CHAPTER 13

FINANCIAL MANAGEMENT GUIDELINES OF THE UNIVERSITY AND THE

POSTGRADUATE INSTITUTES

Contents of the Chapter

Section A - University

PART I – GENERAL

13.1.1 Objectives

13.1.2 Acts, Laws and Regulations Applicable

13.1.3 Accountability for public funds in the university system

13.1.4 Finance Committee and its functions

PART 2 – THE FINANCIAL ADMINISTRATION FUNCTION

13.2.1 Financial authorities / matters / transactions which are retained and/or handled directly by the Bursar’s Office (Senate Financial Division and under the direct preview of the Vice Chancellor)

13.2.2 Financial authorities/transactions which were decentralized to the Faculty Finance Units (FFUs) with effect from 1.10.2004.

13.2.3 Sections and functions of the Central Financial Administration Division

APPENDIX I APPENDIX II APPENDIX III APPENDIX IV

Section B

Financial Management Guidelines for

Postgraduate Institutes of the University of Peradeniya

13.1 Objective 13.2 Functions of the Financial Administration Division

13.3 Payments

13.4 Final Accounts Section

13.5 Petty Cash

13.6 Loans

13.7 Stores

13.8 Fixed Assets

13.9 Investments

13.10 Procurement Procedures

13.11 Research Grants

Section A - University

PART I - GENERAL Preamble

Financial Administration is a key part of the University administration which comprises of collection, accumulation and disbursement of funds to achieve the University objectives in an effective and efficient manner, while adhering to the rules and regulations.

The legal basis for the functioning of Universities in Sri Lanka is provided by the Universities Act No. 16 of 1978 that came into operation from 1^st of January 1979 and its subsequent amendments. As per Section 45 (2) (i) of Part (VII) of the Universities Act No.16 of 1978, the administration of funds is empowered to the Council of the Universities while the Bursar of the University is the custodian of funds. The University takes steps to delegate financial authority of the Accounting officer to subordinate officers as per the Financial Regulation No. 135 to smooth the financial operations of the University.

13.1.1 Objectives

1. To summarize existing procedures to meet the current development and trends for an effective Financial Management System for Good Governance in the University.

1. To enable those involved in financial matters in the University of Peradeniya to understand their duties, responsibilities, and to perform their expected tasks maintaining economy, efficiency and effectiveness, and ensuring transparency and accountability.

13.1.2 Acts, Laws and Regulations Applicable

These guidelines have been prepared considering the following Acts, Ordinances,

Regulations, By-laws, Circulars and Policies that are applicable for the Financial Management of the University.

• Constitution of the Democratic Socialist Republic of Sri Lanka – 1978 and subsequent Amendments thereto.
• Universities Act No. 16 of 1978 and subsequent amendments thereto.
• Finance Act No. 38 of 1971 and subsequent amendments thereto.
• ETF Act No. 46 of 1980 and ETF (Special Provision) Act No: 19 of 1993.
• UPF Ordinance of the UGC.
• Gratuity Act No. 12 of 1983 and subsequent amendments thereto.
• Pension Ordinance of the UGC.
• Circulars issued by the UGC, Treasury, Ministry of Finance and Public Administration and adopted by the UGC.
• Financial Regulations and Establishment Code of the Government of Sri Lanka.
• Establishment Code of the Universities and Higher Educational Institutions.

• Government Procurement Guidelines and Procurement Manual.
• Internal Circulars issued by the University of Peradeniya.
• Right to Information Act No 12 of 2016
• National Audit Act No 19 of 2018
• Finance Policy of the University
• Policy on Conflict of Interest

13.1.3 Accountability for public funds in the university system

Accountability refers to the answerability for the results of the activities and funds assigned to a person and all government officials should be responsible and accountable for public funds. As a State University, the University of Peradeniya has to largely depend on public funds. More specifically, the Council of the University and the following Officials are accountable to the Parliament via the Committee on Public Enterprises (COPE) with regard to the use of public funds.

13.1.3.1 - The Council

The Council of the University shall be the executive governing authority of the University as per the Section 44 (1) of the Universities Act No 16 of 1978 and shall hold, control and administer the property and funds of the University as per the Section 45 (2) of the said act. Therefore, control over the public fund is vested with the Council subject to the rules and regulations that are applicable to the University governance.

13.1.3.2 - Chief Accounting Officer

According to the Financial Regulation 127, the Chief Accounting Officer is the Secretary to the line Ministry and is responsible for adequacy of the financial administration of all the departments falling within the Ministry and is accountable to the Parliament through various standing committees such as Committee on Public Enterprisers (COPE), Committee on Public Accounts (COPA) etc. The Secretary to the line Ministry has delegated his/her accountability to the downline officers for better control of public funds and smooth functioning of the universities.

13.1.3.3 - Accounting Officer

The Vice-Chancellor is the Principle Executive Officer of the University and the Accounting Officer of the University as per the Section 34 (2) & (5) of the Universities Act No 16 of 1978.

13.1.3.4 - Assistant Accounting Officer

The Registrar is the Assistant Accounting Officer of the University according to the Section 37 (4) of the Universities Act No 16 of 1978 and the Custodian of the records and properties of the University.

13.1.3.5 - Custodian of funds

According to Section 38 (2) of the Universities Act No 16 of 1978, the Bursar shall, subject to the direction and control of the Registrar, be responsible for the administration of the finances of the University, and maintain its accounts in such form and manner as may be prescribed by rules. He/she shall have the custody of the funds of the University.

13.1.4 Finance Committee and its functions

Overview

The Finance Committee is a Council sub-committee which is responsible to the Council for the finances of the University ensuring that the University manages its financial functions effectively.

The Finance Committee shall liaise and provide assurance to the Audit Committee as appropriate.

It shall review the University’s financial strategy and be confident that it is sustainable and underpins the University’s corporate strategy. It shall review all aspects of applicable financial regulations and ensure that appropriate actions are in place and are effective. It also shall ensure that adequate financial allocations have been made for and acceptable explanations and clarifications are called as appropriate for any deviations.

