OPERATIONAL PROCEDURES FOR ACCESSING DEPARTMENTAL/OTHER FUNDS

1. OPERATIONAL PROCEDURES FOR ACCESSING DEPARTMENTAL/OTHER FUNDS BEING A PAPER PRESENTED BY S. T. KWAYA (BSc, MSc, MBA) 2016 ANNUAL SENSITIZATION WORKSHOP FOR DEANS, DIRECTORS AND HEADS OF DEPARTMENT JULY, 2016

2. INTRODUCTION • It gives me a great pleasure to have been selected as one of the paper presenters at this wonderful gathering of eminent Scholars holding sensitive positions in the University. The Bursary Department is one that is saddled with the responsibility of sourcing and disbursing funds to the various facets of the University. This is derived from the mandate given to it by the University’s Governing Council through the delegation of authority to the Bursar by the Vice Chancellor. • In the past payments were all done centrally, but with tremendous growth of the University in terms of student and staff populations and the increasing need for Management at different levels to respond promptly to the demands of their Departments, Institutes and Centres, the need for decentralization of the Bursary accounting functions became imperative.

3. INTRODUCTION CONT’D • Thus, it is pertinent for Deans, Directors, and HODs to get abreast with the operational procedures for accessing funds in the University. • The workshop came at a time when the country is passing through difficult times and money is very difficult to come by and therefore, it is not only how to access funds that matters but the needs for accountability, transparency and prudent spending of public funds is not to be over emphasized.

4. DEFINITION OF FUNDS • A fund is defined as “a sum of money or other resources segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations and constituting an independent fiscal and accounting entity with a self-balancing set of accounts consisting of assets, liabilities, and a fund balance’’. (Manual of Uniform Accounting Standard).

5. BUDGETING AND CONTROL • Before any Department can access its funds there must be a provision whether by way of budgetary allocation or other means and It is the responsibility of the Bursar as the Chief Financial Adviser to ensure that there are adequate control systems in the University collection, disbursement and control of financial activities and has the duty to monitor and control funds in compliance with Government financial regulations. • The University maintains and operates a budgeting system whereby every year, call circulars are sent to the various Deans, Director and heads of departments for their inputs. After which their request are collated by the Budget and Budgetary Control Unit of Bursary and a draft estimates are normally presented to Senate Estimate Committee which makes necessary corrections and then pass it to the Finance and General purpose Committee who then deliberates and pass it to the University’s Governing Council for consideration and approval.

6. APPROVED ESTIMATES • Once the Estimates are approved the Bursary Department which is made up of over 16 sections/Units, communicates the Internal Audit and those controlling vote such as the Deans, Directors, Heads of Department of how much have been allocated to their Faculties, Departments, Institute, or Centres. SOURCES OF REVENUE FOR THE UNIVERSITY • These are the main sources of revenue for the University: • Government Grants • School Fees (PG and UG, LVT, Others) • Income from University Companies

7. Dividends from Equity shareholding of some Public Liability Companies • Interest income from placements • Private Grants and Donations However, given these stream of income sources above, the Departments are more concerned with how they are able to access funds from the allocation from these various sources.

8. SCHOOL FEES COLLECTIONS • The School Fees component of the Revenue forms substantial part of the University’s Internally Generated Revenue (IGR). A cursory look at the School Fees collection for both PG and UG 2015/2016 academic session shows that the University had ‘’effective ownership of income realised’’ of only 45% of the School Fees for UG while 55% are later claimed wholly or shared by the University/Faculties/Departments. • The situation in the PG collection is more glaring as the University could only boast of 8% effective ownership as against amount to be claimed/shared of 92%. Thus, this leaves the university with little IGR for its day to day activities. For instance, amount spent on electricity bill per month is over N86m. This is further compounded with the fact the University overheard allocation for 2016 is a paltry sum of N156m for the whole year and may not be released fully at the end of the year.

