Account Lifecycle: The Beginning

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Policy Training Program for the Lifecycle of an
Account
Account Lifecycle The Beginning Session
1 Account Establishment November 2008
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Team Members

• Mary Bell, Computer Science
• Stacy Brown, Discovery Park
• Angie Delworth, Consumer and Family Sciences
• Christy Haddock, Vice President for Research
• Samantha Reece, Physical Facilities Business
  Office
• Katie Stair, Budget and Fiscal Planning
• Patti Vostry, Electrical and Computer Engineering
• Becky White, Sponsored Program Services

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Course Content

• Section 2 Payroll Set up
• Tracking Effort and Impact on accounts
• Summer Payroll Processes
• Section 3 Cost Sharing
• Documentation and Tracking
• Managing Cost Sharing

• Section 1 - Account Set up
• Different fund types
• Unrestricted vs Restricted
• Fund Establishment processes
• Similarities between funds
• Fund Attributes
• Key Aspects of Account/ Fund Establishment

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Course Objectives

• Provide an understanding of issues and policies
  guiding classification of accounts. A focus on
  the 12 highest levels of accounts will help
  participants
• Identify commonalities in sources and
  establishment of the funds and overall account
  management issues.
• Identify differences in the sources of funds,
  establishment of the funds and overall account
  management.
• Develop an understanding of the types of source
  documentation
• Discuss activities associated with new accounts
  such as payroll set up and sponsored program cost
  sharing.

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Introduction All Funds

• What are the twelve high level types of funds in
  the Chart of Accounts?
• Unrestricted / Restricted Funds
• Twelve high level funds at Purdue
• http//www.purdue.edu/comptrlr/pdf/AccountManageme
  ntGuidelines.pdf

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Account Set up

• Why do we have different funds?
• Purdue practices fund accounting
• Factors that affect classification
• Board of Trustees (BOT) priorities
• Donor specifications
• Regulations, restrictions, or limitations set by
  sources
• Reporting requirements and compliance guidelines

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What are the different funds?

• Unrestricted Funds
• General Funds
• Income Producing
• Auxiliary

• Restricted Funds
• State Line / Federal Appropriated
• Sponsored Programs
• Voluntary Support
• Student Aid
• Endowments
• Construction (Plant)

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Account Set up

• Why would we want to set up a new fund and why
  are there different processes?
• Income Producing
• Royalty, Continuing Education, Residuals
• Established by area responsible
• General Funds
• Rate Activities
• Sponsored Programs

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Account Set up

• Why would we want to set up a new fund and why
  are there different processes?
• Gift Acceptance Policy
• Voluntary Support
• Accounting Services (Gifts)
• Sponsored Program

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Account Set up

• What funds are similar?
• Budgeted Funds
• Income Producing
• Sponsored Programs
• Voluntary Support
• Accounting Services (Gifts)
• Sponsored Program

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Account Set up

• What can we learn from the Accounting Services
  fund listing that will help us understand the
  fund groupings and better practice account
  management?
• https//www.purdue.edu/account/BPM/OnePurdue/Final
  FundListing.xls

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Account Set up

• Why should we review and maintain documentation
  when a staff/faculty member brings a check to the
  business office?
• Ensure funds are appropriately classified
• Stewardship of funds
• Record Retention best practices

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Account Set up

• Why should you review your accounts once they
  have been established?
• SRM Workflow
• Attributes established correctly
• GM Account Setup Checklist
• http//www.purdue.edu/sps/xls/GMAccountSetupCheckl
  ist.xls

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Account Set up

• Why is it important to establish funds timely?
• Consistent charging of costs
• Prompt deposit of future gifts

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Example 1 - Situation

• A department receives a check and a letter that
  indicates the donor wants to support a
  scholarship for undergraduates in your
  department. The administrative assistant who
  brings it to the business office states that it
  should be deposited in the departments general
  gift account. What action should you take? What
  fund do you think should receive the check?

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Example 1 Answer

• Department should clarify with the administrative
  assistant that since the letter indicates the
  funds are specifically designated for a
  scholarship, the funds should be deposited in
  either a unique scholarship account (if this will
  become an annual scholarship) or a general
  department scholarship account. This will allow
  for better stewardship of the funds.

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Example 2 - Situation

• A recharge activity in your department is
  overdrafted. The department head would like to
  subsidize the activity with funds in their
  general departmental gift account. Is that
  allowable?

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Example 2 Answer

• Yes, this is allowable. Since the funds held
  in the gift account were given to the department
  for unrestricted use, the department head can
  allocate them for this purpose.

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Example 3 - Situation

• A department forwards an FMBB that is
  transferring funds from their general fund
  account into a sponsored program account (the
  external funds/4XX) that is over drafted. The
  rationale is that both funds are budgeted and the
  department wishes to use general funds to cover
  the overdraft. Is this an allowable transfer?

