Print Policies

a. Purpose
Operating Budget PTAs are the primary PTAs for the University's core academic programs and support services. Operating Budget PTAs are used to record accounting transactions for these core activities.

b. Source of Funds
At the beginning of the fiscal year, Operating Budget PTAs receive money only from University unrestricted funds and from appropriate departmental designated funds, gift funds, and endowment income funds (see Guide Memo 3.1.2: University Funds). Changes in funding during the year may be made online by authorized budget officers.

c. Setting Up
The Fund Accounting department of the Controller's Office sets up and maintains PTAs funded from the University's Operating Budget. To request a new Operating Budget P, T, and/or A, a person who has organizational authority submits the Fund Accounting PTA Request form via email to Fund Accounting in the Controller's Office. The form is located at Stanford's Gateway to Financial Activities. 
For step-by-step instructions, see Quick Steps: Request New PTA. 

d. Fiscal Year End
At fiscal year end (August 31), all unused restricted funds that are held in an Operating Budget Award must be returned to their original source fund. If expenditures have exceeded the Expense Control, other sources of funding must be identified to cover the deficit. If there are still budgeted funds available, work with the University's Budget Office to determine how to handle these funds.

e. Closing an Operating Budget PTA
At any time, a department may send a memo to Fund Accounting in the Controller's Office requesting that an Operating Budget P, T, and/or A be closed to expense. The P, T, and/or A will be closed as of the first of the month following the month in which the memo is received, unless otherwise stipulated.

a. Purpose
A grant or contract fund and related expenditure PTA(s) are used to record accounting transactions for a sponsored project. The Research Policy Handbook 13.1, sets out criteria for determining if external support for a project should be handled as a sponsored project. Note that external support that does not meet these criteria is handled as a gift.

b. Source of Funds
A grant or contract fund receives money from the agency sponsoring the research, instruction, or other sponsored activity at the University. Proposals for grants and contracts are processed through the Office of Sponsored Research (OSR) or its delegates. Additional information is available at the DoResearch website. 

c. Setting Up
When a grant or contract has been awarded, OSR assigns a fund (award) number for the sponsored project, and sets up related Project(s) and Task(s) as requested. OSR handles any subsequent accounting system maintenance during the life of the award. OSR also receives awards for student aid directly from a school or from the Graduate Financial Aids Office. The form used to request a PTA is located here. 

d. Early Accounts
For the effective and economical conduct of a sponsored project, it is sometimes necessary for costs to be incurred before the award document has been received. In such cases, departments should request that OSR set up an early PTA. The "Authorization for Early Project Task and Award Request" form is available online at http://doresearch.stanford.edu/research-administration/pta-initiation-and-setup.
The early PTA becomes the permanent PTA when the award is effective; no cost transfers are needed. Pre-award costs must be charged to a pre-award account and may not be placed on an unrelated award and later transferred to the benefiting PTA.

e. Ongoing PTA Management
(1) Allowability of Expenditures
The Principal Investigator (PI) is accountable for the accuracy, allowability, allocability, appropriateness and timely review of charges to a grant or contract PTA (or a related cost sharing PTA) and for ensuring that expenditures do not exceed the level authorized by the award. See Guide Memos:

• 3.1.4: Cost Policy
• 3.2.1: Authorizing Expenditures
• 3.2.2: Cost Transfers
• 3.2.3: Allocations and Offsets

(2) Approvals
The terms of the award and governing cost principles may require approval from the agency for such actions as rebudgeting funds, travel, or purchasing capital equipment. OSR processes approval requests.
(3) Review
The PI or someone else knowledgeable about the sponsored project must review the PTA each month, bringing any questionable items to the PI for decision on any needed action. Review guidance and tools are available at DoResearch. The review is evidenced by a signature on the monthly expenditure report.
(4) Suballocations
A suballocation of a grant or contract may be set up to handle accounting for:

• A subcontract
• Separate portions of the work
• Fabrication of capital equipment
• A conference associated with the project: This is usually accomplished by setting up additional Tasks within the Project, linked to the appropriate award(s).

f. Fiscal Year End
Accounting records for grant and contract PTAs are closed for reporting purposes at fiscal year end. The entire budget and all expenditures for the period of the award are carried forward to the new fiscal year expenditure reports.

g. Closing a Grant or Contract PTA
(1) Definition
Closeout is the administrative process whereby sponsors determine whether all technical and administrative requirements of the grant or contract have been completed. Sponsored projects are considered completed or "closed out" only after the sponsor receives and approves all technical, financial, invention and property reports as required by the terms and conditions of the award and notifies Stanford of its acceptance and signoff.
(2) Principal Investigator's Responsibilities
At the close of a grant or contract, the Principal Investigator is accountable for ensuring that the expenses recorded are complete, allowable, allocable, and without overdrafts. For more information, see Guide Memo 3.2.2: Cost Transfers, and the Research Policy Handbook 15.8 Cost Transfer Policy for Sponsored Projects.
(3) Office of Sponsored Research Responsibilities
OSR prepares the final financial reports and performs a review. Generally, the final financial report is due 90 days after the end of the award.

a. Purpose
Cost sharing represents that portion of the total project costs of a sponsored agreement borne by the University, rather than the sponsor. The Research Policy Handbook 15.3 states the University's policy on cost sharing. Separate PTAs must be established to track committed cost sharing. This is usually accomplished by setting up a cost sharing Task in the Project that holds the sponsored project, and linking it to a cost-sharing award.

b. Source of Funds
The Principal Investigator must identify and provide resources to fund the cost-sharing PTA. Funds from other federal awards may not be used as the source of cost sharing except as authorized by statute. Funds generally come from unrestricted, gift, endowment income, or designated funds.

