This Guide Memo outlines the roles and responsibilities of various University officers and organizations in managing the University's financial assets.
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.
The Board of Trustees has assigned responsibility to the President for the management of the University's business activities. For more information, see Guide Memo 1.2.1: University Organization.
b. University Officers
The President has delegated responsibility to individual University officers for management of financial assets within their purview. See Guide Memo 1.9.1: Signature and Financial Approval Authority and Guide Memo 3.2.1: Authorizing Expenditures for details of the framework governing assignment of responsibility to individuals throughout the University. The framework is designed to provide the appropriate oversight, accountability and transparency to ensure that commitments of University resources are executed appropriately and in accord with applicable laws, regulations and University policies. University officers also exercise responsibility for financial management decisions through the University's governance structure, which is described in Guide Memo 1.2.1: University Organization, and accompanying organization charts.
c. Schools and Departments
Schools and departments are responsible for ensuring that expenditures are (1) reasonable and necessary; (2) consistent with established university policies and practices applicable to the work of the university, including instruction, research, and public service; and (3) consistent with sponsor or donor expenditure restrictions. Individuals with a delegated financial approval role must complete mandatory training prior to approving transactions; see Guide Memo 3.2.1: Authorizing Expenditures. See Fingate for the training information and requirements that must be completed to access systems that facilitate financial transaction approval. For more information, refer to Financial Systems and Reporting Authority on the Fingate website.
d. Office of the Vice President for Business Affairs and Chief Financial Officer
Business Affairs, led by the Vice President for Business Affairs and Chief Financial Officer, plays a central role in assuring that the Trustees meet their fiduciary responsibility to donors, government officials, employees, students, and the general public. For more information on Business Affairs organization and responsibilities, see the Office of the Business Affairs and Chief Financial Officer website.
(1) Financial Management Services (FMS)
Financial Management Services (FMS) establishes and evolves the university’s financial infrastructure to effectively balance controls with operational efficiency. Layered upon this is oversight and monitoring of compliance, financial and operating risks. In addition, FMS serves as a liaison to the hospitals and the Stanford Linear Accelerator Center (SLAC). FMS exercises legal and fiduciary responsibility over funds entrusted to the University by maintaining systems of internal control and financial reporting, and supports decision making by providing financial information and consulting services. More information about FMS can be found on the Fingate website.
(2) Research Administration
The Office of Research Administration (ORA) and its Office of Sponsored Research (OSR) is authorized to commit the University to the legal terms and conditions of grant or contract agreements for sponsored projects, including research related agreements (e.g., data use agreements). OSR also provides financial post-award services for sponsored awards, such as establishing accounts, preparation of financial reports, billing and collections, and close out. In addition, the Property Management Office (PMO) of ORA is responsible for property (capital assets) administration and operating the University surplus sales and reuse programs. The Cost and Management Analysis (CMA) group at ORA determines, proposes, and negotiates the Facilities and Administrative Cost rates and Fringe Benefits rates on behalf of the university. Information on rates is available on the ORA website. ORA’s Research Administration Policy and Compliance (RAPC) group provides Indirect Cost Burdening setup and support, and financial compliance oversight for sponsored award-related matters. Information about ORA is online.
(3) University IT
University IT (UIT) provides the primary IT infrastructure, communications technologies, collaboration tools, and business information systems that support the university. UIT also provides centralized IT support and call center services. The Information Security Office resides jointly in UIT and the Office of the Chief Risk Officer. The Stanford Research Computing Center provides high-performance computing systems and is a joint effort of University IT and the Dean of Research. More information is on the UIT website.
(4) Office of the Chief Risk Officer
The Office of the Chief Risk Officer (OCRO) includes Internal Audit, Ethics and Compliance, Enterprise Risk Management, Risk Management, Privacy and Information Security. OCRO provides independent, objective assurance and advisory services designed to add value and improve the operations of Stanford University and its related organizations. OCRO helps these organizations accomplish their objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. More information is on the OCRO website.
e. Land, Buildings and Real Estate (LBRE)
The role of LBRE is to provide and sustain the facilities and infrastructure in support of the academic campus. LBRE also manages the real estate that the Board of Trustees has designated for the production of income (e.g., Stanford Shopping Center, Stanford Research Park, certain commercial properties, housing developments, and gift real estate). More information is on the LBRE website.
f. Office of Development
The Office of Development solicits and processes gifts to the University. For more information, see Chapter 4: Giving to Stanford.
g. Stanford Management Company
The Stanford Management Company (SMC) is the office within Stanford that invests financial assets to provide long-term support to the University including the Merged Pool and the Intermediate Pool. More information is on the SMC website.
h. Office of the General Counsel
The Office of the General Counsel provides legal advice to the Board of Trustees, the University and its officers concerning the University's legal rights and duties in its financial dealings. More information is on the OGC website.
