Getting and Spending University Money
There are many ways to get money and many ways to spend money. The rules associated with obtaining and spending money are sometimes complex and sometimes frustrating, but they were written to assist us in making correct decisions in compliance with Federal and State regulations and industry requirements. The University is a public institution and we are accountable as stewards of public funds.
Fund Accounting
Industry standards and State law require the University to organize money in "funds." Fund Accounting is a classification of financial resources for accounting and financial reporting purposes that focuses on accountability. Funds segregate financial resources by specific activities, objectives, restrictions, or regulations. Transactions must be managed in accordance with rules appropriate to the fund, and rules are different for different funds. There may be spending limitations (restrictions) on use imposed by donors, sponsors, or Federal or state requirements. For this reason, money in one fund may not be interchangeable with money in another fund.
All monies are maintained in the University's official accounting system, UAccess Financials. As money is received, it is classified into the appropriate fund and deposited into an account within that fund. Refer to the Financial Services Manual 2.01 Structure of the Accounting System for definitions of Funds and Accounts.
Accounts
In UAccess Financials, we establish "accounts" for each different source of money. Accounts are individual pots of money within a fund that are being budgeted for or funded and spent against. Please refer to Account Roles – UAccess Financials for information about the roles and responsibilities of Fiscal Officers, Account Managers, and Account Supervisors.
Account Numbers
Refer to the Financial Services Manual 2.01 Structure of the Accounting System
Deposits
Money is usually sent directly to the University by the sponsor, donor, or other source. If you receive a gift in the form of a check, it must be delivered immediately to the Central Gifts Office for deposit to the appropriate gift account. Cash and other checks received must be deposited immediately with the Bursar's Office. You may not set up separate bank accounts or use the University name in any bank account title.
Gifts
Refer to the Financial Services Manual 8.12 Gifts for guidelines for soliciting, reviewing and accepting, processing, reporting and stewarding gifts.
Expenditures Requiring Special Attention
While all expenditures from accounts must be appropriate and allowable, certain payments are subject to more scrutiny from outside sources than others due to the sensitive nature of the expense or certain risks associated with the payment of the expense. Fiscal Officers should ensure that requirements are complied with and proper documentation is attached on these types of payments. Some examples of expenditures subject to heightened scrutiny are travel expenditures, consultant payments, reimbursements to individuals, and payments to students and nonresident aliens.
Expenditures must be for a valid University business purpose. It is important to note that University funds may not be used for personal use, including employee social or recreational functions and gifts (such as for condolence, illness, congratulations), service organization dues (such as Kiwanis, Lion's Club) or charitable contributions.
Travel
The University of Arizona follows travel regulations established by the State of Arizona. Travel expense is one of the highly scrutinized categories because of the potential for misuse. One person's idea of reasonable travel expenses may be far different from another person's (such as a taxpayer). The State travel regulations are intended to prevent inappropriate or excessive travel expenses by requiring that travel be pre-approved and that travel expenses meet specified limits.
Independent Contractors
The IRS would prefer that we treat all individuals providing services to the University as employees rather than independent contractors and will assume that an individual is an employee unless we can provide adequate documentation to prove otherwise. Why? Because the IRS receives more tax revenue, and on a timelier basis, from employees than from independent contractors. In recent years, the IRS has been increasing its audits of questionable classifications. The penalties for improper classification include fines.
Determining independent contractor status is driven by facts and circumstances. The facts and circumstances that make one individual an independent contractor may differ from those that make another individual an independent contractor. Court cases were used as a conceptual framework for the IRS to develop a list of the most common and significant independent contractor characteristics. Financial Services has summarized and simplified the IRS list of characteristics on the Independent Contractor Form (ICON form). Please refer to Financial Services Manual 9.12 Independent Contractor Services.
Reimbursements
Because reimbursements are paid to individuals, the University must take extra care to ensure that the expenditure occurred, was for a valid University business purpose and that proper documentation exists to support the payment. Care should also be taken to ensure reimbursement is not made twice. Receipts or other documentation must be provided to support the payment.
There are times when it is appropriate for an employee to make a business-related purchase using his or her own money, then request reimbursement (for example, an emergency purchase of supplies). However, it is best practice to use established University procurement methods to purchase and pay vendors. Procurement and Contracting Services and the Purchasing Card (PCard) should be used whenever possible to ensure compliance with University policies.
Payments to Students or Nonresident Aliens
Special care must be taken when making payments to students because such payments could affect the student's ability to qualify for financial aid. Refer to Financial Services Manual 13.00 Student & Postdoctoral Payments.
Payments to nonresident aliens must be made in accordance with complex regulations. For example, the visa type determines whether the nonresident alien is eligible for compensation for providing outside professional services or for reimbursement of expenses and may establish limits on how much they can be paid. Refer to Financial Services Manual 9.16 Payments to Nonresident Aliens.
About Foundation Monies
The University of Arizona Foundation is a private nonprofit corporation whose primary purpose is to enhance the University of Arizona. The Foundation is a separate entity from the University and has its own rules and regulations, many of which are less stringent than those imposed on the University. If you have money on deposit with the Foundation designated for your use, you may be able to use the money in different ways than you use the money deposited in your University accounts. For questions on Foundation monies, please contact the University of Arizona Foundation.
It is very important to keep Foundation money separate from University money and to deposit receipts with the appropriate institution. A common misunderstanding relates to conferences. If a conference is held at University facilities and is supported by expenditures from University accounts, the proceeds must be deposited with the University, not the Foundation. If the conference sponsors intend for the proceeds to be deposited with the Foundation, the conference may not be held using University facilities and University money may not be used to support the conference without the payment or reimbursement from the Foundation. Such arrangements must be approved in advance.
When University money is used, follow University policies and procedures. When Foundation money is used, follow Foundation policies and procedures.
Keeping Track of University Money
Object Codes
All transactions are assigned an object code, which identifies the type of revenue, expense, asset, or liability. Every request to spend money must include both the account and the object code that best describes the nature of the expense.
Use of the correct object code is important because the University is subject to audits by various agencies. The financial statements are audited by the Office of the Auditor General, an agency of the State of Arizona, for accuracy and for compliance with State and Federal regulations, industry standards and internal control requirements. Other organizations that provide funding for programs at the University and the Arizona Board of Regents also ask to audit the finances to ensure that money is being spent as intended.
In addition to external reporting and audit requirements, tracking expenditures by object code is a good management tool. If used properly, you can determine exactly how the money has been spent. This is useful for historical analysis as well as for budgeting and forecasting (for example, analyzing which expenses could be reduced or which expenses are likely to increase).
Reports/Reconciliation
Policy requires that all University accounts be reconciled at least monthly. Errors do occur, and some errors can only be caught through the reconciliation process and knowledge of the Fiscal Officer. Reconciling means checking to see if the transactions that you requested posted in your account and for the correct amounts. If you come across a transaction that is posted incorrectly or should not have been charged to your account, it is your responsibility to process the correction or notify the appropriate office so the error can be corrected as soon as possible.
Monitoring Budget
Most accounts are budgeted and reports are available that display the available budget balance. You need to monitor the balance to make sure you do not exceed the budget.
To help monitor the budget, the University uses a system of encumbering funds. Encumbering is a method of reserving a portion of your budget when a commitment has been made. For example, if you order a piece of equipment, the estimated amount of the expense will be removed from the budget at the time the Purchase Order is sent to the vendor. When the bill is paid, the actual amount of the expense is posted to your account and the encumbrance is removed. The monthly report shows the actual expenses and the encumbrances separately.
EDGE Learning offers UAccess Financials Reference Guides.