General Ledger Governance

General Ledger Governance

SUMMARY

The General Ledger Governance Policy defines the key mechanisms through which governance of the General Ledgers of the University and it controlled entities (the Group) is achieved. This Policy is supported by the following Procedures:

  • Balance Sheet Account Reconciliation Procedure
  • Inter-company Procedure
  • Manual Journal Entry Procedure
  • Natural Account and Associated Reporting Hierarchy Procedure

Policy

General Ledger Governance Policy

1 PURPOSE

This Policy defines the key mechanisms through which governance of the General Ledgers of the University and it controlled entities (the Group) is achieved.

2 BACKGROUND

The General Ledger is fundamental to understanding the University’s financial performance, delivering decision support to stakeholders and enabling reporting to regulatory bodies. Governance over the General Ledger is important to ensure that the information and reporting is fit for purpose, accurate and complete.

3 SCOPE

This Policy applies to all officers and directors, members, employees, consultants and contractors of Macquarie University and its Controlled Entities.

4 DEFINITIONS

Commonly defined terms are located in the University Glossary. The following definitions apply for the purpose of this Procedure:

Chart of Accounts: List of account codes used to enter data in the General Ledger.  Includes both General Accounts (used to code activities by nature e.g. wages, income, debtors; referred to as Natural accounts within the University) and Profit Centres (used to group activities by area of the organization; referred to as Discipline and Major Accounts within the University)

Controlled Entity Head of Finance: Most senior person in a Controlled Entity with accountability for Finance. This role may have a local title, e.g. Finance Director or Finance Manager.

Financial Accounting (FA) Reporting Hierarchy – grouping of Natural Accounts in Calumo (management reporting tool) that replicates the grouping used in Caseware (statutory reporting software).

Journal Approver: The individual who reviews and approves the posting of the Manual Journal Entry into the General Ledger.

Journal Preparer: The individual who creates and uploads the Manual Journal Entry into the General ledger for approval by the Journal Approver.

Management Reporting (MR) Reporting Hierarchy – hierarchical grouping table of Natural Accounts in Calumo that groups Natural Accounts according to management preference, to best review the financial drivers of the organization.

General Ledger: The system that contains all the financial transactions of an entity.

Macquarie University Group or Group: means Macquarie University and its Controlled Entities.

Manual Journal: A manual entry to record financial transactions in the General Ledger. Principles of double entry accounting require the journal to include debit and credit entries whose sum will be equal and opposite.

Supporting Documentation: Supporting documentation consists of source documents, supportive calculations, and/or other items necessary to substantiate the accuracy and appropriateness of a journal entry. Typical supporting documents include, but are not limited to, general ledger reports, worksheets with supportive calculations, copies of source documents such as purchase orders, travel expense reports and third-party reports/statements

5 POLICY STATEMENT

Note: Appendix 1 – General Ledger Policy Family Tree describes how policies relating to the General Ledger relate to each other.

General Ledger Governance

5.1 Governance over access to the General Ledger

The University Information Security Policy and Information Security Procedure define requirements for User Access Management and User Registration for all systems, including the General Ledgers of the Group.

In addition to protocols defined in those documents, the following Policy position applies with respect to user profiles within General Ledger systems that are assigned access to manual journal formats:

5.1.1 Assignment of user access as a Journal Preparer or Journal Approver requires approval from the Director, Financial Control & Treasury (for the University) or the relevant Controlled Entity Head of Finance (for a controlled entity) in addition to the approval of the user’s line manager.

5.1.2 Journal Approver rights will only be granted to staff in the Office of Group Finance (or controlled entity finance teams), and only to those staff that have formal responsibility for reviewing and approving journals as part of their role.

5.1.3 Segregation of duties between Preparer and Approver is mandatory and will be enforced using business rules in the General Ledger system.

5.1.4 The level of Chart of Accounts access assigned to each Journal Preparer and Approver will be sufficient for them to efficiently perform their role.

5.2 Governance over Manual Journals

Procedures for the preparation, review and approval of Manual Journal Entries for the University and its Controlled Entities are detailed in the Manual Journal Entry Procedure.

5.3 Governance over permitted Accounting Policies

5.3.1 Specific guidance on Capital Assets are detailed in the Capital Asset Management Policy

5.3.2 Authority to make and amend Accounting Policies, as well as details of current Accounting Policies to which all entities in the Group must adhere, are detailed in the Accounting Policies Policy and Accounting Policies Register

5.4 Governance over the use of the University Operations and Project Ledger

Appropriate uses of the University Project and Operations Ledgers, governance and controls surrounding major account set-up and ongoing use of major accounts, are detailed in the Project and Operations Ledger Policy and associated Procedure.

5.5 Governance over Natural Accounts and associated Financial Reporting Hierarchies

Procedures for the creation and modification of Natural Accounts and the creation and modification to associated Natural Account Reporting Hierarchies for the University, and the controlled entities are detailed in the Natural Account and associated Reporting Hierarchy Procedure.

5.6 Governance over Balance Sheet reconciliations

Procedures for establishing requirements for the reconciliation of Balance Sheet accounts are detailed in the Balance Sheet Account Reconciliation Procedure.

