Discretionary Expenditure Policy

Preamble

As a publicly funded and accountable institution, the University must ensure that it conducts its business in accordance with the overarching principle of financial prudence. In times of budgetary constraint particularly, some "non-essential" items of expenditure (such as mobile phones, hospitality and consultants) may be perceived as inappropriate or superfluous. Such a perception, whether or not it is well-founded, may cause controversy, which has the potential to be damaging to the University's reputation.

The Auditor-General has signalled that Audit New Zealand will pay particular attention to waste and deficiencies in purchasing and contracting arrangements in future audits of the University by Audit New Zealand . By ensuring that it has a robust policy and internal control framework in place, the University is being proactive with respect to its audit, compliance and public accountability obligations.

Expenditure incurred for the benefit of individual staff members (over and above their salary entitlements) must be managed in accordance with consistent and equitable guidelines that apply to all areas of the University. This policy sets out the University's expectations in relation to the reasonable and equitable use of funds for particular types of discretionary expenditure.

Scope

1. This policy should be read in conjunction with the following policies
   • Financial Authority Policy
   • Financial Ethics Policy
   • Purchasing Policy
2. Discretionary expenditure covers the following items
   • Mobile phones and other communication devices
   • Staff functions and gifts for staff
   • The use of external venues
   • Hospitality and entertainment
   • Consultants
   • Petrol Vouchers
   • Sponsorship

Authorisation of discretionary expenditure

3. All items of discretionary expenditure listed in this policy are subject to authorisation, in accordance with the University's schedule of approved financial delegations (refer to the Financial Authority Policy).
4. In addition, Deans and Directors (or equivalent) are required to monitor expenditure in relation to these items in all cost centres within their area of responsibility, to ensure that it is appropriate in relation to this policy and other factors.
5. Where there is any doubt about the appropriateness or reasonableness of any planned expenditure, staff are advised to seek the advice of the Director of Finance in advance.
6. Expenditure must be authorised by the manager to whom the staff member reports. Under no circumstances may junior staff members authorise claims by more senior staff, nor may managers approve their own claims.

Mobile phones and other communication devices

7. The use of mobile phones for University business has steadily increased, with a consequential increase in expenditure. The University must ensure that the use of mobile phones is warranted and that the associated expenditure is as cost-effective as possible.
8. The Information and Technology Services Division (ITS) is responsible for managing the University's mobile phone plans and services, and for sourcing the best deals for the University.
9. ITS has a preferred supplier arrangement with one mobile telecommunications provider; however other providers will be considered if individual needs are not able to be met by the primary provider. The negotiated corporate call plans, rates and services have been leveraged on the total University telecommunications spend and it is important that the preferred supplier arrangement is utilised wherever possible.
10. Mobile phones may be provided to staff for the purposes of conducting University business, where the authorising manager considers that a mobile phone is a necessary tool for carrying out the job effectively.
11. Where a manager determines that a staff member needs to have the use of a mobile phone, he or she must decide which of the following options is the most appropriate and cost-effective
    1. reimbursing a staff member for business calls made on his or her own personal mobile phone, particularly in cases where the number of calls is relatively small or the need is only temporary, or
    2. assigning the staff member a University-owned mobile phone.
12. Managers are responsible for
    1. arranging phone purchases, upgrades, call plans, changes to call plans, and reassignment or disposal of phones through ITS
    2. contacting ITS when mobile phones are required for short periods such as for overseas trips (loan phones may be available in some instances)
    3. ensuring that the staff member hands in his or her phone prior to leaving the employ of the University, or transferring to a position where a University mobile phone is not required
    4. ensuring that ITS is kept advised of relevant information, so that the University's register of mobile phones can be kept up to date.
13. The purchase of a wireless handheld device (for example a BlackBerry) for mobile email use us subject to the approval of the Vice-Chancellor, Deputy Vice-Chancellor, or Head of Corporate Services on the recommendation of the relevant Dean or Director (or equivalent).  Approval will be given for senior staff who:
    1. need routine and ready access to email outside normal work hours, and/or
    2. frequently travel on work business.
14. Staff who are assigned a University mobile phone or wireless handheld device must
    1. find out the terms and conditions associated with the University's mobile phone plan and/or data plan
    2. operate the phone in the most cost-effective manner for the University including using desktop phones when they are available
    3. realise all benefits available under the University's mobile phone plan and/or data plan
    4. reimburse the University for costs incurred from personal calls, text messages and all other private telecommunications services available to mobile users
    5. surrender the phone and accessories to his or her manager on resigning, retiring or transferring to a position where the use of a mobile phone or wireless handheld device is not necessary.

Staff functions and gifts for staff

15. Reasonable costs associated with functions for staff may be permissible expenditure, provided that such functions are directly related to the objectives of the organisational area involved.
16. The reasonable cost of providing gifts to staff in circumstances involving hospitalisation or bereavement is permissible at the discretion of the relevant dean or director (or equivalent).
17. The University provides gifts to staff upon retirement after ten years' service, up to a maximum value of $200.
18. In circumstances other that those specified in sections 16 and 17 above, gifts may be arranged among colleagues as a personal matter.
19. The total annual expenditure on functions and gifts for staff must not exceed 0.15 of one per cent of the gross salaries expenditure (not including overheads such as superannuation and ACC) of the Faculty, School or Division concerned.
    [Note: This overarching limit is controlled at the Faculty, School or Division level but Deans and Directors may at their discretion allow pro rata budget allocations to be made for this purpose at departmental level.]
20. Annual budget submissions must include a separate line item "staff functions and gifts" under Employee Related Expenses.
21. Expenditure on staff functions and gifts must be allocated to the transaction type PE25 as it is incurred.
22. Purchases of gifts, or costs associated with staff functions are subject to the regular purchasing systems (PCard, UniMarket etc) and the schedule of approved financial delegations (refer to the Financial Authority Policy).

