INTERNAL CONTROLS

POLICY STATEMENTS

BAU staff with fiscal responsibility shall:
1. Perform their duties in accordance with the appropriate recognized ethical and legal standards
2. Practice honesty and integrity in all aspects of their work
3. Exhibit professionalism in the workplace, and conduct themselves in a way that will continue to promote the public’s confidence in the integrity of BAU
4. Be fair-minded, non-discriminatory, and treat all individuals, both internal and external to the university community equitably, with civility, respect and dignity
5. Fulfill their assigned responsibilities, and be proactive in developing the skills necessary to provide high job performance
6. Exercise fiduciary responsibility with respect to safeguarding the university’s assets
7. Exercise custodial responsibility with respect to the use of university property and resources
8. Exercise, within the requirements of the law, confidentiality with respect to information, records, and data management, respecting the rights and privacy of individuals
9. Take action to mitigate any real or perceived conflicts of interest; and
10. Comply with Federal and State laws and regulations and University Policies and Procedures.

DEFINITIONS

–

EXCEPTIONS

None

POLICY STATEMENT

BAU has developed a conflict-of-interest policy, which will be reviewed every two years by the Board of Trustees, the President, the CFO, and the CAO to accommodate the needs of the growing body and units of the university.

An institutional conflict of interest (“COI”) describes a situation in which the financial interests of an institution or an institutional official, acting within his or her authority on behalf of the institution, may affect or appear to affect the research, education, clinical care, business transactions, or other activities of the institution. Institutional COIs are of significant concern when financial interests create the potential for inappropriate influence over the institution’s activities. This policy is intended to protect against exposure from risks related to Institutional COI.

Any institution, including its officials, must balance many competing pressures. It engages in relationships with a variety of sponsors that may lead to financial benefit for the institution in many forms, including gifts, business ventures, royalty payments and equity from licensing intellectual property, as well as sponsored educational and research agreements. In addition, university-industry relationships are essential for advancing scientific frontiers and enabling the commercial development of academic discoveries to the benefit of the public. Nonetheless, while generally part of legitimate educational, research, and business activities, relationships with external entities or individuals cannot be allowed to compromise, or appear to compromise, the integrity of the BAU’s primary mission, including the safety and integrity of its research, education, and outreach.

PROCEDURES

Identification of Potential Institutional Conflicts of Interest: The following significant financial and fiduciary interests of the institution warrant formal review for potential Institutional COI:
a. Significant financial interests for the institution.
b. Significant financial interests on the part of covered officials.

Establishment of an Institutional Conflict of Interest Committee: In order to review and manage Institutional COIs, a committee will be established that includes members who are not employed by BAU as well as senior BAU employees. The Committee will be advisory to the University Board of Trustees, which holds final authority regarding questions of Institutional COIs.

Annual Reviews: Each year the Conflict of Interest (COI) Committee requests information from the CFO in order to identify financial relationships BAU has with business entities that could compromise the integrity of research, teaching, outreach, and other mission-related activities. This information will regard vendor contracts with business entities in the prior fiscal year valued at $50,000 or more.

Management of Potential Institutional Conflicts of Interest: The reasons to manage Institutional COIs include: 1) To maintain the highest possible standards in research, education and outreach; 2) To adhere to all applicable federal and state regulations; 3) To maintain the primacy of the university’s educational mission; 4) To protect the reputation and credibility of the University, its faculty and staff.

The COI Committee evaluates the risk of an institutional conflict, either because of the financial or business interests of a University Official or because of the financial interests of the University and consults with individuals and involved offices as appropriate.

If there is little risk that the circumstances could affect University research, teaching, outreach or other mission-related activities, the COI Committee notifies the University official or employee who submitted the disclosure that no further review or evaluation is required.

If there is a risk that the circumstances could compromise or appear to compromise the integrity of the conduct or reporting of research, or other mission-related University activity, and if the Committee concludes that a potential conflict of interest exists, it refers the matter to the President or to the Board of Trustees if the possible COI includes the President.

The President or the Board of Trustees reviews the matter and determines whether a conflict of interest exists and whether the conflict should be managed, reduced, or eliminated.

DEFINITIONS

Institutional Conflict of Interest: A COI may occur whenever the financial interests of the institution, or of an institutional official who has authority to act on behalf of the institution, might affect-or reasonably appear to affect-institutional processes for the design, conduct, reporting, review, or oversight of research, education and clinical care.