5.7 Governance over Inter-company transactions

Procedures for recording and elimination of inter-company transactions in the General Ledgers of the University and its Controlled Entities are detailed in the Inter-company Procedure.

5.8 Financial Delegations

The Delegations of Authority Policy and its Appendices specify who may perform specific functions, including financial delegations, and the principles by which delegations of authority are exercised

5.9 Training

Appropriate General Ledger training must be completed before access is given to a General Ledger.

6 RELEVANT LEGISLATION

N/A

7 KEY RELATED DOCUMENTS

Within this policy suite (see tabs above):

Balance Sheet Account Reconciliation Procedure

Inter-company Procedure

Manual Journal Entry Procedure

Natural Account and Associated Reporting Hierarchy Procedure

Other Key Related Documents:

Accounting Policies Policy and Register

Capital Asset Management Policy

Project and Operations Ledger Policy and Procedure

Delegations of Authority Policy and Appendices

Information Security Policy and Procedure

8 NOTES

8.1

Contact Officer

Senior Finance Manager, Group Financial Reporting and Fixed Assets

8.2

Implementation Officer

Director Financial Control & Treasury

8.3

Approval Authority / Authorities

Vice-President, Finance and Group Chief Financial Officer

8.4

Date Approved

28 September 2019

8.5

Date of Commencement

30 September 2019

8.6

Date for Review

30 September 2022

8.7

Documents Superseded by this Procedure

Nil

8.8

Amendment History

N/A

Balance Sheet Procedure

Balance Sheet Account Reconciliation Procedure

1 PURPOSE

This Procedure supports the General Ledger Governance Policy in establishing requirements for the reconciliation of Balance Sheet accounts for the University and its Controlled Entities (‘the Group’).

2 SCOPE

This Procedure applies to all staff of the Macquarie University Group who are assigned roles as Preparer or Approver of Balance Sheet account reconciliations, or otherwise responsible for compliance with this Procedure.

High quality and timely Balance Sheet account reconciliations are a vital internal control which assists in ensuring accuracy and reliability of financial information.

3 DEFINITIONS

Commonly defined terms are located in the University Glossary. Definitions specific to this Procedure are contained in the accompanying Policy and below.

Approver: The individual who has assigned responsibility to review and approve the Balance Sheet Reconciliation.

Balance Sheet Account: These are Natural accounts in a General Ledger used to record the financial transactions involving the entity’s assets, liabilities and equity.

Balance Sheet Account Reconciliation: The substantiation of a Balance Sheet account at a point in time, involving providing evidence that the composition of a balance or a group of related account balances are accurate and complete, and identifying any Unreconciled Items that require remediation.

Blackline: Cloud-based software used by the University to complete Balance Sheet Reconciliations.

Closing Balance: This is the amount remaining in a Balance Sheet Account at the end of a reporting period.

Preparer: The individual who has assigned responsibility to prepare the Balance Sheet Reconciliation.

Reconciling Item: A transaction(s) or item(s) that represents a difference between the general ledger balance and the subsidiary ledger or other supporting schedule(s) balance.

Reviewer: A suitably qualified staff member who will perform a secondary level of review of a Balance Sheet Account Reconciliation that has been approved.

Unreconciled Items: Any component of an account balance that is incorrect, unexplained, has been confirmed as an error or requires further investigation.

4 RESPONSIBILITIES AND REQUIRED ACTIONS

4.1 Frequency of Reconciliations

The following Balance Sheet Account types must be reconciled monthly:

a) accounts with sub-ledgers or with interfaces to systems performing similar functions (including bank, fixed assets, debtors, creditors).

All other Balance Sheet accounts must be reconciled at least quarterly, unless otherwise agreed in writing by the Director Financial Control & Treasury.

b) material accrued/prepaid expenses and accrued/deferred income accounts (materiality set at greater than 0.5% of the entity’s budgeted full year expenses).  For the University this equates to a closing balance of > $5m.

c) Account types other than those listed in (a) and (b) above with closing balances greater than $10m for the University, and 1% of full year expenditure for Controlled Entities.

d) other high-risk accounts as identified by the Director Financial Control & Treasury or the Controlled Entities Head of Finance.

All other Balance Sheet accounts must be reconciled at least quarterly, unless otherwise agreed in writing by the Director Financial Control & Treasury.

4.2 Due Dates

Timelines for completion of Balance Sheet Account Reconciliations for the University will be determined by the Director Financial Control & Treasury and communicated as part of month-end timetabling communications to all Preparers and Approvers.

Timelines for completion of Balance Sheet Account reconciliations for Controlled Entities will be set by the Controlled Entity Head of Finance and agreed with the Director Financial Control & Treasury.

4.3 Content of Balance Sheet Account Reconciliations

Regardless of the system used for storage, a Balance Sheet account reconciliation must include:

4.3.1 a statement of purpose for the account

4.3.2 balance sheet account number and name

4.3.3 the accounting period of the reconciliation

4.3.4 General Ledger balance as at close of the accounting period

4.3.5 Supporting Documentation (refer further in clause 5.4) to substantiate the entire closing balance (not just movement in the period)

4.3.6 list of all Reconciling Items, with Supporting Documentation (see further below)

4.3.7 list of Unreconciled Items, with explanatory notes and documented action plan for investigation, including the specific task(s) required to be completed, the resources required and the timeframe for resolution.

