Project and Operations Ledger Account

Project and Operations Ledger Account

SUMMARY

The Project and Operations Ledger Account Policy establishes the permitted uses of the two ledgers (Project and Operations Ledgers) within the University finance system, and authority for governance and procedural ownership of the Project and Operations Ledgers.

The Project and Operations Ledger Account Procedure and Appendix (PDF) provides guidance on the process of creation and maintenance of an account in the Project and Operations ledger.

POLICY

PROJECT AND OPERATIONS LEDGER ACCOUNT POLICY - Purpose, set-up, usage, carry-forward and use of residual funds.

1 PURPOSE

To establish the permitted uses of the two ledgers (Project and Operations Ledgers) within the University finance system. To establish authority for governance and procedural ownership of the Project and Operations Ledgers.

2 BACKGROUND

This Policy provides clarity on the appropriate uses of the Project and Operations Ledgers within the University financial system, and the governance and controls surrounding set-up and ongoing use for the duration of the Accounts created within the ledgers.

3 SCOPE

This Policy applies to all officers, directors, members, employees, consultants and contractors of Macquarie University and its Controlled Entities. Specific application of these principles within the financial ledger systems of the Controlled Entities may vary, due to the array of financial systems used across the Group.

4 DEFINITIONS

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

Chief Investigator Report: predominantly non-financial progress report written by the Chief Investigator for the Funding Provider.

Controlled Entity (CE): As defined in the Controlled Entities Policy

Discipline Code: The lowest level of hierarchical organisational structure within Finance One, denoted by a 4-digit code., e.g. Ancient History belongs to Faculty 2000 (Faculty of Arts), Department 2030 (Department of Ancient History) and Discipline Code 2031.  All areas of the University have a discipline code.  A discipline code is the parent of a Major Account.

Director: A member of a Board of Macquarie University and/or a Controlled Entity.

Faculty Residual Non-Research Funds Account: An Account in the Project Ledger of Finance One to which residual non-research funds from Externally Funded Non-Research Accounts and Individual Academic Accounts are transferred after the Carry Forward End Date of these Account types.  Funds in this account are for use on strategic non-research activities, at the discretion of the relevant Faculty Executive Dean in consultation with the DVC Academic.

Faculty Residual Research Funds Account: An Account in the Project Ledger of Finance One to which residual research funds from Externally Funded Research Accounts are transferred after the Carry Forward End Date of that Account type.  Funds in this Account are for use on strategic research activities, at the discretion of the relevant Faculty Executive Dean in consultation with the DVC Research.

Finance Project Ledger Account Set-up Form: form issued by Finance for gathering all pertinent information and approvals required for the set-up of those Accounts that are not set-up via the Research Services Application Process.

Finance Project Ledger Account Amendment Form: form used to request an amendment to the key terms of an Account e.g. Account End Date (except for changes to Account End Dates for Research Accounts, as these changes are processed by Research Services).

Finance One: The University financial system.

Financial Acquittal: a financial report prepared for the purpose of communicating summarised financial transactions for an Account, to the Funding Provider, over an agreed period.

Financial Year: 1 January to 31 December.

Funding Provider: External institution (e.g. Australian Research Council) or internal department (e.g. DVC-Research, DVC-Academic) that provides funds to be spent for a specific purpose, and over a specific timeframe, as specified in a Written Document.

HERDC code: a code assigned to all Accounts to denote which category of research income the Account should be reported under in the annual Higher Education Research Data Collection (HERDC) submission to the Department of Education.  Note that non-HERDC reportable Accounts are allocated a “non-HERDC reportable” HERDC code.

Major Account: component of the Finance One Operations and Project Ledgers, within which transactions are grouped.  Major Accounts within the Project Ledger, for the purpose of this Procedure, are known as Accounts.

Macquarie University Group or Group or The University: Macquarie University and its Controlled Entities

Major Account or Account: component of the Finance One Operations and Project Ledgers, within which transactions for particular activities within a Discipline Code can be grouped together, to aide monitoring and reporting.  Major Accounts within the Project Ledger, for the purpose of this Policy, are known as Accounts.

Non-Research Activities: activities that do not meet the Research Activities definition in this Procedure, but which form part of the core mission of the University, e.g. teaching and learning.

Operations Ledger: component of the Finance One financial system, within which Accounts are located.

Project Ledger: component of the Finance One financial system, within which Accounts are located.

Research Activities: Creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge.  The definition encompasses pure and oriented basic research, applied research and experimental development.

