages returned and/or unclaimed pays.

– How are returned and/or unclaimed pays financially accounted for?

– How are returned pays entered in the financial journal? Are they entered on a one-for-one basis to match the bank statement?

– What is the process to determine the cause of the returned and/or unclaimed pay? For example, funds were transferred into a closed account.

– What is the process to obtain the correct banking details from the staff member?

– What is the process if an unclaimed and/or returned pay has remained unclaimed for a period of time? Is it left in an expense account and documented as a liability? Who can approve this?

– Can payment be made by cheque to the employee if a returned and/or unclaimed pay is returned?

– How is a clear audit trail maintained for returned and/or unclaimed pays?

6.12.7 Payroll Bank Account

– Describe how the Foundation manages the payroll bank account.

– Does the Foundation require a separate bank account to manage staff payroll?

– Does the payroll bank account receive regular reimbursement from the Foundation’s main bank account?

– Is the payroll bank account controlled through a clearing account?

– How often is the payroll bank account reconciled? Who is responsible for undertaking this?

– Can reconciled items be carried forward beyond the reconciliation period? If so, how far forward can they be carried?

– How often does the payroll account, including associated accounts, require clearing? For example monthly or quarterly?

– Does the payroll bank account have an overdraft function? Are there restrictions on operating the payroll bank account in overdraft?


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– What are the mechanisms that support the Payroll bank account carrying out the appropriate deduction activities as identified in section 6.12.3 - Payroll Deductions?

– How is a clear audit trail maintained for the use of the Payroll bank account, and associated accounts?

6.12.8 Payroll Calculations

– Describe how the Foundation manages payroll calculations. Who reviews and approves payroll calculations?

– Does the Foundation take random payment samples to ensure accuracy of payment calculations? If so, who does this? How often is this undertaken?

– How do the Foundation’s risk management policies apply to payroll calculations?

Where the payroll is calculated electronically

– Describe how the Foundation manages payroll calculated electronically. In particular, non-standard leave payments or other allowances. For example:

o Long service leave

o Unpaid annual leave

o Leave and entitlements paid on termination.

Where the payroll is calculated manually

– Describe how the Foundation manages payroll calculated manually.

– Are manual or other non-standard payment calculations checked and verified individually?

– Do manual or other non-standard payment calculations require additional authorisation or approval? If so, who can approve these calculations?

– How are deductions calculated for manual payments?

6.12.9 Payroll Overpayments and Underpayments

– Describe how the Foundation manages payroll overpayments and underpayments.

– What processes are in place to minimise the risk of overpayments or underpayments? How do they support overall risk management for payroll?

– How are overpayments and underpayments financially accounted for? What if this extends to another financial year?

– What mechanisms are in place to ensure accurate details are provided to payroll management to include information on:

o Staff wages and entitlement changes

o Staff appointments

o Terminations

o Leave processes (loading, long service, special, time off in lieu, etc.)

o Changes in timekeeping requirements.


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– What is the process when payroll is made aware of an overpayment or underpayment? Does the Foundation investigate immediately?

– Does the Foundation have a wages and salary overpayments register? (See Chapter 2).

– What is the process for correcting underpayments? Describe the support provided to the recipient during this process.

– What is the process for recovering an overpayment? Describe the support provided to the recipient during this process. How does this process support the revenue recovery processes in Chapter 5?

– How are overpayments receivable assessed for impairment? How is the allowance for impairment calculated?

– If an overpayment cannot be recovered is it recorded as a loss? See section 6.24 - Loss of Assets.


Incorrect PAYG Tax Deductions

– Describe how the Foundation manages incorrect PAYG tax deductions.

– What is the process if an incorrect PAYG tax deduction is due to Foundation error?

6.12.10 Payroll Reconciliations

– Describe how the Foundation manages reconciliations.

– How often are payroll reconciliations undertaken? Are they fortnightly, monthly, quarterly?

– What is the process for reconciling the payroll accounts? For example:

o After each payroll processing run, the total net pay amount must be confirmed with the amount withdrawn from the respective bank account. Variances are investigated and cleared without delay.

o At the end of each reconciliation period, payroll transactions are reconciled to the general ledger transactions, to verify that the amount in the ledger for payroll agrees with the payroll system on a period basis and year to date.

o At the end of the reconciliation period, the payroll banking transactions, i.e. withdrawals, cheques, and deposits, must be reconciled to the general ledger transactions affecting the bank accounts.

o At the end of the reconciliation period, payroll clearing accounts for payroll deductions must be verified.

– Who approves the reconciliations? What supporting documentation is required for approval?

– How is a clear audit trail maintained for payroll reconciliations?

6.12.11 Payroll Control

– Describe how the Foundation manages payroll control.

– How are employee time and attendee records used to support the payroll function?


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– Are employee time and attendee records required to be approved prior to payment? Who can approve these? Can this process or its approvals be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Are employees compelled to take leave entitlements?

– How is a clear audit trail maintained for the payroll controls?

6.12.12 Personal Expenses

TIP: Significant judgement should be exercised when approving any type of personal expense/reimbursement.

– What are the policies, principles and procedures for managing personal expenses?

– How does the Foundation manage instances where the policies, principles and procedures for managing personal expenses have been breached?

– Can Foundation funds be used to cover personal expenses? If so, what can they cover and what controls are in place to support this?

– What information is required to be presented by staff seeking reimbursement for personal expenses incurred during official business? Who can authorise this? How does this process align with the fundamental principles outlined in Section 6.7 - Authorisation of Expenses?


– How do the Foundation’s risk management policies apply to authorisation of personal expenses?

– What is the segregation of duties for the approval or reimbursement of personal expenses?

– How is applicable FBT accounted for in certain reimbursements? Refer to Chapter 12 – Taxation Management.

– What expenditures are regarded as not eligible for reimbursement? For example:

o Tea, coffee or kitchen supplies

o Casual drinks

o Stocking of office bar fridges

o Personal laundry/dry cleaning/grooming expenses

o Gym/exercise session fees

o Child minding fees incidental to carrying out official duties

o Club membership fees

o Floral presentations.

6.12.13 Accountable Advances

– What are the policies, principles and procedures for managing accountable advances?

– How does the Foundation manage instances where the policies, principles and procedures for managing accountable advances have been breached?


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– Who can authorise the advancing of funds? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How is a clear audit trail maintained for accountable advances?

– Is there a value threshold for accountable advances? If so, what is it?

– How do the Foundation’s risk management policies apply to accountable advances?

– Outline the restrictions on using accountable advances. What can/can’t they be used for? For example:

o Minor travel

o Meals

o Transportation

o Incidentals.

– How is applicable FBT accounted for in certain advances? Refer to Chapter 12 – Taxation Management.

– What information is required prior the approval of an accountable advance?

– Are advances provided electronically, by cheque or cash? Which is preferred?

– What is the process if an accountable advance was insufficient to cover actual costs incurred? Is this process similar to a reimbursement?

6.12.14 Payments following the death of an employee

TIP: Payments should be processed without tax deducted and paid to the estate of the deceased. Refer to Chapter 12 – Taxation Management for further details.

– How does the Foundation manage payments following the death of an employee? Who is responsible for this?

– What are the objectives and principles for managing payments following the death of an employee?

– Describe how the Foundation ensures that payments and other benefits due to a deceased employee will be paid or given to the rightful beneficiary. What systems and procedures are in place to support this?

– How are payments following the death of an employee undertaken? Who is responsible?

– Who can approve payments following the death of an employee? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How are these payments recorded and reported (see Chapter 4)?

– Does the Foundation require verification of an employee’s death prior to making payments? For example, written advice from the Executor or Administrator of the deceased estate?

– Does the Foundation have provisions in its gifts policy to allow the purchase of items for the family of a deceased employee? For example: flowers and cards etc.


