When transactions occur (items are purchased and paid for), the
actual dollars spent are recorded in your account (fund/org). In
choosing where that transaction should be recorded from an accounting
perspective, it is important to choose an account code that reflects
the true nature of the transaction. Accuracy in an account
code selection is important to the integrity of the financial data.
The financial data should be able to tell a story that reflects
what we spent to carry out our goals and objectives. As part of
our performance evaluation tool, we ask the following questions:
How did we do as compared to what we planned? How does this
inform what we should do in the future?
The definition of a budget is a quantification
of an organization’s plan. In addition to a quantified
plan, at SPU the budget represents the authority to spend. If this
is the case, our departmental budgets should reflect our operational
plan for the year. If your budget doesn’t reflect your operational
plans, take time during budget planning, or at the beginning of
the year, to tie your budget to your operational planning. The budget
in each account line (revenue or expense line) should reflect what
you plan to spend in those areas to accomplish your operational
goals. Once this is done, you have created a financial plan, a communication
tool and a performance evaluation tool. The communication plan tells
others in your area and in the controller’s office what you
are planning to do during the year. The performance tool allows
you to measure how you are actually doing as compared with your
plan, which also allows modifications as needed and provides
information for ongoing decisions. Performance reports (detail ledgers)
are available through Cognos or Finance Queries, detailing actual expenditures
as compared to the budget.
With this perspective on budgets, moving budget around during the
year within an individual departmental budget is no longer required
from a control perspective but does become important from a management
and planning perspective. If the budget is used to assess how you
are doing as compared to what you planned, then if your plans change,
your budget should reflect that change.
How does this new perspective fit into the University’s policy that budget availability requires confirmation for transactions over $2,000? While the budget is a plan and a communication tool, it also defines the amount of resources allocated to each department.
How do we bring the two closer together—the planning and
communicating functions and the constraints—to give managers
the most freedom to carry out their goals and objectives? The budget
checking process has to be at a dollar level that provides a benefit,
and the method of checking must enhance the performance evaluation
tool. To encourage this, budget checking will occur on transactions
over $2,000, and the checking will verify budget availability by
three major categories: (1) salaries and benefits, (2)
operations and (3) capital. This will reduce the
need to move budget around during the year. The methodology of planning
and monitoring creates a budget process that supports the manager’s
responsibility to plan, operate, monitor, control and communicate
to University management and leadership.
Budget Transfers (See Budget Change Request form)
Budget transfers move budget allocations from one line to another. In the purchasing process, if there is not enough budget money available within the designated range (salaries, operations and capital), a budget transfer needs to be processed before the transaction can be completed. Permanent budget transfers between designated ranges are discouraged, but if absolutely necessary they must have VP approval. For example, permanent transfers within the salary and benefit range require area VP approval, permanent transfers in and out of the salary and benefit range require area VP approval, and permanent transfers in and out of the capital range require area VP approval.
These policies are in place to ensure that individuals aren’t leaving positions open or leaving equipment needs unmet in order to fund other areas of the budget. When requesting these types of transfers, an explanation of why there is extra funding and a rationale for why the funding should be used for a different type of expenditure must be included.
Budget availability will be checked for transactions over $2,000
to create a feedback loop to departments on budget status and provide
early warning of low budget availability. Budget availability
is required before a purchase order (over $2,000) can be processed.
Departmental budgets are now segregated into three categories for
budget check purposes: (1) salary and benefits, (2) operations and
(3) capital. These categories are segregated using the following
account number ranges:
|6xxxx series accounts
7xxxx and 8xxxx series accounts, with the exception of 78xxx accounts
78xxx series accounts
Capital items are defined as items that are tangible assets, with
useful lives of greater than one year, that are not consumed (supplies
are consumed). All items that meet this definition and have a value
greater than $2,000 are included in the fixed asset inventory and
are tagged and inventoried at the end of each year. Capital items
are purchased using the account code range 78xxx.
In addition to the special account treatment related to capital purchases, the University has specific standards for furnishings and fixtures, as well as computer technology. When purchasing these items, work with Facility Procurement and Computer and Information Systems in developing specifications to meet University standards.
All contracts and agreements for goods and services processed by
SPU are required to be reviewed and approved by the assistant
vice president for finance and budget. Contracts should have
appropriate indemnification and insurance language whereby the individuals/businesses
are responsible for their own insurance and indemnify the University
(see Approved Indemnity
Language). In many cases, the contracted individuals or businesses
should also cover the liability of SPU while performing services
for and at SPU. It is not the intent of SPU’s insurance to
cover the liability of a contracted individual or business.