This definition of Research Activities is consistent with the definition provided by the Department of Education in the Higher Education Research Data Collection guidelines.

Research Grant: funding for a research project resulting from an application process which is open to more than one organisation and which is to some degree investigator driven.

Research Services: Office of Macquarie University that supports researchers with external research grant applications and ongoing research lifecycle management activities.

Residual Funds: surplus funds remaining in an Account at the Account End Date.

Selection Type: User defined attributes created in Finance One to enhance account structure by tagging additional information. They are used to dissect reports and enquiries in Finance One.Selection types are the parent attribute of Selection Codes.

Selection Code: User defined attributes created in Finance One to enhance account structure by tagging additional information related to a Selection Code. Selection Codes are children of Selection Types.

Sunset Clause: a period of five years in which funds received into an Individual Academic Account can be used, or they will be transferred to the Faculty Residual Non-Research Funds Account, for use as noted in section 5.  At the end of each Financial Year, the carry-forward amount on an Individual Academic Account will be equal to or lower than the sum of the last five years of income into that Account.

Written Document: a document, including an agreement, contract or other written format, that specifies the income source, required use and duration for the funds that will be allocated to the Account.  This document will usually be written, or at least approved, by the Funding Provider.

5 POLICY STATEMENT

The University records financial transactions through two ledgers in the Finance systems; the Project and Operations Ledgers.

Major accounts are mapped to one of the ledgers at inception of the Major Account based on the attributes of the activities that will be recorded in the Major Account, as follows:

Attribute of activity in major account

Operations Ledger

Project Ledger

Nature of transaction

Routine or recurring, typically happen every year

Specific, one-off activities with a clear end date

Funding source

Internal or External Funding

Usually externally funded (sometimes with matched internal co-funding)

Financial Reporting requirements

Annual reporting

Life-to-date reporting required, usually to the external funding provider

Restrictions on expenditure

In accordance with annual budgetary approvals

Funds must be spent in accordance with the requirements listed in the Written Document

Examples of activities:

Teaching Revenue

Rental Income

Consultancy Income

Investment Income

External Research grants

Specific purpose donations

Property capital projects

Ledger functionality

Unspent surplus within a Major Account at the end of the Financial Year is not available for use in the following year

Unspent surplus within a Major Account at the end of the Financial Year is available for use in the following year, subject to details in the Project and Operations Ledger Procedure

Common Features of Both Ledgers

Governance of temporary deficits

To be managed by Faculty and Offices Leadership teams with support from the local finance team

Budgetary considerations

Income and expenditure are subject to review during the annual budget process. External non-cancellable contractual expenditure commitments will be honoured

Revenue Recognition

For Accounts that have external revenue sources e.g. research grants and scholarship funding, separate Accounts are to be created for each revenue source to facilitate appropriate revenue recognition. All income and expenses relating to the activity of the Account must be recorded in the same Account, i.e. separate Accounts for recording solely income to separate Accounts for recording related expenses is not appropriate.

Ownership of equipment purchased from funds in Accounts

Equipment purchased using University funds are the legal property of Macquarie University.  Should an employee leave the University, such items will remain the property of the University unless their transfer to another institution has been agreed 1) in writing with the relevant Funding Provider as part of a funding novation agreement OR 2) in accordance with Clause 2.33 (Non-Property Capital Asset Write-Off and Disposal) of the Delegations of Authority Register

Expenditure authorisation

Authorisation of expenditure is subject to the University’s Delegations of Authority Register, Travel, Procurement and Purchasing Policies

Use of appropriate chart

In cases where the allocation of a Major Account to either the Operations or Project Ledgers is not clear based on the above attributes, a decision on Ledger allocation will be jointly made by the Director of Planning & Performance and the Director of Financial Control & Treasury

Procedure

Refer to the Project and Operations Ledgers Procedure Document which details Major Account setup and maintenance processes.

6 RELEVANT LEGISLATION

7 KEY RELATED DOCUMENTS

Project and Operations Ledger Procedure

Capital Asset Management Policy - Capital Accounts are subject to this Policy.

Purchasing Procedure and Procurement Policy (under development)  – all expenditure from Accounts are subject to the provisions of this policy

Travel Policy – all travel funded from all types of Accounts (including Individual Academic Accounts) must comply with the Travel Policy.

