1. Fiscal Officer Development Series - November 5 & 6, 2008 1 Kathleen T. McNeely Associate Vice President, FMS Kmcneely@indiana.edu (812) 855-3377 Indiana University Financial Policies

2. Fiscal Officer Development Series - November 5 & 6, 2008 2 Policies and Internal Controls Policies are key to Internal Controls because they establish a documented framework of executive management’s philosophy on how university resources are to be utilized.

3. Fiscal Officer Development Series - November 5 & 6, 2008 3 Goals of this Session Policy History Policy History Process Process Responsibility Responsibility Categories Categories Review of Key Policies Review of Key Policies Review of Draft/Modified Policies Review of Draft/Modified Policies

4. Fiscal Officer Development Series - November 5 & 6, 2008 4 History of Financial Policies Previously were Controller Memoranda Previously were Controller Memoranda Rewritten in 1991 Rewritten in 1991 Hardcopies initially distributed Hardcopies initially distributed Maintenance/Accessibility on Web Maintenance/Accessibility on Web www.indiana.edu/~vpcfo/policies/ www.indiana.edu/~vpcfo/policies/

5. Fiscal Officer Development Series - November 5 & 6, 2008 5 Process for Financial Policies Policies are written/proposed by functional areas Policies are written/proposed by functional areas Policy Committee Policy Committee CFO personnel CFO personnel Bloomington VC office Bloomington VC office Indianapolis VC office Indianapolis VC office VC from Regional Campus VC from Regional Campus

6. Fiscal Officer Development Series - November 5 & 6, 2008 6 Process for Financial Policies – continued Distribution to Standard Personnel for review Distribution to Standard Personnel for review VC for Fiscal Affairs included VC for Fiscal Affairs included Internal Audit Internal Audit Legal Counsel Legal Counsel Research Administration Research Administration Two track process Two track process Compliance Compliance Non-compliance Non-compliance Changes/New Policies posted to Web Changes/New Policies posted to Web

7. Fiscal Officer Development Series - November 5 & 6, 2008 7 Financial Policy Categories Accounting Accounting Budget Budget Contracts and Grants Contracts and Grants Payroll Payroll Travel Travel Treasurer’s Office Treasurer’s Office Other Related Functions Other Related Functions

8. Fiscal Officer Development Series - November 5 & 6, 2008 8 I-001, Role of Fiscal Officer, Account Manager and Account Supervisor Fiscal Officer Fiscal Officer Budgeting Budgeting Authorizing Charges and Credits Authorizing Charges and Credits Delegation of Signature Authority Delegation of Signature Authority Reviewing Activity to Insure Compliance Reviewing Activity to Insure Compliance Understanding purpose of Fiscal Activity Understanding purpose of Fiscal Activity Reconcilement of Account Reconcilement of Account Retaining necessary records Retaining necessary records

9. Fiscal Officer Development Series - November 5 & 6, 2008 9 I-001, Role of Fiscal Officer, Account Manager and Account Supervisor Account Manager Account Manager “has the responsibility to ensure that the funds are being spent according to a budgeted plan and that the allocation of expenditures is appropriate to the function identified for the account.”

10. Fiscal Officer Development Series - November 5 & 6, 2008 10 I-001, Role of Fiscal Officer, Account Manager and Account Supervisor Account Supervisor Account Supervisor “ultimately responsible for the fiscal integrity of the organization. This role will provide leadership, oversight and management philosophy to ensure that all funds are spent and managed according to the goals, objectives and mission of the organization. The Account Supervisor will also ensure that the fiscal officer has the education and training required to perform their assigned functions.”

