APS #4015

Active

Propriety of Expenses

Policy Profile

APS Policy Title: 
Propriety of Expenses
APS Number: 
4015
Effective Date: 
January 17, 2013
Approved By: 
President Bruce D. Benson
Responsible University Officer: 
Vice President and Chief Financial Officer
Responsible Office: 
Office of University Controller
Policy Contact: 
The appropriate campus Controller, who will consult with the University Controller as appropriate, will respond to questions and provide guidance regarding interpretation of this policy. Any exceptions to this policy must be approved by the University Controller.
Supersedes: 
APS Propriety of Expenses, June 1, 2006
Last Reviewed/Updated date: 
January 17, 2013
Applies to: 
All campuses

I. Introduction

This policy provides guidelines as to the propriety of expenses made using University fundsUniversity FundsAll funds appropriated, generated, awarded, donated or otherwise received by the University regardless of their source. With the exception of University Physicians Incorporated (UPI) funds, the term University Funds does not include Agency Funds (Fund 80) that the University maintains for legally separate External Student Organizations or other entities..  It governs direct payment made to an entity as well as reimbursement paid to an individual or entity. This policy applies to all employeesEmployeesAn individual who currently holds a University employment appointment, whether full-time, part-time, temporary, seasonal or hourly., associatesAssociateAn individual who is not employed by the University, but who is actively involved in furthering the University's mission in some fashion. Examples of associates include members of the Board of Regents and off-campus work-study employers. The term associate does not generally include University vendors, non-employee students, alumni, parents of students, university-sponsored conference attendees, employees of University affiliates, official business guests, donors, sponsors, congressional or state legislative members, or members of the general public., affiliatesAffiliateAn organization that has a contractual or other legal relationship with the University that closely aligns them operationally with the University to more effectively further both the University and the organization's missions. Affiliates are identified at https://www.cusys.edu/controller/policies/supporting%20listing.doc. Affiliates include Blended Organizations and Supporting Organizations., and other individuals (including studentsStudentAny individual who applies to, is accepted for admission, and enrolls for a course at the University of Colorado. This does not include an individual who has never attended or never enrolled at the institution.).

II.  Policy Statement

  1. Processing Expenses

    All expenses made using University fundsUniversity FundsAll funds appropriated, generated, awarded, donated or otherwise received by the University regardless of their source. With the exception of University Physicians Incorporated (UPI) funds, the term University Funds does not include Agency Funds (Fund 80) that the University maintains for legally separate External Student Organizations or other entities. must comply with the Tests of Propriety and other requirements found in this policy and its related procedures.
  2. Funding Restrictions on Expenses

    If more than one regulation or policy applies to a particular transaction, the more restrictive one must be followed.  For example, a sponsor cannot authorize the purchase of first-class airline tickets on a research project because University Fiscal Procedures and related University policies prohibit using University fundsUniversity FundsAll funds appropriated, generated, awarded, donated or otherwise received by the University regardless of their source. With the exception of University Physicians Incorporated (UPI) funds, the term University Funds does not include Agency Funds (Fund 80) that the University maintains for legally separate External Student Organizations or other entities. to purchase first-class air travel.
  3. Approving Expenses

    As indicated in the Administrative Policy Statement Fiscal Roles and Responsibilities, all expenses made using University fundsUniversity FundsAll funds appropriated, generated, awarded, donated or otherwise received by the University regardless of their source. With the exception of University Physicians Incorporated (UPI) funds, the term University Funds does not include Agency Funds (Fund 80) that the University maintains for legally separate External Student Organizations or other entities. must involve at least two different employeesEmployeesAn individual who currently holds a University employment appointment, whether full-time, part-time, temporary, seasonal or hourly.: a requestor and an approver. 

    Approvers may not approve their own transactions (e.g., personal reimbursement, travel expenses, or official functions), nor are approvers permitted to approve transactions that provide personal reimbursement to their supervisors.

