Finance & Procurement

Financial policies

The Financial policies form part of the financial regulations, and provide more detailed information on how regulations are to be followed in important areas such as purchasing and intellectual property.

UP1 - Full Economic Costing

  1. One of the main functions of the University Research Support Unit is to advise members of academic staff on the costing of research activity using the appropriate indirect and estates rates which are calculated annually according to fEC rules. It is important that applicants should cost projects using the software costing tool, pFACT, and should seek advice on this if needed from the Research Support Unit at an early stage. All projects must be costed in this way regardless of whether the funder will pay the full cost. Understanding of the full cost of research is essential in order to set a price for the work and prior to starting negotiations with those sponsors, such as industry, who can apply discretion over whether to fund in full or not, in order to ensure that both the Academic Department and the University achieve the best possible financial support for the research to be undertaken.
  2. It is the responsibility of the Head of Department to ensure that all Research Grants and Contracts are costed in full. Grants which do not make full recovery of overhead costs may only be accepted with the authority of the Faculty Dean, and must be explicitly justified. Such decisions must be discussed fully with the Research Support Unit to ensure that future applications to the same sponsor are not prejudiced.

UP2 - Authority Limits

  1. In general, it is the responsibility of Heads of Departments to designate appropriate authority limits within their spending units. However, all units must abide by the following limits:
    • Orders for purchases costing more than £10,000 (inclusive of VAT) per individual item or group of related items - to be approved by the Director of Finance. For this purpose, purchase includes leasing and other finance arrangements.
    • Invoices and credit notes to a value greater than £10,000 - to be approved by Head of Department.
  2. All Heads of Departments must ensure that authority limits for their areas of responsibility have been detailed and notified to the Finance Office and the Head of Purchasing Services for:-
    • Approval of Purchasing Requisitions and Orders.
    • Payments.
    • Salaries & Wages. (timesheets).
  3. Deputies for authorisers must be clearly established in advance of need.
  4. All requisitions must be approved by a person who has the appropriate level of authority, prior to the issue of a Purchase Order to the supplier

UP3 - Procurement Policy

The Procurement policy should be read in conjunction with the Purchasing Processes (Procedure and Guidance).

UP4 - Equipment

  1. Computer Security
    Any computer order valued at £4,000 or more must be accompanied by an order for a computer safe ideally secured by an anchor plate in order to protect the computer processor unit and micro chips within.
    The security device should be approved by the Loss Prevention Council.
  2. Use of mobile communication devices and computers
    The University policy applies in regard to mobile phones, other mobile communication devices and computer equipment purchased or rented by the University and made available to any individual member of staff in the course of their work.
    Equipment is issued for business purposes only.  Incidental private use is permitted.  In the case of mobile phones incidental private use will be interpreted as having a cost of calls or data which is no more than £5 in any month.  If an exceptional situation arises where an individual has to use their phone personally at a greater cost then he or she should refund the personal use amount. Personal use will be subject to audit.
  3. Supply of Computer Software
    Computer software may be provided to a University employee for use at home free of charge, provided that this software is used solely in connection with work for the University.
  4. Removal of Equipment from Campus
    When equipment is to be removed from campus, on loan or otherwise, prior authorisation must be obtained from the Head of Department, using the appropriate form (Authorisation for temporary removal of equipment from campus). Security staff are authorised to challenge individuals who are seen to be removing equipment from the site.
  5. Disposal of Surplus Items
    Surplus items can be purchased by members of staff provided that the procedures for disposal of equipment (PR5) are followed.

UP5 - Documents Retention Periods

The Financial Records are now governed by the University Records Management Policy.

UP6 - General Funds

The Financial Regulations apply to all funds administered by the University, including donations and general funds created by donation to the University, and fees due to members of staff from work on University and other contracts (General Funds). Once donated to the University, General Funds become the property of the University and may not be expended or removed from the University other than in accordance with the Financial Regulations.

Heads of Department are responsible for authorising the use of General Funds created by staff employed in their department. General Funds shall be used solely to support the normal academic activities of the University, including attendance at conferences and travel by University employees. General Funds must not be used to fund the private expenditure of any employee. Private expenditure includes travel costs of the relatives and associates of employees and travel costs in excess of the University rates for the time being in force.