c. Setting Up
The notice of award prepared by OSR and the signed award document indicate if the project involves cost sharing. OSR will not open the sponsored PTA until the related cost-sharing PTA is opened. When a cost-sharing PTA is required, a person with signature authority over the fund from which the cost-sharing PTA will be funded or guaranteed sends a copy of the cost-sharing budget and the Cost-Sharing Authorization form to OSR requesting the PTA be opened. For information on how to set up a sponsored PTA, see the DoResearch website.

d. Ongoing PTA Management
Cost-sharing PTAs are subject to the same PTA management procedures as described above for grant and contract PTAs.

e. Fiscal Year End
Cost-sharing PTAs must be fully funded at the end of the University's fiscal year. Cost-sharing budgets and expenditures carry over to the new fiscal year, as described above for grant and contract PTAs.

f. Closing a Cost Sharing PTA
The cost-sharing PTA is closed at the same time as the related grant or contract account, as described above.

a. Purpose
A gift PTA is used to record the expenditures that execute the purpose of the gift.

b. Source of Funds
The source of money for a gift fund may be a single gift or multiple gifts that have a common purpose and any related income generated by the gift itself or its associated endowment.

c. Setting Up
When a gift is received whose terms require the opening of a separate fund, the Department submits the Fund Accounting PTA Request form via email to their school/department Fund Accountant in the Controller's Office. They must also fax copies of the donor documentation and a Gift Transmittal Form to their fund accountant. The original donor correspondence regarding the restricted purpose of the gift and the original Gift Transmittal along with the donor check should be sent to Gift Processing. Never hold a donor check while waiting for a PTA. Fund Accounting, in consultation with the school, assigns a fund/award number and sets up the related expenditure Project and Task(s). Fund Accounting creates the Fund Authorization document that describes the purpose of the fund. If the gift creates a new endowment fund, Fund Accounting sets up a related expendable endowment income fund to receive the endowment income. The form used to request a new Gift PTA is located at here.

For step-by-step instructions, see Quick Steps: Request New PTA .

d. Fiscal Year End
At fiscal year end the balance of the gift fund automatically carries over into the new year. If expenditures exceed available funds in an expendable gift fund or an endowment income fund, a transfer from another appropriate fund restricted to departmental use must cover the overdraft. Consult with your fund accountant for the appropriate account to use.

e. Closing a Gift PTA
(1) Endowment
Endowment gift funds and their related endowment income funds are very seldom closed. In the event that a PTA funded by an endowment income fund needs to be closed, the department should contact Fund Accounting. The account will be closed the first of the next month.
(2) Expendable Gift PTAs
At any time during the year, departments may send a memo to Fund Accounting requesting that a PTA for an expendable gift fund be closed to expense. The memo should include the reason for closing the PTA. The PTA will be closed as of the first of the month following the month in which the memo is received, unless otherwise stipulated.

a. Purpose
Designated funds generally contain unrestricted funds that the University (rather than a donor or sponsoring agency) has decided to use for a specific purpose.

b. Source of Funds
There are two sorts of designated funds:
(1) General funds that have been transferred to a department for a specific purpose, such as departmental research support.
(2) Income that has been generated by the department and designated for departmental use. Examples are fees from professional services and conferences.

c. Setting Up
To open a designated fund and related expenditure account, the department sends an email and Fund Accounting PTA Request Form to their school/department Fund Accounting. The form used to request a new PTA is located here.  Fund Accounting, in consultation with the school, assigns a fund (award) number and sets up the related Project and Task(s) with the Fund Authorization information. For step-by-step instructions, see Quick Steps: Request New PTA.

d. Changes to Fund Balances
(1) Designated funds funded by general funds transfers are increased only by transfers from other University designated or unrestricted funds. That is, income cannot be deposited to this kind of fund.
(2) Designated funds holding income are increased as cash receipts are deposited or transferred from other University designated or unrestricted funds.

e. Fiscal Year End
At fiscal year end the balance of the designated fund automatically carries over into the new year. If expenditures exceed available funds in a designated fund, a transfer from another appropriate fund must cover the overdraft. Consult with your fund accountant for the appropriate account to use.

f. Closing a Designated Fund PTA
At any time during the year, the department may send an email to Fund Accounting requesting that a P, T, and/or A for a designated fund be closed to expense. The memo should include the reason for closing the PTA. The PTA will be closed as of the first of the month following the month in which the memo is received, unless otherwise stipulated.

a. Purpose
Capital Asset projects capture expenditures related to facilities and infrastructure projects or computer hardware or software systems that require capitalization. They allow the University to categorize expenditures as capital assets or expenses and to collect expenditures in a way that supports indirect cost recovery, service center rate development and financial reporting.

b. Source of Funds
Multiple sources of funding may support a specific capital project. Examples are gifts, departmental funds, University unrestricted funds, University facilities reserves, debt, and Stanford Infrastructure Program funds.

c. Setting Up
A department planning a facilities construction or renovation project works with  Land, Buildings and Real Estate (LBRE)/Department of Capital Planning to initiate the project via the Facilities Form 1 System. When the project receives approval, a copy of the Facilities Form I and PTA set-up form is submitted to the Capital Accounting section of the Controller's Office. Capital Accounting reviews the Form 1 for necessary approvals, appropriateness of sources of funding and fund availability. It also sets up the PTA and sends out an Authorization memo, which includes the appropriate capital PTA, authorized budget, and applicable asset code for the project, notifying the appropriate individuals so they can grant signature authority on the PTA, as needed. For step-by-step instructions, see Quick Steps: Request New PTA.

For capital asset projects that do not involve facilities (e.g., computer hardware or software systems) the Capital Projects PTA Request Form should be completed and sent to Capital Accounting. The form is located here.   

d. Mid-Project Changes
If changes are needed to source of funds, the department informs Capital Accounting. Once funds are committed via the Form I, the department may not withdraw the funding commitment. However, a substitution of one fund source for another can be made.

e. Fiscal Year End
At fiscal year end the entire budget and expenditures for the project are carried forward to the new fiscal year expenditure statements. Expenditures must be fully funded. The department must work with Capital Accounting throughout the year to cover overdrafts.

f. Closing a Capital Project
The project manager informs Capital Accounting that a project has been completed. Capital Accounting reconciles outstanding commitments, closes the project and award, and returns any unexpended funds to their original source.