    The approver must have sufficient knowledge to evaluate the transaction and the authority to challenge or seek further approvals for questionable transactions. For certain expenses, such as routine procurement card purchases, it is reasonable to conduct the approval process after the transaction has been completed. For others, such as a purchase exceeding $5,000, the approval must be done prior to incurring the expense. Whether the approval process is done before or after the transaction has been completed, it consists of the following four steps:

    1. The approver initially considers the Tests of Propriety presented in this policy, policies set forth in other Administrative Policy Statements, and Procurement Service Center Procedural Statements to evaluate whether or not the transaction is a proper expense of University funds.
    2. The approver next evaluates the expense for propriety with respect to other applicable policies, laws, regulations, and rules; and contracts, grants, and donor restrictions. The approver also evaluates the expense in terms of campus-specific or organizational unitOrganizational UnitA subset of University operations. An Organizational Unit may be a department or any other distinct operational activity with the following characteristics: • Organizational permanency; • Programmatic autonomy; and • An annual operating budget that is fiscally independent. Within the Finance System, these areas are represented on the ChartField tree as Orgs.-specific rules.
    3. The approver is expected to challenge any transaction that does not appear to be an appropriate expenditure of University funds.
    4. If the approver is uncertain that the propriety of the expense has been substantiated, the approver must refer the matter to the next higher level Fiscal RoleFiscal RoleThe categorization of Employees to indicate their fiscal responsibilities to the University as defined in Administrative Policy Statement Fiscal Roles and Responsibilities. Categories include Officers, Fiscal Principals, Fiscal Managers and Fiscal Staff. (as defined in the hierarchy set forth in the Administrative Policy Statement Fiscal Roles and Responsibilities) for further evaluation and approval.
  4. Personal Responsibility

    As indicated in the Administrative Policy Statement Fiscal Roles and Responsibilities, the individuals involved in a transaction may be held personally liable for a transaction that is made in violation of policies, laws, regulations, and rules and contracts, grants and donor restrictions, regardless of when the approval occurred.

    EmployeesEmployeesAn individual who currently holds a University employment appointment, whether full-time, part-time, temporary, seasonal or hourly., associatesAssociateAn individual who is not employed by the University, but who is actively involved in furthering the University's mission in some fashion. Examples of associates include members of the Board of Regents and off-campus work-study employers. The term associate does not generally include University vendors, non-employee students, alumni, parents of students, university-sponsored conference attendees, employees of University affiliates, official business guests, donors, sponsors, congressional or state legislative members, or members of the general public., affiliatesAffiliateAn organization that has a contractual or other legal relationship with the University that closely aligns them operationally with the University to more effectively further both the University and the organization's missions. Affiliates are identified at https://www.cusys.edu/controller/policies/supporting%20listing.doc. Affiliates include Blended Organizations and Supporting Organizations. and other individuals (including studentsStudentAny individual who applies to, is accepted for admission, and enrolls for a course at the University of Colorado. This does not include an individual who has never attended or never enrolled at the institution.) responsible for making expenses using University fundsUniversity FundsAll funds appropriated, generated, awarded, donated or otherwise received by the University regardless of their source. With the exception of University Physicians Incorporated (UPI) funds, the term University Funds does not include Agency Funds (Fund 80) that the University maintains for legally separate External Student Organizations or other entities. have an obligation to stay up-to-date in their knowledge about, and act in compliance with, applicable policies, laws, regulations and rules, and contracts, grants, and donor restrictions, regardless of when the approval occurred.
  5. Tests of Propriety

    The Tests of ProprietyTests of Proprietya framework for evaluating whether or not it is appropriate to use university funds when incurring certain expenses. The list below contains a series of questions designed to test the propriety of expenses by forming a framework for evaulating each transaction. An expenditure of university funds will be considered proper only if it meets all tests of propriety. Is this transaction: 1. For official university business? 2. In the best interests of the university? 3. The most effective way to accomplish official university business? Meaning that, without the expense, would programmatic objectives be difficult or otherwise more costly to achieve? Or would the impact, level, or quality of the achievement be reduced? 4. In compliance with applicable policies, laws, regulations, and rules; and contracts, grants, and donor restrictions including having the required approvals and authorizations by the appropriate fiscal role? Consult with the campus Controller for questions about whether or not a transaction is in compliance and with the Administrative Policy Statement "Fiscal Roles and Responsibilities" for information on fiscal roles. 5. Within the available resources of the responsibility unit, taking into consideration all outstanding commitments and encumbrances? 6. Directly beneficial to the responsibility unit where it is being charged? 7. Reasonable? Meaning that the quantity and quality of goods or services being purchased is sufficient to meet the university's identified need without exceeding it. 8. In compliance with university conflict of interest provisions? Meaning that, if an employee derives private gain, or appears to derive private gain, as a result of the transaction, then the transaction violates the conflict of interest provisions stated in Regent Law, Regent Policy, and in the Administrative Policy Statement, "Conflict of Interest Policy." If any of these questions receives a "no" response, then the expense is not appropriate for university funds. Evaluating the propriety of university expenses requires the exercise of a high degree of judgment and discernment. Therefore, consider the following when deciding whether or not a particular transaction is a proper use of university funds. • "Would a university outsider such as your dentist, a teacher at the local elementary school, the clerk at your grocery store, or your neighbor – consider the expenditure to be a reasonable and necessary expense of public funds? • "Would you want others such as newspaper, radio, television, or other media outlets knowing and reporting about the expenditure?" Think about whether an outsider, such as the general public or an auditor, would consider the expenditure a reasonable expense for university business and an appropriate use of university funds. are used to evaluate the appropriateness of an expenditure.  In order for an expenditure to be considered an appropriate use of University fundsUniversity FundsAll funds appropriated, generated, awarded, donated or otherwise received by the University regardless of their source. With the exception of University Physicians Incorporated (UPI) funds, the term University Funds does not include Agency Funds (Fund 80) that the University maintains for legally separate External Student Organizations or other entities., the answer to each of the Test questions must be “Yes.”  If any of these questions receives a “No” response, then the transaction is not an appropriate use of University funds.  Is the transaction: 