Composition

The Finance Committee of the University shall consist of the following members:

• Ex- Officio Members: Vice Chancellor

Deputy Vice Chancellor

Deans of the Faculties

Registrar

• Two members appointed by the Council from amongst its UGC appointed members

(preferably at least one member should be an expert in the area of Financial Management)

• Bursar of the University – Member and the Secretary

Secretary

Bursar of the University shall act as the Secretary/ Convener to the Committee. In the absence of the Bursar, his/her nominee ( at Deputy Bursar level) shall be presented at the Finance Committee

Quorum

There shall be a quorum when at least 05 Ex- Officio members and at least 01 Council appointed member, are present.

Duties & Responsibilities of the Finance Committee shall be:

1. to review budgets/ estimates initially prepared by the Accounts & Budget section in order to ensure that the budget is in line with the University Corporate Plan and the Annual Action Plan,

1. to review actual income and expenditure reports provided by the Finance division and analyze with the budget,

1. to review year-end financial statements and make recommendations,
2. to review and make approvals regarding the authorized signatories in respect of all banking activities,

1. to review and make recommendations for the approval of the Council regarding the Delegation of Authority levels,

1. to evaluate significant asset acquisitions in terms of the procurement plan, disposals and making recommendations to the Council as appropriate,

1. to review and monitor capital projects, works and programmes of the University.

Authority

The Council authorizes the Committee, within the scope of its responsibilities,

1. to perform activities within its terms of reference as the Committee deems relevant and necessary;

1. to seek any clarifications/information it requires from any employee or any division of the university or to summon any employee or any outside party for more clarifications

Frequency of Meetings

1. The Committee shall meet at least ten times in each financial year in full plenary sessions to review the Committee’s activities and overall financial management procedures.

1. Additional special meetings shall be called as deemed necessary by the Chairman on the request of a member of the Committee or if there are any special matters to be discussed.

Notice of Meetings

Notice of the meetings of the Committee shall be given by the Secretary as the Convener.

Minutes of Meeting

The Secretary shall minute the proceedings and decisions taken at all meetings. Minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once confirmed, to all members of the Council unless a conflict of interest makes it inappropriate to do so.

*The Secretary of the committee shall be responsible for the custody of the records. All documents shall be addressed in writing to and from the committee.

Ethical Practices, Confidentiality and Independence Members of the Committee shall:

• exercise objectivity, and probity in the discharge of their duties and responsibilities;

• refrain from entering into any activity that may prejudice their ability to carry out their duties and responsibilities objectively and independently;

• act in a proper and prudent manner in the use of information acquired in the course of their duties and responsibilities;

• exercise sound judgment guided by highest personal standards of honesty and integrity in all matters relating to membership of the Committee;

Review of Terms of Reference

These Terms of Reference shall be reviewed annually by the Committee to ensure the terms remain consistent with the Committee’s objectives and responsibilities. Any proposed amendments to the Terms of Reference shall be referred to the Council for approval.

PART 2 – THE FINANCIAL ADMINISTRATION FUNCTION

Until the 1^st October 2004, all financial transactions were effected by the Bursar’s Office. However, with the decentralization of Financial Administration with the approval of the Council, on the recommendation of the Vice Chancellor and the Finance Committee, some activities have been devolved while the Central Financial Administration (CFA) retains some activities. The financial matters that are handled by the Central Financial Administration Division (CFAD) are given in Section 13.2.1. The financial matters that are handled Finance Units (through AB or SAB of Faculties) are given in Section 13.2.2

13.2.1 Financial authorities / matters / transactions which are retained and/or handled directly by the Bursar’s Office (Senate Financial Division and under the direct preview of the Vice Chancellor)

1. Payment of salaries and wages/Overtime for employees attached to Departments other than Faculties.
2. Payment of loans and loan recoveries. iii) Payment of air-fare, per diem, incidental allowances and warm-clothes allowance (for foreign travels on study leave, sabbatical leave and training).
3. Payment of Holiday payments to the administrative officers and other employees.
4. Foreign supplies - after receiving the Regional Procurement Committee (RPC) and/or University Procurement Committee (UPC) approvals, placing indents, clearing, making payments, settling advances, etc.
5. University Procurement Committee (UPC) Meetings or University Tender Boards; for procurement of goods and services and for construction and major rehabilitation projects.
6. Payment for bulk supply of Electricity, Water, Taxes, Railway Warrants, etc. viii) Payment of capital construction and Rehabilitation Projects. ix) Financial management of Centers/Units that come under the purview of the Vice- Chancellor including payments for consultancy assignments.

x) All payments in respect of Divisions and Units which are not attached to the Faculties. xi) Release/Processing, applications of Provident Fund and Gratuity, University Pension fund xii) All revenue matters including receipts from students and scholars – registration fees, hall fees, library fees and fines, etc.

1. Payments for goods and services relating to Publications Board, Arts Council, General Convocation, Annual Research Sessions, etc.
2. Purchase of uniform materials for the employees. xv) Long service award payments. xvi) Payments for disciplinary inquiries and Selection Committees. xvii) Obtaining money from the Treasury. xviii) Preparation of Final Accounts. xix) Handling all matters relating to the Finance Committee, the University Procurement Committee (University Tender Board), Fellowships, Scholarships, Bursaries (including

‘Mahapola’ and Bursary payments), etc. xx) Answering the queries and reports relevant to the Financial Administration, issued by the Internal Audit and the National Audit Office.

13.2.2 Financial authorities/transactions which were decentralized to the Faculty Finance Units (FFUs) with effect from 1.10.2004.

