Accounting and Financial Management Policy
Document type: Rule/Policy/Plan/Guidelines/Operating Procedures
Administering entity: Administration & Finance Manager
Date approved: 29 Apr 09
Approved by: (Academic Board/Principal)
Latest amendment date: 11 June 09
Indicative time for review: Annual
Responsibility for review: Principal
1 Purpose
The purpose of this policy is for the management of all accounting activities of Top Education Group Pty Ltd. In accordance with Australian Accounting Standards, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board.
2 Scope
This policy refers to all accounting activities of Top Education Group Pty Ltd.
3 Definitions
All Accounting definitions within this document are in accordance with Australian Accounting Standards.
4 Procedures
4.1 General statement
The financial statements constitute a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board, and audited by Pricewaterhouse Coopers or equivalent accounting firm.
4.1.1The financial statements have been prepared on the accrual basis of accounting using the historical cost convention, except for certain assets and liabilities which, as noted are measured at fair value.
4.2 Non-current assets
4.2.1 Top Education takes all reasonable steps to ensure that the assets recorded in the assets module of the finance system are correct.
4.2.2 For annual financial statement purposes, only capitalized assets are included.
4.2.3 Tangible Assets – Top Education’s accounting policy is that purchases of assets with a cost, and with a useful life of more than 12 months, are capitalized as tangible assets.
4.2.4 Intangible assets - Top Education’s accounting policy is to amortize such assets over useful life of 10 years, following recommendations by PWC
4.2.5 Administration & Finance Manager will arrange for an annual stocktake of assets:
Verify the existence of the assets listed at least up to the value threshold (80% or 100% depending on the cycle)
Identify any changes to asset records
Identify any capital assets held that are not on the list
4.2.6 The Administration Manager will provide a statement verifying the assets held and advising any changes, and will update the assets register to reflect the results of the stocktake.
4.2.7 Top Education uses a straight-line depreciation method to record the assets depreciation and amortization, on an annual basis.
4.3 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and Goods and Services Taxes (GST).
Revenue is recognised as follows:
4.3.1 Fees and Charges
Revenue from Tuition fees and charges are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.
4.3.2 Cash
For the purposes of the Statement of Cash Flows, cash includes cash at current bank accounts and term deposit bank accounts.
4.3.3 Receivables
Accounts receivable include amounts due from students for tuition fees, and other enrolment related services and reimbursements due. Accounts receivables are recognised at the amounts receivable as they are due for settlement no more than 90 days from the date of recognition. Accounts receivables do not carry any interest.
4.3.4 Payables
Payables, including accruals not yet billed, are recognised when TOP becomes obliged to make future payments as a result of a purchase of assets or services. Accounts payable are not interest bearing and are stated at their nominal value. Unearned revenue is also recognized as current liability.
4.4 Employee Benefits
4.4.1 Remuneration
TOP pays its employees based on their contracts and reviews annually. Academic staff will be managed by the academic board and will normally be covered by professional indemnity and public liability insurances.
4.4.2 Annual Leave
Annual leave benefit is recognised at the reporting date in respect to employees’ services up to that date and is measured at the nominal amounts expected to be paid when the liabilities are settled.
4.4.3 Long Service Leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision for employee benefits and is measured at the nominal amounts expected to be paid when the liability is settled. The liability for long service leave falling due more than 12 months after the reporting date is recognised in the provision for employee benefits and is measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.
4.4.4 On-Costs
On-costs arising from employee benefit obligations, when TOP has a present legal or constructive obligation as a result of past events, including payroll tax and workers compensation, are recognised together with employee benefits costs when the obligations to which they relate are recognised as liabilities and expenses. It is more likely than not that an outflow of resources will be required to settle the on-cost obligation and the expected costs are accrued over the period of employment using the present value of the on-cost obligation at the reporting date.
4.4.5 Superannuation
TOP contributes to the Superannuation fund on behalf of its employees at a rate of 9% of their salaries and wages.
4.5 Foreign Currency Translation
Transactions in currencies other than Australian Dollars are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date.
4.6 Taxation
Top’s income tax is prepared and lodged by an outside accountancy firm, and audited by PriceWaterhouseCoopers or an equivalent accounting firm.
4.7 Accounting Transaction Procedures
Accounting transactions and financial reports follow the Australian and International Accounting Standards. Process sing of transactions is performed using recognised accounting software
4.8 Financial Management System
4.8.1 MYOB is used for company’s accounting records; hardcopy records are also retained and stored in locked filing cabinets.
4.8.1.2.1 Top Education’s accounting transactions are daily managed and monitored by its CPA qualified accountant, the Administration Manager. To separate accounting duties, at least two people are allowed to access MYOB and two people to manage the cash accounts.
4.9 Auditing Arrangements
4.9.1 Top Education’s annual report is audited by PriceWaterhouseCoopers every year.
4.10 Budget Monitoring
The monthly report will be compared with the budget. If there is a significant difference, the Board of Directors will be informed and they will advise on any necessary adjustment.
5 Related Policies
Risk Management Plan
Information Security Policy