    1. For official university businessOfficial University BusinessAny activity that carries out the university's mission of instruction, research and service or that provides support to the university's instruction, research, and service activities.?
    2. In the best interests of the University?
    3. The most effective way to accomplish official University business?  Meaning that, without the expenses, would programmatic objectives be difficult or otherwise more costly to achieve?  Or would the impact, level, or quality of the achievement be reduced?
    4. In compliance with applicable policies, laws, regulations, and rules; and contracts, grants, and donor restrictions, including having the required approvals and authorizations by the appropriate fiscal role? 
    5. Within the available resourcesAvailable ResourcesFunds legally available to an Organizational Unit to support the costs of carrying out its assigned roles or objectives, including allocated revenue budgets or spending authority (expense budgets), cash, convertible short-term assets (e.g., inventories, receivables), and allocated accumulated net assets. of the responsibility unitResponsibility UnitRefers to the level of Organizational Unit or Sponsored Project for which an individual Fiscal Principal has responsibility., taking into consideration all outstanding commitments and encumbrances?
    6. Directly beneficial to the responsibility unit where it is being charged?
    7. Reasonable?  Meaning that the quantity and quality of goods or services being purchased is sufficient to meet the University’s identified need without exceeding it.
    8. In compliance with University conflict of interestConflict of InterestSituations defined in the Administrative Policy Statement Conflict of Interest Policy in which financial or other personal considerations may compromise, or have the appearance of compromising, an employee's professional judgment in administration, management, instruction, research and other professional activities. This includes situations in which an employee might derive private gain due to her/his association with the University. provisions? 

      Meaning that, if an employee derives private gain, or appears to derive private gain, as a result of the transaction, then the transaction violates the conflict of interest provisions stated in Regent Law, Regent Policy, and in the Administrative Policy Statement Conflicts of Interest and Commitment.

      Evaluating the propriety of university expenses requires the exercise of a high degree of judgment and discernment. Therefore, consider the following when deciding whether or not a particular transaction is a proper use of University funds:
      1. “Would a University outsider - such as your dentist, a teacher at the local elementary school, the clerk at your grocery store, or your neighbor – consider the expenditure to be a reasonable and necessary expense of public funds?
      2. “Would you want others – such as newspaper, radio, television, or other media outlets – knowing and reporting about what you have decided?”

        Think about whether an outsider, such as the general public or an auditor, would consider the expenditure a reasonable expense for University business and an appropriate use of university funds. 
         
  6. Tests of Propriety and Immediate Family Members

    Generally, it is the policy of the University not to pay for an employee’s immediate family member(s)Immediate Family MembersImmediate family is a spouse, SGDP, civil union partner or dependent child.​ to attend an event, function, or activity. However, there are limited instances, such as external community relations or fundraising functions, where it is deemed necessary for immediate family member(s) to attend an event for the purpose of promoting the University. The attendance of immediate family members at such events must be limited to those individuals necessary to represent the University.

III.  Procedures, Forms, Guidelines and Resources

  1. Related Administrative Policy Statements (APS) and Other Policies
  2. Related Procedures
  3. Resources

IV.  Definitions

Italicized terms used in this Administrative Policy Statement are defined in the Policy Glossary.

V.  History

Supersedes:             

  • Administrative Policy Statement Propriety of Expenses dated June 1, 2006
  • Administrative Policy Statement Propriety of Expenditures dated July 1, 2003

VI.  Key Words

Expenses, propriety, sensitive, university, funds, fiscal