The British Library The Finance Code

Transcription

1 The British Library The Finance Code Enquiry Point: Mick Wilkin Last Updated 29 th October 2013

2 Contents 1 Introduction 1.1 Purpose 2 Statutory Duties 3 Financial Planning and Accounting Timetable 3.1 Planning for Future Years 3.2 Current Expenditure 3.3 Accounting for Previous Financial Year 4 Financial Roles and Responsibilities 4.1 Board 4.2 Chief Executive and Accounting Officer 4.3 Directors 4.4 Responsibility Centre Managers (RCMs) 4.5 Finance 5 Financial Guidance and Advice 5.1 Procurement Policy and Procedures 5.2 Budget Management 5.3 Delegated Authority 5.4 Losses and Write Offs 5.5 Special Payments 5.6 Gifts and Hospitality 5.7 Payments in Advance of Need 5.8 Travel and Subsistence 5.9 Value Added tax (VAT) 5.10 Anti-Fraud Policy 5.11 Anti-Bribery Policy 5.12 Insurance 5.13 Payment Card Industry Compliance 6 Asset Management 6.1 Responsibilities 6.2 Attractive Assets 7 The Role of Internal Audit 7.1 Objective 7.2 Audit Programme 7.3 Internal Audit Reports 8 Responsibility for Income and Receipts 8.1 Introduction 8.2 Control 8.3 Monthly Reports 8.4 Accounting For Income 8.5 Results Required 9 Cash Management 9.1 Payments Received 10 Cash-Flow Planning 11 Integrity of Accounts Data 11 Government Transparency

3 1. Introduction The Finance Code is the definitive document describing the Library's financial policies and procedures. It contains essential information for all levels of management and is issued on the authority of the Chief Executive. The Code and the associated literature should be both the first and last resort for those who have any questions on aspects of the financial policy of the British Library. Every officer of managerial grade should read and understand the Finance Code. Every employee of the British Library should have access to the Code and managers should endeavour to make sure that those officers of non-managerial grade who deal with financial operations are also well acquainted with the Code. If you have any concerns or questions please do not hesitate to contact your Divisional Finance Manager (DFM) or Finance directly. Failure to comply with the requirements of the Code will be reported to Management and serious breaches of the Code may result in disciplinary action being taken. To ensure the Code reflects current practice, please notify changes in procedures to the Chief Accountant, Finance, Boston Spa. Author: M Wilkin Last updated: 16/10/13

4 2. Statutory Duties General description of the statutory duties and the conventions ensuring the propriety of financial transactions by The British Library Statutory Position 1. The British Library was established in 1973 by Act of Parliament passed in The British Library Act 1972 places the British Library under the control and management of the British Library Board. Under the terms of the Act, the Board comprises a Chairman and between eight and thirteen other members, one of whom is the Chief Executive. The part-time members of the Board are appointed by the Secretary of State (with the exception of one member who is appointed by HM The Queen) and they represent a wide range of outside interests 2. The Library is primarily financed by public money. It is required to account for its expenditure annually in a form acceptable to Parliament. Neither Parliament nor the Department of Culture, Media and Sport or Treasury exercise any detailed control over the day to day management of the Library. This remains the responsibility of the Board, who are required to account for their actions in certain formal ways. 3. The Library s funding from the Government is awarded on a number of conditions which are set out in the Management Agreement between the Department of Culture, Media and Sport and the BL. The agreement sets out the DCMS priorities for the BL and its funding levels, as well as policies and procedures, authority levels, audit requirements and transparency rules the BL is required to adhere to. A full list of the compliance requirements is available in Appendix A of the agreement. Author: M Wilkin Last updated: 16/10/13

5 3. Financial Planning and Accounting Timetable Planning for Future Years Current Expenditure 1. Future spending is expressed in the Corporate Financial Plan which is incorporated into the Corporate Plan. The Corporate Plan is guided by the BL s Strategic Objectives. The Corporate Financial Plan is usually for a period of three to five years dependant on the current year s position in the Government Comprehensive Spending Review cycle. 2. The Executive Leadership Team reviews the priorities for next year's Corporate Plan in light of confirmation of the funding settlement from DCMS and issues guidelines to divisions in July or early August. Draft estimates are produced by early/mid-october. Through November and December the plans are refined with the final position being agreed by the Executive in January. 3. The Corporate Business and Financial plans are presented and agreed by the Board in February. 4. A detailed budget, based on the first year of the Corporate Financial Plan, is then loaded onto the Finance System ready for profiling and reporting. 5. The Executive Leadership Team and Divisions receive a quarterly update on the financial position and an updated annual forecast for the current year on a quarterly basis. The Executive considers any actions necessary to ensure any financial risks are addressed and its decisions are factored into the forecast and amended into the budgets for the year. Board examines the budgetary position in detail during these quarterly reviews. Account for the Previous Financial Year 6. The provisional outturn based on the Management Accounts should reach the Executive by the beginning of May. 7. The Statutory Financial Accounts must reach the Board by the end of June. It must be signed by the Chief Executive, following audit by the National Audit Office, with the aim of reaching Parliament prior to Parliament s summer recess in July. Author: M Wilkin Last updated: 16/10/13

