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| Treasurer’s Instruction No | 102 |
| Title | Finance Manuals |
| Effective date | 1 July 2005 |
| Objective and Background | Provides instructions on the establishment and maintenance of Finance Manuals within Agencies |
| Last Reviewed Date | 31 March 2005 |
| PDF Version |  |
This Instruction was previously known as Treasurer's Instruction No 301 - Financial Manuals.
Black letter (or bold) items within these Instructions are mandatory and other plain font items are instructional or for the purpose of providing guidance only.
| Section 10 of the Financial Management and Audit Act 1990 (the Act) requires a Head of Agency to prepare and issue an accounting manual in accordance with the Treasurer’s Instructions. The section also requires that the manual be maintained in an effective and up to date form and be readily available to officers of the Agency.
In this Instruction, the term “Finance Manual” is used to describe the accounting manual referred to in section 10 of the Act. Finance Manual better describes the broad range of accounting and financial management activities that should be covered within the Manual. |
| (1) | The Head of Agency must ensure the Agency’s Finance Manual: |
 | (a) | documents all of the Agency’s accounting and financial management policies and guidelines; and |
| (b) | provides an up to date and authoritative source of information on financial management matters, which is easily accessible by staff. |
| The Finance Manual should incorporate all accounting and financial management policies and guidelines in place within the Agency.
It is at the discretion of each Agency to determine the most appropriate form of its Finance Manual and how it is made available (ie as a physical reference document, as web based documents accessed by the intranet, CD or other means). The Finance Manual may comprise a group of related individual policy documents as opposed to a single comprehensive document.
The Finance Manual should be accessible to all staff as it is the means by which all financial policy changes are determined and communicated throughout the Agency. The manual should incorporate the specific areas of financial management for which the Head of Agency is responsible under section 22 of the Act. In addition, the Manual should incorporate: |
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- details of the legislation under which the Agency operates;
- delegations in place under section 35 of the State Service Act 2000;
- a description of the State Sector financial management structure;
- the Agency chart of accounts;
- standard forms to be used in financial management;
- exemptions from Treasurer’s Instructions that affect the Agency’s accounting and financial management policies; and
- Australian Accounting Standard requirements.
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| Attachment 1 Contents Guide for a Finance Manual provides guidance as to the range of topics that should be covered in a Manual.
As a general rule, the Manual will describe procedures rather than describe how specific processes are performed. The Finance Manual may reference more detailed procedural information that is maintained separately to ensure the user has access to all information necessary to undertake the financial management tasks for which they have responsibility. This supporting documentation should describe each key financial management transaction, process and procedure within the Agency.
The Finance Manual should be easily understandable by its wide range of users. It should outline the key roles and responsibilities of staff undertaking financial management related activities within the Agency. The Manual should not merely paraphrase the Treasurer’s Instructions, but translate these obligations into the specific activities that are expected within the Agency. For example, the Manual should outline the actual role and responsibilities of an officer who authorises and certifies expenditure.
The Manual must reference other relevant user manuals, legislative references, Treasurer’s Instructions, key Agency accounting and finance systems and processes.
The Finance Manual should improve the internal control of the Agency by: |
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- providing a single, authoritative statement of accounting and financial management policies and procedures;
- reducing the risk of ad-hoc policies and procedures being developed;
- enhancing staff awareness of established procedures;
- providing a formal means by which procedural changes are made and communicated throughout the Agency; and
- enabling Agency management and internal audit to monitor compliance with Agency procedures.
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| Attachment 2 Sample Set of Key Controls contains a sample set of key controls that an Agency should consider when developing or reviewing its finance manual.
MAINTAINING THE FINANCE MANUAL |
| (2) | The Head of Agency must ensure there is a process for periodic review of the Finance Manual in order to continuously improve the policies and reflect changes in the business of the Agency, technologies and best practice trends in financial management.
The Manual needs to provide relevant current information to be a useful document. The maintenance of a Finance Manual is a significant issue, as it will always be competing with other priorities for an agency. In this regard, it is important that each Agency establishes an appropriate review process to ensure the manual is kept up to date.
The following flowchart illustrates the process for preparation and/or maintenance of a Finance Manual:
Flowchart 1: Preparation/Maintenance of a Finance Manual
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USER ACCESS TO A FINANCE MANUAL
All staff within an Agency should be made aware that the Finance Manual provides a single, authoritative statement of Agency accounting policies and procedures. The Manual should be a key reference for new and existing staff, Agency management and persons undertaking internal and external audit activities. Table 1 provides a summary of the various categories of users of the Finance Manual within an Agency.