1. Payment of Visiting Lecturer Fees.
2. Payment of Over-time. iii) Payment of Traveling and subsistence (local traveling only).

iv) Procurement of goods & services up to the approved limits (RPC/Delegated Authority) adhering to the Procurement Guidelines.

v) Making miscellaneous payments in respect of the following;

1. Consumable & stationery items
2. Fuel and lubricants
3. Tailoring charges
4. Glassware items, mechanical and electrical goods
5. Medical supplies
6. Other supplies

vi) Payments for maintenance charges of the following;

1. Vehicles
2. Plant and machinery
3. Equipment
4. Furniture and others

vii) Payment for the following contractual services (recurrent nature) :

1. Transport
2. Telephone bills
3. Postal charges
4. Electricity payment (if any)
5. Water charges (if any)
6. Security services, cleaning services (janitorial services)
7. Rents and hiring charges
8. Printing and advertising charges

viii) Payment for the following other Recurrent expenditure:

1. Membership fees
2. Bank charges
3. Workshops and seminars
4. Academic research
5. Staff development

ix) Payment for the following miscellaneous items;

1. Course fees
2. Scholarships
3. Faculty Boards
4. Petty cash imprests
5. Reimbursement of petty cash imprests
6. Miscellaneous advances and their settlements
7. Supplies advances (on indents) and their settlements
8. Capital advances and their settlements
9. Research and Fund advances and their settlements
10. Payment of Examination claims and related expenses

13.2.3 Sections and functions of the Central Financial Administration Division

Sections:

01. Salaries, Retirement Benefits and Loans Section 02. Procurement Management Section 03. Payments, Revenue, Student Services and Management Accounting Section 04. Accounting & Reporting, and Research & Funds Section

Note: Organization Structure of the Central Financial Administration Division is given in Appendix I

Functions:

13.2.3.1. Salaries, Retirement Benefits and Loans Section

This section is responsible for;

1. Timely preparation of salaries and wages of permanent, temporary, casual, assignment/contract basis employees of the university.

1. Deduction and remittance of Advance Personal Income Tax (APIT) on employment income, to the Inland Revenue Department (IRD), preparation of Annual Return of APIT and submission of the same to IRD and issuance of T 10 certificates.

1. Issuance of salary particulars, undertakings to remit loan installments/net salary of employees to banks and other financial institutions, certification of salaries paid and loans deducted for the amalgamation of University Provident Fund Balances, certification of periods of salaries paid for the consideration of awarding long service awards and payment of retirement benefits and certificate of the Accountant for obtaining claims from National Insurance Trust Fund (NITF) under the Agrahara Insurance Scheme. .

1. Taking over / settlement of balances of festival/ special advances and loans of employees transferred to and from the university.

1. Processing Distress, Computer, Motor Vehicle, Motor Bicycle, Staff and Provident fund loans and festival/ special advancesto permanent staff.

1. Processing documents relating to releasing of University Provident Fund, Gratuity, Pension, EPF and ETF to the retired/terminated/resigned permanent, temporary, contract, and assignment basis employees.

13.2.3.2. Procurement Management Section

This section is responsible for :

1. The procurement guidelines enacted by the Department of Public Finance is the key regulation that governs the procurement process in the University. The university has decentralized its procurement, where faculties have authority to procure goods and services up to the limits mentioned in the procurement guidelines (with the approval of the Regional Procurement Committee) / delegated by the University authorities.)

1. Preparation of annual procurement plan by obtaining necessary information from various Departments / Divisions.

1. Registration of suppliers to procure goods and services under the shopping procedures (Procurement Guideline 3.4.3).

1. Administer the calling of quotations and bid opening.

1. Arrange Technical Evaluation Committees.

1. Recommendation of payments for local supply creditors and supply advances.

1. In the case of foreign suppliers:
   1. Obtain relevant approval for foreign purchases from relevant authorities.
   2. Preparation of documents for Marine Cargo/Air freights Policies.
   3. Make payments to foreign suppliers
   4. Custom clearance
   5. Purchase of air tickets for official purposes.
2. Issuing and receiving goods from and to the stores and maintain records.

1. Management of all the stores that are currently in operation in the University.

1. Conduct stock verifications.

13.2.3.3. Payments, Revenue, Student Services and Management Accounting Section

This section is responsible for:

1. Disbursement of approved capital/recurrent payments within the budget allocation and sending monthly budget utilization reports to the Faculties/Divisions.

1. Collection of all revenue except funds, researches, centres, and all other self-financing projects.

1. Request/obtain allocated recurrent and capital funds from the Treasury and distribute among faculties and other relevant divisions.

1. Open up of fixed deposits with the excess funds and manage the investment according to relevant rules and regulations.

1. Collect revenues (Student income such as hall fees and fines, damages, registration fees etc), and other refundable deposits and bank these funds promptly to the relevant bank accounts.

1. Collect the dues of the bond violators and invest such money in fixed deposits.

1. Deduct staff recoveries (house rent, water, electricity charges and other revenues) from monthly salaries.

1. Disburse Mahapola and Bursary funds and submission of reports to the relevant authorities.

1. Handle endowment funds (Scholarships, Prizes and Medals).

1. Open fixed deposits from the funds received for endowment funds with the necessary approvals.

1. Issue clearance certificates for the students who wish to obtain provisional certificates, transcripts or degree certificates once dues have been settled.

13. 2. 3. 4 Accounting & Reporting and Research & Funds Section

This section is responsible for;

1. Financial accounting and reporting (Final accounts &special financial reports).

1. Answer audit queries and take corrective measures as per the matters highlighted in the audit queries and reports and liaison with internal and external auditors.

1. Preparation of monthly cash forecast statement to be sent to the UGC and the Treasury for obtaining funds.

1. Development and maintenance of ERP System.

1. Reviewing systems and controls relating to the Financial Administration.
2. Ensuring that resources are correctly and effectively used

1. Prepare annual budget of the university.

1. Accounting & reporting of financial activities relating to Publications, Research & Funds and other self-financing projects funded by internal and external parties.

The Organogram of the Division to be included here

Organizational Structure – Financial Administration Division

Bursar

Note:

1. The ABs/SABs attached to the Faculties and the CDCE shall directly report to the Bursar, and also report to the functional Deputy Bursars(except Deputy Bursar, Salaries, Retirement Benefits and Loans Section) for relevant subject matters.

This organization chart represents only the relationships among the bursar staff and does not include the other administrative staff who has the financial authority (e.g., Vice Chancellor, Deans of Faculties, Director of the CDCE, and the Registrar).

APPENDIX II

SUPPLIES COMMITTEE

Composition of Supplies Committee

The Supplies Committee shall consist of the following members.