9. TYPE OF FUNDS IDENTIFIED IN THE UNIVERSITY The following are some of the Funds that are available for access in the University: • Funds for Operating Expenses • Faculty Charges/Specific Charges (Undergraduate and Postgraduate) • Bench Fees (Postgraduate for Sciences only) • Student Charges funds (e.g. Medical fees, Netlibrary Fees, Student Union, I.D. Cards etc) • TETFUND • DTLC Fund • Teaching and Research Equipments Funds • General Research Funds • Shares of part-time Tuition Fees (PG)

10. TYPE OF FUNDS IDENTIFIED IN THE UNIVERSITY CONT’D • OTHER FUNDS • Conference Funds • Staff Revolving Funds • MacArthur Funds • Staff Tuition Funds An attempt is hereby made to give some briefs on the types of funds identified:  • FUNDS FOR OPERATING EXPENSES • Funds for Operating expenses are normally released on quarterly basis to all the Faculties/Departments/Centres of the University with minimal stress. It is expected that all financial rules and regulation be observed in the course of spending the Operating Expenses.

11. OPERATING EXPENSES CONT’D • An operating expense, operating expenditure, operational expense, operational expenditure or OPEX is an ongoing cost for running a product, business, or system. In the University wide application Operating Expenses is what is referred to as Common Charges and include expenditure on items such as: • Electricity Bill • Maintenance of Generating Plants • Maintenance of Academic buildings • Printing of Security Documents • University Representation • Water rate • Publication and publicity

12. OPERATING EXPENSES CONT’D • However, Operating Expenses for the Departments are classified under six headings: • Transport and Travels • Repairs and Running Cost of Vehicles • Maintenance of Office Equipments • Printing and Staionery • Consumable Stores • General Expenses It has been observed that Faculties only maintain control codes for their expenditures. The Deans/HODs are to ensure their GFA that Vote Books are maintained reflecting the expenses codes of the items above.

13. FACULTY CHARGES FUNDS • Due to the peculiarity in the needs of some Faculties/Departments, Students are expected to pay certain amount during their registration to defray the cost of the specific needs. These charges are also based on Faculty basis. Thus, we have Art based Faculty Charges and Science Based Faculty. The Charges are payable by both the Undergraduate and Postgraduate students. At the end of each Registration exercise, the Bursar having ascertained and obtained approval of the Vice Chancellor for releases of the Faculty Charges to various Faculties, forward letters to the Deans of Faculties stating the following: • The period covered (Academic Session) • Contribution by each of the Department for both undergraduate and Postgraduate • The total amount paid by the registered Students in the Faculty

14. FACULTY CHARGES FUNDS CONT’D • The Bursar then advises the Dean to make request to the Vice Chancellor of the needs of their Faculties, attaching verifiable invoices where necessary, limited to the faculty’s shares for consideration and approval. If the Vice Chancellor approves, the request is forwarded to the Bursar for release through the Faculty Account domiciled in ABU Microfinance Bank. On receiving alert/confirmation of the receipt of the funds the Dean gives directives to the accountant to use the approved sharing formula adopted by the Faculty for sharing of the funds to the various Departments and Credit the Departments Accounts with ABU Microfinance bank following due process after raising and clearing the necessary payment Vouchers .

15. FORMULA FOR SHARING FACULTY CHARGES • Sharing formula differs from one Faculty to the other, for instance some faculties allocates 10%, 15%, 25% or 30% to the Deanery before the balance is shared among the Departments on pro-rata based on student registered by each Department. • For ease of understanding, hypothetical figures are being used to show how the Faculty of Social Sciences distributes (share) its Faculty Charges using the following assumptions: • Let’s assume that total number of students that registered in the Faculty for 2014/2015 academic session is 5,000 and each paid N3,000.00 during registration, that gives a sum of N15m. Deanery was allocated 30% and the four Departments of the Faculty were allocated 70% to be shared pro-rata based on the number of registered students. The amount then is shared as depicted in the table below.