6 4. Financial Roles and Responsibilities Board Board Members have corporate responsibility for ensuring that the Library fulfils the aim and objectives set out in legislation and complies with any statutory or administrative requirements for the use of public funds. The responsibilities of Board members are set out in the Model Code of Practice for Board Members of Public Bodies. Chief Executive The Chief Executive is normally designated as the Library's Accounting Officer by the Accounting Officer of the Department of Culture, Media and Sport. As the Library's Accounting Officer the Chief Executive is personally responsible for safeguarding the public funds for which s/he has charge, for propriety and regularity in the handling of those public funds and for the day-to-day operations and management of the Library. S/he should act in accordance with the terms of the Finance Code and with the instructions and guidance in Government Accounting and other instructions and guidance issued from time to time by the Department of Culture, Media and Sport, the Treasury and the Cabinet Office - in particular, the Treasury documents, the Responsibilities of an NDPB Accounting Officer and Regularity and Propriety, both of which the Chief Executive receives on appointment. As the Library's Accounting Officer the Chief Executive will: advise the Board on the discharge of its responsibilities as set out under the Act, the BL s Management Statement and in any other relevant instructions and guidance that may be issued from time to time; ensure that all public funding made available to the Library and all sums receivable are used for purposes intended by Parliament, and that such monies, together with the Library's assets, equipment and staff, are used economically, efficiently and effectively; ensure that timely monitoring information and forecasts are provided to the Department; that the Library keeps within the resource and capital expenditure limits determined by the Secretary of State; that corrective action is taken to avoid overspends; and that the Department of Culture, Media and Sport is notified promptly when overspends or underspends are likely; ensure that the financial considerations are taken fully into account by the Board at all stages in reaching and executing its decisions, and that standard financial appraisal techniques are followed as far as is practical; ensure that adequate internal management and financial controls are maintained by the Library, including that sums receivable are collected, and that there are effective measures against fraud, bribery and theft; ensure the Library's compliance with the financial and other management controls applied by the Department of Culture, Media and Sport, and maintain systems for compliance; be responsible for signing the accounts and for ensuring that proper records are kept relating to the accounts and that the accounts are properly prepared and presented in accordance with any directions issued by the Secretary of State; and for signing a Statement of Accounting Officer's responsibilities for inclusion in the annual report and accounts; The Chief Executive may delegate the day-to-day administration of these Accounting Officer responsibilities to the Chief Financial Officer or other employees in the Library. However, s/he shall not assign absolutely to any other person any of the responsibilities set out in the BL s Management Statement. In practice, this places an obligation on ALL staff involved in the performance management process to conduct their business in a way that ensures the above can be achieved. Directors Directors are responsible for pro-actively managing the performance of their divisions in order to deliver the financial and non-financial targets set. They need to ensure that any variations from target (under or over) are identified early and action is taken to report and address the variance. Where they delegate responsibility to staff within their management chain they need to ensure their managers are properly managing the budgets delegated to them by regular review. Responsibility Centre Managers (RCMs) - including Project and Restricted Fund Managers

7 RCM s are responsible for pro-actively managing the performance of their resources in order to deliver the financial and non-financial targets set. They need to ensure that any variations from target (under or over) are identified early and action is taken to report and address the variance. Where they delegate responsibility to staff within their management chain they need to ensure their staff are properly managing the budgets delegated to them by regular review. Where funds are provided to the BL for a specific purpose they need to ensure they are applied to that purpose and ensure the requirements of the funder are adhered to. Responsibilities include the need to provide detailed input in the development of divisional plans and budgets and for regular monitoring of outturn against agreed budget to provide early warning of variances (and as a basis for accurate forecasting). Responsibility for meeting agreed financial and service level targets for individual services. This includes adherence to procurement practice and rules, processing invoices (incorporating correct coding) quickly to enable the Library to meet its payment terms and statutory obligations, and submission of statistical and performance returns. Responsibility for adherence to principles of regularity and propriety and the requirements of Government Accounting as set out in the Finance Code, Finance Notices and Anti- fraud Policy. A pivotal responsibility is ensuring that authorisation of commitments and expenditure is in accordance with delegated limits and financial procedures. More details and guidance on the above is provided at [insert link] Finance It is the responsibility of Finance to ensure an accurate financial record of the BL s activities is maintained, and that this record is designed to: Enable the Annual Accounts to be prepared and published in accordance with the relevant standards and to be available for inspection by external auditors. To provide a system for financial planning, budgeting and forecasting in support of managers across the BL. To report on the overall financial position to the Executive and Board, at regular intervals, highlighting risks and opportunities and to advice on courses of action necessary for the BL to achieve its financial objectives. To provide performance information to the sponsoring department as requested. To provide day to day support to directors and their management teams through the DFM service. To identify, develop and report on the BL s Strategic Performance Dashboard and Key Performance Indicators. To provide support in the development of divisional business plans, business cases, targets and key performance indicators. To provide support and training to managers to enable them to discharge their responsibilities effectively. To promote best practice across divisions and to monitor developments in the external accounting environment to identify opportunities for continuous improvement. Author: M Wilkin Last updated: 16/10/13