• Deputy Vice-Chancellor – Chairman
• Deans of Faculties
• Registrar
• Bursar

The following officials attend the supplies committee in the capacity of invitees

• Head, Department of Statistics and Computer Science – Faculty of Science
• Director /Internet & Communication Service Unit (NCSU)
• One senior academic member from the Department of Computer Engineering - Faculty of Engineer

The Secretary to Supplies Committee shall be the DB/SAB/AB of the Local Supplies Section.

Duties of the University Supplies Committee

1. ensure the availability of funds before commencement of a procurement activity

 no procurement of goods, works and services shall be initiated without adequate financial provision in the approved budget. (2.5.1 of procurement guideline),

1. ensure the need of the goods to the university and to

1. scrutinize the specification/s to procure more suitable goods to the University

APPENDIX III

FINANCIAL MANAGEMENT GUIDELINES RELATED TO RESEARCH GRANTS (INTERNAL/ EXTERNAL); FOREIGN FUNDED PROJECTS/GRANTS; BOND VIOLATION FUNDS; PUBLICATIONS AND CENTRES/UNITS

1. Financial Management Guidelines related to Research Grants (Internal)

1. Research Grants (External)

1. UGC Grants for Lecturer (Probationary)

1. National Centre for Advanced Studies (NCAS) Grants

1. Bond Violation Fund

1. University Publications

1. Financial matters related to Centres/ Units/Cells

1. Financial Management Guidelines for use of funds generated from Self-Financing Activities (SFAs)

1. Foreign Funded Projects/Grants

Introduction

The Research, Funds and Publications Unit of the Accounting &Reporting and Research &Funds section is primarily responsible for coordinating and monitoring of financial activities related to university research grants. Further it handles all financial matters, connected to grants awarded by the University Grants Commission (UGC) for Lecturer (Probationary), grants awarded by the National Centre for

Advanced Studies (NCAS) for postgraduate studies, Bond Violation Funds, University Fellowships, University Publications and financial matters relating to University established Centres/ Units/Cells. Furthermore, this section is responsible for coordinating with respective external authorities, obtaining necessary approval for foreign funded projects/grants managed by the faculties and handling all financial matters related to foreign projects/grants managed by the Centres that are attached to this section.

Accounts branch of each Faculty, on receipt of funds, handles all financial matters with respect to university research grants and maintains individual grant files. In addition, all financial matters relating to outside research grants and foreign funded projects/grants coming under the respective faculties are also handled by these branches.

1. Financial Management Guidelines related to Research Grants (Internal)

1. The main functions of the Research, Funds and Publications section relating to university research grants are as follows:

• • 1. distribution of funds allocated in the annual budget of the University under “Strengthening Research” among the respective faculties as recommended by the Senate Research Committee and Finance Committee and approved by the Council.

• • 1. assign ledger codes for individual research grants.

1. The main functions of the Accounts Branch of each faculty related to University research grants are as follows:

• 1. receipt of funds to the individual research grants.
  2. make all payments requested by the grantee, with the recommendation of the relevant Head of the Department and approval of the Dean of the respective Faculty as per the approved budget.

• 1. payment of advances for the purchase of smaller value items and consumables requested by the grantee with the recommendation of the relevant Head of the Department and approval of the Dean of the respective Faculty as per the approved budget.

• 1. procurement of goods and services identified in the approved budget only up to the amount received from the Treasury.

• 1. preparation of half yearly and annual financial statements to be submitted to the Faculty Research Committee and the Senate Research Committee on the request of the grantees.

• 1. reimbursement of any expenditure incurred by the grantee with the recommendation of the relevant Head of the Department and the approval of the Dean of the respective Faculty or the Vice-Chancellor within the delegated financial authority limits.

• 1. transfer in full the funds allocated to the general research account, including any funds disbursed to the grantee already, in the event any research grant is withdrawn/cancelled.

• 1. transfer any remaining balances of completed research grants, to the general research account maintained in the Research, Funds and Publications Section.

• 1. recover any money paid to a grantee/s as recommended by the Faculty Research Committee and approved by the Senate Research Committee.

• 1. maintain detailed records of each grant or fund received and details of expenses incurred.

• 1. provide income and expenditure statements of research grants to the relevant authorities and auditors on request.

2. Research Grants (External)

All financial matters related to external research grants funded by the National Science Foundation (NSF), Centre for Agricultural Research Policies (CARP), National Research Council (NRC), etc. are fully decentralized to the respective faculties.

The guidelines to be followed with regard to the external research grants are as follows:

1. opening of separate ledger accounts and maintaining files for individual research grants upon the receipt of grant awarding letters from the respective research institution.

1. opening separate ledger accounts for individual grantees and recording receipt of money received from outside research institutions.

1. making payments to the grantee with the recommendation of the relevant Head of the Department and approval of the Dean of the respective Faculty or the Vice-Chancellor within the delegated authority limits as per the approved budget.

1. reimbursing any expenditure incurred by the grantee with the recommendation of the relevant Head of the Department and approval of the Dean of the respective Faculty or the Vice-Chancellor within the delegated financial authority limits.

1. paying of advances for the purchase of smaller value items and consumables requested by the grantee with the recommendation of the relevant Head of the Department and approval of the Dean of the respective Faculty as per the approved budget.

1. handling the entire procurement process with respect to procuring of goods and services as per the approved budget falling within the Faculty delegated authority limits. If the value of the procurement exceeds the delegated authority limit, the procurement process should be carried up to the Technical Evaluation Committee level and forward the documents to the Local Supplies Section for obtaining the approval of the University

Procurement Committee

1. preparing financial progress reports on quarterly/biannually/annual basis to be forwarded to the respective research institution along with the research progress reports prepared by the grantee

1. submitting of final financial statements and transferring any remaining balances to the respective research institution/s upon completion of the grant. In the event any research grant is withdrawn/cancelled, transfer funds to the respective research institution as directed

3. UGC Grants for Lecturer (Probationary)

The Research, Funds and Publications Section in the Division of Financial Administration handles all financial matters related to UGC Grants for Lecturer (Probationary). The key functions of this section related to these grants are as follows:

1. opening up and maintaining files for individual grantees upon receipt of grant awarding letters from the UGC.