Any items purchased using General Funds are the property of the University and are subject to the rules and regulations covering purchasing policy, expenditure and assets for the time being in force.

General Funds remain the property of the University if the member of staff who generated them leaves University employment.

UP7 - Travel, Subsistence and Entertaining

General Expenditure

  1. The University rules for the time being in force governing the type and values of travel and other expenses that will be reimbursed apply to all funds administered by the University, including research and other grants and contracts and Departmental general funds. Only where such funds are subject to more stringent rules imposed by external bodies will any other rules be considered to override those of the University.
  2. It is the responsibility of the Head of Department to ensure that all expense claims submitted to the Finance Office for payment adhere to the rules for the time being in force. It is the responsibility of the claimant to ensure that claims submitted to the Head of Department adhere to the rules. The Finance Office will conduct such enquiries as are necessary to establish that claims apparently deficient in this respect are acceptable and will do so as quickly as possible.
  3. Claims for reimbursement should be submitted as soon as possible after the expenditure to which they relate is incurred. Claims submitted more than six months following the date that expenditure was incurred will not be reimbursed.
  4. Members of staff should avoid incurring large expenditures on behalf of the University. A system of providing advance allowances exists where it is known that large expenditure over an extended period, e.g. in undertaking a research project abroad, will be incurred. Advances will not normally be given for amounts less than £100. Where an advance is obtained, records must be kept of all expenditure incurred and a complete statement in the agreed format supported by vouchers provided to the Finance Office within 28 daysof the employee’s return.
  5. Further advances will not be made if an expenditure statement is overdue.
  6. The cheapest possible method of travel, consistent with efficient working practices, should be used. This will usually be second class rail travel or economy air fare for travel abroad and applies to all University employees, regardless of status or source of salary funding.
    Advantage should be taken wherever possible of special saver fares, discount cards, etc.
    • With the agreement of their Head of Department, staff may use first class rail travel when to do so is more efficient than travelling second class, e.g. due to infirmity.
    • With the agreement of their Head of Department, where air travel involves more than ten hours flying time, staff may consider an upgrade from economy class if the additional cost is justifiable.
    • The rules relating to rail and air travel apply to tickets paid for directly by the University as well as to reimbursements requested by members of staff. The ability to travel other than by second or economy class in the circumstances outlined above is permissive, not obligatory.
    • Justification for travel at other than second class or economy rates must accompany all claims for reimbursement or payment.
    • Payments to employees for reimbursement of travelling expenses are paid without deduction of income tax because the University has a dispensation from the HM Revenue and Customs to do so (see Appendix V). This dispensation does not cover journeys from home to work, whether within University hours, at night or at weekends. These reimbursements are always taxable and will be paid to employees through the payroll.
    • All claims for travel, subsistence, and expenses - please refer to Travel, Subsistence and Expenses Guidance Notes below.
    • The general principles of reasonableness and economy combined with efficient working practices should be borne in mind, particularly in relation to hotel and meal expenses.
    • The Purchasing Services Office maintains a list of local hotels with whom special rates have been negotiated.
    • Miscellaneous charges on hotel bills, e.g. telephone calls and fax charges, will be reimbursed when incurred on University business.

Travel, Subsistence and Entertaining – Research Support Unit

Expenditure from Research and other Grants and Contracts is subject to the University Financial Regulations and Policies and Procedures, including this Policy. This note amplifies their application to Research and other Grants and Contracts, and should be read in conjunction with the terms and conditions relating to the Grant or Contract in question.

Travel and Subsistence

Travel & subsistence costs that are incurred as an essential part of the research may be charged to research projects for investigators and staff assigned to or associated with the project. Travel should be based on the most suitable and economical form of transport. Any person travelling who is not directly connected with the research should pay for their costs at source.

Entertaining

Reasonable amounts of expenditure for hospitality and entertaining involving third parties may be charged to research projects where they are necessarily incurred in the conduct of the research.

Acceptable costs are those for meetings that are directly related to the research and where attendees are directly involved in the research.

Such meetings would normally be held on University premises and make use of the University’s catering facility. If it is not possible or practicable to hold the meeting on campus, modest expenditure off campus may be acceptable depending on the terms and conditions of the grant or contract.