Covered Officials: This COI Policy applies to the President, Chief Academic Officer, Chief Finance Officer, other senior officers, and other institutional administrators at the University. This policy will also require review of conflicts of interest involving department chairs, division chiefs, institute and center directors, and chairs of committees that might be created in the future.

Officials with Oversight: Covered officials with responsibility for the supervision of faculty and staff participating in research conducted at or under the auspices of the institution. Of particular importance are supervisory roles like evaluation and management of promotion, pay raises, and the assignment of job responsibilities.

Significant Financial Interest (individual): For covered officials: payments, honoraria, royalties (even through the institution), equity, options and warrants, management positions, and gifts.

Significant Financial Interest (institutional):
A. Royalties: COI may be present when the institution has agreements to receive milestone payments and/or royalties.
B. Non-publicly traded equity: When, through its technology licensing activities or investments related to such activities, the institution has obtained an equity interest or an entitlement to equity of any value (including options or warrants) in a non-publicly traded company that is: i) the sponsor of research at the institution, or ii) the manufacturer of a product to be studied or tested at or under the auspices of the institution;
C. Publicly traded equity: When, through technology licensing activities or investments related to such activities, the institution has obtained an ownership interest or an entitlement to equity (including options or warrants) exceeding $100,000 in value (when valued in reference to current public prices, or, where applicable, using accepted valuation methods), in a publicly-traded company that is i) the sponsor of research at the institution, or ii) the manufacturer of a product to be studied or tested at or under the auspices of the institution.
D. Gifts from sponsors: When the institution has received substantial gifts (including gifts in kind) from a potential commercial sponsor of research or a company that owns or controls products being studied or tested, or an individual affiliated with these companies. The following circumstances should be evaluated:

1. Whether a gift is of sufficient magnitude that even when held in the general endowment for the benefit of the entire institution, it might affect, or reasonably appear to affect, oversight of research, education or clinical care at the University;
2. Whether a gift is held for the express benefit of the college, school, department, institute or other unit where the research, education or clinical care is to be conducted; or
3. Whether any institutional official who has the authority, by virtue of his or her position, to affect or appear to affect the conduct, review or oversight of the proposed research, education or clinical care has been involved in solicitation of the gift.

EXCEPTIONS

None

POLICY STATEMENT

The policy established the authority of officers and employees to authorize and execute transactions and otherwise bind BAU. It is designed to ensure an appropriate level of control and accountability.

BAU is governed under the provisions of its by-laws by the Board of Trustees (the “Board”). The Board is an independent entity charged with the fiduciary and legal oversight of BAU. As stated in the by-laws, Article III, Section 1, the Board is vested by law with all the powers specified below with authority to govern effectively and to set policy for the institution in accordance with the laws of the District of Columbia:
1. Establish, disseminate, and keep current the institution’s mission
2. Authorize amendment of the Bylaws.
3. Approve new members to the board and to elect board officers.
4. Authorize a merger, consolidation, or dissolution of the Institution.
5. Initiate bankruptcy proceedings.
6. Select a chief executive to lead the Institution.
7. Support and periodically assess the performance of the chief executive and establish and review the chief executive’s compensation.
8. Charge the chief executive with the task of leading a strategic planning process, participate in that process, approve the strategic plan, and monitor its progress.
9. Ensure the Institution’s fiscal integrity, preserve, and protect its assets for prosperity.
10. Engage in fundraising and philanthropy and oversee the endowment and other institutional investments.
11. Approve recommended tuition and mandatory fee rates, annual and long-range operating budgets, and any plans for borrowing and investments.
12. Ensure the educational quality of the Institution.
13. Preserve and protect institutional autonomy and academic freedom.

In addition, Bay Atlantic University’s Board provides guidance, monitoring, and assistance to the president/CEO of the university in public affairs and in building key alliances to assist in and support the growth of the university.

The board appoints the President/CEO of the university who is responsible for the overall management and daily operations and accountable to the Board.

The President/CEO delegates specific responsibilities to members of the executive team: Chief Financial Officer (CFO), Chief Academic Officer and Institutional Effectiveness, and Chief Growth Officer. Each member of the administrative staff is fully accountable for the operation of the respective department of the university. The CFO oversees the financial affairs, the facilities including technological infrastructure and human resources. The CAO is responsible for the overall leadership, management and organization of the university’s academic affairs. The CAO also oversees academic advancement, academic quality, career counseling, registrar, and library services. The CGO is responsible for the marketing and admissions operations and the enrollment growth of the university. All these officers report directly to the President/CEO.

