Financial Delegations Procedure

Purpose

Financial devolution is a key feature of the University's financial systems with considerable autonomy given to cost centres to spend their budgets. Delegations allow the Vice-Chancellor to operate the business of the University by allowing specific employees authority to expend funds.

Organisational scope

This is a University-wide Procedure.

Definitions

FSD

Financial Services Division

Content

1. Introduction

1. The Education and Training Act 2020 defines the University as a body corporate (S272) with the Council as the governing authority (S271). Power is vested in the Council but may be delegated in accordance with Section 285, which states in S285(1) that:
   1. An institution's council may, from time to time, either generally or specifically, in writing signed by at least 2 members of the Council, delegate to the chief executive of the institution or to a committee appointed under section 283(4) of this Act, any of its functions or powers under this Act (except the power to appoint a chief executive) or under any other Act.
2. The powers are extensive, although limited by Section 282(4) which states:
   1. …an institution may not exercise any of the following powers without the written consent of the Secretary:
      1. the power to sell or otherwise dispose of assets or interests in assets
      2. the power to mortgage or otherwise charge assets or interests in assets
      3. the power to grant leases of land or buildings or parts of buildings
      4. the power to borrow, issue debentures, or otherwise raise money
3. This restriction is tempered by Section 282(5) which allows these activities to be undertaken within Minister determined levels (for a, b, and d above) or for leases, for terms of less than 15 years.
4. The application of money is covered by Section 304 which provides:
   1. …the money of an institution shall be applied only:
      • in payment or discharge of the expenses, charges, obligations or liabilities incurred or undertaken by or on behalf of the institution; or
      • in payment of any remuneration or allowances payable to members of the Council or of committees of the Council or to the chief executive or members of staff of the institutio; or
      • in making any other payments that are required or permitted by this Act or any other enactment to be made out of the money of the institution

2. Contracts

Contracts are categorised as follows:

1. Category 1: Purchase Contracts with Suppliers for Goods and/or Services
   1. Category 1 contracts shall be approved and signed by the initiators, subject to the delegations and budget limits specified in the Schedule of Financial Delegations.
   2. Contracts or agreements which commit to expenditure beyond the annual budget or exceeding the available carry forwards shall be considered as Category 3 contracts.
   3. Operating Leases which continue beyond the annual budget and all Finance Leases, regardless of period, shall be considered to be Category 3 Contracts.
   4. Central recording is not required for Category 1 contracts.
2. Category 2: Research, Commercial and Teaching Contracts to Provide Goods and/or Services
   1. Category 2 contracts, regardless of value, shall be submitted by the initiator to the Deputy Vice-Chancellor Research & Enterprise, or their delegated authority, for final approval and signing.
   2. Category 2 contracts are required to be recorded centrally.
3. Category 3: All Other Contracts (except Employment Contracts)
   1. Category 3 contracts, regardless of value, shall be submitted by the initiator to the Chief Operating Officer, or their delegated authority, for final approval and signing.
   2. Category 3 contracts are required to be recorded centrally.

3. Financial Delegations explanatory notes

1. Staff Delegations
   1. Policies and procedures for the appointment of staff are held by Human Resources Division.
2. Capital Delegations
   1. These delegations apply to the purchase, sale and disposal of capital assets.
   2. The transfer, sale or disposal of assets is restricted by section 282 of the Education and Training Act 2020, which requires Ministry of Education approval before any transfer, sale or disposal can proceed.
   3. Assets, other than land or buildings, may be transferred, sold or disposed without Ministry of Education approval where the book value is less than a sum determined by formula provided by the Ministry of Education (as calculated annually and advertised by Financial Services Division). The transfer, sale or disposal of land and buildings, including the full or partial demolition of buildings, requires the approval of the Ministry of Education regardless of value.
   4. Ministry of Education approvals are required to be obtained before any transfer, sale or disposal is commenced as retrospective approval is not permitted. The Chief Financial Officer will arrange approval on request.
   5. The delegation also covers the ability to transfer funds from operating budgets to capital budgets.
   6. Cost Centre heads may delegate their authority for expenditure approval within the constraints outlined above, which are also in accordance with the University’s Schedule of Financial Delegations. Cost Centre heads should also ensure that the relevant Delegated Signing Authority form has been completed and submitted as per process.
3. Operating Expenditure Delegations
   1. These delegations apply to expenditure other than capital expenditure. Operational budgets are approved annually.
   2. These delegations refer to expenditure within the current approved budget. Any expenditure commitments beyond the current approved budget are excluded from this delegation. Such commitments should be treated as Category 3 contracts.
   3. The delegation for operating expenditures is subject to, and should be read in conjunction with, the delegations for staff, contract delegations and carry forward balances.
   4. Cost Centre heads and research grant holders may delegate their authority for expenditure approval within the constraints outlined above, which are also in accordance with the University’s Schedule of Financial Delegations. Cost Centre heads should also ensure that the relevant Delegated Signing Authority form has been completed and submitted as per process.
4. Carry Forward Balances
   1. Specified Cost Centres within the University are entitled to carry forward any variances from budget in terms of the Financial Monitoring and Control Policy.
   2. Carry forward balances are held at Activity Centre level.
   3. Delegations for the expenditure of carry forward balances are subject to the net carry forwards at each organisational level being positive. That is, no Activity Centre carry forwards may be used when either the aggregate Cost Centre carry forward or the aggregate Divisional carry forward is negative.
5. Notification of Delegations by Cost Centre Heads
   1. Cost Centre heads should ensure notification of delegation by completing and submitting the Delegated Signing Authority Form (available from the Financial Services Forms Store linked below).
   2. If you require any assistance on the completion of this form please contact:
      Financial Accountant
      Email financial.accountant@otago.ac.nz

Related policies, procedures and forms

• Financial Delegations Policy
• Schedule of Financial Delegations
• Financial Services Forms

Contact for further information

For further information, contact:

Financial Controller
Email financial.controller@otago.ac.nz