1. obtaining a copy of the signed surety bond and agreement from the Academic Establishments Division for the initial granting period and any subsequent extensions.

1. opening up separate ledger accounts for individual grantees and record the money received from the UGC.

1. making payments as per the approved budget, on the recommendation of the relevant Head of the Department and the approval of the Dean of the respective Faculty or the Vice Chancellor within the approved delegated authority limits. All payments shall be supported by valid bills, if the payments are made to a 3^rd party and should be related to the research. No personal expenses shall be made out of grant funds.

1. reimbursing any expenditure incurred by the grantee with the recommendation of the relevant Head of the Department and the approval of the Dean of the respective Faculty or the Vice-Chancellor within the delegated financial authority limits.

1. paying advances for the purchase of smaller value items and consumables requested by the grantee on the recommendation of the relevant Head of the Department and the approval of the Dean of the respective Faculty or the Vice Chancellor as per the approved budget.

1. coordinating with the Regional Procurement Committees of the respective Faculty to carry out the procurement of goods and services included in the budget.

1. preparing financial progress reports on quarterly/biannually/annual basis to be forwarded to the UGC along with the research progress reports prepared by the grantee.

1. submitting of final financial statements and transferring any remaining balances to the UGC upon completion of the grant.

1. recovering the money paid to a grantee as directed by the UGC, in case of breach of bond or agreement signed with the University or fails to utilize grant money and/or show adequate progress.

4. National Centre for Advanced Studies (NCAS) Grants

All financial matters related to NCAS grants awarded to the academic staff of the University are handled by the Research, Funds and Publications Section of the Financial Administration Division. The key functions of this section related to these grants are as follows:

1. opening up and maintaining files for individual grantees upon the receipt of grant awarding letters from NCAS.

1. obtaining a copy of the signed surety bond and agreement from the Academic Establishments Division covering the initial granting period and any subsequent extensions.

1. opening up separate vote ledgers for individual grantees and record the money received from NCAS.

1. Releasing the funds received in installments from NCAS, to the grantees on the recommendation of the Academic Establishments Division.

1. submitting two biannual reports to the NCAS by the grantee for each year of funding, along with the financial progress report in order to get the future installments released to the university (the grantee shall submit originals of bills and other proof documents to the UGC through the Research, Funds and Publications Section).

1. submitting the final financial statements and transferring any remaining balances to the NCAS upon completion of the grant.

1. taking action to recover the money paid to the grantee as directed by the NCAS, in case of breach of bond or agreement signed with the University or fails to utilize grant money and/or show adequate progress.

4. Bond Violation Fund

The distribution of income derived from the investment of bond violation funds among faculties are handled by the Research, Funds and Publications Section of the Financial Administration Division. Final disbursements of funds to the academic staff attached to the Faculties are carried out by the Accounts Branches of the faculties concerned, while payment to library academic staff and the administrative staff are handled by this section.

6. University Publications

Financial activities related to University approved publications are handled by the Research, Funds and Publications Section. However, all procurements according to the approved budgets are handled by the respective Faculties concerned. The main activities handled by the Research, Funds and Publications Section in relation to publications are as follows:

1. submitting the required annual allocation for university publications, when preparing Annual Budget Estimates of the University

1. checking, recommending and forwarding the budgets/revised budgets prepared by the Managing Editors of the respective publication to the Academic & Council Division to obtain the recommendation of the Publication Committee and the Finance Committee and approval of the Council.

1. Making all payments related to University publications forwarded by the Faculties on the recommendation of the Managing Editor and the approval of the Dean of the respective Faculty.

7. Financial matters related to Centres/ Units/Cells

All financial matters related to the Centre for Environmental Studies (CES), Staff Development

Centre (SDC), International Relations Office (InRO), Sri Lanka Japan Study Centre (SLJSC),

University Research Council (URC), Arts Council, Peradeniya University Art Gallery and Museum Trust and the Child Care Center are handled by the Research, Funds and Publications Section.

Financial matters related to all other Centres/Units/Cells are handled by the respective Faculties to where the Centre/Unit/Cell is attached.

The key functions related to Centres/Units/Cells are as follows

1. obtaining the recommendation of the Finance Committee and approval of the Council for the annual budgets or the activity budgets prepared according to the prescribed format for each activity conducted by the respective Centre/Unit/Cell.

1. making all payments of these Centres/Units/Cells according to the approved budgets, with the recommendation of the respective Director and the approval of Registrar /Vice Chancellor according to the approved financial authority limits.

1. Preparing and forwarding the financial progress reports for the recommendation of the governing bodies of the respective Centre/Unit/Cell and the approval of the University Council.

1. preparing final financial statements of the self-financing activities conducted by these Centres/Units/Cells upon completion of the activity and obtain the recommendation of the Finance Committee and the approval of the Council.

1. confirming the availability of funds for the recruitment of staff on contract basis and purchasing of capital assets for the Centre/Unit/Cell.

1. maintaining separate votes ledgers for each Centre/Unit/Cell for updating all transactions and preparing schedules to be included in the financial statements of the University.

8. Financial Management Guidelines for use of funds generated from Self-Financing Activities (SFAs)

According to Commission Circular No: 04/2016 dated 01^st March 2016, Self-Financing Activities (SFAs) include activities such as consultancy, postgraduate taught courses, short- courses, part-time courses, external degree programmes, testing assignments, surveys, contract research, contract testing, etc conducted by the University. However, income generating activities such as laboratory services and testing, medical tests and fees charged for hiring or renting of University properties, are not considered as SFAs,but considered as “ancillary services” provided by the University using the facilities available and such revenue shall be transferred to the University Fund.

The guidelines to be followed when carrying out SFAs are as follows:

1. obtaining the prior approval of the Vice-Chancellor with the authorized delegation by the Council.

1. preparing a budget on non-profit and cost recovery (Self-Financing) basis according to the prescribed format and obtain the recommendation of Finance Committee and approval of the Council.

