What is Consumption?
Consumption rules are applied to Capital Funds 6510 and 6700, Fund 6300 and Fund 6100 when a negative balance is reported.
The consumption rule is applied monthly. This is a function which forms part of month end processes carried out by Corporate Finance.
Consumption will affect end of month Funds Available balances displayed in the Schools Overview Report when applied. When one of these balances is in a negative an adjustment will be processed to align the funds to zero using existing funds as per the Consumption Rules.
Consumption values appear in the Schools Overview Report (SOR) in column 'E' as Funds Adjustments. All funds adjustments are posted to GL 528660 - Consumption Rule Transfer using the Cost Centre Educational Delivery.
1. Capital Funds (6510 and 6700) - Any balance in 6510 transfers to 6100 and any balance in 6700 transfers to 6300.
2. Consolidated Fund (6100) - A negative total fund balance in 6100 Result line transfers to 6300. Any transfer initiated is not to take the balance of 6300 funds below zero. Where there are insufficient funds to cover the total of the negative 6100 value the residual negative balance remains against 6100 # Not Assigned funds.
Please note: the calculation for consumption of fund balances is done using the Result line so that all funding within a fund code is captured. The transfer of funds as a result of Consumption is however placed against the # Not Assigned line. In Fund 6100 this will affect the Funds Available balance of the # Not Assigned 6100 funds only.
3. School and Community Funds (6300) - A negative fund balance in 6300 transfers to 6100 and is offset against the total fund 6100 balance. Any transfer initiated is to clear the negative balance of 6300 funds back to zero.
How Consumption is applied
1. Capital Funds balances
- When expenditure occurred during the month, the Capital Fund balance value will be offset to the corresponding fund being 6100 for 6510 and 6300 for 6700 to clear any balances reported against these Capital fund codes.
- Only Capital fund codes 6510 and 6700 are to be used by schools. Capital fund codes should only be used in transactions where purchased items are greater than or equal to $10,000 (GST exclusive) together with the required WBS (CSA or CSP).
- In the example below 6100 funds were allocated to be used to make the capital purchase, so fund code 6510 was used in the acquisition transaction. When the consumption rule is applied at the end of the month, the funds consumed against the Capital Fund code 6510 are offset against 6100 funds to zero the capital fund.
2. A negative 6100 Funds Available balance
- If the school holds a negative 6100 Funds Available balance in the Result line at month end, then this value will be debited from 6300 fund to zero the 6100 Funds Available balance.
- When there are insufficient funds in 6300 to cover the total negative 6100 Funds Available value in the Result line, the 6300 available balance will be debited to equal zero, and the remaining negative balance will remain in the #Not Assigned to show a 6100 Funds Available as a negative balance.
3. A negative 6300 fund balance
- If the school holds a negative 6300 balance at month end, then this value will be debited from #Not Assigned 6100 to return the 6300 Fund Result to zero.