8 5. Financial Guidance and Advice The following section provides key guidance on the financial responsibilities, rules, best practice and reporting requirements for managers within the BL contained within the key management documents we are required to adhere to: 1. Procurement Policy and Procedures For information on procurement rules and legislation, tendering and contract procedures and how to order goods or services see Procurement Policy and Procedures. 2. Budget Management Managers with responsibility for managing budgets need to be aware of their responsibilities in contributing to the overall management of the Library s financial resources and need to comply with all requests for information, in a timely manner, whether this is for internal or external reporting purposes. This responsibility applies to all budgets including those allocated to Responsibility Centre Managers, Projects and Externally Funded Programmes of work. For more details of the process and systems in support of budget management see Budgets and Planning. 3. Delegated Authority Within the limits of the authority delegated to the Library by the Treasury and the Department for Culture, Media and Sport, the BL Board has approved further levels of internal delegation. The limits of delegation for purchasing, research and general administrative expenditure are set out in the Finance Notice which deal with the delegation of financial authority for expenditure and write off. The limits are designed to allow managers to conduct the Library's business in an efficient and effective manner and are periodically revised. Under the terms of the financial arrangements between the Library and the Department for Culture, Media and Sport, the Library is required to obtain the prior agreement of the Secretary of State before entering into any commitments with substantial grant implications for the future whether for new services or investments in existing ones. A full list of these restrictions and the delegated authority levels is available at [insert]. For guidance and seeking approval for expenditure above the delegated authority levels please contact your Divisional Finance Manager [insert link to directory]. 4. Losses and Write Offs When considering losses, thought should be given as to whether a fraud has been committed against the Library. The Library is required to keep a register of all losses and 'special payments'. The purpose of this is to draw them to the attention of Parliament and Treasury. As well as seeking authority from the Department for Culture, Media and Sport (DCMS) for any payments going beyond the Library's delegated powers, the Library must ensure that any such exceptional payments can be fully justified in all the circumstances. Procedures have therefore been established for reporting, recording and writing off losses, and for the approval of 'special payments'. Definition of a Loss A loss is an event which leads to the Library's resources being diminished in a way which was not intended. Some obvious examples are fraud, theft, destruction by fire or flood, bad debts and overpayments of salary. There are also less obvious cases which must be identified as losses. A full description of types of loss is given Annexes 4.10 to 4.13 of the Treasury s guide, Managing Public Money. The main types of loss are: 1. Cash losses: physical losses of cash and its equivalents (e.g. banknotes, credit cards, electronic transfers, payable orders); 2. Bookkeeping losses: unvouched or incompletely vouched payments, including missing items for example, IT equipment or items from the collection. 3. Exchange rate fluctuations: losses due to fluctuations in exchange rates or revaluations of currencies; 4. Losses of pay, allowances and superannuation benefits paid to staff, i.e. overpayments due to miscalculation, misinterpretation, or missing information, unauthorised issues, e.g. inadmissible payments