4.3.8 electronic links (or location details) to any separate templated procedures relevant to the Balance Sheet reconciliation

4.3.9 the Preparer and Approver’s name, and dates of preparation and approval

4.3.10 if a zero balance, confirmation that the account is appropriate to be zero.

4.3.11 confirmation that the closing balance has been calculated in accordance with the relevant identified sections of the Accounting Policies Register.

4.4 Supporting Documentation

All Balance Sheet Account Reconciliations must include Supporting Documentation that explains the account, substantiates the closing balance and enables the Approver to understand its purpose and validate its accuracy.

Examples of supporting documentation include, but are not limited to:

  • Bank or Third party statements
  • Reports from Subledgers or other internal systems
  • Calculation worksheets.

For sensitive and confidential information, relevant Approvers will document and implement protocols around document storage and retention in compliance with the Records and Information Management Procedure.

4.5 Segregation of Duties

Segregation of duties between Preparer and Approver is mandatory.

The allocation of Preparer and Approver roles for Balance Sheet Account Reconciliations must be documented, approved and formally reviewed at least bi-annually:

a) For the University, this task will be performed by the Senior Finance Manager, Group Financial Reporting and Fixed Assets, with a copy of the review submitted to the Director Financial Control & Treasury.

b) For Controlled Entities, this task will be performed by the Controlled Entity Head of Finance, with a copy of the review submitted to the Director Financial Control & Treasury.

4.6 Responsibilities of Preparer and Approver

The Preparer must ensure their allocated Balance Sheet Account Reconciliations are created in accordance with the communicated timelines and include all content required by this Procedure.

The Approver is accountable for reviewing the reconciliations, including performing an assessment on the accuracy, completeness and validity of the reconciliations according to the requirements of this Procedure.

Reconciliations that do not meet the standards of this Procedure must not be approved.  The Approver will advise the Preparer of remedies required to revise the reconciliation for compliance with this Procedure.

The Approver will oversee the action plan for resolution of any identified unreconciled items.

4.7 System for storing reconciliations

The University will use Blackline as the portal to prepare and approve all Balance Sheet Account Reconciliations.  Supporting Documentation must be attached to the reconciliation within Blackline.

The Controlled Entity Heads of Finance will determine the storage procedures for their Balance Sheet Account Reconciliations and will advise the Director Financial Control & Treasury in writing.

4.8 Pre-set expectations of balances and auto-certification against these expectations.

Certain Balance Sheet Account Reconciliations have expected balances that can be predicted in advance due to their inherent nature.  Blackline includes a feature to load expected balances and auto-certify accounts which are within a tolerance of this balance. Tolerance is set at $10,000 per Balance Sheet Account Reconciliation.

Use of this feature within Blackline requires approval by the Director Financial Control & Treasury for each impacted Balance Sheet Account.  Approvers for impacted accounts are required to confirm in writing to the Director Financial Control & Treasury each quarter that the preloaded expected balance is still appropriate for the underlying nature of the account.

4.9 Tolerance thresholds for Unreconciled Items

The tolerance thresholds for temporary Unreconciled Items is set at $50,000 per Balance Sheet Account Reconciliation for the University, and 0.1% of full year expenditure for Controlled Entities.  Unreconciled Items within this tolerance limit do not require a formal action plan for investigation unless they persist for more than three months.

4.10 Timeframe for resolution of Unreconciled Items

Unreconciled items with a value above the tolerance thresholds noted above require an action plan for investigation and resolution, in accordance with the following timeframes:

University

$ value of unreconciled item

Controlled Entities

value of unreconciled item as % of full year budgeted expenditure

Time frame for resolution from initial identification of Unreconciled Item

$0 - $50,000

0 – 0.1%

Three months

$51,000 - $100,000

0.1 – 0.5%

Two months

> $100,000

> 0.5%

One month

> $500,000

> 1%

Two weeks plus immediate notification by Approver to Director Financial Control & Treasury

4.11 Independent rotational quality reviews of Balance Sheet Account Reconciliations

Rotational independent quality control reviews of Balance Sheet Account Reconciliations will be performed by Reviewers who are neither the Preparer nor Approver of the reconciliation under review.

Reviews will focus on reconciliations that are required to be reviewed monthly because of their inherent nature or risk profile (per clause 4.1 above), plus any other reconciliations that are identified as a cause for concern during month-end Income Statement and Balance results reviews.

A quarterly timetable for quality reviews will be prepared by the Senior Manager Financial Controls & Compliance, for approval by the Director Financial Control & Treasury. The timetable will detail the reviews to be performed, due date for review, and nominated reviewer.  Findings from the quarterly reviews, including any remediation actions and due dates for improving the quality of the reconciliations, will be summarised by the Senior Manager Financial Controls & Compliance and communicated to the relevant reconciliation Preparers, Approvers, Reviewers and the Director Financial Control & Treasury.