16. TABLE SHOWING THE SHARING OF FACULTY CHARGES FOR FAC. OF SOCIAL SCIENCE

17. UTILISATION OF FACULTY CHARGES: Available records indicate that the Specific charges being paid by the Students are normally expended in the following areas: • Administration of Postgraduate Board Meetings of the Faculty • Processing of documents for submission to postgraduate School • Entertainment at Postgraduate/Undergraduate Meetings • Running undergraduate practicals • Processing of undergraduate senate results • Renovation of Offices, Lecture Halls, Laboratory equipments • Purchase of computers and Air-conditioners and Consumables

18. Apart from the Faculty Charges there are some fees that are claimed by Departments/Units concerned from time to time, such as: • SIWES • Medical Fees (9% University, 1% SAD, 30% HMO and 60% UHS) • Field Trip • Net Libray Fees

19. NET LIBRARY FUNDS • This Fund is realized from the payment in respect of Netlibrary Fees by both Postgraduate and undergraduate students of the University. • The Netlibrary funds are accessed by the University Librarian by forwarding an application letter to the Vice Chancellor stating the total amount collected as Netlibrary Fees from registered students for the relevant academic session. The letter is sent to the Bursar to handle and all necessary verifications are carried out through liaison with the M.I.S. Unit. This is to ascertain the claim before payment is effected to the Netlibrary Account.

20. UTLISATION OF NETLIBRARY FUNDS • The Netlibrary Funds are utilised for the following as captured in the MOU with the MTN Foundation: • Fund for servicing e-library • Database subscription • Systems staff salaries • Systems upgrade and maintenance • Purchase of Computer accessories and consumables • Stationeries • Cleaning materials • Maintenance Agreement • Staff and students’ training and other sundry expenses

21. TETFUND • This has to do with accessing TETFUND which, is a personal request made by staff through their HODs. The sum of N25.5M was received from TEFUND for conferences and workshops and was shared as follows: • Non Teaching Staff N7.5m 30% • Academic Staff N18m 70% • Due to paucity of funds maximum allocation per non teaching staff is now N800,000.00 and between N1.5m to N1.8m for Academic Staff conference/workshop.

22. TETFUND CONT’D • TETFUND also provides fund for Academic Research where an Academic staff is expected to either pursue a Phd or go for Bench Mark. Those pursuing Phd are allocated between N8m to N10m whereas for Bench Mark is fixed at N5m. • The Vice Chancellor is the Chairman while the Directorate of Academic Planning and Monitoring is the Secretariat. For 2015 only N100m was released as against the usual N150m by TETFUND for academic research/Phd. Out of the N100m the sum of N40m is to take care of backlog and N60m for the current period which could only cater for six staff at N10m each.

23. ACCESSING TETFUND FUNDS • The method of accessing funds in this regards is that a prospective staff/candidate have to apply to the Vice Chancellor through his Head of Department who will then minute the application to the Directorate of Academic planning and monitoring to handle. It will then be inputed in the system for screening and award. • Under TETFUND all Deans and Directors of Academic Institutes are normally invited to consider the applications of the staff for possible award. The release of approved TETFUND is handled by the TETFUND Accountant in the Capital Expenditure Unit of the Bursary.

24. TEACHING AND RESEARCH EQUIPMENT FUNDS • TETFUND also provides fund for the purchase of Teaching and Research Equipments. To access this fund, Faculties/Departments normally submit proposals of their requirements to the University. This is collated and sent to TETFUND for consideration and funding. If it is successful (approved), TETFUND releases the Funds to the University for procurement of the Equipments for Faculties/ Departments. (i.e. through award of Contracts).

25. DIRECT TEACHING AND LABORATORY (DTLC) FUNDS • DIRECT TEACHING AND LABORATORY (DTLC) FUNDS • DTLC came into effect in the Nigerian University System in 2004. Though, of recent no funding in respect of DTLC has been released by the Federal Government to the University, it is very important that it is discussed as we are optimistic that releases may be effected soon. • GUIDELINES FOR ACCESSING AND RETIRING GRANTS FOR DIRECT TEACHING AND LABORATORY COST (DTLC) • In June, 2004 the University received from the National Universities Commission a Circular which provided the guidelines for accessing and retiring DTLC. It stated that the purpose/area in which the DTLC were to be used to as follows: • Purchase of consumables for laboratories, studios and workshops • Stationery for teaching and laboratory work • Maintenance of laboratory equipment (not purchase of new equipment) • Direct Accounting Officer: Head of Department • Supervising Accounting Officer: Vice-Chancellor

26. DIRECT TEACHING AND LABORATORY (DTLC) FUNDS CONT’D • TO ACCESS DTLC • Forward to NUC, data as contained in the table below • DEPARTMENT • NAME OF HEAD OF DEPARTMENT • NAMES OF DEPARTMENTAL DTLC UTILISATION COMMITTEE CHAIRED BY THE HOD • ALLOCATION N • As soon as the completed table is received, NUC shall remit the grant to the Vice-Chancellor. • RETIREMENT OF DTLC FUNDS • To be done by the Head of Department through the Vice-Chancellor to NUC. • Minutes of meeting of Departmental DTLC Committee to be attached.

