701 Financial Administration Policy

701.1 Administrative Authority and Responsibility

The Senior Vice Chancellor for Finance and Business Affairs functions as the chief financial officer of the University. Subject to the approval of the Chancellor, the Senior Vice Chancellor for Finance and Business Affairs is in charge of the financial administration of the University and shall have custody and control of all its funds and securities. He/she is in charge of all the assets of the University, including physical property.

The Senior Vice Chancellor for Finance and Business Affairs is responsible for the development and implementation of all accounting records and procedures, the preparation and interpretation of all financial reports, and the internal control function. He/she is responsible for the preparation of the University budget and oversight control of the budget. He/she maintains financial records of all contract/grants and leases, compiles financial analyses, and coordinates the preparation of business and financial statistical reports.

701.2 Fiscal Accountability

Fiscal accountability for the efficient use of budgeted funds is assigned to senior administrators and department heads. For each approved annual operating budget, the Board of Trustees allocates to each department a portion of the University's current resources to be utilized to fulfill departmental responsibilities and to achieve long-range goals. The department chair is charged with the management of all budgeted funds in accordance with the guidelines set forth in this manual. Misuse or abuse of University resources is addressed in the Internal Audit section.

701.3 Fiscal Authority Required for various transactions

PURCHASE REQUISITIONS must be approved by the department chair, the Senior Vice Chancellor for Finance and Business Affairs, and/or Director of Purchasing before a purchase order may be issued. The Purchasing section will expand upon this authority level.

APPLICATION FOR OUT-OF-STATE-TRAVEL must be approved by the department chair, dean and/or vice chancellor, and/or Chancellor.

TRAVEL EXPENSE ACCOUNT VOUCHERS must be approved only by the department chair, dean, and/or vice chancellor, the Senior Vice Chancellor for Finance and Business Affairs, Controller and/or Coordinator of Accounts payable before payment may be processed.

ALL INSTITUTIONAL CONTRACTS FOR SPONSORED PROGRAMS (GRANTS AND CONTRACTS) AND LEASE, MAINTENANCE, AND CONSULTING AGREEMENTS must be reviewed and approved by the Senior Vice Chancellor for Finance and Business Affairs.

701.4 Troy University Contractual, Financial, and Personnel Authority Level

Implied in the authority levels set forth in this document is the understanding that appropriate personnel at the subunit levels have reviewed and provided appropriate input on these approvals.

  1. Lease Agreements, Independent Contractors, Consultants, Maintenance Agreements, Licensing Agreements, and Other Types of Performance Contracts 1 (This does not include employee contracts or construction contracts.)
         
    A. $2,500 and under for a period of one year or less provided funds are in the department/college budget. Information copy provided to next level supervision. Associate Deans and Campus Directors
         
    B. Over $2,500 and up to $5,000 for a period of one year or less, provided funds are in the department/college budget. Information copy provided to next level supervision. Deans, University-wide Directors, Athletics Directors, Associate Vice Chancellors and Vice Chancellors
         
    C. $5,001 to $30,000 for a period of one year or less. Information copy to Chancellor on all contracts $20,001 to $30,000. Executive Vice Chancellor and Senior Vice Chancellor
         
    D. Contracts for $30,001 and over and all contracts for more than one year regardless of financial obligation. Chancellor
         
    E. All contracts are required to meet the specifications of the Alabama bid law, University guidelines and policy, and other applicable state statutes and laws. All contracts must be acceptable under the guidelines and requirements of the State of Alabama Department of Examiners of Public Accounts.
       
    F. Paper copies of all new contracts and leases must be provided to the Purchasing Department on the Troy Campus.
       
    G. In cases where Senior Vice Chancellors are planning an event or project that may require a series of contracts that in total exceed the above authority levels, the total of the contracts will dictate the authority level at which the event or project must be approved.
       
  2. Authority Levels for Approving Travel (in-state and out-of-state travel)
         
    A. $500 or less Associate Deans and Campus Directors
     
    B. $501 - $1,500 Deans, University-wide Directors, 2 Athletics Director, Associate Vice Chancellors, and Vice Chancellors
     
    C. Over $1,500 3 Executive Vice Chancellor and
    Senior Vice Chancellor
     
    D. Over $2,500 Chancellor
     
    E. All travel must meet the requirements set by the State of Alabama and internal requirements established by the Senior Vice Chancellor for Finance and Business Affairs.
     
