Chart of Accounts (COA) - Overview Charles Darwin University Chart of Accounts (COA) - Overview Presenters: Garrett McGrath University Finance

Purpose of Demonstration To introduce the changes to the Charles Darwin University’s Chart of Accounts (COA) and provide further understanding on how these changes will establish an improved, dynamic and simplified view to facilitate the reporting needs of the University in 2018. Desirable outcomes: Making the COA meaningful and accessible to all staff in the University Enabling better tracking and reporting Reducing the number of Natural Accounts and Sub Accounts Remove the double up of areas and activities Location / Campus to be introduced The new Chart of Accounts will become effective as of January 2018 http://www.cdu.edu.au/finance/office-financial-services#ap31_7 Discuss: Introduce yourself & Participants. House keeping, toilets, exits, tea breaks. Mention the key parties involved in the project and the period this project has been running Background: The existing chart of accounts has been in existence since the commencement of the University and a detailed review of the chart of accounts has not been conducted. Since its introduction, there have been many changes:   New campuses have been added, The organisational structure has changed, Significant growth has occurred with student numbers, schools and course offerings and New entities / business types have been added. The existing chart of accounts has grown since its introduction to facilitate some of the above changes, this has led to many new natural accounts and sub accounts being created many of which are now dormant.

The University’s Chart of Accounts (COA) What is a Chart of Accounts The Chart of Accounts is a financial organisational tool that provides a complete listing of every account in CDU’s financial system. The COA is a coding system used to record income, expenditure, assets & liabilities for the University and prepare financial reporting. CDU’s Financials system is used to facilitate management of the University's financial resources and to provide information to stakeholders The Structure of CDU’s Chart of Accounts: CDU’s Chart of Accounts is made up of 5 segments totalling 15 characters, this is also known as the Cost Code. The five segments are: Area – 4 characters Activity – 4 characters Account – 3 characters Sub-Account – 2 characters Entity / Location – 2 characters Discuss: Stakeholders The Members of Council, Government, Partners, Funding Bodies, Areas, Colleges, Business Enterprises, Centres, Staff, Individual Project etc.

The University’s Chart of Accounts (COA) Hierarchy - http://www.cdu.edu.au/sites/default/files/fas/docs/hierarchy.pdf The Hierarchy segment defines the grouping they belong to. Each Hierarchy will have a division, branch / college, and a section. The Hierarchy can be classified under the following: 1000 – Vice Chancellor & President 2000 – Indigenous Leadership 3000 – Operations 4000 – Research & Research Training 5000 – Teaching Group 7000 – Global Strategy & Advancement 8000 – VET

The University’s Chart of Accounts (COA) Area Area is used to identify the business or organisational unit where transactions are controlled. It will closely follow the official Organisation Chart at the higher levels The Area or posting segment (division, branch / college and section) defines the internal management structure or areas of responsibility within a Hierarchy. 2018 Chart of Accounts changes – Appropriation - http://www.cdu.edu.au/sites/default/files/fas/docs/area_and_approp_activity_-_old_to_new.pdf Restricted - http://www.cdu.edu.au/sites/default/files/fas/docs/area_and_restricted_activity_-_old_to_new.pdf Discuss: Area It is used to identify the business or organisational unit where transactions are controlled. It will closely follow the official Organisation Chart at the higher levels  This combination can be identified by a unique number which is used at the posting level. The area or posting segment (division, branch / college, and section) defines the internal management structure or areas of responsibility within a Hierarchy.

The University’s Chart of Accounts (COA) Activity Appropriation and Restricted The segment identifies jobs or projects under the control of an Area where transactions need to be separately identified and monitored. Appropriation - http://www.cdu.edu.au/sites/default/files/fas/docs/appropriation.pdf Appropriation is the operational budget an area receives to carry out their operational activities for the year. 0500 Series – recurrent overhead activity – non-Academic 1000 Series – recurrent administration support activity – non-Academic 2000 Series – recurrent academic teaching HE activity – Academic 3000 Series – recurrent academic teaching VET activity – Academic Discuss: Appropriation Appropriation funding is recurrent funding received from Commonwealth and Territory governments. Appropriation accounts cannot receive income – only increases and decreases in budget. Appropriation accounts do not receive a cash carry forward balance as they are renewed each year. Appropriation activities are the 1000, 2000 & 3000 series.