In either case, it would not be appropriate to use research funds to generate future business or for general entertaining not related to the project.

As with all expenditure, the relevant sponsor’s rules & regulations should be reviewed for eligibility. Where any rules & regulations are unclear, advice should be sought from the Research Support Unit . The ability to justify costs is vital, as there is often a condition in the terms of the grant or contract allowing the sponsor the right to audit. In addition, the University might be required to perform internal checks.

Conferences

The cost of attendance at conferences is allowable where the conference is directly relevant to the research, has prior approval, if required by the funding sponsor, and where attendance is likely to result in specific benefit to the research.

The University is not normally in a position to make available conference grants.

There are certain external sources that may be approached for contributions towards travel and subsistence costs for conferences both home and abroad. Further information can be obtained from the Research Support Unit .

UP8 - Requests for ‘Private Purchase’

It is not appropriate for the University to buy any equipment, consumables or services on behalf of its employees. The University’s purchasing operations and the terms of business negotiated for University purchases are for the benefit of the University alone and it is not within the spirit of these arrangements that they should be used by members of staff.

UP9 - Intellectual Property

The full policy can be found in Ordinance 22.

Distribution of Residual Income to Staff

The current thresholds for the distribution of total residual income to staff from a given piece of IP are as follows:

Residual income up to the first £3K*:

  • 100% to staff team

Residual income between £3K* and £10K*:

  • 75% to staff team
  • 25% to Department

Remainder of residual income (after the first £10K*):

  • 14% to University
  • 20% to Faculty
  • 33% to Department
  • 33% to staff team

UP11 - Administration of University Contracts and Personal Consultancies

This Policy has been replaced by Procedure PR6 - Academic Consultancy.

UP12 - Business Ethics and Fraud

The University is a large organisation whose actions have an impact on the life and livelihood of students, employees, suppliers, business contacts, the local population etc. It is responsible for the expenditure of large sums of money from public and private sources, including research charities and individual students, and is very visible in the local and national community. For the University to function effectively, it is essential that it is viewed by all interested parties as honest, ethical and open in the conduct of its affairs, both financial and non-financial. The University Financial Regulations contain arrangements to guard against fraud and financial mismanagement, some of which are referred to below; the ethical conduct of all individuals in the University is also important.

Commitment to Ethical Behaviour

The University is committed to the highest ethical standards. In all dealings with commercial partners, the interest of the University must be paramount and personal or family gain, or the perception thereof, must be avoided.

Compliance with Laws and Regulations

All laws and regulations applicable to the business of the University must be complied with.

Gifts, hospitality, private work and conflicts of interest

Sections G5, G6 and G7 of the Financial Regulations which address gifts and hospitality, private work and conflicts of interest must be complied with.

Conflicts of interest may arise in non-financial matters where individuals are in a position to make decisions, which have a significant impact on others. Examples are in staff recruitment or promotion and in selection and assessment of students. In all cases, decision making should be open and fair and be able to stand up to external scrutiny. Situations where a conflict of interest is present should be identified so that individuals are not open to accusations of bias.

Confidential information

From time to time, individuals will become aware of confidential information, either about other individuals or about the University’s commercial or academic activities. Such information must be kept confidential and all policies relating to information security and confidentiality must be complied with.

Policy on Intellectual Property

The requirements within the University’s Policy on Intellectual Property relating to confidentiality and reporting of conflicts of interest must be complied with.

Fraudulent activity

All members of Council and employees should act with integrity at all times and should not engage in fraudulent activity of any kind. Fraud includes a range of irregularities and illegal acts characterised by intentional deception e.g. obtaining property or services by deception, false accounting. Fraud may be committed for the benefit of the organisation e.g. tax fraud, or it may be for the direct or indirect benefit of the employee or a third party.

The University is committed to ensure that it has cost-effective controls and procedures to prevent, detect, deter and deal with fraud. Financial Regulation G14 – Irregularities – outlines the action to be taken by anyone who believes that an irregularity or fraud has occurred or is about to take place.

Public interest disclosure

The University’s public interest disclosure procedures provide a mechanism for staff and students to raise serious concerns which are in the public interest, without fear of reprisal.

