University Financial Policies
The Financial Policies contain the governing principals and standards for the financial management of Pepperdine University. The development of the Financial Policies are the primary responsibility of the Finance Office.
Section 1.1: Responsibility for Expending University Funds
This policy is designed to outline the responsibilities of various University constituents in delegating authority for spending University funds, and the corresponding responsibilities of those to whom authority has been delegated.
Delegating Authority to Expend Funds
i. The Board of Regents grants authority to the chair, vice chair, secretary and assistant secretary of the Board of Regents and Authorized Officers to execute documents (see Execution of Documents Policy, Section 11.1.).
ii. Only the Executive Vice President or the Vice President and Chief Financial Officer are authorized to delegate authority to other officers and employees to execute documents in amounts of $25,000 or less.
Responsibility of Authority to Expend Funds
Any employee who is authorized to execute documents to expend funds and bind the University
is responsible for assuring that expenditures are: i. Reasonable and necessary.
ii. Consistent with established University policies and practices applicable to the work of the University, including instruction, research, and public service.
iii. Consistent with sponsor or donor expenditure restrictions.
Signature Security— Only the person to whom authority is delegated may expend funds by authorizing a transaction either manually or electronically.
Deactivating Expenditure Authority — When a person with expenditure authority transfers to another department or leaves the University, the person's current supervisor is responsible for deactivating the departing employee's expenditure authority.
Expenses and Reimbursements — No person may approve his or her own expenses or reimbursements, or the expenses or reimbursements of an individual to whom he or she reports directly. Expenses of the President and Chief Executive Officer or of employees reporting directly to the President and Chief Executive Officer are approved by the Associate Vice President and University Controller.
Salaries — No person may sign or approve any payroll/personnel form that affects his or her own salary, or that affects the salary of an individual to whom he or she reports directly.
Conflict of Interest — No person may authorize payment to any individual or business where there is a conflict of interest (see Conflict of Interest Policy, https://community.pepperdine.edu/hr/policies/policymanual.htm#11-6).
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 Circular A-21, Cost Principles for Educational Institutions, and to negotiated agreements between the University and the federal government. Cost-sharing expenses are subject to the same standards as the sponsored project that they support.
Monthly Review of Charges — For sponsored projects and related cost-sharing expenses, the expenditure statements must be reviewed each month. 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). For more details see the Research and Sponsored Programs website: https://community.pepperdine.edu/rsp/.
Section 1.2 Responsibility for University Financial Assets
This policy was approved by the Board of Regents according to the Amended and Restated Bylaws of Pepperdine University. It outlines the roles and responsibilities of various University officers as defined in the Authorizing Execution of Documents policy and their delegates in managing the University's financial assets.
Members of the Board of Regents – Any two of the chair, vice chair, secretary or assistant secretary of the Board of Regents may execute any document as delegated in 11.1.B of the Execution of Documents policy.
Authorized Officers – One or more Authorized Officers, as defined in 11.1.A.1. of the Execution of Documents Policy, acting alone or jointly may execute documents on behalf of the University.
Major Area Administrators – Major Area Administrators are responsible for managing funds in their major area. They are expected to achieve budgeted revenues and operate within budgeted expenses. They hold Major Area Budget Managers accountable for operating and budgetary results and are also responsible for maintaining adequate reserves for unforeseen contingencies during the fiscal year. A list of Major Area Administrators may be found at https://community.pepperdine.edu/finance/accounting/majorareacontacts.htm.
Major Area Budget Managers – Major Area Budget Managers are responsible for ensuring the appropriateness and overall accuracy of their major area budgets and for actual results. Major Area Budget Managers are responsible for submitting applicable deliverables to the Office of Financial Planning and preparation of budget information, as well as overseeing and coordinating the day-to-day financial operation of their major area. A list of Major Area Budget Managers may be found at https://community.pepperdine.edu/finance/accounting/majorareacontacts.htm.
Departmental Budget Managers – Departmental Budget Managers are responsible for managing funds in their specific area of responsibility and for exercising sound financial judgment. They are responsible for ensuring the appropriateness and overall accuracy of their budgets and operating results and preventing irregularities.
Approvers — Approvers have been delegated authority to expend University funds within specified limits and are responsible for ensuring the appropriateness of these expenditures and for recording transactions accurately.
Requestors – Requestors are responsible for initiating transactions in the PeopleSoft Financial System on behalf of the University and for assuring that requisitions are entered in a timely manner and recorded accurately. They are also responsible for monitoring the progress and approval process of requisitions they initiate to ensure desired outcomes.
President -- The President is the Chief Executive Officer of the university and assumes general responsibility for its overall sound operation, including academic, operational, and fiscal matters. The president is responsible for setting future goals and strategic direction for the university including recommendations to the board of trustees, oversees and approves the university budget, and holds financial signatory approval for transactions not requiring board approval.
Executive Vice President – The University's Executive Vice President and Chief Operating Officer is charged with management of the overall business health of the university. The office's responsibilities encompass broad operational, financial, budgeting, and related fiscal duties. The Executive Vice President ensures the university's financial, capital, and operational resources are optimally deployed in support of the institution's mission and oversees many departments with financial authority.
Vice President and Chief Financial Officer —The Vice President and Chief Financial Officer (CFO) is primarily responsible for managing the financial risks of the University. The CFO is responsible for financial planning and record-keeping, as well as financial reporting. The CFO supervises all financial operations of the University and assists on all strategic and tactical financial matters as they relate to operations, budget management, cost benefit analysis and financial forecasting needs. The CFO is responsible for the sound and strategic management of all university financial resources and for promoting the overall well-being and mission of the University by overseeing and assuring the delivery of financial and accounting services to the Pepperdine community. The CFO exercises legal and fiduciary responsibility over all funds entrusted to the University by maintaining adequate systems of internal control and financial reporting. The CFO supports decision making by providing advice, counsel and financial information to University management and the Board of Regents. The CFO is responsible for establishing a sound business environment, for the acquisition and disposition of property, and for the expenditure of University funds. Additionally, the CFO is responsible for planning and management of the University's debt portfolio and debt policy and serves as a liaison with the Board of Regents' Finance and Administration Committee.
Associate Vice President and University Controller – The Associate Vice President and University Controller (Controller) is responsible for maintaining, interpreting and reporting financial information that is useful for evaluating the management of resources in attaining the University's mission. The Controller provides leadership in development of effective control systems to safeguard University assets and is the custodian of the University's financial records. Additionally, the Controller is responsible for coordinating and overseeing the day-to-day business of the University.
Senior Vice President for Investments and Chief Investment Officer — The Senior Vice President for Investments and Chief Investment Officer is responsible for the planning and management of the University's investments and treasury functions, real estate operations, and trust and estate services.
Vice President for Administration - The Vice President for Administration serves as the chief of staff for the executive vice president and is responsible for the sound and strategic management of the university's financial resources in a broad portfolio of administrative offices and functions including insurance and risk, human resources, planning, operations, and construction, and emergency management.
Chief Business Officer – The Chief Business Officer (CBO) is responsible for the oversight and management of the University's auxiliary services and contracts.
General Counsel – The General Counsel is responsible for providing legal advice to the University and its officers. The General Counsel is also responsible for reviewing contracts that are $75,000 or more and/or that present a high or unusual risk to the University.
Chief Information Officer — The Chief Information Officer (CIO) is responsible for developing and maintaining the primary enterprise information systems, as well as providing technology-related services to the University community. This includes the PeopleSoft financials module for enterprise systems applications, all financial transactions, processes and reporting, as well as subsidiary systems. The CIO also supports the administrative functions for the University.
Director of Auditing Services — The Director of Auditing Services is responsible for reviewing and appraising University operations. The Director of Auditing Services assists University management and the Pepperdine Board of Regents in identifying, assessing and, where necessary, mitigating risks. The Director of Auditing Services is responsible for examining and evaluating the adequacy and effectiveness of (1) the systems of internal control and their related accounting, financial, and operational policies and (2) procedures for financial and compliance monitoring and reporting. The Director of Auditing Services conducts investigations of suspected fraudulent activities in conjunction with other University resources, and is responsible for reporting the results to the University Audit Committee https://community.pepperdine.edu/assurance-advisory-services/.
Chief Human Resources Officer — The Chief Human Resources Officer (CHRO) is responsible for the Human Resources function of the University and developing and administering risk-management and loss-prevention programs to control risks and losses, minimize asset liability and ensure that the University's financial assets are protected against catastrophic losses. The CHRO is also responsible for initiating policies to comply with safety legislation and industry practices.
Associate Vice President of Planning, Operations and Construction – The Associate Vice President of Planning, Operations, and Construction is responsible for the oversight and management of the University's physical plant and construction functions.
At fiscal year end, the Controller is responsible for closing the accounting records for the year and preparing reports on the year's financial activity.
Annual Audit — In order to ensure that the University's assets are protected and that transactions and events are recorded properly, an independent auditor recommended by management and selected by the Board of Regents is responsible for auditing the annual financial statements in accordance with generally accepted auditing standards. The auditor's procedures include obtaining an understanding of University systems, procedures and internal accounting controls, and performing tests and other auditing procedures to provide reasonable assurance that the financial statements neither are materially misleading nor contain material errors.
Audited Annual Financial Statements — The Controller is responsible for producing the financial schedules from which the audited financial statements and related notes are derived in a document distributed to University administration. The Controller is responsible for preparing, reviewing and/or approving all financial statements of the University, which receive final approval from the CFO.
Annual Report — After they have been approved by the CFO, audited summary financial statements and accompanying notes to the financial statements in the University's Annual Report are published.
Section 1.3: Submitting Confidential and Anonymous Complaints to the Audit Committee of the Board of Regents
This policy outlines the methods by which a member of the University community may submit complaints to the Audit Committee of the Board of Regents.
Complaints may be mailed to the Audit Committee, under the direct control of the Director of Mail and Receiving Services at the following address:
24255 Pacific Coast Highway
Malibu, CA 90263-4293
All mail received at the Audit Committee mail address will be immediately forwarded to the Chairperson of the Audit Committee by the Director of Mail and Receiving Services.
