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3.1.1 Responsibility for University Financial Assets

Last updated on:
08/11/2014
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.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

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.

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2. Delegated Responsibility

a. President
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 Board of Trustees has delegated responsibility to individual University officers for management of funds in their accounts. For more information, and for information on further delegation of authority, see Guide Memo 3.2.1: Authorizing Expenditures. 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 appropriateness of expenditures and for recording transactions correctly. For information on mandatory training for all faculty and staff members before signature authority for expenditures is granted, see Guide Memo 3.2.1: Authorizing Expenditures. A person must be given authority through Stanford's online Authority Manager to approve transactions or view financial information online. Access to online financial reports requires the signing of a Confidentiality Statement. For step-by-step instructions, see Quick Steps: Grant Authority for Oracle Financial Reporting.

d. Business Affairs
Business Affairs, headed 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 Business Affairs and CFO website.
(1) Financial Management Services (FMS)
Financial Management Services, including the Controller's Office, Office of the Treasurer, Procurement, Global Services, and Consulting & Support, promotes the academic health of the University by delivering financial and accounting services to the Stanford community. FMS exercises legal and fiduciary responsibility over funds entrusted to the University by maintaining systems of internal control and financial reporting. The organization supports decision making by providing financial information and consulting. FMS is responsible for establishing a sound business environment so that various funding sources (such as government agencies, donors, students, and bondholders) can confidently provide resources to support Stanford's academic mission.
(2) Controller's Office
The Controller's Office is responsible for ensuring proper internal controls and safeguarding of University assets and properly recording the University's assets, liabilities, funds, revenues and expenses in compliance with applicable laws, regulations, University policies and donor requirements. The Controller's Office also provides financial information and analyses to support senior administration decisions and meet reporting requirements such as the annual report and tax return. In addition, the Controller's Office manages the timely and accurate production of payroll for the University community while ensuring compliance with all applicable laws and regulations.
(3) The Office of the Treasurer
The Office of the Treasurer oversees the University's debt program, directs capital market borrowings and communicates with rating agencies and investors in Stanford's debt securities. The office manages the University's operating liquidity, cash management operations and Ecommerce, The Treasurer or specific designees are the only individuals authorized to open bank accounts on behalf of the University.
(4) Procurement
Longer retention times apply to certain documents retained by central offices. For information on a specific document or category of documents, the office responsible for the type of transaction should consult the Office of Sponsored Research (OSR) or Financial Management Services (FMS) consisting of the Controller's Office, Office of the Treasurer, Procurement (including Accounts Payable, Travel & Reimbursements), Global Services, and Financial Management Consulting & Support.
The Board of Trustees has authorized Procurement to handle purchases of goods and services for the University. For more information, see Guide Memo 5.1.1, Procurement Policies.
(5) Global Services
Global Services provides services to enable University activities outside of the United States to be conducted efficiently and in compliance with U.S. and foreign regulatory requirements.
(6) Consulting and Support
Consulting and Support facilitates effective management of university financial assets by providing services to schools, departments and central offices in business process improvement; financial information and reporting systems design and implementation; and ongoing education and communication.
(7) Research Administration
The Board of Trustees has authorized the Office of Sponsored Research to commit the University to the legal terms and conditions of grant or contract agreements. For more information, see the Research Policy Handbook. In addition to administering sponsored projects, the Research Administration Policy and Compliance (RAPC) assists the University in complying with its regulatory obligations to the federal government in the areas of indirect cost recovery, fringe benefits, service centers, capital equipment, space use, and cost studies. Information can be found on the DoResearch website.  The Research Administration Policy and Compliance (RAPC) is also responsible for negotiating both indirect cost and fringe benefits rates on behalf of the University. Detailed information on rates is found on the DoResearch website.
(8) Information Technology Systems & Services
The Information Systems Delivery & Support division of ITS provides the primary business information systems support for Business Affairs. Business systems applications also support administrative functions of schools and departments.
(9) Internal Audit
The mission of the Internal Audit Department is to assist University management and the Stanford Board of Trustees in identifying, avoiding and, where necessary, mitigating risks. The Department is responsible for examining and evaluating the adequacy and effectiveness of (1) the systems of internal control and their related accounting, financial, and operational policies and (2) procedures for financial and compliance monitoring and reporting. The Institutional Compliance Program is online.
(10) Office of Risk Management
The Risk Management Office is responsible for obtaining insurance from third parties, determining appropriate self-insurance coverage levels, and processing all insurance claims. Risk Management's overall goals are to ensure that the University's resources are expended wisely, that risks within a department's area of responsibility are managed effectively and efficiently, and that the University is protected against catastrophic losses.

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).

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 a separate division of the University formed in 1991 to manage financial and real estate investment assets. Effective 2006, LBRE assumed responsibility for real estate investments.  SMC manages the investments of the endowment, the expendable funds pool, and life income trusts.

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.

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3. Annual Audit and Annual Report

At fiscal year end, the Controller's Office 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
The Office of University Communications publishes the auditor's report, the audited summary statements and accompanying notes to the financial statements as the University's Annual Financial Report. Departments and individuals may obtain copies from Office of University Communications, Bldg. 170 (650) 725-8396.

c. Annual Report Detail
The Controller's Office publishes the financial schedules from which the audited statements are derived in a document distributed to school financial officers.

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3.1.2 University Funds

Last updated on:
03/09/2018
Formerly Known As Policy Number: 
34.1

This Guide Memo describes the University's funds and budgets.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

1. Fiduciary Responsibility for Fund Balances

Individual fund balances are controlled by the fund owner. This may be a faculty member or principal investigator, a department head, a university officer, or the university as a whole. The owner of the fund has the fiduciary responsibility for prudent management of fund balances. While at any time during the fiscal year a fund may go into deficit, by the end of the fiscal year, any fund with a deficit equal to or in excess of $1,000 in cash must be made whole by some other appropriate funding source. Exceptions to this policy must be approved by the University Budget Office and the Office of the University’s Chief Financial Officer.

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2. Basis of Accounting

a. Fund Accounting
The University maintains its accounts in accordance with the principles of fund accounting. Because the University receives funding from a variety of sources, with different types of terms and restrictions, each source must be tracked as a separate accounting entity in a unique fund.

b. Restrictions on Use of Funds
Fund restrictions are classified differently for internal and external reporting purposes.  While some of the terms overlap, they have different meanings depending on the reporting context.  For external reporting purposes, the definitions are based on generally accepted accounting principles.  For internal reporting purposes, the definitions are based on the use of the funds.

(1) Internal Reporting Definitions

  • Restricted: When a donor makes a gift to the University, the donor may provide terms for the use of that gift.  If the terms specify a particular purpose, the funds are restricted to that purpose.  Income and appreciation produced by restricted endowments is also restricted as per the terms of the endowment.  Funding provided by sponsored agencies or corporations for specific grant or contract work is also considered restricted.
  • Unrestricted: Funds without donor terms or with terms that allow the funds to be used anywhere at the University.  If donor terms allow a gift to be used broadly within a school or unit, it is deemed Unrestricted at the unit level, but Restricted by central University administration.
  • Designated: These are unrestricted funds that have been designated for a specific purpose by the Board of Trustees or senior management.  Internal units in the University can designate unrestricted resources to any number of specific purposes, but from a broader analytical perspective those funds are unrestricted for purposes of internal reporting.

(2) External Reporting Definitions

  • Permanently Restricted: The University classifies as Permanently Restricted (a) the original value of gifts donated to the Endowment and (b) accumulations to the Endowment made in accordance with the direction of the applicable donor gift instrument.
  • Temporarily Restricted: Temporarily Restricted assets include gifts and pledges that are subject to donor-imposed restrictions that expire with the passage of time, payment of pledges, or specific actions to be undertaken by the University or the Hospitals; these assets are then released and reclassified as Unrestricted.  In addition, appreciation and income on certain donor-restricted endowments funds are classified as Temporarily Restricted until authorized for spending.  Donor-restricted resources intended for capital projects are initially recorded as Temporarily Restricted and released from their temporary restrictions and reclassified as Unrestricted when the asset is placed in service.  Also included in this category is the University’s net equity in split interest agreements, expendable at maturity.
  • Unrestricted: Funds that are not Permanently Restricted or Temporarily Restricted are treated as Unrestricted for external reporting purposes.  This includes expendable gifts that have donor restrictions, so long as the University is free to spend the gift.  Funds Functioning as Endowment, or FFE, are University resources designated by the Board or internal University units to be held as endowment.  FFE is usually considered Unrestricted per accounting rules, as are most other expendable resources in the University.

c. Chart of Accounts
Stanford’s accounting system uses an alphanumeric code, or chart of accounts. The fund number, also referred to as the award number, is included in the chart of accounts.  The University accounting system also records attributes assigned to each fund that further define the fund purpose and restrictions.  For a detailed explanation of its structure, please see Stanford's Gateway to Financial Activities

The Controller's Office, a unit in Financial Management Services (FMS), and the departments and individuals authorized to spend funds in an account share responsibility for using the chart of accounts appropriately. The Controller's Office is responsible for maintaining the integrity of the chart of accounts and for assigning fund and other account numbers. Schools and departments are responsible for communicating any restrictions on use of funds so that Controller's Office staff can set up the account correctly. Find information on the various kinds of expenditure accounts in Guide Memo 3.1.3: Expenditure Accounts (PTAs).

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3. Fund Groups

The University combines funds with similar characteristics into fund groups for budgeting, planning, and reporting purposes.

a. Expendable Resources
Expendable resources are available for the current operation of the University; balances can be accumulated for future expenditure. Sources of funds include, but are not limited to, the following:

(1) Contracts and Grants
Funds provided by sponsors to reimburse the direct costs of contracts and grants are restricted per internal reporting definitions. The terms of the award and applicable regulations determine how the money may be spent. To apply for a contract or grant the principal investigator for the project submits a proposal through the Office of Sponsored Research (OSR) or its delegate to the sponsor. OSR negotiates the award with the sponsor. For more information, see the OSR website.

(2) Tuition and Fees
The Board of Trustees sets tuition and fee rates. The Student Financial Services Office collects tuition and fee payments from registered students each quarter. Income from tuition and fees is unrestricted per internal reporting definitions.

(3) Gifts
Donor gifts that are not ultimately directed to the endowment are usually considered expendable; exceptions include cases where the funds are not available for the current operation of the University, such as Pending funds and Donor Advised Funds.  Donors typically specify the purpose of gifts, which will determine whether the gifts are assigned to expendable, capital, or endowed purposes. The Office of Development solicits and processes gifts to the University. For more information, see Chapter 4: Giving to Stanford.

(4) Reimbursement of Facilities and Administrative Costs (Indirect Costs)
The Cost and Management Analysis Office calculates  rates that are charged to each contract and grant to pay for facilities and administrative overhead costs associated with sponsored research. These costs include utilities, building maintenance, and administrative support.  The responsible agency for the federal government, which for Stanford is the Office of Naval Research (ONR), approves the rates. Indirect cost reimbursements are unrestricted funds per internal reporting definitions. Information on rate calculations and policy is available on the DoResearch website. 

(5) Reimbursement of Facilities Costs (Infrastructure and Utilities Charges)
Designated Funds and Restricted Funds that do not otherwise pay facilities-related costs (both Sponsored and Non-sponsored) are charged an infrastructure fee to offset operations, maintenance, and utilities costs paid by University unrestricted funds. The fee is a percentage of certain types of expenditures, and these reimbursements are unrestricted funds per internal reporting definitions. More information is available in Guide Memo 3.3.1: Infrastructure Charges.

(6) Auxiliary Activities
Auxiliaries are self-contained financial entities (see Guide Memo 3.1.3: Expenditure Accounts (PTAs)). Income is used to support operations, including overhead, and all income is considered unrestricted per internal reporting definitions.

(7) Special Program Fees & Other Income
Income from outside sources related to programs, patents and royalties, program activities, affiliations, ticket income and the like are collected throughout the institution.  Much of this income is subject to the Infrastructure and Utilities Charge.  All of it is considered unrestricted per internal reporting definitions.

b. Endowment Funds
Funds in the Endowment include:

(1) True Endowment:
Endowment funds created pursuant to the terms of a donor’s gift.  These funds are generally intended to last in perpetuity.  Funds established with gifts directed to the endowment are typically used to purchase “pure” shares in the Merged Pool, and in rare circumstances are held in assets specifically directed by the donor.  True Endowment and payout from True Endowment are considered restricted per internal reporting definitions if the donor terms specify a particular purpose.