4.12 Reporting

The following information must be provided to the Director Financial Control & Treasury on a monthly basis:

4.12.1 Confirmation of completion status of reconciliations against the requirements of the published timetable, with an explanation and action plan for any reconciliations that are late.

4.12.2 Listing of Preparers and Approvers by General Ledger Account

4.12.3 Listing of all Unreconciled Items across all Balance Sheet Account Reconciliations with the action plans that each relevant Balance Sheet Approver has endorsed for resolution

4.12.4 Reports of any breaches of this Procedure.

The Senior Finance Manager, Group Financial Reporting and Fixed Assets will oversee the provision of this information for the University.

The Controlled Entity Heads of Finance will oversee the provision of this information for the Controlled entities.

5 RELEVANT LEGISLATION

N/A

6 KEY RELATED DOCUMENTS

Within this policy suite (see tabs above):

General Ledger Governance Policy

Inter-company Procedure

Manual Journal Entry Procedure

Natural Account and Associated Reporting Hierarchy Procedure

Other Key Related Documents:

Accounting Policies Policy and Register

Records and Information Management Policy

7 NOTES

7.1

Contact Officer

Senior Finance Manager, Group Financial Reporting and Fixed Assets

7.2

Implementation Officer

Director Financial Control & Treasury

7.3

Approval Authority / Authorities

Vice-President, Finance and Group Chief Financial Officer

7.4

Date Approved

28 September 2019

7.5

Date of Commencement

30 September 2019

7.6

Date for Review

30 September 2022

7.7

Documents Superseded by this Procedure

Nil

7.8

Amendment History

N/A

Inter-company Procedure

Inter-company Procedure

1 PURPOSE

This Procedure supports the General Ledger Governance Policy in establishing requirements for recording of inter-company financial transactions in the General Ledgers of the University and its Controlled Entities (the Group) and for the elimination of these transactions for Group reporting.

Provision of goods, services and other transactions are routinely made between entities within the Group.  These transactions must be identified and eliminated upon consolidation of the Group financial statements, such that the Group financial results only reflect transactions with third parties to the Group.

Efficient and accurate identification of inter-company transactions is critical to ensure the accurate elimination of these transactions to enable accurate Group reporting.

2 SCOPE

This Procedure applies to all staff of the Macquarie University Group involved in the creation, processing, approval, and recording of inter-company transactions.

3 DEFINITIONS

Commonly defined terms are located in the University Glossary. Definitions specific to this Procedure are contained in the accompanying Policy and below.

Accrual: A type of reversing Manual Journal that adjusts the underlying financial results to ensure that both expenses are recorded when a liability exists, and revenue is reported when performance obligations have been met.

Caseware: software used to produce external statutory accounts.  Natural Accounts in Calumo are grouped to in compliance with the requirements of the Department of Education and local entity statutory reporting requirements.  For the University, this hierarchy is replicated in Calumo (management reporting tool) as the FA Reporting Hierarchy.

Financial Reporting team: team within the Office of Group Finance, lead by Senior Finance Manager, Group Financial Reporting and Fixed Assets.

Inter-company transaction: a transaction between two entities within the Macquarie University Group.

Journal Approver: The individual who reviews and approves the posting of the Manual Journal Entry into the General Ledger.

Natural account: account codes in a General Ledger system used to code activities by nature e.g. wages, income, debtors, provisions.

Trial Balance: A trial balance is a list of all the general ledger accounts contained in the ledger of the entity. This list will contain the name of each account and the value of that account balance. Each account will hold either a debit balance or a credit balance.

4 RESPONSIBILITIES AND REQUIRED ACTIONS

Recording of Inter-Company Transactions

4.1 Permitted Natural accounts

All inter-company transactions must be recorded using designated inter-company Natural Account codes, which are used exclusively for this purpose.

A master list of inter-company Natural Accounts across the Group will be maintained and regularly communicated to all relevant parties by Financial Reporting team.

Exceptions to this requirement to use designated inter-company Natural Accounts for an inter-company transaction are limited to minor sundry transactions which are procured via a Point-of-Sale transaction (e.g. purchase of food at a retail outlet owned by a controlled entity).  Any other exceptions require approval by the Director Financial Control & Treasury.

4.2 Pass-through of transactions from one entity to another

In situations where one entity within the Group incurs a transaction with a third party (income or expense) and then ‘passes on’ the effect of that transaction to another entity within the Group, these two separate transactions must be recorded in separate Natural Accounts (not netted off within a single Natural Account), such that the second (inter-company) transaction can be isolated.

Where such pass-through costs are material, the relevant third-party and associated inter-company Natural Accounts may generally be grouped together within the Management Reporting (MR) Reporting Hierarchy (subject to the requirements of the University Natural Account and associated Hierarchy Procedure) and controlled entity internal reporting hierarchies.  These accounts will generally be grouped separately in the Financial Accounting (FA) Reporting Hierarchy and controlled entity statutory reporting hierarchies in Caseware.

4.3 Recording of inter-company transactions – invoices

Where feasible, inter-company transactions will be raised via standard Accounts Receivables invoicing procedures and settled via standard Accounts Payable processes, for ease of identification.