UP13 - Risk Management

Definitions

  • The Higher Education Funding Council for England (HEFCE) published the following definition of risk:
    ‘the threat or possibility that an action or event will adversely or beneficially affect an organisation's ability to achieve its objectives'
    [Circular 2001/28, ‘Risk Management'].
    For the purposes of this Risk Management Strategy, risks are considered as occurrences or opportunities that would impact on the delivery of the University's core business, the quality of its outputs, the achievement of its strategic goals or the excellence of its reputation. Risks can be as diverse as the threat of a global flu pandemic and a missed opportunity to enhance an existing business practice.
  • Risk management is variously defined as:
    “a process which provides assurance that: objectives are more likely to be achieved; damaging things will not happen or are less likely to happen; beneficial things will be or are more likely to be achieved.” (HEFCE)
    “the process which aims to help organisations understand, evaluate and take action on all their risks with a view to increasing the probability of their success and reducing the likelihood of failure. Risk management gives comfort to stakeholders (shareholders, customers, employees and so on) that the business is being effectively managed and helps the organisation confirm its compliance with corporate governance requirements.”) Institute of Risk Management

Institutional Attitude to Risk and Principles of Risk Management

  • The University of Bath encourages enterprise and innovation. Whilst it is robust in its approach to risk management, it is not inherently a ‘risk averse' organisation. The University has achieved considerable success since it received its Royal Charter in 1966 and is prepared to invest and innovate in order to enhance its current standing as one of the UK 's leading universities.
  • The University's objective is to be ‘risk aware' , by ensuring that risk management is an integral part of its planning and review processes, including the evaluation of new development opportunities. Effective risk management will enhance:
    • the University's reputation;
    • its financial sustainability;
    • its planning and decision-making activities;
    • its leadership, management and governance;
    • its core business;
    • its ability to innovate.
  • The approach adopted to risk management is proportionate , proactive and transparent . In order to ensure a proportionate response, the University has embedded risk management processes into the University's planning and decision-making framework. In order to ensure a proactive response, heads of academic and support departments are required to consider risk management plans alongside the development of their 5-year strategic plans. In order to ensure transparency , risk management is conducted in an open, blame-free culture which encourages all risks to be highlighted and addressed. There is also a systematic approach to reporting and reviewing risk management, involving senior managers and members of the governing body.
  • The University's approach to risk management follows the principles of the private sector Combined Code ( Internal Control: Guidance for Directors on the Combined Code (“the Turnbull guidance”) published by the Internal Control Working Party of the Institute of Chartered Accountants in England and Wales ) to the extent that:
    • University Council (its governing body) provides leadership within a framework of prudent and effective controls by which risk is assessed and managed;
    • Members of Council receive regular reports on the implementation of the University's Risk Management Plan from the Executive Committee (senior management team);
    • Council receives annual reports on institutional financial and risk management performance;
    • Council is responsible for maintaining a sound system of internal control that supports the achievement of policies, aims and objectives, while safeguarding the public and other funds and assets for which it is responsible.

Roles and Responsibilities

  • Council is responsible for agreeing the University's key risks, approving the framework for risk assessment and management, monitoring risk management activities, and for the continuous process of calibrating the institution's risk appetite. Council has a key role in the management of strategic risk.
  • The Vice-Chancellor is responsible for maintaining and promoting the operational efficiency of the University's financial management, strategic management and risk management processes. The Vice-Chancellor is the University's Designated Officer and is “r esponsible and accountable to HEFCE (and ultimately to Parliament) for ensuring that the institution uses HEFCE funds in ways that are consistent with the purposes for which those funds were given, and complies with the conditions attached to them. These include the conditions set out the Further and Higher Education Act 1992 and in this [the HEFCE] financial memorandum”.
  • Executive Committee is responsible for advising the Vice-Chancellor on the assessment of risk, the development of the risk management action plan and the implementation of the risk management action plan. Executive Committee is also responsible for submitting an annual report on risk management to the University Council.
  • Audit Committee is responsible for reviewing the effectiveness of the risk management, control and governance arrangements, and in particular to review the external auditors' management letter, the internal auditors' annual report and management responses.
  • Heads of Department are responsible for the assessment and management of operational and project risk at departmental level. Heads of department are also responsible for horizon scanning activities to provide early warning of strategic risk and for identifying operational risk associated with the business processes of other departments.
  • The Deputy Vice-Chancellor and the Director of Finance are responsible for co-ordinating operation-wide planning, risk management and resource allocation activities.
  • The Vice-Chancellor's Office is responsible for the implementation and development of the University's risk management activities and for the publication of the University's Risk Register and Risk Management Plan.