The Board of Trustees establishes an annual payout rate for distributions from the University’s endowment funds.  Payout may be made from True Endowment without limitation to income as long as the payout rate is prudently established and the gift terms do not provide otherwise. There is a group of funds referred to as “Pool A” funds that are established by gifts with terms that specify something like the following: “income but no appreciation” may be paid out of the fund. These types of funds are typically no longer established by the University. There are also funds that contain what are known as “Pool B Limited” shares. This situation arises where the donor specifies something like the following: only income and appreciation above the original gift value may be paid out. These types of funds are also typically no longer established by the University. Funds without such terms of limitation are referred to in the University accounting system as “Unlimited."

Payout generated by a true endowment fund that cannot be used for operational purposes can be redirected back to the principal of the fund for investment if provided for in the donor's gift agreement, or at the request of an internal University unit.  When the funds are reinvested pursuant to a provision in the donor’s gift agreement, they add “pure” shares to the Endowment; when they are reinvested at the request of an internal unit they add “quasi” shares to the Endowment. In both cases, reinvestment takes place at year end unless the provision in the donor's gift agreement specifically provides that all payout be reinvested until the True Endowment fund reaches a certain level, in which case reinvestment is made monthly. All such reinvestment is subject to the same donor terms as the original Endowment gift, and is restricted per internal reporting definitions if the donor terms specify a particular purpose. Any reinvestment of unused payout by an internal University unit must be requested by July 31 for the given fiscal year.

For True Endowment funds that contain Pool B Limited shares, payout is limited to income and appreciation in any year. Withdrawals in excess of income and appreciation are only permitted if that fund also contains quasi shares, in which case up to the full value of all quasi shares can be sold to make the full regular payout for that year (or as much of the full regular payout as possible).  Requests for such withdrawals must be made by July 31 for the given fiscal year; refer to the form Withdrawal Guidelines for True Endowment.

(2) Funds Functioning as Endowment (or Quasi-Endowment Funds):
Funds Functioning as Endowment (FFE) are expendable resources (both restricted and unrestricted per internal reporting definitions) that are invested in the Merged Pool (MP) and are considered part of the University’s Endowment. These are created at the request of an internal University unit (department, school, etc.). In order to create a new FFE, the unit must invest a minimum of $1 million. The minimum addition of “new” money to an existing FFE is $250,000. The University’s Chief Financial Officer and Provost are jointly authorized to make an exception to these minimums. Requests to create FFE must be approved by both the Dean or Chair, and the school’s or unit’s Senior Financial Officer. Requests to approve the creation of FFE involving gift funding must be reviewed by the Office of Planned Giving.

To optimize investment returns, the University takes a long term perspective of its investments in the MP which requires minimal unplanned cash flow volatility in the portfolio.  Thus, the MP should not be used by individual fundholders to support short term needs.  Accordingly, FFE invested in the MP these funds are subject to the following guidelines:

Lock-up Periods:

  • Any FFE investment made on or after September 1, 2016, is subject to a 7-year initial “lock-up” period, during which it cannot be redeemed.
  • Any FFE investment made prior to September 1, 2016 is subject to the previous 5-year initial “lock-up” period, during which it cannot be redeemed.

Annual Withdrawal Limits:

Once the “lock-up” period is met, FFE can be withdrawn under the following conditions:

  • FFE invested on or after September 1, 2016 are subject to an annual withdrawal limit, which is the greater of:
    • $5 million, or
    • 10% of an individual fund’s market value. The 10% limit will be calculated as 10% of the fund’s market value which is eligible for withdrawal at the time the request is made, less any amount that has been redeemed or is pending redemption during the same fiscal year.
  • FFE invested prior to September 1, 2016 are grandfathered under the previous FFE policy, and are not subject to an annual withdrawal limit.

Required Approvals:

Withdrawals are also subject to the following approval authority:

  • Withdrawals in keeping with these guidelines may be transferred out of the endowment with the approval of the school financial officer, the University Chief Financial Officer and the Provost. Smaller amounts may be withdrawn only if the remaining balance is being withdrawn.
  • Withdrawals outside these guidelines are not typically allowed and extraordinary exceptions require an action of the Board of Trustees.

Notification Periods:

In order to provide the Stanford Management Company with sufficient time to divest assets, requests for withdrawals must be received by Fund Accounting based on the following minimum notification requirements prior to anticipated month of withdrawal:

  • Up to $150 million – 90 days
  • $150 million-$250 million – 150 days
  • Greater than $250 million – 270 days

Please refer to the "Investment and Withdrawal Guidelines for Funds Functioning as Endowment Greater than $500,000" form for further details.

Reinvestment of Payout:

Even if the amount is less than the minimum for new principal investments, at the request of the creating unit, all unused payout from FFE may automatically be reinvested back in to the principal of the fund at year end; this election can only be made upon the formation of the fund or when additions of $500,000 or more are made to the fund. If a unit chooses not to request the automatic year end reinvestment, they may contact Fund Accounting by July 31 to specify the amount that should be reinvested for the given fiscal year.

(3) Term Endowments: Endowment created at the request of a donor, but intended to be fully spent down on a timeline established by the donor.  These monies are used to purchase “quasi” shares in the Endowment.  Regular withdrawals are made as per the donor terms.

c.  Non-Endowment Funds invested in the Merged Pool
Funds in this group include, but are not limited to:

(1) Life Income Gifts: A life income gift allows donors to give assets to Stanford while providing themselves or others with income for a period of time before Stanford is permitted to use the gift; until that period has ended, the gift is not counted as part of the University Endowment. The university, as trustee, manages the investment of the assets and pays a specified income to the donor, the donor’s designated beneficiaries, or both. Income payments continue for the beneficiaries' lives or, in some cases, for a term of up to 20 years.

(2) Donor Advised Funds: Stanford has Donor Advised Funds. For more information on the size and type of gifts required to create a Donor Advised Fund at Stanford, and the amount of the fund that must ultimately be designated for the use of the University, please refer to the Office of Development’s website. In cases where all or part of a Donor Advised Fund is later used to establish or add to an Endowment fund, it is not counted as part of the Endowment until the funds are explicitly transferred to the endowed fund for use per the terms of the donor’s request.

(3) Pending Funds: These are gifts where the purpose is pending final designation by the donor and the university. In cases where all or part of a Pending Fund is later used to establish or add to an Endowment fund, it is not counted as part of the Endowment until the funds are explicitly transferred to the endowed fund for use per the terms of the donor’s request.

d. Student Loan Funds
Student Loan Funds are not meant to be expensed, but rather are loaned to students as a portion of the financial aid package. As these loans are repaid, the principal and accumulated interest become available for new student loans.

e. Plant Funds
Plant Funds are funds that have been received or designated by the Trustees for facilities and retirement of indebtedness. They also include all of the University's investments in long-lived capital assets and related liabilities.

f. Agency Funds
These are funds held for others, with Stanford acting as the custodian. Funds in this group represent liabilities owed by the University.

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4. Intermediate Pool Funds

Intermediate Pool Mechanics

The Intermediate Pool (IP) functions as a unitized pool with shares and share prices, similar to the Merged Pool.  The net return of the portfolio, less the cost to administer the portfolio, is allocated to the individual participating funds.  Returns are not distributed on a scheduled basis, but are reinvested and accumulated in the participating funds.

Shareholder Policies

The Intermediate Pool is open to the following types of shareholders:

  • New Pending Funds not intended for endowment
  • New Donor Advised Funds (DAFs), or portions of DAFs, not intended for Stanford’s endowment
  • New additions to the Land Development Fund
  • Hospital investments
  • School and Department Funds (SDF) (e.g. The Stanford Business School Trust, Stanford Engineering Venture Fund, DAPER Investment Fund, etc.)
  • Intermediate term reserves from school and units
  • A portion of the Expendable Funds Pool (EFP), at the discretion of the University’s Chief Financial Officer
  • Debt recycling pool and unexpended debt proceeds
  • Other centrally managed funds, at the discretion of the University’s Chief Financial Officer

Requests to invest school and unit reserves in the IP made by a school or academic department must be approved by both the Dean or Chair, and the school’s Senior Financial Officer.

Requests from an auxiliary must be approved by a University Vice Provost or Vice President. 

Requests from an administrative unit must be approved by the Provost.

Minimum Investment Amounts and Lock-up Periods

Pending Funds invested in the IP require an initial investment amount of at least $500,000.  Exceptions to this policy must be approved by the Vice President for Development. 

All other investments in the IP, including both initial investment and additions, must be in increments of at least $1 million. Exceptions must be approved by the University’s Chief Financial Officer.

School and unit reserves invested in the IP are subject to a four year lock-up period, during which the school or unit may not withdraw from the fund.

SMC’s Intermediate Pool Investment Policy Guidelines

SMC manages the investment policy of the IP with the intention of replicating the debt and equity exposure of a well-balanced global investment portfolio, investing in passive index funds.

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5. Budgeting

Each year the University prepares a consolidated budget based on estimates of income and expenses. Budgeting enables the University to verify fund availability when processing expenditures.

a. Responsibilities 

(1) The Provost is the University's chief academic officer and chief budget officer. The development of the University's Consolidated Budget is a principal responsibility of this officer.

(2) The Vice Provost for Budget and Auxiliaries Management directs and manages, on behalf of the Provost, the process leading to the development of the Consolidated Budget.

(3) Budget Officers in schools and departments coordinate all budget activities within their respective organizations in collaboration with the University Budget Office in the Provost's Office and the Controller's Office.

(4) The University Budget Office in the Provost's Office maintains the budget system, approves the budget submissions of all schools and departments, and monitors and reports on variances from the approved budget.

b. Annual Budget Process/Cycle
The budget process is directed by the University Budget Office.

(1) Forecasts
In the spring, budget officers prepare high-level income and expense forecasts for the following year. The University Budget Office uses these forecasts to prepare the University consolidated budget forecast that they present, via the Stanford University Budget Plan, to the Board of Trustees for approval.

(2) Consolidated Budget
Following the approval of the Stanford University Budget Plan (Consolidated Forecast) by the Board of Trustees, budget officers record the final, detailed, account-by-account budget for both revenues and expenses (salary and non-salary) in the budgeting system. As of September 1, it is the official University Consolidated Budget.

(3) Variance Reporting
Periodically through the year, as determined by University management, budget officers provide analysis and explanation of the variance between actual income and expense (or projected income and expense) and the Consolidated Budget in accordance with the guidelines provided by the University Budget Office. As necessary, analysis and explanation of changes from the previous fiscal year to the current fiscal year are also provided by the budget units. The University Budget Office uses this information to prepare high-level variance analysis for the Board of Trustees and University management.

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6. Fund Transfers

Fund transfers are accounting entries that move all, or a portion of, a fund's balance to another fund. The appropriateness of a fund transfer is dependent on the characteristics of the source and destination funds, including the type of fund, the restrictions of the fund, whether the source and destination fund share the same infrastructure and EFP (Expendable Funds Pool) treatment, etc. Generally, fund transfers are allowed when the characteristics of the source and destination funds conform to one another and the terms of each fund does not preclude such a transfer. These transfers are used to:

  • Move money between designated funds or between restricted funds (generally transfers between a restricted fund and a designated fund are not allowed, nor are transfers to/from a sponsored project fund)
  • Transfer money into or between plant funds
  • Allocate and reallocate general (unrestricted) funds among budget units
  • Increase or decrease restricted funds’ support of an Operating Budget account

Authorized central office staff typically performs fund transfers.

As transfer of funding creates an initial disconnect between where the funds were collected and where they were used (appropriated), strong controls and audit trails of fund transfers are required by the University and is responsible business practice.

