Year End Briefing 202021 June 2021 Year end

Year End Briefing 2020/21 June 2021

Year end Roadshow Agenda • Self Assurance (15 mins) • Tax update relating to year end (15 mins) • Year end update (40 Mins) • Wrap up and final questions (5 mins)

Financial Assurance Update 2021

Departmental Financial Self-Assurance Return 2021

Financial Self-Assurance Identify areas for action Finance: Communication Departments: Assurance Assess internal control environment Share good practice Risk-based questions Understand where we need to do more Annual communication and review University: Assurance Highlight key processes and controls with links to information Reflect on how you manage risk Departmental declaration Assurance over certain controls

Financial Self-Assurance: timetable July 2021: • Please let us know of any updates to your HAFs/Ho. Ds - coordinators and approver are named in the return August 2021: • Coordinators receive an email with a link to the Share. Point site when the return opens • Coordinators can set up additional completers • Completion of the return – can be used as communication tool in the team • Liaise with head of department around approval 30 September 2021 – deadline for submitted and approved returns • Submission • Approval

Financial Self-Assurance: tips for completing 1. 2. 3. 4. Log in as private computer – this improves time out time. Save, save! Different people can work on different sections (but not the same section). Check you are in edit mode – otherwise you will not be able to save work. Three methods: 1. 2. 3. 5. Pencil to the left of your department name Click on the ellipsis to the right of your department name and select edit Click on your department name and once in the return in read-only mode, click edit in the ribbon. To save or print a PDF, please do not use internet explorer (chrome/edge recommended).

Financial Self-Assurance 2020 Self-Asurance feedback 2020 120% 113 returns completed 100% 80% 60% 40% 100% submission rate 20% 0% 13 reports to process owners and report to A&SC “I appreciate having the prompt to reflect on our processes and set goals for the coming year. ” Easy to complete Strongly agree Reminders clear Agree Neither Questions easy to understand Disagree Strongly disagree Exercise useful Blank eas r a f o inder m e r eel l f u f o e t s d u it a e, an v o r p “I find m are ni e a c w e e r w whe s a where e r a he rd”. t a d n i n e a t d pri od s o g a g in achiev

Risk context “Challenging to discipline PIs to follow the correct policy” cts e f f a t I “ every y l e t u l abso f the o r e b mem nt e m t r a dep ss of e l d r a g re ole. ” r r i e h t “We are reliant on all staff across the department keeping themselves up to date and seeking advice if they are unsure on any issues”

Managing Oracle Access

Managing research projects FUNDER TS & CS CONSIDERED WHEN TRANSACTION APPROVED Occassionally 1% ADMINISTRATIVE TRANSACTION REVIEW FOR COMPLIANCE WITH FUNDER TS AND CS Risk-based 20% Usually 37% Monthly 25% Annually 4% Always 62% Towards end 8% At least twice a year 15% Quarterly 27%

Managing research projects Distribution of PSA reports or equivalent to PIs Less frequently 13% Quarterly 10% Monthly 77% Monthly Quarterly Less frequently

Dashboards and action tools

Dashboards and action tools Issuing 4, 500 dashboards 2021 18 hours per year Saving over 2, 000 hours

Dashboard/action tool development: why üMake life as easy as possible for resource-constrained departments üProviding analysed data to reduce analysis effort and duplication of effort üEasy access to main messages up front üFocus on risk üMore time for action üEvidence trail in one place

Department Actions Department Review (controls) Department Review (assurance) University assurance Departmental finance/project teams Departmental HAFs/finance managers Financial Assurance Analysis and Action Tool Month-End Dashboard User Access Dashboard Projects Action Tool

What to do next: v. Look out for the launch events v. Come along to the launch events v. Encourage colleagues to attend

Contact us Financial Assurance Team • Team: • Katherine Gardiner • David Assirati • Dan Hollidge • Email: Financial. assurance@admin. ox. ac. uk • Call us via Teams • Website: https: //finance. admin. ox. ac. uk/financial-assurance-home

Year end presentation - Tax Update June 2021 Sally Mc. Kinlay – Head of Tax

Aim of this presentation • Policy Update - Tax Strategy/Tax fraud policy • International issues – Overseas taxes/Overseas payrolls • VAT changes - Brexit challenges • Corporation tax changes - Activity 25 update • Oracle changes • E-books • Medical testing • Import change • Furlough claim

Policy documents – Tax Strategy • Tax Strategy – been through Finance Committee going to GPC – annual proces • https: //finance. admin. ox. ac. uk/files/taxstrategy 1819 pdf The Tax Strategy has four core objectives: (1) To comply with mandatory tax, compliance and reporting requirements; (2) To manage the tax risks and opportunities arising from routine operations; (3) To support furtherance of the University’s charitable objectives. (4) To communicate and coordinate with HMRC, where appropriate.

