Finance Forum 29 th May 2014 29 May

Finance Forum 29 th May 2014 29 May 2014 Finance & Business Services

AGENDA 1. Introduction/F&BS Staffing Update (Peter Shipp, Deputy Director, CFFR) 2. Research Accounting – Training & HERDC (Luke Beckett, Mgr Research Accounting & Taxation) 3. Federal Budget Update (Melissa Abberton, AD MR&B) 4. AP Workflow – Tips & Tricks (Trevor Langtry, A/g AD Fin. Ops. & Systems) Finance & Business Services 29 May 2014 2

AGENDA 5. University Financial Planning Model (Natasha Murphy, Project Manager SIG) 6. Research Accounting – Costing & Pricing Update (Maria Davern, Program Mgr. RSD) 7. Accounting Standards – Technical Update (Rachelle Conry, Senior Accountant MR&B) 8. General Question Time Finance & Business Services 29 May 2014 3

F&BS Organisational Structure Finance & Business Services 29 May 2014 4

Finance Forum 29 May 2014 FEDERAL BUDGET UPDATE

THE BIG TICKET ITEMS Ø DEREGULATED FEES FOR COMMONWEALTH SPONSORED PLACES Ø CHANGES TO INDEXATION Ø RTS AND THE CO-CONTRIBUTION Ø ARC EFFICIENCY DIVIDEND 6

DEREGULATION Main Proposals: ØUniversities may charge fees above the current HECS caps from 1 January 2016. ØCGS cluster rates will be cut from 1 January 2016 by circa 20% but this will vary across clusters. ØThe number of Clusters will reduce from 8 to 5 tiers. ØScholarship Scheme will be introduced ØGrandfathering arrangements will apply. Ø FEE- HELP will continue but will be amended. 7

CGS Ø CGS cluster rates will be cut from 1 January 2016 by circa 20% but in reailty this will vary across clusters. Ø Clusters will reduce from 8 to 5 tiers. Ø Some clusters will lead to reduced student contribution under the proposed model: Ø Humanities – 10% Ø Mathematics – 29% Ø Clinical Psychology & Foreign Languages – 4% Ø The majority of clusters lead to an increase in student contributions however some significantly Ø Social Sciences – 59% Ø Communications – 46% Ø Environmental Studies – 107% !!!!! 8

SCHOLARSHIP SCHEME Ø $1 in every $5 (20%) of additional deregulated revenue will be used to fund Commonwealth Equity and Access Scholarships ØScholarship schemes will be awarded and managed by the University 9

GRANDFATHERING 10

GRANDFATHERING Status of Student Accepts and Enrolment Offer before 14/5/14 Grandfathering Arrangement Current arrangements until 2020 Accepts enrolment offer before 14/5/14 and defers commencement Current arrangements until 2020 Accepts enrolment offer before 14/5/14 and is on approved leave of absence Current arrangements until 2020 Currently supported students who finish a course and immediately enrol in another UG or PG CSP Accepts and Enrolment Offer after 14/5/14 and commences before 1/1/16 Current arrangements until 2020 Current arrangements until 1/1/16 then new arrangements until completion Students offered enrolment in a PG course but chose to defer before 1/1/16 Not guaranteed a CSP but if offered then current arrangements until 1/1/16 Accepts an enrolment offer after 1/1/16 New arrangements 11

FEE- HELP Ø Fee HELP will continue to be made available so there will continue to be no upfront fee payments Ø However arrangements will be amended: Ø Income thresholds to start repayment of HELP debt will reduce from $53 k to $51 k from the 2016/17 The repayment rate will reduce from 4% at this band to 2% on a sliding scale Ø Indexation of outstanding HELP debt will change from June 2014 Ø Rate will change from CPI, currently 2. 9% to 10 year Commonwealth Bond Yield, currently 3. 8% but capped at 6% 12

OTHER CHANGES Ø HECS/HELP benefit to support specific priority areas will cease from 2015 -16 Ø CGS being extended to Diploma, Sub Bachelor and Associate degrees – no rates yet but will be below Bachelor Levels Ø Lifetime borrowing for Fee Help and VET Help has ceased Ø FEE-HELP loan fee on fee paying UG course removed Ø VET FEE-HELP loan fee for higher level vocational courses removed Ø CGS to be extended to TEQSA certified private providers Ø Relocation Scholarship Assistance for students relocating within and between major cities removed Ø Removing Grandfathering for Student start-Up scholarship recipients 13