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3.1.3 Expenditure Accounts (PTAs)

Last updated on:
08/11/2014
Formerly Known As Policy Number: 
34.2

The University's Oracle Financial system has two core accounting applications: Grants Accounting (GA) and General Ledger (GL). The GA subledger records all detailed expenditure transactions and then summarizes them in the GL. The GA module has five segments: Project (P), Task (T), Award (A), Expenditure types (E) and Organization. A Project (P) is an activity or event with a single purpose. A Task (T) is a further breakdown of the project; every project has at least one task. An Award (A) is a funding source for a particular project or task. Find further information on the University's Chart of Accounts at Stanford's Gateway to Financial Activities.  This Guide Memo describes the various kinds of expenditure accounts or PTAs (the intersection of Project, Task, and Award) within the University's accounting system.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

1. Operating Budget PTA

a. Purpose
Operating Budget PTAs are the primary PTAs for the University's core academic programs and support services. Operating Budget PTAs are used to record accounting transactions for these core activities.

b. Source of Funds
At the beginning of the fiscal year, Operating Budget PTAs receive money only from University unrestricted funds and from appropriate departmental designated funds, gift funds, and endowment income funds (see Guide Memo 3.1.2: University Funds). Changes in funding during the year may be made online by authorized budget officers.

c. Setting Up
The Fund Accounting department of the Controller's Office sets up and maintains PTAs funded from the University's Operating Budget. To request a new Operating Budget P, T, and/or A, a person who has organizational authority submits the Fund Accounting PTA Request form via email to Fund Accounting in the Controller's Office. The form is located at Stanford's Gateway to Financial Activities
For step-by-step instructions, see Quick Steps: Request New PTA

d. Fiscal Year End
At fiscal year end (August 31), all unused restricted funds that are held in an Operating Budget Award must be returned to their original source fund. If expenditures have exceeded the Expense Control, other sources of funding must be identified to cover the deficit. If there are still budgeted funds available, work with the University's Budget Office to determine how to handle these funds.

e. Closing an Operating Budget PTA
At any time, a department may send a memo to Fund Accounting in the Controller's Office requesting that an Operating Budget P, T, and/or A be closed to expense. The P, T, and/or A will be closed as of the first of the month following the month in which the memo is received, unless otherwise stipulated.

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2. Grant and Contract PTA

a. Purpose
A grant or contract fund and related expenditure PTA(s) are used to record accounting transactions for a sponsored project. The Research Policy Handbook 13.1, sets out criteria for determining if external support for a project should be handled as a sponsored project. Note that external support that does not meet these criteria is handled as a gift.

b. Source of Funds
A grant or contract fund receives money from the agency sponsoring the research, instruction, or other sponsored activity at the University. Proposals for grants and contracts are processed through the Office of Sponsored Research (OSR) or its delegates. Additional information is available at the DoResearch website. 

c. Setting Up
When a grant or contract has been awarded, OSR assigns a fund (award) number for the sponsored project, and sets up related Project(s) and Task(s) as requested. OSR handles any subsequent accounting system maintenance during the life of the award. OSR also receives awards for student aid directly from a school or from the Graduate Financial Aids Office. The form used to request a PTA is located here

d. Early Accounts
For the effective and economical conduct of a sponsored project, it is sometimes necessary for costs to be incurred before the award document has been received. In such cases, departments should request that OSR set up an early PTA. The "Authorization for Early Project Task and Award Request" form is available online at http://doresearch.stanford.edu/research-administration/pta-initiation-and-setup.
The early PTA becomes the permanent PTA when the award is effective; no cost transfers are needed. Pre-award costs must be charged to a pre-award account and may not be placed on an unrelated award and later transferred to the benefiting PTA.

e. Ongoing PTA Management
(1) Allowability of Expenditures
The Principal Investigator (PI) is accountable for the accuracy, allowability, allocability, appropriateness and timely review of charges to a grant or contract PTA (or a related cost sharing PTA) and for ensuring that expenditures do not exceed the level authorized by the award. See Guide Memos:

  • 3.1.4: Cost Policy
  • 3.2.1: Authorizing Expenditures
  • 3.2.2: Cost Transfers
  • 3.2.3: Allocations and Offsets

(2) Approvals
The terms of the award and governing cost principles may require approval from the agency for such actions as rebudgeting funds, travel, or purchasing capital equipment. OSR processes approval requests.
(3) Review
The PI or someone else knowledgeable about the sponsored project must review the PTA each month, bringing any questionable items to the PI for decision on any needed action. Review guidance and tools are available at DoResearch. The review is evidenced by a signature on the monthly expenditure report.
(4) Suballocations
A suballocation of a grant or contract may be set up to handle accounting for:

  • A subcontract
  • Separate portions of the work
  • Fabrication of capital equipment
  • A conference associated with the project: This is usually accomplished by setting up additional Tasks within the Project, linked to the appropriate award(s).

f. Fiscal Year End
Accounting records for grant and contract PTAs are closed for reporting purposes at fiscal year end. The entire budget and all expenditures for the period of the award are carried forward to the new fiscal year expenditure reports.

g. Closing a Grant or Contract PTA
(1) Definition
Closeout is the administrative process whereby sponsors determine whether all technical and administrative requirements of the grant or contract have been completed. Sponsored projects are considered completed or "closed out" only after the sponsor receives and approves all technical, financial, invention and property reports as required by the terms and conditions of the award and notifies Stanford of its acceptance and signoff.
(2) Principal Investigator's Responsibilities
At the close of a grant or contract, the Principal Investigator is accountable for ensuring that the expenses recorded are complete, allowable, allocable, and without overdrafts. For more information, see Guide Memo 3.2.2: Cost Transfers, and the Research Policy Handbook 15.8 Cost Transfer Policy for Sponsored Projects.
(3) Office of Sponsored Research Responsibilities
OSR prepares the final financial reports and performs a review. Generally, the final financial report is due 90 days after the end of the award.

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3. Cost-Sharing PTA

a. Purpose
Cost sharing represents that portion of the total project costs of a sponsored agreement borne by the University, rather than the sponsor. The Research Policy Handbook 15.3 states the University's policy on cost sharing. Separate PTAs must be established to track committed cost sharing. This is usually accomplished by setting up a cost sharing Task in the Project that holds the sponsored project, and linking it to a cost-sharing award.

b. Source of Funds
The Principal Investigator must identify and provide resources to fund the cost-sharing PTA. Funds from other federal awards may not be used as the source of cost sharing except as authorized by statute. Funds generally come from unrestricted, gift, endowment income, or designated funds.

c. Setting Up
The notice of award prepared by OSR and the signed award document indicate if the project involves cost sharing. OSR will not open the sponsored PTA until the related cost-sharing PTA is opened. When a cost-sharing PTA is required, a person with signature authority over the fund from which the cost-sharing PTA will be funded or guaranteed sends a copy of the cost-sharing budget and the Cost-Sharing Authorization form to OSR requesting the PTA be opened. For information on how to set up a sponsored PTA, see the DoResearch website.

d. Ongoing PTA Management
Cost-sharing PTAs are subject to the same PTA management procedures as described above for grant and contract PTAs.

e. Fiscal Year End
Cost-sharing PTAs must be fully funded at the end of the University's fiscal year. Cost-sharing budgets and expenditures carry over to the new fiscal year, as described above for grant and contract PTAs.

f. Closing a Cost Sharing PTA
The cost-sharing PTA is closed at the same time as the related grant or contract account, as described above.

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4. Gift PTA

a. Purpose
A gift PTA is used to record the expenditures that execute the purpose of the gift.

b. Source of Funds
The source of money for a gift fund may be a single gift or multiple gifts that have a common purpose and any related income generated by the gift itself or its associated endowment.

c. Setting Up
When a gift is received whose terms require the opening of a separate fund, the Department submits the Fund Accounting PTA Request form via email to their school/department Fund Accountant in the Controller's Office. They must also fax copies of the donor documentation and a Gift Transmittal Form to their fund accountant. The original donor correspondence regarding the restricted purpose of the gift and the original Gift Transmittal along with the donor check should be sent to Gift Processing. Never hold a donor check while waiting for a PTA. Fund Accounting, in consultation with the school, assigns a fund/award number and sets up the related expenditure Project and Task(s). Fund Accounting creates the Fund Authorization document that describes the purpose of the fund. If the gift creates a new endowment fund, Fund Accounting sets up a related expendable endowment income fund to receive the endowment income. The form used to request a new Gift PTA is located at here.

For step-by-step instructions, see Quick Steps: Request New PTA .

d. Fiscal Year End
At fiscal year end the balance of the gift fund automatically carries over into the new year. If expenditures exceed available funds in an expendable gift fund or an endowment income fund, a transfer from another appropriate fund restricted to departmental use must cover the overdraft. Consult with your fund accountant for the appropriate account to use.

e. Closing a Gift PTA
(1) Endowment

Endowment gift funds and their related endowment income funds are very seldom closed. In the event that a PTA funded by an endowment income fund needs to be closed, the department should contact Fund Accounting. The account will be closed the first of the next month.
(2) Expendable Gift PTAs
At any time during the year, departments may send a memo to Fund Accounting requesting that a PTA for an expendable gift fund be closed to expense. The memo should include the reason for closing the PTA. The PTA will be closed as of the first of the month following the month in which the memo is received, unless otherwise stipulated.

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a. Purpose
Designated funds generally contain unrestricted funds that the University (rather than a donor or sponsoring agency) has decided to use for a specific purpose.

b. Source of Funds
There are two sorts of designated funds:
(1) General funds that have been transferred to a department for a specific purpose, such as departmental research support.
(2) Income that has been generated by the department and designated for departmental use. Examples are fees from professional services and conferences.

c. Setting Up
To open a designated fund and related expenditure account, the department sends an email and Fund Accounting PTA Request Form to their school/department Fund Accounting. The form used to request a new PTA is located here.  Fund Accounting, in consultation with the school, assigns a fund (award) number and sets up the related Project and Task(s) with the Fund Authorization information. For step-by-step instructions, see Quick Steps: Request New PTA.

d. Changes to Fund Balances
(1) Designated funds funded by general funds transfers are increased only by transfers from other University designated or unrestricted funds. That is, income cannot be deposited to this kind of fund.
(2) Designated funds holding income are increased as cash receipts are deposited or transferred from other University designated or unrestricted funds.

e. Fiscal Year End
At fiscal year end the balance of the designated fund automatically carries over into the new year. If expenditures exceed available funds in a designated fund, a transfer from another appropriate fund must cover the overdraft. Consult with your fund accountant for the appropriate account to use.

f. Closing a Designated Fund PTA
At any time during the year, the department may send an email to Fund Accounting requesting that a P, T, and/or A for a designated fund be closed to expense. The memo should include the reason for closing the PTA. The PTA will be closed as of the first of the month following the month in which the memo is received, unless otherwise stipulated.

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6. Capital Asset Projects

a. Purpose
Capital Asset projects capture expenditures related to facilities and infrastructure projects or computer hardware or software systems that require capitalization. They allow the University to categorize expenditures as capital assets or expenses and to collect expenditures in a way that supports indirect cost recovery, service center rate development and financial reporting.

b. Source of Funds
Multiple sources of funding may support a specific capital project. Examples are gifts, departmental funds, University unrestricted funds, University facilities reserves, debt, and Stanford Infrastructure Program funds.

c. Setting Up
A department planning a facilities construction or renovation project works with  Land, Buildings and Real Estate (LBRE)/Department of Capital Planning to initiate the project via the Facilities Form 1 System. When the project receives approval, a copy of the Facilities Form I and PTA set-up form is submitted to the Capital Accounting section of the Controller's Office. Capital Accounting reviews the Form 1 for necessary approvals, appropriateness of sources of funding and fund availability. It also sets up the PTA and sends out an Authorization memo, which includes the appropriate capital PTA, authorized budget, and applicable asset code for the project, notifying the appropriate individuals so they can grant signature authority on the PTA, as needed. For step-by-step instructions, see Quick Steps: Request New PTA.

For capital asset projects that do not involve facilities (e.g., computer hardware or software systems) the Capital Projects PTA Request Form should be completed and sent to Capital Accounting.

d. Mid-Project Changes
If changes are needed to source of funds, the department informs Capital Accounting. Once funds are committed via the Form I, the department may not withdraw the funding commitment. However, a substitution of one fund source for another can be made.

e. Fiscal Year End
At fiscal year end the entire budget and expenditures for the project are carried forward to the new fiscal year expenditure statements. Expenditures must be fully funded. The department must work with Capital Accounting throughout the year to cover overdrafts.

f. Closing a Capital Project
The project manager informs Capital Accounting that a project has been completed. Capital Accounting reconciles outstanding commitments, closes the project and award, and returns any unexpended funds to their original source.

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7. Student Aid PTA

A student aid PTA is a special kind of PTA used to record departmental expenditures for student aid from current funds. Student aid PTAs are set up and managed in the same way as Operating Budget, gift, or designated PTAs, depending on the source of funds. See Quick Steps: Request New PTA.

Note: Salaries to student employees and graduate research and teaching assistant tuition allowance are not student aid.