Cut-offs for the raising of inter-company invoices will be communicated by the Financial Reporting team as part of the month-end timetable communications and must be adhered to by all entities.

4.4 Recording of inter-company transactions – accruals

Inter-company transactions that miss the cut-off for invoicing in a particular period may be accrued via Manual Journal, in accordance with the Manual Journal Entry Procedure.  Evidence of acceptance of the value of the accrual by the counterparty must be included by the Journal Preparer as part of the Supporting Documentation for the journal.

Cut-offs for the inter-company accruals will be communicated by the Financial Reporting team as part of the month-end timetable communications and must be adhered to by all Group entities.  Controlled Entity Heads of Finance will ensure local entity month-end timetables include this important cut-off and will drive local adherence. University Manual Journal Approvers must similarly ensure adherence to this inter-company accrual cut-off.

4.5  Elimination of Inter-Company Transactions For Group Reporting

Trial balances containing completed inter-company transactions will be submitted to the Financial Reporting team in accordance with the month-end timetable issued by that team.

The Financial Reporting team will oversee the identification and elimination of inter-company transactions to produce Group financial reports that exclusively reflect third party transactions.

4.6 Dispute Resolution of Inter-Company Transactions

In the event that the finance teams are unable to resolve a concern on an inter-company transaction, the below guidelines should be followed to reduce the risk of mismatched balances for Group reporting.

4.6.1 Disputes on unrecorded invoices or accruals

The receiving entity will notify the originating entity of this transaction and seek an explanation as to the nature of the transaction. If the transaction is legitimately rejected e.g. due to a coding error, the receiving entity does not record this. The originating entity has the responsibility to ensure the correct receiving entity records the transaction in the correct reporting period and to resolve any remediations in the source data systems.

If the receiving entity needs to further dispute this, the receiving entity will record this transaction to ensure that there is not an out of balance for Group reporting. This will apply where the aggregate of the disputed transactions is greater than $50,000.

If the disputed transactions are not resolved between the entities within one month of the date the transaction was originally contested, this is to be reported to the Director of Financial Control and Treasury and the Controlled Entities Head of Finance with an action plan of resolution.

4.6.2 Disputes on recorded invoices

It is the responsibility of University Finance Shared Services and the Controlled Entities Head of Finance for the timely settlement of inter-company invoices.

Inter-company invoices that are aged greater than 60 days will be reported to the reported to the Director of Financial Control and Treasury and the Controlled Entities Head of Finance with an action plan of resolution.

5 RELEVANT LEGISLATION

N/A

6 KEY RELATED DOCUMENTS

Within this policy suite (see tabs above):

General Ledger Governance Policy

Manual Journal Entry Procedure

Natural Account and Associated Reporting Hierarchy Procedure

7 NOTES

7.1

Contact Officer

Senior Finance Manager, Group Financial Reporting and Fixed Assets

7.2

Implementation Officer

Director Financial Control & Treasury

7.3

Approval Authority / Authorities

Vice-President, Finance and Group Chief Financial Officer

7.4

Date Approved

28 September 2019

7.5

Date of Commencement

30 September 2019

7.6

Date for Review

30 September 2022

7.7

Documents Superseded by this Procedure

Nil

7.8

Amendment History

N/A

Manual Journal Procedure

Manual Journal Entry Procedure

1 PURPOSE

This Procedure supports the General Ledger Governance Policy in establishing requirements for the preparation, review and approval of Manual Journal entries for the University and its Controlled Entities (the Group).

2 SCOPE

This Procedure applies to all staff of the Macquarie University Group involved in the creation, processing, approval, and recording of Manual Journals.

This Procedure excludes Automated/System Generated Journals, which are exclusively posted by the IT Business Support team.

Manual journals are used to adjust the financial results of an entity.  Strong protocols around the use and quality of journals are a vital internal control which assists in ensuring accuracy and reliability of financial information.

3 DEFINITIONS

Commonly defined terms are located in the University Glossary. Definitions specific to this Procedure are contained in the accompanying Policy and below.

Accrual: A type of reversing Manual Journal that adjusts the underlying financial results to ensure that both expenses are recorded when a liability exists, and revenue is reported when performance obligations have been met.

Automated/System Generated Journal: A journal entry that is generated and submitted to the General Ledger through an interface with a subsidiary ledger or other system, without the ability for the data to be manually adjusted.

Controlled Entity Head of Finance: Most senior person in a Controlled Entity with responsibility for Finance. This role may have a local title, e.g. Finance Director or Finance Manager.

Financial Reporting team: team within the Office of Group Finance, lead by Senior Finance Manager, Group Financial Reporting and Fixed Assets.

Journal Approver: The individual who reviews and approves the posting of the Manual Journal Entry into the General Ledger.

Journal Preparer: The individual who creates and uploads the Manual Journal Entry into the General ledger for approval by the Journal Approver.

Journal Reviewer: A suitably qualified staff member who is assigned to perform a rotational quality review of a manual journal and its associated Manual Journal Procedure.

Manual Journal Procedure Template: standard template used to record a financial procedure that results in the creation of a Manual Journal.

Prior Period Journals (months within the same financial year): A type of manual journals prepared in a current month to adjust the previous months results due to a material error or omission.  The preparation of these are restricted to the Financial Reporting team in the University.