A student aid PTA is a special kind of PTA used to record departmental expenditures for student aid from current funds. Student aid PTAs are set up and managed in the same way as Operating Budget, gift, or designated PTAs, depending on the source of funds. See Quick Steps: Request New PTA.

Note: Salaries to student employees and graduate research and teaching assistant tuition allowance are not student aid.

a. Purpose
Auxiliary enterprises are self-supporting entities that support the University's teaching and research mission. They service principally faculty, students, staff and the Stanford community. Major University auxiliaries include Housing and Dining Services, Stanford University Press, and the Department of Athletics.

b. Source of Funds
The source of funds for auxiliary PTAs is the income generated by the auxiliary activity. The amount budgeted for the fiscal year is based on a forecast of expected income and expenses for the year.

c. Setting Up
To set up a new auxiliary account, the department sends a memo to Fund Accounting with the appropriate information. The Fund Accounting PTA Request form is located here. 

d. PTA Management
Auxiliaries are managed similarly to a business enterprise. In addition to income and expense activities, they may have assets, liabilities, and reserve (fund) PTAs.

e. Fiscal Year End
Any surplus or deficit is transferred at year-end to a reserve PTA of the auxiliary.

f. Closing an Auxiliary P, T, and / or A
At any time during the year, the auxiliary may send a memo to Fund Accounting requesting that a P, T, and/or A for the auxiliary be closed. The memo should include the reason for closing the account. The PTA will be closed as of the first of the month following the month in which the memo is received, unless otherwise stipulated.

a. Purpose
A service center is an organizational unit of the University that provides a specific service, group of services, or products to users principally within the University. Large service centers include Information Technology Services (ITS), Land, Buildings and Real Estate (LBRE), and the Medical School's Veterinary Service Center. Smaller service centers are typically found within academic departments. Detailed information on Service Centers is available at DoResearch.

b. Authorization
Proposals for a new service center must have the approval of the department chair and school dean, or their equivalent for nonacademic areas. The Office of Research Administration Policy and Compliance (RAPC) is responsible for setting service center policy and reviewing annual budget submissions which should include the volume projection for services, and ensure the costs are compliant with Federal as well as University regulations. Review the Service Center Manual for additional information.

c. Annual Breakeven
All service centers must annually break even, unless ONR has granted an exception. Twelve months of operational expense should be allocated to users via twelve months of allocation journals. If the year-end under-recovery exceeds 5% of expenses including the prior year balance for administrative service centers or 15% for academic service centers then either the users are charged the under-recovered amount or the service center's department will need to subsidize the entire loss. If the year-end over-recovery exceeds the 5% or 15% limit, a rebate must be allocated to all users of the service center. The breakeven calculation is fully explained here. 

d. Source of Funds
The costs of service center services or products are charged directly to all users based on the actual level of activity using a nondiscriminatory rate schedule. This rate schedule (the service center rate) must be calculated to recover no more or no less than the estimated aggregate cost of the service or product over a fiscal year unless otherwise agreed upon by the federal government.

e. Setting Up
When a new service center is reviewed and approved by RAPC, RAPC will open a new PTA. Some of the information required to open a new service center includes the purpose of the service center, anticipated usage, list of anticipated internal and external users, estimated initial budget, list of capital assets that will be required for the service center operation and a valid Guarantee PTA account. All academic service centers must have a guarantee account, which can be an operating budget, Dean's Executive fund, or unrestricted gift PTA designated by the school dean or department head. See the "Request for Establishing a New Service Center" PTA setup document.

f. Mid-Year Changes
Requests to change a service center rate should be made as soon as it appears an administrative service center will not break even within +/-5% at year-end or an academic service center will not break even within +/-15% at year-end using the previously approved rates. Such requests much be routed to the appropriate service center analyst for review and approval before the new rate can be used. A list of service center analysts is available online.

g. Fiscal Year End
Service center balances at fiscal year end must be within +/- 5% of an administrative service center's annual expenditures, including the prior year balance and +/- 15% of an academic service center's annual expenditures, including prior year balances. When any over-recovery exceeds break-even percentage, the entire surplus balance must be refunded to all users in an equitable manner. When any under-recovery exceeds the applicable percentage, the entire deficit balance must be cleared either by either charging the service center's Guarantee PTA or by allocating a yearend assessment of the entire loss to all users on a prorated usage basis. Service centers that operate under special long-term break-even or pricing agreements with the government will not be required to break even at year-end.

h. Closing a Service Center PTA
The department will need to clear any remaining balance before RAPC can close the service center PTA.

a. Purpose
An expenditure allocation (expense clearing) PTA is a departmental expenditure PTA used to accumulate specific costs as a means of expediting the processing of accounting transactions. Expenditure allocation PTAs are used when the final distribution of expenses is unknown at the time the expenses are incurred. Expenditure allocation PTAs are cleared via iJournals or Labor Distribution adjustments. Labor and material costs cannot be combined in the same expenditure allocation PTA. If labor and material expenses must be combined, the department should establish a service center PTA (see section 9). For related information, see AGM 3.2.3: Allocation and Offsets. Please refer to the DoResearch site for additional guidance on the use of expenditure allocation PTAs.

b. Authorization
Expenditure allocation PTAs must have the approval of the requesting department's Administrative Service Manager and an individual with financial authority over the guarantee PTA.

c. Source of Funds
The requesting department must identify and provide resources to guarantee the expenditure allocation PTA. Funds from sponsored awards may not be used as the guarantee. Guarantees generally come from unrestricted, gift, endowment income, or designated funds. The fund source will be used to guarantee any uncleared expenses at the end of the fiscal year.

d. Setting Up
When a department needs a new expenditure allocation PTA it requests Research Administration Policy and Compliance (RAPC) to set it up by submitting the Request For Expenditure Allocation PTA form. RAPC will review the allocation method(s) to be used by the account administrator and maintain records to support the establishment of the PTA.