At fiscal yearend, Financial Management Services closes the accounting records for the year and prepares reports on the year's financial activity.
a. Annual Audit
To assure that the University's assets are protected, and that transactions and events are recorded properly, an independent auditor selected by the Board of Trustees audits the annual financial statements in accordance with generally accepted auditing standards. The auditor's procedures include obtaining an understanding of University systems, procedures and internal accounting controls, and performing tests and other auditing procedures to provide reasonable assurance that the financial statements neither are materially misleading nor contain material errors.
b. Annual Report
Financial Management Services publishes the auditor's report, the audited summary statements and accompanying notes to the financial statements as the University's Annual Financial Report. The report can be downloaded from the university’s bondholder information website.
This Guide Memo describes the University's funds and budgets.
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.
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
(2) External Reporting Definitions
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).
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.
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:
Annual Withdrawal Limits:
Once the “lock-up” period is met, FFE can be withdrawn under the following conditions:
Withdrawals are also subject to the following approval authority:
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:
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.
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.
The Intermediate Pool is open to the following types of shareholders:
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.
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.
(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.
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.
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:
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.
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.
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.
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 here.
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:
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.
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.
A suballocation of a grant or contract may be set up to handle accounting for:
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
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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:
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.
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.
This Guide Memo covers time requirements for retaining financial records and security requirements for disposing of old records.
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.
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.
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.
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:
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.
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.
This memo describes the limited circumstances when a charitable donation may be made by Stanford to an outside organization.
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 US charitable institutions as donations is highly restricted. When considering support of another charitable organization, Stanford personnel must first consider whether the objective should 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. Coordinate with the Office of Community Engagement to assess potential collaboration opportunities, as needed.
All approved donations from Stanford are limited to US charities with current Internal Revenue Code (IRC) Section 501(c)(3) status. No donor funds or sponsor-restricted funds may be used in support of other charitable organizations.
a. A donation may only be made at the direction of the President, the Provost, the Vice President for Business Affairs and Chief Financial Officer, or the Chief External Relations Officer.
b. A donation may be made to the charity of the 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 and approved by senior management of the Office of Development.
Exceptions to the policy are rare. The Office of Community Engagement (OCE) and the Office of Government Affairs (OGA), under the direction of the Chief External Relations Officer and in close coordination with related offices, will respond to inquiries about exceptions and guide the university’s response to external community requests.
Following review, requests for exception must be approved by the Vice President for Business Affairs and Chief Financial Officer or the Chief External Relations 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 and proof of its tax-exempt status.
The Offices of the Vice President for Business Affairs and Chief Financial Officer and the Chief External Relations Officer will annually create a list of such donations for each fiscal year, including the name, address, Federal Employer Identification Number and Section of the Internal Revenue Code under which the organization is granted tax-exemption (typically IRC Section 501 (c)(3)), and the amount of cash or extent of property being donated for any recipient of more than $5,000 from the university within that year. A copy of this list is to be forwarded to the Tax Department within Financial Management Services to include this information on Stanford’s annual Form 990 filing with the Internal Revenue Service (IRS).
This Guide Memo describes responsibilities for the management of funds in University Projects, Tasks and Awards (PTAs).
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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:
Review of transactions is evidenced by a manual or electronic signature in the appropriate field of the form.
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.
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.
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.
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).
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.
PROJECT TASK MANAGER’S
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.
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.
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.
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:
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.
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.
This policy applies to all Stanford employees responsible for accounting transactions.
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:
Online cost transfer documentation must clearly show:
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.
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.
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." See Fingate for the training information and requirements that must be completed to get access to the Labor Distribution system within Oracle Financials.
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.
This Guide Memo sets out policies and procedures for expense allocations and salary distribution offsets, which are a form of cost transfer.
This policy applies to all Stanford employees responsible for accounting transactions.
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.
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.
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:
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.
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.
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:
Online signature of the person responsible for the PTA to be debited is required. Signature for the PTA to be credited is not required.
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.
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:
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.
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.
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.
This policy applies to restricted funds and designated funds effective September 1, 2005.
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.
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.