1. in order to manage the SFAs efficiently and effectively, staff can be hired on contract basis using the funds of the SFAs. Salaries and wages paid to such external personnel should be similar to the parallel positions of the University. The Coordinator/Grantee shall make a request to the Corporate Management Division (CMD) confirming the availability of funds by the Financial Officer in-charge of the funds of the respective Centre/Unit/Cell.

1. preparing financial statements on completion of SFAs and obtaining the recommendation of the Finance Committee and the approval of the Council, prior to any payments being made to the employees of the University.

1. distributing funds allocated to the Development Votes in each SFA according to the criteria approved by the Council and shall be utilized only for the defined purposes approved by the Council.

9.Foreign Funded Projects/Grants

The Research, Funds and Publications Section coordinates the process of obtaining the required approvals from respective external authorities for all foreign funded projects of the University. All financial matters related to the implementation of projects are fully delegated to the respective Faculties. However, all financial matters related to foreign grants managed by the Centres attached to the Research, Funds and Publications Section shall be handled by this section.

The guidelines to be followed with regard to foreign funded projects/grants are as follows:  Approvals for projects/grants

1. obtaining the recommendation of the respective Head of the Department and the Dean of the Faculty.

1. obtaining clearance for the draft agreement from the Legal officer of the University and the approval of the Council (depending on the nature of the project/grant, the Vice Chancellor may refer it to the Academic Development and Planning Committee and the Senate for approval).

1. obtaining the approval of the National Planning Department (project proposal and the draft agreement should be forwarded through the Chairman/UGC and the Secretary/Ministry of Higher Education).

1. obtaining the approval of the Department of External Resources.

1. obtain clearance from the Attorney General’s Department for the Draft Agreement.

1. obtaining clearance from the Ministry of Foreign Relations for the Draft Agreement.

1. obtaining approval of the Cabinet of Ministers.

 Receiving, releasing and utilizing of funds

1. Grant funds can be channeled through the Treasury or directly disbursed to the University. If the funds are directly disbursed to the University, the University should submit detailed monthly expenditure reports with clear expenditure lines and supporting documents to the line Ministry.

However, if the External Resources Department mandates to obtain funds through the Treasury, funds shall be credited to the Deputy Secretary to the Treasury account maintained at the Central Bank of Sri Lanka. The Department of Treasury Operations will release funds for the implementation of projects/grants after receiving funds from the donors and on the request of the University.

1. preparing a budget in the prescribed format and forwarding it for the recommendation of the Finance Committee and approval of the Council.

1. submitting the progress reports to the Donor, Ministry and the Treasury in the prescribed formats for the time durations specified.

1. transferring any remaining balance in the respective account, to the donor on completion of the activities of the project/grant.

APPENDIX IV

DELEGATION OF FINANCIAL AUTHORITY

Preamble

As per the requirement of Financial Regulation 135 (Delegation of Functions for Financial Control), an Accounting Officer may delegate his/her functions either generally or with regard to individual transaction; but he/she must do so in a reasonable way. In particular he/she must satisfy himself/herself with regard to the competence of those to whom authority is delegated, and in regard to the adequacy of internal checks in the system of delegation. The Accounting Officer will be responsible for his/her scheme of delegation and for supervising the system of financial control generally. His/her scheme of delegation will naturally be determined by the organization of the department, except where geographical and technical factors necessitate special arrangements. Whenever possible the duties should be so divided that each transaction passes through two or three different officers.

An officer to whom functions have been delegated will have full discretion to perform the duties delegated to him and will be held accountable for his/her acts. It will also be his/her duty to keep the Accounting Officer acquainted of any transactions, which involve novel principle, or are of sufficient importance, to merit the Accounting Officer’s personal attention. On the other hand, and act of delegation will not relieve an Accounting Officer of his/her ultimate responsibility. If an officer exceeds or misuses his/her delegated powers, or fails to carry out his/her duties, he/she will be accountable for such acts and defaults. In such a case, however, the Accounting Officer will not be held responsible, unless the excesses, misuses or defaults are attributable to causes within his/her control.

In turn, an officer holding a delegation can entrust to his/her subordinates the routine or minor tasks connected with and within the limits of his delegation. This does not, however, absolve him of his/her own responsibility to his/her Accounting Officer.

Whenever the Accounting Officer intends to delegate one or more of his/her functions, he/she should prepare a Schedule specifying each officer, by name or office, and the functions delegated to him/her. In the case of delegation for the control of expenditure, the Accounting Officer may link particular functions with specific allocations. At the same time any limitations imposed on the character or amount of individual transactions should be specified. Arrangements to cover absence from duty must also be shown on the schedule, which should be revised periodically and circulated in the department generally. Copies of delegations relating to expenditure should be supplied, in particular, to each Authorizing, Approving, Certifying and Paying officer; and copies of delegations in respect of the receipt of money, to each Assessing, Collecting and Accepting Officer. A copy should also be sent to Auditor-General. If necessary, the advice of the Chief Accounting Officer or of the Treasury (Department of Public Finance) may be sought concerning the Schedule.

It is important that the scope of delegation should be set down in writing so that there may be no doubt in the future about the nature of the responsibilities of the officers to whom authority has been delegated. Such delegations should be periodically reviewed and any revisions brought to the notice of officers concerned.

The following stages or functions may be distinguished: - (a) Expenditure: i Authorization (FR 136). ii Approval (FR 137). iii Certification (FR 138).

iv Payment (FR 139-140).

(b) Income: i Assessment (FR 142(1)). ii Collection (FR 142(2-3)).

iii Acceptance (FR 142(4)).

In particular circumstances, a delegation of authority granted to an individual officer by an Accounting Officer may involve more than one of the above stages or functions.

Conclusion

The Delegation of Financial Authority shall be prepared annually and its approval should be granted by the Governing Council of the University/Boards of Management of the PGIs where applicable on the recommendation of the Finance Committee (Delegation of Authority for 2019).

