UCOP Financial Policy

I. Financial Accountability

1. Accountability cannot be delegated.
2. A person cannot delegate greater responsibility than he or she has.
3. Tasks shall only be delegated to people who are qualified to perform them.

4. A person delegating tasks is responsible for ensuring that those tasks are being properly performed.
5. The DA must keep a complete, up-to-date record of the delegations, as well as an audit trail of modifications to them. The DA must ensure that delegations are appropriately decided and communicated, documented, and periodically reviewed for accuracy, completeness and effectiveness.
6. The DA must designate an individual with responsibility for updating the Distributed Administrative Computing Security System (DACSS) to grant access to department employees to prepare, review, or inquire against on-line systems.

1. A Preparer must:

2. A Reviewer must:

1. Spending money wisely and monitoring expenditures as if they were your own.
2. Purchasing goods and services wisely.
3. Helping others in their financial stewardship efforts.
4. Being accountable for your actions, equipment, funding and time.
5. Encouraging others to be good stewards of their resources.

II. Financial Management

1. A budget must be established annually by the department, and reviewed and approved by the department head. All budget augmentation requests must be reviewed and approved by UCOP Budget Administration. The budget provides a tool to project resources necessary to achieve a department's goals and objectives.
2. Actual financial results must be compared to the budget on a regular basis to detect changes in circumstances or the business environment, identify and/or correct transaction errors and measure financial performance. When actual financial results vary significantly from the budget, a manager must determine the cause, evaluate the activity, and take corrective action.
3. Departments must operate within their budget. When expenditures exceed budget, justification for such excess must be provided to the department head. The department head and DA must develop a formal plan to eliminate deficits generated.

1. Utilizing monthly financial reports that are clear and concise, provide budget vs. actual comparisons, and identify trends and special areas of concern.
2. Developing a method for reviewing revenue and expenses at the end of each ledger cycle, including identification of the individual(s) responsible for performing the reconciliation procedures.
3. Ensuring that staff reconcile transactions appearing on the general ledger in a timely manner at the end of each accounting period. All transactions must be verified for:

4. A monthly sampling and review of individual financial transactions by a supervisor to ensure transactions are appropriately approved, accurately recorded and supported by proper documentation.
5. For each significant deviation, an examination must be completed to determine why the deviation occurred. A method for taking corrective action must be established, including complete documentation of the deviation and the corrective action.

1. All cash, checks or cash equivalents collected at major and sub cashiering stations, and all petty cash funds, are processed and managed in compliance with the requirements of BUS-49 Cashiering Responsibilities and Guidelines.
2. All department assets are properly described and accounted for in the Financial System. Actual physical assets, as recorded in the equipment inventory system, are compared to assets recorded in the Financial System at least once per year. Discrepancies are resolved in a timely manner, and adjustments to asset records must be documented and approved.
3. Access to any forms or on-line systems that can be used to alter financial balances must be restricted to employees who require such access to perform their University duties.

III. Data Integrity

1. An adequate data control system including independent checks and balances must exist within and between operating units.
2. All employees engaged in financial management activities are responsible for ensuring that adequate data controls are being employed. If problems are identified, all employees must take an active role in developing and implementing appropriate corrective actions.
3. All systems that are used to report financial data must be secure, reliable, responsive and accessible. These systems must be designed, documented, and maintained according to accepted development and implementation standards.

4. All interfaces between financial systems and affecting any financial information must contain controls to ensure the data is synchronized and reconciled.

1. Recording transactions into the Financial System directly or through an interfacing system;
2. Authorizing transactions through pre-approval or post audit review;
3. Receiving or disbursing funds;
4. Reconciling financial system transactions; and
5. Recording corrections or adjustments.

1. Each department needs experienced and well-trained technical professionals to support the department's computing needs. Such support can be contracted for or provided by a department itself through a PC Coordinator.
2. If a department is developing or acquiring information systems for their use, the requirements in BFB IS-10 must be followed.
3. When significant hardware and software purchases costing over $7,500 are being contemplated, the PC Center in IR&C should be contacted.

IV. Compliance

1. Departments will conduct transactions in compliance with applicable financial reporting requirements, including Generally Accepted Accounting Principles (GAAP), Governmental Accounting Standards Board (GASB) Statements, and Cost Accounting Standards Board (CASB) Statements. The basic requirements of these standards as applied at UCOP include the following:
1. Sources and uses of funds must be segregated by the type of activity they support in accordance with any restrictions imposed on their use.
2. Revenues are reported when earned, and expenditures are reported when goods or services are received.