Policy documents – Tax Fraud • Tax Fraud Policy – on its ways to GPC https: //finance. admin. ox. ac. uk/criminal-finances-act 2017#collapse 2172066 • Subsidiary Questionnaire - circulate • Training video https: //finance. admin. ox. ac. uk/criminal-finances-act-old#tab-1165416

International Working - Current Overseas Cases As at 26. 04. 21 180 160 Staff Count 140 Current Cases 120 OCRU Overseas Staff 100 120 115* Covid-19 -related (perm. ) >55 80 Covid-19 -related (temp. ) >120** 60 Subtotal 40 *Managed within NDM **Tracked within departments, most report 10 -20% of staff being overseas 20 0 201 201 201 202 1 2 3 4 5 6 7 8 9 0 1 >410

International Working - Overseas Registrations and Payrolls Shadow payrolls setup to satisfy overseas tax/social security withholding obligations as at 26. 04. 21 • • Germany (2: OU & Oi. B) Belgium Denmark France Norway Sweden Spain Netherlands • Australia (OUP) • USA (OUP) Germany (OU) setup in September 2019 – others setup in 2020 and 2021. The timescale for setup ranges from 6 months to 2 years Payrolls setup in collaboration with OUP due to existing CMS registrations

Imports - Brexit changes • Goods from EU are now imports • Import VAT and duty may be due • EU Free Trade Agreement • No import duty (subject to Rules of Origin!) • VAT and duty reliefs available

Before you order an import……. …you may need the following information: • Our EORI number: GB 125 5067 30 065 • Commodity/Tariff Code for the goods • Country of export and country of origin • Valuation of goods • INCOTERMS • Reason for the import/use of the goods • Any Import VAT and Import Duty reliefs? • Customs Procedure Code for import relief

INCOTERMS • Who is responsible for transport/clearance etc. • DDP (Delivered Duty Paid) supplier does everything • To claim reliefs we need to be “importer of record” • Use DAP so we are importer of record • Use our EORI number on import documents • Make sure freight forwarders know this!

Corporation Tax updates – Activity 25 • Updated tax guidelines • See the link https: //www. ox. ac. uk/search? query=activity%2025 The principal objects of the University are the advancement of learning by teaching and research and its dissemination by every means. Therefore, in order for a University activity to be considered primary purpose, it must both: • further the University’s charitable objects; and • be for public benefit and any private benefit must be incidental.

Oracle changes Medical research projects – removal of the CPC 4000 C 15 E-books and publications, natural accounts - 91120, 91210 and 91220 now all zero rated Sales category code 40 medical lab testing – 20% VAT Sales category 40 b - Diagnostic services provided by medical professionals using relevant scientific equipment in a hospital or approved facility - exempt

Furlough Update • Total claimed to 31 May is £ 12. 5 m • Finishes 30 September 2021 (subject to any Covid changes) • GLAM £ 3. 55 m, Med. Sci £ 2. 8 m, MPLS £ 1. 78 m, Estates £ 1. 36 m, Rest £ 3 m • Be aware HMRC is reviewing our claim: - Late amendments to return to work date - Failure to end furlough on employee departure – this is not automatic on CORE - Failure to end furlough prior to notice period - Placing employees on statutory leave on furlough

Questions?

Year end update Agenda • Year end Overview • New items for 2020/21 • Year end timetable and tasks • Year end sign off • External Audit • Contacts

Complex/new areas for this year end • Stocktakes • Splash GL and Templated Financial Reports • Remote/in-person audit • Deloitte onboarding

Furlough accounting • Lower value than for 2020/21 but some staff are on furlough • Grants from HMRC continue to be treated as income and are posted to departmental accounts by the Financial Reporting Team. • A central accrual will be posted for claims relating to 2020/21 where the cash has not been received by 31/07/21. • If a member of staff on furlough is normally charged to a trust or to a donation then cost should be moved off the B or C SOF and on to SOF 00000 to match the grant income. It is not possible to add furlough grants to trust funds or donations. • If the member of staff is normally charged to external trading e. g for one of the shops then the furlough credit should match the coding of the staff cost and both be coded to activity 25.