WHAT DOES IT ALL MEAN 14

CHANGES TO INDEXATION Ø Basis for calculating the rate of indexation on Commonwealth revenues will change from 1 January 2016 ØCurrently based on HEGI but will move to CPI Ø HEGI in 2015 will be 1. 79%, using CPI in 2015 would have indexed revenues 2. 9%. Ø Affected revenues: Ø NIF Ø HECS CGS Ø Commonwealth Scholarships Ø Research Block Grant Schemes Ø ARC 15

RESEARCH TRAINING SCHEME Ø RTS reduced for 2015/16 and will reduced $173. 7 M over 3 years Ø Sector wide 10% effect. Ø RTS students to be charged a contribution at $1700 low cost courses, $3900 high cost course per EFTS Ø Unclear how these two proposals will intersect 16

ARC EFFICIENCY DIVIDEND Ø 3. 25% Efficiency Divided on all ARC administered funding from 2015/16 ØCurrent impact estimated at 3. 5% of 81 M approximately $2. 9 M for ANU 17

OTHER RESEARCH RELATED IMPACTS Ø HC Coombs Policy Funding Ceased - $6. 4 M over 4 years (1. 6 M in 2014/15) Ø Establishment of Medical Research Future Fund on 1 st Jan 2015. The divided, Net Interest on the Capital, estimated at $276. 2 M over 3 years from 1 st July 2015 to fund research including through NHMRC. Ø Research funding of $3. 3 M for digitisation of Indigenous Cultural Resources 18

OTHER RESEARCH RELATED IMPACTS ØAdditional $150 m NCRIS funding – 1 year only Ø Boost to Dementia Research Funding – $200 m including $26 m through ARC ØCessation of ARENA Ø NICTA to move to a self funding model by mid 2016 19

OTHER RESEARCH RELATED IMPACTS Ø Rural Development Corporation’s will be given additional $100 m over 4 years to fund research in partnership with RDC’s Ø Continuation of Future Fellowships for midcareer researchers – $139. 5 m Ø Amalgamating the National Environmental Research Program and Australian Climate Change Science Program to form a new national environmental Science Program – reduction of $21. 7 m – impacts to be determined 20

OTHER IMPACTS Ø Higher Education Reward Funding ceased Ø Higher Education Participation Program – funds are to be reduced by $51. 3 m over 4 years Ø 300 additional general practitioner places – yet to understand the terms and if ANU is eligible Ø Impact of DFAT funding cuts Ø NRAS program to cease 21

AP Workflow – Tips & Tricks Erin Clements & Trevor Langtry 29 May 2014 Finance & Business Services 23

Foreign Currency Processing • • Can be confusing Invoice currency & Payment currency Need to check Tip & Technique http: //fbs. anu. edu. au/__documents/tips_an d_techniques/accounts-payableworkflow/2014_tip_siw_foreign_currency. p df Finance & Business Services 24

Work Flow Actions • Push. Back – Always comes back to the person who pushed it back - even if you change the business contact or delegate • Restart – resets each of the steps – delegate, business contact, etc. • Deny – equivalent to putting it in the bin • Reassign – a single step not the whole process around the team • Step not routed can change Business Contact/Delegate without restart • Intsert Additional Steps – key is to save after insert • Start New Path – use instead of insert so steps can be complated in parrallel rather than sequentially http: //fbs. anu. edu. au/__documents/tips_and_techniques/accountspayable-workflow/2014_tip_siw_workflow_actions. pdf Finance & Business Services 25

Monitoring Workflow Finance & Business Services 29 th May 2014 26

Monitoring Workflow Finance & Business Services 29 th May 2014 27

Monitoring Workflow Finance & Business Services th 28

Monitoring Workflow http: //fbs. anu. edu. au/__documents/tips_and_techniques/accounts-payableworkflow/2014_tip_siw_monitoring_workflow. pdf Finance & Business Services 29 th May 2014 29

Checking Of Defaulted Info • • • From Vendor From OCR Process Some review process by F&BS Staff Vendor Invoice No. Invoice Date Invoice Amount GST Amount Foreign Currency codes – Invoice and Payment Finance & Business Services 29 th May 2014 30

Stats & Turn Around Times • For 2014 – Average times per step Finance & Business Services 29 th May 2014 31

Stats & Turn Around Times Invoices Paid on-time (trade vendors only) • Progressed from really bad to bad • Key contributor is the 19. 8 days from invoice date to being scanned • Encourage Vendors to send invoice to invoice. workflow@anu. edu. au Finance & Business Services 29 th May 2014 32

Stats & Turn Around Times F&BS Turnaround Times • Aim at < 3 Days – 2014 average 0. 8 • Vendor Maintenance can slow down process Finance & Business Services 29 th May 2014 33