1. In general, revenue is earned when the University provides goods or services.
2. Likewise, expenses are incurred as the University uses goods or services. For example, when supplies are received, the University incurs the expense. Holding an invoice does not and must not prevent the expense from being incurred.

2. Accounting principles must be applied consistently, both within fiscal years and between fiscal years. Financial Management is charged with ensuring consistent, University-wide application of these accounting principles.

3. Reports to sponsoring entities will be made according to the specific reporting requirements. In general, most sponsoring entities require adherence to GAAP. Additionally, federal agencies and entities which serve as conduits for federal funds require adherence to either Office of Management and Budget Circulars (OMB) and/or Federal Acquisition Regulations (FAR). Two primary OMB circulars are:

1. Maintaining records for a period of three years from the latter of the budget period or the filing of all required reports.

See the UCOP Website http://www.policies.uci.edu/adm/records/721-11a.html for specific retention requirements.

2. In cases where there is pending litigation or audits, records must be maintained until the action is concluded.

1. Federal and state restrictions must be followed.
2. When goods and services are purchased for the University, the following requirements apply:

3. Actions affecting a person's compensation must adhere to the following additional requirements:

1. Sales and use tax on certain sale and purchase transactions as required by the California State Board of Equalization. Purchases made for resale are generally exempt in cases where the seller obtains evidence from the purchaser such as a certificate of resale. Otherwise:
1. Departments that conduct sales activities must charge sales tax and properly account for sales tax collected by coding related deposits against sales tax payable account numbers designated by UCOP Payroll and Tax Services; and
2. Departments making purchases must include a provision for such taxes when making orders. Further, they must ensure these payments have been included on their invoice payments or through other charging methods used by the UCLA Office of Accounting Services, which is responsible for the actual filing and remitting of sales and use tax payments.
2. Income tax on income-producing activities which constitute a regularly-carried-on trade or business that is not related to the furtherance of educational activities. Consequently, employees who are engaged in such activities must:
1. Maintain information that supports whether or not a particular activity is subject to income tax;
2. Notify UCOP Payroll and Tax Services of any income taxable activities and complete the various questionnaires and worksheets prescribed by UCOP Payroll and Tax Services; and
3. Account for all taxable income earned in an income-producing fund approved by Corporate Accounting, which is responsible for the actual completion of the Form 990-T, Exempt Organization Business Income Tax Return.
3. Federal and State income taxes assessed on University employee base salary and wages, supplemental pay, undocumented reimbursements, and various allowances (such as car and housing) in accordance with the Internal Revenue Code and California Revenue and Taxation Code. In this process:
1. The UCLA Payroll Office is responsible for withholding taxes on compensation based upon the individual's Form W-4, Employees’ Withholding Allowance Certificate on file. This office is also responsible for remitting the actual tax payments to the Federal and State governments, completing the required quarterly tax returns, and distributing Forms W-2 Wage and Tax Statements to employees; and
2. Departments at UCOP are responsible for submitting accurate and timely data to payroll for the completion of these forms, and determining whether individuals are to be considered employees or contractors for tax purposes.
4. Income paid to payees outside the university (such as payment of fees, commission, rents, and royalties) or University employees (such as prizes and awards) must be accumulated and reported as taxable income. In this process:
1. Departments must provide tax identification numbers when processing these types of payment transactions; and
2. The UCLA Office of Accounting Services is responsible for reporting this information to the payees via annual reporting forms such as the Forms 1099, W-2, or 1042S.
5. The University is generally exempt from paying property taxes. When necessary, the UCOP Facilities Administration Department will file the exemption reports and claims to receive refunds of such taxes paid on leased property for UCOP departments.

1. Any person who suspects that fraud or illegal activities are taking place in his or her department must report that suspicion immediately to their immediate supervisor. If the employee believes that the supervisor is involved, or is otherwise uncomfortable reporting in this manner, he or she must immediately notify the University Auditor. Supervisors to whom such reports are made must review them, and if they have merit, report them to the next level of management or to the University Auditor. For complete guidance on reporting irregularities, see Business and Finance Bulletin G 29 - Procedures for Investigating Misuse of University Resources.
2. Individuals conducting business on behalf of the University are personally responsible for the consequences of any violations they commit.
3. Individuals conducting business on behalf of the University must do so for the benefit of the University. Where a potential for personal gain exists, this potential conflict of interest must be reported immediately, and be carefully evaluated before any financial transactions are allowed to occur.

1. The University Auditor is notified prior to commencement of any audit or review by an external regulatory agency; and
2. A full investigation of the facts is conducted to ensure accuracy of any findings.