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– Does the Foundation pay any termination payments to a deceased employee’s estate? If so, what are they?


– How is a clear audit trail maintained for payments following the death of an employee?

6.12.15 Salary Sacrifice Arrangements

Refer to Chapter 6 for further details on salary sacrifice arrangements.

TIP: If salary sacrifice arrangements are not offered by the Foundation, then remove this section.

– How does the Foundation manage salary sacrifice arrangements following the death of an employee? Who is responsible for this?

– How does the Foundation ensure all relevant documentation and payments of employee credits are provided to the Executor or Administrator of the deceased estate? Who is responsible for this?


– How is a clear audit trail maintained for salary sacrifice arrangements following the death of an employee?

6.12.16 Other Payments

– Are there other payments the Foundation makes following the death of an employee? For example, a gratuitous payment made in recognition of the employee’s service.

– How does the Foundation manage other payments following the death of an employee? Who is responsible for this?

– How are other payments recorded and reported (see Chapter 4)?


– How is a clear audit trail maintained for other payments following the death of an employee?

6.12.17 Foreign Currency Requirements

– What are the policies, principles and procedures for managing transactions in foreign currencies?

– What additional information is required to be included during these procedures?

– What foreign currency exchange rate is used?

– How are foreign currency transactions and exchanges accounted for?

6.13 Salary Sacrifice Arrangements Salary Sacrifice Arrangements must also comply with FBT requirements. Foundations must refer to the Australian Taxation Office for more information.

– What are the policies, principles and procedures for managing salary sacrifice arrangements?


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– How are the tax requirements of salary sacrifice arrangements for staff managed?

– Is a specific salary sacrifice provider used?

– Where can the information about salary sacrifice be found?

– What are the mechanisms that link salary sacrifice deductions and payroll management?

6.13.1 Common Matters relating to Salary Sacrifice

Unforeseen Circumstances

– What are the policies, principles and procedures in the event an employee dies before receiving payment?

– In the event of an employee death, how are future payments managed? Are they held until the executors of the deceased estate make instructions?

Fringe Benefits Tax

– What are the policies, principles and procedures for managing FBT requirements? This includes FBT liabilities.

– What documentation and records are retained for tax audit purposes? Where are these records stored? Refer to Refer to Chapter 12 – Taxation Management.

Superannuation

– What are the policies, principles and procedures for managing contributions to superannuation funds as part of an employee’s salary sacrifice arrangements?

– Are there restrictions on which superannuation funds can be contributed to through salary sacrifice arrangements? For example, superannuation funds must be complying funds according to s42 of the Superannuation Industry (Supervision) Act 1993.

– What are the procedures when the nominated superannuation fund is not considered a complying fund? Are contributions to be withheld until the nominated fund becomes a complying fund or another complying fund is nominated?

Lump Sum Payments of Back Pay

– What are the policies, principles and procedures for managing lump sum payments of back pay when employees are utilising salary sacrifice arrangements?

– Does the receipt of lump sum payments of back pay require additional payments into employees’ salary sacrifice arrangements?

6.14 Consultants Consultants can play an important part in the business operations. The Foundation should however ensure the contracts used to engage consultants are managed in accordance with the Foundation’s Contract Performance Guarantee System.

The type of engagement (independent and working externally, or contracted and working within the Foundation) of a consultant and/or contractor will determine a number of impacts on the business. These effects may include: form of contract to be used, taxation and superannuation liabilities, worker's compensation and rates payable for services.

TIP: Foundations should record details of consultancies engaged in the Consultancies Register as identified in Chapter 2.


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– Does the Foundation engage consultants? If so, what are the policies and procedures for managing consultants?

– What are the principles for managing consultancy services? For example:

o Consultancy arrangements are for a fixed term and a fixed price

o Contracts may only be entered into with individuals, companies, trusts or partnerships trading either in their own name or as registered businesses

o Consultants are free to accept other engagements where the requirements of the consultancy agreement require a part-time commitment.

– How is the need to engage a consultancy identified? What are the key determining factors that would require a consultant to be engaged?

– What are some examples where consultancy services are considered appropriate? For example:

o Providing expert advice on technical/professional matters

o Undertaking research projects, attitude surveys, feasibility studies and investigations resulting in recommendations

o Developing and designing processes and standards, including benchmark identification

o Designing and developing staff training courses

o Providing policy and/or planning advice.

– How is the need for consultants and/or contractors determined whether they are:

o Engaged to provide services as an independent contractor

o Employed under supervision within the Foundation?

– Who can approve the use of consultancies? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)? What information is required to be provided for the approval of a consultancy? For example, costs, timeframes, milestones etc.

– Is a cost-benefit analysis required prior to a consultant being engaged? If so what additional costs considered? For example:

o Administrative costs for specification preparation, proposal evaluation, agreement negotiation and project evaluation

o Overhead costs of using in-house facilities and equipment

o Travel and accommodation costs

o Report preparation

o Costs of Foundation staff assisting or managing the consultancy.

– What are some factors that may result in not proceeding with an intended consultancy? For example:

o Significant costs

o Lack of expertise in marketplace


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o Low priority of project.

– Who is responsible for ensuring the terms, conditions, costs and milestones of the engagement contract are met? Who is responsible for monitoring progress and negotiating variations?

6.14.1 Definition of Consultant

The term “consultant” can be defined as: “An individual or an organisation provides expert advice with recommendations to an agency as the basis for making a decision or taking a certain course of action”.

– How does the Foundation differentiate between a consultant and an operational contractor? What different roles are they engaged for?

– What are considered the key characteristics of a consultant? For example:

o Generally an engagement for a fixed period at an agreed rate

o Work which is not directly supervised by the Foundation

o Independent research/investigation is conducted.

6.14.2 Specification of Requirements

– Is a written specification required for any proposed consultancy? If so, what are the requirements? Who is responsible for writing this?

– Are there generic requirements considered vital to each consultancy engagement? For example:

o Timetable of milestones used for cash flow forecasting (if progress payments are made)

o Project resources consider possible accommodation, equipment and Foundation staff support

o Selection criteria and processes consider if consultant is best fit and is financially capable of undertaking the contract

o Report requirements determine what progress reporting is required, format, numbers

o Termination of agreement clauses consider penalty payments and potential for litigation

o Payment of fees schedule outlines how payments are to be made (if progress payments or final payment only)

o Penalty fee policy if milestone delivery is late

o Confidentiality between parties and ownership of intellectual property

o Evaluation process and criteria to be applied post consultation

o Arrangements to transfer consultants’ skills to Foundation employees wherever appropriate.


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6.14.3 Evaluation of Consultants’ Performance

– How is the evaluation of a consultant’s performance undertaken? Are they evaluated against the contract specifications?

– Is evaluation of a consultant’s performance required prior to the final payment?

– Who undertakes the evaluation of a consultant’s performance?

– What if the evaluation considers the consultant’s performance to be unacceptable?

6.14.4 Annual Reporting

Foundations are required to publish information regarding consultancies in their annual reports. See Chapter 17 of the Annual report requirements for Queensland Government agencies.

TIP: Foundations should also record details of consultancies in the Consultancies Register as identified in Chapter 2.

– How does the Foundation collect consultancy information and data to be reported on in its Annual Report? Is this done throughout the consultancy? Who is responsible for this?

6.15 Contractors – Are contractors utilised to fill staffing vacancies?

– What type of staffing vacancies are contractors used to fill? For example, short term positions requiring certain skills? Work experience staff?

– Who can approve the hiring of contractors? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– What are the policies, principles and practices for engaging contractors?

– What are the procedures to engage a contractor? Is this done through an employment agency or directly with individuals?