PROCEDURES

1. Authority of the Board
The Board is an independent entity charged with the fiduciary and legal oversight of BAU.

The Board appoints the President; the President reports exclusively to the Board, and the Board supervises the President. The Board prescribes the President’s compensation and terms and conditions of employment and is responsible for the reappointment or removal of the President. The President performs such duties as are assigned by the Board. Except as otherwise provided by law or Board action, the President is the executive and governing officer of BAU and President of the faculty. The President periodically reports to the Board all significant matters within the President’s knowledge related to the affairs of the University.

The Board adopts five-year budgets. The budget process is an inclusive and collaborative effort with the president making final decisions on new funding requests and budgets, prior to the board approving the budget. The Finance Committee of the Board reviews the proposed budget and presents it to the Board for approval. The approved budget is shared with the Leadership Team by the President.

The Board determines tuition and mandatory fees, and the President determines all other fees, fines and charges. In arriving at a determination of fees, fines and charges, the President consults with employees as the President deems appropriate.

The Board approves the appointment of external auditors.

The Board has the authority to approve a capital project budget that is anticipated to exceed $850,000, including for architects, construction managers, engineers, and other professional consultant; and approves of any increase to a board-approved capital project budget that causes the total of all increases to the capital project budget to exceed $1,000,000 or fifteen percent (15%) of the approved budget, whichever is greater.

2. Authority of the President
The President is the executive and governing officer of BAU, except as otherwise provided by statute or Board actions. Subject to the supervision of the Board and Board action, the President directs the affairs of BAU. The President may delegate any authorities and responsibilities. The President remains responsible for the proper functioning of BAU, notwithstanding any delegation.

The President formulates, prescribes, and issues Presidential actions regarding matters within the authority of the President when the Board or the President deems it necessary or appropriate. Any Presidential actions are subordinate to and must be consistent with Board actions. In carrying out these duties, the President shall consult with the faculty, other employees, and students as deemed appropriate by the President. Consultation shall not remove from the President the authority and the responsibility vested in the President by law and Board actions.

The President establishes emergency and temporary policies, standards and directives when the Board or the President deems it necessary or appropriate.

The President establishes and defines the charge of any and all University committees, councils, and advisory groups. The recommendations and reports of all committees, councils and advisory groups shall be made to the President. The President shall inform the Executive Committee of the Board regarding significant recommendations and reports related to the affairs of the University. Upon request by the Chair of the Board or a majority of the Trustees, the President shall provide the Board with a recommendation or report of a University committee, council or advisory group.

The President is responsible for development and administration of university policies and procedures governing the role of students and their conduct. In carrying out this responsibility, the President shall take into account the views of students, faculty, and others. The guidelines for student conduct which set forth prohibited conduct and provide for appropriate disciplinary hearings and sanctions for violations of institutional policies and procedures must be consistent with standards of procedural fairness. The Board recognizes and affirms the importance of active student involvement in the deliberative and decision-making processes.

The President is responsible for development and administration of university policies and procedures regarding fiscal operations. In carrying out this responsibility, the President shall take into account the views of finance, human resources, and other related departments. The fiscal policies and procedures must be consistent with the GAAP. The policies are reviewed as needed. When a new policy is created or an existing policy is updated, the policy is shared by all related departments via a memo and published on the Fiscal Policies and Procedures Manual and the webpage.

Except as provided by Board action, the President has the authority to establish standards, qualifications, policies, and practices relating to admission to study at BAU and the curriculum, grading, credits, scholarships, and academic standards of BAU. Except as set forth in law or Board action, the faculty (the “President and academics”) has the immediate government and discipline of BAU and the students therein and the authority to prescribe the course of study to be pursued in BAU and the textbooks and learning materials to be used. The faculty has primary authority over choice of method of instruction; subject matter to be taught; academic standards for admitting students; and standards of student competence in a discipline.

The President appoints any instructional, research, administrative, professional, trade, occupational and other personnel as are necessary or appropriate and establishes their compensation and other terms and conditions of employment.

The President may appoint volunteers as necessary or appropriate and establish the terms and conditions of the activities of such appointed volunteers.

