Section 4: Income

Section 4: Income


4.01 Receipt of Cash, Cheques and Other Funds
4.02 Scottish Funding Council Income
4.03 Tuition Fee Income
4.04 Research Grants and Contracts
4.05 Other Services Rendered
4.06 Earmarked Grants
4.07 Charitable Donations and Endowment Funds
4.08 Sales Invoices
4.09 Salaries Recovered
4.10 Personal Remuneration Waivers


4.01 Receipt of Cash, Cheques and Other Funds
All monies received by the University must be recorded within the University’s main financial system either through direct input or through an appropriate interface from another University approved system platform. All sums received must be paid in and accounted for in full and should not be used to meet miscellaneous expenses or used as a petty cash float. All income received will be accounted for in the relevant budgetary cost centre in order to facilitate budgetary control at the School, Research Institute or Administrative Service level. Cheques intended for any fund within the University must be made payable to the University of Glasgow or associated legal entity.

4.02 Scottish Funding Council Income
Each year, the Scottish Funding Council publishes a ‘main grant letter’ detailing the income that it will pay to the University in the next financial year. The Planning Office are responsible for the allocation of the main recurrent grants to School, Research Institute or Administrative Service. The method of allocation is reviewed annually and the allocation process is embedded within the annual budgeting process (see Section 3.02). Income subsequently received is accounted for by the Finance Office who are responsible for attributing the income to Schools Research Institute or Administrative Service based on Planning Office guidelines.

The Scottish Funding Council may also make available additional funding to support the teaching and research infrastructure within the University. This funding will be allocated to capital projects that have been approved by University Court (via Finance Committee or Estates Committee as determined by the University capital approval process – see Section 5.11). The Director of Estates and Buildings will manage this process with approval from the Director of Finance and Vice Principal for Strategy and Resources and will be required to report periodically to the Scottish Funding Council.

4.03 Tuition Fee Income
The level of tuition fees charged to students is reviewed on an annual basis and approved by Finance Committee on behalf of the University Court. Details of the level of tuition fees and associated policy are available on the Registry website.

Tuition fee income is received from a variety of sources, both in the UK and overseas. All tuition fee income must be accounted for through the relevant University approved IT software package. 

The Finance Office is responsible for ensuring that tuition fee income is accounted for in the relevant budgetary cost centre within the University financial system in order to facilitate budgetary control at the School, Research Institute or Administrative Service level.
 

4.04 Research Grants and Contracts
As a research led University, staff are encouraged to seek and obtain grants and other awards from the various research granting bodies. Where approaches are to be made to outside bodies for research projects or where contracts are to be undertaken on behalf of such bodies, it is the responsibility of the relevant Senior Management Group member to ensure that the financial implications have been fully appraised (see also Section 4.05).

Before a research grant or contract is approved, the Senior Management Group member should ensure that a risk assessment has been carried out and documented. The risk assessment should identify any actions, events or sets of circumstances that could arise as a result of the grant or contract, that could adversely impact on the University’s ability to achieve its objectives. The risk assessment should also identify how the risks can be i) avoided, ii) reduced to an acceptable level, or iii) managed and contained.

The Senior Management Group member should also ensure that a set of grant terms and conditions are obtained from each funding body and that any specific conditions of offer are understood within the College / University Service and are fully complied with. Any loss to the University arising from a failure to meet conditions of funding is the responsibility of the College / University Service and will be charged to the College / University Service income and expenditure account.

The University has developed detailed policy guidelines on the full economic costing (FEC) of research and service contracts and these are available at the University’s FEC website. In particular, it is University policy that all externally funded research and service projects will be costed on a FEC basis, except for travel grants, equipment grants and studentships.

Research and Enterprise (R&E) are responsible for all administration regarding research grants and contracts up to and including the point of acceptance by the University. It is crucial that all proposals for work for third parties are notified to R&E to ensure that the correct procedures are followed. In particular, when a research grant or contract is awarded by an external body, R&E or the relevant College / University Service administrator should prepare a Project Approval Form (PAF) which must be authorised by both R&E and the relevant College / University Service staff members.