– What information is required to be provided for the approval of a contractor? For example:

o Name of the contractor

o Tax file number and/or ABN

o Hourly/daily/weekly rate of remuneration

o Tasks to be performed

o Name and position of supervisor

o Duration of the contract

o Provisions for termination and relevant notice periods.

– What is the process to extend a contracted worker? Who can approve this?

6.15.1 Taxation Requirements

Contract services may constitute employee services under the terms of the Income Tax Assessment Act 1936.


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If it is determined that the contract services fall within the definition of employee services under the terms of section 221A Income Tax Assessment Act 1936, the contract must be assessed for taxation purposes before the contractor is paid.

– What is the process if the correct taxation treatment of a contractor cannot be determined?

6.16 Hire and Leasing The Foundation may decide whether hiring or leasing goods or services best suits its needs at a particular time. As a general principle:

Goods and services are hired when they are required for a short period and when it is not practical/cost effective to purchase them outright.

Leases are usually entered into as a means of financing or acquiring an asset which may or may not be purchased at the end of the lease period.

Certain aspects of Hiring and Leasing may be covered further in Asset and Liability Management in Chapters 7 & 8.

– Are hiring or leasing arrangements utilised for various goods, services or assets?

– What criteria determine whether goods/services/assets are hired or leased as opposed to purchased outright?

– Who can approve hiring or leasing? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How do any lease arrangements entered into comply with the Foundation’s contract performance guarantee system? See section 6.8.2 - Contract Performance Guarantee.

6.16.1 Leases

Foundations must comply with the Australian Accounting Standards, in particular AASB 117 - Leases of the Australian Accounting Standards Board when determining what type of leases it is engaged in.

In addition, Foundations must also comply with the Leasing in Queensland Public Sector Policy Guidelines document produced by Queensland Treasury.

Leasing policies may also be covered in section 6.7 Introduction - Authorisation of Expenses and Chapter 7 – Asset Management.

There are different types of leases that can be utilised: These include:

Finance (capital) lease - These transfer to the lessee substantially all the risks and benefits associated with owning the leased property, without transferring legal ownership. Finance leases are usually non-cancellable and are often a means of eventually owning an asset. See section 6.16.4 - Finance Leases

Operating lease - This is a lease where the lessor effectively retains substantially all the risks and benefits associated with owning the leased property. Examples include: motor vehicle leases and certain leases of office equipment.

Each lease entered into by the Foundation must be classified in accordance with the criteria set out in AASB 117 to determine the associated accounting treatment. See section 6.16.5 - Operating Leases

– What types of leases does the Foundation engage in? What goods, services or assets does the Foundation lease?

– What are the policies, principles and practices for engaging in leases?


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– How do the leasing arrangements comply with the State Procurement Policy? How do the Foundation’s risk management policies apply to leases?


– Who can approve the Foundation entering into leases? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Is a business case required to approve a lease?

– What information is required to be provided for the approval of a lease? For example:

o Name of the company leasing goods/services/assets

o Tax file number and/or ABN

o Daily/weekly/monthly/yearly rate of cost

o Purpose of leased goods/services/assets

o Duration of the lease

o Provisions for termination.

– What is the process to extend a lease? Who can approve this?

– Is a cost-benefit analysis required prior to engaging in a lease? Who undertakes this? What are the acceptable findings of this analysis? This may be further addressed in sub-section 6.16.3.Lease verses Buy.

6.16.2 Recording of Leases

TIP: Leases and leased assets can be included in the Foundation’s Leased Asset register. See Chapter 2.

– What information is recorded in relation to leasing arrangements?

– Who is responsible for recording and maintaining information relating to leasing arrangements?

6.16.3 Lease versus Buy

– Is a lease versus buy analysis undertaken prior to engaging in a lease? If so, what is the process for this? Who undertakes this? What are the acceptable findings of this analysis?

– When conducting a lease versus buy analysis, what are the details to be considered? For example:

o When the lease is for the entire useful life of the equipment - assessment is based on comparison of Net Present Value (NPV) of lease payments with cash cost of equipment

o When the lease is for less than the useful life of the equipment - Assessment is based on comparison of NPV of lease payments plus residual value, with cash cost of equipment

o When the lease is for equipment plus maintenance and/or consumables - The value of additional items must be separately identified by the supplier in tenders.


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The assessment is then based on NPV of lease payments and additional items, compared with NPV of the whole of life cost of equipment.

6.16.4 Finance Leases

TIP: Finance leases can also be covered in Chapter 7 – Asset Management.

– What finance leases does the Foundation have?

– How are finance leases accounted for? How are finance leases recorded in the General Ledger and the Asset Register?

– How is the residual value of the leased assets recorded and accounted for?

– How is the liability of the leased assets recorded and accounted for?

– What are the preferred payment intervals for a finance lease? Monthly/quarterly?

– Is the Foundation a lessor of any goods or services? If so, what are they? Where are they recorded?

– How are leased assets (of which the Foundation is the lessor) recorded and financially accounted for?

6.16.5 Operating Leases

– What operating leases does the Foundation have? For example, office equipment or vehicles.

– How does the Foundation account for operating leases? How are operating leases recorded in the General Ledger and the Asset Register?

– How is the liability of the operating leases recorded and accounted for?

– What are the preferred payment intervals for operating leases? Monthly/quarterly?

– Is the Foundation a lessor of any operating leases? If so, what are they? Where are they recorded?

– How are operating leases (of which the Foundation is the lessor) recorded and financially accounted for?

6.17 Repairs and Maintenance Repairs and maintenance may be covered in Asset and Liability Management, Chapters 7 & 8. Refer to sections 23 & 25 of the Financial and Performance Management Standard 2009.

Foundations must also comply with Non-current asset policies for the Queensland Public Sector document produced by Queensland Treasury.

– What are the policies, principles and procedures for repairs and maintenance undertaken? Who is responsible for these?

– How does a maintenance expense differ from a capitalised expenditure? Provide an example of a capital expenditure compared with a repairs and maintenance expenditure.

– What are the procedures if the Foundation is made aware of repairs or maintenance activities that contravene the policies, principles and procedures?


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– Who can approve repairs or maintenance activities? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How is a clear audit trail is maintained for repairs or maintenance activities?

– Is there a value threshold where additional approval is required for repairs or maintenance activities? For example minor repairs compared to major repairs?

– What steps are taken to minimise the need for repairs or maintenance of assets?

– How are repairs or maintenance done through contract (operation leases) or insurance managed?

– Is a cost-benefit analysis undertaken when considering repairing or replacing assets? If so, what issues are taken into consideration? For example:

o Replacement cost

o Age and useful life of the existing asset

o Efficiency of the existing asset following repair as compared to the efficiency of a replacement

o Time involved in completing the repair.

6.17.1 Repairs and Maintenance Objectives

Key documents regarding expense management include Information Sheet 2.3 - Internal Controls from the Financial Accountability Framework and Information Sheet 4.1 - Monitoring/Assessment of Internal Controls from the Financial Management Tools.

TIP: Repairs and maintenance objectives may closely align with Foundation’s internal control objectives. See section 8 of the Financial and Performance Management Standard 2009.

– What are the objectives for repairs and maintenance? For example to ensure:

o Minimum maintenance requirements are achieved

o Building assets are adequately maintained

o Risks to the Foundation are effectively managed

o Necessary information for monitoring maintenance condition and performance of building assets

o Adequate information is available at operational level.

– Who is responsible for these objectives? How/when are they reviewed?

– How do these objectives align with the Foundation’s overall control objectives? For example:

o How do these objectives support the principles and objects set out in the State Procurement Policy?

o How do the Foundation’s risk management policies apply to repairs or maintenance activities?

– Is there a minimum monetary value required to be spent on maintenance? If so, what is this? 1% of asset value? How would this be funded?