The University’s Chart of Accounts (COA) Activity (continued) Restricted - http://www.cdu.edu.au/sites/default/files/fas/docs/restricted.pdf Restricted funding relates to activities funded for a specific purpose and the University uses them for self-funded and project related activities. Restricted accounts are subject to funds control which means the expenditure cannot exceed the funds received. 4000 Series – Acquittable Contracts/Projects 5000 Series – Non Acquittable Projects / Consultancy 6000 Series – Research & Scholarship 7000 Series – Facilities Management 8000 Series – Entrepreneurial (Only to report income) Restricted guidelines - http://www.cdu.edu.au/sites/default/files/fas/docs/restricted_activity_-_operating_guidelines_2018.pdf Discuss: Restricted Most common usage of Restricted Activities is for capital works; research projects where reporting and acquittal of expenditure is required; consulting jobs; and various one-off projects. The University undertakes a significant number of research, consulting and other individual engagements that often span over more than one accounting period. The Restricted Activity segment provides a mechanism for collecting and reporting financial activities across multiple accounting periods. 4000 Series – Acquittable Contracts/Projects o 4100 – 4499 - Teaching Activities and other non-research projects, Acquittable o 4500 – 4799 - Consultancy (non-individual), Acquittable o 4800 – 4999 - Internally Funded Projects, funded by Appropriation, requires tracking. Non-Acquittable. 5000 Series – Non Acquittable Projects/Consultancy o 5101 – 5199 – Projects o 5300 – 5799 – Individual academic codes o 5800 – 5899 - Teaching contracts/projects o 5940 – Commercial business units 6000 Series – Research & Scholarship o 6101 – 6199 - Scholarships o 6201 – 6299 - Internal Research o 6401 – 6499 - RTS Codes – Internal o 6500 – 6999 – External Research 7000 Series – Facilities Management o 7101 – 7399 - Capital works FAS o 7401 – 7499 – Other areas capital works o 7501 – 7599 – Minor new works o 7601 – 7699 – Repairs and maintenance 8000 Series – Revenue

The University’s Chart of Accounts (COA) Natural Account and Sub Account - http://www.cdu.edu.au/sites/default/files/fas/docs/accounts_sub-accounts.pdf The Natural Account segment is used to describe the nature of the transaction, it is for financial reporting and management control purposes. The Sub Account itemises the natural account to an individual expense adding an additional description to describe the nature of the transaction. Each natural account must have a sub account. Income – 100 – 199 Expenditure – 200 – 699 Assets – 751 – 899 Liabilities – 901 - 999 Equity – 711 – 749 2018 Natural & Sub Account Changes – http://www.cdu.edu.au/sites/default/files/fas/docs/natural_and_sub_final_-_old_to_new.pdf Discuss: Income – 100 - 199 o 111 - 119 – Australian Government Contracts o 121 - 129 – HELP - Australian Government payments o 131 - 139 – NT Government financial assistance o 141 - 149 – Consultancy and Contracts, Donations, Scholarships and Prizes o 151 - 159 – Fees & Charges o 171 - 179 – Investment revenue and income o 181 - 189 – Other revenue o 191 - 199 – Miscellaneous Income Expenditure – 200 - 699 o 201 - 299 – Salaries & Related Costs (includes staff medical expenses) o 301 - 499 – Administration & Operational Expenses o 501 - 599 – Income Tax Expense (To be used by Finance Only) o 601 - 699 – Depreciation & Amortisation (to be used by Finance Only) Assets – 751 - 899 o 751 - 799 – Current Assets o 811 - 899 – Noncurrent assets Liabilities – 901 - 999 Equity – 711 - 749

The University’s Chart of Accounts (COA) A major change to the Chart of Accounts is the introduction of Location as a reporting segment. CDU operates from many locations throughout the territory and nationally so to improve reporting, decision making and management of operations, a Location segment was necessary. Entity / Location - http://www.cdu.edu.au/sites/default/files/fas/docs/location_or_entities.pdf Entity is used to identify the various Business Enterprises of CDU and the Separate Legal entities within the University. The Location segment is used to determine the assignment of campus or physical locality to transactions. The Entity / Location is an independent segment that is a two digit numeric value (01-99) Discuss: The Business Entities and Separate Legal entities do not require a location code. Using Location will assist with the improvement of financial reporting and management control purposes.