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8. Auxiliary PTA

a. Purpose
Auxiliary enterprises are self-supporting entities that support the University's teaching and research mission. They service principally faculty, students, staff and the Stanford community. Major University auxiliaries include Housing and Dining Services, Stanford University Press, and the Department of Athletics.

b. Source of Funds
The source of funds for auxiliary PTAs is the income generated by the auxiliary activity. The amount budgeted for the fiscal year is based on a forecast of expected income and expenses for the year.

c. Setting Up
To set up a new auxiliary account, the department sends a memo to Fund Accounting with the appropriate information. The Fund Accounting PTA Request form is located here

d. PTA Management
Auxiliaries are managed similarly to a business enterprise. In addition to income and expense activities, they may have assets, liabilities, and reserve (fund) PTAs.

e. Fiscal Year End
Any surplus or deficit is transferred at year-end to a reserve PTA of the auxiliary.

f. Closing an Auxiliary P, T, and / or A
At any time during the year, the auxiliary may send a memo to Fund Accounting requesting that a P, T, and/or A for the auxiliary be closed. The memo should include the reason for closing the account. The PTA will be closed as of the first of the month following the month in which the memo is received, unless otherwise stipulated.

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9. Service Center PTA

a. Purpose
A service center is an organizational unit of the University that provides a specific service, group of services, or products to users principally within the University. Large service centers include Information Technology Services (ITS), Land, Buildings and Real Estate (LBRE), and the Medical School's Veterinary Service Center. Smaller service centers are typically found within academic departments. Detailed information on Service Centers is available at DoResearch.

b. Authorization
Proposals for a new service center must have the approval of the department chair and school dean, or their equivalent for nonacademic areas. The Office of Research Administration Policy and Compliance (RAPC) is responsible for setting service center policy and reviewing annual budget submissions which should include the volume projection for services, and ensure the costs are compliant with Federal as well as University regulations. Review the Service Center Manual for additional information.

c. Annual Breakeven
All service centers must annually break even, unless ONR has granted an exception. Twelve months of operational expense should be allocated to users via twelve months of allocation journals. If the year-end under-recovery exceeds 5% of expenses including the prior year balance for administrative service centers or 15% for academic service centers then either the users are charged the under-recovered amount or the service center's department will need to subsidize the entire loss. If the year-end over-recovery exceeds the 5% or 15% limit, a rebate must be allocated to all users of the service center. The breakeven calculation is fully explained here

d. Source of Funds
The costs of service center services or products are charged directly to all users based on the actual level of activity using a nondiscriminatory rate schedule. This rate schedule (the service center rate) must be calculated to recover no more or no less than the estimated aggregate cost of the service or product over a fiscal year unless otherwise agreed upon by the federal government.

e. Setting Up
When a new service center is reviewed and approved by RAPC, RAPC will open a new PTA. Some of the information required to open a new service center includes the purpose of the service center, anticipated usage, list of anticipated internal and external users, estimated initial budget, list of capital assets that will be required for the service center operation and a valid Guarantee PTA account. All academic service centers must have a guarantee account, which can be an operating budget, Dean's Executive fund, or unrestricted gift PTA designated by the school dean or department head. See the "Request for Establishing a New Service Center" PTA setup document.

f. Mid-Year Changes
Requests to change a service center rate should be made as soon as it appears an administrative service center will not break even within +/-5% at year-end or an academic service center will not break even within +/-15% at year-end using the previously approved rates. Such requests much be routed to the appropriate service center analyst for review and approval before the new rate can be used. A list of service center analysts is available online.

g. Fiscal Year End
Service center balances at fiscal year end must be within +/- 5% of an administrative service center's annual expenditures, including the prior year balance and +/- 15% of an academic service center's annual expenditures, including prior year balances. When any over-recovery exceeds break-even percentage, the entire surplus balance must be refunded to all users in an equitable manner. When any under-recovery exceeds the applicable percentage, the entire deficit balance must be cleared either by either charging the service center's Guarantee PTA or by allocating a yearend assessment of the entire loss to all users on a prorated usage basis. Service centers that operate under special long-term break-even or pricing agreements with the government will not be required to break even at year-end.

h. Closing a Service Center PTA
The department will need to clear any remaining balance before RAPC can close the service center PTA.

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10. Expenditure Allocation PTA

a. Purpose
An expenditure allocation (expense clearing) PTA is a departmental expenditure PTA used to accumulate specific costs as a means of expediting the processing of accounting transactions. Expenditure allocation PTAs are used when the final distribution of expenses is unknown at the time the expenses are incurred. Expenditure allocation PTAs are cleared via iJournals or Labor Distribution adjustments. Labor and material costs cannot be combined in the same expenditure allocation PTA. If labor and material expenses must be combined, the department should establish a service center PTA (see section 9). For related information, see AGM 3.2.3: Allocation and Offsets. Please refer to the DoResearch site for additional guidance on the use of expenditure allocation PTAs.

b. Authorization
Expenditure allocation PTAs must have the approval of the requesting department's Administrative Service Manager and an individual with financial authority over the guarantee PTA.

c. Source of Funds
The requesting department must identify and provide resources to guarantee the expenditure allocation PTA. Funds from sponsored awards may not be used as the guarantee. Guarantees generally come from unrestricted, gift, endowment income, or designated funds. The fund source will be used to guarantee any uncleared expenses at the end of the fiscal year.

d. Setting Up
When a department needs a new expenditure allocation PTA it requests Research Administration Policy and Compliance (RAPC) to set it up by submitting the Request For Expenditure Allocation PTA form. RAPC will review the allocation method(s) to be used by the account administrator and maintain records to support the establishment of the PTA.

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11. Receivables PTA

A department that administers a program such as a conference or professional journal sponsored by an organization outside the University must use a receivables PTA for expenses incurred on campus. Operating budgets, designated funds and restricted funds cannot be used for such activities. To open a receivables account, contact the Receivables Accounting section of the Controller's Office.

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12. Account Maintenance

Certain information gathered at the time the account is established may change over time. The information includes the Owner, Manager and Owning-Organization of the Project, Task and Award. This information is crucial to reporting on and analyzing financial activity and may impact authority and approvals. When a change occurs due to turnover or business reorganization the department must update PTA roles and owning, as described at Stanford's Gateway to Financial Activities

 

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3.1.4 Cost Policy

Last updated on:
06/15/2011
Formerly Known As Policy Number: 
34.5

This Guide Memo outlines general policies on expense reimbursement by the federal government and discusses the importance of assigning the correct Project, Task and Award (PTA) and Expenditure Type to expenses and credits. For more detailed information, see Proper Coding of Allowable and Unallowable University Expenditures on the Gateway to Financial Activities website.  

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

1. Background

One-third of all funding for University expenditures comes from the federal government. Most of this funding comes in the form of direct support for sponsored projects, but a substantial portion comes in the form of reimbursement for indirect costs of federally sponsored grants and contracts. Stanford tracks whether University activities are allowable for reimbursement using the Project, Task and Award (PTA) to which transactions are charged, and tracks allowable and unallowable cost objects through the Expenditure Type used to record transactions.

Employees must pass DOR-1101: Understanding Cost Policy and FIN-0103: Approving Financial Transactions training in order to be granted signature authority in the Oracle Financial system. For more information visit Stanford's Gateway to Financial Activities.  

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2. Definitions

Direct Costs are expenses that can be identified specifically with a particular sponsored project or other direct cost objective, such as Auxiliary Activities or Instruction, or expenses that can be directly assigned to such activities relatively easily with a high degree of accuracy.

Example: cost of materials used on a project

Indirect Costs are those incurred for common or joint objectives and therefore cannot be identified readily with a particular sponsored project. Indirect costs are sometimes called Facility & Administrative (F&A) or overhead costs.

Example: costs of buildings or utilities

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3. General Rules

Rules for allowability are covered in the government document OMB Circular A-21 and the Uniform Guidance. In many cases, the issue of whether a particular cost is allowable is a complex one. When in doubt, consult with your local financial or research administrator, the Office of Sponsored Research or Research Financial Compliance and Services (RFCS). All unallowable activities and objects (line items) must be coded as such. In general, expenses are chargeable to the federal government only if they are:

  • Reasonable
    A prudent person would have purchased this item and paid this price.
  • Allocable
    Expenses can be allocated to the government activity based on benefit derived, cause and effect, or other equitable relationship.
  • Consistently Treated
    Like expenses must be treated the same in like circumstances.
  • Allowable
    Allowable for reimbursement as specified by government regulations.

If an expense cannot meet the above criteria, it is not eligible to be charged to a federal grant or contract no matter what its purpose.

Note: Agencies that sponsor grants and contracts use the term allowable to mean permitted as a direct cost under the terms of a specific grant or contract. Expenses that are generally allowable for federal reimbursement may not necessarily be permitted under the terms of a specific grant or contract.

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4. Unallowable Costs

Expenses that are unallowable for federal reimbursement as a direct or indirect cost may still be reasonable and necessary business expenses permitted by the University, as outlined in the Administrative Guide. Departments may incur these expenses, but they must be coded as unallowable so they can be readily identified and excluded from the indirect cost calculation. A detailed list of specifically unallowable activities (Tasks) and objects (Expenditure Types) is provided in the Understanding Cost Policy course

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3.1.5 Retention of Financial Records

Last updated on:
06/15/2012
Formerly Known As Policy Number: 
34.4

This Guide Memo covers time requirements for retaining financial records and security requirements for disposing of old records.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

1. Purpose of Record Retention

Retaining records serves two purposes. In the short-term, it provides those responsible for the management of accounts with the means to monitor transactions and resolve problems. In the long-term, it enables the University to comply with Federal Acquisition Regulations, the Internal Revenue Service regulations, and other federal, state and local regulations governing auditability and retention of records.

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2. Responsibility

a. Online Transactions
When the source documentation for a transaction is online, the central administrative office responsible for maintaining the online application is responsible for retaining the online transaction record.

b. Paper Documents
When the source documentation for a transaction is paper, the office that receives the original document is responsible for retaining it. The submitting department is responsible for retaining the support until the transaction has posted to the monthly expenditure report. Originating departments have the responsibility to destroy any paper backup once central administration has successfully processed the reimbursement request, has a copy of the scanned supporting documentation and the transaction has posted to the monthly expenditure report.

Exceptions:
1) For Federal contracts, a copy of the original paper copy must be retained for one year past the date it was scanned;
2) either a paper copy or scanned copy of the monthly grant and contract expenditure statements or quarterly certification statement signed by the principal investigator and task manager should be retained by the department in accordance with the "Direct Charges and Revenues to Contracts and Grants" retention policy.

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3. Retention Times

a. Minimum Paper and Electronic Record Retention Times
Legal and Audit Requirements

When requirements for long-term retention of records overlap, the responsible office should retain records for the maximum period needed to meet legal and audit requirements. In special cases retention times may be extended by request of the central offices. In such a situation the affected will be notified in writing. General rules:

  • Tax-Exempt Debt Related Records: Life of the bond issue, plus the life of any issue that refunds the issue, plus six years. Records related to tax-exempt debt include but are not limited to documentation of the use of the debt proceeds (project costs), how debt financed property is used, relevant sponsored research contracts and grants in facilities financed with tax-exempt debt, relevant third party leases of space, etc. Detailed information can be found under the Compliance Guidelines for Tax-Exempt Bonds
  • Direct Charges and Revenues to Contracts and Grants: Four years following the end date of the award (longer if circumstances related to tax-exempt financing require it, see Tax-Exempt Debt Related Records above).
  • Transactions involving depreciable assets:
    • Moveable equipment records (not financed with tax-exempt debt) will be centrally retained three years beyond the disposal of the asset.
    • Transaction records involving other depreciable assets will be retained six years beyond the asset becoming fully depreciated (longer if circumstances related to tax-exempt financing require it, see Tax-Exempt Debt Related Records above.)
  • Business Transaction Records (not contract or grant-related): Four years.
  • Employee Payroll Information: Six years from retirement or termination.
  • Taxable Income (Cash receipt information and billings, and all documents for activities considered unrelated business income. See Guide Memo 1.5.3: Unrelated Business Activity). Four years following the end of the fiscal year. Longer retention times apply to certain documents retained by central offices. For information on a specific document or category of documents, the office responsible for the type of transaction should consult the Office of Sponsored Research (OSR), Research Financial Compliance and Services, or Financial Management Services (FMS) consisting of the Controller's Office, Office of the Treasurer, Procurement (including Accounts Payable, Travel & Reimbursements), Global Services, and Consulting & Support.

b. Management Information
When a central office has retention responsibility, the department initiating a transaction may discard copies of documentation supporting the transaction when it is no longer needed for management purposes. For example, when the transaction is complete and the expenditure statement containing the transaction has been reviewed. At its discretion, a department may keep copies of documents for longer periods.

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4. Disposal of Old Documents

To safeguard the privacy of individuals, documents that contain salary information must be shredded, incinerated, or otherwise disposed of securely. Departments may arrange for service from a business record destruction vendor.