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6.17.2 Repairs and Maintenance Defined

While not mandatory, the Maintenance Management Framework published by the Department of Public Works can provide good practice advice for managing repairs and maintenance of a Foundation’s assets.

– How are repairs and maintenance defined? For example:

o Repairs are activities required to return an ‘aged’ asset to a fully functioning and operational or “as new” state. This includes activities to improve the efficiency, range, capacity, capability, size or functionality

o Maintenance refers to the "normal or anticipated" activities required to keep the asset in good working condition. This does not include activities performed with the “deliberate intention to improve” the assets design.

6.18 Special Payments Legislation requires Foundations to have a system to record any special payments made. In addition, payments over $5,000 are required to be recorded as special payments. See section 20 of the Financial and Performance Management Standard 2009.

Foundations must comply with the Accounting Policy Guideline - APG 5 Losses and Special Payments. This guideline provides further clarification on payments that would be classified as “special payments”.

– Does the Foundation use special payments? If so, what is considered a special payment? For example:

o Extra-contractual payments – made when a contractor incurs additional costs as a result of inaction

o Ex-gratia compensation – made on grounds of hardship due to excessive loss on a fixed price contract due to the Foundation’s failure or delay

o Other payments – made as gifts and settlements in the nature of damages i.e. arising out of negligence; incorrect delays and inaction; loss or damage of staff personal effects

o Out of court settlements.

– What are the policies, principles and procedures for managing special payments? Who is responsible for these?

– How do the policies, principles and procedures for managing special payments comply with the legislated requirements?

– What are the procedures if the Foundation is made aware of special payments being made that that contravene the policies, principles and procedures?

– Who can undertake approve special payments? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How is a clear audit trail maintained for special payments?

– What mechanisms are in place to ensure payments of more than $5,000 are recorded as special payments? These payments are required to be recorded along with the following details:


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o Date of payment

o Recipient of payment

o Reason for payment

o Approver of payments

o Other details considered relevant.


6.18.1 Disclosure Requirements

Foundations are required to disclose amounts of special payments made as outlined in Part B of the Financial Reporting Requirements for Queensland Government Agencies. These disclosures form part of the financial statements.

– What mechanisms are in place to ensure any special payments are reported on as required by legislation?

6.19 Travel Expenses While not explicitly mandatory, the Whole-of-Government Air Travel Policy for Queensland contains key principles to manage travel that are considered to promote best practice.

Travel activity should also be captured in the Foundation’s registers. See Chapter 2.

Fringe Benefit Tax impacts also require management if official travel is extended to personal travel. See Fringe Benefits Tax Assessment Act 1986.

– What are the Foundation’s policies, principles and procedures for travel? Who is responsible for these?

– What are the procedures if the Foundation is made aware of travel expenditure that contravenes the policies, principles and procedures?

– What mechanisms ensure unnecessary travel is not taken?

– What are considered legitimate travel expenses? For example: airfares, transfers, accommodation, meals, incidentals, taxes etc?

– What are the principles of the travel policies and controls? For example:

o Advance the achievement of Foundation and Government priorities

o Benefit the business

o Undertaken only after exploring alternatives to travel

o Be undertaken at the most advantageous price.

– How do the principles of the travel policies support the objects set out in the State Procurement Policy?

– How is a clear audit trail maintained for travel expenses?

– How do the Foundation’s risk management policies apply to travel expenses?

– Are travel expenses recorded into relevant registers as highlighted in Chapter 2? For example:

o Travel register (domestic and international)


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o CabCharge register

o Accommodation register.

– How does the Foundation comply with Fringe Benefits Tax requirements when official travel is combined with personal travel?

6.19.1 Travel Authorisation and Reporting

Foundations are required to report on any international travel in their annual reports. See Chapter 17 of the Annual report requirements for Queensland Government agencies.

Fringe Benefit Tax impacts also require management if official travel is extended to personal travel. See Fringe Benefits Tax Assessment Act 1986.

TIP: Travel activity should also be captured in the Foundation’s registers. In particular, international travel - see Chapter 2.

– Who can authorise travel expenses? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Is there a value threshold where additional approval is required for travel expenses?

– Do different types of travel require additional approvals? Travel examples include:

o Air travel (international and domestic)

o Long distance rail, bus or car travel

o Cabs/taxis

o Public transport

o Bicycle hire.

– What is the process of application and additional approval requirements for international travel?

– What mechanisms are in place to ensure relevant information is captured to assist the Foundation in meeting its requirements for reporting on travel?


– What information is required to be included in any application for travel? For example:

o Name of travelling staff member

o Purpose of travel

o Date of event/meeting/conference/etc.

o Dates of travel

o Location of event/meeting/conference/etc

o Total travel/accommodation/allowance/incidental costs

o Name of approval officer

o Position of approval officer.

– What are the policies, principles and procedures if travel expenses are paid for by an external agency/company/individual? In addition:

o How does the Foundation ensure necessary reporting of this occurs?


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o Is this travel also recorded in the Gifts and Benefits Register in Chapter 2?

o How does the Foundation ensure it complies with any Fringe Benefits Tax requirements?

6.19.2 Travel Allowances

– What are the travel allowances for Foundation staff? Who is responsible for these?

– Are allowances paid prior to travel or on a reimbursement model? If using a reimbursement model, what is the timeframe for making a travel allowance claim?

– What is the procedure for staff claiming travel allowances?

– What information must be presented for staff to make a travel claim? For example:

o Notice of the travel approval

o Evidence (receipts or invoices) of expense occurred

o Statutory declaration.

– Who can approve the payment of travel allowances for Foundation staff? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Do different destinations provide for higher value of allowances?

– Are travel advances provided? If so, what are the advances provided for? For example to cover all costs other than fares and accommodation.

– Is there a standard monetary value provided for travel advances?

6.19.3 Air Travel

– What are the Foundation’s policies on air travel?

– Is air travel booked on the most direct route?

– What timeframe between connecting flights requires accommodation to be booked?

– What are the Foundation’s polices on premium economy, business and first class travel? Can these be upgraded using Foundation funds? What about with personal funds?

– Is the use of “fly-buy” points to be used towards travel? Or travel upgrades?

– What are the reporting requirements for air travel? Where is information kept and how is it reported?


6.19.4 Motor Vehicle Travel

– Does the Foundation provide vehicles for staff? Either for home garaging or for business use?

– Are any toll tags i.e. ‘go via tags’ for motor vehicle travel provided? How do these apply to a vehicle that is home garaged? Are staff required to reimburse the Foundation for tolls incurred during private travel?


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– How are any Fringe Benefits Tax implications for private use of Foundation vehicles managed?

– How is the use of private vehicles that may intermittently be used for official business managed?

– How is vehicle registration managed? Who is responsible for this?

– What are the insurance requirements for vehicles? What about private vehicles intermittently used for official business?

– How are fuel expenses managed? Does this differ with Foundation and private vehicles? Are Fuel Cards managed through a Fuel Card Register as discussed in Chapter 2?

– How do the Foundation’s risk management policies apply to motor vehicle use?

– What are the Foundation’s reporting requirements for motor vehicles? Where is this information kept and how is it reported?


6.19.5 Use of Car Hire, Taxi & CabCharge and other

– What are the Foundation’s policies on car hire, taxi and CabCharge usage?

– Are CabCharges managed through the CabCharge Register as discussed in Chapter 2?

– What are the processes required for using a CabCharge or equivalent?

– Is there a distance where the use of a taxi is not allowed? For example, from Brisbane to the Gold Coast?

– Are taxis only to be used on official purposes? What about transporting staff home late at night?

– Does the Foundation have public transport cards e.g. “Go Cards”? How are these managed?

– How do the Foundation’s risk management policies apply to car hire, taxi and CabCharge usage?