Complaints or concerns about accounting and reporting, internal accounting controls, auditing, or fraud may be made directly to the Audit Committee though the established University mail address or at AuditCommittee@pepperdine.edu.
While a complaint or concern may be submitted anonymously, the Audit Committee encourages those who submit complaints/concerns to provide appropriate contact information, particularly with regard to serious matters. Be assured that the Audit Committee is committed to holding all information in confidence to be shared only on a "need to know" basis or as required by law.
Section 2.1: University Accounting and Funds
This policy outlines general policies guiding the accounting for University funds in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America. For further information on these principles, please see the AICPA Not-for-Profit Entities Audit and Accounting Guide.
Accrual Accounting - The accounts and funds of the University are maintained on the accrual basis of accounting in accordance with GAAP and with provisions of the AICPA's Audit and Accounting Guide. The University's funds are received from a variety of sources and may have associated restrictions. Restricted funds are tracked individually and are a separate accounting entity with their own assets, liabilities and fund balance.
Restrictions on Use of Funds – Depending on their source, funds may be:
i. Unrestricted, meaning they may be used for any institutional purpose. Such funds may be designated or undesignated.
ii. Temporarily restricted, meaning a restriction must be met either by the passage of time or the occurrence of a certain event.
iii. Permanently restricted, meaning funds must remain in perpetuity, only income and appreciation may be made available for spending.
Unrestricted Operating – Funds received primarily from tuition and fees to support the general operations of the University.
Designated Operating – Funds received from donors for a designated purpose. See the gift donation policy for guidelines on designation of gifts from donors.
Student Loan Funds – Student loan funds are loaned to students as a portion of the financial aid package. As these loans are repaid, the principal and accumulated interest become available for new loans to students.
Grants - Funds provided by sponsors to reimburse the direct costs of contracts and grants. The terms of the grant and the applicable regulations determine how the money may be spent. To apply for a contract or grant, the principal investigator for the project submits a proposal through the Office of Research and Sponsored Programs (ORSP).
Plant/Facilities – Plant funds are funds that have been received or designated for facilities and
retirement of indebtedness. They also include all the University's investments in
long lived capital assets and related liabilities.
Endowment Funds – Endowment funds include:
i. True Endowment - Gifts subject to donor restrictions requiring that principal be invested in perpetuity with distributions made available for spending in accordance with the Uniform Prudent Management of Institutional Funds Act ("UPMIFA").
ii. Quasi-Endowment –are expendable funds which management or the Board of Regents has determined should function in a manner similar to donor-restricted true endowment funds.
Agency Funds - Includes funds that are held for others, with Pepperdine acting as the custodian.
Fund transfers are accounting entries which move all, or a portion of, a fund's balance to another fund. The appropriateness of a fund transfer is dependent on the characteristics of the source and destination funds, including the type of fund and the restrictions associated with the fund. Generally, fund transfers are allowed when the characteristics of the source and destination funds conform to one another and the terms of each fund does not preclude such a transfer. These transfers are used to:
i. Transfer money between designated funds or between restricted funds (generally,
transfers between a restricted fund and a designated fund are not allowed nor are
transfers with a sponsored project fund),
ii. Transfer money into or between plant funds, or
iii. Increase or decrease the budgeted funds of a designated operating fund.
Most fund transfers are processed by the Office of Financial Planning (OFP) or in some cases by the General Accounting Office (GA). However, Budget Managers are authorized to make certain types of fund transfers, generally as a step within the budget process.
Each year the University prepares a consolidated budget based on estimates of income and expenses. Budgeting enables the University to verify fund availability when processing expenditures.
Revenue and expense recognition is made on an accrual basis in accordance with accounting principles generally accepted in the United States of America. Revenues are recognized when earned, and expenses are recognized when incurred. Revenue is considered earned when the University has substantially met its obligation to be entitled to the benefits represented by the revenue. Revenue should be recorded when earned, regardless of the timing of cash receipts. In the event a sponsored project stipulates performance measures, revenue is considered earned when the performance measures have been completed. Deposits (whether refundable or non-refundable), early payments and progress payments should not be recognized as revenue until the revenue producing event has occurred.
Transfers (or reclassifications) of revenue or expense are generally unallowed. Certain exceptions may be made at the discretion of the General Accounting Office (GA). Exceptions may be made based upon materiality or the correction of Fund, Project ID or Operating Unit.
Certain expenses are allocated across the functional expense categories for financial statement presentation purposes only. Expenses allocated are central plant operation expenses, debt interest expense and depreciation expense. The functional expense categories are:
- Instruction and Research
- Academic Support
- Student Services
- Auxiliary Enterprises
- Management and General
- Alumni Development
The accounting process for awards begins in ORSP. ORSP notifies the General Accounting Office (GA) when a proposal has been awarded and indicates the type of award. Proposal and award records are maintained by ORSP. GA will establish a new Project ID to be used specifically for the accounting of that award. GA then notifies all pertinent offices, including the Principal Investigator, of the new Project ID.
The University's Investment Policy is maintained by the Treasurer's Office and is approved by the Investment Committee.
Section 2.2: Grant Funds
The University receives various grants and contracts from federal, state, and local agencies as well as from private foundations. Policies and procedures related to these funds may be found on the ORSP website here.
Section 3.1: University Operating Budget
Unrestricted activities are unrestricted revenues and expenditures consisting of all unrestricted funds (all funds that begin with U). The operating budget consists of unrestricted operating funds (UONDA, UOAUX, UOEXT, UORCG).
Designated activities are designated revenues and expenditures consisting of unrestricted designated funds (UODNS, UODSC). Each designated account is assigned a unique operating unit. Most operating units within this group are included in the annual operating budget.
Capital activities occur within the unrestricted plant funds (UPPRJ and UPRAR). Capital activities generally include major equipment expenditures greater than $10,000, fiscal year expenditures (renewal and replacement, or R&R) and larger scale capital projects. Each project, whether fiscal year or capital, is assigned a unique project ID. Some of these projects are funded annually from the operating budget, primarily the R&R projects.
Reserve funds include banking reserves, strategic reserves, and sinking funds, and are each assigned a unique operating unit. Funds are not expended directly from these operating units, but are held and accumulated to fund strategic allocation as approved by management.
The annual budget process is designed for the development of the proposed "Operating Budget" and as revised will serve as a tool for accountability. Year-end results are subject to the "Year-end Banking" policy.
- To facilitate strategic and prioritized allocation of operating resources.
- To provide budget managers with a financial planning and monitoring tool.
- To encourage and enhance management creativity, initiative, delegation, and flexibility.
- To provide incentives to maintain and enhance revenues and to utilize resources responsibly.
- To provide a tool to evaluate and hold managers accountable for use of resources.
Each major area is expected to achieve its budgeted revenues and operate within its budgeted expenses. To the extent this is not achieved, the University experiences financial disequilibrium and other units are adversely affected. University management may take material surpluses and deficits into account in subsequent budget allocations.
Each major area budget manager is accountable for overall accuracy of their budgets and for actual results. Managers are expected to achieve results consistent with budget plans and/or provide timely explanations for material variances. Changes from budget plans, year-end forecast, and/or errors should be reported in a timely fashion in writing to the Office of Financial Planning for corrections within approved policy.
Budget managers must plan for all expenses related to new or continuing programs within the budgets allocated, including all operating expenses, equipment and furnishings (new or replacement), and space requirements.
It is principally the responsibility of the major area manager to hold their budget managers accountable for operating and budgetary results.
University management's primary budget responsibilities include the allocation of strategic resources; the development of the proposed annual Operating Budget; and the year-end review of the Operating Budget results, which include any strategic allocation of funds and review of year-end banking results.
Responsibility for budget revisions and day-to-day management of the Operating Budget will be conducted by the Office of Financial Planning.
The official budget is maintained in PeopleSoft Financials and can be viewed using the University's enterprise reporting solution, currently Simpler Systems.
The Original Budget is the budget that is submitted to and approved by the Board of Regents in the annual budget process.
Frequently, and for a variety of reasons, the original budget is revised during the fiscal year. The revised budget is the principal tool for planning and measuring financial results. Material variances from the revised budget are reported to the Board of Regents with the financial statements.
A budget revision changes total University expenses or revenues within the operating budget. A revision that increases revenue due to additional tuition, gift, sales, or other revenue, can be used to increase expense budgets. Generally, a portion of new revenue is set aside to the central University at a pre-established expense-to-revenue ratio. In some instances, a situation arises that requires an additional expense budget that cannot be absorbed by a given area of the University. In these cases of time-sensitivity, strategic opportunities, or true emergencies, the CFO will review and approve as needed.
Budget adjustments differ from revisions in that an adjustment does not increase University revenues or expenses, but rather reallocates the existing operating budget among departments. Requests for budget adjustments can be submitted by a major area budget manager via the Budget Adjustment Request (BAR) form. Adjustments shall be identified as base (recurring) or non-base (non-recurring) adjustments. BARs submitted by the major area budget manager via the BAR form are considered approved by the affected major area. All BARs are reviewed by the OFP for policy and budget compliance. Approved BARs will be processed within 24 hours of approval by OFP. The last date to submit a BAR for the current fiscal year is July 31. Certain exceptions can be made for gift processing that occurs after July 31. Special circumstances may require OFP to make exceptions to the above rules.
An important tool for assessing financial and management performance is the University's allocated budget. The allocated budget is built monthly and prorates the revised budget based upon the portion of the fiscal year elapsed and historical trends. For example, endowment support is assumed to be earned and recognized on a monthly or 1/12 basis. Thus the allocated budget for November would allocate 4/12 of the full year's endowment support budget. Actual results through the same point in time are then compared to the allocated budget to identify potential budget issues that need to be addressed. This tool provides management with information to monitor and make decisions on a proactive basis prior to year-end when the allocated budget is allocated at 100%. Each major area is responsible to provide timely explanations of material variances as requested by OFP. These explanations are used to inform the Board of Regents of material variances that could impact the University at year-end.