Table 1 Users of the Agency Finance Manual |
| User | Main Purpose |
| Head of Agency | To meet statutory responsibilities imposed under sections 10, 22 and 23 of the Financial Management and Audit Act 1990. |
| Senior/middle management | As a reference to improve familiarity with financial management policies and procedures, to assist with resolving procedural issues and as an internal control document. |
| Agency staff | As a basis for understanding of procedures and to assist in the review of procedures. |
| Internal/External Audit | As an explicit statement of internal control for monitoring compliance with procedures and understanding the financial management systems of an Agency. |
Attachment 1
Contents Guide for Finance Manuals
The following section provides a guide to outline a possible structure for a Finance Manual. The structure is meant as a guide only, and an Agency may also include additional sections, if appropriate, or exclude sections that are not appropriate. |
| 1. | Introduction |
| 1.1
1.2
1.3 | Purpose, Scope and Format of the Finance Manual
Definitions
Control, Maintenance and Update of Manual |
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| 2. | The Agency |
| 2.1
2.2
2.3
2.4
2.5 | Overview
Organisational Structure
Acts, Regulations, By-Laws.
Statutory Responsibilities (responsibilities/obligations under relevant legislation and the Financial Management and Audit Act 1990)
Objectives and Policies |
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| 3. | Financial Management |
| 3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8 | Objectives
Accounting Policies
Financial Structure
Financial Systems
Financial System Controls
Government Accounting Arrangements
Internal Audit Policy
Exemptions from Treasurer’s Instructions relating to ongoing financial management activities (if any) |
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| 4. | Budgeting |
| 4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9 | Overview
Preparation and Collation of Agency Estimates
Treasury Budget Process – updating the Treasury Budget Management System (BMS)
Internal Allocation and Advice of Approved Budgets
Cash Flows
Monitoring of Budget
Requests for Additional Funds
Carry Forwards
Capital Funding |
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| 5. | Delegations |
| 5.1
5.2
5.3
5.4 | Authority to Incur Expenditure
List of Certifying Officers
Delegations under the State Service Act 2000
Other (type and extent) |
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| 6. | Revenue |
| 6.1 | Overview |
| | 6.1.1
6.1.2
6.1.3
6.1.4
6.1.5
6.1.6
6.1.7
6.1.8
6.1.9 | Types of Revenue
Revenue Collection
Key Controls
EFTPOS
Cheques
Preparation of Receipts
Refunds
Security of Moneys Received
Clearing Account |
| 6.2 | Accounts Receivable |
| | 6.2.1
6.2.2
6.2.3
6.2.4
6.2.5
6.2.6
6.2.7
6.2.8 | Definition and recognition
Terms of Credit
Credit management
Reporting
Debt Management
Inter-Agency Debts
Doubtful Debts
Write-offs |
| 7. | Purchasing |
| 7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9 | Overview
Purchasing Principles
Purchase Orders
Purchasing Delegations
Commitments Register
Information Technology
Tasmanian Government Card
Tenders
Complaints Process |
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| 8. | Inventories |
| 8.1
8.2
8.3
8.4
8.5
8.6 | Overview
Receipts of Stores/Inventory Rounding
Stock Control
Reimbursement for Losses or Damages
Disposal of Surplus Equipment or Materials
Write-offs |
| 9. | Asset Management |
| 9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
9.10
9.11 | Overview
Definition and Recognition of Assets
Valuation Basis
Asset Recognition Threshold
Revaluation
Depreciation
Asset Registers
Purchase of Assets
Maintenance and Security
Disposals/Write-offs
Impairment |
| 10. | Expenditure |
| 10.1
10.2
10.3
10.4
10.5 | Overview
Types of Expenditure
Key Controls
Treasurer’s Expenditure Control Authority
Payment of Accounts |
| | 10.5.1
10.5.2
10.5.3
10.5.4
10.5.5
10.5.6 | Preparation of Payment Documentation
Examination, Certification and Authorisation of Payment Documentation
Reimbursement of Expenses – Departmental Employees
Duplicate Invoices
Prepaid Expenditure
Tasmanian Government Corporate Card |
| 10.6
10.7
10.8 | Entertainment Expenses
Advance Accounts
Petty Cash |
| 11. | Salaries and Wages |
| 11.1
11.2
11.3
11.4
11.5 | Overview
Payroll Distribution Procedures
Unclaimed Salaries and Wages
Payroll Reconciliation Procedures
Transfer of Leave Entitlements |
| 12. | Taxation |
| 12.1
12.2 | Overview
Fringe Benefits Tax (FBT) |
| | 12.2.1
12.2.2
12.2.3 | Benefits Subject to FBT
Reportable Fringe Benefits
Annual Return |
| 12.3 | Payroll Tax |
| | 12.3.1
12.3.2 | Payroll Tax Returns
What is Taxable? |
| 12.4 | Goods and Services Tax (GST) |
| | 12.4.1
12.4.2 | Tax Invoices
Remittance and Reporting Obligations |
| 12.5 | Pay As You Go (PAYG) system |
| | 12.5.1
12.5.2 | PAYG instalment system
PAYG withholding system |
| 13. | Financial Management Information Systems