The President has the authority to establish written codes of conduct for instructional, research, administrative, professional, trade, occupational and other personnel, including volunteers.

Except as provided by Board action, the President shall act for the Board regarding the execution and administration of instruments and the affairs of the University. Notwithstanding the dollar limits specified in section 1.0 above, the President shall act regarding the execution and administration of all instruments, business affairs, and operations relating to:

1. Acquisition of electricity, natural gas, sewer, water, and all other utility services
2. Subcontracts for collaborative research entered into in furtherance of sponsored research programs.
3. The acquisition of goods and services made by participating in contracts entered into by group purchasing organizations or pursuant to collaborative purchasing initiatives with public or non-profit entities.
4. The acquisition of fixtures, equipment and furnishings that are included in capital project budgets that have been authorized by the Board of Trustees.
5. The acquisition of goods and services for sponsored research programs when the source of the goods or services is directed by the sponsor, or the sponsor retain.s title to the goods acquired.
6. The settlement of claims or lawsuits brought against the University.
7. The acquisition of insurance or self-insurance.
8. Leases and licenses of real property and modifications thereto of up to 20 years.
9. The acceptance of current gifts of non-traditional investment assets, including but not limited to charitable lead trusts, bargain sale gifts of property, and partial interest gifts.
10. The acceptance of deferred gift assets.
11. Real property acquired through gift.
12. The protection of the University’s interests, property, and operations in an emergency.
13. Actions and execution of documents necessary to establish legal entities, controlled by the University, through which the University may conduct business.
14. The selection of depositories and investments.
15. The execution of instruments or the conduct of business affairs where approval by the Board or a Board committee is impractical due to time or other constraints. The President shall submit a report of any actions taken pursuant to this delegation to the Board of Trustees or its Executive Committee on or before the next regularly scheduled meeting.

The President acts for the Board of Trustees regarding all legal action necessary or appropriate to protect the interests of BAU. However, no litigation shall be instituted against a public entity or official or in exercise of the power of eminent domain without approval by the Board of Trustees.

The President acts for the Board of Trustees regarding all current and deferred gifts to BAU, including gifts to establish quasi-endowed or permanently endowed funds. Notwithstanding any delegation by the President, a gift with unusual terms or conditions affecting an academic program shall be accepted only with the concurrence of the President to the proposed terms or conditions. The proceeds of any gift, devise, bequest, or contribution received by BAU shall be administered in accordance with the intention of the donor and any directions of the Board of Trustees in accepting the gift. The President is authorized to act for the Board of Trustees regarding the disposition of gifts.

The President establishes fees, fines, and charges. In arriving at a determination of fees, fines and charges, the President consults with employees and students as the President deems appropriate. The President shall enforce the collection of tuition, mandatory enrollment fees, other fees, fines, charges, and all other amounts
due to BAU.

The President conducts ongoing reviews of the practices and policies of the university relating to transparency and access. When conducting the reviews the President shall include faculty, nonfaculty staff and student representatives.

EXCEPTIONS

None

POLICY STATEMENT

Segregation of duties is critical because it ensures separation of different functions and defines authority and responsibility over transactions. Segregation of duties is also a key Internal Control; it reduces the risk of errors and inappropriate actions.

BAU’S financial duties are distributed among multiple people to help ensure protection from fraud and error. The distribution of duties aims for maximum protection of the organization’s assets while also considering efficiency of operations. Senior administration and all individuals responsible for assignment and supervision of employees that carry out fiscal activities, budget, and implementation of Internal Controls must ensure there is adequate segregation of duties within their areas of responsibility. An individual should not be in a position to initiate, approve, and review the same action. The recording/verification function and the asset (e.g., money, inventory) custody function should be separated among employees.

In an ideal environment, a different employee should perform each of the following major duties or functions:
• Authorization
• Recording
• Verification
• Custody of Assets
• Managerial Review

No one person should have responsibility to complete two or more of these major functions. There is a greater need for proper segregation of duties for assets that are more negotiable (i.e. cash funds, negotiable checks and inventories). If a person performs more than one of these major functions, mitigating controls should be put in place. Without additional Mitigating Controls in place, there is the potential to carry out and conceal errors and/or irregularities in the course of performing day-to-day activities.