27. Normally, DTLC and Overhead Cost were usually released together. • According NUC letter Ref. NUC/DFA/14/128 of 24th August, 2005 directed all University Bursars should endeavour to transfer the DTLC elements of the releases into their DTLC designated accounts. • Sometimes in October, 2010 the Bursary conducted some verification of retirements from various department shows the following findings: • DTLC funds as its description clearly indicates, is specifically for the purchase of materials necessary for Direct Teaching & Laboratory Cost. • On verification of supportive retirement documents, the following observations were made in respect of fund utilization:

28. 10% of allocated DTLC funds to Faculty goes to the Dean to upgrade Faculty Library; • Apart from the Engineering, Medical Sciences and Core Science-Based disciplines, other faculties were engaged in the usage of the funds as follows: • Purchase of Office Equipment and furniture e.g Air-conditioners, Cutleries, Refrigerators, Photocopiers, Rug & Carpets; • Purchase of general office Stationery items and computer consumables • Construction and Rehabilitation of Departments e.g. Construction of a block of 20 offices by a Department, Classroom Blocks for students, Provision of security lights; • Purchase of Desktop Computers, Generators, Research Equipment • Staff training and development e.g Sponsorship of Phd students;

29. Printing of examination, registration and student election materials; • General maintenance and repairs of departmental vehicles and personal vehicles • Expenditures to meet up accreditation benchmarks; • Purchase of library books for the Departments;

30. The above observations are examples to justify the wrong use of DTLC against the initial purpose for which it is meant. • A circular written by the Bursar Ref: B/CON/03 of 25th June, 2004 requested all Head of Departments to send in the names of the DTLC Utilisation Committee. He also informed them that the Accounting /retirement of the amount allocated/advanced to them as DTLC should be done by the Head of department through the Vice-Chancellor, to the NUC with minutes of Departmental DTLC Committee meetings attached. • Items used in procuring materials for DTLC were: • Local Purchase Order LPO • Invoices • Receipts • Minutes of meetings

31. LPOs are usually raised by the Finance Office in the name of suppliers submitted by the Departments via their minutes of meetings and requesting them to counter sign the LPO after which the LPO will be released to the supplier. On supply of the items stated therein, the Department call the Store Officer and the Auditor to receive and inspect the items after which the department certify the invoices for payment. Obtain the receipts and attach for further necessary action. • DELAYS IN RETIRING DTLC BY SOME DEPARTMENTS • Some of the reasons attributed to the delays in retiring DTLC by some Departments include among others: • The Departments do not want to comply with laid down accounting rules as being enforced by the Audit and the Bursary.

32. Some Departments tried to circumvent Federal Government Treasury Circular Ref. No. TRY/a5 & B5/2001 of 7th September, 2001 which provided that procurement of store items, works and services costing N100,000.00 should be through Local purchase Orders and Job-Orders by separating items of the same type to get cash advance. • Some prefer to buy from outside with the excuse that items are cheaper outside compared to the University’s Central Stores. • Some Departments even preferred not to take the DTLC allocation or look for an excuse to shift blames to Audit and Bursary all in an attempt not to comply with these accounting rules.

33. In 2006, HODs were obliged to collect cash advance of not more N100,000.00 which must be retired, provided the list of items for purchase is attached. The purchased items will then be taken to the Central Store for ckecking and documentation before the Department accounts for the advance.” • In 2010 a Schedule obtained from the NUC (National Universities Commission) provided a robust and detail information on those items that the DTLC funds can be utilized for:

34. NATIONAL UNIVERSITIES COMMISSION SCHEDULE IIDIRECT TEACHING AND LABORATORY COST MONITORING EXERCISE FOR YEAR 2010ANALYSIS OF QUALIFYING EXPENSESName of Institution/Centre …………………………………………………………………………Faculty:Department:Number of Students:

36. GENERAL RESEARCH FUNDS • This fund comes from the University Board of Research (UBR) and is awarded to Academic Staff to conduct research. The University for quite sometimes now has not received any funds in this respect. • OTHER FUNDS The following listed funds are accessed by individual staff through the HOD to the approving Officer. • CONFERENCE FUNDS • The University annually makes allocation of funds to Faculties, Departments, Units and Centres for both Local and overseas conference attendance. Funds allocation for local conference attendance are kept at Departmental level while allocation for International Conference attendance are held in the Dean’s Office for the benefit of qualified staff that met certain criteria set by the Faculty/Department Board for screening of applications.