The Finance Office is responsible for the financial administration of research grants and contracts once the award has been accepted by the University. The Finance Office will provide the following service areas: opening of new projects; production of claims, statements, final claims; support for administration throughout the life of the project; setting up of budgets on the University financial system; clearance of staff appointed on awards; closing of projects. Paperwork in respect of current awards is retained in the Finance Office. Schools, Research Institutes or Administrative Services must not raise invoices in respect of any research grant or contract.

Each awarded research grant or contract will be set up as a project on the University’s financial system. The project will record the income received and expenditure incurred on each grant or contract. Each project will have a named Principal Investigator (PI) who will have control of the pay and non pay expenditure budgets set up under each project. The PI may delegate day to day control of a project to another member of staff but will remain accountable for the financial management of the project. The project number on the financial system will be notified to the PI by the Finance Office by e-mail. It is the responsibility of the PI to ensure that the project is managed correctly; all expenditure is appropriate and remains within budget. Under no circumstances should a project become overspent. A management report is issued for each project to the PI monthly. This report details the actual expenditure and commitments to date on a project, the budget and the remaining balance on the project.

If the salary cost of a member of staff is to be recharged to a research grant then notification must be given to the Finance Office on the Project Approval Form available from R&E.

Where a grant or contract funds staff from within the Greater Glasgow Health Board, PI’s should ensure that they receive invoices from the Health Board for authorisation and submission to the Finance Office on a regular basis.

If the conditions of the award change for any reason, i.e. an extension in time or additional funds, the PI must:

  • Notify R&E, who will record necessary information, and formally agree the change with the sponsor where necessary;
  • Pass the information to the Finance Office in order that the University’s financial system can be updated.

Within three months of the end of the award, the Finance Office will prepare a final claim. Draft claims are prepared and sent to the PI and the relevant College / University Service administrative staff member for checking before submission to the sponsor. A signed copy should be returned to the Finance Office, within one month of issue, showing any amendments required. Once the claim has been submitted no further amendments are allowed by the sponsor. If the Final Claim is not returned to the Finance Office within one month of issue to the PI the claim will be deemed to have been accepted as correct by the PI and will be sent to the sponsor as any delay in submitting the final claim will result in reduced payment.

A project will be closed when the granting body has paid the last instalment.  If an overspend has occurred this will be notified to the PI, and this will be charged to the College / University Service income and expenditure account.

Any surplus on a research project, that is not required to be returned to a sponsor or shared with another institution or the health board, will be credited to the College / University Service income and expenditure account in the year that the project is closed.

As part of its annual financial statements, the University is required to classify research income by sponsor type. The Finance Office are responsible for ensuring that each research grant and contract is classified accordingly to allow this analysis to be performed. This may require projects that are sponsored by more than one funding body to be set up as a number of individual projects.  

4.05 Other Services Rendered
Where the University provides a service to an external organisation which does not fall within the definition of a research grant or contract it will be considered to be a ‘Services rendered’ contract. Services rendered contracts are income generating activities and include: the provision of a service (routine testing, analysing samples etc), Conferences, Continued Professional Development Courses and Consultancies.

All commercial contracts must be signed on behalf of the University by the University Court and its delegated representatives. Research and Enterprise has delegated authority to sign 'Service and Consultancy' agreements. Heads of College have delegated authority to sign Conference and Short Course agreements. It is the responsibility of all staff members who have delegated responsibility to ensure that the University tendering policy is followed when entering into a commercial buying contract with an external third party. (See Section 5.03)

All staff members must comply with the University policy on consultancy and commercial activity. The full policy is available from the Research website.  Before approval is sought, all staff members should ensure that a risk assessment is carried out and documented. The risk assessment should identify any actions, events or sets of circumstances that could arise as a result of the consultancy or commercial activity, that could adversely impact on the University’s ability to achieve its objectives. The risk assessment should also identify how the risks can be i) avoided, ii) reduced to an acceptable level, or iii) managed and contained.

The Finance Office is responsible for the invoicing and cash collection of consultancy and commercial contracts and will also arrange payment to members of staff for personal consultancy in line with the University policy on consultancy and commercial activity. Schools, Research Institutes or Administrative Services must not raise invoices in respect of consultancy and commercial activity.