A department that administers a program such as a conference or professional journal sponsored by an organization outside the University must use a receivables PTA for expenses incurred on campus. Operating budgets, designated funds and restricted funds cannot be used for such activities. To open a receivables account, contact the Receivables Accounting section of the Controller's Office.

Certain information gathered at the time the account is established may change over time. The information includes the Owner, Manager and Owning-Organization of the Project, Task and Award. This information is crucial to reporting on and analyzing financial activity and may impact authority and approvals. When a change occurs due to turnover or business reorganization the department must update PTA roles and owning, as described at Stanford's Gateway to Financial Activities. 

Retaining records serves two purposes. In the short-term, it provides those responsible for the management of accounts with the means to monitor transactions and resolve problems. In the long-term, it enables the University to comply with Federal Acquisition Regulations, the Internal Revenue Service regulations, and other federal, state and local regulations governing auditability and retention of records.

a. Online Transactions
When the source documentation for a transaction is online, the central administrative office responsible for maintaining the online application is responsible for retaining the online transaction record.

b. Paper Documents
When the source documentation for a transaction is paper, the office that receives the original document is responsible for retaining it. The submitting department is responsible for retaining the support until the transaction has posted to the monthly expenditure report. Originating departments have the responsibility to destroy any paper backup once central administration has successfully processed the reimbursement request, has a copy of the scanned supporting documentation and the transaction has posted to the monthly expenditure report.

Exceptions:
1) For Federal contracts, a copy of the original paper copy must be retained for one year past the date it was scanned;
2) either a paper copy or scanned copy of the monthly grant and contract expenditure statements or quarterly certification statement signed by the principal investigator and task manager should be retained by the department in accordance with the "Direct Charges and Revenues to Contracts and Grants" retention policy.

a. Minimum Paper and Electronic Record Retention Times
Legal and Audit Requirements
When requirements for long-term retention of records overlap, the responsible office should retain records for the maximum period needed to meet legal and audit requirements. In special cases retention times may be extended by request of the central offices. In such a situation the affected will be notified in writing. General rules:

• Tax-Exempt Debt Related Records: Life of the bond issue, plus the life of any issue that refunds the issue, plus six years. Records related to tax-exempt debt include but are not limited to documentation of the use of the debt proceeds (project costs), how debt financed property is used, relevant sponsored research contracts and grants in facilities financed with tax-exempt debt, relevant third party leases of space, etc. Detailed information can be found under the Compliance Guidelines for Tax-Exempt Bonds. 

• Direct Charges and Revenues to Contracts and Grants: Four years following the end date of the award (longer if circumstances related to tax-exempt financing require it, see Tax-Exempt Debt Related Records above).

• Transactions involving depreciable assets:
  • Moveable equipment records (not financed with tax-exempt debt) will becentrally retained three years beyond the disposal of the asset.
  • Transaction records involving other depreciable assets will be retained six years beyond the asset becoming fully depreciated (longer if circumstances related to tax-exempt financing require it, see Tax-Exempt Debt Related Records above.)

• Business Transaction Records (not contract or grant-related): Four years.

• Employee Payroll Information: Six years from retirement or termination.

• Taxable Income (Cash receipt information and billings, and all documents for activities considered unrelated business income. See Guide Memo 1.5.3: Unrelated Business Activity). Four years following the end of the fiscal year. Longer retention times apply to certain documents retained by central offices. For information on a specific document or category of documents, the office responsible for the type of transaction should consult the Office of Sponsored Research (OSR), Research Financial Compliance and Services, or Financial Management Services (FMS) consisting of the Controller's Office, Office of the Treasurer, Procurement (including Accounts Payable, Travel & Reimbursements), Global Services, and Consulting & Support.

b. Management Information
When a central office has retention responsibility, the department initiating a transaction may discard copies of documentation supporting the transaction when it is no longer needed for management purposes. For example, when the transaction is complete and the expenditure statement containing the transaction has been reviewed. At its discretion, a department may keep copies of documents for longer periods.

To safeguard the privacy of individuals, documents that contain salary information must be shredded, incinerated, or otherwise disposed of securely. Departments may arrange for service from a business record destruction vendor.

a. University Officers' Responsibility
The Board of Trustees has delegated to deans, department chairs, directors, principal investigators and other University officers the responsibility for management of funds in their PTAs. See Guide Memo 1.2.1: University Organization. These officers have the authority to expend these funds to accomplish their assigned responsibilities, and are responsible for assuring that expenditures charged to their PTAs are:

• Reasonable and necessary
• Consistent with established University policies and practices applicable to the work of the University, including instruction, research, and public service
• Consistent with sponsor or donor expenditure restrictions

For more information on cost policy, see Guide Memo 3.1.4: Cost Policy.

b. Delegation of Authority
Authority to sign expenditure documents for the purchase of services and materials on a PTA may be delegated and the University officer may authorize the person to whom authority is delegated to further delegate signature authority. The University officer retains accountability for prudent control of the PTA. The University officer may place limits on the dollar level and the types of expenditures for which signature authority is delegated. For more information, see the Financial Authority section of the Gateway to Financial Activities website. 

a. Training
To be granted signature authority in the Oracle Financial system, employees must complete required training, ORA-1101: Cost Policy and FIN-0103: Approving Financial Transactions. For more information, see the Overview: About Financial Authority At Stanford. 

b. Delegation of Signature Authority
(1) University Officers
A letter from University officers indicating the organization for which they are responsible and the administrator to whom they have delegated the ability to manage authority must be on file in the Controller's Office.
(2) Delegation of Signature Authority
To delegate authority for both electronic and paper form transactions, the person responsible for the organization or PTA must delegate such authority via the Authority Manager.

