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Policy Training Program for the Lifecycle of an Account. Non Sponsored Program Accounts. Delivered by: Jennifer Craig & Kristi Mickle. Content Experts: Suzanne Bennett Kathy Vanderwall Jason Dietz James Wiley Kristi Hartwick JoAnn Wiley. May 2009. Objectives

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Non Sponsored Program Accounts


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    1. Policy Training Program for the Lifecycle of an Account Non Sponsored Program Accounts Delivered by: Jennifer Craig & Kristi Mickle Content Experts: Suzanne Bennett Kathy Vanderwall Jason Dietz James Wiley Kristi Hartwick JoAnn Wiley May 2009

    2. Objectives Gifts and Endowments Residual Accounts Continuing Education and Conferences Construction Accounts Hospitality PRF Accounts Course Content

    3. Upon completion of this course you will: Understand why we have the different types of non sponsored program accounts within the University Gain an understanding of the University policies associated with the non sponsored program accounts Course Objectives

    4. Why are gifts classified differently? GASB and GAAP Requirements Restricted vs. Unrestricted University Policy IX.6.2 Classification, Administration and Reporting of Nongovernmental Support Voluntary support vs. Contract Support Donor intent / Purpose of funds (Gifts, Scholarships, Construction, etc) http://www.purdue.edu/policies/pages/advancement/ix_6_2.html Gifts and Endowments

    5. The gift acceptance policy University Policy IX.2.1 http://www.purdue.edu/policies/pages/advancement/ix_2_1.html Policy Exists to protect University and donors interests “A gift shall not be accepted by the University unless there is a reasonable expectation that acceptance of the gift will support the University in its missions of learning, discovery, and engagement.” Gifts and Endowments

    6. Would there be a situation where Purdue would not accept a gift? Gifts and Endowments

    7. Gifts of significant risk are reviewed by gift acceptance committee Examples include: Gifts of land Non-publically traded securities or businesses Cash gifts with significant donor restrictions All unusual gifts or gifts of questionable value Gifts and Endowments

    8. Why is it necessary to process the form 44? Update UDO Advance system with gift information Funds need to be deposited to the appropriate account (51XXXXXX & 52XXXXXX) Determine the correct gift classification Voluntary support vs. Contractual support http://www.purdue.edu/sps/pdf/fundguide.pdf Gifts and Endowments

    9. Why is it necessary to process the form 44? Dean / Department Head signature for: - Accepting the Gift - Document potential conflict of interest Donor backup documentation is important for stewardship and classification purposes Gifts and Endowments

    10. What are the benefits of gifts in kind and loans? To further the teaching, research, and engagement missions of the University Examples of gifts in kind include equipment, software, books, art, animals, etc. Examples of loans include equipment Process gifts in kind and loans via form 41B https://www.purdue.edu/udo/info/pdf/gift_in_kind_form.pdf Gifts and Endowments

    11. Why do gifts process through Purdue(PU), Purdue Foundation(PF), or Purdue Research Foundation(PRF)? The PF and PRF exist to secure private gifts for the benefit of Purdue Both Foundations are organized as corporations, exempt from federal tax liability, and qualify as a public charity Gifts and Endowments

    12. Why do some gifts process through Purdue (PU), Purdue Foundation (PF), or the Purdue Research Foundation (PRF)? Purpose of gift and donor restrictions Gift instrument (i.e. securities, land, estate, trusts, etc.) drive where it should be deposited Donors are encouraged to write checks to PF for the flexibility to deposit into a PU or PRF account Gifts and Endowments

    13. Discussion Item: What do you do if the back up documentation for a gift indicates something different than the recipient has indicated? Gifts and Endowments

    14. Why do we establish endowments? Endowments provide income stream for university in perpetuity and protects purchasing power over time Donor wishes Gifts and Endowments