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3.1.6 Charitable Donations by Stanford University to Other Charitable Organizations

Last updated on:
12/05/2014

This memo describes the limited circumstances when a charitable donation may be made by Stanford to an outside organization.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

1. Policy Statement

Stanford University is a non-profit public charity that receives its funds from sponsors, donors,  parents/students and others in furtherance of our educational, research and patient care missions. Accordingly, provision of University funds to other charitable institutions as donations is highly restricted. When considering support of another charitable organization, Stanford personnel should first consider whether the objective can be achieved through a contractual arrangement or other form of written understanding with the potential recipient institution, spelling out services and deliverables that align with Stanford’s purposes. In any case, such donations are limited to US charities. No donor funds or sponsor-restricted funds may be used in support of other charitable organizations.

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2. When Donations to Other Charitable Organizations Are Permissible

a. A donation may be made at the direction of the President, the Provost or the Vice President for Business Affairs and Chief Financial Officer.

b. A donation may be made to the charity of family’s choice in the case of the death of an employee or a member of his/her immediate family, in lieu of customary flowers (Limit: $100).

c. Upon recommendation by a donor, a donation may be made from the portion of his/her donor-advised fund available for such designation. Recipient charities must be vetted by senior management of the Office of Development.

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3. Exceptions to Policy

Exceptions to the policy are rare. Requests for exception must be approved by the Vice President for Business Affairs and Chief Financial Officer. Requests should state:

a. How and over what period Stanford-provided funds would be spent by the intended recipient.
b. What  Stanford goals would be achieved by the donation.
c. Why such goals could not be achieved through any other form of relationship with the charity.
d. That the recipient will provide written acknowledgement of the funding, certify that the funds were used for Stanford’s intended purpose and detail what results were achieved.
e. A description of the intended recipient charity, proof of its tax-exempt status and a documented vetting of the charity

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3.2.1 Responsibility for University Funds

Last updated on:
11/08/2017
Formerly Known As Policy Number: 
36

This Guide Memo describes responsibilities for the management of funds in University Projects, Tasks and Awards (PTAs).

Authority: 

Approved by the Vice President for Business Affairs & Chief Financial Officer.

1. Responsibility for University Funds

a. University Officers' Responsibility

Deans, department chairs, directors, principal investigators, and other University officials are responsible for the management of funds in their PTAs. See Guide Memo 1.2.1: University Organization. These individuals have the authority to expend these funds to accomplish their assigned responsibilities, and are responsible for assuring that expenditures charged to their PTAs are:

  • Reasonable and necessary
  • Consistent with established University policies and practices applicable to the work of the University, including instruction, research, and public service
  • Consistent with sponsor or donor expenditure restrictions

For more information on cost policy, see Guide Memo 3.1.4: Cost Policy.

b. Delegation of Authority

Authority to sign expenditure documents for the purchase of services and materials on a PTA may be delegated and the University official may authorize the person to whom authority is delegated to further delegate signature authority. The University official retains accountability for prudent control of the PTA. The University official may place limits on the dollar level and the types of expenditures for which signature authority is delegated. For more information on authorization procedures, review and error correction procedures, and expenditures of restricted funds, please see the Financial Authority section of the Gateway to Financial Activities website.

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2. Authorization Procedures

a. Training

To be granted signature authority in the Oracle Financial system, employees must complete required training, ORA-1101: Cost Policy and FIN-0103: Approving Financial Transactions. For more information, see the Overview: About Financial Authority At Stanford on the Gateway to Financial Activities website. 

b. Delegation of Signature Authority

(1) University Officials

A letter from University officials indicating the organization for which they are responsible and the administrator to whom they have delegated the ability to manage authority must be on file with Financial Management Services.

(2) Delegation of Signature Authority

To delegate authority for both electronic and paper form transactions, the person responsible for the organization or PTA must delegate such authority via the Authority Manager.

c. Electronic Signature

Users of campus financial systems identify themselves to these systems using approved, secure authentication methods. See Guide Memo 6.4.1: Identification and Authentication Systems, for details on these methods. In addition to these system-independent authentication methods, financial systems may have system-specific authentication methods (e.g., a username and password for a particular system). Regardless of the authentication method, authentication using any of the approved methods is the electronic equivalent of an employee's hand-written signature and may be used as an "electronic signature" in electronic applications.

d. Signature Security

Only the person to whom authority is delegated may authorize a transaction either manually or electronically. Disciplinary steps will be taken against individuals who are found to have fraudulently signed the name of another person, used the authentication information of another person, or divulged their authentication information to another person. The possible disciplinary actions for violations, which can include termination of employment or student status, will depend on the facts and circumstances of each case. User responsibilities for handling authentication information are described in Guide Memo 6.4.1: Identification and Authentication Systems.

e. Limitations on Signature Authority

(1) Expense Reimbursement

No person may approve his or her own expense reimbursement, or the expense reimbursement of an individual to whom he or she reports either directly or indirectly. Expense reimbursements, which require two signatures, must have the signatures of the person incurring the expense and the person responsible for the management of the PTA or a properly delegated agent.

(2) Independent Review

Business expenses incurred by or on behalf of the President, the Provost, a direct report to the President or the Provost, or the senior financial officer of the academic units must be approved by an independent reviewer designated by the CFO. Expenses for ordinary supplies, customarily available for all employees in an office, should be approved by a local business official and need not be routed for independent review.

(3) Salaries

No person may sign any payroll/personnel form that affects his or her own salary, or payroll/personnel forms that affect the salary of an individual to whom he or she reports either directly or indirectly.

(4) Conflict of Interest

No person may authorize payment to any individual or business where there is a conflict of interest. See Guide Memo 1.5.2: Staff Policy on Conflict of Commitment and Interest.

f. Revoking Signature Authority

The University official who delegated authority (or the person who currently holds that position) is responsible to ensure granted authority reflects the unit's current needs. When a person with signature authority transfers to another department or leaves the University, his/her authority is automatically revoked. Changes for other operational reasons can be made at any time through the Authority Manager. For more information, see Quick Steps: Grant, Change, Revoke or Restore Financial Authority to Others on the Gateway to Financial Activities website.

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3. Review and Error Correction

a. Departmental Review

The deans, department chairs, directors, principal investigators and other University officials to whom funds are allocated are responsible for reviewing their expense transactions and monthly expenditure/operating statements to assure that:

  • Any expenditure is necessary and for University purposes.
  • Charges are correct.
  • Charges are allowable for the PTA.
  • Charges are correctly coded as allowable or unallowable for inclusion in the University's indirect cost rate calculations.
  • Charges are allocable to the PTA (i.e., necessary to achieve objectives of the project).
  • Any allocation of costs is reasonable and equitable.
  • Charges are appropriately documented, and are recorded in a consistent manner within departmental accounts.

b. Evidence of Review

Review of transactions is evidenced by a manual or electronic signature in the appropriate field of the form.

c. Responsibility for Error Correction

The department is responsible for correction of errors. Time limits for error correction are outlined in Guide Memo 3.2.2: Cost Transfers, and the Research Policy Handbook 15.3,  Cost Sharing Policy. Occasionally errors are found after the regular time limits for correction. Regardless of when the error is found, the University officer whose PTA used the good or service must pay for it, either from the same or another appropriate PTA.

d. Central Office Review

To supplement (but not replace) the University official's basic review responsibility, Financial Management Services (including Procurement and the Controller's Office) and the Office of Sponsored Research review University selected expense transactions. If incorrect or improper charges are found, the reviewing office directs the person responsible for the expenditures to correct the error. If necessary, the reviewing office may correct the department's error and will provide the department with a copy of the accounting entry.

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4. Expenditures of Restricted Funds

a. Conformity to External Restrictions — Sponsored Research

Expenditures of restricted funds, such as organized research or gift funds, whether from federal or non-federal sources, must conform to any limitations or exclusions set forth in the agreement (e.g., grant or cooperative agreement). Expenditures of funds for federally sponsored projects are subject to the allowability, allocability, and reasonableness standards of the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200, Uniform Guidance), and the negotiated agreements between the University and the federal government. Please see the DoResearch website for more information: http://doresearch.stanford.edu/research-administration/major-topics/uniform-guidance-concepts-are-changing Cost-sharing tasks are subject to the same standards as the sponsored project that they support.

b. Monthly Review of Charges

For sponsored projects and related cost-sharing tasks, the expenditure statements must be reviewed each month, as noted in Guide Memo 3.1.3: Expenditure Accounts (PTA). The review should include areas such as those covered by the Monthly Review Guidance and Monthly Reconciliation tools. The review is evidenced by a signature on the monthly expenditure statement. The review must be completed within two months of the end of the month of the statement (e.g., October expenditures must be reviewed no later than December 31). Principal Investigators may delegate monthly review of expenditures, but may not delegate the Quarterly Certification of Charges (see paragraph 4.c).

c. Quarterly Certification of Charges

The following certification of direct costs is preprinted on expenditure statements for sponsored projects and cost-sharing tasks each month:

"I have reviewed the three months of expenditures for this quarter. To the best of my knowledge, all expenditures are appropriate. Where required, corrections have been or will be made through the accounting system. I understand that to be considered timely all corrections must be made within two months of the last day of month being reviewed.

PRINCIPAL INVESTIGATOR'S
Signature___________________________Date_____________
 

PROJECT TASK MANAGER’S
Signature___________________________Date_____________"

Quarterly certification is the responsibility of the project Principal Investigator (or Co-PI). A PI may delegate the monthly review of statements for accuracy, but may not delegate certification of the appropriateness of the charges. This certification statement must be signed by the principal investigator and the project task manager. Only the last expenditure statement for the academic quarter must be signed by the principal investigator and Project Task Manager. The quarterly certification must be completed within two months of the end of the academic quarter being certified, as described in the Monthly Review and Quarterly PI Review Certification. This signature means that the principal investigator has reviewed all direct charges to the project and that either the charges on the expenditure statement are reasonably accurate as shown, or that the appropriate individual in the department has initiated accounting entries to correct any differences. Review and correction of differences must be completed within the deadlines outlined on the DoResearch site.

d. Record Retention

The certified expenditure statements must be retained in the department files for future review by government and University auditors in accordance with University record retention requirements for sponsored projects (see Guide Memo 3.1.5: Retention of Financial Records.

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5. Expenditures of Gifts

a. Conformity to Donor Restrictions — Gifts

Gifts, which typically differ from sponsored projects in that they do not require a detailed scope of work, budget, or period of performance, may on occasion have restrictions on the use of funds (to ensure the use is consistent with the donor’s original, accepted, stipulations). If this is the case, the University must take care to allocate the funds to the academic area, group, department, faculty member or other University activity as stipulated. While the academic area or faculty member may have broad discretion over the specific expenditures of support, the donor may expect a report on the general uses of funds donated or even a report on line-item expenses. Donors do not typically recoup gift funds, but if a gift made for a restricted purpose has not, however, been spent according to the donor’s restrictions, a donor may have grounds to rescind and recoup the gifted funds.

b. Gifts to Stanford made by Faculty, Staff, Spouse or Family member

To ensure compliance with regulations governing charitable contributions and to avoid the appearance of conflict of interest, gifts made to Stanford by Stanford faculty, staff, spouse or family member: 

  • Should be placed in a unique account so that the source and use of the gifted funds can be clearly identified.
  • May not be placed in accounts under the control of the donor (e.g. neither the donor, nor any individual reporting to the donor, may have signature authority over the account).
  • May not be used to fund travel, purchases, or any other expense that could be construed by others to benefit the donor for purposes unrelated to his or her work for the University.
  • May not be used to fund the salary of the donor.

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6. Sources for More Information

Cognizant Office

Financial Management Services (including Procurement and the Controller's Office) and the Research Financial Compliance and Services (RFCS) office are available to answer questions about expenditure authorization. For contact information, see the Gateway to Financial Activities website or the DoResearch website.  

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3.2.2 Cost Transfers

Last updated on:
09/04/2015
Formerly Known As Policy Number: 
38

This Guide Memo sets out policies and procedures for transferring already incurred costs from one expenditure account (Project-Task-Award) to another. Cost transfers may also be called transfers of expense.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

Applicability: 

This policy applies to all Stanford employees responsible for accounting transactions.