9 or losses arising from other causes, e.g. non-disclosure of full facts by the beneficiary, short of proven fraud; 5. Losses arising from overpayments of grants, subsidies, etc. arising from miscalculation, misinterpretation or missing information; 6. Losses arising from failure to make adequate charges for the use of public property or services; 7. Losses of accountable stores; 8. Fruitless payments and constructive losses; A fruitless payment is a payment for which liability ought not to have been incurred, or where the demand for the goods and services in question could have been cancelled in time to avoid liability. 9. Claims waived or abandoned. Reporting Losses Once identified, losses must be reported to Finance where action must be taken to register and write off the loss. Form FB33 Report of a Loss Form must be completed and sent as indicated to the Financial Accounts Office, Boston Spa, the Head of Security, St. Pancras and the Head of Planning and Compliance.. It is essential that the value of the loss is provided (estimated if actual value is not known) since this determines the level of authority required for write-off. As much information as possible should be given concerning the circumstances of the loss and the action taken to investigate, recover and to tighten up procedures to avoid future losses. This information forms the basis of the justification for write-off. FB33 Report of a Loss Form is to be used for notifying losses of property belonging to staff or members of the public; whatever the circumstances the completion of the form does not relieve the division from its responsibilities for carrying out a full investigation of the loss. Losses Register As soon as the Financial Accounts Office receives notification of a loss, this is entered in the Losses Register and classified in the appropriate category. Quarterly returns are made to DCMS. Write-off of Losses For each category of loss the Library has delegated authority to write off losses up to a certain limit. These limits are set out in [insert] of the Finance Code. Above these limits, losses must be referred to DCMS for approval of the writeoff. The decision to approve write-off is based on the information given in the Report (Form FB 33). 5. Special Payments There may be reasons to carry out current transactions which would not normally be planned for. These might be: 1. Extra-contractual. A payment not legally due under the original contract but which appears to be an obligation the courts might uphold; 2. Ex-gratia Payments; which are not legally due but which the Library feels must be made; for example, on the grounds of hardship caused by official failure or delay; 3. Compensation Payments; made for injury or damage to property, whether or not legal action is involved; 4. Severance payments to employees leaving voluntarily before retirement or the end of their contract;. 5. Purchases from staff. Any purchase in excess of 50 of an item of personal property from a member of staff. (This does not include reimbursement for approved purchases made on behalf of the Library). Approval for Special Payments The Library has delegated authority to approve certain Special Payments, within the limits set out in [insert] of the Finance Code. Any Division wishing to make such a payment should present the proposal to the Chief Financial Officer within Finance. 6. Gifts and Hospitality There are strict rules on both the giving and receiving of gifts contained within the governing documents. Gifts given - In a financial year, any one gift or total of gifts to one person/organisation must not exceed 1,000. Proposals for making gifts outside this delegated limit must have the prior approval of DCMS. The British Library must keep a record of gifts given. Details of gifts should be noted in the annual accounts if, individually or collectively, they exceed 1,000.

10 Gift Approval Form complete prior to giving a gift to any individual or body. Gifts Received - A "gift" is defined as any item of cash or goods or any service which is provided for personal benefit. No gifts (other than advertising matter of modest value such as calendars and diaries) or favours can be accepted or solicited by a member of Library staff or other representative or by a member of his/her close family, from people or organisations with whom that person has business dealings on behalf of the Library. Similarly, Library staff or other representatives should not offer gifts or favours to business contacts or their families. More information is available in the Conduct at Work Policy click here. Sections 10 (concerns over issues of impropriety, fraud or malpractice), 12 (prevention of bribery), 13 (gifts, hospitality or entertainment), 14 (loyalty scheme benefits) and 15 (retention of awards and prizes) are of particular interest in this area. Corporate Gifts Form complete for gifts received. The Library is required to keep a Register of Gifts and Hospitality that are received. Additions to the register and requests requiring DCMS approval should be sent to Financial Accounts Office, Boston Spa. Non-cash gifts donated to the BL - All non-cash gifts donated to the BL, (as opposed to an individual), should be reported to Financial Accounts for incorporation into the financial statements. The donation will need to be valued. If a valuation is not readily available, as it has not been purchased in the normal manner, then a reasonable estimate will be calculated. Where an item has been bequeathed there may be a value for inheritance tax purposes which can be used, or an insurance value. Where there isn't a value which can be applied, the Library's auditors have agreed that the expertise of the Library's own curatorial staff can be used to assign an appropriate value to the asset. This procedure will avoid the Library incurring any costs whilst providing a reasonable basis of valuation. When considering whether a gift should be accepted or not, consideration should be given as to whether the transaction could deemed to have any Value-in-Kind or sponsorship element whereby the giver receives some form of benefit in return, for example through naming rights, free events or brand association. To discuss any potential arrangements of this nature please contact CPU, Boston Spa. Hospitality - Staff are expected to observe exceptionally high standards of personal honesty and integrity. The principles governing the acceptance of hospitality are covered in more detail in the Library s Anti-Bribery Policy. The principles below may be used as a guide: 1. that the conduct of individual staff should not foster the suspicion of any conflict between their official duty and their private interests; 2. that the actions of staff acting in an official capacity should not give the impression to any member of the public, to any organisation with whom they deal or to their colleagues that they have been or may be influenced by an item of hospitality to show favour or disfavour to any person or organisation; 3. that if either the individual officer or the Library is in any doubt of the propriety of accepting an item of hospitality then it should be refused. In practice, the principles listed above mean that neither a member of staff nor any member of their family should accept any hospitality that would, or might appear to, place them under any obligation to the donor, compromise their impartiality or otherwise be improper. These principles should be applied with common sense and are not intended to preclude accepting the occasional working lunch during an official visit. However, in order to comply with the Bribery Act 2010, the Library is required to keep a Register of Gifts and Hospitality which will be maintained within Finance. The register is subject to audit and all staff and persons acting on behalf of the Library will need to declare the hospitality received via the Corporate Hospitality Form. Before deciding to accept an offer of hospitality you should be satisfied that it is conventional hospitality, normal and reasonable in the circumstances. In considering what is normal and reasonable regard should be given to: 1. The legitimate reason for the contact; 2. The frequency; 3. The nature of the relationship. Contacts that are promotional or representational are less likely to create an obligation or embarrassment than those which involve or could lead to a contractual relationship; 4. The cost. The greater the cost the more caution should be exercised in accepting; 5. The body concerned. For help and further information please contact Planning and Compliance, Finance. 7. Payments in Advance of Need