4 RESPONSIBILITIES AND REQUIRED ACTIONS

4.1 Responsibilities of Journal Preparers and Approvers

Journal Preparer Responsibilities

The Journal Preparer is responsible for ensuring that the journals they create and upload:

  • are valid and necessary
  • are compliant with this Procedure
  • are complete
  • are using the correct format for journal entry (e.g. accrual or GST templates)
  • are for the correct accounting period
  • have the correct Chart of Account codes on each journal line.
  • have complete and self-explanatory Supporting Documentation (refer also clause 5.4 below)
  • are submitted for approval in a timely manner and in accordance with the applicable timetables.
  • comply with relevant clauses of the Accounting Policies Register.

Journal Approver Responsibilities

The Journal Approver is accountable for ensuring the Journal Preparer has complied with the Procedure requirements listed above.  The Journal Approver will only approve journals that comply with this Procedure.

4.2 Supporting Documentation

All Manual Journal entries must have Supporting Documentation that substantiates the amount and purpose of the journal to a standard that enables the Approver or Reviewer to understand its purpose and validate its accuracy.

All calculations must be clearly documented, with methodology and assumptions clearly defined.  Information relied on from external sources (e.g. reports) must be documented in sufficient detail, including source and relevant parameters (e.g. dates and other filters) such that a report can be extracted, and any associated calculations could be reperformed.

All Supporting Documentation must be uploaded into the General Ledger as an attachment to the Manual Journal, where the system used includes this functionality. Where such functionality is absent Approvers will document and implement protocols around document storage and retention in compliance with the Records and Information Management Procedure.

The procedures under-pinning regular Manual Journals will be documented using a standard Manual Journal Procedure Template.

Manual Journal Procedure Templates must be approved by the Journal Approver, and must also be formally re-appraised and re-approved bi-annually to ensure that they remain current.  Evidence of approval must be retained on file.

4.3 Timetable for submission and approval of Manual Journals

All Manual Journals must be prepared and approved in accordance with deadlines communicated each month by the University Financial Reporting team.

4.4 Accruals

All Accrual journals must use a journal format which auto-reverses in the following period, such that the full accrual balance needs to be approved each month.

4.5 Manual Journals Impacting Prior Period Adjustments

Prior Period Adjustments – between financial years

The adjustment of prior year externally audited financial results is not permitted without the written authorization of the Vice President and Group Chief Financial Officer.

Prior Period Journals (months within the same financial year)

The adjustment of prior month results within the same financial year is not permitted without the written authorization of the Controlled Entity Head of Finance (for Controlled Entities) or the Director Financial Control & Treasury or their nominated delegate (for the University).

4.6 Independent rotational quality reviews of Manual Journals

Rotational independent quality control reviews of Manual Journals and their associated written procedures as documented in the Manual Journal Procedure Template will be performed by nominated Journal Reviewers who are neither the Preparer nor Approver of the Manual Journal under review.

Reviews will focus on journals that are materially large and/or deemed to be high risk because of their inherent nature or complexity of calculation, plus any other journals that are identified as a cause for concern during month-end Income Statement and Balance Sheet results reviews.

A quarterly timetable for quality reviews will be prepared by the Senior Manager Financial Controls & Compliance, for approval by the Director Financial Control & Treasury.  The timetable will detail the manual journals to be reviewed, due date for review, and nominated reviewer.  Findings from the quarterly reviews, including any remediation actions and due dates for improving the quality of the journals or associated procedures, will be summarized by the Senior Manager Financial Controls & Compliance and communicated to the relevant Journal Preparers, Approvers and the Director Financial Control & Treasury.

5 RELEVANT LEGISLATION

N/A

6 KEY RELATED DOCUMENTS

Within this policy suite (see tabs above):

General Ledger Governance Policy

Balance Sheet Account Reconciliation Procedure

Inter-company Procedure

Natural Account and Associated Reporting Hierarchy Procedure

Other Key Related Documents:

Accounting Policies Policy and Register

Project and Operations Ledger Policy and Procedure

7 NOTES

7.1

Contact Officer

Senior Finance Manager, Group Financial Reporting and Fixed Assets

7.2

Implementation Officer

Director Financial Control & Treasury

7.3

Approval Authority / Authorities

Vice-President, Finance and Group Chief Financial Officer

7.4

Date Approved

28 September 2019

7.5

Date of Commencement

30 September 2019

7.6

Date for Review

30 September 2022

7.7

Documents Superseded by this Procedure

Nil

7.8

Amendment History

N/A

Natural Account Procedure

Natural Account and Associated Reporting Hierarchy Procedure

1 PURPOSE

This Procedure supports the General Ledger Governance Policy in establishing requirements for the creation and modification of Natural Accounts and the creation and modification to associated Natural Account Reporting Hierarchies for the Group.

2 SCOPE

This Procedure applies to Natural Accounts in use within the General Ledger of the University, and the associated MR and FA Reporting Hierarchies.

3 DEFINITIONS

Commonly defined terms are located in the University Glossary. Definitions specific to this Procedure are contained in the accompanying Policy and below.