    15. Different classifications of endowments: True Endowment (7201XXXX-7223XXXX): Book value is kept intact Income expended according to the endowment agreement Term Endowment (7275XXXX): Similar to true endowment Book value may be spent according to the agreement Quasi Endowment (7230XXXX-7263XXXX): Mgmt decision to invest internal funds Gifts and Endowments

    16. Why are there different classifications of endowments? GASB Financial Reporting Requirements Non-expendable vs. Expendable Restricted vs. Unrestricted Funds classification tracking Reporting purposes Gifts and Endowments

    17. Why do we have a spending policy? Smooth market volatility Protect long-term growth and purchasing power http://www.purdue.edu/invest/ Gifts and Endowments

    18. Why do we track the book and market value of endowments? Book and market value are currently used in the composition of financial statements Stewardship Gifts and Endowments

    19. Non-SPS Account Task List • We’ve received funding from a donor and now have it properly classified and deposited Next – I need to better understand my residual accounts . . .

    20. Types of Residual Accounts Residual Funds from fixed price contracts/agreements Royalty Funds from Intellectual Property Residual Accounts

    21. SPS INSTRUCTION NO. 4 1.     The contract is fixed-price (i.e., there is no provision for return of unexpended funds to the sponsor.) 2.     All payments required under the contract have been received by Purdue. 3.     All required project work is complete, and all reports and other deliverables have been provided to the sponsor. 4.     All expenses related to the project have been properly charged to the account. Residual Funds

    22. Residual Funds The unexpended direct cost balance in the account can be transferred to a residual fund in the appropriate department. http://www.purdue.edu/sps/accountmgmt/i4.html

    23. If the residual balance is > 15% of the total award, an explanation should accompany the request for transfer. Proposal is fully costing projects – not inflating Not make a profit Reimbursement for cost Residual Accounts

    24. Residual Accounts Discussion Item: “Due to a miscalculation, the grant was undercharged for the PI’s April salary.  If the correct amount had been charged the amount remaining would have been less than 15%.” Is this adequate justification to transfer the residual funds?

    25. Residual Accounts Discussion Item: “The funding was given for a project at Company A.   Two students worked on the project, the first stayed several weeks and the second several months.  Beyond the work that was accomplished there was no interest from Company A to continue the project.” Is this adequate justification to transfer the residual funds?

    26. Royalty activity, which is generated from Intellectual Property, is also tracked in residual funds. Intellectual Property Policy (VIII.4.1) http://www.purdue.edu/policies/pages/teach_res_outreach/viii.4.1.htm Residual Accounts

    27. Residual and Royalty (2201XXXX funds) are expended like general funds and expenditures must be in compliance with University Policies Note: these funds are chargeable for fringe benefits Residual Accounts

    28. Non-SPS Account Task List • We’ve received funding from a donor and now have it properly classified and deposited • My residual accounts are all in order Next – Understand what I need to do to get ready for the department’s Team Building conference . . .

    29. Why do we have CEC? As a land grant institution, Purdue bears a major responsibility to provide continuing education, professional development activities, and other extended accesses of learning and discovery to the public. Continuing Education and Conference

    30. Responsibility and Authority for Continuing Education and Conference Activities (VIII.2.1) http://www.purdue.edu/policies/pages/teach_res_outreach/VIII_2_1.htm This policy assigns academic, administrative, and fiscal responsibility for all CEC activity sponsored by a college/school, department, or other agency of the University. Continuing Education and Conference

    31. Why do we have a CEC policy? To address how the University administers these unique activities Establish the authority for approving rates and registration fees Continuing Education and Conference

    32. Why are there separate funds for CEC activities? Institutional tracking of credit (2209XXXX) and non-credit (2210XXXX) programs Residual funds transferred to 2203XXXX Unique Allowable Expenses Continuing Education and Conference

    33. Why do we use Letter of Agreements in CEC? Outlines and provides approval for conference activity, budget, and fees Details funding sources and where residual funds should be transferred Ensure that the event is scheduled on the University calendar Continuing Education and Conference

