1. Business Services Account Lifecycle: The Beginning Session 1 Account Establishment November 2008 Policy Training Program for the Lifecycle of an Account

2. Business Services 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

3. Business Services Course Content 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 Section 2 – Payroll Set up –Tracking Effort and Impact on accounts –Summer Payroll Processes Section 3 – Cost Sharing –Documentation and Tracking –Managing Cost Sharing

4. Business Services 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. Course Objectives

5. Business Services 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/AccountMana gementGuidelines.pdf

6. Business Services 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 Account Set up

7. Business Services 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)

8. Business Services 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 Account Set up

9. Business Services 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 Account Set up

10. Business Services What funds are similar? –Budgeted Funds –Income Producing –Sponsored Programs –Voluntary Support Accounting Services (Gifts) Sponsored Program Account Set up

11. Business Services 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/ FinalFundListing.xlshttps://www.purdue.edu/account/BPM/OnePurdue/ FinalFundListing.xls Account Set up

12. Business Services 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 Account Set up

13. Business Services 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/GMAccountSetupChecklist.xls Account Set up

14. Business Services Why is it important to establish funds timely? –Consistent charging of costs –Prompt deposit of future gifts Account Set up

15. Business Services 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 department’s general gift account. What action should you take? What fund do you think should receive the check?

16. Business Services 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.

17. Business Services 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?

18. Business Services 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.

19. Business Services 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?

20. Business Services 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.

21. Business Services 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?

22. Business Services 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.

23. Business Services 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 company’s accounts payable department to determine the purpose of the check. The company sent copies of invoices that the Professor had submitted to them.

24. Business Services 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.

25. Business Services 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, F&A 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.

26. Business Services 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 PAR’s for sponsored research accounts

27. Business Services 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

28. Business Services 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

29. Business Services Cost Sharing Why must we track cost share commitments? Purdue’s cost share policy Cost sharing must be verifiable and auditable Sponsor reporting requirements Determine availability of funds within your department

30. Business Services 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

31. Business Services 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 University’s facilities and administrative cost proposal

32. Business Services Cost Sharing Why are there separate cost sharing IO’s set up at the beginning of the grant? To verify that the charges are auditable within the University’s accounting system Multiple IO’s may be established for reporting purposes and to expend funds from multiple departments

33. Business Services 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?

34. Business Services 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?

35. Business Services 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.

36. Business Services Business@Purdue https://www2.itap.purdue.edu/bs/BPP/index.cf m https://www2.itap.purdue.edu/bs/BPP/index.cf m Accounting http://www.purdue.edu/account/http://www.purdue.edu/account/ Sponsored Programs http://www.purdue.edu/sps/ http://www.purdue.edu/sps/ NCURA https://www.ncura.edu/content/https://www.ncura.edu/content/ Resources