10. Advances

10.1 Introduction

This Chapter contains instructions for the management of advances, including the issue, management, acquittal, transfer and reporting of advances and should be read in conjunction with the SAP Instructions relating to advances.

Advances fall into the following categories:

Finance Managers are responsible for the management of advances including monitoring the acquittal of temporary advances issued to employees, ensuring that security deposits are redeemed as appropriate and that permanent advances are approved and recorded on the SAP Advances Register and in the SAP Advances general ledger accounts

The Advances Register is a listing of all advances held by employees or organisations. It identifies the category of an advance, name of the Advance Holder, amount of the advance and, where applicable, the date the acquittal is due.

In State Offices where a Cashier's advance is made for the purpose of passport revenue collection and employees are regularly rotated to positions on a fortnightly basis, the advance should be recorded against the location of the Office (eg "Cashier Perth”) rather than the individual. Advance Holders are required to complete handover/takeover statements and a paper record of the management of the advance is to be maintained by the State Office.

In SAP, advances are recorded in the accounts receivable module as a noted item against the customer account of the person/organisation holding the advance. The SAP Advances Register is comprised of all amounts recorded against customer accounts as noted items. Regular reports should be run and action taken as appropriate in accordance with the instructions contained in this Chapter.

Outstanding acquittals of temporary advances should be vigorously pursued. Where an employee has not acquitted an advance prior to departure from an office or post, the advance must be transferred to the employee’s next location for action.

Acquittal of all advances must be made in the currency of the advance and the employee will be required to produce evidence of currency exchange transactions as part of the advance acquittal (see FMM 17.9).

10.2 Issue of Advances

Instructions

Temporary Short-Term Advances

  1. Travel advances should be approved on a Movement Requisition. Other short-term advances should take account of the minimum spending proposal supporting documentation requirements at FMM Chapter 8.3.
  2. Money advanced to an employee is a debt owing to the department until the advance is acquitted.  If an advance is not fully acquitted by the due date a debt should be raised for the amount not acquitted.
  3. Finance Managers are to ensure that temporary short-term advances are recorded in the SAP Advances Register.
  4. Where a temporary advance recipient is overdue in acquitting an advance, no additional advances or payments should be made to the recipient, with the exception of salary.

Emergency Cash Advances

  1. The CFO or FAS CMD can approve the issue of an emergency cash advance in circumstances where there is an urgent or anticipated need to have a large sum of cash available for emergency purposes. The emergency advance must be recorded in SAP and is subject to the normal 5.11 checks. Any such advances must be repaid once the emergency is over.

Temporary Long-Term Advances

  1. Security deposits and bonds for DFAT employees must be approved by an Approver or Approver’s agent in accordance with the terms of the governing lease or contract, where applicable.
  2. Finance Managers are to ensure that temporary long-term advances are recorded in the SAP Advances Register and that repayment of deposits and bonds are recorded against the appropriate SAP GL account and cleared from the SAP Advances Register.

Permanent Long-Term Advances

  1. The Finance Manager (Canberra), Finance Manager (State/Territory Offices and posts) should:
    • Appoint, in writing, all permanent Advance Holders
    • Approve, in writing, the establishment of all permanent advances and any subsequent variations to the level of a permanent advance
    • Ensure that Permanent Long-Term Advances are recorded in the SAP Advances Register and against the correct SAP GL code.
    • Note: Attached agency permanent advances must be approved by an agency official and not recorded in the SAP Advances Register.
  2. The issue of all permanent advances and reimbursements to permanent advances should be approved by an Approver/Approver's agent.
  3. A Cashier’s advance should only be used for the following purposes:
    • cashier's advance: held by Cashier to facilitate normal cash and emergency payments
    • cash establishment or reimbursement to the advance is issued in accordance with a Form FMA 001 signed by an Approver/ Approver’s agent
  4. A change float advance should be held by a Cashier or Sub-cashier to enable change to be given to clients.
  5. A stamp/franking machine advance should be used to facilitate postage and/or meet postage costs.
  6. A petty cash advance:
    • Should be used to facilitate small cash payments usually by way of reimbursement to employees (eg reimbursement of taxi fares). There is usually a limit set, based on local operating requirements, on the amount per claim that may be paid from this advance. A minimum amount per claim may also be set by the Finance Manager to make the petty cash process more efficient;
    • The payment of petty cash to officials must be approved by an FMA Regulation 9 Approver (or Approver’s agent) and documented on a Petty Cash claim form; and
    • to assist the accounts section, the Advance Holder should attach a Petty Cash Summary to the FMA 001 when seeking reimbursement.
  7. Holders of permanent cash advances must not mix public money (cash held by way of advance) with private money.