Caseware – software used to produce external statutory accounts.  Natural Accounts in Calumo are grouped in compliance with the requirements of the Department of Education.  This hierarchy is replicated in Calumo as the FA Reporting Hierarchy.

Caseware prior year journal – manual adjustment made within Caseware to manually adjust the mapping for prior year statements back to the mapping in use when the statements were approved.

Controlled Entity Head of Finance: Most senior person in a Controlled Entity with responsibility for Finance. This role may have a local title, e.g. Finance Director or Finance Manager.

Financial Reporting team: team within the Office of Group Finance, lead by Senior Finance Manager, Group Financial Reporting and Fixed Assets.

Metadata: Metadata is contextual information about a piece of data or a data set that is stored alongside the data.

Natural Account and Reporting Hierarchy Request Form – official form, maintained by the Financial Reporting team, and used to submit all requests for change toNatural Accounts or their associated Hierarchies.

Manual Journal Procedure Template: standard template used to record a financial procedure that results in the creation of a Manual Journal.

4 RESPONSIBILITIES AND REQUIRED ACTIIONS

Natural Accounts are used in the General Ledger to group transactions by nature (e.g. wages, income, debtors).  These Natural accounts are then further grouped by hierarchies for internal and external reporting.  Appropriate controls around the creation and modification to Natural Accounts and their hierarchies is essential to ensure that financial information is reported accurately for internal and external stakeholders.

Within the University, two Natural Account hierarchies exist:

  • Management Reporting (MR) Hierarchy – grouping of natural accounts according to management preference, to best review the financial drivers of the organization
  • Financial Accounting (FA) Hierarchy – grouping of natural accounts to support external reporting in compliance with the requirements of the Department of Education.

Within the controlled entities, other hierarchies exist to cater for internal and external reporting.

4.1 Types of Permitted Changes

For the University:

Requests for new Natural Accounts, modifications to existing Natural Accounts, as well as alterations to the description, purpose or MR and FA Reporting Hierarchies of Natural Accounts, must be made using the Natural Account and Reporting Hierarchy Request Form.

Requests must be submitted for review to the Financial Reporting team.

For each Controlled Entity:

The Controlled Entity Head of Finance has accountability for documenting and overseeing procedures to ensure the appropriate creation and modifications to Natural accounts or hierarchies in their entity.

4.2 Requests for new Natural Accounts must specify:

4.2.1 Description and operational purpose of proposed Natural Account

4.2.2 Why an existing Natural account cannot be used e.g. is the new Natural Account required to meet external reporting requirements, adhere to the Accounting Policies Register, or adhere to the Inter-Company Group Procedure?

4.2.3 Expected dollar value to be processed through this account per annum (as a gauge for materiality).  New Natural Accounts with an immaterial expected usage levels will generally not be approved unless they are required for a reason stated in 4.2.2.

4.2.5 If the Natural Account is classified as an income account – submission of information for assessment of revenue recognition as required in the Revenue Procedure

4.2.5 Details of how transactions will be posted to the Natural Account e.g. System Interface or Manual Journal.  If Manual Journals will be used, submission of a Manual Journal Procedure Template to detail underlying procedure that will trigger the journals.

4.2.6 Assessment of whether the new Natural Account request will impact any of the following financial processes in Finance One:

a) Non-teaching revenue deferral

b) Interest allocation

c) Indirect Costs

4.2.7 The proposed MR and FA Hierarchy codes to which the Natural Account will map, and an assessment of whether these mappings will trigger a new reconciling item in the MR vs FA Hierarchy Reconciliation.

4.2.8 All other mandatory meta-data as detailed in the Natural Account and Reporting Hierarchy Request Form

4.3 Requests for changes to existing Natural Accounts must specify:

4.3.1 Nature of requested change, e.g.:

a) Name change to provide a more meaningful description, with no change to underlying business process.

b) Name change and business purpose change – all information noted in 5.1 above for new Natural Accounts must be provided.

4.4 Requests for changes to the MR or FA Hierarchical mapping of existing Natural Accounts must specify:

4.4.1 The rationale for the change of mapping is required.

4.4.2 Whether the Natural Account was used in the previous reporting year.  As there is only one live hierarchy, a re-mapping of such accounts will by default change prior year groupings of Natural Accounts.  This will require a Caseware prior year journal to be posted to manually force externally reported results to match audited financial statements.

4.5 Requests for changes to the narrative description of MR or FA Hierarchical mapping code, with no change to the mapping of the underlying Natural Accounts of existing Natural Accounts must specify:

4.45.1 The rationale for the change of mapping is required.

4.6  Approvals

Approvals for changes are determined by the level of impact of the change, as detailed in Appendix 1 and 2 to this Procedure. Changes will not be made in any system until all necessary approvals are secured.

For the University, the Financial Reporting team will oversee and drive the timely updating of all relevant systems upon receipt of all necessary approvals.

For Controlled Entities, the Controlled Entities Head of Finance will oversee and drive the timely updating of all relevant systems upon receipt of all necessary approvals

4.7 Evidence of approvals obtained

All documentation associated with the change request, including all relevant required information specified in this Procedure, plus evidence of required approvals, will be retained on file.