c. Electronic Signature
Users of campus financial systems identify themselves to these systems using approved, secure authentication methods. See Guide Memo 6.4.1: Identification and Authentication Systems, for details on these methods. In addition to these system-independent authentication methods, financial systems may have system-specific authentication methods (e.g., a username and password for a particular system). Regardless of the authentication method, authentication using any of the approved methods is the electronic equivalent of an employee's hand-written signature, and may be used as an "electronic signature" in electronic applications.

d. Signature Security
Only the person to whom authority is delegated may authorize a transaction either manually or electronically. Disciplinary steps will be taken against individuals who are found to have fraudulently signed the name of another person, used the authentication information of another person, or divulged their authentication information to another person. The possible disciplinary actions for violations, which can include termination of employment or student status, will depend on the facts and circumstances of each case. User responsibilities for handling authentication information are described in Guide Memo 6.4.1: Identification and Authentication Systems.

e. Limitations on Signature Authority
(1) Expense Reimbursement
No person may approve his or her own expense reimbursement, or the expense reimbursement of an individual to whom he or she reports either directly or indirectly. Expense reimbursements, which require two signatures, must have the signatures of the person incurring the expense and the person responsible for the management of the PTA or a properly delegated agent.
(2) Independent Review
Business expenses incurred by or on behalf of the President, the Provost, a direct report to the President or the Provost, or the senior financial officer of the academic units must be approved by an independent reviewer designated by the CFO. Expenses for ordinary supplies, customarily available for all employees in an office, should be approved by a local business officer and need not be routed for independent review.
(3) Salaries
No person may sign any payroll/personnel form that affects his or her own salary, or payroll/personnel forms that affect the salary of an individual to whom he or she reports either directly or indirectly.
(4) Conflict of Interest
No person may authorize payment to any individual or business where there is a conflict of interest. See Guide Memo 1.5.2: Staff Policy on Conflict of Commitment and Interest.

f. Revoking Signature Authority

The University officer who delegated authority (or the person who currently holds that position) is responsible to ensure granted authority reflects the unit's current needs. When a person with signature authority transfers to another department or leaves the University, his/her authority is automatically revoked. Changes for other operational reasons can be made at any time through the Authority Manager. For more information, see Quick Steps: Grant, Change, Revoke or Restore Financial Authority to Others. 

a. Departmental Review
The deans, department chairs, directors, principal investigators and other University officers to whom funds are allocated are responsible for reviewing their expense transactions and monthly expenditure/operating statements to assure that:

• Any expenditure is necessary and for University purposes.
• Charges are correct.
• Charges are allowable for the PTA.
• Charges are correctly coded as allowable or unallowable for inclusion in the University's indirect cost rate calculations.
• Charges are allocable to the PTA.
• Any allocation of costs is reasonable and equitable.
• Charges are appropriately documented, and are recorded in a consistent manner within departmental accounts.

b. Evidence of Review
Review of transactions is evidenced by a manual or electronic signature in the appropriate field of the form.

c. Responsibility for Error Correction
The department is responsible for correction of errors. Time limits for error correction are outlined in Guide Memo 3.2.2: Cost Transfers, and the Research Policy Handbook 15.3,  Cost Sharing Policy. Occasionally errors are found after the regular time limits for correction. Regardless of when the error is found, the University officer whose PTA used the good or service must pay for it, either from the same or another appropriate PTA.

d. Central Office Review
To supplement (but not replace) the University officer's basic review responsibility, Financial Management Services (including Procurement and the Controller's Office) and the Office of Sponsored Research review University selected expense transactions. If incorrect or improper charges are found, the reviewing office directs the person responsible for the expenditures to correct the error. If necessary, the reviewing office may correct the department's error and will provide the department with a copy of the accounting entry.

a. Conformity to External Restrictions
Expenditures of restricted funds, such as organized research or gift funds, whether from federal or non-federal sources, must conform to any limitations or exclusions set forth in the agreement or gift document. Expenditures of funds for federally sponsored projects are subject to the allowability, allocability, and reasonableness standards of the Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions, and to negotiated agreements between the University and the federal government. Cost-sharing tasks are subject to the same standards as the sponsored project that they support.

b. Monthly Review of Charges
For sponsored projects and related cost-sharing tasks, the expenditure statements must be reviewed each month, as noted in Guide Memo 3.1.3: Expenditure Accounts (PTA). The review should include areas such as those covered by the Monthly Review Guidance and Monthly Reconciliation tools. The review is evidenced by a signature on the monthly expenditure statement. The review must be completed within two months of the end of the month of the statement (e.g., October expenditures must be reviewed no later than December 31).

c. Quarterly Certification of Charges
The following certification of direct costs is preprinted on expenditure statements for sponsored projects and cost-sharing tasks each month:

"TO THE BEST OF MY KNOWLEDGE, SALARY AND WAGES CHARGED TO THIS PROJECT ARE APPROPRIATE IN RELATION TO WORK PERFORMED ON THIS PROJECT. ALL OTHER COSTS CHARGED TO THIS PROJECT ARE, TO THE BEST OF MY KNOWLEDGE, APPROPRIATE. WHERE REQUIRED, CORRECTIONS HAVE BEEN OR WILL BE MADE THROUGH THE ACCOUNTING SYSTEM.PRINCIPAL INVESTIGATOR'S
Signature___________________________Date_____________"

This certification statement must be signed by the principal investigator. Quarterly certification is the responsibility of the project Principal Investigator (or Co-PI). A PI may delegate the monthly review of statements for accuracy, but may not delegate certification of the appropriateness of the charges. Only the last expenditure statement for the academic quarter must be signed by the principal investigator. The quarterly certification must be completed within two months of the end of the academic quarter being certified, as described in the Monthly Review and Quarterly PI Review Certification. This signature means that the principal investigator has reviewed all direct charges to the project and that either the charges on the expenditure statement are reasonably accurate as shown, or that the appropriate individual in the department has initiated accounting entries to correct any differences. Review and correction of differences must be completed within the deadlines outlined on the DoResearch site.

d. Record Retention
The certified expenditure statements must be retained in the department files for future review by government and University auditors in accordance with University record retention requirements for sponsored projects (see Guide Memo 3.1.5: Retention of Financial Records.