Research accounts issues • Funder cost and time extensions e, g Research Councils – increase research income and expenditure • Time extensions but no cost extension – research costs to be moved to departmental general ledger for staff who have been unable to work • Funding cost – decision needed on whether to carry on research and then costs not covered by funder so again costs transferred out of research project into departmental general ledger • Furlough credit may be needed as “a negative cost “ for some funder reporting • UK Government funding cuts significant for about 15 projects mainly in Social Sciences. Will need detailed review to see if projects are continuing and whether costs need to go to departmental costs • Greater scrutiny of potential funder bad debts due to Covid impact on their revenues

Accounts Payable capacity • Year end has traditionally seen a peak of invoices for central processing • Please spread invoice and expense submissions over July month end not the last week

Blended approach to external audit • The working assumption that the audit will be a mixture of in-person and remote working. • Any remaining local rules regarding onsite working will be respected. • Teams meetings will again be used to talk through complex areas. • The Financial Reporting Team will provide documentation to the auditors using their Share. Point site whether working onsite or remotely.

Other different areas • No cash collections organised by Cashiers due to low volumes but cash can be delivered to HBS on Tuesday or Thursday between 0900 and 1330 or keep cash in departments until organised cash collections are resumed. • Cheques can be sent to Cashiers. Twice weekly banking • Only conduct a stocktake if can be done in a COVID-secure way • No holiday pay exercise • New Templated Financial Reports have gone live • The year-end checklist (formerly form YE 01) will be embedded in the Self-Assurance return this year. • The YE 11 form for pre-award balances no longer exists but a similar verification process will be carried out.

Year-End Overview • Year end is Saturday 31 July 2021 • Four phases for departments 1 July Review accounts Complete transactional processing 2 1 – 18 August Adjust for items in the incorrect accounting period 3 18 August - 27 August Finalise departmental accounts 4 September External Audit and Sign-Off

Year-End Timetable – July 2021 Monday Tuesday Wednesday Thursday Friday 1 2 5 CASUAL PAYROLL DEADLINE 6 7 8 9 12 APPROVE ALL JULY PAYROLL INSTRUCTIONS 13 14 15 16 SEND FOREIGN CURRENCY CHEQUES TO CASHIERS FOR BANKING IN 2020/21 19 20 AP INVOICE DEADLINE FOR PAYMENT IN JULY FOREIGN CURRENCY PAYMENT RUN & STERLING (17: 00) CAPITAL COSTS ADJ 21 22 23 26 SEND STERLING CHEQUES TO CASHIERS FOR BANKING IN 2020/21 27 PAYROLL POSTED TO GENERAL LEDGER & PROJECTS 28 29 30 YEAR END LAST DAY FOR PURCHASE ORDERS AND GOODS RECEIPTING FINAL DAY FOR AP POSTINGS LAST DAY FOR EXPENSES & INVOICES TO AP (17: 00) LAST DAY CARD TERMINALS, PDQ AND ON -LINE STORE FOR JULY

July 2021 We recommend you: • Review project Pre-Award and Suspense account transactions • Check general ledger for costs relating to projects and transfer • Check general Ledger coding (including trusts, donations and external trade) • Check for incomplete transactions in the purchase to pay process • Complete transaction processing in Accounts Payable and Accounts Receivable (including internal trade) • Ensure goods receipting is up to date • Review courtesy accounts

Research Project Set-Up on Oracle • RPF cut-off date (for award setup and amendment on Oracle) • All Research Services teams except the EC team • All costings and associated paperwork should be with the teams by the end of Monday 12 th July. • EC team • All costings and associated paperwork should be with the team by the end of Friday 16 th July.

Payments • Main UK payment run dates to ensure supplier receives payment pre year end: Finance Division Payments team deadline is 5 pm on 20 July foreign & sterling payments • The deadline for central input before 31 July is 5 pm on 27 July. • Local input on the Accounts Payable module can continue until 30 July.