Section B

FINANCIAL MANAGEMENT GUIDELINES FOR PG INSTITUTES OF THE

UNIVERSITY OF PERADENIYA

13.1 Objective Reference to source

and SoPs

These guidelines explains the internal accounting procedures for the currently function three

Postgraduate Institutes affiliated to the University of Peradeniya namely Postgraduate Institute of Agriculture (PGIA), Postgraduate Institute of Science (PGIS), Postgraduate Institute of Humanities and Social Sciences (PGIHS), and are prepared to ensure that their assets are safeguarded, financial statements are free from material misstatements and that finances are managed with responsible stewardship. These guidelines serve as a commitment to proper, accurate financial management and reporting. The Postgraduate Institute of Medical Sciences (PGIMS) which was established by the Ordinance No.03 of 2019, affiliated to the University of Peradeniya shall also follow all financial rules, regulations applicable to the PGIs once the Institution commences its activities.

The PGIs are required to forward their financial statements to the University and the University Grants Commission.

All personnel with a role in the management of the Institutes’ fiscal operations are expected to uphold the policies in these guidelines.

Establishment

PGIA – Ordinance No.09 of

1979

PGIS – By an Ordinance made by the UGC under Section 18 with Section 24A of the Universities Act no.16

of 1978

PGIHS – Ordinance made by the Ministry of Higher Education under Section 24 A of the Universities Act.

13.1.1 Financial Management Structure a) Board of Management

Board of Management of the Postgraduate Institutes shall be the Governing Authority of the Institute and acts as the Academic and Executive Body of the Institute. The Board of Management shall be chaired by the Director of the respective Institute and members represent both the ex-officio members and UGC appointed members. The respective Ordinances detail provisions to hold, control and administer the property and fund of the

Institute.

b) Chief Accounting Officer

According to the Financial Regulation 127, the Chief Accounting Officer is the Secretary to the line Ministry who is responsible for adequacy of the financial administration of all the departments within the Ministry and is accountable to the Parliament through various Standing Committees such as Committee on Public Enterprisers (COPE). The Secretary to the line Ministry has delegated his/ her accountability to the downline officers for the better control of public funds and smooth functioning of the Institute.

c) Accounting Officer The Director is the Accounting Officer as well as the Principal Executive Officer of the

Postgraduate Institute.

d) Finance Committee and its Functions

The Finance Committee is a sub-committee appointed by the Board of Management to provide assistance to the Board of Management in relation to the financial operations. However, there is no uniformity or documented statutory provisions related to the establishment, composition, membership, frequency of meetings for the Finance Committee.

e) Members of the Finance Committee

1. Director (Chairman)
2. UGC appointed Board of Management Member
3. Dean of the related Faculty of the University
4. Board of Management Member from a Board of Study
5. Deputy Registrar/Senior Assistant Registrar/Assistant Registrar
6. Deputy Bursar/Senior Assistant Bursar/Assistant Bursar (Secretary to the Finance

Committee)

f) Functions of the Finance Committee

1. Scrutinize the Annual Budget, Procurement Plan and Action Plan and recommend them to the Board of Management

1. Examine and recommend the estimates of various projects and activities

1. Examine and recommend the financial statements of the Institute to the Board of Management

1. examine and recommend annually the delegation of finance authority as per the FR 135 to the Board of Management

1. Examine the current financial procedures and evaluate the progress of the financial positions and propose remedial actions to improve the quality of the financial management of the Institute.

1. Examine and recommend recurrent and capital income and expenditure which are not covered by circulars, financial regulations and statutory provisions.

1. Examine and recommend course fees, refunds, lecture fee per hour for separate boards of study.

1. Recommend new investments and withdrawal of fixed deposits for the approval of the Board of Management

g) Financial Year

 The financial year of PG Institutes shall be from 1^st January to 31^st December of a particular year.

h) Duties of the Deputy Bursar/Senior Assistant Bursar/Assistant Bursar of the Postgraduate Institutes

1. Organize and coordinate accounting activities of the institute.

1. Attend regular management meetings and hold regular meetings with the accounting staff personnel to brief them on relevant matters arising out of management meetings.

1. Allocate schedule of duties to staff members in the Finance Division.

1. Ensure that financial management systems and improvements initiated by management are implemented.

1. Monitor revenue and expenditure and other commitments to ensure that they are within the budgetary allocation.

1. Certify payment vouchers and sign cheques.

1. Ensure that the books of accounts and other accounting documents of the Institutes are properly maintained to ensure that,

1. all revenues are properly captured and recorded.

1. all expenditure are properly captured and recorded.

iii) daily cash balances are reported completely and accurately.

1. all liabilities are properly captured and recorded

1. all assets are properly captured and recorded.

1. Prepare and forward monthly and quarterly reports and financial statements to the Finance Committee and Board of Management.

1. Ensure that Bank Reconciliation Statements are prepared for all current accounts.
2. Prepare the annual budget of the Institute with the details provided by the Director.

1. Perform any other duties that may be assigned from time to time by the Director.

13.2 Functions of the Financial Administration Division The activities handled by the finance division have been categorized based on the nature of the activity and grouped under the sub sections as follows:

13.2.1 Receipts and collection of money

Revenue Collection

 Collection of all nature of income by way of cash, cheques or credit and debit cards to the

Institute is handled by the Shroff of the Institute.

• Students registration fees, course fees, examination fees, semester fees, congress fees, rent from properties, sale of publications and workshop charges are collected by Shroff by issuing receipts and updating MIS.

 Interests from investments are directly credited to the bank account of the Institute as per the instructions given to the relevant Banks where the fixed deposits are invested.

• The main income of the Institutes is course fees and it should be collected within the minimum period granted for the particular postgraduate degree program as per the income recognition policy of the Institutes.
• Income recognition policy of the PG Institutes requires to keep the students in receivables ledger until the minimum period granted to complete the relevant postgraduate degree program.

13.3 Payments

Payments are made by way of cheques mainly and it can be collected from Shroff directly or sent through registered mail.

13.3.1 Functions of payment section

Refer Part A of the Financial Management Guidelines of the University of Peradeniya.