Cognizant Office
Financial Management Services (including Procurement and the Controller's Office) and the Research Financial Compliance and Services (RFCS) Office are available to answer questions about expenditure authorization. For contact information, see the Gateway to Financial Activities website or the DoResearch website.  

An expense allocation is a method that enables apportionment of a particular expense or expenses to Projects-Tasks-Awards (PTAs) that specifically benefit from those charges. Allocations are used in situations where it is difficult to determine in advance how much to charge each PTA for a shared supply or service. They are used to distribute expenses to PTAs receiving the benefit of the good or service. Allocations are often used to distribute costs from expenditure allocation PTAs (formerly knows as "clearing accounts") or service centers. They may also be used to distribute costs between benefiting PTAs when a purchase was originally charged to one PTA and one or more other PTAs also benefited from the purchase. Allocations are also used to distribute charges from independent systems (known as "feeders") into the financial system. Often allocations are repetitive or are required on a regular basis.

a. Expenditure Allocation PTA Definition
An expenditure allocation PTA, as described in Guide Memo 3.1.3: Expenditure Accounts (PTAs) is a special PTA in which charges for materials, supplies, services, or salaries are accumulated, and then allocated each month to PTAs receiving the benefit of the good or service. Salary and material costs cannot be combined in the same expenditure allocation PTA. If salary and material expenses must be combined, a service center must be used. Sponsored project PTAs may not be used as expenditure allocation PTAs.

b. Allocation Basis
The basis of allocation/distribution (e.g., effort, square footage, headcount) must logically relate to the type of costs being allocated. It must produce an allocation to each activity/account in reasonable proportion to the benefits received. The allocation methodology must produce a result that is allowable, allocable, reasonable and consistent. Feeder systems typically charge other departments based on usage or services provided at specified rates. Administrative expenses may not be distributed or rotated among sponsored agreements. Departments shall not use any type of pooled allocation method to charge expenses to federal sponsored agreements except from a service center with approved rates, or as described in the Research Policy Handbook. Training is provided in the Understanding Cost Policy class.

c. Documentation
Online expense allocation documentation must clearly show the nature of the cost being allocated. The originator of the journal must include comments about the distribution basis in the online documentation and retain documentation of the allocation methodology and calculation resultsin accordance with the government and University's record retention requirements. Feeder systems track the charges and maintain documentation in their own systems.

d. Approvals
Before an allocation journal or feeder is submitted to the financial system, the department processing the journal/feeder must have received approval from an authorized individual for each PTA charged. Certain feeder transactions, such as utility charges, are approved implicitly as part of the annual budget process. Approval for other allocations and feeders can be a "blanket" approval for regular ongoing costs allocated in a consistent manner. Approval can be evidenced in writing in a memo, on a request form (e.g., SU-13 or similar form) or via electronic means. The department originating the journal/feeder must maintain documentation of written approval. For allocation journals, written approval must be on file from individuals with signature authority over the PTAs being charged, while online approval is required for the PTA or Project-Fund-Object being credited. The originator of the journal attests to the following when creating the allocation journal:

• This allocation is being processed in accordance with policy
• The cost is an appropriate charge to the PTAs sharing the expense
• The PTA actually benefited from the cost of the goods and services
• The transaction is documented according to policy

Feeder transactions are not routed for online approval, nor does the originator make the above attestation in the financial system. The ability to act as a feeder into the financial system is granted by the Controller's Office with the understanding that the transactions follow University policy. Feeder owners must sign an annual attestation that they understand and accept their responsibilities and have followed the policies, and must pass Cost Policy Training as described in Guide Memos 3.1.4: Cost Policy, and 3.2.1: Authorizing Expenditures.

e. Deadlines
Allocation journals should be prepared and submitted before the end of the month following the month the expense was posted.
Example: A cost that appears on an expenditure allocation PTA's March expenditure or operating statement should be allocated to the PTAs that benefited from the service by the last working day in April. Allocations submitted after the deadlines must include a valid reason for the delay.

The federal government and some nongovernment sponsors require that the University charge salaries and wages to sponsored projects as they are earned. However, many faculty members who are on 9-, 10-, or 11-month appointments choose to have a reduced salary amount paid over all 12 months of the year. To correctly charge sponsored project PTAs or the related cost sharing PTAs in such situations, departments may use the Labor Distribution Schedule method or the Salary Distribution Offset method. The Labor Distribution Schedule method is preferred, as it requires fewer accounting transactions to accomplish the result. In the employee's Oracle Labor Distribution Schedule sponsored or cost sharing PTAs are charged the appropriate percentage of the faculty member's 9-month salary (subject to any regulatory caps) for the academic period. The remainder of the amount to be PAID over 12 months is charged to an operating budget or other unrestricted PTA. For templates to aid in the calculation, see Faculty Labor Distribution Entry Templates.  When following the Salary Distribution Offset (using after-the-fact Labor Distribution Adjustments for salary expenses originally incurred after March 31, 2005, or Salary Journals for salary expenses originally incurred before April 1, 2005) method the department must:

• Charge the faculty member's entire salary to the operating budget PTA paying for the nonresearch portion of salary. (For more information on payroll processing see Guide Memo 2.2.3: University Payroll, and Faculty Specific Payroll Administration. 
• Record a transfer to allocate the amount of earned salary to the sponsored project(s).
  The salary actually paid will show as a charge on the expenditure detail report for the operating budget PTA. The salary earned will show as a charge on the sponsored project expenditure detail report and as a credit on the operating budget expenditure detail report.