Federal, state and other sponsor regulations impose additional requirements for the Authorization, review and documentation of sponsored activity that necessitate additional controls. Authorization, Verification and Managerial Review should not be performed by the same person. However, although it is less than optimal, the Principal Investigator (PI) may be allowed to perform all three functions when adequate Mitigating or Compensating Controls are in place.

The departmental office is responsible for maintaining accurate documentation of Authorizations and retaining documentation of the delegation of authority in a reproducible form, in accordance with records retention requirements.

PROCEDURES

Authorization: All transactions must be authorized. The individual initiating the transaction must have the authority to do so. Authorization confirms adherence to the following general requirements:
• Employees cannot authorize transactions for their own reimbursement.
• Documentation of the Authorization.
• All transactions must adhere to the University policies, existing laws, regulations, compliance requirements, as well as any terms and conditions of the sponsor.
• All individuals responsible for assignment and supervision of employees that carry out fiscal activities, or their designees, should appoint and document authorized signers of all financial transactions.
• The PI is responsible for all sponsored activity to ensure the activity is Allowable, Allocable, and within the period of availability. For operational convenience the PI may delegate another employee to authorize transactions on his/her behalf. The department must manage and maintain documentation of delegated authority.

Recording: Recording is the process of creating and maintaining records of revenues, expenditures, assets, and liabilities. These may be manual records or records maintained in the financial systems.

Verification: Verification of processing or recording of transactions ensures all transactions are valid, comply with Authorization requirements, and are properly recorded on a Timely basis. This includes resolving identified differences or discrepancies. The Verification must be documented with a signature (electronic or manual) and date. A PI, when size limitations apply may be permitted to verify all transactions for their respective sponsored activity; however, Internal Controls are significantly enhanced when someone other than the PI performs this function.

Custody of Assets: Custody of Assets is the access to or control over physical assets such as cash, checks, equipment, supplies, or materials.

Managerial Review: In all cases, there is a level of review of the activity by managerial level personnel. This Managerial Review function provides assurance that segregation exists and that the transactions are appropriate. The frequency and extent required of the Managerial Review depends upon the degree to which duties are or are not segregated and other factors such as the dollar volume of transactions, the amount of cash involved, or the nature of the operation.

Minimal Acceptable Degrees of Segregation: In those departments where the optimum degree of segregation cannot be achieved, a minimum degree of segregation must be maintained. At a minimum, no person should be able to perform more than two of the functions. The matrix below illustrates various degrees of segregation. The X, and O represent different staff members, and the M represents a third staff member—the manager.

To maximize the opportunity to identify errors in the ordinary course of business, it is recommended that the process of recording and Verification be performed by two different individuals such as in examples 1 and 2. In examples 3 and 4, there must be a significant reliance on the Managerial Review to operate on a much more detailed and frequent basis to identify errors and irregularities Timely.

In instances where duties cannot be fully segregated, based on the matrix presented above, Mitigating or Compensating Controls must be established. For instance, if the record keeper also performs a Verification process, a frequent detailed review could be performed and documented by a supervisor to provide additional control over the assignment of incompatible functions.

Mitigating Controls: There are several other control mechanisms that may mitigate a lack of segregation of duties:
• Audit trails enable re-creation of the actual transaction flow from the point of origination to its existence on an updated file. Adequate audit trails should provide the initiator of the transaction, date and time of entry, type of entry, data fields, and files updated.
• Reconciliation of applications increases the level of confidence that processes ran and/or interfaced successfully.
• Exception reports monitored at a supervisory level, supported by evidence that exceptions are reviewed, and if necessary, corrected Timely. The review must be evidenced by signature of the supervisor and dated.
• Managerial Reviews should periodically be performed through observation and inquiry to help detect errors and irregularities.

DEFINITIONS

Authorization: process of giving someone permission to initiate a financial transaction, known as approval, indicating agreement that a transaction meets certain accounting and compliance requirements as defined by BAU.

Managerial Review: process providing assurance that appropriate individuals are authorizing, recording, and verifying accounting transaction information.

Mitigating or Compensating Control: additional procedure designed to reduce the risk of errors or irregularities in those instances where duties cannot be fully segregated.

Timely: within two accounting periods (two months) after the end of the accounting period in which the original transaction posted. When errors and omissions are not discovered in a Timely manner, additional approvals may be required.

Verification: process that confirms accuracy of accounting transactions, such as appropriate use of accounts and that the transaction was recorded in the appropriate accounting period.