11. Fiscal Officer Development Series - November 5 & 6, 2008 11 I-010, Ranking of Fiscal Officer, Account Supervisor, Account Manager, and Delegation of Authority Fiscal Officer - Exempt Fiscal Officer - Exempt Account Supervisor – Exempt Account Supervisor – Exempt Account Manager – Exempt Account Manager – Exempt Delegation of Authority – Either Exempt or Non Exempt Delegation of Authority – Either Exempt or Non Exempt

12. Fiscal Officer Development Series - November 5 & 6, 2008 12 I-330, Inappropriate Use of University Funds “Judgment should be utilized by Account Managers, Account Supervisors and Fiscal Officers in determining if expenditures are appropriate, given the fund group and the mission of the university.”

13. Fiscal Officer Development Series - November 5 & 6, 2008 13 Reasonable?

14. Fiscal Officer Development Series - November 5 & 6, 2008 14 I-050, Allowable Hospitality Expenses Necessary Necessary Appropriate to the occasion Appropriate to the occasion Reasonable in amount Reasonable in amount Serve a bona fide university purpose Serve a bona fide university purpose

15. Fiscal Officer Development Series - November 5 & 6, 2008 15 I-050, Allowable Hospitality Expenses – con’t Conferences – registration fees must cover hospitality Conferences – registration fees must cover hospitality Auxiliary & Services Units – promotional expenses for client base Auxiliary & Services Units – promotional expenses for client base Contracts & Grants – specific to award and within university guidelines Contracts & Grants – specific to award and within university guidelines Guidelines provided based on the total operating budget of the campus, excluding Guidelines provided based on the total operating budget of the campus, excluding Conferences Conferences Promotional events Promotional events Contract and grant activity Contract and grant activity Student activities Student activities

16. Fiscal Officer Development Series - November 5 & 6, 2008 16 I-050, Allowable Hospitality Expenses – con’t Allowables Allowables Faculty, staff & student recruitment – including spouses with Dean approval Faculty, staff & student recruitment – including spouses with Dean approval Official, ceremonial events Official, ceremonial events Receptions primarily for students or potential students Receptions primarily for students or potential students Official Business of the Board of Trustees Official Business of the Board of Trustees Refreshments at formal training sessions Refreshments at formal training sessions Campus human resource department Campus human resource department Campus faculty development office Campus faculty development office External training consultant External training consultant

17. Fiscal Officer Development Series - November 5 & 6, 2008 17 I-050, Allowable Hospitality Expenses – con’t Allowables - continued Allowables - continued Employee recognition receptions Employee recognition receptions Meals related to accreditation activities or peer reviews Meals related to accreditation activities or peer reviews Meals for academic visitors contributing to intellectual life Meals for academic visitors contributing to intellectual life Meals or refreshments for formally organized departmental or organizational employee business meetings. This does not permit lunch only meetings. To qualify, a meeting must be of at least one-half day duration. Meals or refreshments for formally organized departmental or organizational employee business meetings. This does not permit lunch only meetings. To qualify, a meeting must be of at least one-half day duration.

18. Fiscal Officer Development Series - November 5 & 6, 2008 18 I-050, Allowable Hospitality Expenses – con’t Unallowables Unallowables Alcoholic beverages under ANY circumstances Alcoholic beverages under ANY circumstances Flowers not related to an allowable function Flowers not related to an allowable function Gifts, of any kind, to any individual Gifts, of any kind, to any individual Items utilized for personal entertainment Items utilized for personal entertainment Fund raising events where revenue goes to IUF Fund raising events where revenue goes to IUF Refreshments for staff meetings, internal training Refreshments for staff meetings, internal training Anything related to local, state, or federal government Anything related to local, state, or federal government

19. Fiscal Officer Development Series - November 5 & 6, 2008 19 I-460, Depositing of Revenue for the Sale of Goods and Services at the IUF Payments or transfers can only be made when goods or services have been provided. Payments or transfers can only be made when goods or services have been provided. Revenues generated with university resources must be deposited at IU. Revenues generated with university resources must be deposited at IU. Associated unallowable amounts can be transferred with documentation – revenues must exceed expenses. Associated unallowable amounts can be transferred with documentation – revenues must exceed expenses. Effective August 2002 Effective August 2002