The infrastructure charge is applied at the time the funds are expended or transferred. All expenditure types are subject to the charge.
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.
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.
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.
The ISC Implementation Guide provides additional detail about how the revised ISC policy is implemented. The guide can be found at the DoResearch website.
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.
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.
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).
b. Expendable Funds Pool
The EFP holds the following types of expendable funds:
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:
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:
The allocation shall vary between 0% and 5.5% of the zero-interest account average monthly balances during the prior fiscal year:
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”).
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."
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:
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:
This Guide Memo describes revenue recognition policy.
This policy applies to auxiliaries, service centers and sponsored research.
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.
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
Revenue Recognition - Sponsored Research
This policy provides guidelines on acceptance and processing of credit and debit card, account number, or third party account numbers at Stanford.
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.
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.
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.
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 Provider
Departments must use a Stanford authorized payment application, payment mechanism, and point of sale terminal hardware vendor (if applicable). See the Gateway to Financial Activities (Fingate) website.
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:
(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.
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.
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.
To define the categories of fees and charges to the University's student billing and how items are added.
All matriculated students including undergraduate, graduate, and the professional schools of Law, Medical, and Graduate School of Business.
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 Dean or Director as delegated by the Provost.
The Student Financial Services Office is responsible for managing the billing and collection of tuition and fees from students, with the exception of the Honors Cooperative Program (HCP) students.
Definition: Mandatory fees are required for all students or for an identifiable population of students. Categories of mandatory fees include:
|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||University IT/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|
Definition: Voluntary charges are not mandated and the students elect to have these charges. Categories of voluntary charges include:
|Category||Responsibility for Charging the Item|
|Cardinal Dollars||Residential & Dining Enterprises|
|IT Services (in-room Cable TV, software purchases, etc.)||University IT|
|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|
Definition: Penalties are assessed to students who fail to comply with policy and guidelines. Categories of penalties include:
|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||University ID Card Office|
Process: To request an item to the University bill, the Dean or Director of the requesting department will complete a Tuition Request Form or New Fee Request Form and submit it to the Student Financial Services.
The Student Financial Services office will review the request and ensure the tuition or fee is reasonable and appropriately approved by the approving authority and/or owning organization, as well as develop and implement appropriate internal controls and processes for the related funds transfers for the billable item.
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:
Departments must immediately notify the Office of the Chief Risk Officer or the Ethics and Compliance 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.
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.
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:
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.
This policy applies to all academic and administrative units of the University operating under its tax identification number (TIN), and affiliated foreign domiciled entities.
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.
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.
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.
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.
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.
This Guide Memo section outlines the policy and responsibilities for reconciling account balances in the University’s general ledger and the Statement of Financial Position.
This policy applies to all Stanford departments and employees responsible for reconciling account balances in the University’s general ledger and the Statement of Financial Position.
See also sections 3.1, Funds Management and 18.104.22.168c, Expenditures of Restricted Funds – Quarterly Certification of Changes of the Administrative Guide. These sections cover accounting for University fund balances and reconciling and attesting to expenditure statements for sponsored projects, respectively.
Account balance reconciliations provide reasonable assurance that account balances on the University’s Statement of Financial Position are accurate, complete and valid. Together the account balance reconciliations and account balance attestations are key internal controls that provide reasonable assurance around the following financial statement assertions:
The Statement of Financial Position is a financial statement that reports the balances of the University’s assets, liabilities and net assets at a point in time. The Statement of Financial Position is also known as a Balance Sheet. Additional information about the Statement for Financial Position is available in the Balance Sheet Account Reconciliations section of the Gateway to Financial Activities website.
An account balance on the Statement of Financial Position represents the balance of an asset or liability at a point in time, such as at the end of a month, quarter or year.
An account balance reconciliation is the comparison of one or more asset or liability account balances in the general ledger to another, often independent or more detailed source of financial data, such as a bank statement, a subledger or another system. The differences between the account balance and the other source of financial data are reconciling items. Reconciling items may be caused by timing differences or errors, such as general ledger errors, bank errors, or subledger system errors that should be resolved in a timely manner.
At least quarterly, each University department with an asset or liability account balance in the general ledger is responsible for designating individuals who are responsible for reconciling and reviewing those balances on all ledgers (typically within 30 days of general ledger close).
Multiple account balances that are of a similar nature may be reconciled together in one reconciliation, as needed. For some object codes there may be multiple account balances that are the responsibility of different departments. Each department is individually responsible for reconciling its respective balance.
