FINANCE DEPARTMENT TREASURY MANAGEMENT AND ETHICAL INVESTMENT & BANKING POLICY

Transcription

1 FINANCE DEPARTMENT TREASURY MANAGEMENT AND ETHICAL INVESTMENT & BANKING POLICY 1. Purpose 1.1 This policy sets out the regulations and arrangements for the University s management of cash reserves, investments and borrowing requirements. 2. Scope 2.1 Treasury management comprises the management of all cash, money market investments and capital market transactions in connection with the cash and funding resources of the University and the control of associated risks. All treasury management activities involve risk and potential reward. 2.2 The University s policy on borrowing is to minimise cost while maintaining the stability of its financial position by sound debt management techniques. The objective for lending purposes is to achieve the best possible return while minimising risk. 3. Treasury Management 3.1 The strategic decisions made in respect of borrowing, investment and financing are made by the University s Accounting Officer, the Vice Chancellor, and the Finance and Resources Committee of Governors in line with the University s schedule of delegation. The Accounting Officer and the Finance and Resources Committee delegates the reporting and Treasury Management activities to the Director of Finance & Chief Financial Officer. 3.2 The University adheres to the requirements of the Terms and Conditions of Funding for Higher Education Institutions, as determined by the Office for Students (OfS), in considering any future financial commitments, including long term borrowing. This includes the requirement to consider risk and affordability, value for money and for the source of repayment to be clearly identified and agreed by the governing body. 3.3 All borrowing is reported in the financial forecasts shared with the OfS, in line with the terms and conditions of funding. 3.4 The Director of Finance & Chief Financial Officer will report annually to the Finance and Resources committee on the Treasury Management activities for the year. This will include a review of the risk of any investments placed and the return from these investments, a 1

2 schedule of current levels of borrowing and the outcome of the review of the ethical investment policy of the banking institutions or financial advisers. 3.5 The Director of Finance & Chief Financial Officer is authorised by the Finance and Resources Committee, subject to the provisions of the policy statement, to: (a) deposit surplus funds of the University with approved organisations up to limits specified for each individual organisation; and (b) draw down and borrow funds, subject to the loan agreements approved by the Finance and Resources Committee. 4. Banking Arrangements 4.1 All bank accounts and investments will be held in the name of the University or one of its subsidiary companies, and will be managed by the Finance Department on behalf of the Director of Finance & Chief Financial Officer. 4.2 No other Department, School, Faculty or Employee/Officer of the University shall operate a bank account in the name of the University and no cheques or financial instruments made payable to the University shall be endorsed and credited to any other account. 4.3 The decision to appoint a bank or other professional financial advisers (such as investment managers) will be presented by the Director of Finance & Chief Financial Officer for recommendation to be considered by the Finance and Resources Committee. The appointment shall be for a specified period after which consideration shall be given by the Finance and Resources Committee to competitively tender the service. 4.4 As part of the appointment process of a bank or other professional financial advisers due consideration will be given to ethical banking standards and how these fit with the aims and values of the University. The ethical banking policy of the service providers will be obtained and reviewed at least annually during the term of service to ensure best fit is maintained. 4.5 The decision to open or close a bank account for dealing with the University s funds will be authorised by the Accounting Officer, the Vice Chancellor. 4.6 All automated transfers on behalf of the University must be authorised in line with the bank mandate, as approved by the Finance and Resources Committee and shared with the bank. Details of authorised persons and limits are included in the authorisation of expenditure and payment of suppliers financial procedures. 4.7 All bank accounts will be reconciled to the financial ledgers for daily banking and at the month end. Any large or unusual items will be investigated by the Assistant Director of Finance. 4.7 The University will avoid taking on any currency risk and accordingly will not borrow or deposit funds denominated in foreign currencies. 5. Formulation of the Treasury Management Plan 5.1 The Director of Finance & Chief Financial Officer will prepare: 2

3 a) an annual forecast of surplus funds and loan repayment requirements for the coming financial year (in the form of a cash flow forecast); and b) a plan for funding the University s capital finance proposals and lending surplus cash for the period covered by the forecast. 5.2 In preparing the budget the Director of Finance & Chief Financial Officer will have regard to: a) maintenance of a financially sustainably position for the University. b) ensuring appropriate facilities are available to meet capital and interest repayments, for funding needs arising from uncertainties inherent in the planning process and from the timing and amount of cash flows; c) the current levels of interest rates and forecasts of future changes in interest rates. d) any new proposals to raise capital finance and the impact of forecast interest rates on these proposals; e) policies contained in other planning documents within the University including: (i) the strategic plan; (ii) the revenue budget and capital programme; (iii) working capital management including debt collection, creditors payments and payroll. 5.3 Based on the annual forecast the Director of Finance & Chief Financial Officer will prepare monthly rolling forecasts of the short term surplus cash for the purpose of applying the strategy on a day to day basis. 5.4 The Director of Finance & Chief Financial Officer has the authority to carry out the University s strategy for depositing surplus funds and managing the cash flow of the University. In exercising these powers he/she will have regard to the perceived credit risk associated with the approved organisations with which funds may be deposited or invested; also the effect of possible changes in interest rates on the cost of borrowing and the return from investing and the need to maintain adequate liquid funds to meet the University s obligations. 6. Approved methods of raising capital finance 6.1 The Director of Finance & Chief Financial Officer will undertake on behalf of the Governing Body the borrowing activities of the University. He/she cannot commit the University to any particular borrowing for capital purposes without obtaining the specific authority of Finance and Resources Committee. 6.2 The Director of Finance & Chief Financial Officer will prepare for Finance and Resources Committee a report for each proposed capital borrowing. 7. Investing and depositing of surplus funds 3