13.3.2 Types of payments

Personal emoluments, travelling, supplies, maintenance, contractual services and other recurrent UGC Commission Circular

expenses. Refer Part A of the Financial Management Guidelines of the University of Peradeniya. No. 01/2015 dated

28.09.2017

13.3.2.1 Payments for Visiting Lecturers UGC Commission Circular

04/2016 dated 01.03.2016

Payment of Visiting Lecture claims

Calculation of hourly visiting lecture fee payments

 Visiting lecture fees for each postgraduate degree program conducted by the Institute shall be approved by the Board of Management of the Institute.

• The minimum hourly rate is Rs.1,000.00 and there is no maximum rate.

• The Deputy Bursar/Senior Assistant Bursar/Assistant Bursar of the Institute shall prepare separate budgets for each degree program as per the instructions given in the UGC

Commission Circular no. 04/2016 and submit to the Director.

 The recommendation of the Finance Committee and the approval of the Board of Management shall be obtained before making such payments.

• Any allocation given for a particular batch shall be used in that batch itself and

cannot be transferred to another batch.

• Under the Government regulations stamp fee of Rs. 25 shall be charged for the payment of a claim above Rs. 25,000.00.

 Visiting Lecturers should be liable to make tax deductions under APIT scheme, as per the circulars issued by the Department of Inland Revenue.

13.3.2.2 Payment for Assessments, Coordination, Supervision and Practical Fees

 Assessments, Coordination, Supervision and Practical Fees for each postgraduate degree program conducted by the Institute shall be approved by the Board of

Management of the Institute.

 The amounts for above activities shall be included in the program budget prepared by the Institute for each program.

13.3.2.3 Travelling claims for visiting lecturers

Travelling claims shall be submitted for payment within 30 days.

13.3.2.4 Allowances for attending meetings – External parties

Board of Management and Board sub committees Rs. 6,000.00

Board of Study and any other ad-hoc committees Rs. 1,000.00

13.4 Final Accounts Section

Refer Part A of the Financial Management Guidelines of the University of Peradeniya.

13.5 Petty Cash

Policy:

 Institutional petty cash imprest shall be Rs. 150,000. Departmental Petty Cash imprest limit shall be Rs.25,000.

Advances

Types of payments of advances

1. By cash advance- Only to Head of Departments or Units, Program Coordinators Financial Regulation 371

(maximum Rs.100,000.00)

1. By Bank Draft- For foreign indents only – for ordering books and periodicals on a request made by the Librarian.
2. By Cheque - Cheque will be drawn in favour of the supplier as mentioned in the indent. Cheque will be handed over to the Head of the Department,

Program Coordinators who had requested the advance

• 1. Loans

Refer Part A of the Financial Management Guidelines of the University of Peradeniya.

• 1. Stores

Refer Part A of the Financial Management Guidelines of the University of Peradeniya.

13.8 Fixed Assets

Objective s, responsibilities and functions and maintenance of the Fixed Assets Register

Refer Part A of the Financial Management Guidelines of the University of Peradeniya.

13.9 Investments UGC Internal Audit Circular

Objectives No. 02/2019 dated 15.05.201

Effective and efficient cash management. UGC Internal Audit Circular

•

• To match future expenses. No. 04/2019 dated 29.07.201

13.9.1 Responsibility Public Enterprises Circular

02/2018 dated 14.11.2018

The Deputy Bursar /Senior Assistant Bursar/Assistant Bursar is responsible for maintaining, investing and correct recording of details of investments of the Institute adhering to the relevant Circulars, Section 8.2.2. of the Public

F inance Regulations and Finance Act No.38 of 1971 subject to necessary approvals. Enterprises Circular No. PED

12 dated 02.06.2003

13.9.2 Types of money that can be invested

1. any money belonging to the Institute including any unapplied income
2. any portion of such money not required for immediate expenditure (Deferred expenditure)
3. surplus funds of the Institute

13.9.3 Call Deposits/Fixed Deposits

i. Investments shall be made with the approval of the Board of Management on the recommendation of the Finance Committee as per relevant Financial Regulations and

Finance Act N o.38 of 1971.

ii. Approval for investments shall be obtained from the General Treasury.

iii. All investments shall be made in State Banks approved by the Commission having called quotations to select the highest offer and select period to optimize investment income. iv. Approval for such anticipated investments shall be obtained at the beginning of the year.

13. 10 Procurement Procedure Procurement Guidelines of

Method of Procurement and Approving Authority ^{the NPA}

Refer Part A of the Financial Management Guidelines of the University of Peradeniya.

13.10.1

Shopping Procedures (Guideline 3.4) applicable for the procurement

of goods, works and services other than consultancy

13.10.2 Direct purchase of smaller value repair works, goods and services (Guideline Nos 3.5 and 3.6) (by GOSL funds)

Postgraduate Institutions are largely depended on their generated funds. Treasury funds are used only for personnel emoluments in recurrent expenditure and to cover some part of capital expenditure. Institutional Procurement plan shall be prepared based on the Annual Budget and the

Action Plan.

13.10.3 Procurement approval limits applicable at present

Recurrent

Capital

Minor Departmental Procurement Committee Up to Rs. 5,000,000.00

Major Departmental Procurement Committee Rs. 5,000,000 and above

Minor Departmental Procurement Committee composition is Director, DR/SAR/AR and

DB/SAB/AB.

Major Departmental Procurement Committee composition is Director, DR/SAR/AR or

DB/SAB/AB and the line Ministry appointed Senior Officer.

Research Grants

13.11

• Research Facilitation Fund (RFF) and Research Publication Fund shall be maintained by PGIs to facilitate and promote the research activities of the postgraduate students.

• Grantees shall be selected by the RFF selection committee having evaluated the research proposal s presented at the RFF interview.
• Supervisor of the student shall sign a surety bond with the Director of the Institution.

• If the RFF student is unable to complete the Research within the grant period, the Board of Management shall be informed to make a decision to recover from the student.

Research Grants offered by the National Science Foundation and other local and foreign



institutions to the postgraduate students as well as to the teachers, shall also be handled by

the Institution having signed the agreements and obtaining the approval of the Board of

Management on the recommendation of the Finance Committee.