Estates recharges & construction charges • Adjustments required for capital costs in departmental accounts to Estates Capital Team by 20 July • Construction recharges will also be promptly charged • Routine recharges drawn together on 20 July followed by… • Final review of and recharge for material items at 30 July 2021

Departmental Equipment Listing (DEL) • Normal process at year end • 100% response required on all DEL – even Nil returns • All assets over 5 years old will be removed from the DEL after the quarter four submission – expense and capital

Inventory • Stocktakes should only take place if they can be carried out in a COVID-secure way • Stock records may not be as accurate as in prior years • Year-end stock valuation to Financial Reporting by 6 August 2021 • Stock listing by item must be in an Excel format (not pdf) • Review the itemised stock listing to ensure accuracy (eg there should be no negative stock lines) • Notify the Financial Reporting Team of any stock adjustments by 12 August 2021

External Trade – issues to be aware of • Activity 25 income to be reviewed • Allocate direct and indirect costs • Direct Costs are costs directly related to the external trade activity e. g. . goods to be sold on 100% • Indirect Costs relate to many different activities. Examples are building costs, cleaning, security, staff costs, office supplies Apportionment • Detailed guidance is available in year end guidance – or ask for help if unsure

Apportionment – a department’s choice Method Description Income Based Ratio of trading income against total sales income Equipment based Ratio of equipment usage for Trading purposes against total equipment usage Periodic charge % of staff time spent on Trading Activities Spatial Charge Ratio of floor space used for Trading Activities against total floor space • Only relevant costs which have been incurred by the department should be apportioned. • A record must be kept showing how the apportionment was calculated.

Year-End Timetable – August 2021 Monday Tuesday Wednesday Thursday Friday 2 ACCOUNTS PAYABLE CLOSES AT 08: 00 3 ACCOUNTS RECEIVABLE CLOSES AT 17: 00 4 5 PROJECT GRN ACCRUALS PROJECTS CLOSES AT 15: 00 (ACCESS REMOVED) 6 INTERIM DONATION POSTING YEAR END STOCK VALUATION TO FINANCIAL REPORTING PRE-AWARD BALANCES TO DEPARTMENTS 10 INTERIM TRUST POSTING 11 12 NOTIFY FINANCIAL REPORTING OF ANY STOCK ADJUSTMENTS. INTERIM DEPARTMENTAL DEPRECIATION POSTING CONFIRM PRE-AWARD BALANCES 13 YEAR END PROJECTS FORMS TO BE SUBMITTED YE 05, YE 07 INITIAL DEPARTMENTAL POSTING OF GL ACCRUALS, PREPAYMENTS ETC, GL GRN ACCRUALS POSTED 9 DEL SENT TO DEPARTMENTS 16 DEL RETURN TO CENTRAL FINANCE. 17 PROJECTS MODULE REOPENED FORMS 18 GL CLOSES TO DEPARTMENTS AT 17: 00 19 20 23 24 25 26 FINAL POSTING TRUST INCOME 27 FINAL POSTING DONATION INCOME LAST DAY OF CENTRAL ADJUSTMENTS FINAL DEPARTMENTAL DEPRECATION POSTING 30 BANK HOLIDAY 31 1 SEPTEMBER DEPARTMENTS CAN RUN REPORTS FOR 2020/21.

Projects Module • Project journals in early August • Full accrual for any costs incurred before year end (Form YE 05) • Prepay any costs incurred in 2020/21 which relate to 2021/22 (Form YE 07) • Pre-award (NX) projects Income only recognised at year end Balance details to be sent to departments after project close Confirm balances are correct by 12 August • Clear suspense (NZ) projects by 5 August • Approach also applies to departmental projects

Projects Module Year End Forms • Process the same as prior years for projects • Two forms • YE 05 Expenditure Accruals • YE 07 Prepayments • GRN Accruals for research are posted at year end. Be careful not to double-count on the YE 05 • Forms available on the Year End website • Deadline 13 th August 2021 • Forms will be posted on 17 th August.

Donations (General Ledger) • Restricted donation requirements • Confirmation from the donor • So. F code (C) • Greater than £ 10 k • Interim income posting on 6 August • Final income posted before 27 August • Accruing of donation income is not permitted • Refer to projects module deadlines if applicable

Trust Funds • Each trust has a legal duty to spend its income BUT only on the purposes of the trust • Spending trust money before spending departmental funds supports the University financial strategy • Accruing of trust fund income is not permitted • Review costs to determine whether they fit the purpose of the trust • Trusts fund course on 13 th July if want more detailed guidance • If you’re unsure get in touch: Trusts@admin. ox. ac. uk

Unspent Trust Fund Surpluses Unspent trust reserves for Divisions (£'m) 70, 0 60, 0 50, 0 40, 0 30, 0 20, 0 10, 0 July 2016 July 2017 July 2018 July 2019 July 2020

Holiday Pay • Agreed with auditors that there is little change year on year so this adjustment will only need to be done every 5 years. • This is a good time saving!

