Stewardship and Financial Accountability (B10)

Stewardship and Financial Accountability (B10)

SUBJECT:
Stewardship and Financial Accountability

PURPOSE:
Define financial accountability and expectations for persons responsible for financial resources at Graceland University.

POLICY:
The stewardship of human, capital and financial resources is the responsibility of all persons employed by Graceland University. Financial accountability helps to insure that Graceland University has adequate resources to accomplish the institution’s vision, mission, and core values. Being financially accountable helps all Graceland employees to be good stewards over Graceland resources. Financial Accountability is to be a part of each responsible person’s job description, and is to be evaluated as part of the annual Service Share. Appropriate measures will be taken for any abuses as well as for compliance throughout the year.

Financial accountability will be implemented at the function level. Each person assigned to a function will be held accountable for the total actual balance of the revenue and expense accounts within the function being equal to or better than the total budget balance of the function. A function is the accounting code assigned to a defined area for accounting purposes. Each function has a President/Vice President, a Primary and a Secondary responsibility level, with an employee assigned to each level. In most cases, the President/Vice President and the Primary levels are the same person. In some cases, all three levels are the same person.

All responsible persons are involved in establishing the objectives and plan for the area, which then translate into the budget for the area. At times, the plan for the area may need to change, in which case, the budget for the area needs to be changed as well. Or, if some planned expenses exceed expectation, the plan may change to eliminate pending expenses. To the extent that the budget needs to be modified to reflect modified plans, a Budget Revision needs to be prepared and submitted.

All Budget Revisions should be neutral, or better. For any request that is taking resources (reducing income and/or increasing expense) under $5,000, the Secondary and Primary must find the amount within the Secondary area, or within the Primary area, and submit a neutral revision. Non-neutral revisions taking resources submitted to Executive Council, therefore, will always be for $5,000 or more. Non-neutral revisions adding resources, approved by Vice President’s, will be converted by Accounting, to neutral revisions by adding the resource to the Planned Contingency account. The balance of the Planned Contingency account will be communicated to Executive Council. Primaries should think carefully about neutral revisions before approving them, considering whether the resource should be allocated for other purpose besides the account(s) in the revision.

Executive Council will be responsible for the bottom line of the budget (balanced or better) as well as any planned contingency amount held by the budget. Lacking a very good reason, the budget should not be in a negative balance. Non-neutral revisions taking resource can be approved to reduce the bottom line until it is at $0, or made neutral to take away from the Planned Contingency balance until it is at $0. At any time, Executive Council may convert a non-neutral revision taking resource into a neutral revision by requiring reductions in resources in other areas. Executive Council may also deny a revision, or send it back to the department for more attention.

During the Fall Budget Revision process of each year, non-neutral revisions (either adding or taking resources) will be submitted to Executive Council, for balancing and approving in total, resulting in an appropriate bottom line and an appropriate Planned Contingency balance.

ACCOUNTABILITY EXPECTATIONS:

1) It is expected that the Secondary responsibility level will be involved in establishing the budget for the function in response to the annual objectives of the area. Revenues and expenses must be budgeted at realistic levels, based on the best information available at the time when budgets are being set, and should accurately reflect the financial plan for the area for that year. There may be instances where department objectives need to be modified based on available resources that can be allocated.

Secondary responsibility levels will manage the financial activity for the area according to the budget. When it is necessary to make changes to the plan for the area, then a Budget Revision should be submitted to make the corresponding budget changes thereby always reflecting the plan for the area in the area budget.

While individual line items within the function may have budget variances either up or down, the total revenue and expense activity for the function should be equal to or better than the total budget for the function at the end of the year. The Secondary responsibility will monitor the budget and actual balances for the area throughout the year. S/he will have a working knowledge of activity that has happened, and which has not yet happened, and will be able to project all activity to an annual balance. Decisions regarding Budget Revisions or regarding changes in spending will be the result of this ongoing review. 2) It is expected that the Primary responsibility level will assist and supervise the Secondary responsibility level in establishing and managing the budget for each function and the Secondary area as a whole. When individual function areas appear to be exceeding the allocated budget, and the Secondary has not submitted a Budget Revision or communicated a plan to keep the function in budget, the Primary will help to make sure that plans are modified and related Budget Revisions are submitted.3) It is expected that the President/Vice President responsibility level will assist the intermediate Primary responsibility level in establishing and managing the budget for each function and the Primary level as a whole. 4) External commitments for expenditures $1,000 or greater can only be committed by the President and Vice Presidents. It is expected that no Executive Council officer will commit to such expenditures unless, or until, budget for the expenditure is in place. If the budget is not already in place as a result of the Board Approved Budget, or any approved Budget Revision after that point, resources must be identified, and a Budget Revision must be approved before such a commitment can be made.5) It is expected that the President will work with Vice Presidents regarding objectives and financial activity in any function area reporting to the Vice President.

6) It is expected that Board of Trustee members will not make or direct expenditure commitments for Graceland University.

ACCOUNTING PROCESS EXPECTATIONS:

It is expected that all employees and all students conducting University business will follow the appropriate accounting processes for: Advance Requests, Budget Requests and Budget Revisions, Budget Responsibility, Corporate Credit Cards, Expense Reports, Invoices, ICs, Payroll Requests, Purchase Orders, and any other accounting processes.

It is also expected that Graceland resources are acquired and expended in an ethical manner. For more information, see applicable policies and guidelines, as well as the Accounting Services web page for process instructions.

For those persons external to Graceland employees and students, who need reimbursement for some legitimate Graceland expense, an Expense Report form should be submitted to the appropriate department for review and approval.