– What are the procedures for staff obtaining a CabCharge card or taxi voucher? Are CabCharges provided to staff in certain positions?

– Are staff reimbursed for payment of travel for official business if their own funds were used? What is the process for this? Who can approve this?

– What are the reporting requirements for car hire, taxi and CabCharge usage? Where is this information kept and how is it reported?


6.19.6 Accommodation

– What are the Foundation’s policies on accommodation?

– How does the Foundation ensure accommodation costs are kept within reasonable limits? What is considered reasonable and how is this determined?


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– How are emergency situations when a staff member is travelling on official purposes and requires additional accommodation managed? Are staff reimbursed?

– Can purchase reward programs points be used towards accommodation?

– What are the reporting requirements for accommodation? Where is this information kept and how is it reported?

– What is the Foundation’s policy if accommodation at the location is particularly expensive and is above what is “usually” considered reasonable?

6.20 Business Meetings, Official Functions and Hospitality – What are the policies, principles and procedures for business meetings, official functions

and hospitality? Who is responsible for these?

– What are the procedures if the Foundation is made aware of business meetings, official functions and hospitality activities that contravene the policies, principles and procedures?

– Who can approve official functions and hospitality activities? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Describe the procedures to record details of official functions and hospitality activities in the appropriate registers. See Chapter 2.

– How is a clear audit trail maintained for official functions and hospitality?

– Is there a value threshold where additional approval is required for official functions and hospitality of a considerable and/or significant nature?

– How do the Foundation’s risk management policies apply to business meetings, official functions and hospitality?

– Outline any restrictions on official functions and hospitality.

– What is the distinction between business meetings, official functions and hospitality?

– Describe how the policies on business meetings, official functions and hospitality work together with existing policies, for example:

o Code of Conduct

o Gifts and Benefits policies and associated register

o Entertainment and other policies (for example use of alcohol at official functions).

6.20.1 Criteria for determining expenditure

– What are the criteria used to determine if Foundation funds can be used for hospitality at a business meeting or official function? Who is responsible for determining the criteria?

– What expenses would normally qualify as expenditure on official functions or hospitality? For example:

o Tea, coffee, morning tea for official visitors and those in attendance

o Lunch and/or dinner involving official visitors

o Attendance at an official function where a fee is charged.


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– What expenses would not normally qualify as expenditure on official functions or hospitality? For example:

o Working lunches for internal staff provided at a restaurant

o Casual drinks before or after an official dinner event

o Stocking of office bar fridge

o Light refreshments provided during internal conferences, workshops, and seminars

o Non-official entertainment and travel costs for staff functions

o Dinners/functions at a private residence.

– Are there any criteria to determine what type of meals, drinks, entertainment can be provided? For example:

o Light meals for working lunches

o Basic alcohol only

o Special dietary requirements observed.

– Are there any criteria to determine what type of meals, drinks, entertainment can be provided?

6.20.2 Defining Official Function and Hospitality

– What are the criteria used to determine if circumstances require the Foundation to host an official function and provide hospitality? Who is responsible for setting the criteria?

– What is the definition of an Official Function? For example:

o An official function is defined as one at which both invited guests and Foundation personnel attend for the purpose of extending or improving relations by hosting, attending or providing hospitality.

– What is the definition of an Official Hospitality? For example:

o Official hospitality is defined to mean the presentation of entertainment, food, refreshments, attendance and the like to visitors and guests and to employees attending but not waiting on or serving the host/s and visitors.

6.20.3 Claims and Reimbursement

– How are claims for recoupment and/or reimbursement of official function/hospitality costs processed?

– What supporting documents are required? For example invoices and receipts.

o Description of the purpose of attended or hosted official function including hospitality

o Certification that expenditure was incurred in relation to the performance of official duties

o Invoice or account validating expenditure or purchase order including details of expenditure


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o Names of persons in attendance and external organisations represented.

– Can reimbursement occur from Petty Cash?

6.20.4 Receiving Hospitality

– Are there any policies regarding the receiving of hospitality?

– How do the policies on receiving of hospitality comply with the Code of Conduct?

– Is there a value threshold where hospitality is required to be recorded in the Gifts and Benefits Register? What if the value can’t be easily determined? See Chapter 2.

6.21 Telephone – What are the policies on managing the expenses of employees’ telephones?

– Does the Foundation provide mobile phones for staff members?

– Does the Foundation utilise other technology to reduce the costs incurred by telephone use? For example VOIP technology – Skype, MSN, Face Time etc.

– How is a clear audit trail maintained for telephone use?

6.21.1 Foundation account

Information Sheet 3.3 - Information and Communication Technology found in the Financial Management Tools can provide assistance when developing this sub-section.

– What are the Foundation’s policies on the use of telephones (both landline and mobile)? For example:

o Only used for business calls?

– Are there exemptions to this? For example, short personal calls and emergencies?

– Are personal calls made on a Foundation mobile phone (other than those exempted) required to have costs reimbursed? If so, what are the procedures for this?

– How do the Foundation’s telephone policies comply with the Code of Conduct and other associated policies? For example, Use of ICT policies.

– What are the policies on the use of “1900" and “0055" numbers?

– Is international calling ability required? If so, who is this available to? Are there restrictions on who can have this ability?

6.21.2 Reimbursement of Personal Accounts

– What are the Foundation’s policies for the reimbursement of staff phone accounts?

– What are the requirements for reimbursement? What supporting information is required?

– Can reimbursement occur on a landline as well as a mobile account?

6.22 Insurance TIP: Insurance plays a critical role in providing security for a Foundation’s continued operations.


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– What do the Foundations insurance policies cover? Building/property, contents, workplace injury, flood, vehicle etc? For example:

o Property insurance covers buildings, furniture and fittings, plant and equipment, machinery in the event of loss, damage or destruction arising from fire, lightning, thunderbolt, explosions smoke, earthquakes impact by vehicles or aircraft, riots, malicious damage, storms wind, rain, flood, hail, sprinkler leakage, theft, machinery or computer breakdown, fusion, or glass breakage

– What company are these insurance policies with? Are they with a single provider? How often are the insurance policies assessed and renewed?

– How does the purchase of insurance policies comply with the principles set out in the State Procurement Policy?

– How do the Foundation’s risk management policies apply to undertaking insurance?

– Is a risk matrix used to determine what aspects of property, business, assets etc. are covered by insurance, and what type/level of cover is sought?

– Are volunteers covered by the insurance policies? If not, are they required to sign a waiver?

– Is there a value threshold where repairs (or replacements) are carried out without claiming on insurance?

– Describe the link between the loss of assets and insurance claims. Is a loss of asset report used as part of the claim documents?

– Are ongoing insurance premiums considered recurrent expenditure? If so, this can be further explained in section 6.26 - Recurrent and Non-Recurrent Expenditure.

6.22.1 GST on Premiums

For further details on GST requirements for certain expenses, refer to the Australian Taxation Office.

– Is the Foundation required to pay GST on insurance premiums?

– Does the Foundation’s GST ruling from the ATO affect its GST obligations?

– How is payment of GST on insurance premiums managed?

– How is payment of GST on premiums financially reported?

6.22.2 Duty on Premiums

– Is the Foundation required to pay duty on insurance premiums?

– How is payment of duty on insurance premiums managed?

– How is payment of duty on premiums financially reported?

6.22.3 Insurance Settlements

– How are insurance settlements managed? What is the process for this? Who is involved in this process?

– How are insurance settlements financially reported?


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6.22.4 Making Insurance Settlement Claims

– What is the process to make an insurance settlement claim? Where are the appropriate documents kept?

– Who is able to make an insurance settlement claim? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How is a clear audit trail maintained for making insurance settlement claims?

– Is there a different process for types of claims? For example, insurance claims on property, motor vehicle, plant and equipment?

