GENERAL PROCEDURES FOR FUNDING AND ACCOUNTING

5.    Monthly demands to OST for instalments of grant-in-aid are submitted by the Finance Division Financial Accounting Section, Swindon Office in accordance with a timetable issued by OST (MS&FM paragraph 47). A profile of estimated funding requirements for the financial year, provided by Finance Division, Swindon Office, to OST before the commencement of the financial year, is used to request the monthly funding requirements after taking into account estimated monthly cash balances and surpluses (MS&FM paragraph 50). An exception to this general rule is found in the case of subscription payments to international organisations, the funds for which are demanded as and when required and may vary from the estimated profiled payment date.

6.    Establishments prepare estimates of the funds required to meet expenditure during the subsequent calendar month. These estimates must be with Finance Division, Swindon Office, not later than the tenth working day of the previous month to which they relate. This enables Finance Division, Swindon Office, to amend the subsequent month's funding demand to OST to reflect actual need rather than that indicated by the estimated profile. Finance Division, Swindon Office, must advise the OST of the necessary amendment to the profile caused by any change. PPARC is required to maintain a balance in hand which is compatible with its immediate needs and to avoid excessive cash holdings and care must be taken to frame these estimates accordingly.

7.    When submitting the monthly grant-in-aid funding request to OST, supporting calculations must be prepared so as to ensure that the projected closing balance of funds held by PPARC do not exceed 2% of the total yearly grant-in-aid. Any monthly grant claim that would result in such an occurrence will be subject to reduction by OST unless PPARC can, with the claim, demonstrate a legitimate requirement for a higher working balance. (See MS&FM paragraph 50.)

FUNDING OF A LOCAL BANK ACCOUNT HELD BY AN ESTABLISHMENT

9.    All requests for funding must be made to Finance Division, Swindon Office, at least 2 working days for sterling transactions and 8 working days for foreign currency transactions before the money is needed. Written confirmation is required using the funding e-mail account (funding@pparc.ac.uk). A payment will be made directly into the Establishment’s bank account.

10.    Establishments are reminded that approval from Finance Division, Swindon Office, must be obtained prior to the opening a commercial bank account. There is a requirement that balances held in commercial bank accounts and foreign currency bank accounts must be kept to the minimum necessary for efficient working to meet immediately foreseeable commitments and should never be overdrawn. (See Government Accounting 28.1.5 & 28.5.21 & 28.7.17)

11.    To avoid large balances being held overnight at local banks, payments in excess of £50,000 must be referred to Finance Division, Swindon Office, for payment from PPARC's account with the Paymaster General (PMG). Unless prior arrangements have been authorised and agreed by the Head of Finance, PPARC.

FUNDING OF A PAYMASTER GENERAL (PMG) ACCOUNT HELD BY AN ESTABLISHMENT

12.     Establishments must seek approval from Finance Division, Swindon Office, for the operation of a PMG account. A PMG account operated by an Establishment will be funded by the OST, only at the instigation of Finance Division, Swindon Office,. Requests for funds must be with Finance Division, Swindon Office, not later than the tenth working day of the previous month to accord with the arrangements specified in paragraphs 5 and 6.

USE OF RECEIPTS

15. The Director Administration’s approval is required for the disposal of capital assets valued in excess of £25k. Establishments must determine value in accordance with the arrangements set out in FM 109 and they must also carry out an option appraisal in accordance with the techniques described in FM 301 to ensure that disposal is the most beneficial course of action to pursue. Establishments must present a case to Finance Division, Swindon Office, if they propose to dispose of any capital assets which require Director Administration approval. The case must indicate any proposal for the use of the proceeds to enable Finance Division, Swindon Office, to seek the necessary approval.

BANK INTEREST RECEIVED

19.    PPARC is required to surrender any recurrent grant-in-aid monies in excess of 2% of grant-in-aid income held at the end of the financial year unless a case for additional retention has been agreed by the Secretary of State and the Treasury. Any grant-in-aid that cannot be carried forward should be repaid to the OST for surrender to the Consolidated Fund. (MS&FM paragraph 51.)

20.    In addition, subject to the grant not having been paid by OST, PPARC may carry forward recurrent grant-in-aid provision up to 3% of grant in aid approved by Parliament. A case for additional carry-forward may be agreed by the Secretary of State. Where the Secretary of State does not agree, any grant that cannot be carried forward should be repaid to the OST for surrender to the Consolidated Fund. (MS&FM paragraph 52.)

ACCOUNTING AND SEPARATION OF DUTIES

23.    Each Establishment maintains its accounting records in its own Sun "company" and must designate an officer to be responsible for the security arrangements of the Sun system at that Establishment. An Establishment does not have access to the company of another Establishment, although Finance Division, Swindon Office, has access to read the accounting records held in all companies.

24.    Prior to the commencement of each financial year a list of account codes will be issued by Finance Division, Swindon Office, for use throughout PPARC to identify and categorise expenditure and receipts. The use of such account codes must be consistent throughout PPARC to ensure that uniform information is available for extraction on a PPARC-wide basis. Optional bands of account codes have been allocated for use by Establishments to identify transactions for which there is no appropriate account code shown on the list.

25.    Officers responsible at Establishments for authorising the use of specific account codes within the optional bands must ensure that they are properly selected from the list under the appropriate category and used for the purpose as defined. No account code, outside of the optional bands, may be created without the prior agreement of Finance Division, Swindon Office,.

