Finance Manual – Financial Management for Schools

Section 17 End of Year (31 December)

17.1 Overview

The End of Year financial policy described in this section must be implemented to enable the completion of End of Year (31 December) and the start of the New Year in CASES21.

17.2 Timing of CASES21 finance end of year (31 December)

17.2.1 Mandatory policy (Must do)

17.2.1.1

The review and clean-up of the Families (Receivables module) must be done for exiting students prior to running CASES21 Administration End of Year.

17.2.2 Prohibited policy (Must not do)

17.2.2.1

The End of Year (31 December) CASES21 Finance rollover must not be done until 1 January of the New Year.

17.3 End of year (31 December) process in CASES21

17.3.1 Mandatory policy (Must do)

17.3.1.1

Schools must read CASES21 Finance Business Process Guide Section 11 — End of Year and follow the guidelines to complete the End of Year (31 December) process.

17.4 Finalise data entry for end of year (31 December)

17.4.1 Mandatory policy (Must do)

17.4.1.1

Data entry in CASES21 against the new period must not commence until all entries for the current year have been entered and the End of Year (EOY) processes are completed.

17.4.1.2

Schools must create a folder on the P:\ Drive to store CASES21 FINANCE EOY files. For example: Name of file CASES21 FINANCE EOY YYYY files (as per CASES21 Finance Business Process Guide Section 11 – End of Year) (login required).

17.5 End of year process

Creditors (Accounts Payable)

As part of best practice financial management, schools must review regularly (preferably monthly) all creditor balances. This includes reviewing invoices processed in creditors (accounts payable) to ensure the most accurate and up-to-date information is available.

17.5.1 Mandatory policy (Must do)

Creditor balances (Accounts Payable)

17.5.1.1

All unpaid invoices as at 31 December must be entered into the month of December in CASES21 creditors (accounts payable module). This does not mean that the payment must be made from the bank, only that the invoices received are entered into CASES21. Payments against the bank are still made within the terms of the purchase.

17.5.1.2

All outstanding creditor balances, orders, invoices and credit notes must be reviewed (preferably monthly) to ensure accuracy of CASES21 data.

17.5.1.3

Any unallocated creditor items identified must be investigated and any rectifying transactions required processed before the End of Year rollover is completed.

17.5.1.4

All invoices entered on CASES21 that relate to the new school year must have a balance day adjustment processed to reflect the expense in the correct year.

For example, the deposit for a camp being paid in the current year when the camp is to be held in the new school year. The balance day adjustment will reflect this as a Prepaid Expense.

Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments for further guidance.

17.5.1.5

Refer to CASES21 Finance Business Process Guide Section 11 — End of Year for further guidance.

Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments for further guidance.

17.6 Accounts receivable

As part of best practice financial management, schools must regularly (preferably monthly) review all accounts receivables (families and sundry debtors) balances. This includes reviewing invoices processed in accounts receivables to ensure the most accurate and up-to-date information is available.

17.6.1 Mandatory policy (Must do)

17.6.1.1

Ensure invoices relating to the month of December are entered by 31 December into CASES21 Receivables module.

17.6.1.2

All account receivable balances must be reviewed (preferably monthly) to ensure accurate balances are recognised in CASES21 Receivables module.

Families

17.6.2 Mandatory policy (Must do)

17.6.2.1

All Family Invoices must be reviewed prior to completing the End of Year process and only those that are collectable and align with the Parent Payments Policy must remain in CASES21.

Refer to the Parent Payments Policy for further guidance.

17.6.2.2

The validity of unallocated Family Receipts and Family Credit Notes must be checked. Any unallocated items identified must be investigated and transactions allocated before the End of Year rollover is completed. Only valid transactions must be transferred into the New Year.

17.6.2.3

If any invoices for the new school year are raised in the current school year, the school must perform a balance day adjustment. Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments for further guidance. This is to ensure the revenue is recognised in the correct year.

Sundry Debtors

17.6.3 Mandatory policy (Must do)

17.6.3.1

Only valid invoices must be transferred to the New Year. (All outstanding sundry debtor invoices will transfer to the New Year).

17.6.3.2

All outstanding invoices, credit notes and unallocated receipts must be reviewed, and appropriate action taken if necessary prior to End of Year rollover.

17.6.3.3

Sundry Debtor invoices entered in the current year that relate to the new year will require a balance day adjustment.

Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments for further guidance.

Doubtful Debts

17.6.4 Mandatory policy (Must do)

17.6.4.1

The End of Year procedures for Doubtful Debts must be completed if the school has transacted journal entries earlier in the year to adjust for doubtful debts. Failure to do so may result in negative revenue on Sub Programs in the next year.