    F. University College operates under a separate out-of-state travel policy due to multi-state locations. Policy is managed by Vice Chancellor for University College and VC for Financial Affairs.
     
    G. Chancellor must approve all travel outside the United States.
       
  3. Purchasing Authority (Instructional Materials, Supplies, Equipment, etc.) 4
         
    AMOUNT    
    A. $1,500 or less Department Chairs and Campus Directors
         
    B. $1,501 to $3,000 Above in addition to Associate Deans or Campus Directors
         
    C. $3,001 to $5,000 Academic and Student Services Deans, Associate Vice Chancellors, University-wide Directors, Athletics Director, and Controller
         
    D. $5,001 to $20,000 5 Senior Vice Chancellors, Executive Vice Chancellor, and Vice Chancellors (for cost centers under his/her control)
         
    E. $20,001 to $30,000 5 Executive Vice Chancellor and Senior Vice Chancellors
         
    F. $30,000 + Above in addition to the Chancellor
         
  4. Personnel Authority 6
    A. Classified Positions
    1. The Executive Vice Chancellor, Senior Vice Chancellors, Vice Chancellor for University College, and Campus Vice Chancellors have the authority within the cost centers for which they are responsible to hire classified personnel for positions that previously have been approved and are budgeted.
    2. All proposed new classified positions must receive approvals through the appropriate administrative channels and receive the final approval of the Chancellor.
    3. All classified personnel salary upgrades, promotions, and reorganizations must move through appropriate administrative channels and receive the final approval of the Chancellor.
    4. All cost-of-living raises that affect the majority of employees must be approved by the Board of Trustees.
    B. Professional Personnel
    1. Executive Vice Chancellor, Senior Vice Chancellors, and the Vice Chancellor for University College have the authority to approve the filling of vacant professional positions that have been previously approved and budgeted for which the salary is $35,000 or less.
    2. All vacant professional positions for which the salary is more than $35,000 must receive approvals through appropriate administrative channels and the final approval of the Chancellor prior to being filled.
    3. All new professional positions, reorganizations involving professional positions, or other actions impacting the salaries of a professional position must be approved through appropriate administrative channels and receive the final approval of the Chancellor.
    4. Any personnel contracts that exceed four years must be approved by the Board of Trustees.
    C. Faculty Appointments, Promotions, and Tenure
    1. All finalists for full-time faculty positions must be interviewed and processed through appropriate academic channels including the Executive Vice Chancellor and Provost and the Chancellor.
    2. All full-time faculty appointments must be approved through appropriate administrative channels and by the Executive Vice Chancellor and Provost and the Chancellor.
    3. All recommendations for faculty promotions and tenure must be reviewed by the tenure and promotion process as outlined in the faculty handbook. Upon recommendation by the appropriate committee and the recommendation of the Executive Vice Chancellor and Provost, the Chancellor will be the final approving authority for all faculty promotion and tenure appointments.
    4. Adjunct faculty must be certified by the appropriate academic officials, prior to being appointed. Adjunct faculty contracts must be approved by the Provost or designee who will ensure the contracts are paid according to established and published University pay standards. Exceptions to these pay standards must be approved by the Provost.
    D. Part-Time Personnel
    1. New part-time positions (classified, professional or graduate assistants) must be approved by the Chancellor.
    2. Replacement of budgeted, approved part-time positions or graduate assistants may be approved by Associate Deans, Campus Directors, University-wide Directors, University College Regional Directors, or Vice Chancellors.
    3. New Workship positions must be approved by the Executive Vice Chancellor or appropriate Senior Vice Chancellor. However, the total expended for Workship for each division cannot exceed the baseline amount established in the 2002-03 budget. The Senior Vice Chancellor for Finance and Business Affairs prepares a report annually to the Chancellor, and any overages must be justified to the Chancellor.
    4. Replacement for budgeted, approved Workships are to be approved by Deans and University-wide Directors.
  5. Facilities Improvement Projects Authority
       
    A. The Executive Vice Chancellor and Senior Vice Chancellors may approve facility improvement projects up to $30,000. Facilities improvement projects approved on the authority of the Executive Vice Chancellor or a Senior Vice Chancellor should receive review through the campus facility project coordinator and the University Director of Physical Plant.
       