6.22.5 Employee’s Loss

– What is the process for an employee to make an insurance claim to cover a loss while working? For example, through burglary, robbery, theft etc.

– Who is able to make an employee loss claim? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How is a clear audit trail maintained for monitoring employee loss claims?

– Are there any specific requirements for making an employee loss claim? For example, employees must use lockers provided?

6.22.6 General Liability

– Describe the Foundation’s general liability cover.

– Who is this provided by? What does this cover?

– Where is the documentation for the general liability cover kept?

– What is the value of the general liability cover?

6.22.7 Workers’ Compensation

TIP: Risk transfer to the Foundation can occur if contractors and/or sub-contractors undertaking work for the Foundation do not have appropriate workers’ compensation cover arrangements.

– Describe the Foundation’s workers’ compensation cover.

– Who is this provided by? What does this cover?

– Where is the documentation for the workers’ compensation cover kept?

– How does the Foundation ensure contractors or sub-contractors employing labour have appropriate workers’ compensation arrangements?

– How do the Foundation’s risk management policies apply to workers’ compensation?

6.23 Loss of Assets Legislation requires foundations to have an expense management system in place to efficiently, effectively and economically manage financial resources and provide value for money. Expense management systems must also encompass:

Loss from official misconduct


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Other losses.

See sections 21-22 of the Financial and Performance Management Standard 2009.

Foundations also have requirements to notify the Crime and Misconduct Commission of any official misconduct, in particular, material losses in relation to expense management. See sections 38 & 39 Crime and Misconduct Act 2001.

Key documents regarding expense management include Information Sheet 3.6 - Expense Management found in the Financial Accountability Handbook.

Foundations are required to report on losses as part of their Statement of Comprehensive Income as part of meeting the requirements outlined in the Financial Reporting Requirements for Queensland Government agencies.

TIP: Certain aspects of Loss of Assets may be covered in future chapters, including the Asset and Liability Management in Chapters 7 & 8.

– Provide an outline of how incidents resulting in loss are managed. Does this include a report of the event?

– What are the objectives of the requirement to investigate losses? For example:

o Staff must report any identified loss to management immediately

o Reports must be provided on all instances of losses

o Losses include: disposal, theft, fraud, misappropriation, wilful damage, etc.

– Describe the link between the loss of assets and insurance claims.

– Describe how the Foundation’s practices and procedures meet the legislated requirements.

– Describe how the business internal controls (refer to Chapter 2) support proper management to prevent loss of assets.

– Describe the different ways the Foundation manages simple losses compared to material losses. Material losses are defined in the Financial and Performance Management Standard 2009. See 6.23.1 - Definition of a Loss.

– How do the Foundation’s risk management policies apply to loss of assets?


6.23.1 Definition of a Loss

The Financial and Performance Management Standard 2009, Schedule, Dictionary defines material loss for property of a statutory body as meaning:

(a) If the property is money, a loss of more than $500 or

(b) For other property, a loss valued by the statutory body at more than $5,000.

Losses are differentiated from expenses as defined in section 6.3 - Definition and Recognition of Expenses.

In a more practical sense, the following definition is adopted that define losses as:

Losses of Foundation monies and property

Losses arising out of the destruction, condemnation, obsolescence, deterioration of or damage to Foundation property (including impairment losses)

Irrecoverable overpayments, debts written off and waiver of claims or rights to


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claim

Expenditure made without lawful authority

Losses of moneys due to failure to assess and levy revenue and other amounts receivable.

Special Payments are not losses. Refer section 6.18 Special Payments.

6.23.2 Losses of Property and Public or Other Moneys

– Provide an outline of how the Foundation categorises losses of property and public or other moneys.

– Provide an outline of how the Foundation categorises losses of property.

– What are the categories of losses of money and property used? For example:

o Losses due to stealing or other offences

o Losses due to the foregone assessment of collections

o Losses due to overpayments written off

o Losses due to debts written off

o Losses due to destruction or damage

o Losses due to inventory shortage where theft is suspected

o Losses due to excess deterioration caused by natural break down of stores

o Losses due to over provision of stores.

6.23.3 Legally Unavoidable Payments

TIP: Legally unavoidable payments are considered losses rather than special payments.

– Provide an outline of how legally unavoidable payments are managed. For example, payments as a result of a cancellation of a contract.

– How does the Foundation ensure these payments are captured and recorded as a loss appropriately?

– Describe the policies and practices employed to reduce the likelihood of requiring these payments to be made.



6.23.4 General Reporting Requirements

Foundations are required to report on losses as part of their Statement of Comprehensive Income as part of meeting the requirements outlined in the Financial Reporting Requirements for Queensland Government agencies.

A system must be in place to manage instances of losses from offence or misconduct. See section 21of the Financial and Performance Management Standard 2009. Foundations also have requirements to notify the Crime and Misconduct Commission of any official misconduct, including in relation to expense management. See sections 38 & 39 Crime and Misconduct Act 2001.

– Describe how the Foundation ensures it reports on losses when they are identified.


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– What is the purpose of reporting on losses?

– Who is responsible for reporting on losses?

– How is it ensured that all losses are recorded in the Losses Register?

– What mechanisms are in place to ensure details recorded in the losses register are captured in the Statement of Comprehensive Income?

6.23.5 Losses caused by Fraud, Theft or Official Misconduct

Foundations are required to have systems in place to manage instances of losses from offence or misconduct. See section 21of the Financial and Performance Management Standard 2009.

The Crime and Misconduct Commission must be notified of any official misconduct, including in relation to expense management. See sections 38 & 39 Crime and Misconduct Act 2001.

– How are losses involving “potential” criminal activity managed in accordance to the legislated requirements highlighted above?

– How are losses involving “potential” official misconduct managed in accordance to the legislated requirements highlighted above? Official Misconduct is defined in ss14-19 of the Crime and Misconduct Act 2001,

– How are losses resulting from an incident which could constitute an offence under the Criminal Code Act 1899, or any other Act or law, managed?

– How is information provided to the Crime and Misconduct Commission when required? Who is responsible for this?

– What are the processes if the losses under this sub-section are of a material nature? Is this reported to the Queensland Police Service and the Minister?

– How does the Foundation ensure staff are aware of their legislated obligations to notify the Crime and Misconduct Commission of suspected official misconduct? See s39 of the Crime and Misconduct Act 2001.

– How do the Foundation’s risk management policies apply? How does the Foundation ensure corrective action is taken and new controls implemented?


6.23.6 Specific Categories

Foundations are required to have systems in place to manage losses within their expense management systems. This includes procedures to effectively report on all losses of the Foundation. See sections 21-22 of the Financial and Performance Management Standard 2009.

Foundations report on losses as part of their Statement of Comprehensive Income.

TIP: The Foundation’s Losses Register can further categorise types of losses and can greatly assist in the reporting processes.

– How does the Foundation categorise different types of losses?

– What criteria are used to determine losses? Who is responsible for this?

– What processes are in place to correct any potential misidentification of any losses?

– What are the different loss categories and how are they managed? For example:


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o Written off debts

o Cash Losses

o Inventory

o Non-current Assets (Tangible)

o Overpayments Other Than Payroll that are not recoverable

o Third Party Claims

o Debt Waivers.

– What are the processes involved prior to any losses being categorised?

– Are some categories given priority over others for either recovery or escalation?

– How is the reporting on these categories used to strengthen the internal control structures? For example, if an increase in cash losses is occurring, then additional procedures and securities can be included in the management of cash.

6.23.7 Accounting Treatment

– How does the Foundation financially account for the different types of losses?