Fixed and generally non-discretionary expenses approved independently of operating budgets. The Steering Committee must approve adjustments. Typical external budgets are:
- Employee benefits
- Graduate center leases
- Interest expense
- University property and liability insurance
- Property taxes
- Bad debt expenses
Auxiliary enterprises exist to furnish goods or services to students, faculty, or staff, and charge a fee directly related to, although not necessarily equal to, the cost of the goods or services. The distinguishing characteristic of auxiliary enterprises is that they are managed as essentially self-supporting activities. Examples are residence halls, food services, and college bookstores. The general public may be served incidentally by auxiliary enterprises.
Recharge Service Centers
Recharge service centers exist to recoup internal resources for the usage of certain functions. Examples include photocopies, telephone, internet usage, etc. In general the recharge rates should be break-even or better. Analysis will be conducted periodically to ensure the rate being charged is still in line with the expenses to provide the particular service. The University Management Committee (UMC) must approve all changes in recharge rates and methods.
Procedure for new recharges or recharge modifications
UMC shall make available a "Recharge Request Form" for use by University schools and departments. To request imposition or revision of a recharge, the completed form shall be submitted to Finance. At a minimum, the following information shall be provided:
- Purpose of the recharge;
- Reason it should be charged;
- Amount of the recharge;
- Reason for modifying an existing recharge;
- Method for determining the amount of the recharge (include specific calculations); and
- Service or material provided for the recharge.
All submitted requests shall be approved and signed by the budget manager responsible for the requesting department.
The UMC recharge subcommittee composed of the Assistant Director of Financial Planning, the University Controller, and the Acting Chief Marketing Officer shall review and assess each request. If the request results in a relatively immaterial financial impact and there is unanimous approval amongst the subcommittee members, the recharge subcommittee may decide to administratively approve the proposal. Otherwise, the subcommittee will refer the request to the UMC.
Based upon the information provided by the requesting department, assessment of the request by the subcommittee, and any discussion at a meeting, UMC shall vote to approve the proposal, deny the proposal, or request revisions to the proposal from the requesting department. UMC will review all recharges on an annual basis during the recharge audit.
Questions regarding this policy should be directed to the chair of UMC.
Designated accounts represent a stand-alone operating unit to account for revenue and expenses that are attributable to a specific donor-designated purpose. Each budget manager is responsible for maintaining the budget for each designated operating unit. In the event a donor fully endows an operating unit, the spendable portion will be paid out over a 12 month period in conjunction with the University's endowment payout policy as approved by the Board of Regents. Endowment payout is currently computed using a five-year (60 month) rolling payout calculation. Designated expense budgets are limited to the available fund balance (accrued surplus from prior years), new revenue to be collected, and endowment payout that will occur. In the event a designated account ends the year with a cash deficit the area budget manager is responsible to rectify the deficit.
Generally, expenses must meet the terms of the restrictions initially set up by the donor and maintained by Advancement and OFP.
Financial Aid is to be actively managed by each school as a revenue-related function. Financial aid is comprised of funded and unfunded aid. Funded aid is supported by a donor-designated fund, in the form of an endowment or current gift. Unfunded aid is a tuition discount that is paid for by the University without support from a donor designated source (endowment or gift). Any tuition revision must include a corresponding revision to the financial aid budget to account for aid that will be awarded to the additional students.
Renewals and Replacements
R&R projects are approved in consultation with Planning and Operations.
University/Major Area Contingency Funds
Included as a component of the annual University operating budget is a University contingency fund, which is used to fund major unforeseen contingencies that may arise during the year. The President, Executive Vice President, and CFO may allocate University contingency funds. Contingency funds are generally not used for correction of operational oversights or minor departmental initiatives. These items should be covered by major area budgets. Each major area manager is responsible to maintain adequate major area contingency funds for such needs.
A Major Area is defined to include each school and administrative area, which are typically represented by the membership of the Planning Committee.
Academic Areas (Schools of the University)
Schools are responsible for revenues, direct expenses, financial aid, and certain incremental indirect costs in order to maintain their base budget net contribution. Base expense-to-revenue ratios (E/R) will be used as a planning and monitoring tool.
Administrative areas are responsible for expense budget management, but are generally not responsible for meeting significant revenue targets.
The President, EVP, CFO, or the Steering Committee may override any of these policies based on the overall financial health or needs of the University.
Section 3.2 Year-End Banking
With the goal of incentivizing prudent and responsible stewardship of University resources and generating capital available to be reinvested in support of University operations, the year-end banking policy (Policy) seeks to maintain equity consistent with the operating results of each major segment of the University. By providing incentives for budget managers to be financially responsible, the overall fiscal strength of the University is enhanced, while providing budget managers with additional funds to help address strategic priorities.
Brief descriptions of words and concepts necessary for accurate interpretation of the overall Policy and calculations follow:
Academic area: An academic area (i.e. school) is a segment of the University that is accountable for both revenue and expense management. Managers of these budgets have the responsibility to meet revenue targets and their budgeted net contribution to the University.
Non-academic area: A non-academic area (i.e. support center) is a segment of the University that is accountable for expense budget management, but are generally not responsible for meeting significant revenue targets.
Banking Components: Components selected for use in calculating the year-end budgetary surplus/deficits:
Components that are excluded from the banking calculation:
i. Transfers - both institutional and major area.
ii. Institutional external budgets (Miscellaneous Administration).
iii. Designated and plant funds (capital activity) do not factor into banking, given the year-end surplus or deficit will remain within each particular operating unit or project.
Expense to revenue ratio:
i. The expense to revenue ratio (E/R) represents the direct cost of operating an academic area and is used as a basis in calculating year-end adjustments.
ii. The E/R is calculated by dividing total expenses into total revenues for non-designated fund groups. (UONDA, UOAUX, UORCG).
University Contingency Fund
In the instance of a year-end unrestricted operating deficit, the University Contingency Fund is first used to balance the University Budget, with any excess funds transferred to the General Surplus Reserve. In the instance of a year-end unrestricted operating surplus, the favorable balances will be transferred to the General Surplus Reserve along with the year-end University Contingency Fund balance.
General Surplus Reserve
The General Surplus Reserve serves as the clearinghouse for the University Contingency Fund and year-end unrestricted operating surpluses and deficits. Favorable balances are allocated to the various major areas of the University and the Endowment Strategic Pool according to Section 3 of this policy.
All banking amounts are calculated based upon the non-designated budget to actual revenue and expense variances.
Favorable revenue variances (excluding gift variances):
i. When the total revenue (less gifts) variance is favorable, the variance is banked at the academic area's E/R ratio. Non-academic area variances are banked using a ratio of 2/3 or 66.7%, meaning the major area will keep 2/3 of the favorable variance.
Unfavorable revenue variances (excluding gift variances):
i. Academic areas: When total revenues (less gifts) are unfavorable, then the resulting net contribution variance is banked at the E/R.
ii. Non-academic areas: When total revenues (less gifts) are unfavorable, then the resulting net contribution variance is banked at 100%.
Non-designated gift income passes through to banking at 100%, regardless of favorable or unfavorable variance.
As noted above, all expense variances will be banked at 100% unless the revenue variance (less gifts) is unfavorable, in which case the expense variance will help offset unfavorable revenue variances.
Summary of calculations:
The following table summarizes the banking calculation scenarios:
Exclusions, Exceptions, Considerations
Negative banking results for a given year will reduce any prior accumulated positive banking balances. If the cumulative banking balance remains negative, the OFP will implement a plan to repay the negative balance over no more than three fiscal years. Negative banking balances will be charged annual interest at the rate of the University's 10-year average endowment return. With specific approval from the CFO, another plan for repayment may be put in place.
Non-invested positive banking reserves will not earn interest.
Sinking funds may be proposed in cases where there is a need to set aside funds over multiple years for approved projects or capital purchases. Sinking funds must be funded through an annual funding source (typically a monthly transfer) identified in the budget process.
In order to provide each major area with additional, permanent resources to support their operations and to increase sources of additional revenue that are not student-dependent, a portion of each major area's annual operating surplus will be invested in a quasi-endowment.
Annual Elective Contributions: each major area with a positive accumulated banking reserve balance will be given an annual opportunity to move some or all of its banking reserve funds into their quasi-endowment banking reserve fund.
Annual Mandatory Contributions: at the conclusion of each fiscal year, each major area that generates a positive banking reserve contribution will be required to invest 40% of that contribution into their quasi-endowment banking reserve fund. The remaining 60% will be invested into the non-endowed banking reserve fund.
Distributions from major area quasi-endowed funds are available to support each major area's operations, or may be reinvested in the quasi-endowed fund.
Banking Reserve Balance:
Requests for withdrawals from the banking reserve balance for each major area should be submitted to the Office of Financial Planning.
Requests for withdrawals in excess of $100,000 must be approved by the CFO.
If an unfavorable banking adjustment is anticipated in the current year that exceeds the available banking reserve balance, any request for withdrawal may be denied.
Base allocations for funding may only be supported by quasi-endowment banking reserve distributions.
Withdrawals are permitted when approved by the CFO and the following are in a positive balance by major area:
Banking Reserve balance
Designated fund balances
Replacement and Renewal (R&R) budget balances
Section 3.3: University Fees
The University has a continuing interest in overseeing the imposition or revision of fees and charges collected by University schools or departments from its students, faculty, and staff. This institutional interest includes: monitoring the totality of charges the University collects from its students; monitoring how those charges relate to the expectation of the student when choosing a Pepperdine program; ensuring fairness regarding fees among its schools; ensuring fees charged to students are used for the intended purpose; and ensuring equity and fairness with regard to fees assessed to employees.
For the purposes of this policy, a fee is a charge collected from individual students, faculty, or staff for materials or a service, including but not limited to mandatory fees, elective fees, and fines.
Mandatory Fees - A mandatory fee is a charge that is imposed upon an individual on the basis of his or her employment status, enrollment status, or degree program. These are fees that a student must pay in order to matriculate or graduate. Examples include laboratory fees, course fees, application fees, graduation fees, etc.
Elective Fees - An elective fee is a charge that is imposed upon an individual in exchange for access to an elective service and is not required within the scope of a his or her academic career or employment. Examples include finance charges, recreation fees, event fees, rental fees, etc.
Fines - A fine is a charge that is imposed as a penalty for violation of a University policy or procedure. Examples include parking fines, late checkout fines, cancellation fees, property damage fines, etc.