    B. All requests for facilities improvements over $30,000 require a preliminary plan to be submitted to the appropriate Senior Vice Chancellor and then to the Senior Vice Chancellor for Finance and Business Affairs who will in turn coordinate the request with the Chancellor. Upon approval of the preliminary plan, a request will be made to the Director of Physical Plant for the development of a final detailed plan including cost. Final approval will come through the Senior Vice Chancellor for Finance and Business Affairs and the Chancellor.
       
    C. All facilities improvement projects must meet the requirements of the Alabama bid law, public works statutes, and other state statutes and regulations pertinent to construction and facilities improvements. Facility improvements and new space allocation must be reported to the appropriate official for proper documentation in the University’s space inventory system.
       
Approved: Cabinet, May 10, 2006
OPR: SVC, Administration
Review, May 2011

702. Grants and Contracts

Grants and contracts are awarded to the University by federal and state agencies, corporations, and foundations. Departments with
project oversight are responsible for the administration of sponsored program activities in compliance with all state and sponsor
imposed guidelines and restrictions. Financial reporting for sponsored programs rests with the principal investigator. Invoicing on
sponsored programs must be submitted to Accounting Services for approval before the invoice is sent to the sponsor.

702.1 Sponsored Program Accounting

General Times

Extramural Funding: This is a general term for money that comes from outside the University that is used to support a program or project. It may come from federal, state or local governments, business, private foundations, or individuals.

Contract: In this context, a contract is generally an agreement to provide a product or service which is of direct benefit to the awarding agency. Contracts provide for payments to the University which cover allowable project costs or payment of a fixed price for satisfactory completion of the project.

Grant: A grant is an agreement to accomplish something for the public good in exchange for money, property or services. Most federal agencies use a grant document for research awards to universities.

Cooperative Agreement: A cooperative agreement is like a grant except that the federal government will be closely involved in the activity that is being funded, perhaps bringing government personnel to campus to work on the project.

Fixed-Price Contract: Payment for this type of contract is based on satisfactory performance. Payment is set and cannot be adjusted because of how much it costs to meet the terms of the agreement, whether more or less than the contracted amount.

Cost-Reimbursement Contracts and Grants: The sponsor will reimburse the University for any actual, approved project costs, within whatever variances the funding agency allows.

Budget: A budget identifies the types of costs and the estimated amounts needed to complete the project. The budget must be approved by the funding agency and Troy University. This budget will be the basis for authorizing any expenditures on the project and the basis for seeking payment from the funding agency.

Generally, funding agencies recognize that there may be differences between the estimated and the actual expenditures for different elements of a project. The degree to which these variances are allowed may depend on federal regulations or on the specific terms of an agreement.

Direct Costs: These can be specifically identified with a particular project with a high degree of accuracy. If, for example, a person spent 50% of their time on a project, 50% of the salary and benefits would be direct costs. Travel, equipment, supplies or services used specifically for a project are examples of direct costs.

Indirect Costs: These are general costs that cannot be clearly identified with a specific project, but are nonetheless necessary to the project. For example, costs of maintaining a building, administrative expenses, or library expenses are types of indirect costs. Indirect costs, based on rates approved by the federal government, should be included in the approved project budget. These are then charged to specific contract/grant accounts in accordance with the terms of the agreement.

Cost Sharing: This refers to costs that the funding agency doesn't pay. It may be Cash Cost Sharing, In-Kind Cost Sharing, Third-Party Cost Sharing or Indirect Costs. These costs are generally covered by the University. In some cases, a third party may provide cost sharing support.

Total Project Costs: Direct costs plus indirect costs. This includes the granting agency's share, the University's share, and, in some cases, it may include a third party's share.

Program Income: This is income earned by the University that is directly generated by a supported activity or earned as a result of the contract or grant. Examples are registration fees for sponsored workshops or conferences and the sale of items fabricated under an award.