1. Cost Transfer Policies

A cost transfer is an after-the-fact reallocation of the cost associated with a transaction from one Project-Task-Award (PTA) to another. Although costs should always be charged to the correct PTA, cost transfers are sometimes necessary. To be allowable, cost transfers must be timely, be fully documented, conform to University and sponsor allowability standards (that is, allowable under the terms of the sponsored agreement), and have appropriate authorizing signatures. See Guide Memo 3.2.1: Authorizing Expenditures.

a. Error Correction
Correction of errors is required on all PTAs. Errors may include clerical errors (such as typographical errors or transposition of digits in the PTA and expenditure types). Other errors may be detected upon review or certification of monthly expenditure reports. It may be that an employee's Labor Schedule was not updated, an individual's effort was redirected, or a purchase was charged to a PTA other than the one that ultimately benefited from the use of the items purchased. All errors should be corrected as soon as they are detected.

b. Active Sponsored Project PTAs
Refer to Cost Sharing in the Research Policy Handbook, Section 15.3. In addition to deadlines, it addresses:

  • Documentation
  • Sponsor requirements
  • Pre-award costs
  • Costs benefiting more than one project
  • Overdrafts

c. Documentation
Online cost transfer documentation must clearly show:

  • The expense directly benefits the receiving PTA
  • The expense is allowable on the receiving PTA
  • The reason the expense was charged incorrectly to the first PTA
  • The allocation methodology used if transferring expenses to multiple PTAs
  • That any systematic reasons which might cause this problem to be repeated have been addressed
  • The reason for any delay in the timely processing of the transfer

d. Cost Transfer Deadlines
Cost transfers should be prepared and submitted as soon as the need for a transfer is identified, and should be completed no later than six months after the cost is posted. Transfers submitted after the deadline must include a valid reason for the delay, and will generally not be allowed to be transferred onto a sponsored project. When transfers are delayed, a correction to the original source of an entry (e.g., an update to a Labor Schedule) may not be made timely. Therefore, care should also be taken to ensure that subsequent charges are either appropriate to the original PTA or also transferred.

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2. Cost Transfer Procedures

a. Getting Started
Cost transfers are submitted using the University's online Oracle Financials system iJournals and Labor Distribution modules. Information about accessing and using the Oracle iJournals and Labor Distribution modules are available from the Month-End/Year-End Close section of the Gateway to Financial Activities web site.

  • New iJournals are used to transfer all costs with the exception of salary or student aid expenses that were originally posted on or after September 1, 2003
  • Historical iJournals are used to transfer any expenses (including salary and student aid expenses) that were originally posted before September 1, 2003
  • Salary iJournals are used to transfer salary expenses originally incurred (determined by the expenditure item date) on or after September 1, 2003 and before April 1, 2005.
  • Labor Distribution Adjustments are used to transfer salary expenses originally incurred after March 31, 2005
  • Allocation iJournals are used to distribute costs based on proportional benefit to a project. Allocations are used when it is difficult to determine in advance how much to charge each PTA for a shared supply or service. Allocations are often used to distribute costs from Service Centers, Auxiliaries, or expenditure allocation PTAs. Often allocations are repetitive, or are required on a repetitive basis.

b. Identification Needed
All users of the University's online financial system must have a SUNetID and password. Approvers must also have:
(1) Been given authority in the "Stanford Authority Manager" and
(2) Passed the online test in the Understanding Cost Policy class with 100%.  See Guide Memo 3.2.1: Authorizing Expenditures, for additional information.
Users of the Labor Distribution Adjustments module must also be granted access through the "Stanford Authority Manager," complete training and sign a confidentiality agreement. See Getting Access to Labor Distribution Module of Oracle Financials System

c. Signatures
Online signature of the person responsible for approving the Project-Task/Award to be debited is required for most iJournal types. Online signature for the Project-Task/Award to be credited is required for Allocation iJournals. In all cases, the department initiating the transfer should make sure all individuals responsible for affected PTAs are informed of the entry.

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3.2.3 Allocations and Offsets

Last updated on:
03/15/2008
Formerly Known As Policy Number: 
38.1

This Guide Memo sets out policies and procedures for expense allocations and salary distribution offsets, which are a form of cost transfer.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

Applicability: 

This policy applies to all Stanford employees responsible for accounting transactions.

1. Expense Allocation Policies

An expense allocation is a method that enables apportionment of a particular expense or expenses to Projects-Tasks-Awards (PTAs) that specifically benefit from those charges. Allocations are used in situations where it is difficult to determine in advance how much to charge each PTA for a shared supply or service. They are used to distribute expenses to PTAs receiving the benefit of the good or service. Allocations are often used to distribute costs from expenditure allocation PTAs (formerly knows as "clearing accounts") or service centers. They may also be used to distribute costs between benefiting PTAs when a purchase was originally charged to one PTA and one or more other PTAs also benefited from the purchase. Allocations are also used to distribute charges from independent systems (known as "feeders") into the financial system. Often allocations are repetitive or are required on a regular basis.

a. Expenditure Allocation PTA Definition
An expenditure allocation PTA, as described in Guide Memo 3.1.3: Expenditure Accounts (PTAs) is a special PTA in which charges for materials, supplies, services, or salaries are accumulated, and then allocated each month to PTAs receiving the benefit of the good or service. Salary and material costs cannot be combined in the same expenditure allocation PTA. If salary and material expenses must be combined, a service center must be used. Sponsored project PTAs may not be used as expenditure allocation PTAs.

b. Allocation Basis
The basis of allocation/distribution (e.g., effort, square footage, headcount) must logically relate to the type of costs being allocated. It must produce an allocation to each activity/account in reasonable proportion to the benefits received. The allocation methodology must produce a result that is allowable, allocable, reasonable and consistent. Feeder systems typically charge other departments based on usage or services provided at specified rates. Administrative expenses may not be distributed or rotated among sponsored agreements. Departments shall not use any type of pooled allocation method to charge expenses to federal sponsored agreements except from a service center with approved rates, or as described in the Research Policy Handbook. Training is provided in the Understanding Cost Policy class.

c. Documentation
Online expense allocation documentation must clearly show the nature of the cost being allocated. The originator of the journal must include comments about the distribution basis in the online documentation and retain documentation of the allocation methodology and calculation results in accordance with the government and University's record retention requirements. Feeder systems track the charges and maintain documentation in their own systems.

d. Approvals
Before an allocation journal or feeder is submitted to the financial system, the department processing the journal/feeder must have received approval from an authorized individual for each PTA charged. Certain feeder transactions, such as utility charges, are approved implicitly as part of the annual budget process. Approval for other allocations and feeders can be a "blanket" approval for regular ongoing costs allocated in a consistent manner. Approval can be evidenced in writing in a memo, on a request form (e.g., SU-13 or similar form) or via electronic means. The department originating the journal/feeder must maintain documentation of written approval. For allocation journals, written approval must be on file from individuals with signature authority over the PTAs being charged, while online approval is required for the PTA or Project-Fund-Object being credited. The originator of the journal attests to the following when creating the allocation journal:

  • This allocation is being processed in accordance with policy
  • The cost is an appropriate charge to the PTAs sharing the expense
  • The PTA actually benefited from the cost of the goods and services
  • The transaction is documented according to policy

Feeder transactions are not routed for online approval, nor does the originator make the above attestation in the financial system. The ability to act as a feeder into the financial system is granted by the Controller's Office with the understanding that the transactions follow University policy. Feeder business process owners must sign an annual attestation that they understand and accept their responsibilities and have followed the policies, and must pass Cost Policy Training as described in Guide Memos 3.1.4: Cost Policy, and 3.2.1: Authorizing Expenditures.

e. Deadlines
Allocation journals should be prepared and submitted before the end of the month following the month the expense was posted.
Example: A cost that appears on an expenditure allocation PTA's March expenditure or operating statement should be allocated to the PTAs that benefited from the service by the last working day in April. Allocations submitted after the deadlines must include a valid reason for the delay.

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2. Salary Distribution Offset Policies

The federal government and some nongovernment sponsors require that the University charge salaries and wages to sponsored projects as they are earned. However, many faculty members who are on 9-, 10-, or 11-month appointments choose to have a reduced salary amount paid over all 12 months of the year. To correctly charge sponsored project PTAs or the related cost sharing PTAs in such situations, departments may use the Labor Distribution Schedule method or the Salary Distribution Offset method. The Labor Distribution Schedule method is preferred, as it requires fewer accounting transactions to accomplish the result. In the employee's Oracle Labor Distribution Schedule sponsored or cost sharing PTAs are charged the appropriate percentage of the faculty member's 9-month salary (subject to any regulatory caps) for the academic period. The remainder of the amount to be PAID over 12 months is charged to an operating budget or other unrestricted PTA. For templates to aid in the calculation, see Faculty Labor Distribution Entry Templates.  When following the Salary Distribution Offset (using after-the-fact Labor Distribution Adjustments for salary expenses originally incurred after March 31, 2005, or Salary Journals for salary expenses originally incurred before April 1, 2005) method the department must:

  • Charge the faculty member's entire salary to the operating budget PTA paying for the non-research portion of salary. (For more information on payroll processing see Guide Memo 2.2.3: University Payroll, and Faculty Specific Payroll Administration
  • Record a transfer to allocate the amount of earned salary to the sponsored project(s).
    The salary actually paid will show as a charge on the expenditure detail report for the operating budget PTA. The salary earned will show as a charge on the sponsored project expenditure detail report and as a credit on the operating budget expenditure detail report.

a. Approvals
Online signature of the person responsible for the PTA to be debited is required. Signature for the PTA to be credited is not required.

b. Deadlines
Salary Distribution Offset transfers should be prepared and submitted in the month the salary is earned.
Example: Salary earned during April should be recorded during April.
A Salary Distribution Offset transfer submitted after the deadline must include a valid reason for the delay.

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3. Allocation and Offset Procedures

a. Getting Started
Allocations and offsets, including feeders, are submitted using iJournals or Labor Distribution Adjustments in the University's online financial system. Guidance on using the University's online accounting system, including procedures for using Allocation and Salary Journals, Uploads, Templates, and Labor Distribution Adjustments, is available from the Month-End/Year-End Close section of the Gateway to Financial Activities website.

b. Nonsalary Charges
Allocations from expenditure allocation PTAs, service centers or other PTAs may be made by the following methods:

  • Allocation Journals are used for submitting a new allocation, a transaction containing repetitive transfers where charges have been previously authorized. Journal transactions entered using this form are limited to non-salary/student-aid expenditure types.
  • Allocation Templates may be set up to save time in processing repetitive allocations each month.
  • Upload Allocation and Feeder Journals may be used to upload an allocation created in another system.

c. Salary Charges
Allocations from expenditure allocation PTAs or offsets are made by using a Labor Distribution Adjustment or a Salary Journal. See Guide Memo 3.2.2: Cost Transfers, for further guidance.

d. Identification Needed
All users of the University's online financial system must have a SUNet ID and password. Approvers must also have received appropriate delegated authority through the Authority Manager system (tutorial available online) and passed the online test in the Understanding Cost Policy class with 100%.  See Guide Memo 3.2.1: Authorizing Expenditures.

e. Review
To ensure compliance with this Guide Memo, the Office of Sponsored Research will periodically sample and review the supporting documentation. Originators may contact the Office of Sponsored Research for further guidance, see the DoResearch website.

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3.3.1 Infrastructure Charges

Last updated on:
06/15/2009
Formerly Known As Policy Number: 
37.3

The Board of Trustees of Stanford University approved a revised infrastructure policy in October 2004. The revised policy, effective September 1, 2005, increases the infrastructure charge (ISC) from 6% to 8% for both new and existing funds. For designated funds, the infrastructure charge will be applied at the time funds are received from all external revenue sources. For restricted funds (expendable gift funds, endowment income funds and sponsored project funds that carry an F&A rate of 0%), the infrastructure charge will be applied at the time funds are expended or transferred.

Gifts for building projects are exempt from the infrastructure charge. The infrastructure charge collected from funds owned by non formula schools will be credited75% to a central University PFOO (project/fund/object code/org code) (controlled by the budget office) and 25% to a central PFOO owned by the budget unit involved in the transaction. The infrastructure charge collected from funds owned by formula schools and auxiliaries will be credited directly to a central PFOO belonging to the formula school or auxiliary.

Any exceptions to the policy require approval of both the Provost and the CFO and are to occur rarely, if at all.

Authority: 

Approved by the Provost and the Vice President for Business Affairs and Chief Financial Officer (CFO).

Applicability: 

This policy applies to restricted funds and designated funds effective September 1, 2005.

1. Purpose

If Stanford is to maintain long-term financial stability, restricted and designated funds must contribute to the cost of the University's infrastructure. Activities supported by designated and restricted funds represent a significant percentage of the University's total activity. General funds, alone, cannot bear the full burden of the infrastructure and administrative costs required to support these activities. The purpose of this policy is to recover a portion of these costs.