Procedure

Responsibility

Frequency/Conditions

Action

10.3 Management of Advances

Instructions

  1. Finance Managers must ensure that:
    • The SAP Advances Register is properly managed and appropriate procedures exist to ensure that temporary and permanent advances are promptly and accurately recorded
    • DFAT permanent and temporary long term advances recorded in the SAP Advances Register reconcile to the EOM Schedule and the respective SAP general ledger codes
    • The SAP Advances Register is reviewed on a monthly basis and, where applicable, appropriate follow-up action taken monthly
    • Appropriate arrangements are in place for the use of franking machines
    • Examinations of permanent cash advances are conducted in accordance with Chapter 5.11 of the FMM.
  2. Employees who have an overdue unacquitted advance are not entitled to receive further payments until the advance is acquitted.
  3. Where an advance acquittal is overdue by more than 30 days the amount becomes a debt due immediately by the Advance Holder to the department. Refer to Chapter 10.4 for further instructions.
  4. When a permanent advance is transferred from one employee to another, the Advance Holder must prepare a handover/takeover statement. A sample statement is provided at the FMM Forms folder. The completed statement should be retained on file. Where the advance is being transferred permanently from one Advance Holder to another the SAP Advances Register must also be updated.
  5. In the event of an unexpected absence of the Advance Holder, the Finance Manager should appoint another Advance Holder. Using the spare key and/or combination to open the secure container, both employees should conduct an audit of the advance and complete a handover to the new Advance Holder, with supporting documentation.
  6. Advance Holders must ensure that records of all payments from permanent advances are maintained.
  7. Returns/redemption of permanent advances must be coded to the SAP GL code and cost centre where the original advance was recorded.

Procedure

Responsibility

Frequency/Conditions

Action

Stamp/Franking machine advance

10.4 Acquittal of Advances

Instructions

  1. Officials issued with temporary advances for international travel are to acquit those advances within 30 days of completion of the journey.
  2. Unless mitigating circumstances exist, employees are also to acquit other temporary short-term advances within the following time frames:
    • Representation advances: within 14 days of the end of each representation cycle (refer HRM Schedule 12);
    • Other short-term advances: within 30 days of the advance being issued.  Staff should not attempt to hold off on acquittal of advances on the presumption of waiting for credit card statements to obtain exchange rates (eg travel acquittals).
  3. Acquit long-term temporary advances as and when the situation demands (eg deposits for school bonds are to be acquitted at the end of an employee’s posting).
  4. Officials must make every attempt to acquit all outstanding advances before departure from an office or post.
  5. Officials can make arrangements with another official at post to repay a temporary long-term advance (eg rental deposit), where they are personally unable to make the repayment (eg after their departure).
  6. Officials with overdue unacquitted advances are not entitled to further payments until such time as the advance is acquitted.
  7. All overdue advance acquittals must be regarded as money due to the Commonwealth and be transferred to the Debtors Register. The provisions of FMM Chapter 11 then apply and the amount should no longer be regarded as an advance, but rather as a debt owing to the department.
  8. Where an official has notified that they will be ceasing employment with the department:
    • Ensure that the due date for the acquittal of any advance issued to the official falls before their last day of duty
    • Immediately transfer any overdue unacquitted advances to the Debtors Register and undertake recovery action in accordance with FMM Chapter 11.
  9. If the Director, FPT or Finance Managers (State/Territory Offices and posts) determines that the work unit no longer requires a particular permanent advance, the permanent advance is to be reimbursed up to its limit and then immediately repaid to a relevant SAP GL code.

Procedure

Responsibility

Frequency/Conditions

Action

Travel Advances
Temporary Short-Term Advances
Temporary Long-Term Advances
Permanent Long-Term Advances (e.g. Cashier’s advance or petty cash)
Accounts Staff

10.5 Transfer of Advances

Instructions

DFAT Officials

  1. Finance Managers are responsible for implementing procedures that require employees to acquit all outstanding advances before departure from an office or post.  For example, for employees departing posts, Return to Australia (RTA) airline tickets may be withheld until the employee has acquitted all outstanding advances.
  2. Employees must make every attempt to acquit all outstanding advances before departure from an office or post.
  3. In circumstances where it is not possible for an employee to acquit outstanding advances prior to departure, the advances should be transferred to the employee's next place of duty.

Attached Agency Official

  1. Where an official of another agency has departed an office or post and has not acquitted an advance the debt must be transferred to the attached agency Central Office.
  2. To transfer the advance cable details of the unacquitted advance to the agency's Central Office and provide a copy of the cable to the senior representative of the agency at the post. The documentation should be retained on file (refer FMM Chapter 11.5).
  3. Once the agency has been advised of the transfer by cable the unacquitted advance can be removed from the office's or post's Advances/ or Debtor’s register.

Procedure

Frequency/Conditions

Action

DFAT Officials
Attached Agency Officials

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