All fees as defined above and not otherwise excluded from this policy must be approved
by the University Management Committee (hereinafter "UMC") prior to imposition or
The following fees and charges are excluded from this policy:
- Tuition, room & board, and any other fee or charge approved by the Board of Regents;
- Fees or charges collected by related corporations;
- Fees or charges collected for a performance or event to which members of the public are welcome and charged (e.g., Athletics tickets, theatre performances, conferences, etc.);
- Chargebacks or recharges (these are addressed in a separate policy).
UMC shall make available a "Request for Fee Imposition or Revision" form for use by University schools and departments. To request imposition or revision of a fee, the completed form shall be submitted to the Office of Financial Planning. At a minimum, the following information shall be provided to UMC:
- Purpose of the fee;
- Reason it should be charged;
- Amount of the fee;
- Way in which the fee relates to instruction or the student experience;
- Reason for modifying an existing fee;
- Method for determining the amount of the fee (include specific calculations);
- Service or material provided for the fee;
- Amount of money the fee is anticipated to generate per year;
- How the department or school will ensure the proceeds go toward the intended purpose;
- Manner and proposed timing in which students will be notified of the fee.
All submitted requests shall be approved and signed by the dean or vice president responsible for the requesting school or department. All course-related fees shall be submitted through the dean and the Office of the Provost.
The director of financial planning, the vice provost for research and strategic initiatives, and the University registrar shall review and assess each request. If the request results in a less than material impact, the fee subcommittee may decide to administratively approve the proposal. Otherwise, they will refer the request to the UMC.
Based upon the information provided by the requesting department, assessment of the request by the Office of Financial Planning, and any discussion at a meeting, UMC shall vote to approve the proposal, deny the proposal, or request revisions to the proposal from the requesting department.
For certain fees (e.g., fines for damage to University property, traffic violations),
UMC may approve a dollar range within which a department may collect a fee at its
UMC will review all fees on a regular basis.
Questions regarding this policy should be directed to the chair of UMC.
A request to impose or modify a fee should present a clear and compelling argument for its implementation. Students and employees should not be charged for materials and services where the University would reasonably be expected to provide them without a charge. When such charges are imposed, the amount should be reasonable and linked to the cost the University has incurred to provide the service or materials.
Generally, it is expected that most regular session instruction offered for credit should be supported by tuition. Course fees should approximately equal the actual cost incurred by the University to provide the materials or services to one student. They are justified when the costs associated with the instruction exceed what is reasonable or ordinary.
Mandatory fees, elective fees flowing directly from mandatory fees (e.g., finance charges), and fines assessed to students should be assessed primarily through student accounts. Other elective fees should be assessed at the point of sale.
Section 4.1: Travel and Entertainment
Faculty and staff shall be reimbursed for reasonable travel and entertainment expenses incurred on authorized university business. All such expenditures must be approved in advance by the employee's Department Budget Manager.
The University assumes no financial responsibility for expenditures incurred by employees who do not adhere to these policies. Both the person who incurs the expense and the person who approves reimbursement of expenses are responsible for achieving maximum economy in the expenditure of university funds. Primary responsibility to ensure that expenditures are reasonable and necessary rests with the Department Budget Manager for the account.
An employee must obtain the approval of his or her Department Budget Manager before payment for any reimbursement, internal requisition, or direct expenditure is issued. A Department Budget Manager may delegate this review to a direct subordinate; nevertheless, the Department Budget Manager will remain personally responsible for any such authorizations.
The Internal Revenue Service (IRS) imposes specific requirements for travel and entertainment reimbursements and advances to be considered as nontaxable to the employee. The University's reimbursement policy requires employees to comply with the following "accountable plan" for all travel and entertainment expenses:
Business Purpose - There must be a business purpose for the expenditure. Such expenses must be deductible business expenses, according to IRS regulations, which are incurred in connection with services performed as an employee.
Substantiation - There must be substantiation of the expense by the employee within a reasonable period of time. Substantiation includes: verification of date, time, place, amount, and business purpose. All substantiation must be done through the PeopleSoft Credit Card Substantiation Module. We require itemized receipts and all receipts must be scanned in, using one PDF file. The receipts must be in order of the transactions showing on the online statement. Each transaction must have all questions completely explained (Who, What, Where, and Why). If proof of payment by check is required, a copy of the cancelled check or bank statement is sufficient. Receipts for expenditures under $25 are not required but are preferred. In in all instances each expenditure must be fully substantiated.
Employees must substantiate all travel and entertainment expenses within sixty (60) days after incurring the expense.
Out-of-pocket reimbursements must be substantiated within sixty (60) days after incurring the expense. Out-of-pocket reimbursements submitted after one hundred twenty (120) days of the expenditure will be paid through Payroll as taxable income.
University Credit Card expenses must be substantiated within sixty (60) days from the statement date. University Credit Card expenses not substantiated within one hundred twenty (120) days, from the statement date, will be processed through Payroll as taxable income.
Travel Cash Advances must be substantiated within sixty (60) days after incurring the expense. Travel Cash Advances not substantiated within one hundred twenty (120) days will be processed through Payroll as taxable income.
Excess travel cash advance monies must be returned within a reasonable period of time. The IRS allows the following method for defining and enforcing this rule:The "30-60-120" method. This method automatically allows an employee to meet the reasonable time requirement if (1) he or she gets an advance no more than thirty (30) days before he or she incurs the expenses; (2) the employee substantiates the expenses no more than sixty (60) days after he or she incurs the expenses; and (3) the employee returns any unspent or unsubstantiated amount no more than one hundred twenty (120) days after he or she incurs the expenses.Travel Cash Advances not substantiated within one hundred twenty (120) days will be processed through Payroll as taxable income.
The University does not pay a per diem allowance.
All domestic and foreign travel should be booked in the lowest priced, coach accommodations. Any accommodation above coach class requires approval by the President or a Vice President of the University. Employees are expected to travel by the most direct route using the most economical and reasonable mode of travel available. To maximize discount fare possibilities, air travel arrangements should be reserved as far in advance of the travel date as possible.
The University does not reimburse travelers for tickets purchased with frequent flier miles.
Airport Transfers: The airport shuttle service should be the preferred method of transportation to a hotel or meeting site. Taxis and private limousines should be used only when they represent a more reasonable alternative or are essential due to time constraints.
Taxis:Taxi use should be limited, with preference given to public transportation. If public transportation is unavailable or inadequate for local travel, then taxis may be used.
Car Rentals: A Driver Status Form must be submitted and approved by the Office of Insurance and Risk prior to an employee renting a car or driving on behalf of university business.
An "Auto Accident Packet" which includes a proof of insurance card, a checklist to follow in an accident, and forms to report an accident must be obtained from the Office of Insurance and Risk prior to an employee driving a rental car on behalf of university business. Please contact the Office of Insurance and Risk to obtain the packet.
To be eligible to rent a car on a University credit card, a driver must be an approved University driver meeting all the requirements of the University Driver Policy. Car rentals must be in the name of Pepperdine University and in the individual's name.
Employees must not purchase insurance from car rental agencies for rentals within the United States as the University's automobile insurance will apply as primary coverage. Pepperdine University's insurance will respond for rental terms of less than 30 consecutive days (as long as the automobile is rented in the name of Pepperdine University). Additional insurance offered by a car rental company is not necessary and purchasing this insurance is not reimbursable.
Car rentals originating outside the United States should include insurance from the car rental agency.
Prior to renting vehicles outside the United States, please notify the Office of Insurance and Risk.Prior to an employee taking possession of a rental car, employees should thoroughly inspect it to assure that any existing damage is noted on the rental agreement.Employees involved in an accident with a rental car should follow the checklist provided in the "Auto Accident Packet" which includes the following:
- Secure the scene• Seek medical aid if injured• Notify the local police department
- Provide information to and obtain information from the other driver.
- Take photos of the vehicles and scene• The employee should alert the Office of Insurance and Risk regarding the accident and refer the rental company, injured party or anyone claiming injury to contact the Office of Insurance and Risk at (310) 506-4410
- The employee should be prepared to furnish the Office of Insurance and Risk with the completed forms from the "Auto Accident Packet" and any photos of the accident. If an employee elects to retain the rental vehicle for personal travel or vacation, the employee is responsible for providing appropriate auto insurance coverage during that period of time. Please note that some car rental agencies may require the vehicle be turned back in to activate a new contract under different auto insurance coverage.
Mileage for Personal Automobiles:
A Driver Status Form must be submitted and approved by the Insurance and Risk department prior to an employee driving any vehicle on behalf of university business.
Employees required to use their personal vehicles while engaged in university business are eligible for mileage reimbursement consistent with this policy and subject to the approval of their supervisor.
Employees who are required to drive a distance greater than that normally driven on a daily basis between their principal work location and their principal residence are eligible for mileage reimbursement. The distance between the principal work location and an employee's principal residence is the "normally driven daily commuting mileage."
Employees working on multiple campuses are eligible for mileage reimbursement for mileage in excess of their normally driven daily commuting mileage.
Consistent with the policy statement above, if a business trip begins or ends at an employee's residence, the normally driven daily commuting mileage should be subtracted from the total trip mileage before submission for reimbursement.
The mileage reimbursement rate is determined each year by the IRS and includes gas, oil, maintenance, insurance, and depreciation costs. Any changes in the IRS reimbursement schedule will be automatically implemented by the University. The current mileage reimbursement rate and standard mileage distances are available at https://community.pepperdine.edu/finance/accountspayable/employee-reimbursements/mileagerates.htm.
No employee is authorized to use a personal vehicle on university business unless the driver possesses a valid license and the vehicle is insured with at least the minimum California state requirements. Employees should recognize that their personal automobile insurance will respond primarily in the event of an accident while driving on university business.
Employees will be reimbursed reasonable and appropriate hotel expenses when traveling overnight on university business. Reimbursement is limited to a single room rate unless the room is shared with another university employee.Room service charges are discouraged, but are not prohibited and should be at the Department Budget Managers discretion depending on travel circumstances.
