Foreign Exchange (Hedging) for Research and Consulting Contracts Policy

This policy applies to all University staff members who are involved in the management of research and consulting income and expenses denominated in foreign currencies.

To provide a framework for the management of foreign exchange risk arising from the receipt of funding from international funders and payment of expenses denominated in foreign currencies.

Income

1. Staff must use the foreign exchange rate from the FX Rate Table on the ResearchHub when developing a new proposal budget or subsequent project budget variation for international funding where the equivalent value of the project is less than or equal to $500,000 New Zealand Dollars (NZD) (excluding any applicable taxes).

2. Staff must obtain a foreign exchange rate from the University’s Treasury team when developing a new proposal or subsequent variation for international funding where the equivalent value of the project is more than $500,000 NZD (excluding any applicable taxes) or the foreign currency is not available in the FX Rate Table.

Note: The request for advice to Treasury must also detail any foreign currency denominated subcontracts, Contracts for Service (CFS) and other forms of expenditure within the proposal/project budget to inform hedging decisions in accordance with the Treasury Management Policy.

3. The foreign exchange rate used in clause 1) or 2) is fixed for the duration of the project and the Research Operations Centre is responsible for managing any foreign exchange fluctuations for any income received. Foreign exchange gains and losses on income are managed centrally and do not impact the project budget.

Expenditure

4. Staff with the appropriate delegation shall take all commercially reasonable steps to ensure that research and consulting subcontracts, CFS and other forms of expenditure are denominated in NZD to minimise foreign exchange risk.

5. Staff must use the foreign exchange rate from the current FX Rate Table on the ResearchHub when developing a new proposal budget or subsequent project budget variation that includes expenditure denominated in foreign currencies with an equivalent value of less than or equal to $500,000 NZD (excluding any applicable taxes).

6. Staff must obtain a foreign exchange rate from the University’s Treasury team when developing a new proposal budget or subsequent project budget variation that includes foreign currency denominated expenditure with an equivalent value of more than $500,000 NZD (excluding any applicable taxes) or the foreign currency is not available in the FX Rate Table.

7. Project expenses are to be paid at the prevailing spot rate unless the expense has been hedged at the time of commitment. Foreign exchange gains and losses on unhedged expenditure are to be realised within the project budget. Foreign exchange gains and losses on hedged expenditure are to be managed centrally and do not impact the project budget. The decision to hedge an expense will be made by Treasury in accordance with the Treasury Management Policy.

Note: Notwithstanding the NZD threshold set out in clause 6), staff can seek advice from Treasury on ways to manage foreign currency exchange gains and losses associated with foreign currency denominated research subcontracts of any value.

The following definitions apply to this document:

Hedging refers to a foreign exchange hedge, which is a method of eliminating foreign exchange risk resulting from transactions in foreign currencies.

Spot rate is the price quoted for immediate settlement of a foreign currency.

Staff member refers to an individual employed or contracted by the University.

University means Waipapa Taumata Rau | the University of Auckland and includes all subsidiaries

Include the following:

• Treasury Management Policy
  

Owner: Deputy Vice-Chancellor (Operations) 
Content manager: Chief Financial Officer 
Approved by: Vice-Chancellor
Date approved: 03 April 2023
Review date: 03 April 2028