Identifying Risks

  • The University's Corporate Plan articulates its Vision, Mission and business objectives for the next three years. The University's approach to risk management is objective-driven and its Risk Management Strategy outlines the framework of systematic processes that the institution has put in place to identify, evaluate, manage and review the risks associated with the delivery of its Corporate Plan. The Corporate Plan is approved by Council, the University's governing body.
  • Risks are identified through various self-assessment exercises. Strategic and operational risks are identified through the University's annual planning cycle, whilst most project risks are identified by individual project management teams. The annual planning process provides a bottom-up operations-wide assessment of operational and project risk. The University's Risk Register provides a top-down strategic assessment of risk, and incorporates the strategic risks identified during the annual planning process. Executive Committee is responsible for undertaking the strategic assessment of risk and heads of academic and support departments are responsible for undertaking the assessment of risk in the department for which they are responsible.
  • The University's annual planning cycle is a systematic process for integrating strategic planning, financial planning, environment scanning, performance review, risk management and resource allocation. Departments are asked to submit risk management action plans alongside their 5-year departmental plans on an annual basis. The Vice-Chancellor's Office is then responsible for ensuring that the operational and strategic risks identified at departmental level are incorporated into the University's Risk Register as appropriate. From 2006-07, the annual planning template also requires departments to report on their business continuity activities.
  • The University's Risk Register contains eight categories of risk, six associated with the delivery of the University's long term aims and two associated with the pre-requisites necessary for the delivery of the University's long term aims:
    • reputation and international profile
    • research
    • learning and teaching
    • knowledge transfer
    • strategic partnerships
    • human resources
    • estates and infrastructure
    • financial issues.
    All departmental risk registers and risk management plans are also required to relate back to the delivery of the University's strategic goals.
  • The University's Risk Register is updated annually and approved by Council. Departmental Risk Management Action Plans are updated annually, approved by departmental management groups and reviewed by the Deputy Vice-Chancellor and Director of Finance.

Evaluating Risks

  • Having identified risks at institutional or departmental level, they are evaluated in terms of the likelihood of their occurrence (on a scale of 1-9) and the level of impact that they would have if they did occur (on a scale of 1-9). When multiplied together, these give a numerical value for the ‘gross' risk. The University's Risk Register publishes the ‘net' risk for the most significant risk elements associated with the 8 risk categories outlined above. The net risk, or residual risk, refers to the numerical assessment once the likelihood and impact values are adjusted to take account of any mitigation actions already in place.
  • The University finds any ‘net' risk with a numerical value above 50 to be of ‘very high strategic importance'. This represents the University's risk tolerance threshold. Addressing risk elements in the ‘very high strategic importance' category is the University's top risk management priority. Executive Committee submits an Annual Report to Council identifying how the implementation of mitigation activities has affected the likelihood or impact of the individual risk elements in the University's Risk Register. This provides Council with reassurance that unacceptable risks are being managed at an institutional level.

Addressing Risks

Having identified risks, the University deploys four methods for addressing risk:

  • tolerate the risk – where the resource required to address a risk is disproportionate to the beneficial impact or there is no action that the University could take to lessen the likelihood or impact of the risk then it may accept the risk, whilst monitoring the situation regularly. E.g. the University recognises the risk posed by the ageing infrastructure around Parade but is not in a financial position to tackle this on a timescale other than that dictated by availability of external capital investment
  • transfer the risk – where the University seeks through insurance or a third party agreement to transfer some share of the risk to an external organisation. E.g. contract with IP2IPO for the exploitation of institutional intellectual property or insurance cover.
  • treat the risk – where the University puts in place mitigation actions to contain the risk to an acceptable level. E.g. the University identified a weakness in its corporate approach to international activities. In order to reduce this risk, it gave special responsibility for international strategy to the Pro-Vice-Chancellor (Strategic Developments) who is currently leading the response to international opportunities and developing an institutional International Strategy document.
  • terminate the risk – where the University decides not to pursue an activity or an opportunity because the ‘net risk' to its core business, quality of output, attainment of its strategic goals or reputation is too high. E.g. the withdrawal of academic programmes that consistently fail to achieve their intake targets

Where the University opts to treat the risk, an individual/committee/department is designated to take responsibility for implementing agreed mitigation activities to a specified timescale. Progress at departmental level is monitored annually. Progress at institutional level is normally monitored by the Executive Committee which normally receives a progress report on two areas of risk at each meeting.