20. 20 I-45, Donor Intent Responsibilities Gifts are only to be used for the purpose stated by the donor. Gifts are only to be used for the purpose stated by the donor. Fiscal Officer responsible for compliance with donor intent. Fiscal Officer responsible for compliance with donor intent. IUF has role in oversight for IUF gifts received and can audit. IUF has role in oversight for IUF gifts received and can audit. Identifies official repository for gift information. Identifies official repository for gift information. Effective, August 2002 Effective, August 2002

21. Fiscal Officer Development Series - November 5 & 6, 2008 21 I-30, Fiscal Misconduct Fiscal misconduct is: an activity or set of activities that lead to the intentional spending of university resources that are not approved; an activity or set of activities that lead to the intentional spending of university resources that are not approved; inappropriate use of university resources including assets and personnel; inappropriate use of university resources including assets and personnel; knowingly violating university financial policy; knowingly violating university financial policy; manipulation of university data and documentation to allow spending where funds do not exist, or manipulation of university data and documentation to allow spending where funds do not exist, or intentionally misreporting university transactions intentionally misreporting university transactions

22. Fiscal Officer Development Series - November 5 & 6, 2008 22 I-30, Fiscal Misconduct – con’t University disciplinary action will be imposed University disciplinary action will be imposed Could include termination Could include termination If an employee suspects fiscal misconduct they have a responsibility to turn it in If an employee suspects fiscal misconduct they have a responsibility to turn it in Could be subject to disciplinary action if not turned in Could be subject to disciplinary action if not turned in All investigations will be conducted in the strictest of confidence All investigations will be conducted in the strictest of confidence Effective with changes March 2005 Effective with changes March 2005

23. Fiscal Officer Development Series - November 5 & 6, 2008 23 I-35, Fraud Policy Fraud is the deliberate misrepresentation of fact for the purpose of depriving the university of a valuable possession or legal right. Fraud is the deliberate misrepresentation of fact for the purpose of depriving the university of a valuable possession or legal right. Appropriate legal action will be pursued Appropriate legal action will be pursued Immediate termination (if fraud is proven) Immediate termination (if fraud is proven) Chancellor or appropriate VP can overturn Chancellor or appropriate VP can overturn Restitution if required Restitution if required Employees who know or suspect fraud must report Employees who know or suspect fraud must report Non-reporting could lead to termination or disciplinary action Non-reporting could lead to termination or disciplinary action Policy was effective March 2005 Policy was effective March 2005

24. Fiscal Officer Development Series - November 5 & 6, 2008 24 I-470, Internal Controls Formally establishes responsibility for internal controls Formally establishes responsibility for internal controls Communicates to responsible parties what their role is Communicates to responsible parties what their role is Defines what internal controls are Defines what internal controls are Defines role of others including internal audit Defines role of others including internal audit States BOT and President “are committed to a solid structure of internal controls.” States BOT and President “are committed to a solid structure of internal controls.”

25. Fiscal Officer Development Series - November 5 & 6, 2008 25 I-470, Internal Controls – con’t The Office of the Vice President and Chief Financial Officer (VPCFO) is responsible for insuring that an adequate internal control structure is in place. In this role the VPCFO’s office will insure that appropriate documentation and guidance exist in the form of Financial Policies and Standard Operating Procedures, that appropriate business rules and controls have been incorporated into financial systems, and that a tone of ethical behavior and compliance is maintained by senior financial administrators

26. Fiscal Officer Development Series - November 5 & 6, 2008 26 I-470, Internal Controls – con’t It is the responsibility of the vice-presidents, campus administration, deans, department chairs, directors, and the fiscal officers of the university to build and maintain an internal control environment at the responsibility center and department level. This responsibility includes requiring that staff are well trained, educated on university financial policies, and that a tone of ethical behavior and compliance is maintained by leadership of the responsibility center or department.

