3.1.1 Responsibility for University Financial Assets
Formerly Known As Policy Number: 34.
This Guide Memo outlines the roles and responsibilities of various University officers and organizations in managing the University's financial assets.
1. Legal Status
By the terms of the Founding Grant and subsequent legislation and court decrees, the properties of Stanford University are held in trust by the University's trustees for the founding, endowment, maintenance and benefit of the University. The trustees have corporate powers and privileges; that is, they may organize and act as a Board of Trustees, elect officers, and adopt by-laws. For more information about the University's founding and the Board of Trustees, see Guide Memo 1.2.1: University Organization.
2. Delegated Responsibility
The Board of Trustees has assigned responsibility to the President for the management of the University's business activities. For more information, see Guide Memo 1.2.1: University Organization.
b. University Officers
The President has delegated responsibility to individual University officers for management of financial assets within their purview. See Guide Memo 1.9.1: Signature and Financial Approval Authority and Guide Memo 3.2.1: Authorizing Expenditures for details of the framework governing assignment of responsibility to individuals throughout the University. The framework is designed to provide the appropriate oversight, accountability and transparency to ensure that commitments of University resources are executed appropriately and in accord with applicable laws, regulations and University policies. University officers also exercise responsibility for financial management decisions through the University's governance structure, which is described in Guide Memo 1.2.1: University Organization, and accompanying organization charts.
c. Schools and Departments
Schools and departments are responsible for ensuring that expenditures are (1) reasonable and necessary; (2) consistent with established university policies and practices applicable to the work of the university, including instruction, research, and public service; and (3) consistent with sponsor or donor expenditure restrictions. Individuals with a delegated financial approval role must complete mandatory training prior to approving transactions; see Guide Memo 3.2.1: Authorizing Expenditures. See Fingate for the training information and requirements that must be completed to access systems that facilitate financial transaction approval. For more information, refer to Financial Systems and Reporting Authority on the Fingate website.
d. Office of the Vice President for Business Affairs and Chief Financial Officer
Business Affairs, led by the Vice President for Business Affairs and Chief Financial Officer, plays a central role in assuring that the Trustees meet their fiduciary responsibility to donors, government officials, employees, students, and the general public. For more information on Business Affairs organization and responsibilities, see the Office of the Business Affairs and Chief Financial Officer website.
(1) Financial Management Services (FMS)
Financial Management Services (FMS) establishes and evolves the university’s financial infrastructure to effectively balance controls with operational efficiency. Layered upon this is oversight and monitoring of compliance, financial and operating risks. In addition, FMS serves as a liaison to the hospitals and the Stanford Linear Accelerator Center (SLAC). FMS exercises legal and fiduciary responsibility over funds entrusted to the University by maintaining systems of internal control and financial reporting, and supports decision making by providing financial information and consulting services. More information about FMS can be found on the Fingate website.
(2) Research Administration
The Office of Research Administration (ORA) and its Office of Sponsored Research (OSR) is authorized to commit the University to the legal terms and conditions of grant or contract agreements for sponsored projects, including research related agreements (e.g., data use agreements). OSR also provides financial post-award services for sponsored awards, such as establishing accounts, preparation of financial reports, billing and collections, and close out. In addition, the Property Management Office (PMO) of ORA is responsible for property (capital assets) administration and operating the University surplus sales and reuse programs. The Cost and Management Analysis (CMA) group at ORA determines, proposes, and negotiates the Facilities and Administrative Cost rates and Fringe Benefits rates on behalf of the university. Information on rates is available on the ORA website. ORA’s Research Administration Policy and Compliance (RAPC) group provides Indirect Cost Burdening setup and support, and financial compliance oversight for sponsored award-related matters. Information about ORA is online.
(3) University IT
University IT (UIT) provides the primary IT infrastructure, communications technologies, collaboration tools, and business information systems that support the university. UIT also provides centralized IT support and call center services. The Information Security Office resides jointly in UIT and the Office of the Chief Risk Officer. The Stanford Research Computing Center provides high-performance computing systems and is a joint effort of University IT and the Dean of Research. More information is on the UIT website.
(4) Office of the Chief Risk Officer
The Office of the Chief Risk Officer (OCRO) includes Internal Audit, Ethics and Compliance, Enterprise Risk Management, Risk Management, Privacy and Information Security. OCRO provides independent, objective assurance and advisory services designed to add value and improve the operations of Stanford University and its related organizations. OCRO helps these organizations accomplish their objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. More information is on the OCRO website.
e. Land, Buildings and Real Estate (LBRE)
The role of LBRE is to provide and sustain the facilities and infrastructure in support of the academic campus. LBRE also manages the real estate that the Board of Trustees has designated for the production of income (e.g., Stanford Shopping Center, Stanford Research Park, certain commercial properties, housing developments, and gift real estate). More information is on the LBRE website.
f. Office of Development
The Office of Development solicits and processes gifts to the University. For more information, see Chapter 4: Giving to Stanford.
g. Stanford Management Company
The Stanford Management Company (SMC) is the office within Stanford that invests financial assets to provide long-term support to the University including the Merged Pool and the Intermediate Pool. More information is on the SMC website.
h. Office of the General Counsel
The Office of the General Counsel provides legal advice to the Board of Trustees, the University and its officers concerning the University's legal rights and duties in its financial dealings. More information is on the OGC website.
3. Annual Audit and Annual Report
At fiscal yearend, Financial Management Services closes the accounting records for the year and prepares reports on the year's financial activity.
a. Annual Audit
To assure that the University's assets are protected, and that transactions and events are recorded properly, an independent auditor selected by the Board of Trustees audits the annual financial statements in accordance with generally accepted auditing standards. The auditor's procedures include obtaining an understanding of University systems, procedures and internal accounting controls, and performing tests and other auditing procedures to provide reasonable assurance that the financial statements neither are materially misleading nor contain material errors.
b. Annual Report
Financial Management Services publishes the auditor's report, the audited summary statements and accompanying notes to the financial statements as the University's Annual Financial Report. The report can be downloaded from the university’s bondholder information website.