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Policy
2.1 Accounts eligible for interest allocations
2.1.1 Normally, no interest will be credited
to research grants. University staff must use their best endeavours
in grant negotiations to achieve this requirement. Whilst
many research grants contribute 15% towards overheads, 80%
of these funds are returned to the faculties, and the residual
is insufficient to cover the full overhead costs. In some
cases, due to granting body restrictions, no contribution
is able to be made towards overheads. The interest generated
from research grants therefore helps to cover the otherwise
unfunded overhead costs.
2.1.2 In some cases the funding body will
require that interest be credited to research grants. If this
is a condition of funding, and the University is unable to
negotiate otherwise, then interest will be credited to those
particular accounts.
2.1.3 Interest earnt on bequest/donation
funds will be credited if the conditions of the bequest/donation
specify that this will occur.
2.1.4 No interest will be credited to University
consulting accounts.
2.1.5 Interest earnt on funds held on behalf
of student entities will be credited. Interest earnt on funds
held on behalf of other external entities will be credited
where authorised by the Executive Director of Administration.
2.1.6 Interest earnt on surplus cash held
by Flinders Housing will be credited.
2.1.7 Interest earnt on unallocated student
loan funds will be credited. (Note that student loans are
interest free.)
2.1.8 In all other cases, the default position
is that no interest is applied, unless specifically approved
by the Executive Director of Administration.
2.2 Rates to be credited
2.2.1 Rate 1: Accounts with this rating
will receive interest in full at the University’s short
term investment rate. There will be no deduction for administrative
costs incurred. This rate will apply to bequests and donations,
controlled entities, student entities and other accounts as
approved by the Executive Director of Administration.
2.2.2 Rate 2: Accounts with this rating
will receive interest at the University’s short term
investment rate less a 0.5% administrative charge. This rate
applies to Flinders Housing – refer section 2.2.2 of
the Policy
for the Operation of Flinders Housing.
2.2.3 Rate 3: Accounts with this rating
will receive interest at the University’s short term
investment rate less a 1% administrative charge. This rate
applies to the student loan account, other accounts on which
the University is contractually bound to pay interest and
any other accounts approved by the Executive Director of Administration.
The revenue from the administrative charge will be returned
to the University Recurrent Budget.
Example
If the short term interest rate is 5.5%, then the interest
rate credited for a rate 2 account will be 5.5% -0.5% =
5%.
2.2.4 Rate 4: Where bequest/donation
funds have been invested in accordance with the University
Investment Policy, in longer term investments, interest earnt
will be credited in full. Due to the nature of long term investments,
in some years returns may be negative.
2.3 Accounts in Deficit
2.3.1 Normally, University accounts will
operate with a positive or zero funds balance. In exceptional
circumstances, accounts may be overdrawn, ie. go into deficit.
When accounts eligible to earn interest go into deficit, an
interest charge will be levied at the interest rate applicable
to that account.
2.4 Interest Calculation
2.4.1 Interest is calculated on the monthly
average account balance and is normally credited to the account
as part of end of month account processing.
2.4.2 Where the balance recorded for an
account to be credited with interest is not equal to the actual
cash held for that account (due to the effect of accruals),
the Financial Accountant is authorised to override the automatic
interest allocation by making a manual adjustment.
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