EXCEPTIONS

None

POLICY STATEMENT

It is the policy of BAU that appropriate internal controls and accepted best practices be utilized in the approval of Transactions that bind BAU.

Entering into Transactions can create legally binding obligations and affect BAU’s financial control environment. The purpose of this policy is to promote the University’s internal control environment through specifying the persons who are Authorized to approve a Transaction, the criteria for delegating Approval Authority, and the limitations on Approval Authority.

This policy applies to any member of the University Community who seeks to approve a Transaction.

All existing delegations of Approval Authority not otherwise revoked will be deemed revoked as of the effective date of this policy. Any action taken under a proper delegation in effect at the time of the action will not be invalidated because of the subsequent issuance of this policy. All delegations of Approval Authority and Delegation Authority made on or after the effective date of this policy must be made in accordance with this policy.

PROCEDURES

Authorized Persons and Approval Levels

All Transactions must be approved by an Authorized person in accordance with this policy unless otherwise Authorized by the Board of Trustees of the University (or its Executive Committee).

Each Authorized person is designated as Level 1, Level 2, Level 3, Level 4, or Level 5, as follows:

Level 1:
President of the University (“President”)

Level 2:
Chief Finance Officer (“CFO”)
Chief Academic Officer (“CAO”)
Chief Growth Officer (“CGO”)
Persons delegated Approval Authority by Level 1 persons

Level 3:
Director of Human Resources and Facilities
Director of Marketing
Director of Student Services
Persons delegated Approval Authority by Level 1 or 2 persons

Level 4:
Persons delegated Approval Authority by Level 1, 2, or 3 persons

Level 1 and Level 2 persons have the Approval Authority set forth in Table A. Level 1 persons may delegate such Approval Authority to any of the above levels of person; Level 2 persons may delegate such Approval Authority to persons who report directly or indirectly to them; in both cases, up to the maximum levels set forth in Table A based upon a person’s level.

All delegations of Approval Authority must be expressly granted in writing. A delegation of Approval Authority also may grant Delegation Authority (i.e., provide that the person to whom Approval Authority is delegated has the right to further delegate his or her Approval Authority), provided that Delegation Authority by Level 2 and below persons is permitted only to persons who report directly or indirectly to the person delegating, such Approval Authority may not exceed the limitations set forth in Table A based upon the level of the person to whom such Approval Authority is delegated, and Level 5 persons are not authorized to grant Delegation Authority to any other person.

Delegations of Approval Authority may be indefinite or for a limited period of time, as so specified in the writing granting the Approval Authority, but in any case will automatically terminate if the Authorized person either ceases to be employed or engaged by BAU or ceases to hold the position specified in the delegation or a position that includes the duties contemplated by the delegation.

During an Authorized person’s absence there may be insufficient Authorized persons available to conduct necessary business. It is important for Authorized persons and their supervisors to assure that there will be adequate coverage during such times (e.g., a temporary delegation of Approval Authority may be appropriate).

The President may revoke the Approval Authority or Delegation Authority of any Level 2, 3, or 4, person at any time. Persons of a higher level can revoke Approval Authority or Delegation Authority of any lower level person who reports directly or indirectly to them (e.g., a Level 2 person can revoke the authority of a Level 3 person who reports directly or indirectly to that Level 2 person).

Table A specifies limitations on Approval Authority based on a maximum dollar amount for types of Transactions depending on the level of the Authorized person. A person is not Authorized to approve Transactions involving amounts in excess of the threshold established for his or her level (or any lesser threshold amount that may be specified in the applicable written Delegation Authority). Where a Transaction is denominated in other than U.S. dollars, the exchange rate as established by the CFO effective for the fiscal year in which the Transaction is approved (known as the “Budget Rate”) will be utilized in determining whether the approval is within the Approval Authority. The CFO may from time to time designate a revised Budget Rate for a specific currency in unusual situations, such as where there is extraordinary inflation resulting in a substantial currency devaluation.

