707 Accounts Payable Policies
 

Accounts Payable policies and procedures have been developed to assure authorization and documentation of all expenditure checks. They are responsible for paying all invoices for the Troy University system. These items include (but not limited to): 1) Invoices attached to approved purchase orders for materials or services received; 2) Student refunds; 3) Utility bills; 4) Invoices attached to approved check requests; 5) Approved travel reimbursement reports; 6) Memos requesting payment with proper documentation; 7) Payments to individuals through consulting agreements for services rendered; 8) Payments to contractors and other vendors for construction projects paid through plant and reserve funds.

The approval levels for various payments can be found in the Financial Adminstration Policy section (701). Note: This information can also be found on the Controller website in the Financial Policies section.

To expedite the processing of check requests, the Accounts Payable Check Request form has been developed for use when requesting checks not related to travel reimbursements or purchase order payments. Payment procedures for purchase orders issued to vendors are described in the Purchasing Policy Section . Payments for other check requests include travel reimbursements, consultant professional service agreements, petty cash replenishments, refunds, etc., must be approved by the Department Chair, Dean, Vice Chancellor, and/or Senior Vice Chancellor for Finance and Business Affairs prior to processing.

The check requests are only to be used for purchases less than $500.00, all other purchases should be on a purchase order or an approved credit card. The accounts payable check request is to be limited in use. The following items are exempt from purchase orders regardless of amounts:

Therefore, vendor payments over $500.00 should have prior approval which will expedite the payment process and eliminate invoices from being held for approval. Whenever purchases are made for items over $500.00 and a purchase order has not been created, Accounts Payable will ask the department requesting payment to create a purchase order after the goods have been received.

All checks will be mailed from the Accounts Payable area unless extenuating circumstances occur. The need to decrease lag time for paying vendors requires checks not to be returned to the department requesting payment. The only exception to this requirement is the payment of employee travel.

The purchase order needs to be approved prior to vendor payment. The departments will create their own requisition on line, however accounts payable needs a copy of the approved purchase order to attach to the invoice.


708 Sales and Use Tax
 
Sales and use tax compliance at Troy University is governed by the following policies/procedures:
  1. All departments and branches must request approval from the appropriate senior administrator prior to initiating new sales activities.
     
  2. The Tax Director shall be notified of all new sales activities.
     
  3. If sales are delivered outside the State of Alabama or if sales activities are conducted outside the State of Alabama, it is the responsibility of the department or branch personnel to complete all registration and license procedures in that state, acquire guidelines and report forms for sales and use taxes in the state, and ensure that all sales activities comply with sales and use tax regulations in the state. These activities should be coordinated with the Troy System Director of Tax Services.
     
  4. Deposits: departments should reconcile taxable sales collections daily and submit deposits with appropriate reports to the campus Cashier.
709 Asset Management
 
Asset management functions are vital to safeguard current Troy assets and to assure future growth. The following policies and procedures have been developed to enhance the University's asset management.

709.1 Investment Policy

Purpose of the Investment Policy

This investment policy is set forth by the Board of Trustees of Troy University in order to:

  1. Define and assign the responsibilities of all involved parties.

  2. Establish a clear understanding of all involved parties of the investment goals and objectives of Funds Held for Investment.

  3. Offer guidance and limitations regarding the investment of Funds Held for Investment.

  4. Establish a basis of evaluating investment results.

  5. Establish the relevant investment horizon for which the Funds Held for Investment assets will be managed.

In general, the purpose of this policy is to outline a philosophy and attitude which will guide the investment management of the invested assets toward the desired results. It is intended to be sufficiently specific to be meaningful, yet flexible enough to be practical.

Delegation of Authority

The Board of Trustees of Troy University is responsible for directing and monitoring the investment management of the University's Funds Held for Investment.  As such, the Board of Trustees is authorized to delegate certain authority.

These may include, but are not limited to:

  1. Investment Management Consultant(s). The consultant may assist in: establishing investment policy, objectives, and guidelines; selecting investment managers; reviewing such managers over time; measuring and evaluating investment performance; and other tasks as deemed appropriate.

