EDUCATIONAL BODIES

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SMALL BUSINESS, EDUCATIONAL AND COMMUNITY ADVISER
EDUCATION PROGRAMME
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EDUCATIONAL BODIES COURSE 2 SYSTEMS
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What is a system?
Systems are a series of processes that are
designed to provide information that is

• Timely
• Relevant
• Accurate
• This enables organisations to make informed
  decisions

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Why are systems important?

• To allow organisations to
• Set targets
• Monitor performance against the targets
• Make informed decisions
• Adapt to any changes

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Why are systems important?

• Give procedural guidelines to staff
• Protect staff health and safety by providing a
  safe working environment
• Provide comfort to different stakeholders by
  providing relevant, accurate and timely
  information as required.

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Why do systems change?

• Because organisations need to cope with constant
  change
• Technology
• Customers, suppliers and competitors may force
  change
• The introduction of new issues like GST
• You cannot avoid change, so make change work to
  your advantage

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Supplies Educational Bodies

• Taxable supplies acquired by an educational
  institution
• Taxable supplies made by an educational
  institution
• GST-free supplies made by an educational
  institution
• Input taxed supplies made by an educational
  institution

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Look at your activities

• Various activities give rise to different
  transactions
• Different activities have different GST
  consequences
• Different activities drive costs and income in
  different ways
• Transaction analysis for GST can be used for
  management purposes

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Different activities could include

• Tuck shops, canteens or restaurants
• Child care facilities
• Uniform and book shops
• Accommodation
• Fundraising

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Structure

• The way organisations are structured can affect
  GST
• Educational institutions may be able to register
  components parts separately for GST
• For GST purposes educational institutions may be
  able to group register associated entities

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Grouping

• Grouping may be an option for educational bodies
• Educational bodies with more than one entity
  could group register
• Group registration would reduce GST compliance
  costs
• One member of the group acts as the group
  representative for GST purposes

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GST Systems

• Documentation needed to calculate GST
• Attribution rules
• Cash basis of accounting for GST
• Invoice basis of accounting for GST

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Reports generated from systems
Ensure the reports generated by the system
separately identify

• Taxable supplies
• GST-free supplies
• Input taxed supplies
• Other tax liabilities, eg FBT

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Systems and staff

• Recognise the impact GST will have on staff
• Additional responsibilities
• Staff will need education on the impact of GST in
  their area

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Assisting staff to deal with GST

• User friendly policies and procedures
• Importance of appropriate Charts of Accounts
• Ensuring that documentation is compliant
• Review debtors and creditors systems

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Source Documents

• Documented evidence that organisations accumulate
• Contain the evidence to substantiate GST returns
• All staff should understand the importance of
  source documents
• The more they are the more useful

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Tax Invoice

• Recording the transaction in the system
• The information source
• Legal requirements to be met
• Analysis and recording needs to be accurate

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Structure
Ensure valid tax invoices are received

• Code invoices on receipt
• Record the invoices in a way that generates
  totals of the various types of supply
• Taxable
• GST-free
• Input taxed

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Bank Statements

• Flow of information
• Accounting records a part of information only
• GST is only a part of this again

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Recording GST in your General Ledger

• Pulls all the GST data together
• The Chart of Accounts should be revised to
  incorporate GST information requirements
• Figures required for financial reporting will be
  GST exclusive
• Figures required for GST reporting will be GST
  inclusive

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Computer Systems

• Many educational bodies will have computers
  available
• Computer packages that can handle GST will be
  available
• Ensure the benefits justify the cost
• Ensure any system acquired, has provision to deal
  with the transactions typically undertaken by the
  educational body that intends to use it

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Adjustments

• Credit notes
• Bad debts
• Transactions without a GST invoice

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Irregular Transactions

• Purchase of assets using credit terms or external
  finance
• The trade in of assets
• Note the invoice requirements
• Note the correct requirements

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Structure

• Action required
• All existing contracts extending beyond 1 July
  2000 should be reviewed
• The GST implications of new contracts entered
  into from now until 1 July 2000 should be reviewed

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Transitional Issues

• All possible advantages should be considered
  prior to entering into the contract
• What further actions may be needed

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Transition Issue Examples

• General rules of supply
• Goods and services
• Progressive supplies