Payment of personal consultancy to a member of staff will only be arranged once the University has received payment from the invoiced customer. The subsequent payment to the member of staff will be net of employment taxation.

The income received and expenditure incurred for other services rendered contracts will flow to the College / University Service income and expenditure account which will be the ultimate responsibility of a Senior Management Group Member.  Any project within the University will usually involve some form of indirect costs such as lighting, heating etc. It is insufficient for a contract to be sought to cover the direct or marginal costs of a project only. Senior Management Group members must ensure that appropriate procedures are in place to ensure that the full economic cost of a project is calculated and covered within the price agreed with the external party.

The University has developed detailed policy guidelines on the full economic costing (FEC) of research and service contracts and these are available at the University’s FEC website. In particular, it is University policy that all externally funded research and service projects will be costed on a FEC basis, except for travel grants, equipment grants and studentships. When a service contract is awarded by an external body, R&E or the relevant College / University Service administrator should prepare a Project Approval Form (PAF) which must be authorised by both R&E and the relevant College / University Service staff members.

Approval documents and associated guidance notes for short courses and conferences can be found on the CPD website. Approval documents and associated guidance notes for consultancy and other services are available on the Research and Enterprise website.

In all cases where a contract has been approved, Research and Enterprise will advise the Finance Office of the category of the award and forward to the Finance Office a copy of the signed contract or letter of award, the relevant approval document and any other relevant correspondence. The Finance Office will then set up the contract as a project on the University’s financial system. This project will record the income received and expenditure incurred on each contract. Each project will have a named University staff member who will have control of the pay and non pay expenditure budgets set up under each project. The project number on the financial system will be notified to the relevant individual by the Finance Office by e mail. It is the responsibility of the named individual to ensure that the project is managed correctly and that expenditure remains within budget. Under no circumstances should a project become overspent. A management report is issued for each project centre to the named individual monthly. This report details the actual expenditure and commitments to date on a project, the budget and the remaining balance on the project.

Any surplus on a commercial contract will be credited to the College / University Service income and expenditure account in the year that it arises. 
 
4.06 Earmarked Grants
From time to time, the University is awarded grants and funding for a specific purpose or programme.  The Finance Office will discuss with the appropriate budget holder how best to administer the grant but normal practice will be to set the grant up as a separate project within the University’s financial system. Each project will have a designated budget holder who must ensure that the terms and conditions of the grant are adhered to. Failure to adhere to conditions may lead to the University having to reimburse a sponsor or incur a financial penalty. Any loss to the University resulting from a failure to meet conditions of the grant will be charged to the College / University Service income and expenditure account. Any unspent income on an ear-marked grant will be carried over between financial years as long as this does not conflict with any conditions associated with the grant.

4.07 Charitable Donations and Endowment Funds
Charitable donations, where the full amount of the donation is to be expended and there is no restriction to a particular objective by the donor, are treated as income in the year in which they are received.

Donations received to be applied to the cost of a tangible fixed asset are shown on the balance sheet as a deferred capital grant. The deferred capital grant is released to the income and expenditure account over the same estimated useful life that is used to determine the depreciation charge associated with the tangible fixed asset.

Where the University receives a donation with the condition that the capital element must be maintained but the income thereon can be applied, the donation is accounted for as a permanent endowment. There are two main types:

  • Restricted permanent endowment - the capital fund is maintained and the income must be applied to a particular objective specified by the donor.
  • Unrestricted permanent endowment - the capital fund is maintained but the income thereon can be applied to the general purposes of the institution and is therefore unrestricted.

Where the trustees have the power of discretion to convert endowed capital into income, and the donation is restricted to a particular objective specified by the donor, the donation is treated as a restricted expendable endowment.

The receipt of a donation by a School, Research Institute or Administrative Service should be referred to the Financial Accounting team who will ascertain if it meets the requirements for treatment as a donation or endowment and ensure that appropriate accounting treatment is applied.