After review and approval, the contract will be sent back to the
person who sent it for completion. Contracts should be sent for
review well before the day the contract begins. Please allow one
month for review. After a contract is completed and executed, a
copy is sent to the risk management and insurance specialist for the University
No material (physical) gifts are allowed to be purchased for employees
by department managers from University funds. Gifts that are part
of a reward and recognition program may be purchased once the program
has been approved. In no case should University funds be used to
purchase personal gifts (birthday, anniversary, etc.).
All invoices should be sent directly to the payments department
from the vendor (and then the PD will forward the invoice to the
appropriate campus office). The payments department is responsible
for maintaining the University’s good credit rating, ensuring
any discounts are taken, and avoiding all late charges. All invoices
received are monitored for prompt payment and processing by the
Payments to Individuals
The University requires all payments to individuals, sole proprietors, partnerships, and LLC to provide an IRS form W-9. This form is mandatory even if the payment amount is below the required reporting threshold of $600.00. The Payments department will not process such payments without a W-9 in hand.
Printing and Mailing Services
University Services provides mailing, printing and convenience copying
services. These services are contracted out through IKON, Kinkos
and Copiers Northwest, respectively.
Purchase orders serve to create a contract between SPU and a
vendor. They should be used when exact specifications must
be met, and they should assure the vendor that SPU has committed
itself to paying them. A purchase order also creates an encumbrance
in the accounting system. An encumbrance is a place holder.
It informs the manager and the controller’s office that SPU
has an obligation related to a transaction that isn’t complete
yet. In keeping with this philosophy, purchase orders are most beneficial
at higher dollar levels (over $2,000) or where the required specifications
are very precise.
|Departments initiate purchase transaction directly with vendor.
||Requires a purchase order.
||Requires a purchase order with a minimum of three quotes.
||Requires a request for proposal process (or specifications
Rush Checks (See Rush
All requests for rush checks are approved by the controller and
will be ready the next day if received by the payments department
by 5 p.m. The PD provides one rush check request per department per
month. Due to the manual process required for rush checks, any additional
requests carry a $5.00 processing fee.
Sales Tax and Use Tax
Sales tax is applicable on all goods purchased within Washington
state. Use tax is applicable on goods purchased out of state. If
sales tax is not evident on purchases, the University is required
to self-assess this tax. The payments department will make the use
tax calculation and add the charge to the request for payment or
Sales tax is applicable on materials printed in Washington state.
Use tax is applicable on materials printed out of state and sent
to the University. Neither sales nor use tax is applicable on materials
printed out of state for SPU that are then distributed to states
other than Washington.
Signature Authority (See Signature Authorization form and full policy)
Management responsibility for achieving goals and objectives is
assigned to various levels in the organization. Where the management
responsibility lies, so should the budget responsibility. Once the
budget is finalized, the area manager responsible for the budget
has the authority to use the resources available to them to achieve
their goals and objectives. Typically, this authority is at the
dean and director level. As transactions occur and the payments
department produces checks to pay vendors, they need to know that
the person responsible for the budget approves the transaction.
Many transactions are handled by someone other than the dean or
director. As a result, the signature authority identifies who
can authorize expenditures and allows the dean or director to assign
some responsibility to others. This assignment of responsibility
must be communicated to the payments department so they can perform
their role. The signature authority levels are set up in an
attempt to match responsibility for area management and operations
with the dollar threshold. Therefore, all documents initiating
expenditure of University resources must be approved according to
the following schedule.
Signature Authority Thresholds
|$100,000+ with board approval of annual
operating budget, capital expenditures over $250,000,
and specific approval of construction contracts over $500,000
|VP of Business & Planning
||Up to $100,000 for institutional contracts and capital projects
||Up to $50,000
|Deans and Directors
||Up to $20,000
||Up to $2,000, if preauthorized by one of the above individuals,
the evidence of which is on file in the payments department.
Sodexo is the food service provider on campus. Employees coordinating
events on campus that require food service (catering) must grant
Sodexo the first option of providing catering. The director of
University Services must approve any exception.
Any single event with catering over $2,000 needs to have budget
pre-approval (budget check prior to finalization of the event).
When entertaining at any of the Sodexo locations on campus, the
business purpose for the entertainment must be provided at the time
of purchase. This requirement is the same for entertainment off
campus. Without a business purpose documented, the purchase becomes
taxable income to the purchaser.
Stop Payments Policy
When a check produced through the payments department is lost, a
stop payment can be placed on the check once a written statement
is made by the recipient that they will not cash the check if it
materializes. Please note: Written acknowledgement by the check
recipient is required. Here’s an example of an adequate
“I did not receive the check for invoice #123. If I later receive it, I will not cash it.”
Once the stop payment is received and acknowledged by the bank, a new check can be reissued by the PD.