There may be situations in which the Approval Authority and/or Delegation Authority established in Table A is further limited for certain persons or more generally by a unit. For example, a unit may decide to limit acquisitions Authorized by specific Level 3 persons or all Level 3 persons up to and including $2,500 rather than $1,000

Approval Processes and Enforcement

Each Authorized person is responsible for ensuring that he or she has the appropriate Approval Authority to approve a Transaction, and that such approval and the Transaction itself complies with other policies of the University including the following:

• All purchase requisitions must adhere to the 5.83 Purchases and Procurement Policy.
• All vendor payments must adhere to the 5.84 Invoice Approval and Processing Policy and 5.95 Agency Commissions Policy.
• All activities involving accounts with financial institutions also are governed by the Bank and Securities Account Policy.
• All petty cash Transactions must adhere to the Petty Cash Funds Policy.

With respect to the policies set forth in this section, the applicable policy will govern to the extent there is any inconsistency between such policy and this policy.

Each Authorized person approving a Transaction must affix his or her own signature (physical or electronic, as permitted) to any documents that are required to be signed.

Note 5: In addition to Level 1 persons, only the CFO are authorized to approve such transactions.
Note 6: Journal entries over $100,000 will be reviewed by the President.
Note 7: The approval hierarchy for time and attendance is established and maintained in the University’s time and attendance system, known as APS.
Note 8: The establishment of petty cash funds must be approved by CFO.
Note 9: Only the Purchasing Department is authorized to issue Purchase Orders.
Note 10: All contracts that do not use the University’s standard terms need to be approved by the Office of General Counsel.
Note 11: Level 1 and 2 persons have Approval Authority and Delegation Authority for Transactions not otherwise specified in Table A that do not involve the transfer of money or assets but that create a potential legal obligation for BAU, such as an agreement to indemnify another person or to provide insurance coverage for the benefit of another person.

DEFINITIONS

Approval Authority: the authority to approve a Transaction, including sending any written communication or signing any document, instrument, or agreement relating to such Transaction that may be binding on BAU.

Authorized: With respect to a Transaction, that a person has been granted the authority in accordance with this policy to approve such Transaction (and sign the related documents, instruments or agreements, where applicable) and obligate BAU in respect of the amount in question (where applicable), and to charge the relevant BAU cost center for such amount.

Delegation Authority: the authority to grant Approval Authority for a Transaction to another person.

Transaction: A commitment by BAU involving the exchange of money or property, an obligation to perform services requiring payment or use of BAU resources, or the assumption of a liability (e.g., indebtedness) or potential liability, currently or in the future (e.g., BAU agreeing to indemnify another party).

University Affiliate: Each of those entities controlled, directly or indirectly, by the University through (a) ownership of more than 50% of the ownership interests in the entity or (b) the power to appoint or elect a majority of the entity’s governing body (e.g., directors or trustees).

University Community: all BAU faculty, including visiting faculty; researchers, including persons participating in research at or under the auspices of BAU; employees; professional staff; volunteers; fellows, trainees, and post-doctoral appointees; students; and consultants, vendors, and contractors.

EXCEPTIONS

None

POLICY STATEMENT

It is the policy of BAU that appropriate internal controls and accepted best practices be utilized in establishing, maintaining, and conducting transactions in or through BAU Accounts.

BAU Accounts can create legally binding obligations and affect BAU’s financial control environment. The purpose of this policy is to promote the University’s internal control environment through specifying the persons who have the authority to establish, maintain, and conduct transactions in or through BAU Accounts and the procedures with respect to such grants of authority.

This policy applies to any member of the University who seeks to establish, maintain, or conduct transactions in or through BAU Accounts.

All BAU Accounts that were established under proper authority, not otherwise revoked, at the time of establishment will remain validly established and may continue to be maintained and transactions may continue to be conducted in or through them under such prior authority, unless the President or his or her designee determines that such BAU Accounts should no longer be maintained or that transactions may not continue to be conducted in or through them under such prior authority; provided, however, that existing delegations of authority relating to such accounts not otherwise revoked will be deemed revoked as of the effective date of this policy to the extent that they have not been exercised (e.g., if a person was delegated the authority to specify the signatories to a specific BAU account, any previously specified extant signatories remain authorized but new signatories cannot be named under the existing delegation).

All BAU Accounts established after the effective date of this policy must be made in accordance with this policy and existing delegations of authority relating to the opening of BAU Accounts that have not yet been opened will be deemed revoked as of the effective date of this policy.

The President and the CFO is authorized:

A. to establish, maintain, and conduct transactions in or through BAU Accounts.
B. to transact any and all business that either of them deems advisable for BAU with or through banks, brokerage firms, and other financial institutions.
C. to determine that any existing BAU Account should not be maintained and to take such action as is necessary or desirable to cause such BAU Account to be closed.