Accounting Policies Policy

Research Indirect (Overheads) Costs Policy

Donations and Fundraising Policy

8     NOTES

8.1

Contact Officer

Finance Manager – Research Finance

8.2

Implementation Officer

Director – Financial Control & Treasury, Finance

8.3

Approval Authority

Vice-President, Finance and Group Chief Financial Officer

8.4

Date Approved

31 July 2019

8.5

Date of Commencement

1 August 2019

8.6

Date for Review

August 2022

8.7

Documents Superseded by this Policy

Project Ledger Account Policy dated 9th November 2015

8.8

Amendment History

Nil

PROCEDURE

1 PURPOSE

To support the implementation of the Project and Operations Ledger Account Policy. This document provides guidance on the process of creation and maintenance of an account in the Project and Operations ledger.

2 SCOPE

This Procedure applies to all officers, directors, members, employees, consultants and contractors of Macquarie University and its controlled entities (Specific application of these principles within the financial ledger systems of the controlled entities may vary, due to the array of financial systems used across the Group).

3 DEFINITIONS

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

4 ROLES AND RESPONSIBILITIES

Account Structure in the Finance Chart

4.1 Project Ledger – Account Structure

Accounts are created with a parent-child structure, with income and expenses recorded in the ‘child’ layer, known as the sub-group. Separate ‘child’ codes are established to separate out different sources of funding to ensure appropriate revenue recognition and reporting of the funding, see the example below:

Account:

12345 – parent layer (reporting layer only), comprising several ‘children’ or sub-groups:

12345/01 – sub-group – e.g. external income from the ARC Discovery Program

12345/19 – sub-group – e.g. external income from the ARC Fellowships

12345/20 – sub-group – e.g. internal income from the DVC-Research

Each funding source should be recorded against one subgroup except for Research fellowship grants as these are for specific salary costs, as per the example above.  The creation of multiple subgroups for a single funding source is not permitted as there are various accounting processes and external reporting requirements that are dependent on the current design of the chart.  Instances of these will be assessed on a case by case basis in conjunction with the Finance Manager Research Reporting.

The University will not recycle or reuse existing Project Ledger Accounts, in order to maintain the integrity of life to date reporting of financial information. The Finance One chart is live and all changes including remapping of Accounts are applied retrospectively.

The table below defines the use of sub-groups according to their funding source. Changes to this defined usage, introduction of additional or retirement of existing sub-groups, requires approval by Director Financial Control & Treasury or their nominated delegate.

Sub Group Range

Type of fund/Fund Source

00-17

External Research Funding

18

External Research Fellowship reserve

19

External Research Fellowship

20,23-29

Internal Funding

21

Internal Fellowship

22

Internal Scholarship

30-39,41-47

Non-Research

40

Individual Academic Account

49

Script Costs

50-59

Project Activity

99

Not used

4.1.1 Project Ledger – Types of Accounts

There are several types of Accounts, differentiated by their funding source, their purpose, the procedures required for account set-up, the permitted use of Residual Funds at the Account End Date, and the determination of the Carry Forward End Date.

The Account types apply to the Account sub-group or ‘child’ level, rather than the Account ‘parent’ level.

Note that where funding is received for a mixture of research and non-research purposes, the funds assigned for each purpose will be recorded in different sub-groups within the Account, to enable different HERDC codes to be assigned to each sub-group and apply appropriate revenue recognition.

Each Account type is summarised in the table below, with additional detail included in the Appendices.

Account Type

Purpose of Account

Externally Funded Research Accounts

Externally Funded research activities with a Written Document that specifies the income source, required use and available duration for use of the funds.

Account set-up approval: Research Services or Office of Advancement

Common sources of income are listed in Appendix A.

Externally Funded Non-Research Accounts

Externally Funded Non-Research activities with a Written Document that specifies the income source, required use and available duration for use of the funds.

Account set-up approval: Member of Executive or their nominated delegate and;

Director of Financial Control & Treasury or their nominated delegate.

Common sources of income are listed in Appendix A.

Internally Funded Research / Non-Research Accounts

Internally Funded activities with a Written Document that specifies the income source, required use and available duration for use of the funds.

Account set-up approval: Member of Executive or their nominated delegate and;

Director of Financial Control & Treasury or their nominated delegate.

Common sources of income are listed in Appendix A.

Individual Academic Accounts

An account opened for use by an individual academic to record income earned that does not have specific usage restrictions attached to the income source.

Account set-up approval: Member of Executive or their nominated delegate and;

and Director of Financial Control & Treasury or their nominated delegate.

Detailed examples of the types of income allowed within this account type, and the permitted used of these funds, are listed in Appendix A.

Funds must not be allocated to this account if they meet the definition of another Account type.