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2. Assessment on Designated Revenue

The infrastructure charge is applied to all external designated revenue at the time it is received. Once the designated revenue is deposited in a fund, no infrastructure charge will be applied to either expenditures against the fund or transfers out of the fund.

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3. Assessment on Restricted Expendable Funds (Gifts)

The infrastructure charge is applied at the time the funds are expended or transferred. All expenditure types are subject to the charge.

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4. Assessment on Restricted Endowment Income

The infrastructure charge is applied at the time the funds are expended or transferred. Endowment funds whose purpose is restricted by the donor to academic-year tenure line salaries (professorships), undergraduate and graduate student financial aid, or undergraduate research opportunities are not subject to the infrastructure charge. Restricted endowments that are not specifically restricted to these purposes but are used to support these activities will incur the charge.

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5. Assessment on Sponsored Projects

Sponsored project awards that carry an F&A rate (indirect cost rate) of 0% are subject to the infrastructure charge as follows:

a. Sponsored project awards with start dates prior to September 1, 2005, are subject to the previous infrastructure policy and rate of 6%. Sponsored project awards with start dates on or after September 1, 2005, are subject to the revised policy unless they meet the exception in 5.d (2) below.

b. Sponsored project awards made in response to proposals submitted using the previous infrastructure policy and rate of 6% will be subject to the previous policy and rate until the end of their competitive segment. A new competitive segment will be subject to the revised infrastructure policy.

c. Proposals submitted on or after September 1, 2005, are subject to the revised infrastructure policy.

d. The revised infrastructure policy applies to sponsored projects as follows:
(1) No sponsored project award is assessed the infrastructure charge if the award is already paying indirect costs (IDC). Awards paying less than 8% indirect costs are not charged ISC but instead are charged their applicable IDC rates.
(2) The infrastructure charge is assessed on non-government sponsored project awards and awards sponsored by foreign governments. U.S. Government awards (federal, state and local government agencies) are excluded from infrastructure.
(3) The infrastructure charge is automatically exempted, but not waived (an alternate PTA must be provided by the principal investigator/ department to pay the infrastructure charge) on all non-government and foreign government awards where the sponsor has a written policy stating it does not pay indirects and the sponsor/program is on OSR's (Office of Sponsored Research) pre-approved IDC waiver list. A request to exempt the award from the infrastructure charge is not required.

For all other sponsors who will not pay indirect costs, a request to exempt the award from the infrastructure charge must be submitted and approved by the Provost and the CFO before an institutional official approves the proposal for submission to the funding agency.

e. All cost-sharing is exempt.

f. Institutional allowances for federally-sponsored projects are exempt.

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6. Exceptions to the Policy

Any exceptions to the policy require approval of both the Provost and the CFO and are to occur rarely, if at all. If a donor/sponsor will not allow the infrastructure charge to be applied to a restricted fund, then either the gift/award will have to be refused or the Provost and the CFO may grant an exemption. If an exemption is granted, then the unit receiving the funds must identify an alternative source of funding to pay the infrastructure charge. To request an exemption, complete the "Request for Infrastructure Exemption" form, following the guidelines posted with the form. 

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7. ISC Implementation Guide

The ISC Implementation Guide provides additional detail about how the revised ISC policy is implemented. The guide can be found at the DoResearch website.  

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8. Additional Sources of Information

A list of expenditure types subject to infrastructure can be found on the Burden Expenditure Type Mapping Schedule (Excel spreadsheet).

For sponsored project awards subject to the previous infrastructure policy, the prior implementation guideline can be found here.

For policy clarification contact appropriate members of the Budget Office, Controller's Office Fund Accounting or Office of Sponsored Research described at the DoResearch website.

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3.3.2 Expendable Funds Investment, Return Allocation and Buffer Policy

Last updated on:
03/09/2018
Formerly Known As Policy Number: 
37.4

This policy replaces the “Expendable Funds Investment, Interest Allocation and Buffer Policy” adopted by the Board of Trustees on June 9, 2016. The policy is to be effective beginning December 5, 2017.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer. Approved by the Stanford University Board of Trustees on December 5, 2017.

1. Expendable Funds Investment and Return Allocation Policy

The university has two pools for managing expendable funds, the Endowment Income Funds Pool (“EIFP”) and the Expendable Funds Pool (“EFP”).

a. Endowment Income Funds Pool

The EIFP comprises funds holding unspent prior year payout distributed from pure endowment funds (including amounts reinvested in those funds).

  1. Investment Policy: One hundred percent of the assets in the EIFP are to be invested in cash and liquid short-term investment vehicles managed in the Short-term Investment Pool (“STIP”).
     
  2. Return Allocation Policy: Each endowment income fund holding unspent prior years’ payout will receive an allocation equal to the net return on the STIP, less the cost to administer the portfolio.

b. Expendable Funds Pool

The EFP holds the following types of expendable funds:

  • Endowment Income Funds – current year payout distributed from pure endowment funds and all payout from Funds Functioning as Endowment (“FFE”) not yet expended
  • Restricted Funds – gifts or other restricted expendable funds not yet expended
  • Designated Funds – funds designated for a specific school, department, faculty or purpose, not yet expended
  • Unrestricted Funds – university, school, department, auxiliary or faculty funds held in reserve or pending expenditure
  • Gifts Pending Designation – gift funds received for which the purpose has not yet been designated and which are not invested in the Merged Pool or Intermediate Pool
  • Plant Funds – funds designated for facilities, not yet expended.
  • Recycling Pool – proceeds from internal debt amortization available to lend to projects
  • Insurance and Benefit Program Reserves – reserves held for claims within self-insurance programs
  • Student Loan Funds – funds available to lend for student loans
  • Agency Funds – funds held by Stanford University on behalf of third parties
  1. Investment Policy: Depending on the University’s operating and other liquidity requirements, the University’s Chief Financial Officer or his/her designee will determine appropriate balances to be invested in the Intermediate Pool (IP) or cash and liquid investment vehicles managed in the STIP.  The remainder of the EFP is to be cross-invested in the MP. The University may also draw on a bank line or other debt vehicle to fund liquidity needs as deemed necessary by the University’s Chief Financial Officer or his/her designee.
     
  2. Return Allocation Policy:  Funds invested in the EFP are grouped into two categories for purposes of allocating investment returns.

a. Money-Market Accounts

The following types of Expendable Funds will be treated as “Money-Market Accounts” and will receive an allocation equal to the net return on the STIP:

  • Restricted Funds, only when stipulated by donor requirement
  • Gifts Pending Designation, excluding class gift funds and donor funds of less than $100,000
  • Plant Funds, raised from gifts exceeding $1 million
  • Recycling Pool
  • Insurance and Benefit Program Reserves
  • Student Loan Funds
  • Agency Funds

b. Zero-Interest Accounts

All other Expendable Funds will be treated as “Zero-Interest Accounts.” Investment returns on these funds will not be allocated to the individual fund, but will be accumulated and distributed to the Provost’s General Fund and to the  School of Medicine (“SoM”) and Graduate School of Business (“GSB”) Dean’s Unrestricted Funds, as described below: 

  • SoM Dean’s Unrestricted Fund will receive an allocation related to zero-interest account balances controlled by the SoM dean’s office, departments and faculty.
  • GSB Dean’s Unrestricted Fund will receive an allocation related to zero-interest account balances controlled by the GSB dean’s office, departments and faculty.
  • Provost’s General Fund will receive an allocation related to all other zero-interest account balances.

The allocation shall vary between 0% and 5.5% of the zero-interest account average monthly balances during the prior fiscal year:

  • The allocation shall be 0% if the prior year’s return of the EFP is less than or equal to 0%
  • The allocation shall be 5.5% if the prior year’s return of the EFP is greater than or equal to 5.5%
  • The allocation shall be equal to the prior year’s return of the EFP if the actual return is greater than 0% and less than 5.5%

To the extent the allocation on zero-interest account balances is less than 5.5% in any year, the Provost and Deans may, at their individual discretion, elect to offset the shortfall by reducing an equivalent amount of the contribution in that year from general funds and deans’ funds to the Capital Facilities Fund (“CFF”).

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2. Buffer Policy

The total allocation to Money-Market Accounts, General Fund and Dean's Unrestricted Funds will differ from the investment returns of the EFP. These differences will be buffered by the "Tier I Buffer" and the "Tier II Buffer."

  • The Tier I Buffer is the University's unrestricted FFE funds, excluding Land Development Funds. These funds are fully invested in the MP and receive a regular MP-based payout used to support the Provost's General Fund.
  • The Tier II Buffer is a single unrestricted FFE fund. This fund is primarily invested in the MP. A fraction of the Tier II Buffer is invested in separately managed investments such as the President’s Venture Fund. The portion of the Tier II Buffer invested in the MP receives a regular MP-based payout that is distributed at the President’s discretion (“President’s Funds”). In addition, the President is authorized to withdraw up to $30 million in principal each year to be used at his or her discretion.

To the extent there is a shortfall in EFP investment returns relative to stipulated allocations, principal will be withdrawn from the Tier I and Tier II Buffers to make up such shortfall, as follows:

  • First, from the Tier I Buffer up to a limit of 20% of the fiscal year-end market value of the Tier I Buffer in any fiscal year
  • Second, from the Tier II Buffer until fully depleted
  • Third, from the remainder of the Tier I Buffer

To the extent there is a surplus of EFP investment returns relative to stipulated allocations, excess returns will be added to the Tier I and Tier II Buffers as follows:

  • First, to the Tier I Buffer until such time as the value of the Tier I Buffer, in total, equals 35% of the total value of the EFP ("the target threshold")
  • Second, to the Tier II Buffer

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3.4.1 Revenue Recognition

Last updated on:
12/15/2008
Formerly Known As Policy Number: 
39

This Guide Memo describes revenue recognition policy.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

Applicability: 

This policy applies to auxiliaries, service centers and sponsored research.

1. Revenue Recognition

Revenue recognition should be based on accrual accounting in accordance with generally accepted accounting principles (GAAP). Revenues should be recognized when earned, and expenses should be recognized when incurred. Revenue is considered earned when the University has substantially met its obligation to be entitled to the benefits represented by the revenue. Revenue should be recorded when earned, regardless of the timing of cash receipts. In the event a project stipulates performance measures, revenue is considered earned when the performance measures have been completed. Deposits (whether refundable or non-refundable), early payments and progress payments should not be recognized as revenue until the revenue producing event has occurred.

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2. Sources of More Information

More information about revenue recognition for auxiliaries, service centers and sponsored research is available on the Gateway to Financial Activities website:

Revenue Recognition - Auxiliaries and Service Centers
http://fingate.stanford.edu/staff/fundsmgmt/policy_notes/rev_recog_aux_serv_ctr.html

Revenue Recognition - Sponsored Research
http://fingate.stanford.edu/staff/fundsmgmt/policy_notes/rev_recog_sponsor_research.html

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3.4.2 Card and Payment Account Acceptance and Processing

Last updated on:
06/23/2014
Formerly Known As Policy Number: 
84

This policy provides guidelines on acceptance and processing of credit and debit card, account number, or third party account numbers at Stanford.

Authority: 

Approved by the Vice President for Business Affairs & Chief Financial Officer.

Applicability: 

Applies to all Stanford entities that accept payments via credit or debit card accounts or financial account numbers or third party account numbers either directly into a Stanford owned merchant account; or indirectly where a third party company accepts card or payment account payments on behalf of the University and then remits payment to a Stanford owned bank account. Section 5 of this policy applies to all third-party vendors or service providers that conduct business at Stanford.

1. Definition

The term "card or payment account" as used in this policy includes the use of credit or debit card accounts or account numbers (such as a bank account) or third party account numbers (such as a PayPal or Google accounts). For purposes of this policy, card or payment account acceptance and processing is defined as using any application or device for accepting a card or payment account as payment for goods or services sold by a Stanford University entity. This policy does not apply to the Stanford Card Plan, Cardinal Dollars or to the University's PCard or Travel credit card programs.

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2. Purpose

A card or payment account provides a convenient way to handle business transactions such as conference registration, the purchase of course materials, or the purchase of meals at a campus dining facility. In order to accept card or payment account payments it is the University's best interest that the acceptance and processing is compliant with Payment Card Industry Data Security Standards for safeguarding card numbers, account numbers, and other High Risk Data as listed in Administrative Guide Memo 6.3.1: Information Security. In addition, funds from payments must be securely transferred to the University's financial systems. This policy is to establish guidelines for card or payment account acceptance and processing.