Where suitable documentation already exists separately for computer based accounting systems, the Manual need only include a general description of the system and contain an appropriate reference to the relevant Procedure Manual. In the absence of such documentation, Procedure Manuals should be written and either incorporated in the Finance Manual or appropriately referenced as above. Interfaces between various systems are to be noted. |
| 14. | Bank Accounts |
| 14.1
14.2
14.3
14.4
14.5 | Overview
Opening and Closing Accounts
Bank Account Register
Signatories to Accounts
Bank Reconciliation |
| 15. | Financial Systems |
| 15.1
15.2
15.3
15.4
15.5
15.6
15.7 | Reconciliation of Ledger/s
Postings to Ledger/s
Postings to Subsidiary Records
End of Day Processes
End of Month Processes
End of Year Processes
Chart of Accounts |
| | 15.7.1
15.7.2
15.7.3 | Overview
Role in Reporting (TFRS etc)
Updating the Chart |
| 15.8 | TFRS Interface Requirements |
| 16. | Internal Control |
| 16.1
16.2
16.3
16.4
16.5
16.6
16.7 | Overview
Accounting Systems and Internal Control
Organisational Structure
Management
Personnel
Audit Committee
Internal Audit |
| 17. | Other |
| 17.1
17.2
17.3 | Fees and Charges
Travel Guidelines
Motor Vehicle Guidelines |
Attachment 2
| Sample Set of Key Controls
The following table is an extract from the Australian National Audit Office’s Best Practice Guide “Controlling Performance and Outcomes: Better Practice Guide to Effective Control”. The publication can be accessed from the Australian National Audit Website at www.anao.gov.au
The table provides an outline of a set of key control objectives in relation to the major sections within a Finance Manual. The set is provided as a guide for consideration when preparing or reviewing a Manual. |
Accounting Function
General Ledger
Financial Reporting
Cash Balances
Payroll Calculations
Payroll Payments
Inventory Management
Asset Management
Depreciation | Control Objective
- Adequate management review and reconciliation of general ledger journal entry information.
- All journal postings are authorised by an appropriate official.
- Access to general ledger processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- Journal vouchers are entered for processing accurately, completely and only once.
- Journal vouchers are completely and accurately processed in the proper accounting period.
- The general ledger provides sufficient analysis of transactions.
- Accounting records are retained in accordance with applicable laws and regulations.
- Confidentiality of financial information is maintained.
- Financial reports are prepared accurately, completely and in an efficient and timely manner.
- Financial reports are prepared in compliance with applicable laws and regulations.
- Management are provided with adequate timely and accurate information to enable them to discharge their responsibility.
- Adequate and properly authorised bank mandates have been established.
- An effective and efficient cashiers department has been established.
- Bank reconciliations are performed for all relevant accounts on a frequent and timely basis.· Cash balances are adequately safeguarded.
- Cash balances are adequately safeguarded.
- Petty cash and cash float balances are properly controlled.
- Adequate management information is produced and is used in the management of the payroll function.
- An effective payroll function has been established.
- Periodic data used as the basis for the payroll calculation are reviewed and approved by an appropriate official.
- Access to payroll processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- Amendments to rates of pay, deductions and other standing data are properly authorised.
- All payroll data is entered for processing accurately, completely and only once.
- Amendments to rates of pay, deductions and other standing data are entered and processed completely, accurately and only once.
- Payroll data is completely and accurately accumulated in the underlying financial records.
- Payroll data is completely and accurately processed in the proper accounting period.
- Access to payroll payment processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- Payroll payments are approved by an appropriate official.
- All payroll payment data is entered for processing accurately, completely and only once.
- Payroll payment data is completely and accurately accumulated in the underlying financial records.
- Payroll payment data is completely and accurately processed in the proper accounting period.
- Payroll payments are made to the proper employee or other recipient.
- Payroll payments are prepared completely and accurately only on the basis of approved payrolls or other supporting documentation.
- Adequate management information is produced and employed in the management of the inventory management function.
- Inventory items are stored and handled in compliance with applicable laws and regulations.
- Physical inventory is appropriately verified on a periodic basis.
- All inventory transfers are entered for processing accurately, completely and only once.