Duration: Every agreement should have specified beginning and ending dates. All expenditures must be incurred or encumbered during this period. If expenditures fall outside this period, they cannot be reimbursed or used as cost sharing. In some cases, pre-award costs may be approved by the sponsor or the Vice President for Research. Some aspects of this rule do not apply to fixed-price contracts.

Research and Development Terms

Research: Systematic study that is undertaken in order to gain a fuller scientific knowledge or understanding of a subject.

Basic Research: Research for the purpose of gaining a fuller knowledge or understanding of a subject without seeking specific ways to put that knowledge to work in new processes or products.

Applied Research: Research that seeks knowledge or understanding so that recognized and specific needs might be met.

Developmental Research: Putting information gained from research to use to create new products or processes.

Note: Research and Development do not include training of scientific personnel, mapping and surveys, routine product testing, quality control, experimental production, and collection of general-purpose statistics that aren't part of a specific research and development project.

Classification of Sponsored Projects by Their Major Functions

Organized Research: All research and development activities of an institution that are separately budgeted and accounted for by project. This includes specific research projects funded by Troy University as well as extramurally-funded projects.

Instruction: Except for research training, instruction includes all teaching and training, whether for credit toward a degree or certificate or on a non-credit basis. It includes:

(1) Sponsored Instruction is specific instructional or training activity established by a grant, contract or cooperative agreement.

(2) Departmental Research is research, development and scholarly activities that are not organized research and are not separately accounted for by specific project. Departmental research is considered by A-21 to be a part of the Instruction function.

Other Sponsored Activities: Programs and projects supported by outside sponsors that involve performing work other than instruction and organized research.

Some Important Federal Documents

Federal regulations require universities to be consistent in the handling of costs, regardless of the type of funds involved. Therefore, Troy University applies the guidelines cited in these Office of Management and Budget circulars to all contracts and grants from all funding sources:

OMB Circular A-21 establishes the principles for determining costs applicable to grants, contracts and other agreements with colleges and universities. These principles are to be used as a guide in the pricing of fixed price agreements and apply to direct costs and indirect costs.

OMB Circular A-110 provides a public declaration of the standards to be used by federal agencies and colleges and universities in the administration of grants and other agreements. This does not include contracts that are administered under procurement laws and regulations.

OMB Circular A-133 states audit requirements and provides policy guidance to federal agencies and colleges and universities regarding the institutions' financial records, internal control structure, and compliance with applicable laws and regulations.

702.2 Cost Sharing

Granting agencies may require the University to bear some of the costs of a sponsored project, with a third party sometimes providing support. Support which is not  provided by the primary granting agency is called "cost sharing."

Any cost sharing commitment must be approved by the department head, dean or director, and the appropriate vice president.

Generally, funds from the granting agency and cost sharing funds should be spent at about the same rate throughout the project: for example, when 10% of grant funds have been spent, 10% of cost sharing funds should have also been spent. This provides even support by both parties throughout the project and prevents some problems at the end of the project.

Granting agencies may accept several methods for cost sharing. It is important that both the method and the amount of cost sharing are clearly stated in the written agreement.

702.3 Indirect Costs

If indirect costs are the approved method for University cost sharing, the indirect costs are forfeited, meaning that the University gives up the right to be paid by the sponsoring agency for these indirect costs.

No special account or certification is needed for this method of cost sharing. If a cost sharing report is required, Sponsored Program Accounting will compute the forfeited indirect costs and prepare the report.

702.4 Fixed-Price Contracts

Payment for a fixed-price contract is based on successfully providing the goods or services agreed to in the contract. A fixed-price contract is not adjusted when it actually costs more or costs less to complete the project than the price initially agreed upon. One of the greatest benefits of fixed-price contracts is the reduced amount of administrative burden for the University and the funding agency.

It is very important that all fixed-price contracts be clearly identified as such in the written agreement.

All projects costs, including indirect costs, are to be charged to the contract/grant account. Indirect costs, at Federally-approved rates, should be included in the proposal or contract budget and subsequently charged to the account.

In some cases, money may remain in an account after a fixed-price project has been completed, all bills have been paid, and all payments have been received from the sponsor. If the University's policies regarding project costs and indirect cost recovery have been met, the University may allow the administering department to use the remaining funds.