a. Approvals
Online signature of the person responsible for the PTA to be debited is required. Signature for the PTA to be credited is not required.

b. Deadlines
Salary Distribution Offset transfers should be prepared and submitted in the month the salary is earned.
Example: Salary earned during April should be recorded during April.
A Salary Distribution Offset transfer submitted after the deadline must include a valid reason for the delay.

a. Getting Started
Allocations and offsets, including feeders, are submitted using iJournals or Labor Distribution Adjustments in the University's online financial system. Guidance on using the University's online accounting system, including procedures for using Allocation and Salary Journals, Uploads, Templates, and Labor Distribution Adjustments, is available from the Month-End/Year-End Close section of the Gateway to Financial Activities website.

b. Nonsalary Charges
Allocations from expenditure allocation PTAs, service centers or other PTAs may be made by the following methods:

• Allocation Journals are used for submitting a new allocation, a transaction containing repetitive transfers where charges have been previously authorized. Journal transactions entered using this form are limited to non-salary/student-aid expenditure types.
• Allocation Templates may be set up to save time in processing repetitive allocations each month.
• Upload Allocation and Feeder Journals may be used to upload an allocation created in another system.

c. Salary Charges
Allocations from expenditure allocation PTAs or offsets are made by using a Labor Distribution Adjustment or a Salary Journal. See Guide Memo 3.2.2: Cost Transfers, for further guidance.

d. Identification Needed
All users of the University's online financial system must have a SUNet ID and password. Approvers must also have received appropriate delegated authority through the Authority Manager system (tutorial available online here) and passed the online test in the Cost Policy and Chart of Accounts class with 100% (available online here).  See Guide Memo 3.2.1: Authorizing Expenditures.

e. Review
To ensure compliance with this Guide Memo, the Office of Sponsored Research will periodically sample and review the supporting documentation. Originators may contact the Office of Sponsored Research for further guidance, see the DoResearch website.

Expendable Funds include all University funds that are not endowment funds. They represent a significant component of University investment capital and had an average total balance of $3.1 billion in FY2011. Expendable Funds include a diverse collection of approximately 15,000 separate funds including several different types of funds:

• Endowment Income Funds: Unexpended payout from pure endowment funds and funds functioning as endowment ("FFE").
• Recycling Pool: Proceeds from internal debt amortization available to lend to projects.
• Insurance and Benefit Program Reserves: Reserves held for claims within self-insurance programs.
• Student Loan Funds: Funds available to lend for student loans.
• Plant Funds: Gifts designated for facilities, not yet expended.
• Agency Funds: Funds held by Stanford University on behalf of third parties (e.g., Stanford Health Care, Lucile Packard Children's Hospital).
• Gifts Pending Designation: Gift funds received for which the purpose has not yet been designated and which are not invested in the Merged Pool.
• Restricted Funds: Gifts or other restricted expendable funds not yet expended.
• Designated Funds: Funds designated for a specific school, department, faculty or purpose, not yet expended.
• Unrestricted Funds: University, school, department, auxiliary or faculty funds held in reserve or pending expenditure.

a. Endowment Income Funds
Endowment Income Funds holding unspent prior years' payout from pure endowments (but not from FFE) will have that payout invested in the "Endowment Income Funds Pool (EIFP)." One hundred percent of the assets in the EIFP are to be invested by Stanford Management Company (SMC) in cash vehicles.¹

b. Expendable Funds Pool
All other Expendable Funds will be invested in a single, merged investment pool, the "Expendable Funds Pool" ("EFP"). A minimum of approximately $100 million of the EFP is to be invested by SMC in cash vehicles, rebalanced periodically at the discretion of the Chief Financial Officer and the Treasurer's Office. A higher minimum target level for cash vehicles may be established by the University's President or Chief Financial Officer as deemed appropriate. The remainder of the EFP is to be cross-invested in the Merged Pool ("MP"). ²

a. Endowment Income Funds
Each endowment income fund holding unspent prior years' payout on pure endowments will receive an allocation equal to the return on cash vehicles, less any management expenses.

b. Money-Market Accounts
The following types of Expendable Funds will be treated as "Money-Market Accounts" and will receive an allocation equal to the return on cash vehicles, less any management expenses:

• Recycling Pool
• Insurance and Benefit Program Reserves
• Student Loan Funds
• Plant Funds, only for gift funds exceeding $1 million
• Agency Funds
• Gifts Pending Designation, excluding class gift funds and donor funds of less than $100,000
• Restricted Funds, only when stipulated by donor requirement

c. Zero-Interest Accounts
All other Expendable Funds will be treated as "Zero-Interest Accounts" and receive no allocation to the individual fund.

Each of the Provost’s General Fund, School of Medicine (“SoM”) Dean’s Unrestricted Fund and Graduate School of Business (“GSB”) Dean’s Unrestricted Fund will receive an allocation related to the zero-interest account balances.

• SoM Dean's Unrestricted Fund will receive an allocation related to zero-interest account balances controlled by the SoM Dean's office, departments and faculty.
• GSB Dean's Unrestricted Fund will receive an allocation related to zero-interest account balances controlled by the GSB dean's office, departments and faculty.
• Provost's General Fund will receive an allocation related to all other zero-interest account balances.

The allocation shall vary between 0% and 5.5% of the zero-interest account average monthly balances during the prior fiscal year:

• The allocation shall be 0% if the prior year's return of the EFP is less than or equal to 0%
• The allocation shall be 5.5% if the prior year's return of the EFP is greater than or equal to 5.5%
• The allocation shall be equal to the prior year's return of the EFP if the actual return is greater than 0% and less than 5.5%

To the extent the allocation on zero-interest account balances is less than 5.5% in any year, the Provost and Deans may, at their individual discretion, elect to offset the shortfall by reducing an equivalent amount of the contribution in that year from general funds and deans' funds to the Capital Facilities Fund ("CFF").