Creation of an account will be via approval by a member of Executive, or their nominated delegate and Director of Financial Control & Treasury or their nominated delegate, using the Finance Project Ledger Account Set-up Form.  Any academic with a genuine need for this account type may apply for an Account.  Account requests will not normally be accepted where the anticipated future income to be allocated to the Account is less than $1000.

The purpose, current and likely future income sources, expenditure plan, and anticipated account duration must be agreed and documented in a Finance Project Ledger Account Set-up Form.

Accounts will typically be assigned an Account End Date ten years from the Account Start Date, unless a shorter End Date is stated in the Finance Project Ledger Account Set-up Form.  A member of Executive or their delegate may periodically request a review of plans for expenditure of funds in the Account.

For the purposes of this Account type, the Account End Date acts as a review date, rather than an unmovable account closure deadline.  Extensions to the Account End Date will be subject to approval by a member of Executive or their nominated delegate. An Executive member will only refuse an extension of an Account End Date if there have been clear breaches of the use of these funds contrary to:

· the purpose for which the Individual Academic Account was established and documented at inception of the Account, or.

· purchasing and travel policies, or.

· other key terms of the Account type as detailed in this Procedure

If the Executive member refuses to extend the Account End Date, then Residual Funds will transfer to the Faculty Residual Non-Research Funds Account, for use as noted in this Procedure.

Funds in this account type are also subject to the Sunset Clause, which is a period of five years in which funds received into an Individual Academic Account can be used, or they will be transferred to the Faculty Residual Non-Research Funds Account.  At the end of each Financial Year, the carry-forward amount on an Individual Academic Account will be equal to or lower than the sum of the last five years of income into that Account.

The inclusion of this Sunset Clause is to set a balance between giving individual researchers considerable flexibility in how funds within this account type can be used, whilst also ensuring that such funds do not ‘stockpile’ over long periods of time, when they could be spent on strategically important University activities.  Exceptions to the Sunset Clause must be approved by the Vice-President Finance and Group Chief Financial Officer or their nominated delegate.

It will be assumed that all funds allocated to this account type are Non-Research (and therefore will not be considered for HERDC reporting), as all funds for Research Activities must be assigned to either an Externally Funded Research Accounts or an Internally Funded Research Account.

Funds in this account type are subject to periodic review by Department, Faculty or Finance staff.

Any unspent funds in this account type when the account owner leaves the employment of Macquarie University will be transferred to the Faculty Residual Non-Research Funds Account, for use as noted in this Procedure.

Capital

An account, typically used by Property and IT, to capture capital expenses in delivery of an approved capital project.

Account set-up approval: Project Manager

Other

Occasionally an account may be required in the Project Ledger that does not fit into any of the above Account types.  Request for such accounts must be made via a Finance Project Ledger Account Set-up Form.

Account set-up approval: member of Executive, or their nominated delegate and Director of Financial Control & Treasury or their nominated delegate.

4.1.2 Project Ledger – Project Life

Account Start Date

The date when the Account commences.  For externally funded Accounts, this date will typically be stated in the Written Document.  For internally funded Accounts, or other Accounts without a start date specified in the Written Document, the Account Start Date is deemed to be the earlier of either the date on which a Written Document is signed, or the date on which an Account is opened in Finance-One.

Account End Date

The last date by which funds are available for spending to deliver against the objectives of the requirements of a Written Document.  This date is commonly stated in the Written Document (for external Funding Providers) or will be stated in the Finance Project Ledger Account Set-up Form.  Funds will typically all be spent by this date.  Accounts where donations are the revenue source will have a default end date of ten years from Account Start Date unless otherwise stipulated in the Written Document. For externally funded projects, the final Chief Investigator Report and the final Financial Acquittal report are typically completed after this date. Procedure on extensions to the Account End Date varies by Account type; refer to Appendix A for details.

Account Active Period

The time between the Account Start Date and Account End Date is the Account Active Period. It is the period during which all key activities stipulated in the Written Document are delivered.

Carry Forward End Date

This is the last date on which funds in the Account can be accessed for any purpose.

For Externally Funded (Research or non-Research) Accounts, the Carry Forward End Date will be the 31st of December of the year following the Account End Date, unless residual funds are required to be returned to the Funding Provider, in which case the Carry Forward End Date will be the same as at Account End Date.

For Internally Funded (Research or non-Research) Accounts, Individual Academic Accounts and Capital Accounts, the Carry Forward End Date will be same as the Account End Date.

Account Residual Period

The period between the Account End Date and the Carry Forward End Date is known as the Account Residual Period.