  2. Investment Manager(s). The investment manager has discretion to purchase or sell, in the University’s name, the specific securities that will be used to meet the Funds Held for Investment objectives.

  3. Funds Custodian(s). The custodian will physically (or through securities owned by the Fund) collect dividend and interest payments, redeem maturing securities, and effect receipt and delivery following purchases and sales. The custodian may also perform regular accounting of all assets, owned, purchased or sold as well as movement of assets into and out of the Funds Held for Investment accounts.

Assignment of Responsibility

Responsibility of the Board of Trustees of Troy University

The Board of Trustees shall  discharge its duties in good faith like an ordinary prudent person in a like position would exercise under similar circumstances and in a manner the Trustees reasonably believe, to be in the best interest of the University. The Board of Trustees assigns the responsibility of daily oversight and management of all University investment assets to the Chancellor and Senior Vice Chancellor for Finance and Business Affairs.

The Chancellor and Senior Vice Chancellor for Finance and Business Affairs shall be responsible for recommending investment policies and guidelines for approval by the Board of Trustees, implementation of such policies and guidelines and selection of qualified investment professionals including Investment Consultant(s), Investment Manager(s), and Funds Custodian(s); and will oversee investment activities, monitor investment performance and ensure the prudent control of the Funds Held for Investment for the University.

Operational Funds

Because of the diverse nature of funds coming under the management and Control of the Board and the corresponding operational needs of the University, the policies and practices hereinafter set forth necessarily separate funds into two investment categories. Category one is Operational Funds, consisting of relatively short-term investments, while the other is Funds Held for Investment, which consist of relatively long-term assets.

The Board's objective for Operational Funds is to maximize current investment returns consistent with the liquidity needs of the University and to protect the principal.

The Chancellor and Senior Vice Chancellor for Finance and Business Affairs shall be responsible for the direct investment and administration of Operational Funds; however, such investments shall be limited to the following marketable securities:

The maturity range of Operational Funds shall be consistent with liquidity requirements of the funds in this category. However, funds established under certain debt instruments may be invested in accordance with the applicable criteria.

Funds Held for Investment

The Board's objective for Funds Held for Investment is to emphasize income growth (with safety and consistency) and principal growth at a rate at least equal to inflation. The Chancellor and Senior Vice Chancellor for Finance and Business Affairs shall be responsible for the direct investment and administration of long-term assets according to the Funds Held for Investment Policy.

The Funds Held for Investment policy will allow the University’s non-operational funds to be invested to earn a maximum total return that preserves the purchasing power of non-operational funds held for investment while generating an income stream to support the needs of the University; and to more closely correlate the investment strategy therein with the investment policy of the Troy University Foundation within the constraints of what is allowed by the Code of Alabama.  The Funds Held for Investment’s real total return will be sought from an investment strategy that provides an opportunity for superior total returns within acceptable levels of risk and volatility.  Such investment strategy includes transferring a portion of the Funds Held for Investment to the Troy University Foundation to be invested in accordance with its investment policy as directed by its Stewardship Committee and approved by its Board of Directors. 

In order to facilitate communication and reporting between the University Board of Trustees and the Foundation’s Stewardship Committee, a member of the University Board of Trustees shall be appointed to the Foundation Board of Directors as a liaison to the Stewardship Committee and shall serve as a voting director on that committee. The liaison reports to the Board of Trustees the status regarding the University’s investment results and reports recommended changes to the investment policy to the Board of Trustees. The University’s Funds Held for Investment will be designated by the Chancellor and the Senior Vice Chancellor for Finance and Business Affairs as benefiting from a longer-term investment strategy and will from time to time transfer Funds Held for Investment from the University’s reserve funds to the Foundation for investment and will use the same investment and management criteria as those applicable under the University's Investment Policy.

Pass Through or Designated Funds

This policy shall also cover pass through funds (Funds Held for Investment to be forwarded to external fund managers) and any funds managed by the University and designated for specific purposes and not covered by individual investment restrictions (i.e. funds held for investment that may not be co-mingled, bond proceeds during construction, long-term funds available for investment, etc.)