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3. Policy

a. Relation to University Mission
Any use of card or payment account acceptance and processing methods at Stanford must be consistent with Administrative Guide Memo 1.5.3, Unrelated Business Activity, which prohibits the use of Stanford resources for any activity not related to the University's mission.

b. Authorized Vendors and Service Providers
Departments must use a Stanford authorized payment application, payment mechanism, point of sale terminal hardware vendor (if applicable). These are listed at http://treasurer.stanford.edu/merchants/.

A service provider that stores, processes, or transmits cardholder data on behalf of the University must be validated as a Level 1 service provider by a Qualified Security Assessor (QSA) and listed on Visa’s Global Registry of Service Providers. The company listing must be current and the service being provided to the University must match the service listed on Visa’s website.

A company providing a service that can affect the security of an eCommerce transaction (eTransaction) must be validated by a QSA as a service provider and the service being provided to the University must match the services validated as compliant during the QSA assessment.

c. University Card and Payment Account User Agreement
Departments wishing to engage in accepting card or payment accounts for the sale of goods or services must obtain approval from the Office of the Treasurer and comply with all terms of the University's Card and Payment Account User Agreement.

d. Information Security
Card and payment account numbers are classified as High Risk Data. Departments must comply with Administrative Guide Memo 6.3.1: Information Security, and safeguard the confidentiality of High Risk Data related to purchases of goods or services. They may not store any High Risk card or payment account information. They must only use equipment authorized by the Office of the Treasurer to process payment information and are required to use secure and approved, or PCI DSS certified, encrypted connections to transmit payment information.

e. For departments operating electronic commerce websites:
(1) Departments must post a privacy policy on their website that is approved by the University Privacy Officer or the Office of the General Counsel. Vendors and/or Service Providers who independently collect card or third party account information must have privacy and terms of use policies on their websites. These policies must conform to applicable federal and state laws, as well as the University's privacy policies.
(2) Third-party advertising is not allowed on any web pages which are hosted on the stanford.edu domain, or which use Stanford's name or emblems. Exceptions to this policy may be granted by the Vice President for Business Affairs and CFO. Advertising does not include mentioning the name of third parties that are co-sponsoring events with Stanford.

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4. Implementation Guidelines

a. Departments accepting card or payment accounts are responsible for complying with Payment Card Industry Data Security Standards (PCI DSS) and all card brand rules and regulations if applicable, or using secure standard financial industry practices, if PCI DSS standards are not applicable.

b. Information about requesting a merchant account for payment acceptance is available at the Office of the Treasurer's website. Departments must work with representatives from the Treasurer's Office and the Procurement Office to establish and manage card and payment account acceptance and processing.

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5. Third Party Vendors/Service Providers Operating on Stanford's Campus

Third party vendors and service providers operating on Stanford's campus must handle data and other information generated from financial transactions involving the Stanford community ("Data") according to the Third Party Security Requirements listed on the Information Security Office’s website.

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6. Sources of More Information

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3.4.3 Student Billing

Last updated on:
06/15/2011
Formerly Known As Policy Number: 
34.6

To define the categories of fees and charges to the University's student billing and how items are added.

Authority: 

Approved by the Vice President for Business Affairs & Chief Financial Officer and the Vice Provost for Budget & Auxiliaries Management

Applicability: 

All matriculated students including undergraduate, graduate, and the professional schools of Law, Medical, and Graduate School of Business.

Responsibility: 

The Board of Trustees sets tuition, room and board rates. See section 2.a(2) of Guide Memo 3.1.2: University Funds.

The Vice Provost for Budget & Auxiliaries Management approves the Health Insurance, Campus Health Service Fee, Telecommunications Fee, and the Document Fees.

ASSU fees are approved by the Vice Provost for Student Affairs on behalf of the President.

All other fee categories are approved by the Student Financial Policy Advisory Committee. Members of the Student Financial Policy Advisory Committee include the Senior Associate Vice President for Finance, Controller, Associate Vice Provost for Student Affairs and University Registrar, Vice Provost for Student Affairs, Vice Provost for Undergraduate Education, Director of Financial Aid, Senior Associate Vice Provost for Residential & Dining Enterprises, Vice Provost for Graduate Education, and Director of Student Financial Services.

The Student Financial Services Office is responsible for managing the billing and collection of tuition and fees from students.

1. Mandatory Fees

Definition: Mandatory fees are required for all students or for an identifiable population of students. Categories of mandatory fees include:

MANDATORY FEES

Category Responsibility for Charging the Item
Tuition Office of the University Registrar
Room Residential & Dining Enterprises
Board Residential & Dining Enterprises
Row Houses Board Residential & Dining Enterprises
Health Insurance Vaden Health Center
Campus Health Service Fee Vaden Health Center
Telecommunications Fee IT Services/Residential Computing
Documents Fees Office of the University Registrar
ASSU Fees Associated Students of Stanford University
Course Materials Fees Academic Dean of Department
P.O. Boxes: Freshmen Student Services Center

 

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2. Voluntary Charges

Definition: Voluntary charges are not mandated and the students elect to have these charges. Categories of voluntary charges include:

VOLUNTARY CHARGES

Category Responsibility for Charging the Item
Cardinal Dollars Residential & Dining Enterprises
IT Services (in-room Cable TV, software purchases, etc.) IT Services
P.O. Box rentals (non-Freshmen) Student Services Center
Stanford Card Purchases (bookstore supplies, printing, copying, etc.) Student Financial Services on behalf of merchants
International mailing and shipping fee Bechtel International Center

 

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3. Penalties

Definition: Penalties are assessed to students who fail to comply with policy and guidelines. Categories of penalties include:

PENALTIES

Category Responsibility for Assessing the Penalty
Housing room damage Residential & Dining Enterprises
Late fees for late payment of University bill Student Financial Services
Late fees for late submission of study list Office of the University Registrar
Network reconnection fee (DMCA violation) Information Security Office
Student ID Card replacement Student Services Center

 

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4. Adding Fees to the University Bill

Process: To request an item to the University bill, the Dean or Director of the requesting department will complete a service request document and submit it to the Student Financial Services.

The Student Financial Services office will review the request and make a recommendation to the Student Financial Policy Advisory Committee (SFPAC). Once approved by the SFPAC, Student Financial Services will work with the requesting department to place the item on the bill. This will include developing and implementing appropriate internal controls and processes for the appropriate funds transfers for the billable item.

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3.5.1 Financial Irregularities

Last updated on:
06/28/2018
Formerly Known As Policy Number: 
15.4

Procedures to follow when a suspicion or discovery of financial irregularities arise. Some common types of financial irregularities are corruption (e.g., bribery, kickbacks, bid riggings, etc.), conflicts of interest (e.g., sale and purchase schemes, etc.) and asset misappropriation involving cash, inventory or other University assets. Examples of asset misappropriation can include the following:

  • theft of cash
  • the use of a University issued credit card or the expense reimbursement system to make personal purchases
  • the directing of University resources such as supplies, inventory or labor to outside organizations
  • the directing of University revenues (e.g., event ticket proceeds, research funding, etc.) to outside organizations

Departments must immediately notify the Office of the Chief Risk Officer or the Compliance and Ethics Helpline of suspected financial irregularities. Departments should not initiate an investigation. Departments should not discuss, interview or confront individuals about the suspected financial irregularity. Departments should not initiate any disciplinary actions without specific direction from the Office of General Counsel, or the Office of the Chief Risk Officer.

Authority: 

Approved by the Vice President for Business Affairs and Chief Financial Officer.

1. Notification

The department where the alleged financial irregularity is suspected or discovered must immediately notify the Office of the Chief Risk Officer or the Compliance and Ethics helpline, at (650)-721-2667 or helpline.stanford.edu. Preliminary research will be conducted to determine if an investigation is warranted. In general, there must be an adequate basis for suspecting a possible illegal or improper act and sufficient information available to conduct an investigation.

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2. Investigation Process

When warranted by information obtained during preliminary research, the Office of the Chief Risk Officer will commence a fact-finding investigation into the suspected financial irregularity. Depending on the circumstances, the Office of the General Counsel may decide to direct the investigation. If an investigation is commenced, the Office of the General Counsel, the Chief Financial Officer, and all appropriate stakeholders will be notified. These may include representatives from the following offices:

  • Department where the alleged financial irregularity is suspected or discovered, unless the local senior management is alleged to be involved or there is concern that informing local management could compromise the outcome of the investigation
  • Financial Management Services, including the Controller's Office, Office of the Treasurer, Procurement, Global Services, and Financial Management Consulting and Support
  • University Human Resources
  • Student Affairs
  • Dean's, Vice Provost's or Vice President's Office to which the department reports
  • Provost's Office
  • Department of Public Safety (if the report involves allegations of criminal activity)

The Office of the Chief Risk Officer will plan and coordinate the investigation and will consult with the Office of the General Counsel as appropriate. In most cases, a report will be provided to the appropriate University office(s), which summarizes findings on the alleged financial irregularity and makes recommendations for improvement of related internal controls.

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3.6.1 Bank Accounts

Last updated on:
08/31/2016
Authority: 

Approved by the Senior Associate Vice President for Finance.

Applicability: 

This policy applies to all academic and administrative units of the University operating under its tax identification number (TIN), and affiliated foreign domiciled entities.

Policy Statement: 

The University must comply with federal, state, and foreign regulations concerning banking activities. Failure to comply with these regulations may result in penalties, fines, or reputational damage to the University. This guide memo governs the establishment, maintenance and closure of University domestic and foreign bank accounts.

1. Authority

Opening, maintaining and closing accounts is restricted to authorized staff members who have specific designated authority. Use of the University’s name or TIN to establish a bank account by personnel other than authorized staff is prohibited.

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2. Sources of More Information

Further guidance relating to the procedures and internal controls required to ensure prudent management of University assets held in bank accounts, and associated regulatory compliance, is outlined on the Office of Treasurer’s website.

U.S. Tax Compliance, W-8, W-9 and U.S. Treasury Foreign Bank Account Reporting are the responsibility of the Controller’s Office. Visit the FMS Gateway to Financial Activities website and click on the Tax Compliance page for details.

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3.7.1 Establishment and Governance of Legal Entities

Last updated on:
09/28/2017
Authority: 

Vice President and General Counsel, and the Vice President for Business Affairs and Chief Financial Officer

Applicability: 

To facilitate compliance with the responsibilities discussed above, this policy sets forth requirements for the creation, acquisition, disposition, and termination of legal entities affiliated with Stanford. 

In addition to the requirements set forth below, the Office of the General Counsel and Financial Management Services may assist with the ongoing maintenance of legal entities affiliated with Stanford.

 

Stanford University will, on occasion, create or acquire a legal entity in furtherance of the university’s mission. These legal entities can serve many purposes, including the conduct of operations critical to the university (such as support of business registrations in countries outside of the United States). They also carry certain responsibilities, including organizational governance, financial controls, risk management, and government filings.

This memo addresses the limited circumstances when a legal entity may be created, acquired, disposed of, or terminated by Stanford. This policy does not apply to investment entities or those entities received via donor gift, which are subject to other relevant policies and guidelines of the Stanford Management Company and the Office of Development, as applicable.

As used in this policy, the term “legal entity” includes an organization recognized as separate from its owners by the relevant taxing authority or is otherwise recognized as having legal standing under the applicable laws. Examples of a legal entity include a corporation (for-profit or not-for-profit), limited liability company, partnership, unincorporated association, or trust. A legal entity may be formed within or outside the United States.

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A legal entity affiliated with Stanford may be created, acquired, disposed of, or terminated only with the approval of both the Office of the General Counsel and Financial Management Services, per the procedure below. The university's individual schools and other operating units cannot take independent action with respect to legal entities. Stanford employees contemplating the creation, acquisition, disposition or termination of an affiliated legal entity should contact the Office of the General Counsel, which will provide advice on the approach best suited to support the programmatic objective. Registration and maintenance of a legal entity over its lifetime can be both time consuming and costly. Other alternatives may be more expedient and compatible with the goals of shorter term academic activities, such as a contractual arrangement with a local institution or seeking an exemption from registration, if possible.  

In the event the General Counsel and the Senior Associate Vice President for Finance determine that it is necessary to take one of the above actions with respect to a legal entity, the General Counsel’s Office will provide guidance on the process. The department or school sponsoring the legal entity will be responsible for covering any costs arising from outside counsel and other agents that must be retained by the university to accomplish the requested action. In the event an entity is created or acquired, additional procedures will need to be established and followed by the sponsor to ensure the ongoing governance and maintenance of the entity.

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