In addition to quarterly reconciliations, some account balances must be reconciled and reviewed monthly. The University Controller’s Office designates reconciliation frequency for account balances based on multiple factors including risk, materiality and history.
Individuals responsible for reconciling and reviewing cash accounts should also refer to Guide Memo 3.6.1: Bank Accounts and the Office of the Treasurer’s website for additional guidance on bank reconciliations.
Each University department with an account balance on the Statement of Financial Position is responsible for:
Account balance reconciliation best practices and other resources are available in the Balance Sheet Account Reconciliations section of the Gateway to Financial Activities website.
If transactional errors are discovered during the account reconciliation, the department is responsible for their correction.
Information about how to correct miscoded transactions is available in the Balance Sheet Account Reconciliations section of the Gateway to Financial Activities website.
University departments are responsible for implementing and maintaining adequate reconciliation procedures, including reconciliation approval and segregation of duties. Refer to section d. Reconciliation Roles below for additional information about reconciliation segregation of duties.
University departments are responsible for adhering to department-specific reconciliation policies and procedures. It is recommended that University departments annually review all department-specific reconciliation policies and procedures for accuracy and validity.
University departments are responsible for adhering to all University policies and procedures during the reconciliation process. This includes but is not limited to adherence to University policies and procedures regarding:
University departments are responsible for establishing appropriate segregation of duties for account balance reconciliations. Segregation of duties is an internal control that helps safeguard University resources by separating responsibility for a task. The same individual should not prepare and also review a reconciliation. Additionally, University departments are responsible for segregating the reconciliation preparation and activity recording duties. The same individual should not record transactional activity and also reconcile the account balance.
Reconciliation preparation and approval should only be performed by individuals with knowledge of the account balance and an understanding of the reconciliation purpose. Reconciliation reviewers are responsible for ensuring that reconciliation preparers are adequately trained and possess the skill, experience and competence for preparing the reconciliation.
Reconciliation responsibilities are designated by role in the Reconciliation Roles and Responsibilities Matrix in the Balance Sheet Account Reconciliations section of the Gateway to Financial Activities website.
The University Controller’s Office periodically conducts independent reviews of account balance reconciliations. It is expected that reconciliations will be completed prior to the date of request (typically within 30 days of general ledger close) and provided to the Controller’s Office upon request as needed during an audit or other financial statement review. Information about the Reconciliation Review Program is available in the Balance Sheet Account Reconciliations section of the Gateway to Financial Activities website.
This Guide Memo section outlines the policy and responsibilities for attesting to account balances in the University’s general ledger and the Statement of Financial Position.
This policy applies to all Stanford departments and employees responsible for attesting to account balances in the University’s general ledger and the Statement of Financial Position.
See also sections 3.1, Funds Management and 22.214.171.124c, Expenditures of Restricted Funds – Quarterly Certification of Changes of the Stanford Administrative Guide. These sections cover accounting for University fund balances and reconciling and attesting to expenditure statements for sponsored projects, respectively.
Account balance attestations serve as evidence that account balances in the general ledger and the Statement of Financial Position have been reconciled in a timely manner. Together the account balance reconciliations and account balance attestations are key internal controls that provide reasonable assurance around the following financial statement assertions:
Account Balance Attestation:
Account balance attestations are forms that are signed by Attestation Owners, University finance officials and staff that have been designated by the University Controller's Office, to verify that all conditions on the Balance Sheet Reconciliation Review Attestation form have been met for account balances under their authority.
The Balance Sheet Reconciliation Review Attestation form is available in the Balance Sheet Account Reconciliations section of the Gateway to Financial Activities website.
Attestation Owners are responsible for attesting to all statements on the Balance Sheet Reconciliation Review Attestation form, including the statement that the account balances under their authority have been reconciled and reviewed at least quarterly.
Attestation Owners are responsible for ensuring that attestation forms are submitted to the University Controller’s Office on time. The University Controller's Office determines and communicates the timing of attestation submissions.
Information about attestation submission timing is available in the Balance Sheet Account Reconciliations section of the Gateway to Financial Activities website.
Account balance attestations should only be signed by individuals with reconciliation approval authority, knowledge of the account and an understanding of the reconciliation purpose.
University departments are responsible for communicating changes in attestation ownership to the Controller’s Office on a timely basis.
Information about how to communicate a change in attestation ownership is available in the Balance Sheet Account Reconciliations section of the Gateway to Financial Activities website.