Employees will be reimbursed the reasonable cost of meals while the employee is traveling. Expenditures for alcoholic beverages are not authorized. Meal costs which appear excessive will be referred to the Major Area Budget Manager for final approval.The IRS requires substantiation and documentation with dated, original, itemized receipts to support each instance of travel or entertainment. Credit card payment forms or statements alone are not considered itemized receipts.
Expenses with original itemized receipts incurred for local business meals and entertainment (meetings, employer/employee relations, etc.) may be reimbursed with upon approval of the Department Budget Manager. Expenditures for alcoholic beverages are not authorized. Meal costs which appear excessive will be referred to the Major Area Budget Manager for final approval.The IRS requires substantiation and documentation with dated, original, itemized receipts to support each instance of travel or entertainment. Credit card payment forms or statements alone are not considered itemized receipts. To be considered non-taxable, the IRS requires that names of the persons at the meal and the business purpose be clearly stated. Individual names are not required if a large group (more than ten people) is involved that can be identified as a single body (the approximate number of persons and group identification must be stated).
Parking and Toll Charges: Necessary parking and toll charges incurred on university business are reimbursable in addition to mileage allowance and other transportation expenses.Tips and Gratuities: Tips and gratuities should be reasonable. Tips and gratuities on meals and taxi expenses should not exceed 20% of total charge. Bellhop/porter tips should not exceed $1.00 for each bag.Laundry Service: Laundry, cleaning and pressing charges are allowed only when an employee will be away from home more than five days.Telephone: Business calls from non-university telephones that are reasonable and necessary will be reimbursed on a per call basis. Employees may be reimbursed for one personal telephone call (not to exceed 10 minutes in duration) for every day an employee is traveling away from home overnight. The use of telephones aboard aircraft is not permitted except in cases of extreme emergency.The use of a cellular phone may aid an employee's job performance and aid the efficiencies of a department by providing immediate accessibility. Refer to the Telecommunications Policy.Passport and Visa Fees: Fees for passports and visas are reimbursable, if specifically obtained for a required university business trip.Registration Fees for Conferences and Professional Meetings: Whenever feasible, registration fees for conferences and professional meetings should be paid in advance to obtain available discounts.
Pepperdine University will reimburse or directly pay properly substantiated business expenses. Expenses lacking appropriate substantiation, documentation, or authorization will not be reimbursed. Expenses are payments for activities that primarily benefit the individual and will not be reimbursed. The following is a sample list of expenses typically deemed personal (this list is not intended to be all-inclusive):
- Alcoholic beverages
- Barber and hairdresser expenses
- Gasoline purchases (excluding rental cars)
- Golf fees
- Hotel health club fees
- Lost or theft of personal property
- Lost or theft of travel cash advances
- Meal points on employee ID cards
- Medicine and Medical expenses
- Membership fees to warehouse club stores (Costco, Sam's Club, etc.)
- Motorcycle rentals
- Movies or video rentals
- Payments made to individuals
- Payments made to service providers
- Personal credit card fees or penalties
- Personal reading materials (magazines, books, newspapers, etc.)
- Repairs, maintenance, or towing of personal vehicles
- Toiletry items
- Traffic fines or penalties
Due to federal and state tax regulations the use of the University Credit Card for payments to individuals, independent contractors, service providers and/or out-of-state service providers performing services within California is considered an unauthorized/inappropriate use of the University Credit Card.
The dividing of an expense into separate transactions on one or more credit cards to work around the single transaction limit is considered an unauthorized/inappropriate use of the University Credit Card.
Any expense lacking appropriate substantiation, documentation or authorization is considered an unauthorized/inappropriate use of the University Credit Card.
The IRS considers gift cards to be income to the recipient and as such, the cardholder who purchases gift cards must document the full names of the recipients, campus-wide IDs (Social Security Numbers for non-employees), and the amounts of the cards, regardless of the dollar value for submission to payroll and/or accounts payable for proper income tax reporting.Gift cards are reported to the IRS and included as taxable income of the recipient. If the recipient is a University employee, the gift card is included as taxable income on the employee's paycheck. If the recipient is a non-employee the recipient is issued an IRS Form 1099 MISC at the end of the calendar year.
Gifts, such as employee incentives, are considered non-taxable income by the IRS to the recipient until the collective value of all gifts to the recipient per calendar year exceeds $25.00. The cardholder who purchases a gift must document the full names of the recipients, campus-wide IDs (Social Security Numbers for non-employees), regardless of the dollar value for submission to payroll and/or accounts payable for proper income tax reporting.If the collective value of all gifts to the recipient exceeds $25.00 per calendar year the gifts are reported to the IRS and included as taxable income. If the recipient is a University employee, the gift is included as taxable income on the employee's paycheck. If the recipient is a non-employee the recipient is issued an IRS Form 1099 MISC at the end of the calendar year.
Gifts, decorations, supplies or food items for wedding showers, baby showers, birthday celebrations or other similar events are considered non-business-related purchases and are an unauthorized/inappropriate use of University funds.
Travel cash advances may be obtained by employees/students for costs to be incurred while conducting official university business. Advances may not be issued more than seven (7) days prior to the departure. Advances may be authorized when:
- Out-of-pocket expenses (cash and debit card transactions) for the duration of the trip or event will cause a financial hardship to the employee.
- The out-of-pocket expenses are expected to exceed two hundred dollars ($200).
No University funds may be advanced for personal reasons.
Advance Reconciliation: Responsibility for the University funds remains with the individual until a final reconciliation is made of expenditures.
- Failure to submit a final reconciliation of an advance will result in the advance recipient being ineligible to receive any future advances.
- Out of pocket reimbursements will not be processed if an advance has not been substantiated within sixty (60) days.
Advances Reported as Personal Income: The Internal Revenue Service requires that advances be accounted for within a reasonable period of time. If an advance has not been substantiated after one hundred and twenty (120) days, the advance will be reported as taxable income through the Payroll Office for the advance recipient.
As a general rule, the University does not reimburse for spousal accompaniment.
Non-business Expenses: In general, the expenses of a spouse, family member, or other person accompanying the business traveler are not reimbursable.
Hotel Rates: When a double hotel room is occupied by the business traveler and others whose attendance does not constitute a business purpose, the University will pay the single room rate.
Exceptions: It is expected that there will be no exceptions to this policy. Any request for an exception in truly extraordinary circumstances must be approved, in advance of the travel or expense, by the Major Area's Senior Administrator.
Section 5.1: Payments
Accounts Payable pays invoices in accordance with payment terms negotiated or secured by the Purchasing Office. The Accounts Payable Office may, at its discretion, verify receipt or acceptance of products or services before paying any invoice.
Marking the item as received in the financial system indicates to the Accounts Payable Office that the invoice may be paid.Items Requiring Certification of Receipt or Acceptance signifies that the Accounts Payable Office does not pay the invoice until evaluation has been completed and the item has been received.
Open Purchase Order
i. The Accounts Payable Office will start the payment process for the transaction upon receiving an invoice listing the open purchase order number.
ii. The Accounts Payable Office will not pay any invoice that exceeds the not-to-exceed total of the open purchase order.
Price Differences Between Invoice and Purchase Order
For a number of reasons, the invoiced amount may differ from the dollar amount approved on the purchase order or service contract. If the invoice amount exceeds the amount on the purchase document, Accounts Payable Analysts are authorized to pay the invoice amount without a written change order if the difference is not more than 10%, provided that the maximum payment does not exceed $2,500, including taxes and freight charges.
Automatic Payment Orders
i. Purpose — An Automatic Payment Order authorizes the Accounts Payable Office to
make a fixed payment at fixed intervals for a specific period of time. This method
is useful for equipment rental or maintenance, where the charge remains constant.
ii. Schedule — An Automatic Payment Schedule is established by the Purchasing Office in consultation with the requesting department and vendor. Under an automatic payment order the requesting department must maintain records for audit purposes.
Ratification of Confirming and Received Orders
Unless a requisition has been processed by the Purchasing Office a transaction is not an authorized Pepperdine order and will not have a purchase order number. If the Accounts Payable Office receives an invoice without a purchase order number, the Accounts Payable Office may return the invoice to the vendor unpaid.
If the Purchasing Office does not ratify the transaction, the paperwork will be returned to the department. If a vendor contacts the Purchasing or Accounts Payable Office about the unpaid invoice, the vendor will be advised that the transaction was not authorized business, and that the University is not responsible for payment.
Prompt Payment Required — Federal and state regulations require Pepperdine to pay all freight bills within seven days of receipt. Accordingly, departments must send the freight bill to the Accounts Payable Office immediately upon receipt.
Terms — The Purchasing Office attempts to negotiate standard terms of Freight on Board ("FOB") Destination, which transfers the title and risk of loss of the item to Pepperdine upon delivery of an item at Pepperdine or any other specified destination. If those terms are not acceptable to the vendor, the Purchasing Office negotiates to have the vendor prepay transportation charges and add them as a separate charge on the invoice. However, if shipping charges are not known and not included on the issued purchase order, the vendor may prepay freight and separately invoice for shipping costs.
i. Payment for Freight Delivery under a Purchase Order — If any department receives a freight invoice for a product obtained under an issued purchase order, a department representative should write the purchase order number on the invoice, and then forward it promptly to the Accounts Payable Office for payment.
ii. Payment for Freight Delivery Without a Purchase Order — If any department receives a freight invoice and no purchase order has been issued, a department representative should prepare an Exception Payment Requisition as appropriate for the amount of the bill, and forward the invoice to the Accounts Payable Office for payment.
Section 5.2: Purchasing
These purchasing policies are for the procurement of major and minor construction, equipment, supplies and services by Pepperdine.
The Board of Regents of Pepperdine University, which has responsibility for all University funds, including those received under grants and contracts and those originating with other outside sources, has delegated authority for the acquisition and disposition of property and the expenditure of University monies to various University officers and officials as specified in the Authorizing Execution of Documents policy [https://wikis.pepperdine.edu/display/OGC/Policies%2C+Procedures%2C+and+Misc.+Forms].
Approvers in Schools and Departments have the authority to approve the commitment and expenditure of funds for a given purpose, and against specific chart fields for which they have been given authorization.
The Purchasing Office has delegated authority to departments to work directly with vendors in the acquisition of goods or services when procured by the University Credit Card.