External venues for training, development and planning

23. The University has a range of well-appointed facilities which accommodate its regular business and activities. It is expected, therefore, that off-site venues will be used for University business only in exceptional circumstances.
24. Where an additional or irregular activity or meeting is planned (e.g., a strategic planning workshop), which involves a group of staff for an extended period (one or more full days), University facilities must be used where available.
25. In cases where an appropriate University facility is not available, an off-site venue may be used, subject to the approval of the appropriate Dean or Director (or equivalent).
26. Factors to be taken into account when considering an off-site venue include:
    1. the location of the venue, which should be within Hamilton city and its immediate environs, to avoid the need to pay for overnight accommodation
    2. the nature and standard of the facilities, which should be appropriate to the purpose of the activity, and
    3. the cost, which should not exceed the maximum daily rate available from preferred suppliers, as defined on the Procurement web page http://www.waikato.ac.nz/procurement/

Hospitality and entertainment

27. For the purposes of this policy, "hospitality and entertainment" means the provision of food and drink.
28. The primary intention of providing hospitality is to cater for the well-being of visitors to the University, to a level which satisfies the business objectives inherent in the situation concerned.
29. There must always be a direct and demonstrable link between the provision of hospitality and the business of the University.
30. In considering proposed hospitality expenditure, managers must ensure that they know the reasons for and scope of the intended hospitality, including the intended participants.
31. Managers are required to satisfy themselves that the proposed hospitality is appropriate (e.g., the question should always be asked "are food and drink necessary or can the business be conducted quite appropriately without?").
32. The staff member arranging the hospitality should bear in mind the University's obligations to be financially prudent. Where a restaurant is involved, it should be of a reasonable standard but not unduly expensive.
33. The staff member arranging the hospitality must ensure that
    1. arrangements for hospitality are fully detailed in respect of purpose, participants and costs, and approved by the relevant manager in advance
    2. only those staff who are crucial to the business concerned should be included in a hospitality event
    3. alcohol should account for no more than 25% of the total cost of food and alcohol combined.
34. The cost of hospitality and entertainment must be charged to the transaction type PG24/4300.
35. Transaction type PG24/4300 does not apply to the provision of food and drink for staff only , which is subject to the relevant budgetary controls and must be classified as either
    1. "staff functions" (see sections 15-22 above), or
    2. "working meals" (transaction type PE32/4420).

Consultants

36. The use of consultants by public organisations is constantly under scrutiny, therefore the contracting of consultants may only be considered where the necessary expertise, skill or resource is not available within the University, and where the arrangement is demonstrably reasonable.
37. All proposals for the contracting of consultants are subject to the approval of the relevant Dean or Director on the basis of a written business case which
    1. sets out the purpose for which the consultant is required, including objectives, milestones, timeframes and expected costs
    2. addresses the feasibility of using present staff or employing additional staff
    3. addresses the consequences for the University if no action were taken.
38. Wherever practicable, a selection process should be followed that ensures a choice of consultant and competition in the levels of prices and service offered.
39. The independent status of consultants and contractors must be determined before appointment to ensure that the University complies with its employment and taxation obligations. (Refer to http://www.waikato.ac.nz/hrm/internal/policy/independcontract.shtml )
40. Where the services of an individual person are sought (i.e. a consultant who works as an individual, rather than for a consulting firm) an appropriate contract must be developed in consultation with the Human Resources Management Division (HRM).
41. The contract must include a declaration that the consultant agrees to comply with any policies or other requirements determined by the University to be relevant to the consultancy.
42. For reasons of cost, as well as the University's employment and taxation obligations, due care must be taken to ensure that contracts with individual consultants are not unduly prolonged. The renewal of contracts should be treated with great caution and the advice of the HRM must always be sought before any contract for an individual person is extended or renegotiated.
43. A contract awarded to a consulting firm must not be open-ended. However, it may contain provision for a one-off renewal, subject to all contract provisions being met to the University's satisfaction after an appropriate period, normally not exceeding two years.
44. After one renewal of a contract, as provided under section 43 above, any further extension of services must be renegotiated as a result of a competitive selection process.

Petrol Vouchers

45. Petrol vouchers may be purchased only by research project leaders, and only for the purposes of reimbursing non-staff participants in research projects for private vehicle mileage claims.
46. Research project leaders who wish to purchase and issue petrol vouchers must do so in compliance with the FSD Payments - Petrol Voucher Process which is managed by the Director of Finance.
47. Staff who wish to purchase petrol vouchers for purposes other than those set out in section 45 above must seek prior approval from the Director of Finance.

Sponsorship

48. The University's sponsorship of outside organisations and events is subject to consultation with the Director of Communications, who will ensure that any sponsorship arrangements 'fit' the profile of the University, and are consistent with its Vision and strategic objectives, and its image as a public institution.
49. Staff must forward any proposed sponsorship arrangement to the Director of Communications for consideration, and obtain the approval of the relevant Chairperson of Department (or equivalent), prior to any agreement being reached with the external organisation.
50. Costs of sponsorship arrangements are subject to the approval of the relevant cost centre manager.
51. All sponsorship expenditure is to be clearly identified and charged to transaction type PG46/4301.

Compliance

52. Transactions are monitored regularly by FSD for compliance with this policy.
53. The Head of Corporate Services has the authority to disallow any expenditure that he or she considers to be unreasonable.
54. Breaches of this policy will be reported to the Head of Corporate Services and may result in disciplinary action.

Authority to waive the provisions of this policy

55. Only the Vice-Chancellor and the Head of Corporate Services have the authority to waive the provisions of this policy in individual cases.

Approved by Head of Corporate Services 16 September 2009