17.6.4.2

If a school has adjusted for doubtful debts, they must refer to CASES21 Finance Business Process Guide Section 2 — Sundry Debtors to establish the correct steps to take to either recover or write off the debt.

17.7 Balance day adjustments

The recording of transactions under an accrual system may result in revenue and expense items being recognised in the current period when they actually relate to a future period.

A common example of this may be the invoicing of Extra-Curricular Items and Activities for the next school year in December of the current year.

17.7.1 Mandatory policy (Must do)

17.7.1.1

School must carefully read CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments to determine if they need to make any of these type of adjustments.

17.7.1.2

Schools must process journal entries to adjust the accounting records to recognise the revenue or expenses in the correct period.

17.8 Prepaid expenses

17.8.1 Mandatory policy (Must do)

17.8.1.1

Review all prepaid expense balances to ensure that only current balances are recognised in CASES21 in the relevant Chart of Account code 12005 Prepaid Expense as at 31 December.

17.9 Revenue in advance

This involves amounts received in advance for future costs or future services yet to be performed.

17.9.1 Mandatory policy (Must do)

17.9.1.1

Undertake any balance day adjustments for revenue in advance. See CASES21 Finance Business Process Guide Section 10 Balance Day Adjustments for further guidance.

17.9.1.2

Regularly review the balance of revenue in advance to ensure its validity and take appropriate action if required.

17.10 Bank reconciliation and petty cash

17.10.1 Mandatory policy (Must do)

17.10.1.1

All monies, including the petty cash float, must be receipted and banked by 31 December.

17.11 Investment and Commitment details

17.11.1 Mandatory policy (Must do)

17.11.1.1

Schools must hold all surplus funds (excess of 2 months operating expenditure) in a CBS linked account.

17.12 Financial Commitment Summary

The Department’s policy requires schools to identify the intended purpose of any accumulated funds, including identification of an appropriate School Operating Reserve. Refer to the School Cash Reserve Benchmark Policy and Guidelines and the Financial Commitment Summary Guidelines (found under the Resources tab in the Finance Manual).

17.12.1 Mandatory policy (Must do)

17.12.1.1

Schools must complete a Financial Commitment Summary report before running End of Year processes.

The Financial Commitment Summary Guidelines are available on the Resources tab.

17.12.1.2

The Financial Commitment Summary Report must be:

• saved to the schools CASES21 Finance EOY folder for future reference
• the report must be printed (hardcopy) and saved as a PDF during the final end of year process. It must be signed by the principal and school council president and tabled at school council
• the data will be sent electronically to the Department as part of running the End of Year process.

17.13 Preliminary GST/Business Activity Statement Reports

17.13.1 Mandatory policy (Must do)

17.13.1.1

The Financial Highlight report must be checked before any transactions are entered for the New Year.

17.14 Long service leave provision

17.14.1 Mandatory policy (Must do)

17.14.1.1

School councils must manage the provision for Long Service Leave (LSL) for all eligible employees who are paid on eduPay school level payroll.

17.14.1.2

A journal for the provision of LSL must be completed annually from the first anniversary of school council employment to recognize the possible long service leave entitlement and subsequent future debt for the relevant locally paid staff. This will ensure the expenditure incurred by the school is recognized annually and includes future obligations even if not yet paid.

17.14.1.3

Schools must ensure that the LSL provision is included in the Annual Master Budget.

17.15 End of Year Reports (31 December)

17.15.1 Mandatory policy (Must do)

17.15.1.1

End of Year reports must be printed (hardcopy) or saved as PDFs.

School must be able to make available reports at the Departments or auditor’s request.

17.15.1.2

Certification from the School Principal and School Council President are required at year end (31 December) for the following reports:

• Operating Statement
• Balance Sheet.

17.16 Finance Committee/school council reports

17.16.1 Mandatory policy (Must do)

17.16.1.1

The reports as listed below must be printed (hardcopy) or saved as PDF’s for the December End of Year period and must be presented to the Finance Committee. In absence of the Finance Committee, all reports listed below are to be tabled at the school council meeting.