37. CONFERENCE FUNDS CONT’D • Votebook for allocated funds are expected to be maintained by head of Units parallel with vote books kept in the Expenditure Control Section of the Bursary. This process is to guide recommendations given by Heads of Department to avoid over recommending number of applications for conference attendance without recourse to available resources. • The funds are expected to be carefully managed by the Head of Units for the benefit of staff through an agreed process of selection and recommendation.

38. MACARTHUR FOUNDATION FUNDS FOR COMPUTER ACQUISITION • This is another soft fund from which interested senior staff of the University can access funds to enable them buy Laptop Computers in line with the objectives of the Donors, being to raise the level of computerization in the University. • The MacArthur staff computer fund is a revolving loan of N200,000.00 for qualified staff repayable between Six (6) -18 months maximum at an interest rate of 2%. As at September, 2015 over 1,312 staff of the University benefited from the scheme. • The Fund is administered by a Committee and to access the funds a staff is expected to buy an application form for N300.00 from the Bursary Department. When a staff is successful the amount in his favour is paid directly to one of the three approved Vendors who will provide the staff with a Computer. The direct payment to the Vendor is to avoid diversion of the Funds to unrelated needs.

39. STAFF REVOLVING FUND • The staff revolving fund was introduced in 2007. This fund is accessible to all confirmed staff of the University. A staff that is interested is expected to forward a letter of application to the Bursar through the HOD and duly stamped. The staff is required to attach recent payslip preceding the month of application. An amount is advanced to the staff using some criteria and is recovered in 10 equal installments (10months). • The advantage of this fund is that it is interest free, requires no follow up and no delay factors as it is paid along with salary. On the average over 300 staff of the University benefit from Staff Revolving Advance monthly.

40. TUITION LOAN FUNDS • This is accessed by sending application letter through the HOD, to the Deputy Vice Chancellor Administration who then approves and pass it to the Secretary of the Committee for scrutiny before the loan is given to a staff. The Loan is categorized as follows: • Senior Staff N50,000.00 Maximum • Junior Staff N20,000.00 Maximum

41. SOME RELEVANT INFORMATION FOR SMOOTH ACCESS/UTLISATION OF FUNDS • The following information may be relevant and necessary in the accessment/utilisation of funds by Deans/HODs.

42. EXPENDITURE LIMIT/ SPENDING LIMIT • A spending Officer (Dean, Director, HODs) is to ensure that before authorizing any payment, due regards is given to his spending limit/expenditure limit, that he is duly authorized to incur the type of expenditure and that funds allocated is meant for such expenditure. • Accessing these funds is made possible through the operation of the Internal Budget. The Department through the University’s Budgets are normally allocated certain sums as of funds as OPEX (Operating Expense). A letter to this effect is sent to the Deans/Directors/HODs intimating them of the allocation. These funds are to be expended taking cognizance of expenditure limits/authority Level.

43. EXPENDITURE LIMIT/ SPENDING LIMIT CONT’D • Available records in the Bursary reveal that the last time the University Governing Council approved spending limit was in February 2006. Thus, the Vice Chancellor delegation of authority on spending limit to the following are: • (a) Principal Officers N1.00 - N250,000.00 • (b) Deans and Directors N1.00 - N100,000.00 • (c) Heads of Departments N1.00 - N50,000.00 • For any expenditure above the thresholds as indicated above, the spending officer must seek approval from the Vice Chancellor.