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Example 3 Answer

• No. The correct method to resolve the
  overdraft is to move the expenses off of the
  sponsored program account and onto the general
  fund as voluntary cost sharing.

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Example 4 Situation

• Faculty member brought a check into the
  business office said it was voluntary support.
  After he dropped it off, the business office
  noticed that a check stub was attached and that
  it referenced an invoice number.
• Is this check voluntary support or contract
  support?
• What questions can be asked and/or what
  resources can be utilized to assist in the
  determination process?

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Example 4 Investigation

• There is no right or wrong way to investigate
  this scenario.
• Business office staff should consider past
  practices and experiences in their department.
• Consult with the department head on an
  appropriate course of action.

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Example 4 Investigation

• The business office verified with the Development
  Office that they were not expecting a gift from
  that company.
• The business office contacted the companys
  accounts payable department to determine the
  purpose of the check. The company sent copies of
  invoices that the Professor had submitted to
  them.

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Example 4 Investigation Continued

• Through discussions with the company, it was
  determined that the faculty member had been
  invoicing the company for services.
• The company disregarded that request issued 1
  check made out to Purdue Univ. for 16,000,
  referencing three different invoice numbers.

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Example 4 Investigation Continued

• Since services were being rendered, this money
  did not meet the voluntary support criteria.
• In collaboration with Sponsored Program Services,
  the business office worked with the professor to
  explain the issues associated with providing a
  testing service using university equipment, FA
  policies outside consulting terms.
• The business office worked with the professor to
  prepare and formally submit a retroactive
  proposal which generated a contract support
  agreement.

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Payroll Set up

• Why is it important to review payroll information
  with the appropriate Business Office person
  responsible for the account?
• All staff can ensure that payroll is properly
  posted and recorded
• PARs for sponsored research accounts

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Payroll Set up

• Why is it important to communicate deviations in
  effort?
• Effort is planned for individuals
• Sponsor budget restrictions
• Potential Fiscal Impacts
• Bi-weekly finishes project and PI directs that
  their effort should now be charged to another
  project
• Recharge activity is established and the effort
  of departmental staff changes
• Sponsored program account expires

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Payroll Set up

• Why is it important to review the summer payroll
  calendar for AY staff (i.e. faculty, staff and
  graduate students)?
• Confirm summer pay schedules
• Verify funds are available
• Follow policies that govern summer salary
• NSF 2/9, NIH salary cap, Career awards, Provost
  policies

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Cost Sharing

• Why must we track cost share commitments?
• Purdues cost share policy
• Cost sharing must be verifiable and auditable
• Sponsor reporting requirements
• Determine availability of funds within your
  department

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Cost Sharing

• Why do we document cost share commitments not
  captured in the University accounting system such
  as donated items, volunteer services or from
  non-federal restricted funds?
• Documented annually and at closing
• Memo must provide sufficient documentation and PI
  certification
• Cost sharing that is donated or volunteer
  services will be valued and documented

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Cost Sharing

• Why is it necessary to track voluntary cost
  sharing when no effort for the Principal
  Investigator is included in the budget to the
  sponsor?
• Faculty effort must be appropriately classified
  for the purpose of the Universitys facilities
  and administrative cost proposal

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Cost Sharing

• Why are there separate cost sharing IOs set up
  at the beginning of the grant?
• To verify that the charges are auditable within
  the Universitys accounting system
• Multiple IOs may be established for reporting
  purposes and to expend funds from multiple
  departments

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Example 5 Situation

• Situation A Form 32 / Letter of Cost Sharing
  Commitment was submitted and approved with the
  proposal. It contained AY salary for the PI as a
  cost sharing commitment from the department. The
  PI informed the Business Office that he would
  like to pay for a consultant in place of his
  salary on the cost sharing dollars. What are the
  fiscal issues associated with this request?

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Example 5 Fiscal Impacts

• Department has a fixed dollar commitment to the
  sponsor.
• Commitment included fringes from the university
  central pool.
• Faculty salary budgeted on general funds at
  budget time.
• The Head would need to approve the change as it
  increases the overall departmental cost sharing
  commitment.
• Is the scope of the project changing in any way
  by adding this consultant to the project?

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Example 5 Solution

• Fiscal impacts of the request should be addressed
  with the faculty member and, if necessary, with
  the department head.
• In this situation, the business office raised the
  concerns to the department head who determined
  that the original plan as approved on the Form 32
  should be followed.

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Resources

• Business_at_Purdue https//www2.itap.purdue.edu/bs/BP
  P/index.cfm
• Accounting http//www.purdue.edu/account/
• Sponsored Programs http//www.purdue.edu/sps/
• NCURA https//www.ncura.edu/content/