Duplicate Invoice Checking • Yes it checks for duplicate invoice • Where - Vendor ID, Invoice Number and Invoice Amount is the same • Getting occurrences where business areas are sending the invoice in multiple times • Encourage vendor to send the invoice to - invoice. workflow@anu. edu. au Finance & Business Services 29 th May 2014 34

Team Maintenance • Responsibility of respective areas • Contact you relevant College/Admin Finance Manager Finance & Business Services 29 th May 2014 35

Voucher Create • Don’t forget to create the voucher once the workflow process has completed • We monitor and remind but it does slow down the process Finance & Business Services 29 th May 2014 36

Why is the voucher not paid • Credits • How to Check Finance & Business Services 29 th May 2014 37

Staff on Leave • Be Proactive or reassign Finance & Business Services 29 th May 2014 38

Collaborative E-Mail • Updated Tip & Technique – http: //fbs. anu. edu. au/__documents/tips_an d_techniques/accounts-payableworkflow/2013_quickref_collaborativeappr ovals. pdf • There are constraints • Restrict use Finance & Business Services 29 th May 2014 39

ANU Financial Planning Model Project Natasha Murphy, Project Manager SIG 29 May 2014 Finance & Business Services 40

Project purpose…. . • to improve efficiency and effectiveness of the current systems for financial planning and budgeting : • deliver increased data integrity levels; • implementation of automated business processes; • accessibility and transparency of the information to a wide range of relevant staff; and • flexibility for growth in the functionality of the business model and technical support tool. Finance & Business Services 29 May 2014 41

Finance & Business Services 29 May 2014 42

Finance & Business Services 29 May 2014 43

Costing & Pricing Budget (CPB) Tool Project Maria Davern, Program Manager RSD 29 May 2014 Finance & Business Services 44

Background • CPB Tool is being developed as an outcome of the Grant Management Framework – Preparation and Revision of Grant & Consultancy Budgets Working Group Review (January 2013). • Tool has been commissioned by the DVC (Research) and Director, Research Services. • Tool will support our researchers and professional staff at application phase for externally funded research. • CPB Policy and Procedure (draft) is under consideration by Executive that establish principles and a formal cost recovery standard to improve consistency, transparency and accountability. Finance & Business Services 29 May 2014 45

Objectives of Costing & Pricing Budget Tool • To capture accurate costing and pricing budget data for externally funded research in accord with external and internal compliance requirements. • Enabling full cost estimation (direct + indirect), and to improve cost recovery, for externally funded research. • The storage and presentation of budgets for approval and price presentation. • Enabling interoperability with relevant enterprise systems. • Establishing efficient and effective workflow for improved business process management. • Producing accurate reporting and analytics. Finance & Business Services 29 May 2014 46

Present State – Costing & Pricing Budgets Driver Implication Compliance ANU is a Registered Research Agency under 29 A of the Industry Research & Development Act 1986. Under “Pricing Criteria” of this Act, it states that Organisations that do not charge ‘ordinary commercial terms’ (market rate, full cost recovery or full cost recovery plus a normal profit margin) for these services are only eligible if they are able to show that they are NOT using government resources, such as appropriations and grants, to subsidise their services. Competitive Neutrality ANU is not legally subject to ‘Competitive Neutrality’, however it has agreed to observe the principles. Cost Recovery ANU supports the principles of ‘Cost Recovery’ requirements. 2 Sustainability More research dollars in tight times. 3 Value ANU provides external funding collaborators access to world class research expertise and facilities. The cost of this access is currently not reflected in the market pricing of research and consultancies. 4 Transparency Required by funders without disclosing commercial information. 1 Finance & Business Services 29 May 2014 47

Current State – Costing & Pricing Budgets(cont) 5 Driver Implication Formal costing and pricing principles for grants and consultancies. ANU has inconsistent approaches to costing and pricing budgets including different approaches to indirect cost and in-kind contributions in application phase. There is no clear guidance or understanding of what constitutes direct, indirect and in-kind costs, and the full range of costs that should be budgeted for. 6 Audit implications of inconsistent costing & pricing practice at ANU 7 Efficiency and effectiveness There is need for clear guidance, process and structure in improvements budgeting at application stage. In particular, the recovery of full cost of externally funded research is poorly understood 8 Compliance responsibility Finance & Business Services The recent internal audit (January 2013) demonstrates the requirement for greater consistency across ANU is responsible for managing legislative, regulatory, and organisational compliance activities across research activities. Without adequate compliance practice and associated support systems and tools, ANU is at risk of incurring reputation damage. 29 May 2014 48

Approach & Progress • Agile approach to communication and collaboration has been adopted to ensure that the project progresses at a consistent pace through development of the product with opportunities for refinement following input from users. • A prototype will be developed and socialised • Project Plan and Governance arrangements in place • High level requirements near completion. • Seven requirements gathering workshops involving seven colleges and a group of School Managers completed across the University. Finance & Business Services 29 May 2014 49