44. GROUPED FACULTY ACCOUNTANTS (GFA) • The Faculties have Grouped Faculty Accountants (GFA). The GFA shall be responsible to the Deans of respective Grouped Faculties. He shall represent the Bursar in all Faculty Committees on matters relating to finance. The GFA shall be responsible for the Budget preparation of the Faculties grouped under his purview. • Request for executing various needs of the Departments are normally forwarded to the Dean/HOD for approval as the case may be. Once approved the Group Faculty Accountant (GFA) of the Faculty handle the processing of the approved requests. This has facilitated quick clearance of payment vouchers, rather than waiting to be brought to the Senate Building. • On no account should a Dean/Director/HOD allow any cheque or payment mandate schedule be raised and signed without an accompanying payment voucher as this will amount total disregard to financial rules and regulations. This could pose potential danger as Auditors will later discover this and may accuse the HOD of trying to commit fraud.

45. NEW SHARING FORMULA FOR STAFF/DEPARTMENT/UNIVERSITY • The University has an approved new sharing formula in respects of funds generated through consultancy (LVT Fees, Diploma Fee and Fees from all part time courses for both undergraduate and postgraduate). However, some HODs are still making claims using the old sharing formula of one third (1/3). Thus, all claims to be made by the Deans/HODs have to use this new sharing formula. • The new sharing formula was approved by the University’s Governing Council at its 163rd Regular Meeting held in the University from the 9th -11th September, 2015 as follows: • a. 25% for Staff • b. 25% for Department • c. 50% for the University.

46. LAPSED ALLOCATIONS • All funds unaccessed at the end of a financial year are deemed to have lapsed and will be reverted to the Revenue Account. However, unutilized fund for Teaching and Research Equipments allocated to Departments by the Senate Estimates Committee shall be carried forward to the next financial year, if the source of funding shall be from Internally Generated Revenue (IGR). Similarly, General Research Funds allocated to Academic Staff by the University Board of Research (UBR) in pursuit of Research work shall be carried forward to the next financial year, and subsequently rolled over until the final conclusion of the research work. However, in line with financial regulations, no unutilized research funds shall be allowed to be carried forward for more than (3) years from the year of first allocation, except there are clauses to warrant exemptions.

47. CHARGING APPROPRIATE TAX • Deans/HODs/Directors are required to ensure that Payments emanating from accessed funds by the Faculties/Departments are to be subjected to the appropriate Taxes (VAT/WHT) where applicable. • VALUE ADDED TAX (VAT) • Value Added Tax is charged at 5% on all VATable goods and services. VAT is administered by the Federal Inland Revenue Service (IFRS). • A registered supplier, wholesaler, manufacturer and importer of VAtable goods and services is expected to charge and collect VAT on supplied goods and services(Output). On the other hand, a purchaser of VATable goods and services is also expected to pay VAT on the goods and services supplied to him (input).

48. GOODS EXEMPETED FROM VAT • Medical and pharmaceutical products • Basic food items • Books and educational materials, including exercise books, laboratory equipment, school fees, PTA levies etc. • Baby products, like feeding bottles, carriages, clothes, napkins, baby cream and powder, soap, toys and bay dresses; etc • Commercial vehicles and their spare parts • Agricultural equipments and products and veterinary medicine • Fertilizers, farming machinery and farming transportation equipments • All exports • Plants and machinery used in export processing zone • Plant and machinery and equipment purchased for utilization of gas in down stream petroleum operation. • Tractors, ploughs, agricultural equipments and implements purchased for agricultural purposes.

49. Services Exempted from VAT • Medical and health care services; • Services rendered by Community Banks, People's Bank and Mortgage Institutions (interest earnings on loans by commercial bank and premiums paid to insurance companies are not Vatable; • Performance conducted by educational institutions as part of learning; • Social services (orphanages, charities, and fire fighting); • Pure postal service (excluding giro services); • Non-commercial cultural services; • Overseas air transportation; • Public telephone (coin operated) and telegram services. This does not include private telephone or telephone used for business or commercial purposes.

50. WITHHOLDING TAXES (WHT) • Withholding Tax is the Tax deducted from rent due to landlord, Dividends due to shareholders, Director’s Fees due to non executive directors of companies, Contract payment due to contractors, etc paid over to the Internal Revenue office as a deposit for the purpose of reducing the amount of Tax which the landlord or the shareholders or non-executive director of companies would be called upon to pay when assessment is completed.