Financial Authority Policy

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Application

1. This policy applies to all staff of the University of Waikato.

Purpose

2. The purpose of this policy is to set out:
   1. the financial authority limits that apply to single transactions for particular categories of staff, and
   2. responsibilities and accountabilities in relation to financial authorities.

Scope

3. This policy applies to the purchase and procurement of goods and services and does not apply to academic agreements or staff appointments. Financial authorities related to academic agreements are set out in individual academic agreements. All staff appointments are subject to the approval of the Director of People and Capability.

Definitions

4. In this policy:

budget holder means a person who is responsible for the management of an allocated budget

business-as-usual compliance payment means a payment that is required by law or is necessary to the day-to-day operations of the University, such as payroll, tax, and utilities

capital asset means an asset that has been capitalised in accordance with the Capital Asset Policy

tender means the process before a purchase, involving the evaluation and selection of a supplier based on the supplier’s written offer to supply goods and/or services at an agreed price

transaction means a payment or a commitment to make a payment from one person or account to another (e.g. purchase order)

whole-of-life cost means the total cost, including purchase cost, operating cost, maintenance cost and residual value (where applicable) for the life of a contractual term.

Related documents

5. The following documents set out further information relevant to this policy:
   • Capital Asset Policy
   • Desktop Computer Standards: Provisioning, Replacement, Disposal and Redeployment
   • Financial Ethics Policy
   • Fixed Asset Guidelines
   • Governance and Management Guidelines
   • Independent Contractor Policy
   • Koha, Donations and Sponsorship Policy
   • Procurement Policy
   • Tender Manual
   • Travel Policy
   • Treasury Management Policy

Legislative and policy framework

6. This policy takes account of the Education and Training Act 2020, which includes provisions for Council to delegate its functions and powers and for those functions and powers to be sub-delegated (sections 283(1) and 285(1)), and Council’s delegations under its Governance and Management Guidelines.

Financial authority of the Vice-Chancellor

7. The maximum financial authority of the Vice-Chancellor for a single transaction is $5 million; any single transaction exceeding $5 million is subject to the prior approval of the Council.
8. The maximum financial authority of the Vice-Chancellor for approving research, education or commercial contracts is $5 million; any contract exceeding $5 million is subject to the prior approval of the Council.
9. The Vice-Chancellor must report to the Capital and Finance Committee and Council any single financial transaction of $1 million or more, unless it is a business-as-usual compliance payment (see clause 19 of this policy).
10. For any budget category (relevant categories are as set out in the Statement of Financial Performance), the Vice-Chancellor may approve additional operating expenditure of up to 5% or $1 million more than the original operating budget, whichever is larger, provided that they are confident that the financial objectives set by Council will be attained (including achievement of budgeted surplus); the Vice-Chancellor must report such approvals to the next meeting of the Capital and Finance Committee.

Financial authorities of budget holders

11. The Vice-Chancellor delegates to budget holders financial authorities and responsibilities for managing their respective budget allocations.
12. The Vice-Chancellor delegates to budget holders financial authorities for single transactions to the limits set out in Appendix 1 of this policy.
13. The financial authority limits take into consideration the total whole-of-life cost of a commitment, including purchase cost, operating cost, maintenance cost and residual value (where applicable) over the whole of the period of the commitment.
14. The limits listed in Appendix 1 of this policy apply to whole single transactions; transactions must not be split to fit within the maximum authority.
15. Budget holders may only authorise transactions for areas where they are the budget holder.
16. The delegations set out in this policy are standing delegations made in relation to positions within the University, rather than named individuals; if an individual moves from one position within the University to another, the delegations relating to the initial position no longer apply to that individual.
17. Budget holders may, with the approval of their line manager and the Director of Finance, temporarily sub-delegate their financial authorities to another staff member, e.g. to manage approvals in times of extended periods of leave.
18. The Vice-Chancellor may review, from time to time, the limits set out in Appendix 1 and/or Appendix 3 of this policy; any changes to Appendix 1 and/or Appendix 3 approved by the Vice-Chancellor must be reported to the Capital and Finance Committee and Council.
19. The Vice-Chancellor delegates financial authorities for business-as-usual compliance payments as set out in Appendix 2 of this policy.
20. The Vice-Chancellor may at any time restrict or revoke the financial authority of any staff member or the application of the financial authorities set out in Appendix 1, Appendix 2 and/or Appendix 3 of this policy with respect to any particular staff member, category of staff or transaction type.
21. Budget holders must not commit University funds beyond their specified annual budget allocation unless the Director of Finance has first approved the commitment in writing.
22. Budget holders with a separate capital budget must not transfer allocations from a capital to an operational budget, or vice versa.

Responsibilities of line managers

23. Line managers are responsible for ensuring that their staff comply with this policy.
24. Line managers must report any breaches of this policy to the Director of Finance.

Approval of financial commitments

25. This policy establishes the delegated authority limits of a member of staff for a single transaction; the procurement process or purchase must also adhere to the Procurement Policy and/or Purchasing Policy.
26. Staff must not commit University funds beyond the current budget year unless:
    1. in the case of commitments of up to three years, the commitment has first been approved by the Chief Operating Officer or the Director of Finance; or
    2. in the case of commitments of between three and 10 years, the commitment has first been approved by the Vice-Chancellor; or
    3. in the case of commitments of 10 years or more, the commitment has first been approved by Council.
27. Any financial commitment covering a period longer than five years must be reported to the Capital and Finance Committee and Council.
28. Any single operating expenditure commitment more than 5% higher than the operating budget for the relevant category (relevant categories are set out in the Statement of Financial Performance), unless covered by corresponding additional income, is subject to the prior approval of the Capital and Finance Committee and must be reported to the following meeting of Council.

Research, education and commercial contracts

29. Research, education and commercial contracts, where the University has been engaged to provide services or deliver outcomes, require delegated authority to approve the commitment for the University to deliver the contract.
30. The Vice-Chancellor delegates to budget holders financial authorities for the approval of research, education or commercial contracts to the limits set out in Appendix 3 of this policy.
31. The commitment for single transactions within such contracts are subject to the delegated authority limits set out in Appendix 1 of this policy. 

Disposal of capital assets

32. University capital assets must not be disposed of without the prior approval of the Director of Finance.

Debt write-off

33. The Director of Finance has authority to write-off any individual financial debt up to and including $25,000.
34. The Capital and Finance Committee has authority to write-off any individual financial debt of more than $25,000.
35. The Director of Finance  must report to the Capital and Finance Committee all decisions to write-off financial debt.
36. The Director of Finance has authority to approve credit notes of any value, and the Associate Director of Financial Operations has authority to correct invoices raised incorrectly.

Capital expenditure

37. The Director of Finance and Analytics must report to the Capital and Finance Committee any individual item of capital expenditure valued at more than $200,000.

Monitoring of financial authorities

38. The Director of Finance must conduct annual reviews of all financial authorities to ensure that delegations are appropriately and accurately recorded, and make recommendations to the Vice-Chancellor as necessary.

Responsibility for monitoring compliance

39. The Director of Finance is responsible for ensuring compliance with this policy, and is required to report instances of non-compliance to the Capital and Finance Committee.
40. Breaches of this policy may result in disciplinary action under the Staff Code of Conduct.