    34. Why do we need to be careful with grant funded Activities? Charges to grant must be A-21 allowable costs Charges must be within grant project period Food must be specifically budgeted and approved in sponsored project budget Continuing Education and Conference

    35. Why it is important to quickly close Accounts? Good Customer Service Want to know fiscal status of the project Post within grant project period Tracking receivable balances Continuing Education and Conference

    36. Discussion Item: My area wants to charge a registration fee for an event, but doesn't want to use conferences because of their fee...what do I do? Continuing Education and Conference

    37. Non-SPS Account Task List • We’ve received funding from a donor and now have it properly classified and deposited • My residual accounts are all in order • Team Building conference is scheduled in the tropics Next – I couldn’t talk my Department Head out of remodeling, so I need to understand construction . . .

    38. Levels of Construction Projects Work Orders (under $2,500) Less than $50,000 Construction Projects $50,000 to $500,000 Construction Projects Greater than $500,000 New Construction http://www.purdue.edu/physicalfacilities/architect/project_mgmt/cpc/index.htm Construction Accounts

    39. What governs the approval processes? Purdue University By-laws Article V, Committees Article VII, Contracts and Other Written Instruments Article IX, Buildings Indiana State Statutes ICHE, State Budget Committee, Governor approvals Construction Accounts

    40. Why do we need to complete a Request for Professional Services (RPS) form? Obtain departmental approval Document funding source Outline scope of work Requested schedule Construction Accounts

    41. Construction Accounts Greater than $500,000 New Construction • Capital Projects Council (CPC) Process Including: • CPC approval • BoT Approval • ICHE Review • Budget Committee & Budget Agency Recommendations • Governor Approval http://www.purdue.edu/physicalfacilities/architect/project_mgmt/cpc/index.htm

    42. Accounting of Construction Projects is driven by financial reporting requirements as implemented through the University Capitalization Policy Non-Capital Projects vs. Capital Projects Construction Accounts

    43. Types of construction project funding Debt Funded Projects State Appropriated Funds (Including Repair and Rehabilitation) Sponsored Programs Funded Projects Gift Funded Projects Mixed Funded Construction Projects Construction Accounts

    44. Funds expended in following order: Debt proceeds (8202XXXX) State appropriations (8203XXXX) Gift funds (8204XXXX) received by the University for construction School, Department, or Unit unrestricted gift funds (8203XXXX) Designated internal funds (8203XXXX) Construction Accounts

    45. Non-SPS Account Task List • We’ve received funding from a donor and now have it properly classified and deposited • My residual accounts are all in order • Team Building conference is scheduled in the tropics • RPS for office remodel is routing for approval Next – Need to reimburse Prof. Smith for prospective employee lunch. Can I use University funds?

    46. Why the Policy was created: Department’s lack of PRF Funds Lack of flexibility with university funds Dean’s requested the ability to use University funds for hospitality expenses Allowable at Peer Universities Hospitality

    47. Hospitality Expenditure Policy (II.1.1) http://www.purdue.edu/policies/pages/finances/ii_1_1.html Guidelines are based upon an understanding that food and beverage expenditures are allowable only when clearly required to advance the mission of the University and are appropriate to the occasion. Hospitality

    48. Hospitality Hospitality Expenditure Policy (II.1.1) • Expenses should be reasonable in amount and necessary to fulfill the mission of the University. • Consistent treatment for expenses • Have to be excluded from cost study

    49. Allowable hospitality expenses have been divided into three general categories: Meals or refreshments served during business meetings, Meals for prospective employees, visitors, guests, or donors, and University receptions. Hospitality

    50. Hospitality Special Note on Sponsored Programs Funds • Sponsored program accounts may be used if the expense is specifically approved in the budget and is in accordance with sponsor and University policy. 546305 - Conference Meals 533380 - Conf Arrangements for CEC events only 533615 - Hospitality/Food Service