Changes to Natural Accounts will be attached within Finance One as part of the metadata of the Natural Account.

Changes to MR and FA Hierarchies will be retained by the Senior Finance Manager, Group Financial Reporting and Fixed Assets and tracked in a changelog.

4.8 Timetable for Review, Approval and Procesing of Approved Changes

The Financial Reporting Team will issue a monthly timetable detailing timeframe for acceptance and review of change requests, windows for approval and for updates to necessary systems.  Blackout windows for changes to reporting hierarchies will be detailed within the timetable to provide certainty of reporting structures during month-end and yearend close plus results review.

4.9 Reporting

The following information must be provided to the Director Financial Control & Treasury by the Senior Finance Manager, Group Financial Reporting and Fixed Assets on a quarterly basis:

4.9.1 Details of all changes made to Natural Accounts, to the FA and MR Reporting Hierarchies and to Caseware (via Caseware prior year journals) under this Procedure

4.9.2 Reports of any breaches of this Procedure.

5 RELEVANT LEGISLATION

N/A

6 KEY RELATED DOCUMENTS

Within this policy suite (see tabs above):

General Ledger Governance Policy

Balance Sheet Account Reconciliation Procedure

Inter-company Procedure

Manual Journal Entry Procedure

Other Key Related Documents:

Accounting Policies Policy and Register

Project and Operations Ledger Policy and Procedure

Natural Account and Reporting Hierarchy Request Form

Revenue Procedure

Manual Journal Procedure Template

7 NOTES

7.1

Contact Officer

Senior Finance Manager, Group Financial Reporting and Fixed Assets

7.2

Implementation Officer

Director Financial Control & Treasury

7.3

Approval Authority / Authorities

Vice-President, Finance and Group Chief Financial Officer

7.4

Date Approved

28 September 2019

7.5

Date of Commencement

30 September 2019

7.6

Date for Review

30 September 2022

7.7

Documents Superseded by this Procedure

Nil

7.8

Amendment History

N/A

Appendix 1 – approvals for changes to Natural Accounts or associated reporting hierarchies

Use the table below to identify all impacts of the proposed change, and seek approval from all relevant approvers

Impact of change

Approval required from:

Senior Finance Manager, Group Financial Reporting and Fixed Assets

Director Financial Control & Treasury

Director Planning & Performance (or nominated delegate)

Other approver

Change to Natural Account name only

Yes

No

No

Approval by manager who owns either system interface or manual journal procedure that impacts this account

Change to Natural Account name and business purpose

Yes

Yes

No

Approval by manager who owns either system interface or manual journal procedure that impacts this account

New Natural Account

Yes

Yes

No

Approval by manager who owns either system interface or manual journal procedure that impacts this account

Change to mapping in FA Hierarchy - at level that impact Primary Statements in Caseware

Yes

Yes

No

n/a

Change to mapping in FA Hierarchy - at level that impacts a row within a Note supporting a Primary Statement

Yes

No

No

Senior Finance Manager, Group Financial Reporting and Fixed Assets

Change to mapping in MR Hierarchy - at level 1 - 4 of Hierarchy[1]

Yes

Yes

Yes

n/a

Change to mapping in FA Hierarchy - at level 5 or 6 of Hierarchy[2]

Yes

No

No

Head of Group Financial Planning & Analysis

Impact on MR vs FA Hierarchy reconciliation template

Yes

Yes

No

n/a

Prior year Caseware impact

Yes

Yes

No

n/a

Impact on teaching revenue deferral

Yes

Yes

No

Head of Group Financial Planning & Analysis

Impact on non-teaching revenue deferral script

Yes

Yes

No

Finance Manager – Research Reporting

Impact on indirect costs script

Yes

No

No

n/a

Impact on interest allocation script

Yes

No

No

Head of Tax & Treasury

[1] This is the level that will impact the Calumo report Profit & Loss Account – Uni Level Summary – at a Compact roll-up level and Balance Sheet Report – at Summary view

[2] This is the level that will not impact the Calumo report Profit & Loss Account – Uni Level Summary – at a Compact roll-up level Balance Sheet Report – at Summary view

Appendix 2 – approvals for changes to Natural Accounts or associated reporting hierarchies in the controlled entities

Use the table below to identify all impacts of the proposed change, and seek approval from all relevant approvers

Impact of change

Approval required from:

For all impacts of change: relevant Controlled Entities Head of Finance

Plus, other approver in University

Change to Natural Account name only

n/a

New Natural Account

n/a

Change to Natural Account name and business purpose

n/a

Change to mapping in FA Hierarchy - at level that impact Primary Statements in Group Caseware

Senior Finance Manager, Group Financial Reporting and Fixed Assets

Change to mapping in FA Hierarchy - at level that impacts a row within a Note supporting a Primary Statement in the Group

Senior Finance Manager, Group Financial Reporting and Fixed Assets

Change to mapping in local entity internal reporting hierarchy

n/a

Prior year Caseware impact

Senior Finance Manager, Group Financial Reporting and Fixed Assets

Change to revenue recognition

Senior Finance Manager, Group Financial Reporting and Fixed Assets


Back to the top of this page