Governance Finance & Business Services 29 May 2014 50

Timeline: CPB Tool Project Finance & Business Services 29 May 2014 51

Questions Thank you! Finance & Business Services 29 May 2014 52

Accounting Standards Update Rachelle Conry, Senior Accountant MR&B 29 May 2014 Finance & Business Services 53

Overview • 2013 Reporting Year – AASB 13 – Fair Value Measurement – AASB 119 – Employee Benefits • 2014 Reporting Year – AASB 10 – Consolidated Financial Statements (2014) – AASB 11 – Joint Arrangements (2014) – AASB 12 – Disclosure of Interests in Other Entities (2014) Finance & Business Services 29 May 2014 54

AASB 13 – Fair Value Measurement • Effective 1 January 2013 prospectively • A single standard that – defines fair value – sets out a framework for measuring fair value – requires disclosures about fair value measurement only when another standard requires/permits an asset, liability or an entity’s own equity instrument to be measure at fair value. • Scope exclusions – – Share based payment transactions in the scope of IFRS 2 Leasing transactions in the scope of IAS 17 Finance & Business Services 29 May 2014 55

AASB 13 – Prior FV Definition Prior fair value definition Weakness The amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arms length transaction It did not specify whether an entity was buying or selling the asset It was unclear what settling meant as it did not refer to the creditor It was unclear about whether it was market based It did not state explicitly when the exchange or settlement takes place Finance & Business Services 29 May 2014 56

AASB 13 – New FV Definition New fair value definition Improvement The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date It specifies that the entity is selling the asset (exit price) It refers to the transfer of a liability It is not a forced or distressed sale It is clear it is market based It states explicitly when the sale of transfer takes place Finance & Business Services 29 May 2014 57

AASB 13 – FV Measurement Model • Takes into account characteristics of the asset or liability that a market participant would take into account at measurement date • Assumes an orderly transaction between market participants at the measurement date under current market conditions • Assumes transaction taking place in the principle market, otherwise the most advantageous market • For non-financial asset takes into account its highest and best use • For liability reflects non-performance risk including own credit risk Finance & Business Services 29 May 2014 58

AASB 13 – Fair Value Hierarchy • Level 1: quoted prices in active markets – Unadjusted – Identical assets/liabilities • Level 2: observable, but not quoted – Based on publicly available information about actual transactions • Level 3: unobservable Finance & Business Services 29 May 2014 59

AASB 13 – Valuation Techniques • Cost Approach – Current replacement cost • Market Approach – Prices and other relevant information generated by market transactions involving identical or comparable items • Income Approach – Convert the future amounts into a single current amount Finance & Business Services 29 May 2014 60

AASB 13 - Disclosures • Disclosures previously only required for Financial Instruments now required for all items held at Fair Value • For items held at level 2 & level 3 disclosure to include additional data about the unobservable inputs Finance & Business Services 29 May 2014 61

AASB 13 - Example Finance & Business Services 29 May 2014 62

AASB 13 - Example Finance & Business Services 29 May 2014 63

AASB 119 Employee Benefits • Changes to: – Defined benefit plans – Short-term employee benefits – Termination benefits Finance & Business Services 29 May 2014 64

AASB 119 – Employee Benefits • Short-term employee benefits – e. g. annual leave – Definition of a ‘short term employee benefit revised: Employee benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which employees render the related service – Definition looks at when an employee benefit liability is expected to be settled as opposed to when it is due to be settled. Finance & Business Services 29 May 2014 65

AASB 119 – Employee Benefits • Requirement to assess annual leave obligations based on historical trends of employee activity to determine whether annual leave entitlements have historically been utilised in full within 12 months of balance date – If so will be a ‘short term liability’ measured at nominal value – If annual leave entitlements carry forward for > 12 months from balance date, entire annual leave obligation will still be measured as a other long term benefits (similar to long service leave). Current/non -current classification is unchanged only measurement is impacted as an other long term employee benefit as the liability is not expected to be settled wholly within the next reporting period. Finance & Business Services 29 May 2014 66

AASB 10 -12 – Interests in Other Entities • Interests in Other Entities – AASB 10 – Consolidated Financial Statements – AASB 11 – Joint Arrangements – AASB 12 – Disclosure of Interests in Other Entities • Changes to the definition of control, no longer based on the 50% test Finance & Business Services 29 May 2014 67

Questions? Finance & Business Services 29 May 2014 68

Next Finance Forum is Wednesday 20 th August. Please register through Horus: Course Code: FBS 036 Course Session: 11 Finance & Business Services 29 May 2014 69