Prudence and Ethical Standards

The standard of prudence to be used by investment officials shall be the “prudent person” standard and shall be applied in the context of managing the overall portfolio. Persons performing the investment functions, acting in accordance with these written policies and procedures, and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations and appropriate recommendations to control adverse developments are reported in a timely fashion. The "prudent person" standard is understood to mean:

"Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived."

Authority to Invest Funds Held for Investment

The investment of endowment funds and funds held for investment for state institutions is authorized under Alabama Code, Section 16-13-2 as follows:

Section 16-13-2

Investment of endowment funds held by State Board of Education and trustees of state institutions.

Authority is hereby granted to the State Board of Education and the board of trustees of all state institutions respectively, where education is a part of the program of the institution, to invest and reinvest endowment funds and funds held for investment, subject to all the terms, conditions, limitations and restrictions imposed by the laws of Alabama upon domestic life insurance companies in the making and disposing of their investments; and subject to like terms, conditions, limitations and restrictions, each such board shall have full power to hold, purchase, sell, assign, transfer and dispose of any of the securities and investments in which any of the funds shall have been invested, as well as the proceeds of said investments and any moneys belonging to said funds; provided, that all rights and privileges of investment and management of funds heretofore granted or vested in said boards shall continue to vest therein. 

709.2 Depositories of University funds

Depositories of University funds must be approved by the Troy University Board of Trustees. With the Board's approval of a depository, the Senior Vice Chancellor for Finance and Business Affairs may authorize the establishment of accounts as needed to support the operations of the Troy University accounting system. The Senior Vice Chancellor for Finance and Business Affairs will ensure that all University funds on deposit are adequately collateralized.

When establishing checking accounts, the Senior Vice Chancellor for Finance and Business Affairs will select the type of account which will assure maximum interest income on the funds being maintained in the accounts. Because of the nature of funds and/or activity, it may be necessary to establish regular checking accounts which do not accrue interest; however, the funds maintained in these accounts will be minimal.

710 Internal Controls
 
Internal control is imperative to safeguard assets, to ensure the accuracy and reliability of accounting data, to promote operational efficiency, to protect personnel, and to help ensure adherence to prescribed policies and institutional regulations. It is the responsibility each administrators and department chair to utilize these basic policies and procedures to establish guidelines which apply specifically to the functions and activities within their departments and /or units and which ensure effective internal control within the individual departments. Each administrator and departmental chair should monitor activities to assess effectiveness of operations, adequacy of controls, and compliance with established laws, regulations, policies, and procedures.

The following general procedures are recommended for departments maintaining petty cash funds and/or collecting for sales, rentals, and/or services:

Petty Cash: Cash on hand and paid invoices must at all times equal the amount of the authorized Petty Cash Fund. In the event an authorized Petty Cash Fund has been divided and is located in more than one office, there must be a memorandum available authorizing and reflecting the distribution of petty cash in the two locations. The department must request receipts for all petty cash disbursements, and may initiate the replenishment of petty cash funds by submitting a Check Request Memorandum, with original receipts attached, to the Controller.

The department should always maintain copies of all check requests and receipts. At least one a year, audits are performed on all petty cash funds by the Controller’s Department.

Resale Activities: The cash register tape of all daily sales must be retained as a permanent file. Resale activities will submit daily deposits Student Financial Services/Cashier. The deposit reports will reflect the date of collections, the amounts of cash, checks, credit cards, and petty cash and Funds Held slips included, and appropriate account number(s) to be credited. Two calculator tapes must accompany all checks; a tape should be run on each of the two check amounts shown. The departments/units should maintain a copy of all deposit reports and Student Financial Services/Cashier cash receipts.

Service/Rental Fees: All departments that collect fees for a service or for rental must utilize a numbered receipt book with duplicate copies to document all collections. The original receipt should be given to the customer and the copy should remain in the book. All deposit reports should reflect the date(s) of collections, appropriate account number(s) to be credited, the amounts of cash, checks, credit cards, and petty cash slips included, and the beginning and ending receipt numbers for collections being deposited. Two calculator tapes must accompany all checks; a tape should be run on each of the two check amounts shown.