A list of Finance Committee/school council reports to be run from CASES21:

17.16.1.2

Bank Reconciliations

17.16.1.3

Balance Sheet Specific Period (GL21161)

17.16.1.4

Operating Statement Detailed (GL21150)

17.16.1.5

Cash Flow Statement (GL21151)

17.16.1.6

Bank Account Movements Detailed (GL21152)

17.16.1.7

Annual Sub Program Budget Report (GL21157)

17.16.1.8

Cash Receipts Report (GL21002)

17.16.1.9

Cash Payments Report (GL21003)

17.16.1.10

Cancelled Receipts Report (GL21004)

17.16.1.11

Cancelled Payments Report (GL21005)

17.16.1.12

Journal Report Certification (GL21006)

17.16.1.13

Invoices Awaiting Payment - Detailed (CR21118)

17.16.1.14

Family Credit Notes Report Certification (DF21309)

17.16.1.15

Sundry Debtors Credit Notes Report (DR21309)

17.16.1.16

SRP Budget Management Report – Summary Page 1 showing Surplus/(Deficit) (Student Resource Package Website)

17.16.1.17

Present the following reports to school council each month for review:

• Balance Sheet Specific Period (GL21161) — This report must be certified by the principal and the school council president
• Operating Statement (detailed) (GL21150) — This report must be certified by the principal and the school council president.

17.17 Run end of year task

17.17.1 Mandatory policy (Must do)

17.17.1.1

Schools must complete the tasks for the December period and run the End of Year processes.

17.17.1.2

Bank reconciliations and Financial Commitments Summary must be completed before starting the End of Year tasks.

17.17.1.3

Refer to CASES21 Finance Business Process Guide Section 11 — End of Year for instructions on how to run End of Year tasks.

17.18 Start of year processes

17.18.1 Mandatory policy (Must do)

17.18.1.1

Schools must refer to CASES21 Finance Business Process Guide Section 11 — End of Year for further guidance on how to start the New Year Processes.

Definitions

Balance Day Adjustment
The recording of transactions under an accrual system may result in revenue and expense items being recognised in a particular period when they actually relate to a future period.

Journal entries may be required to adjust accounting records to recognise revenue or expenditure in the correct period.

Balance Integrity Report
This report will identify whether any anomalies occur between the balances recorded against the creditor and the transactions data recorded against the creditor (CR21160).

The Balance Integrity Report (DR21902) will indicate whether there are any anomalies between the balances recorded against the sundry debtor and the transaction data recorded against the sundry debtor.

Capital commitments
A capital commitment will arise when a school enters into a legally binding non-cancellable agreement/contract for the acquisition of equipment or capital works.

A capital commitment does not include maintenance contracts associated with assets held (these are usually an operating commitment). Capital commitments are not recognised in CASES21 finance system, as they are to occur in the future.

A capital commitment will arise when there is a signed contract for a tangible asset i.e. building, gymnasium, playground or toilet block.

Contingent assets
A potential asset that may arise depending on the outcome of a future event. For example, the school has taken legal action against a third party for a breach of contract, and the likely outcome will result in receiving compensation from a third party.

Contingent liabilities
A potential obligation that may be incurred depending on the outcome of a future event. A contingent liability is one where the outcome of an existing situation is uncertain, and that uncertainty will be resolved by a future event.

An example of a contingent liability is where there is an outstanding legal action against the school, but not enough certainty to place the settlement value on the balance sheet.

Where a contingent liability may exist, the matter must be referred to the Legal Division of the Department.

Long Service Leave Provision
Long service leave entitlements represent a future obligation for the school and as such must be recognized as a liability on the Balance Sheet.

Operating commitments — contracts for goods and/or services
An operating commitment will arise when the school enters into a legally binding non-cancellable agreement/contract for the future provision of a good and/or service. In most cases, where there is a legal contract, there is a penalty and financial obligation upon rendering the contact void and not continuing with the purchase/service. Operating commitments are not recognised in CASES21 Finance system, as they are to occur in the future.

Examples of an operating commitment include, but are not limited to, provision of services by contractors, IT services, labour hire, maintenance and annual facility charges.

Operating Leases
A lease for which the lessee acquires the property for only a small portion of its useful life. An operating lease is commonly used to acquire equipment on a short-term basis. An example of an operating lease is the rental of a photocopier machine or other office equipment. Any lease that is not a capital lease is an operating lease.

Prepaid expenses
Recognised when a payment has been made to a supplier for goods or services to be received in a future accounting period. Examples of these are rent paid in advance or license fees paid in advance.

Prepayments must be recorded by way of a journal into the CASES21 Finance system. These journals must be reversed in the relevant future period thus bringing the expense to account in the correct period. (CASES21 chart of account code 12005).

Revenues paid in Advance
Recognised when revenues are received in advance of them being earned. (CASES21 chart of account code 38002).