4 7.1 In considering the investment of surplus cash balances the Director of Finance & Chief Financial Officer gives due regard to the preservation of the capital value of the University s resources. The Director of Finance & Chief Financial Officer has delegated authority to invest the surplus funds of the University in accordance with the annual financial strategy and in accordance with the terms of this statement. He/she is authorised to deposit or invest funds only with the organisations agreed with the Finance and Resources Committee. 7.2 The Director of Finance & Chief Financial Officer is responsible for monitoring the creditworthiness of approved deposit takers using appropriate external sources of information including credit agency reports. This is reported annually to the Finance and Resources Committee. 8. Ethical Investment 8.1 The guiding principle of the University s investment policy is to generate funds with which to further the ambitions, aims and values of the University. For ethical reasons the University will not invest in or carry out trade with suppliers of related services that do not support these aims and values. These include where such investment might conflict or be inconsistent with the aims, objects or activities of Canterbury Christ Church University. 8.2 The University will not directly invest funds in the following: Activities that conflict with the University s sustainability measures; within which there is an aim to reduce the carbon footprint; Fossil fuel companies, including coal and tar-sands; Corporations complicit in the violation of International law; Arms companies, including sales to regimes; Where such investment might have an adverse impact on the reputation of the University; Where the investment fund is not able to demonstrate social responsibility within the context of the locality of the investment activity; and, Where the investment is considered unethical and not in keeping with the University s values. 8.3 To further deliver this commitment to ethical investment the University will review the supply chain to ensure it supports the aims of the modern slavery act to abolish the use of forced labour and to discourage human trafficking. The commitment will be reviewed and reported annually to the Finance and Resources Committee as part of the annual Treasury report. 9. Interest and Exchange rate risk exposure 9.1 The Director of Finance & Chief Financial Officer is responsible for monitoring the University s interest rate exposure and for determining the interest rate exposure strategy within the limits set by this statement and by the annual financial strategy or budget for targeted returns on investment. The funds are invested within a short to medium term, to ensure that liquidity is maintained for working capital purposes. 9.2 The principal factor governing the exposure of surplus funds to interest rate movements is the University s cash flow forecast. Where surplus funds are required to meet possible cash outflows in the near future they will necessarily be deposited short term for periods which will ensure that funds are available. 4

5 9.3 Deposits are placed in GBP with a UK based banking institution that meets the minimum standard of credit risk, as agreed with the Finance and Resources Committee. This will reduce the impact of exchange rate differences and reduce the exposure to risk from international issues. 10. Legal issues 10.1 Prior to entering into any borrowing or investment transaction it is the responsibility of the Director of Finance & Chief Financial Officer to satisfy him/herself by reference (if necessary) to the University s legal advisors that the proposed transaction does not breach any article in the Instrument of Government, the University s financial regulations or standing orders, the requirements of the memorandum with the funding council or any terms and covenants concerning borrowing. 11. Cash Management 11.1 The Director of Finance & Chief Financial Officer approves the provision of cash accounts and cash equivalents (including vouchers) for the commercial activities of the University, including but not limited to the supply of catering services and the sale of books Where minor items of expenditure are to be met in the form of cash transactions the Director of Finance & Chief Financial Officer may approve the holding of a cash account on an imprest basis by a nominated, responsible officer of the University. The amount of which shall be determined by the Director of Finance & Chief Financial Officer All expenditure from this account must be supported by a receipted voucher. No personal business expenses can be reimbursed from a cash account, a member of staff must submit an expenses claim for reimbursement following the Finance Department s procedure No income received on behalf of the University may be paid into an imprest account. All income must be banked as stipulated in the financial procedures of the University An officer responsible for an imprest account will be responsible for the reconciliation and reporting of the balance held in the cash account to the Finance Department. At any time the responsible officer may be required to produce cash and vouchers for inspection without prior notification On leaving the employment of the University or otherwise ceasing to be entitled to hold an imprest account the officer will account to the Director of Finance & Chief Financial Officer for the balance of the account Cash equivalents in the form of redeemable vouchers are to be managed and reported as if they are a cash imprest account and will be overseen by the Finance Department. 12. Cash and Cash Equivalent Security 12.1 All cash and cash equivalent balances are to be held in a secure safe when not being held in a cash register All safes are to be approved by the Finance Department. No safe shall be acquired that does not meet the specification as agreed with the Finance Department. 5

6 12.3 Cash in transit is managed through an approved third party. This contract is managed by the Finance Department and any transfer of cash is to be arranged by the Financial Accounts Team of the Finance Department. No other arrangements may be used to transfer the University s cash balances Cash equivalent balances in the form of vouchers, are to be managed by the Accounts Payable team and held within the Finance Office s safe. Once they are provided to the requesting Department they are to be issued promptly to the recipients. 13. Responsible Person to contact 13.1 Any queries arising from this policy should be raised with the Assistant Director of Finance: Financial Accounting. 6