Only a person authorized in writing by Pepperdine may commit Pepperdine funds to purchase goods or services. If a person without University authority commits University funds, Pepperdine may consider the acquisition effort null and void and decline to pay any invoice that might be issued. In such a case, the supplier may look to the individual placing the order for payment or reimbursement.
Ways to expend University funds in addition to purchasing are described in sections 4 and 5 of Expenditure Policies.
Purchases may be completed using the following purchasing methods:
- Purchasing Requisitions
- University Credit Card
- University Office Depot Accounts
The University's preferred office supply vendor is Office Depot. The Purchasing Office has authorized departments with an approved University Office Depot account [http://] to purchase all office supplies with the exception of furniture. An approved Office Depot Business Solutions Division On-Line User Request Form  is required before access is granted.
The University's policy is that acquisition of products or services will be by competition between potential vendors, to the maximum practical extent subject to the requirements of quality, price and performance. When a department needs to use a single or sole source in the acquisition of a product or service with a cost of $20,000 or more, a written source justification is requested. ("Single source" means other sources are available but the requestor chooses to use only one particular source. "Sole source" means that no other sources other than the one recommended are available.) The source justification should include the following information:
- A specific description of the supplies or services required to meet needs, and a statement of facts that show the unique qualifications of the services or items selected to satisfy those needs.
- A description of efforts made to locate other sources of supply.
- Documentation that the anticipated cost is fair and reasonable. This can include a comparison of prices when the item is generally available or, when the item is specially fabricated, an analysis of the manufacturer's cost.
- Any other information supporting the use of other than full and open competition.
Policies — All purchasing activities must conform to the University Code of Conduct [http://www.pepperdine.edu/hr/policies/manual/#rules], Staff Policy on Conflict of Commitment and Interest [http://www.pepperdine.edu/hr/policies/manual/#11-6] and Code of Ethics [http://www.pepperdine.edu/hr/policies/ethics.htm#policy] . Any known or apparent violation of these policies, whether by an employee or a vendor, must be immediately reported: 'Appropriate Supervisor or Senior Administrator as provided in the Human Resource web site, listing 'University Policy Manual 5.4'.
Personal Purchases — Purchasing does not arrange personal purchases for Pepperdine faculty, staff or students. Similarly, a department may not place an order for an individual employee or student and then have that person reimburse the department.
Pepperdine University receives government grants and contracts for academic research. In carrying out its sponsored projects, Pepperdine fulfills the agreement's conditions, some of which are stated in OMB Circular A-110 and the sponsored project agreement, statutes, regulations and policy statements.
Terms and Conditions — A grant or contract often requires Pepperdine to include certain contractual clauses in purchase orders or subcontracts issued under the award. The requesting school/department must obtain input from the Grant Office in advance as to which contractual clauses are appropriate for inclusion in individual purchase order contracts.
Prior Approval — If a government sponsored project agreement is a funding source, a government representative may be required to approve a proposed purchase of capital equipment or complex goods or services before purchasing places the order.
Offices Needing Documentation — The requesting department is responsible for maintaining records of approval documentation. When required, Purchasing or Accounts Payable may request copies of such documents.
ii. Subcontracts — If the purchase requires government approval of subcontract provisions, Purchasing will obtain necessary approval and keep on file.
iii. Screening Levels — The department making the purchase must screen for items of equipment costing between $5,000 and $24,999 at the departmental level before purchase, and items at $25,000 and above at the University level. Equipment costing less than $5,000 need not be screened.
Section 5.3: University Credit Card
These policies apply to the use of the University Credit Card for purchases of goods or services made directly by departments. The University Credit Card is a tool for individuals making purchases on behalf of the University for which Pepperdine is financially liable.
Delegation of Authority — The CFO delegates to University departments signature authorization for ordering supplies and services directly from vendors with a University Credit Card, generally with a transaction purchase limit of $5,000, subject to the limitations contained in this policy.
Department Responsibility — With this delegation of authority comes the responsibility for departments and individual cardholders to observe all University policies and procedures related to purchases, and to observe all government laws and regulations (state and federal) that apply to the commercial transactions placed via the University Credit Card.
Audit — All Pepperdine transactions are subject to review by the Controller's Office as well as internal and external auditors for compliance with sound business practices, institutional policies and procedures, and any applicable laws and regulations.
Basic Criteria — Pepperdine faculty and staff are eligible to obtain the University Credit Card provided that:
- They have the approval from their supervisor and department budget manager.
- They complete an application and training session.
- They agree to follow the University Credit Card policies and procedures and additional guidelines, if any, as defined and supported by their department.
Restrictions — Because of tax reporting, inventory, and regulatory requirements, and to simplify reconciliation, the University Credit Card is NOT to be used in the following circumstances:
Personal Expenses - Personal expenses are purchases that are not made on behalf of the University or for use by the University. These are considered fraudulent transactions. Purchases must be for the use and benefit of Pepperdine University, regardless of intent to reimburse Pepperdine. If the cardholder commits purposeful fraudulent or negligent behavior regarding the proper use or protection of the card, it will be considered serious misconduct and may result in disciplinary action, up to and including termination.
Fabrications - A fabrication is a unique item which cannot be acquired off-the-shelf, has a useful life of more than one year, and is made of components which cumulatively cost $5,000 or more. The components of an item reported as a fabrication should not be acquired with the University Credit Card. (NOTE: Putting together a computer system does not meet the definition of a fabrication since a computer system is not unique.)
Hazardous Materials: Hazardous materials may include chemicals, compressed gases, radioactive materials, nucleotides, peptides, growth media, controlled substances, restriction enzymes, or biological organisms, as defined by federal, state, and University regulations.
- Cash advances
- Any purchase over $5,000.
Cardholders act as purchasing agents of Pepperdine University and are issued a Card associated with their department. Cardholders should not lend or share their University Credit Card (Card). They must keep their Card secure and the Card number confidential.
Approvers have the responsibility to examine transactions to ensure that charges are appropriate and comply with university policies, i.e. include a complete and accurate business purpose, appropriate chart string to be charged, and are approved and routed to any additional appropriate approver(s) in a timely manner. An approver cannot report to the individual who made the purchase or be the beneficiary of the purchase/transaction.
Department Management has the responsibility of approving who can be a cardholder or an approver. Furthermore, managers are responsible for disseminating departmental rules and monitoring University Credit Card transactions to ensure compliance with the University Credit Card Program policies and any departmental rules.
PeopleSoft Requisition – A PeopleSoft Requisition can be used for the following expenditures if credit cards are not accepted by the vendor.
- Accreditation Fees
- Artist Performance Agreements
- Claim payments made through Insurance and Risk Management department
- Guest Lecturers (non-Pepperdine employees)
- Honorariums (non-Pepperdine employees)
- Interpreters (non-Pepperdine employees)
- Legal fees
- Memberships that do not accept credit cards
- Non-Resident Alien travel reimbursements
- Non-employee reimbursements
- Permit/license fees (e.g., building permits; excludes software license agreements)
- Reports/reporting fees (e.g., DMV, South Coast Air Quality Management District, Court records)
- Sports Officials/Referees
Petty Cash Reimbursement – Petty Cash Reimbursement [https://community.pepperdine.edu/finance/cashier/reimbursement.htm] can be used for expenses totaling $100 or less.
Section 5.4: Purchasing Requisitions
The PeopleSoft Requisition is the financial document in which the department requests the issuance of a Purchase Order that is then dispatched to the vendor. University departments are encouraged to contact the Purchasing Office early in the acquisition process. Purchasing buyers can help develop technical specifications, provide product descriptions and list of vendors, negotiate contracts, estimate cost or price.
The University has implemented PeopleSoft, which is an online financial system to manage its financial transactions. All acquisition transactions must be entered in the financial system. Designated employees use the online purchasing requisition process for entry, approval, and review.
Preparing Transactions — PeopleSoft Requisitions must be prepared by an employee with appropriate Requestor authority and access to the online system. Pepperdine faculty and staff may have Requestor access to the online requisition after attending an IT Authorized Requestors Training.
Approvals — Once an online requisition is completely submitted, it is than electronically routed by the Requestor to a designated employee who is an authorized Approver for the department.
Unauthorized Orders – A PeopleSoft requisition may not be submitted if the goods have already been ordered or the service already begun. For goods or services rendered prior to a PeopleSoft Requisition being created an Exception Request will need to be submitted.
Approvals — In addition to the requestor and the first-level approver, additional levels of approval may be necessary for the purchasing requisition. If the dollar amount requested exceeds the Level 1 approver limit, additional approvals will be required. When a purchasing requisition has received all required approvals, it is automatically routed to the Purchasing Office for processing.
Levels of Approvals:
Level 1 - $12,500
Level 2 - $25,000
Level 3 - $50,000
Backup documentation must accompany a purchasing requisition. Backup Documentation consists of a Quote, Agreement or Contract.
Electronic attachment of bids, quotes or contract proposals in the financial system is the required method.
Information Source — Departments may obtain information about vendors through the financial system.
The Purchasing Office is authorized to assign a purchase order number to an approved purchasing requisition. Unless otherwise authorized by the Board of Regents, Executive Vice President or delegated authority by the CFO, no other University department may assign contract or purchase order numbers for acquisition of goods or services.
Purchase order numbers serve as a common identification between University records and those of the vendor, and they aid in tracking the process of vouchers, payments and receiving.
Any agreements by other departments, written or verbal, with the vendor prior to getting an approved Purchase Order are strictly prohibited by the University. The University accepts no financial responsibility for these transactions. Such purchases are the financial responsibility of the requestor or the vendor providing unauthorized goods/services.
Purchase Order — When a Purchasing buyer places a single order with the selected vendor for an acquisition, that transaction is a purchase order. The Purchase order is than dispatched directly to the vendor to ensure adequate supply and/or price.