A request to establish a BAU Account must include the following information:

A. BAU Account name and address.
B. description of the BAU Account purpose and the financial activity to be conducted.
C. name of the financial institution and branch address for the BAU Account.
D. financial requirements and characteristics of the BAU Account, including transaction fees, minimum balance requirements and whether the BAU Account bears interest.
E. currency in which the BAU Account is denominated.
F. names of all proposed authorized signatories for the BAU Account.
G. name and title of the person(s) responsible for reconciliation and reporting for the BAU Account.
H. forecast of estimated cash expected to flow through the BAU Account for the first 12 months.
I. written delegation of authority in a form approved by the President for each proposed authorized signatory on the BAU Account, including authorized transaction levels and transaction types, as appropriate; and
J. such other information as the CFO may require.

PROCEDURES

All transactions conducted in or through any BAU Account (e.g., the incurrence of debt or wiring of funds from an account) are subject to the procedures and limitations on authority specified in the Signature Authority Policy.

With respect to a BAU Account, the President and the CFO each is authorized:

A. to sign checks (using either a hand or facsimile signature), make withdrawals, and make electronic fund transfers for those items provided for in the relevant BAU budget and for such other items as may be required for the general conduct of BAU’s business and financial affairs.

B. to transfer, endorse, sell, assign, set over, and deliver any and all shares of stocks, bonds, debentures, notes, evidences of indebtedness, and other securities registered in the name of or owned by BAU; and

C. to make, execute, and deliver any and all written instruments or other documents necessary or proper to effectuate such operations.

The President and the CFO may:

A. delegate the authority to establish, maintain, and/or conduct transactions in or through a BAU Account to any employee or agent of BAU, specifying such person by name and title and describing the general or specific authority being delegated; and

B. institute such limitations or controls in such delegation as he or she deems necessary or proper in respect of any of the foregoing purposes.

Each such delegation is subject to the authority and procedures set forth in this policy and must be made in writing in a memo approved by the President and must be provided to the designee. The President, and the CFO may revoke any such delegation at any time. A delegation will automatically terminate if the delegee either ceases to be employed or engaged by BAU or ceases to hold the position specified in the delegation or a position that includes the duties contemplated by the delegation.

DEFINITIONS

BAU Account: An account of any BAU entity or unit with a bank, brokerage firm, or other financial institution used to deposit, invest, transfer, exchange, save, or expend funds, securities, or other assets

EXCEPTIONS

None

POLICY STATEMENT

Grants and contracts from grantors who restrict the use of funds are recorded in separate funds during the year.

PROCEDURES

Grants and contracts from grantors who restrict the use of funds are recorded in separate funds during the year. The use of restricted funds is linked to the purpose specified by the donor/grantor. A separate fund is established for each restricted funding source which utilizes line-item budgets. Expenses which fulfill the restrictions of the donor/grantor are recorded in that donor/grantor’s fund. Separate bank accounts are not required for each restricted funding source.

DEFINITIONS

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EXCEPTIONS

None

POLICY STATEMENT

The purpose of this policy is to protect University’s monetary assets from theft and loss. The CFO makes sure of the maintenance of records in a secure manner for the safes, the properly use of the safekeeping devices, and the timely deposit of excess funds.

PROCEDURES

• Cash till lockers must be equipped with a combination or key locks and be locked in the cash safe at the end of the business day.
• During business hours, all cash lockers and safes must be kept locked when not in use.
• The amount of funds secured in a safe overnight, over a weekend, or over a long holiday must be kept to a reasonable minimum. Excess funds must be deposited with the depository bank.
• During business hours, the Finance Office where the cash lockers and safes are stored must not be left unattended. If all of the Finance Office staff members need to be absent from the Office, the Office must be locked.
• Checks and credit card sales slips must be kept separate from cash.
• All checks must be logged or scanned if the accounting detail does not contain sufficient information to obtain replacement checks.
• Access to areas where money is counted or handled must be restricted to those persons directly involved. Visibility by the general public must be restricted for those areas where large volume money-counting activities take place.
• Two persons must be present at all openings and closings.
• At the end of the business day, all doors, windows or other entrances must be securely locked.

DEFINITIONS

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EXCEPTIONS

None