What is Location?? Location will be used to define where a transaction belongs to e.g: - A new computer is purchased for an office at the Waterfront Campus = 05 Darwin Waterfront. (The computer will be used at the Waterfront Campus, the cost is coded here) - A lecturer from Casuarina books a flight to Sydney for a conference = 02 Casuarina (The lecturer works fulltime in Casuarina the cost relates to their primary work location) - A Nursing student in Sydney attends placement in Royal Darwin Hospital = 03 Sydney (the cost to enter the student on the placement program is coded to where the student is based for study) Certain Colleges / Areas will have multiple locations e.g: - VET area operates in multiple locations - College of business operates from multiple locations Central Support Service costs are coded to CDU Head Office 01 and Teaching/Research costs are coded to a location 02-19 Discuss: The purpose of Location is to assist in identifying how much a college costs to run in a certain area or location. Most costs relating to teaching and academics will need to be assigned to a location. Where a student studies helps identify where the income is earned and as such the costs associated with this teaching should be attributed to the same location. For Online Students, their income will be coded to where their primary course is thought. E.g Business = 05 Darwin Waterfront.

What is Location (continued) For every staff member, a location code will be assigned based on their principal place of work e.g: - A nursing lecturer from Darwin teaching in Sydney = 03 Sydney (Sydney is where the lecturer works, where they are from is not relevant) - A business lecturer at the waterfront who lives in Palmerston works from home 1 day a week = 05 Darwin Waterfront (principal place of work is Darwin Waterfront, the cost relates to this location). - The College Dean for Business and Law has three locations to manage, 50% of his time is spent at the Waterfront, 20% in Sydney and 30% in Casuarina = 05 Darwin Waterfront (College Dean spends the majority of time at Darwin Waterfront, where a staff time is split it should be based on the largest %). - A finance staff member working in Casuarina performs tasks for multiple locations = 01 Head Office (Central Support Services provided to the University as a whole are coded to Head Office regardless of where the person works). Discuss:

What is CDU Head Office and why is it different to Location? CDU Head Office is to be used for Central Support Services provided to the University as a whole. Head Office expenses will mainly relate to non-academic activities. Some of the following are considered Central Support Services and should be coded to CDU Head Office: Discuss: Most Operational expenses will be considered as Head Office Expenses. The executive team is considered Head Office Expenses. Heads of Schools and College Dean expenses should be coded to a Location as they are a direct expense for teaching.

What is CDU Head Office and why is it different to Location? Some examples of CDU Head Office expense and exceptions: - Marketing engage a consultant from Melbourne to develop an advert = 01 CDU Head Office (the advert is for all of CDU). - ITMS purchase a new software licence which can be used by all staff = 01 CDU Head Office (the software is for all CDU staff). - Major projects renovate an office in Jabiru = 11 Jabiru (the project is only for Jabiru) Buildings on the Casuarina Campus will be either Head Office 01 or Casuarina 02. - http://www.cdu.edu.au/sites/default/files/fas/docs/building_locations_cas.pdf Discuss: Most Operational expenses will be considered as Head Office Expenses. The executive team is considered Head Office Expenses. Heads of Schools and College Dean expenses should be coded to a Location as they are a direct expense for teaching.

What to do from here: Delete, Shred or Destroy any old ‘Cheat Sheets’ you may have at your desk or saved on your computer Become familiar with the new Chart of Accounts in particular the areas that you use most Obtain and make reference to the new Chart of Accounts which will be available to all staff online. New Chart of Account Versions made available will include: The New 2018 Chart of Accounts Old to New Chart of Accounts What will happen to Historical data: Historical data will now be under the new numbering format, no past data will be lost Historical data for Location will not be mapped to the new COA as this was never classified by location in the past, all historical data will remain at 01. Historical data for Entity Codes 21-99 will be mapped to the new codes where a code has been changed Discuss:

What was achieved by the project: Reporting by location will now be possible. The COA will be aligned with the new Organisational Structure The number of activity accounts has reduced. The number of natural and sub-accounts has reduced. Additional resource documents will be available Regular training will be provided on the COA and the use of Cost Codes The COA will have a fresh new look. Discuss: Introducing location was a primary objective for the team, this will now facilitate more accurate reporting and assist in strategic decision making. Activity accounts has reduced through closing of old dormant accounts, where an activity was defined by a location and a clean up of duplication of area and activity or activity and natural account. Natural and sub accounts have reduced from 1,260 to less than 950. This was done through closing old dormant accounts and grouping similar sub accounts together. Resource documents will include an explanation of what the chart of accounts is and how it works. The New COA and an Old to New COA. Natural Accounts will have notes on what should be coded there. Restricted activity account rules will be explained, the finance website will be update to reflect the changes

Thank you Office of Financial Services – Finance FAQs http://www.cdu.edu.au/finance/office-financial-services Thank you