26.    Each Establishment must identify its expenditure to the Director Administration allocating the funds both for accounting and budgetary control purposes. This is achieved through the use of centre codes, which are devised by each Establishment in accordance with its own needs.

SUSPENSE ACCOUNTS

(a)    For advances pending final amount chargeable:

• to sub accountants/imprest holders

• to individuals for travel and subsistence expenses

• to or from Government Departments.

(b)     For recording cash losses, erroneous payment and overpayment etc pending investigation or recovery. (See FM 115: Losses and Special Payments.)

(c)    For amounts collected or disbursed on behalf of third parties:

• VAT collected

• income tax, national insurance contributions and voluntary deductions from pay.

29.    Each Establishment must designate an officer who will be responsible for:

(a)    obtaining a report on a monthly basis from Sun which lists all outstanding suspense balances; and

(b)    reviewing the report to ensure that the action indicated at paragraph 28 is being followed.

Cash account
Sun electronic ledger extract
Trial balance file
Summary of bank interest received
Statement of advice notes issued and received
Workforce cost control (staff-in-post figures)
Overseas funding requirements
Planning & budgeting outturn forecasts
Quarterly VAT returns

34.    The responsibility for including the transaction in annual and other estimates and in out-turn forecasts rests with the Establishment for whom the work is being carried out, and not with the establishment doing the work.

35.    All advice notes should be accepted or rejected during the year within 3 months of issue. If any dispute arises between Establishments the matter should be referred to the Deputy Head of Finance, PPARC, for arbitration.

36.    In the normal course of business, to save on administration costs, only advice notes for over £50 are to be raised by Establishments.

END OF YEAR ACCOUNTING ARRANGEMENTS

38.    Although the financial year ends officially on 31 March, minor adjustments may subsequently be made to enable PPARC-wide reconciliation. Finance Division, Swindon Office, will issue end of year accounting instructions, which will advise the date up to which such adjustments may be made. After this date no further charges or credits may be made. Finance Division, Swindon Office, will also advise the deadline for the submission of Establishments' final cash accounts and end of year audit file accounting information required. When satisfied that PPARC-wide reconciliation has been achieved, and that final accounts have been officially accepted, Finance Division, Swindon Office, will advise Establishments on the closing down of the ledger procedure and will agree the balance brought forward to the next financial year.

39.    Each Establishment must expedite clearance of all those items of expenditure and receipt held in its suspense, which are a proper charge to the old year before 31 March.

INDELIBILITY CLAIMS INVOLVING GOVERNMENT DEPARTMENTS

43.    Claims relating to journeys undertaken in the old year but paid in the new year must be charged to the new year.

LAPSED AND CANCELLED PAYABLE ORDERS OR CHEQUES

45.    Where payable orders or cheques issued before 31 March lapse or are cancelled after the end of that year, all adjustments must be made in the new financial year. If it is intended to issue a replacement payable order or cheque immediately, the value of the lapsed or cancelled order must be credited to the subhead to which the replacement order is to be charged: this will avoid the payment being charged twice.

46.    Where a payable order or a cheque issued before 31 March lapses or is cancelled after the end of that year and a new payment instrument is not to be issued the value of the lapsed or cancelled order is taken into account when calculating the 2% carry forward of grant-in-aid. As described in paragraph 19 of this FM.

REISSUE OF PAYABLE ORDERS OR CHEQUES

48.    Like payable orders, an Establishment will be aware at every month end of each unpresented cheque. A month before the expiry of a cheque the Establishment must write to the payee to say that the cheque has not been presented and that the payee should either present the cheque or request a replacement. If the payee requests a replacement the Establishment must stop the cheque and on notification from the bank that the stop has been effected, issue a replacement. If no reply is received from the payee the Establishment must cancel the cheque in its books on the cheque's expiry.

49.    If the replacement cheque or payable order remains unpresented at six months it should be cancelled in the Establishment's books and no further effort made to contact the payee.

ANNUAL STATEMENTS OF ACCOUNT

51.    The draft Annual Account must be submitted to the Audit Committee by 31 May each year for approval and comment before formal submission to the National Audit Office (NAO) for audit and OST. Provisional clearance will be obtained from both Departments before the final Account is prepared for signature by the Chairman, as Accounting Officer. The signed Account, together with a formal request for approval for the virement of funds between Estimates' sub-heads, if necessary, are submitted to the OST. Formal submission for approval by the Comptroller and Auditor General precedes the Accounts being laid before Parliament before the summer recess.

52.    On notification that the Comptroller and Auditor General has certified the Accounts, Finance Division, Swindon Office, will advise the Establishments but the books (ie the Sun records) should remain open to facilitate final account adjustments on the instruction of Swindon Office.

CAPITAL EXPENDITURE

54.    The definition of capital expenditure which applies in PPARC's Supply Estimates and Accounts is as follows:

Expenditure on:-

• the purchase of land or existing buildings;

• the erection of new buildings; extensions, alterations and renovation of existing buildings; (excluding work done to keep up, keep the building in repair ie maintenance; renovation is defined as work done when the building has past the maintenance stage);

• plant, machinery, equipment, or any other assets having a working life of more than one year (including motor vehicles but excluding consumable stores). This definition includes the purchase of those spares and replacement items for existing plant, equipment etc which cannot be regarded as consumable.

The following are excluded from the above definitions:

• All PPARC staff costs and those other types of costs eg for which separate provision is made under Current Expenditure in Supply Estimates.

• Expenditure on equipment to be fired into space as part of a space rocket project.

David Strudwick
Deputy Head of Finance, PPARC