The Finance Office are responsible for ensuring that endowments are tracked accordingly within the University’s financial system. This will include the recording of receipts, their investment, and the proper expenditure of any income generated.  This will be recorded in such a way as to distinguish the various funds received both by the restrictions placed upon their use and by the rules applying to their investment.

The Director of Finance, subject to the wishes of the donors, will be permitted to pool the various endowment funds received so as to achieve the most effective investment.

The Investment Advisory Committee will advise the Director of Finance on the investment policy of the funds after approval by the University Court. The detailed decisions on buying and selling particular holdings will be made by investment brokers appointed by University Court, who will adhere to the remit set by the Investment Advisory Committee.

Subject to the wishes of the donors, funds will be invested by external investment managers mainly in equity or fixed interest stocks of UK and overseas public limited companies.

The Investment Advisory Committee sets a Socially Responsible Investment Policy and will monitor the external investment managers’ compliance with the policy. 

The Director of Finance, together with other officers and members of staff to who control has been delegated, have a responsibility to ensure that all endowment funds are used only for the purposes specified by the donor.

4.08 Sales Invoices
The Director of Finance is responsible for the University’s sales invoicing, debt management and credit arrangements. In exercising these responsibilities the Director of Finance will ensure that:

  • Debtors invoices are raised promptly on official invoices, in respect of all income due to the University (other than for block payments such as Scottish Funding Council grant payments and UK tuition fee income);
  • Invoices are prepared with care, recorded in the University’s financial system, show the correct amount due and are credited to the appropriate income account;
  • Any credits granted are valid, properly authorised and accurately recorded in the University’s financial system;
  • VAT is correctly charged and accounted for, where appropriate;
  • Monies received are posted to the correct debtors account;
  • Swift and effective action is taken in collecting overdue debts;
  • Outstanding debts are monitored and pursued, and reports are prepared for management.
  • Debt which is overdue by more than six months, or is deemed irrecoverable before that date, is charged back to the School, Research Institute or Administrative Service who raised the associated invoice;
  • Reports are prepared for management.

The Finance Office holds the authority and responsibility for raising invoices. This responsibility is often delegated to Schools, Research Institutes or Administrative Services. This delegation implies that the issuing School, Research Institute or Administrative Service will utilise the standard University of Glasgow invoice format and comply with the numbering sequences agreed with Finance Office together with any other requirements.

When Schools, Research Institutes or Administrative Services are selling goods or services to a third party it is necessary to raise an invoice, other than for incidental cash sales (e.g. library fines, catering, sport recreation service)

All officers and members of staff shall advise the Finance Office of all sums due from transactions initiated by them.

4.09 Salaries Recovered
A salary recovery is a payment due and payable by an organisation outside the University (e.g. NHS body) towards the cost, full or partial, of the salary (and occasionally other costs) of a member of the University staff. A salary recovery does not apply where an individual is employed by the University in terms of a research grant or contract, a services rendered contract or a consultancy.

The Finance Office are responsible for processing salaries recovered.  Where a staff member is to be funded either fully or partly through a salary recovery agreement, then this should be clearly indicated on the Human Resources Post Management Form and a copy sent to the Financial Accounting department along with a copy of an authorised letter from the third party, which clearly details their commitment to funding.

4.10 Personal Remuneration Waivers
A personal remuneration waiver (also known as a fee waiver) is where an employee gives up the legal right to receive payment for personal consultancy work in favour of the payment passing to the relevant University School, Research Institute or Administrative Service. This arrangement in effect, varies the employee’s terms and conditions of employment. By doing so, the payment may be paid gross (without deduction of tax) to the benefit of the relevant University School, Research Institute or Administrative Service.

Her Majesty’s Revenue and Customs requires that any fee waivers are signed before the proposal has final approval. No fees will be waived without a completed fee waiver form which must be returned to Research and Enterprise with the signed Consultancy Project Form which is available at the R&E website. The fee waiver form is available from the Finance Office website. On waiving a fee, the employee gives up all future personal right to that fee. 

Fee waivers are credited to a College / University Service reserve account and can be accessed by the School, Research Institute or Administrative Service within one year of receipt after approval by the relevant College / University Services Head of Finance. Full details of this policy can be located at the Finance Office website.