11 Payments in advance of need are not normally allowed under the terms of the Library s funding. Exceptions to this principle may be permitted where there are sound financial or operational grounds for making a prepayment for goods or services already approved. A business case must be formulated and documented ensuring the following points are covered: 1. A comparison of the financial costs and savings involved. The case would have to indicate savings in relation to the additional funding costs calculated at the prevailing National Loans Fund rate plus 2%, and thereby demonstrate a "value for money" case in accordance with the guidance provided in the Treasury's green book; 2. Analysis of the options considered, the risks associated and the effect on progress towards the achievement of the Library's strategic objectives; 3. Evidence that the Library has considered the financial status of the supplier (including obtaining a bank guarantee if necessary) in order to protect Exchequer funds should the supplier cease trading; For assistance in preparing the business case please contact you Divisional Finance Manager, [insert link]. 8. Travel and Subsistence Section L of the British Library Staff Handbook sets out the Travel & Subsistence arrangements for UK and overseas travel. Government Procurement Cards can be obtained for frequent travellers. To make a claim you must use the HR Self Service Portal. Full Guidelines are available on Inside Knowledge under Finance Services, Expenses 9. Value Added Tax (VAT) VAT Status 1. The Library is registered for VAT in the United Kingdom. The VAT Registration number is GB and must be quoted on all its tax invoices. 2. At the time of writing the Library is not registered for VAT in any other European country. 3. The Library is classified as 'partially exempt' by HM Revenue and Customs (HMRC). This means that some of its activities are not considered to be of a business nature. By agreement with HMRC the Library is entitled to reclaim 95% of the VAT paid on purchases. VAT on Imports of Goods from Outside The European Union 4. The Library is liable for VAT on the import of goods from the EU. This is also recoverable at 95%. VAT on Acquisition of Goods from The European Union 5. The Library is liable for VAT on the acquisition of goods from EU VAT registered suppliers where the goods are normally subject to VAT in the country of origin. 6. The Library is not liable for VAT on purchases of goods from non-registered EU suppliers. VAT on Services Received from The European Union and the Rest of the World 7. VAT is due on services received from Europe and the rest of the world. The Library has to account for VAT under the reverse charge procedure. VAT on Exports of Goods to Countries Outside The European Union 8. Such exports are zero rated for VAT purposes. Written proof that the goods have left the country within three months of the time of supply is essential. Otherwise the supply will be standard rated and the Library will be liable for the output VAT. Acceptable items of proof are e.g. bills of lading, waybills and certificates of shipment. VAT on Supplies of Goods to the EC 9. All supplies to VAT registered customers are zero rated provided their VAT number is present on the invoice. Supplies to non-registered EC customers are standard rated.

12 VAT on Services Supplied Outside the UK 10. For VAT purposes the place where a supply is deemed to be made is called the 'place of supply' and is the place where it is liable to VAT, if any. If the place of supply is outside the EC it is outside the scope of VAT. 11. The basic rule is that the VAT is chargeable where the supplier belongs, i.e. the Library charges UK VAT on services provided outside the UK. However there are many exceptions including items such as training courses and transfers of rights (patents and royalties) and it is essential to contact Finance. 12. The above is a summary of the extent of the Library's UK VAT liability. VAT legislation is complex so please contact Finance with any queries you may have. Deferred Duty Scheme 13. Goods imported by freight agents through ports and airports, and postal goods over 2,000 will be brought to account by HMRC under the Deferred Duty Scheme. The Library has been allocated a VAT Deferment Approval Number ( ) which may only be used by certain agents nominated by the Library. A list of the approved agents appears in Appendix 3. The Deferment Approval Number must not be quoted to or used by any other agent. 14. Anyone needing to use this scheme should contact Finance. 15. For goods handled by non-approved agents the VAT, duty and other charges must be paid before the goods are released. Storage costs are charged after a few days so prompt payment is essential 16. Goods under 2,000 supplied by post and on-line services will not be covered by the Deferred Duty scheme. 10. Anti-Fraud Policy The Library requires all staff at all times to act honestly and with integrity and to safeguard the public resources for which they are responsible. Fraud is an ever present threat to these resources and hence must be a concern to all members of staff. The purpose of the anti-fraud policy is to set out individual responsibilities regarding both the prevention of fraud and the procedures to be followed where a fraud is detected or suspected. For more information see [add link to new Fraud pages once set up] 11. Anti-Bribery Policy The Bribery Act 2010 covers all sorts of bribery, the offering and receiving of a bribe, directly or indirectly, whether or not it involves a public official in the UK or abroad. Bribery is a criminal offence for both individuals and commercial organisations and the Library therefore have a zero tolerance approach to any form of bribery and will investigate all suspected bribery offences, regardless of grade or position. For more information see [add link to new Bribery pages once set up] 12. Insurance There are some work situations where colleagues may consider taking out commercial insurance. The Government s general view on commercial insurance is that it should not be used as better value can usually be gained across the whole of Government by each department self-insuring. This means that the Government, through HM Treasury, underwrites any losses themselves. However, there are occasions when commercial insurance can provide better value for money. See guidance on taking out commercial insurance is available at Commercial Insurance Details of the Library s Travel Insurance is available at Travel Insurance 13. Payment Card Industry Compliance The Payment Card Industry Data Security Standard (PCI DSS) was put together by the PCI Security Standards Council. The purpose of the PCI DSS Standard is to decrease payment card fraud across the internet and increase credit card data security. Every organisation that stores, transmits or processes card holder data must comply with the PCI DSS. The Standard basically requires merchants and member service providers (MSPs) who store, process or transmit cardholder data to: Build and maintain a secure IT network