The total allocation to Money-Market Accounts, General Fund and Dean's Unrestricted Funds will differ from the investment returns of the EFP. These differences will be buffered by the "Tier I Buffer" and the "Tier II Buffer."

• The Tier I Buffer is a group of unrestricted FFE funds. These funds are fully invested in the MP and receive a regular MP-based payout used to support Provost's General Fund.
• The Tier II Buffer is a single unrestricted FFE fund. This fund is also fully invested in the MP, and it receives a regular MP-based payout that is distributed at the President's discretion ("President's Funds"). In addition, the President is authorized to withdraw up to $30 million in principal each year to be used at his/her discretion.

To the extent there is a shortfall in EFP investment returns relative to stipulated allocations, principal will be withdrawn from the Tier I and Tier II Buffers to make up such shortfall, as follows:

• First, from the Tier I Buffer up to a limit of 20% of the year-end value of the Tier I Buffer in any fiscal year
• Second, from the Tier II Buffer until fully depleted
• Third, from the remainder of the Tier I Buffer

To the extent there is a surplus of EFP investment returns relative to stipulated allocations, excess returns will be added to the Tier I and Tier II Buffers as follows:

• First, to the Tier I Buffer until such time as the value of the Tier I Buffer, in total, equals 35% of the total value of the EFP ("the target threshold")
• Second, to the Tier II Buffer

Once each year, the Trustee Committee on Finance will review the status of the EFP, including fund balances, asset allocation, investment returns, payout and buffer balances.

The term "card or payment account" as used in this policy includes the use of credit or debit card accounts or account numbers (such as a bank account) or third party account numbers (such as a PayPal or Google accounts). For purposes of this policy, card or payment account acceptance and processing is defined as using any application or device for accepting a card or payment account as payment for goods or services sold by a Stanford University entity. This policy does not apply to the Stanford Card Plan, Cardinal Dollars or to the University's PCard or Travel credit card programs.

A card or payment account provides a convenient way to handle business transactions such as conference registration, the purchase of course materials, or the purchase of meals at a campus dining facility. In order to accept card or payment account payments it is the University's best interest that the acceptance and processing is compliant with Payment Card Industry Data Security Standards for safeguarding card numbers, account numbers, and other prohibited or restricted data as listed in Administrative Guide Memo 6.3.1: Information Security. In addition, funds from payments must be securely transferred to the University's financial systems. This policy is to establish guidelines for card or payment account acceptance and processing.

a. Relation to University Mission
Any use of card or payment account acceptance and processing methods at Stanford must be consistent with Administrative Guide Memo 1.5.3, Unrelated Business Activity, which prohibits the use of Stanford resources for any activity not related to the University's mission.

b. Authorized Vendors and Service Providers
Departments must use a Stanford authorized payment application, payment mechanism, point of sale terminal hardware vendor (if applicable). These are listed at http://treasurer.stanford.edu/merchants/.

A service provider that stores, processes, or transmits cardholder data on behalf of the University must be validated as a Level 1 service provider by a Qualified Security Assessor (QSA) and listed on Visa’s Global Registry of Service Providers. The company listing must be current and the service being provided to the University must match the service listed on Visa’s website.

A company providing a service that can affect the security of an eCommerce transaction (eTransaction) must be validated by a QSA as a service provider and the service being provided to the University must match the services validated as compliant during the QSA assessment.

c. University Card and Payment Account User Agreement
Departments wishing to engage in accepting card or payment accounts for the sale of goods or services must obtain approval from the Office of the Treasurer and comply with all terms of the University's Card and Payment Account User Agreement.

d. Information Security
Card and payment account numbers are classified as Prohibited Data. Departments must comply with Administrative Guide Memo 6.3.1: Information Security, and safeguard the confidentiality of Prohibited Data related to purchases of goods or services. They may not store any Prohibited card or payment account information. They must only use equipment authorized by the Office of the Treasurer to process payment information and are required to use secure and approved, or PCI DSS certified, encrypted connections to transmit payment information.

e. For departments operating electronic commerce websites:
(1) Departments must post a privacy policy on their website that is approved by the University Privacy Officer or the Office of the General Counsel. Vendors and/or Service Providers who independently collect card or third party account information must have privacy and terms of use policies on their websites. These policies must conform to applicable federal and state laws, as well as the University's privacy policies.
(2) Third-party advertising is not allowed on any web pages which are hosted on the stanford.edu domain, or which use Stanford's name or emblems. Exceptions to this policy may be granted by the Vice President for Business Affairs and CFO. Advertising does not include mentioning the name of third parties that are co-sponsoring events with Stanford.

a. Departments accepting card or payment accounts are responsible for complying with Payment Card Industry Data Security Standards (PCI DSS) and all card brand rules and regulations if applicable, or using secure standard financial industry practices, if PCI DSS standards are not applicable.

b. Information about requesting a merchant account for payment acceptance is available at the Office of the Treasurer's website. Departments must work with representatives from the Treasurer's Office and the Procurement Office to establish and manage card and payment account acceptance and processing.

Third party vendors and service providers operating on Stanford's campus must handle data and other information generated from financial transactions involving the Stanford community ("Data") according to the Third Party Security Requirements listed on the Information Security Office’s website.

• Administrative Guide Memo 1.4.1, Academic and Business Relationships with Third Parties
• Administrative Guide Memo 1.5.3, Unrelated Business Activity
• Administrative Guide Memo 6.3.1, Information Security
• Stanford authorized payment applications and service providers—http://treasurer.stanford.edu/merchants/
• Payment Card Industry Data Security Standards—http://www.pcisecuritystandards.org
• Information Security Office—http://security.stanford.edu
• Additional information security guidelines, procedures, standards, and practices can be found at http://securecomputing.stanford.edu