The last receipt copy of each deposit should be identified by the notation of "Deposit and Date" on the front of the copy. The departments should maintain a copy of all deposit reports and Student Accounts Receivable cash receipts on file.

Bank Deposits: All departmental/unit funds will be deposited intact; all collections for a specified period will be deposited at the same time. No funds will be carried forward to a later deposit. A collections report, showing the date(s), inclusive receipt numbers, summary of collections by account number and the amounts of cash, checks, credit cards, and petty cash slips included, should be supported by a bank deposit.

The reports should be consecutively numbered and filed in numerical order with the deposit slip attached as a permanent record. All cash and checks received by a department should be deposited in the campus Student Financial Services/Cashier office no later than the next business day. If a department's operations do not conform to any of the activities described above, the Controller will advise the department chair in establishing appropriate procedures for these operations.

710.1 Internal Audits

Internal audits will be performed at random and/or upon request. The Senior Vice Chancellor for Finance and Business Affairs may select the departments and/or activities to be audited, and will determine whether a financial, operational, or compliance audit will be conducted. Administrators, and department chairs may request internal audits by submitting a memorandum to the Senior Vice Chancellor for Finance and Business Affairs explaining the purpose of the requested audit.

With authorization and instructions from the Senior Vice Chancellor for Finance and Business Affairs, these audits will be conducted by the Controller’s staff. The departments/units will not be given prior notice of the audits; however, consideration will be given to departmental activities when scheduling the audits. Internal audits will begin with an interview with the administrator or department chair(s). Everyone will be expected to cooperate fully with the internal auditors in supplying the requested records and information.

Upon completion of the audit, the Senior Vice Chancellor for Finance and Business Affairs will conduct an exit conference to advise the appropriate administrator or Dean of audit findings and recommendations. These administrators will also receive a copy of the formal audit report submitted by the Senior Vice Chancellor for Finance and Business Affairs.

If internal audits should disclose findings of misuse or abuse of University resources, a complete description of the findings will be documented in the audit report, including the names of any individuals involved. The Chancellor, Senior Vice Chancellor for Finance and Business Affairs, and senior administrators will review the nature and severity of the findings and determine the appropriate corrective actions. In addition to adjusting internal controls, policies, and procedures, Troy University officials may respond with any of the following actions:

-Submit written notice of audit findings and reprimand to individual(s) involved, with permanent copy to be placed in Personnel Files.

-Reassign employee(s) to another position and/or department.

-Request immediate restitution of Troy funds.

-Request immediate resignation of employee(s).

-Initiate immediate dismissal of employee(s).

-Report findings to University Police for possible criminal prosecution.

710.2 External Audits

All external audit functions are coordinated by the Senior Vice Chancellor for Finance and Business Affairs. Annual audit reports are submitted to the Chancellor, who subsequently reports this information to the Troy University Board of Trustees. External audits at Troy University are annually conducted by the State of Alabama Department of Examiners of Public Accounts. These audits are conducted in accordance with generally accepted auditing standard and Government Auditing Standards, issued by the Comptroller General of the United States. These standards require that all audits be planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement.

The audits include examination, on a test basis, of evidence supporting the amounts and disclosures in the financial statements. Assessment of the accounting principles used and significant estimates made by management, and evaluation of the overall financial statement presentation are also included in external audits.

In addition to the Examiners of Public Accounts, external audits may also be conducted by federal agency auditors, the U.S. General Accounting Office, the U.S. Internal Revenue Service, and state and local government agencies. External auditors should begin the audit with a conference with the Senior Vice Chancellor for Finance and Business Affairs and/or University administrators subject to audit. All Troy department chairs are expected to cooperate fully with these external auditors in supplying the requested records and information.

Upon completion of audits, an exit conference must be held with the same Troy administrators to discuss findings and recommendations of the external audits. Copies of the formal audit report must be provided to the Senior Vice Chancellor for Finance and Business Affairs and the Chancellor. The University must then take action on the audit recommendations, and if requested, follow with the appropriate audit response.