Accounting for capital construction projects

Basics you need to know

1. ANU records accounting transactions relating to its major capital construction projects in the C fund.
2. Responsibility for the use and maintenance of the C fund resides with F&BS and F&S. F&BS is responsible for the accuracy of the income details, and F&S is responsible for the activity in the expenditure details.
3. Income and expenditure are monitored separately in the C fund. The expenditure is measured against the project's total budget amount. Income is monitored against the total funding approved. The timing of financial arrangements therefore does not impact on the operational activity of the construction.
4. Each construction project can have multiple funding streams. Examples include budget unit or central ANU operating funds, international student fees or specific capital grants from external funding bodies. Funding may also be obtained for major new projects from the CMP2 loan scheme through negotiation with the Office of the Vice-Chancellor and Chief Finance Officer. Repayments of principle and interest are due over the life of the CMP2 loan.
5. Most projects conducted through the C fund will be capitalised on finalisation, due to their capital nature. Large works that essentially refurbish the interior of whole buildings adding years onto their useful lives are capitalised in accordance with accounting standards. Smaller refurbishments are not capitalised, but expensed to that year's income statement, thus decreasing any profit result.
6. Capital projects use account 3198 - an asset account called 'Work in Progress'. If the project is of a capital nature, expense account 3198 should be used in all cases. Non-capital projects mainly use account 5370 Building Work Not Capital - however expense account 5371 Refurbishment expenses may also be appropriate for some of the expenses relating to these projects. Correct account classifications (refer to the University's Chart of Accounts) should be observed in non-capital projects.
7. C fund projects have budgets for the full value of the project loaded into ESPFIN, regardless of the expected life of the project. Annual budgets are not used.