– What are the criteria to determine how different types of payments (losses) are accounted for? For example:

Type of Payment Terms of Payment Accounting Treatment

Loss As defined Post to expense account

Disclose as a loss in Note

Within the contract conditions Treat as a loss, as above

Outside the terms of the contract

Treat as a special payment

Post to expense account

Enter into register

Disclose as special payment

Court settlement

Punitive damages or compensation

Treat as a special payment, as above

Out-of-court settlement Same as above Same as for court settlement

Legally unavoidable payments for which no benefit or value is received

Treat as a loss, as above

Ex-gratis No limitation Special payment by definition

Extra contractual No limitation Special payment by definition

6.24 Other Expenses TIP: The items discussed in this section are considered to be potentially of a personal nature,

and should therefore be subjected to closer scrutiny in light of public accountability and defensibility attitudes.


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6.24.1 Club Membership and Professional Membership

– How is authorisation of club expenses and professional memberships managed? Does the Foundation reimburse staff memberships?

– What are the policies, principles and procedures for club and professional memberships?

– How is a clear audit trail maintained? How does the payment of club and professional memberships comply with the objectives of the State Procurement Policy?

– Who can approve these expenses? Is there a value threshold where approvals are not required?

6.24.2 Subscriptions

– Does the Foundation pay for any subscriptions? If so, how are subscriptions managed?

– What are the policies, principles and procedures for the management of subscriptions?


– Who can approve subscriptions? Is there a value threshold where approvals are not required?

6.24.3 Freight

– How does the Foundation manage charges from freight?

– How are the freight costs of goods financially accounted for and reported?

– What are the specific policies relating to freight? For example, freight costs should be minimised were possible?

– Is there a preferred courier service?


6.24.4 Staff Amenities

– What staff amenities does the Foundation provide? Who determines these?

– Are amenities separated into essential and non-essential?

– What are the staff amenities provided? For example:

o Essential amenities include first aid kits, sanitary paper, soap, towels, disinfectants

o Non-essential amenities include tea, coffee, milk, sugar or substitutes, sandwiches provided for working lunches etc.

– How are staff amenities financially accounted for?


6.24.5 Christmas Expenditure

– Does the Foundation allow for Christmas expenditure? If so, is there a list of what items are permissible?

– Who can approve Christmas expenditure?


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– Describe how the procedures for managing Christmas Expenditure reflect those outlined in section 6.7 Authorisation of expenses.

6.25 Recurrent and Non-Recurrent Expenditure

6.25.1 Recurrent Expenditure

TIP: Recurrent expenditure is for goods and services that are of a repetitive, periodic or standard nature provided to the Foundation as normal day to day operating expense. A purchase order is not generally prepared.

– How does the Foundation manage recurrent expenditure?

– What are the policies, principles and procedures for recurrent expenditure?

– How do the Foundation’s risk management policies apply to recurrent expenditure?


– How is recurrent expenditure managed in compliance with the objectives of the State Procurement Policy?

– Who can provide approvals for recurrent expenditure? Where are these approvals documented and recorded? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Is there a value threshold where approvals are not required? Do different financial delegations have various value thresholds for approval?

– What types of recurrent expenditure are managed? For example:

o Wages, salaries, leave, allowances, deductions and payroll expenditure

o Tax instalment and withholding remittances, payroll tax, superannuation

o Electricity, gas, water and utility

o Telephone, facsimile, bulk postage charges

o Workers' compensation and insurance renewal premiums

o Rent, rates, lease of buildings, plant and equipment

o Motor vehicle registration fees

o Grant payments previously approved.

6.25.2 Non-Recurrent Expenditure

TIP: Non-recurrent expenditure comprises expenditure not classified as recurrent expenditure, excluding losses and special payments. Refer section 6.23 Loss of Assets and section 6.18 Special Payments.

– How is non-recurrent expenditure managed?

– What are the policies, principles and procedures for non-recurrent expenditure?

– How do the Foundation’s risk management policies apply to non-recurrent expenditure?


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– How is a clear audit trail maintained? How does the Foundation ensure that non-recurrent expenditure complies with the objectives of the State Procurement Policy?

– Who can provide approvals for non-recurrent expenditure? Where are these approvals documented and recorded? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Do different financial delegations have various value thresholds for approval?

– What types of non-recurrent expenditure are managed?

o Long service leave

o Redundancies

o Capital Items - buildings, land, plant, equipment, furniture, computers, etc.

o Air travel and allowances

o Stationery and office requisites

o Contracts for goods and services

o Repairs and maintenance

o Petty cash reimbursements

o Books and library materials

o Computer software.

6.26 Grants, Subsidies and Grant Project Funding When administering and managing Grants, Foundations must adhere to the requirements set out in Volume 6 – Grant Management of the Financial Accountability Handbook.

As grants may present considerable potential risk to the Foundation, strong ‘checks and balances’ are required for their management. This can be part of the legislated requirements to have sound internal controls. See section 8 of the Financial and Performance Management Standard 2009.

When developing the control mechanisms for grant management, refer to Information Sheet 4.1 - Monitoring and Assessment of Internal Controls and Volume 3: Designing Internal Controls.

TIP: Documentation relating to grants, subsidies and grant project funding, must comply with the requirements set out in the Public Records Act 2002 and associated Information Standards, refer to Chapter 3.

– Does the Foundation manage any grants, subsidies or grant project funding?

– What are the policies, principles and procedures for managing grants, subsidies and grant project funding?

– How do the grants, subsidies and grant project funding managed support the Foundation in achieving its strategic objectives and operational goals?


– Describe how the Foundation communicates its offer to provide grants, subsidies and grant project funding? Are Invitations to Offer or public advertising used?

– How does the Foundation ensure that the management of its grants, subsidies and grant project funding complies with the objectives of the State Procurement Policy?


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– What are the control objects of the grants, subsidies and grant project funding management? For example:

o Foundation funds are properly managed and accounted for

o Only approved payments are made

o Funds are used for the intended purpose to enable delivery of the agreed services and achievement of the proposed outcome/s

o Use of funding is consistent with the Foundation’s strategic objectives.

6.26.1 Definitions

TIP: There is a specific accounting definition for a ‘grant’. For accounting purposes, the relevant standard is usually AASB 1004 – Contributions.

It is important that the Foundation clearly differentiate between grants and fees for service.

A grant (including subsidies and grant project funding) is a generic term applied primarily to funding provided to individuals or bodies that exhibit all or some of the following characteristics:

Transfer to a recipient in return for compliance with certain terms and conditions

Transfer which may not directly give approximately equal value in return

Recipient may have been selected on merit against a set of program-specific criteria.

The term grant does not include:

Funding activities relating to the provision of goods and services at full cost

Involvement or responsibility for monitoring grant outcomes

Partnering with other organisations, joint ventures, or contributions to cross-Government funded programs or projects.

A grant is usually provided to an entity for a specific purpose under the terms and conditions of a service or funding agreement as a contribution to the existing activity of that entity or to augment or complement its existing activity.

6.26.2 Process and Program Design

– What is the process for managing grants, subsidies and grant project funding? For example:

o Program Design - Setting program objectives, planning, development, approval and initiation

o Program administration - Application, appraisal, payment and monitoring

o Program evaluation.

– What are the objectives of the program design? For example:

o Clearly define the purpose of the program

o Provide a framework for measuring, monitoring and evaluating the program

o Detail specific requirements of program management


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o Be linked to the Foundation’s strategic objectives and operational goals

o Be documented and communicated to applicants and relevant staff.


– What are the reporting milestones during the process of managing grants, subsidies and grant project funding?


– How does the Foundation develop a program for grants, subsidies and grant project funding?

– Are multiple grants managed? If so, what mechanisms ensure grants avoid conflict with or duplication of other grant programs?

6.26.3 Approval and Administration

– Who can provide approvals for managing grants, subsidies and grant project funding? Where are these approvals documented and recorded?

– What is the process for approving grants, subsidies and grant project funding?