27. Fiscal Officer Development Series - November 5 & 6, 2008 27 I-470, Internal Controls – con’t This responsibility includes requiring that staff are well trained, educated on university financial policies, and that a tone of ethical behavior and compliance is maintained by leadership of the responsibility center or department.

28. Fiscal Officer Development Series - November 5 & 6, 2008 28 I-480 Mobile Devices and Internet Access Policy defines business purpose Policy defines business purpose Restricts reimbursements to those items that are for a business purpose Restricts reimbursements to those items that are for a business purpose Applies to mobile phones and home internet access Applies to mobile phones and home internet access Excludes Excludes Pagers Pagers Shared devices Shared devices Two-way radios Two-way radios Devices used for testing new technology Devices used for testing new technology

29. Fiscal Officer Development Series - November 5 & 6, 2008 29 I-480 Mobile Devices and Internet Access Employees must now acquire and pay for devices as personal plans Employees must now acquire and pay for devices as personal plans Additional pay is the mechanism to reimburse employees Additional pay is the mechanism to reimburse employees Base salaries are NOT to be adjusted Base salaries are NOT to be adjusted Range from $15 to $150 a month – mobile devices Range from $15 to $150 a month – mobile devices Range from $30 to $100 a month – internet access Range from $30 to $100 a month – internet access Equipment replacements at discretion of department Equipment replacements at discretion of department

30. Fiscal Officer Development Series - November 5 & 6, 2008 30 I-510, Financial Sub-certification Is recommended by NACUBO for large decentralized institutions Is recommended by NACUBO for large decentralized institutions Requires that Deans, administrative leaders and Auxiliary Directors, along with their fiscal officers, certify to certain statements Requires that Deans, administrative leaders and Auxiliary Directors, along with their fiscal officers, certify to certain statements Implementation date of July 1, 2006 Implementation date of July 1, 2006 Policy outlines who is required to certify Policy outlines who is required to certify Policy identifies exemptions Policy identifies exemptions

31. Fiscal Officer Development Series - November 5 & 6, 2008 31 Other Misc. Accounting Policies I-070, Payments for Memberships in Social Organizations I-070, Payments for Memberships in Social Organizations Payments for memberships in social organizations cannot be paid with university funds. Payments for memberships in social organizations cannot be paid with university funds. I-080, Donations and Contributions to Other Entities I-080, Donations and Contributions to Other Entities Donations and contributions to other entities cannot be made with university funds Donations and contributions to other entities cannot be made with university funds

32. Fiscal Officer Development Series - November 5 & 6, 2008 32 IV-20 on Direct Deposit of Payroll Effective January 1, 2008 Direct Deposit for ALL employees (excluding workstudy) is mandatory Effective January 1, 2008 Direct Deposit for ALL employees (excluding workstudy) is mandatory Individuals who do not turn in forms for direct deposit or forms for a paycard will have their paychecks put in the U.S. Mail Individuals who do not turn in forms for direct deposit or forms for a paycard will have their paychecks put in the U.S. Mail We need departmental help to be successful We need departmental help to be successful

33. IV 20 on Direct Deposit of Payroll October 2008 numbers on checks: October 2008 numbers on checks: Monthly Monthly 291 across all campuses 291 across all campuses 129 of these have received 3 or more paychecks 129 of these have received 3 or more paychecks 119 of the 129 are academic personnel 119 of the 129 are academic personnel Bi-Weekly Bi-Weekly 294 across all campuses 294 across all campuses 120 of them have received 4 or more paychecks 120 of them have received 4 or more paychecks 101 of them are workstudy so mandatory does not apply 101 of them are workstudy so mandatory does not apply 33

34. Policies Under Discussion Reimbursement of: Reimbursement of: Expenses occurring during leave without pay Expenses occurring during leave without pay Expenses occurring during sabbaticals Expenses occurring during sabbaticals Sponsorships: Sponsorships: Revenues Revenues Expenditures Expenditures 34

35. Fiscal Officer Development Series - November 5 & 6, 2008 35 IU Financial Policies Questions