13 Protect cardholder data Maintain a vulnerability management program Implement strong access control measures Regularly monitor and test networks Maintain an information security policy The PCI Data Security Standard Self-Assessment Questionnaire is a validation tool intended to assist merchants and service providers in self-evaluating their compliance with the Payment Card Industry Data Security Standard (PCI DSS). All merchants and their service providers are required to comply with the PCI Data Security Standard in its entirety. The BL needs to maintain compliance with the Government rules on the security of credit card details within the BL s various systems. It is therefore imperative that any changes to or new payment processes are notified to the Finance section so as not to put our future compliance at risk. The Executive Team and the Board Audit Committee have agreed that no new payment methods should be introduced without consultation with, and sign off by, Finance to confirm that they are fully compliant with PCI. Any changes to processes or systems that are being contemplated that change the way payments are received (including, face to face over a till, by telephone or online) are discussed with Jayne Cove (FSD) prior to any decision to make the change. Finance can then advise on and help in the development of the new process to ensure that it maintains the overall integrity of the PCI regime.

14 6. Asset Management All public sector organisations own or use a range of assets. An important part of asset management is good procurement delivering value for money. Public sector organisations should normally acquire goods and services through fair and open competition, using OGC advice to determine best practice. It is important to ensure that procurement is in line with European law, including restrictions on state aids. It is good practice for public sector organisations to take stock of their assets from time to time and reconsider whether they are being used efficiently. If there is irreducible spare capacity there may be scope to use part of it for other government activities, or to exploit it commercially for non-statutory business - sometimes called wider markets activity. These can generate additional income for the organisation, improving its efficiency. For further advice please contact your Divisional Finance Manager [insert link]. Asset Verification -This exercise, which is carried out by Financial Accounts in December of each year, is to reconcile that all registered assets are still in existence and located according to their entry on the Fixed Assets Register. It also allows the condition of assets to be checked and where necessary amendments to be made in respect of useful economic lifespan. The Process -Financial Accounts will provide a report from Oracle Fixed Assets which details :- Responsibility centre Asset number (System generated and not to be confused with IT equipment barcode numbers) Description Useful economic life (when purchased) Net book value (estimated current value) Original cost The report is separated by division and is further broken down by asset category e.g. IT, office etc and sent to relevant RCMs. It is the role of the RCM to carry out the following checks :- Confirm that the asset is still in possession Assess the economic lifespan e.g. If an asset has been held for say 2 of 3 useful years, is it still likely to be used after its 3 rd year? If so, it s useful economic life can be changed. Note any assets in the area which are NOT on the system generated list (may be registered in another area, or may have been donated and not registered) RCMs are required to complete their submissions within 1 to 2 weeks and return to Financial Accounts. Financial Accounts check all returns both individually and against each other (to reconcile where any assets registered in one area, may be physically located in another) Any movement or transfer of asset to another responsibility centre or location should be notified to Financial Accounts. If you need any further training on fixed assets please contact the Financial Accountant on Attractive Assets As per Managing Public Money the library keeps a record of its attractive assets. Within the Library attractive assets include collection items and IT equipment under 10,000 e.g. mobile devices, however due to the volume of items within this category it is not feasible or cost beneficial to include them all within the central Fixed Asset Register. In addition these items are recorded in their own discreet systems and therefore no separate central attractive assets register is maintained. IT Equipment - All IT equipment below the capitalisation threshold is recorded on an IT Service Management system Collection Items -The Library has a duty to catalogue items within the collection and for this there is a planned programme of work. All catalogues are listed on the website and can be accessed by the members of the public.