Review and Reporting Arrangements

  • Departmental risk registers and management plans are reviewed annually by the Deputy Vice-Chancellor and Director of Finance as part of the annual planning cycle. This review of operational and project risk at departmental level informs the re-evaluation of the likelihood and impact of risk elements in the University's Risk Register.
  • The Vice-Chancellor's Office is responsible for preparing regular risk management progress reports for Executive Committee. These reports are standing items on the Executive Committee agenda and each one focuses on two aspects of the University's Risk Management Plan. Following consideration of the progress reports, Executive Committee forwards the documentation to the next meeting of Council. The intention is for all those with a net risk score above 50 and a selection of lower scoring risks to be reviewed by the Executive Committee within an academic year.
  • Executive Committee and Council receive an annual report on Risk Management. The Vice-Chancellor's Office is responsible for preparing the report. The University's Risk Register is updated annually in order to reflect issues emerging from the annual planning cycle and the impact of agreed mitigation activities recorded in the annual report on Risk Management. Risks can be added or withdrawn if the perceived changes in the risks are significant enough.
  • Council receives information on institutional performance in the form of key performance indicators designed to evaluate progress against the University's strategic goals. The University's Corporate Plan has been formatted to facilitate this by linking the strategic aims to activities, milestones and performance measures.
  • As required by the HEFCE Audit Code of Practice, the Audit Committee reports an annual opinion to Council (and subsequently to the HEFCE) on the adequacy and effectiveness of the University's arrangements for risk management, control and governance. It does this by reviewing the external auditors' management letter, the reports written by the Internal Audit Department and other information including management responses. The University's Risk Register is used to help inform the schedule of activities of the Internal Audit Department 

UP15 - Personal Subscriptions

Corporate subscriptions

Corporate subscriptions are where the subscription is in the name of the University or a specific department rather than a named individual. These are treated like any other business expenditure.

Personal membership subscriptions to professional bodies and learned societies (staff)

The general rule in relation to staff is that personal subscriptions to professional bodies and academic and learned societies are a personal liability and as such should not be charged to any funds administered by the University. An individual can claim their own income tax relief on subscriptions to professional bodies provided that the body is on the HM Revenue & Customs list of approved organisations

Exceptions to this general rule may be approved in the following situations:

  • Where the subscription is associated with a role rather than an individual, e.g. an association of heads of a subject department
  • Where the Head of Department has deemed that individual membership is necessary for the purposes of course accreditation or research functionality.
  • Where it can be shown that the membership results in a net saving in costs by giving free or reduced subscriptions to professional journals and/or a reduced fee for the attendance at a conference. Where the former, it is a necessary condition that the journals or other publications and any other membership benefits accrue to the University and not just to the individual member of staff.

Approved subscriptions to bodies that are not on the HMRC approved list will incur a tax charge. This will be met by the University and will be charged to the same project code as the subscription. Heads of Department should bear this in mind when considering the costs and benefits of approving a subscription.

Individuals should always seek Head of Department approval before committing to a membership they expect the University to pay for.

Subscriptions to journals and other publications

The cost of journal subscriptions may be met from funds held by the University provided that the expenditure is relevant to the individual’s work at the University. The publication must be made available to others as required and remain with the University on termination of employment. Wherever possible the subscription should be in the name of the University or a department and be paid for directly by the University. If that is not possible, then the publications should be delivered to a University address and not a personal address.

Student subscriptions

Subscriptions may be paid by the University on behalf of students provided they are wholly necessary for the purposes of their study

UP16 - Investment Policy

Investment Policy

 


Finance & Procurement April 2016