Contracts — A written contract may be required in addition to a purchase order in the following circumstances:
- The nature of the work and obligations of the parties must be specified
- Payment terms are complex and require special handling
- Equipment being acquired is unusual, unique or special - examples include situations where design, engineering, testing or other special factors might be risks of the transaction
- For consulting services
- For research
- For construction or installation of fixtures or staging of events which may expose Pepperdine to liability to third parties
- For blanket orders
- For license agreements, rentals and leases
Change Orders — When the goods, services, or terms of the purchase order needs to be modified to meet the University's requirements, the department is responsible for initiating a change order request before the goods or services are rendered. Failure to do so may result in cancellation of the delivery of goods or services, or nonpayment of the invoice.
General Shipments — Most campus shipments are delivered directly to the Central Receiving Department by the vendor or shipper. All shipments must have the packing slip on the outside of the package for routing to the correct department. If there are questions or special requirements concerning a delivery, a Purchasing buyer can advise on the appropriate manner, place, and terms of delivery to be included in an order.
Radioactive Shipments — Radioactive materials may not be delivered directly to any department. All shipments of radioactive material go to the Central Receiving Department for examination by the Occupational Safety Officer and Campus Operations and Business Services, and verification of a CRA (Controlled Radiation Authorization) number. After examination by Occupational Safety Officer and Campus Operations and Business Services, delivery is made or the materials may be picked up by the requesting department. All shipments must have a Material Safety Data Sheet (MSDS) on the outside of the package being delivered.
Biohazard Shipments — Bio-hazardous material may be delivered directly to University's Central Receiving Department; however, each department is responsible for ensuring that a department representative is available to receive the shipment and for ensuring the safe handling of such products upon delivery by the Central Receiving Department's Personnel. All shipments must have a MSDS on the outside of the package being delivered.
Certification of Receipt or Acceptance
The receipt of goods must be entered into the PeopleSoft system. Entry of the receipts into the system is used to determine eligibility of a particular invoice for payment.
The Purchasing Office works with departments and vendors throughout the acquisition process to ensure that the vendor and the University comply with their mutual obligations.
Expediting — The Purchasing Office can expedite orders when notified by a department or vendor that an order needs special attention, e.g., a delivery failed to come in as expected.
Claims — The requesting department is primarily responsible for administering shipping claims. If the Purchasing Office was involved in the transaction, Purchasing can, upon request, assist departments in the handling of damage claims, the return or repair of defective items, and/or return of the wrong items. For losses or damage over $1,000, the Insurance and Risk Management Office may be contacted for assistance.
Section 5.5: Surplus Property Sales
Warehouse Services Office — The mission of the Warehouse Services office (WS) is to sell University property for the best possible price. The Board of Regents has authorized only WS to perform this function. Therefore, the only entity authorized to sell equipment to non-Pepperdine entities is WS.
Departments may not give or sell property to individuals, including Pepperdine employees, or to non-Pepperdine entities. If a department arranges to sell property to a buyer, the sale transaction must be approved by the Assistant Vice President for Administration and Campus Operations. The check from the buyer must be made payable to Pepperdine University.
Request Form and Routing — Purchases of surplus property are made via a form available from Warehouse Services. Once completed, the request form is sent directly to Warehouse Services, after approval by the originating department.
Proceeds — The sale proceeds for any University property, including gifts to University departments of personal property, surplus items, scrap and salvage belong to the University. The net amount from the sale is credited to the University General Fund. (UOEXT, 12040, 406005, ISGEN)
Delivery — Buyers are responsible for removing and transporting items they buy.
Sale Records — After the property is sold, WS prepares a Bill of Sale. The buyer may not take possession of the equipment until the buyer has signed and returned the Bill of Sale.
Donated Equipment — Pepperdine University is permitted to sell donated equipment without Unrelated Business Income Tax implications. However, any income from such sales must be reported on IRS Form 990. This must be reported to the University Controller's Office.
Contamination Risk — If the property might be contaminated in any way, the department must dispose of the property as required by law. Any other types of equipment that appear to need clearance are handled accordingly.
- Animal cages
- Biological safety hoods (also known as laminar flow hoods)
- Centrifuges & accessories (rotors, shields, unions, rings, cups)
- Electrophoresis apparatus (not power supplies)
- Ethylene oxide sterilizers
- Fraction collectors
- Fume hoods & accessories
- Glove boxes
- Laboratory glassware washing equipment
- Laboratory pumps
- Laminar flow clean benches
- Reagent storage cabinets
- Refrigerators & freezers (unless from Food Services)
- Scintillation, gamma or otherwise labeled radioactive counters
- Water baths
NOTE: WS does not dispose of chemical, biological, or other forms of waste.
Injury Potential — If a piece of property might cause injury to someone browsing through WS's inventory, the department must so note on the request. WS and the department will discuss whether the property should remain with the department, so that only people familiar with the equipment will handle disposal.
Government Safety Standards — If a piece of equipment does not meet applicable government safety standards, the department must so indicate on the request. (For example, lasers, PCB's in transformers, etc.)
Software and Sensitive Data—Any computer or computer peripheral device containing University information must be delivered to Information Technology Field Support for permanent removal of disk information and the salvage of usable parts. Field Support will deliver the remaining equipment to Warehouse Services for collection prior to recycling.
Section 5.6: Technology Purchasing
This policy covers the purchase and acquisition of technology-related goods and services (hardware, software, maintenance, licenses, telecommunications services, consulting, or other technology related goods and services).
This policy shall apply for all contracts and requisitions that exceed $25,000, or, contracts and requisitions that are perceived to have an impact on the overall security of the University's information resources, require integration with the University's enterprise information systems, or require significant implementation assistance by the central IT division.
The University operates a highly complex interconnected system of technology services that include (but are not limited to) telecommunications services for voice, video, and data communications; enterprise information systems for finance, human resources and academic services; and a whole host of hardware and software applications that facilitate the management of information and transactions critical to the University's ability to conduct business. Ongoing responsibility for the strategic planning and management of these services, their operational reliability, and their security lies with the Chief Information Officer.
The purpose of this policy is to ensure that necessary checks and balances are in place to ensure that all University technology purchases are:
- Compatible with existing University infrastructure, practices, operations, and standards;
- Are acquired in such a way as to take advantage of the economies of scale made possible by aggregating the University's buying power;
- Are implemented in a way that assures the overall security of the University's information resources; and
- Ensure that the necessary resources are identified to fully support the internal and external costs of the acquisition, including internal staffing requirements necessary to operate and support the acquired technology service.
All contracts (including written proposals and/or quotations) for technology-related goods and services shall be executed according to Section 11 - Execution of Documents. Written contracts (or proposals) covered under the scope of this policy shall be reviewed by the Chief Information Officer or his or her delegate before the contract is executed. Contracts shall be submitted to the Chief Information Officer sufficiently in advance of any deadline for execution to allow for such further contract modification as the Chief Information Officer or his or her delegate shall recommend. If the Chief Information Officer or his or her delegate does not recommend execution of the contract, he or she may notify the requestor or the senior administrator over the requestor's area.
PeopleSoft approvers asked to approve technology-related contracts subject to this policy should not do so if the contract has not been reviewed by the Chief Information Officer or his or her delegate.
The Purchasing Office will verify that technology-related contracts subject to this policy have been reviewed by the Chief Information Officer or his or her delegate prior to the issuance of a Purchase Order.
Section 5.7: University Vehicles
This policy is for acquisition and ownership of motor vehicles. Motor vehicles can be cars, trucks, boats, golf cart-type vehicles and trailers. All University vehicles are for official use by University personnel only.
Department — The department acquiring the vehicle is responsible for ensuring that the vehicle is properly operated, cared for, and maintained.
Fleet Garage — The Director of Transit Services is responsible for the following aspects of the administration vehicles in their fleet:
- Assistance in the development of specifications for requests for purchasing of vehicles (
- Assistance in the disposal process
- Processing Department of Motor Vehicles Registration Certificates is processed by the Office of the Chief Financial Officer.
- Overseeing the maintenance of vehicles, either performed at the Fleet Garage or other service provider (department must get approval from the Director of Transit Services if service is not performed at the Fleet Garage).
Transit Services uses its maintenance management record keeping system for:
- Scheduling and billing repairs and maintenance
- Charging fuel, maintenance, insurance, and DMV fees
- Recording and tracking vehicles in inventory
Purchasing — The Purchasing Office negotiates purchases and issues purchase orders for vehicles on receipt of a requisition from a department.
Insurance and Risk Management —The Insurance and Risk Manager handles all insurance inquiries.
A University department may acquire a new or used vehicle via any of the following methods.
Purchase with University Funds — Vehicles may be purchased with regularly budgeted general funds, as with any purchase of Capital Equipment. If a purchase is financed, University policy requires that the purchase price of vehicles acquired with University funds be amortized over the useful life of the vehicle. The Controller's Office can provide information on internal loan arrangements.
Gift — Occasionally, a motor vehicle is given to the University. The same records and reports are made and the provisions of this policy apply.
Transfer — Intra- or interdepartmental transfers are at the discretion of the department(s) involved. As with a transfer of any other kind of equipment, the department(s) must notify the General Accounting Office to update the Asset Management System.
The University obtains public liability insurance on all fleet vehicles. This is the responsibility of the Office of Insurance and Risk Management. All vehicles owned as of the beginning of the fiscal year (August 1) will be insured and the department will be responsible for the cost of insurance.
Replacement Schedule — As a general guide, a vehicle should be considered for replacement on a five-year or 60,000-mile basis. Low-mileage vehicles, including trucks and vans, should be retained over a longer term.
Approval for Replacement — When a department requests a replacement vehicle, the purchase requisition signed by the appropriate dean, department head or other authorized signer constitutes the necessary University approval.
Disposition of Replaced Vehicles — When the replacement vehicle is received, the vehicle being retired from service must be released by the department to the Fleet Garage. The department initiates the necessary disposal requests through the Asset Management System and obtains appropriate approvals for disposal of the vehicle, submits a copy of the Excess Asset Request and then delivers the vehicle to Campus Operations and Business Services for removal of all University identification. COBS retires the vehicle from the University fleet and then sends it to Surplus Property Sales to be sold. The portion of the proceeds representing return of capital is credited to the University account that financed the purchase. Any gain from the sale is credited to the purchase price of the newly acquired vehicle or to the department if the vehicle is not replaced.