15 7. The Role of Internal Audit Internal Audit is a branch of management that has been given specific objectives of providing independent and objective assurance outside of line management. Its function is to examine transactions, activities and systems and report thereon in terms of their effectiveness in managing risk, providing control and appropriate governance. To carry out this function Internal Audit has right of access to any records, documentation and explanations required. It is then the function of line management to take the appropriate decisions. The Head of Internal Audit has the right of direct access to the Chief Executive. Currently the Internal Audit function is contracted out. Objective Internal Audit provides an independent appraisal which assists management at all levels in the discharge of their responsibilities in order to ensure that the activities and operations they control are carried out effectively, efficiently, economically and in a manner which meets the requirements of Government Accounting and other legislative frameworks. This objective should be achieved by: Audit Programme a. reviewing and appraising the everyday application of accounting financial and other control systems and recommending ways to achieve effective control at a reasonable cost b. reviewing the effectiveness with which resources are allocated, used, accounted for and safeguarded from losses of any kind. (This includes specifically checks of cash, stores and resource material) c. ascertaining established policy, and the appropriateness and level of compliance d. ascertaining the reliability of data which management use for decision making e. conducting special investigations at the request of management f. ascertaining that the accounting and other data is reliable as a basis for the production of the Library's accounts. Internal Audit will work to a three year rolling programme which is approved by the Board Audit Committee and the Board and revised at least every year. The programme will as far as possible allocate a time scale for individual activities to be examined. Any comments or suggestions for inclusion in the programme should be addressed to the Chief Financial Officer. Before a review commences, terms of reference will be agreed with senior management and the Director in the area to be reviewed. Internal Audit Reports Management in the area will have an opportunity to comment upon the draft report, along with the Director. The final report will be submitted to the Board Audit Committee, following discussion with the Executive Leadership Team. The Head of Internal Audit reports annually to the Chief Executive. Copies of the annual report are sent to the Department for Culture, Media and Sport and the National Audit Office. All Internal Audit papers, other than working files, will be held in Finance. Requests for access should be made to the Compliance Officer. Author: Intranet Last updated: 16/10/13

16 8. Responsibility for Income and Receipts The Library charges for a number of goods and services it provides which places on it a responsibility to ensure it invoices for these services and that payment is received. A definition of Income and Receipts is provided below: Income is the value (exclusive of VAT) of goods or services supplied by the Library to its customers for which a charge is levied. Receipts are the cash funds received (exclusive of VAT) by the Library from its customers for goods or services supplied. The difference between the value of Income and Receipts reflects the amount of outstanding debts still to be collected by the Library. As a public body the Library is obliged to prepare a formal account for presentation to Parliament. Since 1990/91 this account is prepared using accruals-based accounting. This records income and expenditure as they are earned and incurred, not as money is received or paid. In addition, the cost or value of fixed assets is charged against income as depreciation over the estimated lives of the assets. The aim of accruals-based accounting is to match the cost, or value, of resources consumed in a financial period with the income earned in that period. Income is a significant indicator of how well the Library has identified the services which customers need and are willing to pay for. Additionally they are an important factor in planning the funds to be made available to the Library for its operations. Control It will be obvious that in order to have sufficient funds available to meet planned expenditure it is essential that the planned earnings target is achieved. A major contribution to this is firm control of the debtor position. Debt levels should be closely monitored and provision made for bad debts. The authority for writing off bad debts has been devolved to individual divisions. Any shortfall in earnings could lead to a call for prompt reductions in expenditure to balance for the lack of cash. Such reductions will fall in the first place in the area in which the shortfall has occurred. The planning and monitoring of income are as important as the control of expenditure and, just as the responsibility is fixed upon responsibility centre managers for the latter, so responsibility for earnings is allocated to a named individual. Elements that need to be considered in this context are as follows: i. Marketing - ascertaining what the user wants and is prepared to pay for, where the users are to be found and how large the market is, whether the Library is in a position to satisfy the need economically, etc. ii. iii. iv. Adherence to Pricing Policy The Board need to approve all new services and price changes and do this in accordance with the Library s Pricing Policy. The Pricing Policy is based on the Treasury s Fees and Charges guide which places certain restrictions on what can be charged for and at what level. For further information please contact your Divisional Finance Manager. Credit control - Credit Control is normally the responsibility of Finance unless the divisions have satisfactory arrangements in place. Credit terms should not exceed 30 days. Sales - determine strategy for selling, packaging, discounts, advertising, etc. v. Cash Flow - estimating and monitoring the collection of cash receipts is usually the responsibility of Finance. Monthly Reports To assist managers in achieving their income objectives they are provided with monthly budgetary control reports. Additional information concerning income and outstanding debtors is also available and officers nominated to take responsibility for earnings should ensure that this data is provided regularly for review and action where necessary. Overall performance is monitored monthly by the Business Performance Group and managers responsible for income may be asked to attend to explain the performance of their services.