Departmental (GL) Accruals • Departments post their own year-end accruals/ prepayments • DFC’s will give additional guidance as will vary by division • Purpose: To match income and expenditure to the period to which it relates. • Four types of adjustment • Income Accrual • Expenditure Accrual • Prepayment • Income received in advance

Year-End Accruals/Prepayments and VAT • Expenditure accruals and prepayments should include the net amount plus irrecoverable VAT • For prepayments, find the VAT amount from GL Transaction Listing report • For expenditure accruals: • If material, use cost centre recovery classification to calculate • “Cost Centres and VAT Recovery Classifications” at https: //finance. admin. ox. ac. uk/useful-documents-for-oraclefinancials • Irrecoverable VAT – include full VAT amount on invoice • Fully Recoverable – exclude VAT • Residual Recovery – include 88% of the VAT amount of the invoice (12% recovery) • Special rates for Museums

Year-End Accruals/Prepayments Where to code? • Please use your departmental cost centre and the following natural accounts: Income accrual 19151 Expenditure accrual 22100 Prepayment 14000 Income received in advance 26900 • Use activity code 25 ON BOTH SIDES if external trade • Include the company name if the other party is a subsidiary company • Donation and Trust Income (B and C source of funds) should not be accrued or deferred (covered by central processes) • Use a reversing journal

Year-End Accruals/Prepayments • Materiality is £ 5 k for year-end • NO INTERNAL TRANSACTIONS • Departmental Capital Items - If there any accruals relating to capital items over £ 50 k not on a project, please send details to the Fixed Asset Accountant (via yearend 21 mailbox). • Complete postings by Friday 13 th August

Year-End Accruals/Prepayments Reconciliations • Departments should be able to provide reconciliations • External auditors will request to see reconciliations and backing documents at year end for large amounts and a random sample of other accruals

Year-End Timetable – September 2021 Monday Tuesday Wednesday Thursday Friday 1 2 3 6 7 8 9 10 START REVIEW OF DEPARTMENTAL RESERVES BALANCES 13 FINAL AUDIT STARTS 14 15 16 17 20 21 22 23 24 SUBMIT FINAL RESERVES FIGURES TO FINANCE 27 28 29 30 SELF ASSURANCE SIGN-OFF

September 2021 • Departmental accounts finalised • External audit • Reserves • Same re-allocation process as for 2019/20 • Deal with any audit queries • The year-end sign-off (formerly form YE 01) is embedded in the Self-Assurance return. • Due 30 th September • Make Ben Heath aware of any problems in advance

External Audit • KPMG are still the external auditors but this is their last year • Interim audit complete – no issues • Main audit for seven weeks from 13 September • Deloitte being onboarded as new auditors for 2021 -22 – limited impact for departments • Audit queries: Transactions – sales, purchases, journals Departmental visits for fixed assets • Contact the Financial Reporting team with any concerns

Areas of Concern • Reduced funding for certain research projects especially UKRI • International working costs • USS costs for employees in EU – central provision? • Extra work accounting estimates & judgements - tougher new auditing standards

Communications • Year End Manual (online) • Accounting Guidance Notes (online) • Briefing sessions • Weekly emails to Administrators and Finance Officers from 12 July 2021 • Email yearend 21@admin. ox. ac. uk

Contacts • Ben Heath Complex queries • Alan Glaum Fees • Genieve Boon Donations • Louise Stratton Fixed assets • Iwona Kedzior Investments • Matthew French GRNs • Tanya Cosier Trust funds • Cosette Jamous Inventory, Leases • Gemma Greenaway Departmental accruals and prepayments • Sam Hannis Projects (Research) • Daniel Meacoe Projects (John Fell and Departmental)

Support • The Departmental Year End Manual and detailed Accounting Guidance Notes can be found on the Finance Division website. • If you are unsure about any aspect of the year-end process, please either Contact your Divisional Office OR Email queries to yearend 21@admin. ox. ac. uk OR Contact a member of the Financial Reporting Team (contact details can be found at https: //finance. admin. ox. ac. uk/financialreporting-contact)

Questions ?