This concept only applies for Externally Funded (Research and non-Research) Accounts.  During this time, final Chief Investigator Reports are commonly written, and residual funds are returned to the funding Provider, if stipulated in the Written Document (e.g. ARC, NHMRC) or are used by the Account owner.

4.1.3 Project Ledger – Residual Funds

This concept only applies for Externally Funded (Research and non-Research) Accounts.

 

Externally Funded Research Accounts

Externally Funded Non-Research Accounts

Account Active Period

Funds are available for use by the Account owner for spending on Research/Non-Research Activities as specified in the Written Document

Residual Period

Funds are available for use by the Account owner for spending on Research/Non-Research Activities. Usage of funds may be subject to periodic review by Department, Faculty or Finance staff.

Access to funds after Carry Forward End Date

The Account Owner will not be able to access funds after this date

Surplus Balance at Carry Forward End Date

Surplus Balance is transferred to Faculty Residual Account - Research/Non-Research in the Project Ledger. A new account is created for each financial year.

Approval to Re-Purpose Funds from Faculty Residual Pool Account

At the direction of the relevant Faculty Executive Dean, in consultation with the DVC(Research), to meet the strategic research aims of their Faculty, for twelve months from the Carry Forward End Date of the transferred funds.

At the direction of the relevant Faculty Executive Dean, in consultation with the DVC(Academic), to meet the strategic non-research aims of their Faculty, for twelve months from the Carry Forward End Date of the transferred funds.

Use of Funds from Faculty Residual Pool Account

* Allocation of funds to a new Internally Funded Research Activities Account (e.g. where the Faculty runs an internal competitive process to award research funds).  New Accounts of this type would be subject to the set-up requirements specified in this Procedure.
* Use of funds directly from the Residual Research Funds Account (e.g. to fund a Faculty-wide research conference).
* Note that funds from this Account type must not be allocated to an Individual Academic Account.

* Allocation of funds to a new Internally Funded Non-Research Activities Account (e.g. where the Faculty runs an internal competitive process to award non-research funds).  New Accounts of this type would be subject to the set-up requirements specified in this Procedure.
* Use of funds directly from the Unused Residual Non-Research Funds Account (e.g. development of Faculty-wide learning and teaching initiatives).
* Note that funds from this Account type must not be allocated to an Individual Academic Account.

Notification of Funds Available in Faculty Residual Pool Account

Relevant Faculty Executive Dean will be notified by end of January Each Year

Carry Forward Ability of Faculty Residual Pool Account

Any unspent balance will no longer be carried over to the next financial year

4.2 Operations Ledger

4.2.1 Operations Ledger – Account Structure

Accounts in the Operations Ledger are a string of eight-digit characters. Unlike the Project Ledger the structure of the Account is non-hierarchical. The first four digits represent the Discipline. The next four digits represent an activity which is unique to each Discipline, see below example.

Account 2011/0002 where 2011 is a Discipline for Ancient History within the Faculty of Arts and 0002 is the Activity for General Operating costs.

Similar to the project ledger, external revenue streams with multiple revenue recognition requirements should be disaggregated into separate accounts to facilitate appropriate revenue recognition.

The University will not recycle or reuse existing Operations Ledger Accounts, in order to maintain the integrity of life to date reporting of financial information. The Finance One chart is a live system and all changes including remapping of Accounts are applied retrospectively.

4.3 Selection Types and Codes

There are various Selection Types in Finance One that are unique to each of the ledgers. Any changes to the Selection Types or Selection Codes must be approved by the Director of Financial Control & Treasury or their nominated delegate. These Selection Types and Codes are listed in the Finance Project Ledger Account Setup Form.

5 RELEVANT LEGISLATION

NA

6 KEY RELATED DOCUMENTS

Project and Operations Ledger Account Policy

Project and Operations Ledger Account Appendix (PDF)

Capital Assessment Management Policy

Finance Project Ledger Account Set-up Form

7 NOTES

7.1

Contact Officer

Finance Manager – Research Reporting

7.2

Implementation Officer

Director – Financial Control & Treasury

7.3

Approval Authority

Vice-President Finance and Group Chief Financial Officer

7.4

Date Approved

31 July 2019

7.5

Date of Commencement

1 August 2019

7.6

Date for Review

August 2022

7.7

Documents Superseded by this Policy

Project Ledger Account Policy approved 9th November 2015

7.8

Amendment History

22 August 2019 - hyperlinks added for Finance Project Ledger Account Set-up Form
(access via TRUTH).
Back to the top of this page