17 Accounting for Income This is usually achieved via a 'Product File' used in the sales ledger computerised system. This file needs to be reviewed regularly to ensure that a correct linkage is maintained and that those responsible receive the appropriate reports. For manual invoicing the information is obtained from Income Raising forms. Managers responsible for income generating services need to ensure that the product file is updated for any priced increases agreed by the Board so that the correct amount is charged to the customer. An audit procedure is in place to feed back the Board s decisions and managers need to sign off the implementation of the price change for audit purposes. The Results Required The primary purpose of nominating an individual officer to undertake earnings responsibility is to ensure that the inflow of cash meets the target, and thereby to protect the Library's planned expenditure programmes and continued developments. It will also assist in achieving: i. Satisfaction of users' needs. ii. iii. iv. Debtor control to the minimum level consistent with the norm for the product or trade. Good value for money for the Library's investment. The requirements of Audit, Government Accounting, etc. Author: M Wilkin Last updated: 16/10/13

18 9. Cash Management Payments Received Author: M Wilkin Last updated: 16/10/13 1. Every effort should be made to encourage those who are paying the library by cheque to use other means, e.g. bank giro credit transfer, CHAPS, BACS or direct debit. Those who do pay by cheque should be encouraged to use crossed cheques marked 'account payee only. 2. All post likely to contain cheques or other forms of payment must be opened by two full-time employees of the British Library. Cheques must immediately be stamped with the Library stamp and a receipt number upon opening. 3. Sections other than the main post opening areas, which regularly or occasionally receive payments, must follow the same procedures as outlined in paragraph Cheques must be stored in a safe overnight and banked as soon as possible. 5. Payments by other methods i.e. postal orders must be treated in exactly the same way as cash or cheques by being recorded and brought to Finance. 6. Where possible, cheques should not be sent through the internal mail. If it is necessary then the person sending the items should ensure that they keep a record of the details of the cheques sent through the mail. They should also confirm that the recipient has received and banked the cheque.

19 10. Cash-Flow Planning The Management Agreement [add link] gives the Library powers to draw down Grant-in-Aid in monthly instalments to meet expected net payments having regard to any cash balances available. The amount drawdown is strictly controlled within targets set by the Department of Culture, Media and Sport. These targets are known has Departmental Expenditure Limits (DEL). 1. It is the responsibility of the Accounting Officer to ensure cash balances are sufficient to meet incurred expenditure. This responsibility is delegated for day-to-day control to the Chief Accountant. 2. The monthly application of Grant-in-Aid will be assessed in relation to projected matured liabilities and current cash balances. Peaks of major items of expenditure such as acquisitions prepayments should be anticipated prior to call down of Grant-in-Aid. 3. Receipts patterns for the year should be established, taking into account seasonal fluctuations and end-year profiles, in order to match applications of Grant-in-Aid with retained balances. 4. During the eleventh and twelfth months of the financial year, monitoring of expenditure and receipts by division will be done more frequently. Management reports will be produced for this purpose. 5. During the last two weeks of the year particular attention should be paid to the funds position in relation to the payment of matured liabilities due before the month end. Also, as at all times, due receipts shall be collected promptly, with appropriate credit control procedures in place to achieve this. 6. Excess balances may be invested overnight on the money markets within the constraints of paragraph 2. If appropriate 7 days and 14 days investments may also be made if interest rates are favourable. It is the responsibility of the Financial Accountant to make overnight investments and to ensure positive cash balances are retained. 7. The Library is not entitled to carry forward funds into the next financial year but in order to observe charity rules it: a) Will retain an unrestricted cash balance in line with the reserves policy agreed by the Board; b) Keep unlimited unexpended income from donations held in accordance with specific restrictions on their purpose, (Restricted Funds). Author: M Wilkin Last updated: 16/10/13

20 11. Integrity of Accounts Data Accounts data includes all data records on which decisions are based and conclusions drawn. Its integrity is vital at all times from receipt of the original paperwork/record to its eventual disposal. Data records pass through the following stages: Receipt/Identification/Preparation Input/Processing and Filing Output checks Storage and Destruction Throughout there must be clear, consistent record-keeping, prompt action and efficient, secure filing. All stages will benefit from a clear, tidy desk to limit the chances of mislaying (even briefly) vital paperwork. Finance System Access Access to the finance system must be restricted to staff who need it and set to the level necessary for them to perform their jobs effectively. Access is by a user id/password combination unique to each user which is linked to a profile that determines the activities the individual can carry out. Passwords, which MUST NOT be disclosed to anyone, consist of 5-8 characters which can be alphabetic, numeric or alpha-numeric and include punctuation marks. The format of a password is very important. It must be easily remembered by the holder since recording it in any form is strictly forbidden, yet should be one that cannot be intelligently guessed at. To maintain security users will be required periodically to change their passwords. Ensuring segregation of duties and control of IDs and user profiles is the responsibility of Finance, Boston Spa which is concerned with: what they are, where they are and who holds them changes of duties within sections staff leaving sections temporary staff suspicious activities The System Administrator, Finance, Boston Spa should be informed of any changes in the above and of any other event that may affect the security of the system via the passwords. Screens must not be left on in circumstances where unauthorised access to the system could be gained. If you must leave your computer unattended log out from Oracle before doing so. Author: M Wilkin Last updated: 16/10/13