In order to do this, a request for extension of the contract/grant account should be sent to the Office of Sponsored Programs. This request should state that the project has been completed. If more than 10% of the funds remain after completion, please explain why they were not needed. If the full recovery rate for indirect costs had not been used previously, adjustments will normally be made to recover those costs; that is, additional indirect costs will be charged to the account. Any additional expenditure will be subject to the full indirect cost rate. This policy will be followed consistently for all fixed-price contracts.

UNREIMBURSED CONTRACT/GRANT COSTS: Federal regulations require that actual project costs in excess of the award amount cannot be transferred to an account with an A-21 code different from the contract/grant account. For example, "organized research" costs cannot be transferred to an "instruction" account. This applies to other types of unreimbursed sponsored project costs also. It does not apply to costs that have been charged to the contract/grant account in error.

702.5 Policy to Facilitate Final Billing and Reporting for Contracts and Grants

Effective August 1, 2005

Sponsored Program Accounting is responsible for the preparation and submission of invoices and financial reports to the agencies that provide funding for sponsored projects. These financial documents are prepared based on information in the University's accounting records and on special requirements of the sponsors. After the expiration date of a sponsored project, the University has a specified number of days to submit the final invoice or final financial report. A late submission could result in a loss of money to the University. The deadline for final reporting on Federal grants normally is 90 days from expiration. For contracts (Federal or non-Federal) the specific deadline for final financial reporting is given in the agreement; common deadlines are 30 days, 45 days, 60 days, or 90 days from expiration. The deadlines for cost share accounts are the same as for the sponsored accounts.

If the final financial reporting deadline is 90 days after expiration, all project costs must be processed through the accounting system with 60 days after expiration.

If the final financial reporting deadline is 60 or 45 days after expiration, all project costs must be processed through the accounting system within 30 days after expiration.

If the final financial reporting deadline is 30 days after expiration, all project costs must be processed through the accounting system within 2 weeks after expiration.

In order to comply with sponsors' financial reporting deadlines in an orderly and efficient manner, recipient departments should pay all bills promptly, particularly near the end of the project. The financial manager in each department should be aware of the expiration dates and deadlines for each sponsored project in the department and should make any needed adjustments in a timely manner. If any orders are placed near the end of the project, the department should notify the vendor of the deadlines involved to ensure delivery of the products and receipt of the invoice within the time available. (Normally, all products should be delivered while the sponsored project is still in process; otherwise, the costs could be disallowed since they were not received in time to benefit the project.) If salaries and wages are being charged to the contract/grant account, the departments should ensure that steps are taken to reassign employee salaries and wages to other accounts, as appropriate, when the project is over.

Under this policy, Contracts and Grants Accounting is authorized to submit final invoices and financial reports based on the deadlines noted above for processing projects costs through the accounting system. It is, therefore, critical that the recipient departments pay all project costs within these deadlines to ensure that the University is reimbursed for all allowable project costs. Please note that unreimbursed project costs must be covered by the college/school/department involved.



1 All contracts must have appropriate legal review and scrutiny and must reflect that they have been reviewed by the appropriate financial officer to ensure that they are consistent with financial policy and sate laws regarding expenditure of public funds.
2 Director of Human Resources, Controller, Director of Sponsored Programs, Director of Physical Plant, Director of Student Financial Services, Director of Purchasing, Director of Student Development/Counseling, and Director of Auxiliary Services
3 Multiple travelers to the same event for which the expenses exceed $1,500 requires approval of Senior Vice Chancellors.
4
Notes: a. Purchasers must adhere to Alabama state bid law. Senior Vice Chancellor for Finance and Business Affairs and Director of Purchasing will monitor for cumulative costs that exceed bid law.
b. Where appropriate and applicable, purchasers should use institutional and state bid contracts.
c. Purchasers should be coordinated within a college or division to ensure maximum financial benefit to the University.
5 Purchases in this category that have a significant impact on a particular campus should be coordinated with the Campus Vice Chancellor.
6 When making personnel appointments on the respective campuses, the Executive Vice Chancellor and Senior Vice Chancellors will coordinate and communicate with Campus Vice Chancellors regarding personnel decisions to ensure continuity and campus integrity.