- Inventory items are properly safeguarded against loss or damage.
- Adequate management information is produced and employed in the management of fixed assets.
- Effective fixed asset management and accounting functions have been established.
- Fixed asset acquisition costs are minimised.
- Fixed asset balances are periodically verified.
- Fixed assets are disposed of at the time and in the manner which is most cost effective.
- Fixed assets are properly maintained.
- Fixed assets are properly safeguarded against loss or damage.
- Access to fixed asset processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- Acquisition and disposal transaction data is entered for processing accurately, completely and only once.
- All acquisitions are authorised by an appropriate official.
- All disposals and asset transfers are approved by an appropriate official.
- Acquisition and disposal transaction data is accurately and completely accumulated in the underlying financial records.
- Acquisition and disposal transaction data is completely and accurately processed in the proper accounting period.
- Adequate management information is produced and employed in the management of depreciation policy.
- Appropriate and consistent depreciation policies are adopted.
- Changes to depreciation rates and estimated useful lives are entered and processed completely, accurately and only once.
- Changes to depreciation rates and estimated useful lives are properly authorised.
- Depreciation data is entered for processing accurately, completely and only once.
- Depreciation data is completely and accurately processed in the proper accounting period.
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Procurement
Receipt of Goods |
- Adequate management information is produced and employed in the management of the purchasing activities.
- An effective and efficient purchasing function has been established.
- Purchase orders and contracts comply with applicable laws and regulations.
- The most appropriate source of supply is selected.
- Access to purchase order and supplier processing functions/data is restricted to authorised personnel segregated from incompatible duties.
- All purchasing transactions are entered for processing completely, accurately and only once.
- Purchase orders are authorised by an appropriate official prior to the order being placed.
- Purchase orders are prepared which identify suppliers, quantities ordered and prices.
- Purchasing data is completely and accurately processed in the proper accounting period.
- Adequate management information is produced and employed in the management of the distribution and delivery function.
- An effective and efficient receiving function has been established.
- Items accepted are in accordance with those ordered.
- Access to receiving processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- Data on all goods/services received is entered for processing completely, accurately and only once.
- Receiving data is completely and accurately processed in the proper accounting period (including updating of inventory records).
- Receiving data is matched with purchase orders for goods received and differences are investigated on a timely basis.
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Invoice Processing
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- Accounts payable balances are reconciled to statements from suppliers.
- Adequate management information is produced and employed in the management of the supplier invoice processing function.
- An effective and efficient accounts payable function has been established.
- Access to invoice processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- Mathematical accuracy of supplier invoices is checked.
- Supplier invoice and credit note data is completely and accurately accumulated in the underlying financial records.
- Supplier invoice and credit note data is completely and accurately processed in the proper accounting period.
- Supplier invoice data for goods received is matched with purchasing and receiving data.
- Supplier invoices for goods received and services rendered are approved for payment by an appropriate official.
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| Payment of Accounts |
- Adequate management information is produced and employed in the management of the disbursement function.
- Payments are made by the most efficient and effective means.
- Payments are made at the most efficient and effective time.
- Access to disbursements processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- All cash disbursements data is entered for processing completely, accurately and only once.
- Cash disbursements are approved by an appropriate official.
- Cash disbursements are completely and accurately processed in the proper accounting period.
- Cash disbursements are prepared completely and accurately only on the basis of approved invoices or other supporting documentation.
- Cash disbursements data is completely and accurately accumulated in the underlying financial records.
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Sales Activities
Invoice Processing
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- Adequate management information is produced and employed in the management of sales activities.
- Sales prices and amendments are properly authorised.
- Customer orders are completely and accurately processed in the proper accounting period.
- Adequate management information is produced and employed in the management of the invoicing function.
- An effective and efficient accounts receivable function has been established.
- Access to invoice/credit processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- All goods delivered and services performed are invoiced.
- All invoice and credit note data is entered for processing accurately, completely and only once.
- Invoice adjustments and credit notes are approved by an appropriate official.
- Invoices and credit notes are accurately prepared.
- Invoice and credit note data is completely and accurately accumulated in the underlying financial records.
- Invoice and credit note data is completely and accurately processed in the proper accounting period.
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| Customer Receipts |
- Adequate management information is produced and employed in the management of the cash receipts function.
- Access to receipts processing functions/data is restricted to authorised personnel adequately segregated from incompatible duties.
- All receipts data is entered for processing accurately, completely and only once.
- Receipts are properly applied to accounts receivable balances.
- Receipts data is completely and accurately accumulated in the underlying financial records.
- Receipts data is completely and accurately processed in the proper accounting period.
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