– If a grant, subsidy or grant project funding is approved for regular scheduled payments, do these get individually approved? Or does the initial approval cover future payments?

– What are the policies, principles and procedures for the approval and administration of grants, subsidies and grant project funding?

– How does the administration of grants, subsidies and grant project funding support the Foundation’s procurement policies?

– What are the objectives of administering grants, subsidies and grant project funding? For example:

o Request for offer

o Multi-phase processes

o Recording of request for offer documents

o Receipt of the same documents

o Opening and registration of offers

o Registration of offers received

o Opening and registration of offers

o Closing time for receipt of offers

o Offers received after the specified closing time.

– How do the Foundation’s risk management policies apply to the approval and administration of grants, subsidies and grant project funding? In particular, how does the Foundation ensure that:

o Funding agreements are monitored to address any potential fraud events

o Financial and performance progress reports are reviewed regularly and appropriate action taken when necessary.


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– When advertising a potential grant, subsidy or grant project funding, what information is required to be included to potential applicants? For example:

o Background of the grants program

o Objectives of the funding program

o Foundation’s strategic goals and operational objectives to which the grant contributes

o Scope of the funding program

o Reporting requirements under the grant program

o Mandatory criteria for applicants

o Evaluation criteria used to assess applications

o Special conditions (if applicable).

– How are applications received for a potential grant, subsidy or grant project funding managed, appraised and recorded?

– How is relevant information about the financial status of the applicant obtained? For example, it ensures the applicant is not totally dependent upon the grant funds for survival. This is a key component of carrying out due diligence on applications.

– How does the Foundation advise all applicants for potential grants, subsidies and grant project funding of the outcome of the appraisal process? Is there a specific timeframes to advise applicants?

– Are terms and conditions clearly defined within legally enforceable service or funding agreements? Is this achieved through setting out any associated conditions in letters of offer or funding agreements?

– What do the terms and conditions of service or funding agreements include? For example:

o Performance indicators

o Project milestones

o Monitoring requirements

o Intellectual property rights

o Asset ownership or reversion

o Penalties

o Terms of accountability - type of required documentation and audit certification.

6.26.4 Management and Evaluation of Funding Agreements

– Describe how the Foundation manages and evaluates funding agreements.

– What are the policies, principles and procedures for managing and evaluating funding agreements?

– What are the procedures if the Foundation is made aware of activities that contravene the policies, principles and procedures for the management and evaluation of funding agreements?


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– How do the Foundation’s risk management policies apply to managing and evaluating funding agreements?

– How does the Foundation monitor the management and evaluation of funding agreements?

– How does the Foundation ensure financial and performance progress reports are reviewed regularly, and appropriate action taken when necessary?

– Describe how financial and performance monitoring of any funding agreements is undertaken? How does the Foundation ensure this is adequate? For example, relevant financial accountability procedures are complied with and desired outcomes are being, or have been achieved.

– How do progressive reviews assist in the financial and performance monitoring of the progress of any funding agreements?

– How does the Foundation acquit funds? What are the processes for this?

– What should the evaluation address? For example:

o Funds, staff and other resources used to achieve value for money

o Processes undertaken

o Services delivered

o Quality of the services

o Outcomes achieved against the intended program objective

o Lessons learnt - how could the program be improved

o Assess whether original need for the program remains

o Impact of any potential change in Government policy, legislation, etc.

– What is the segregation of duties for program administration and evaluation?

– Is a report developed at the conclusion of the program evaluation? What does this report outline? For example, outcomes expected and achieved for the value of the investment made, any deficiencies noted and any recommendations made.

6.26.5 Ownership of Assets

– What are the policies, principles and procedures for ownership of assets?

– What are the procedures if the Foundation is made aware of activities that contravene the policies, principles and procedures for ownership of assets?

– Describe how the ownership of assets and intellectual property developed through any grants, subsidies and grant project funding is managed?

– Describe how the terms and conditions of grants, subsidies and grant project funding address the ownership of assets and intellectual property. This includes assets in existence, assets to be bought, and assets yet to be brought into existence as a consequence of the project.

– How do the Foundation’s risk management policies apply to ownership of assets?


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6.26.6 Control of Payments

– Describe how the payments of any grants, subsidies and grant project funding are managed? For example, payment methods can include:

o Lump sum

o Standard percentage of costs incurred

o Flexible or discretionary amount which may be payable on the achievement of agreed milestones as defined in the work plan

o Fixed instalments over the life of the service agreement

o Combination of the above.

– What are the policies, principles and procedures for payments of grants, subsidies and grant project funding?

– What are the procedures if the Foundation is made aware of activities that contravene the policies, principles and procedures for payments of grants, subsidies and grant project funding?

– How do the Foundation’s risk management policies apply to payments of grants, subsidies and grant project funding?

– How are payments recorded, reported and financially accounted for?

– How do other aspects of managing grants, subsidies and grant project funding provide information to support the payment mechanisms? For example, how do the financial and performance monitoring processes provide information to determine whether payments should be made?

– Who can approve payments? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– Describe how the performance monitoring mechanisms enable the Foundation to determine whether continuance of payments should occur.

– If progress is not as required in a grant, subsidy or grant project funding agreement, can funding be held or withdrawn?

– What are the requirements for payments to be made? For example:

o Adequate documentation is produced and retained for management of the payments

o Documentation complies with, and is stored in accordance with the Public Records Act 2002

o Payments are made by the most efficient and effective means and time

o Access to payment processing functions and data is restricted to authorised staff

o Cash payments data are entered completely, accurately and only once.

6.26.7 Financial Accounting and Reporting

– Describe the financial accounting and reporting policies, principles and procedures for grants, subsidies and grant project funding?


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– What are the procedures if the Foundation is made aware of activities that contravene the policies, principles and procedures for the financial accounting and reporting of grants, subsidies and grant project funding?

– How are grants, subsidies and grant project funding financially classified for reporting? For example, as non-reciprocal or reciprocal transfers.

– Does the Foundation recognise reciprocal transfers over the term of the funding agreement and not solely when monies have been spent?

– What are the general recognition requirements for contributions? For example they must be:

o Recognised as revenue

o Measured at fair value.

– Describe the link between the financial accounting and reporting practices for grants, subsidies and grant project funding and the Foundation’s Statement of Comprehensive Income and annual financial reports.

– How do the Foundation’s risk management policies apply to financial accounting and reporting practices for grants, subsidies and grant project funding?

6.26.8 Sponsorships

– Describe the sponsorship policies, principles and procedures for grants, subsidies and grant project funding.

– What are the procedures if the Foundation is made aware of activities that contravene the sponsorship policies?

– How are sponsorships financially classified for reporting? For example, sponsorships differ from gifts, because of the benefits to both parties inherent in the sponsorship agreement.

– Who can approve sponsorship deals for the Foundation? Can this be delegated? If so, is this delegation of authority recorded in the Financial Delegations Register (see Chapter 2)?

– How do the Foundation’s risk management policies apply to sponsorship? Does the Foundation have repetitive sponsorships? For example an annual event? If so, where are these details stored? Are there any restrictions on what are considered appropriate sponsorships?

6.26.9 Surplus and Deficit

– Describe how surpluses and deficits from grants, subsidies and grant project funding are managed.

– Describe the processes for dealing with surpluses, for example:

o Returned to the Foundation’s accounts

o Deducted from project funds for following periods

o Carried over into the next financial year.


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– How are returned surpluses financially reported on? Are they recorded and accounted for as a debt due and recoverable?

– Describe the processes for dealing with deficits, for example:

o Re-ordering the service provider’s priorities

o Reducing future expenditure levels

o Paying the next instalment ahead of schedule

o Approve additional funding to the project.

– How are deficits managed that are caused by factors beyond the service provider’s control?


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