Section 6.1: Tax Reporting and Compliance
This policy is designed to outline the various forms of tax reporting and compliance undertaken by the University. Tax compliance and reporting is generally overseen by the Controller's Office in conjunction with various other offices, most notably the Office of Student Information and Services.
The University is a not-for-profit charitable corporation under Section 501(c)(3) of the Internal Revenue Code (the "IRC"). Thus, the University is exempt from taxation on profits from business activities that are related to its exempt purpose, which is the provision of educational services.
Income Tax - The University is also a not-for-profit charitable corporation under Section 23701d of the California Civil Code (the "CCC"). Similar to the IRC, the CCC exempts the University from taxation on profits from business activities that are related to its exempt purpose.
Sales and Use Tax – The University is not exempted from payment of sales and use taxes. Accounts Payable is responsible for ensuring compliance with appropriate payment of sales tax on in-state purchases of goods and services and payment of use tax on goods and services purchased out-of-state.
Any activity that is not directly related to instruction of students may be subject to taxation as Unrelated Business Income. This includes leasing of space for events where services are provided, certain kinds of investment activity and may include some management contracts. Departments contemplating engaging in any business activity should contact the Controller's Office to discuss possible taxation consequences of the activity.
Informational Returns - As required by the IRC and CCC, in order to maintain tax-exempt status, the University files an information tax return with both the Department of the Treasury (Form 990) and the Franchise Tax Board (Form 199). Copies of these filings are part of the public record and available on the Controller's Office website or by contacting the Controller's Office.
Returns for Unrelated Activities – The University also files returns and pays income tax where required for unrelated business activities to both the IRS (Form 990-T) and the State of California (Form 109). The University also files and pays income tax on unrelated business activities in any other state where it has a tax nexus, typically from certain kinds of investment activities.
The University has legal entities in several other countries and complies with all applicable tax laws and regulations related to sales, employment, and corporate and income tax in those countries. For further information on the University's compliance protocols in an overseas location, please contact the Controller's Office.
The University is also required to file many other kinds of informational returns with various government agencies, mostly related to employment (i.e. employment taxes and W-2 information), payment of tuition by students (i.e. Form 1098-E and 1098-T), and charitable contributions. For further information regarding these forms or other tax reporting issues, please contact the Controller's Office.
Section 7.1: Cash Handling and Deposits to the University
Cash requires clear accountability for deposit in a timely manner and custodianship for proper safeguarding. A department must be authorized by the Controller's Office before engaging in any business activities, including cash handling.
Cash handling is the collection, control and deposit of amounts due to the University from sales, accounts receivables, fundraising and other sources.
Definition of Cash – Cash includes but is not limited to:
- Credit/debit card transactions
- Electronic payments
The Credit and Accounts Receivable Office is responsible for overseeing cash handling and ensuring that adequate internal controls are in place in authorized departments to protect and secure the University's assets. In an effort to maintain an effective system of internal controls, departments authorized to handle cash are subject to audits at any time.
The following internal controls must be followed when handling cash or deposits
- Timeliness - All cash items collected for the University from any source must be deposited daily with the Cashier's Office at the Malibu campus for amounts greater than $200 and weekly at a minimum for amounts $200 or less.
- Receiving Checks - All checks must be made payable to Pepperdine University.
- Responsibility to Safeguard Personal Financial Information – The department must ensure the security and confidentiality of customer personal financial information in compliance with Information Security Management.
- Documentation – The department must establish written procedures describing its cash handling practices.
- Cash Handling Responsibility – The cash handling responsibility is to be assigned to a single individual, the Cash Custodian.
- Separation of Duties – It is critical that the responsibility for the physical security of assets is separate from the responsibility for related record keeping. There must be a separation of duties between staff responsible for receiving and depositing cash versus the staff responsible for the accounting records.
- Recording Cash Received – A system must be in place to record the receipt of cash at the time it is received. If you need assistance or have questions on recording cash, please contact the Controller's Office.
- Balancing – Cash receipts are to be balanced daily to the sales records.
- Cash Security - Cash should be physically protected from loss at all times. Any thefts must be immediately reported to the Public Safety Department and the Cash Custodian's supervisor. If you need assistance or need recommendations for securing cash, please contact the Controller's Office.
- Routine Reconciliation – Routine reconciliation is required monthly at a minimum to ensure that all cash sales are recorded properly.
Deposits must be made at the Cashier's Office at the Malibu campus. The use of an unauthorized bank account for depositing University revenue is prohibited.
Departments must obtain authorization from the Controller's Office before accepting credit card payments.
Payment Card Industry (PCI) Data Security Standards (DSS) [https://community.pepperdine.edu/finance/campus-commerce/pci.htm] compliance is required of any merchant service or service provider doing business with Pepperdine University.
The Cashier's Office is responsible for reporting any cash receipt of more than $10,000 in any 12-month period, in a single transaction or in related transactions in compliance with Internal Revenue Code (IRC) §6050I. For purposes of IRS Form 8300 reporting, cash is defined as U.S. or foreign currency, cashier's checks, money orders, bank drafts or traveler's checks. The department that received the cash is responsible for providing the Cashier's Office with the payee's name, address and tax payer ID with the deposit.
Departments must contact the Treasurer's Office or the Controller's Office to obtain current banking information to receive electronic payments. Departments are responsible for notifying the General Accounting Office of all anticipated incoming electronic payments and providing the appropriate chartstring.
Cash gifts, regardless of value, form, or designated use, must be made payable to Pepperdine University. All cash gifts must be sent directly to the Advancement Gifts and Records Office. The Advancement Gifts and Records Office is responsible for verifying that all gift documentation is recorded properly and deposited in a timely manner.
Petty cash funds may be provided to departments to use for reimbursement of small, non-recurring business expenses of $100 or less. The Petty Cash Reimbursement [https://community.pepperdine.edu/finance/cashier/reimbursement.htm] policy applies to petty cash funds. In addition, department petty cash funds are not to be used for mileage reimbursement or cash advances.
Petty cash funds are authorized and advanced through the Credit and Accounts Receivable Office which is responsible for establishing them and communicating standards for their use, safety, and control.
Cash advances in reasonable amounts may be provided to departments as a convenience for making change for cash sales.
Change funds are authorized and advanced through the Credit and Accounts Receivable Office which is responsible for establishing change funds and communicating standards for their use, safety, and control.
Section 7.2: Electronic Commerce
Electronic commerce (e-commerce) is the use of electronic information technologies on the Internet to allow direct selling and automatic processing of payments to Pepperdine University for University goods and services. This policy generally applies to situations where the University is selling goods or services and does not cover business-to-business e-commerce in which the University purchases goods or services.
Departments must have written authorization from the Controller's Office before engaging in e-commerce or any University business activity.
Credit and Accounts Receivable Office – The Credit and Accounts Receivable Office is responsible for the oversight and review of e-commerce activity and for communicating related standards.
University Communications – University Communications is responsible for the appearance and content of the University's Web site. Departments must have prior approval from University Communications before establishing or making any changes to an existing Web site to ensure compliance with University Web standards.
Departments must ensure the security and confidentiality of restricted data, i.e. customer financial records such as names, addresses, phone numbers, bank and credit card account numbers, income and credit histories, and social security numbers. They must comply with all federal and state laws, and University policies.
Departments that engage in e-commerce must use the University's authorized vendor or offer evidence to the Controller's Office that the selected vendor cannot meet the department's business needs and that an alternative vendor meets University requirements for security and for integrating transaction information into Pepperdine's financial systems. This arrangement allows the University to:
- Consistently require the vendor to take necessary and reasonable steps to ensure that transactions are secure,
- Assure appropriate integration with University financial systems,
- Ensure that parties comply with Pepperdine name use and privacy policies,
- Use tested emergency response and recovery procedures,
- Leverage University transactions to reduce costs, and
- Provide current technology and support for developing applications.
Vendors housed or present at Pepperdine campuses that engage in e-commerce may not use the University's network for credit card transactions.
Vendor's that engage in credit card transactions via a dedicated phone company data line or using their own equipment in a cellular network must be Payment Card Industry (PCI) compliant. The vendor's contract/agreement must state that they are PCI compliant, will remain compliant for the duration of their contract/agreement with the University and as proof of compliance a copy of the signed Attestation of Compliance (AOC) must be provided on an annual basis. Please contact the Director of Credit and Accounts Receivable for appropriate contract language or a contract addendum to meet the contract/agreement requirements.
Section 7.3: Sales of Goods and Services
All University business activities involving sales of goods and services should be substantially related to supporting the University's mission.
Departments must be authorized by the Controller's Office before engaging in any business activity to ensure operational efficiency throughout the University. Authorized departments are responsible for ensuring that this policy and applicable laws and regulations are followed. The Controller's Office oversees and reviews University business activities periodically for compliance.
The "general public" is defined as all individuals or entities other than Pepperdine students or employees. University business activities involving sales of goods and services to the general public must meet one or more of the conditions listed below to qualify as exempt from income tax under federal and state laws and regulations:
- The activity is substantially related to the University's educational mission.
- The activity provides a public service as a result of educational efforts.
- The activity sponsors or provides facilities for athletic, cultural, or recreational events.
- The sale or auction of goods and services that have been donated by gift or contribution is related to fund raising activities.
- The activity is carried on primarily for the convenience of University students and employees.
Pepperdine University's educational mission forms the basis for its tax exempt status as a non-profit institution. The University is exempt from income tax under Section 501(c)(3) of the Internal Revenue Code on income from activities that are substantially related to its educational mission.
Unrelated Business Income Tax
Tax regulations require the University to identify all business activities that generate unrelated business income. Unrelated business income is income from any unrelated trade or business activity that is regularly carried on, but that is not substantially related to supporting the University's mission. Unrelated business activity may be subject to income tax (Internal Revenue Code Sections 511, 512 and 513). If you have questions or believe you may be engaged in unrelated business activities that generate income, please contact the Controller's Office.
California State Sales Tax
Sales made by the University may be subject to sales tax governed by the California State Board of Equalization. The Controller's Office is responsible for remitting any sales tax due. Departments are responsible for being aware that the sale of certain goods and services may be subject state sales tax. Tax liability costs will be expensed to the department conducting the business activity.