Chapter 1 – Accounts
Effective December 2017, this policy has been revised. For individual changes, see the redlined version.
The University Treasurer's Office has overall responsibility for the administration and oversight of the banking, debt service, and investment programs for the University.
- Banking, cash management, and debt services. This includes establishing and maintaining University bank and investment accounts and contracting for new banking services, including retail credit card processing and lockbox services. The Treasurer's Office also serves as the bond registrar and paying agent for the majority of the bonds issued by the University.
- Bank accounts. Only the University Chief Financial Officer and Treasurer, the Director of Financial Management and University Secretary, and the Director of Treasury Operations are authorized to establish and maintain University bank accounts. Requests for bank accounts or other banking services must be submitted to the Treasurer's Office for prior review and approval.
- Prohibition of use of University's name and tax identification number. The University strictly prohibits the use of The University of Iowa's name or tax identification number by any person or organization in any bank account except as specifically authorized by the University Chief Financial Officer and Treasurer or the Director of Treasury Operations. Banks are periodically surveyed to identify any accounts utilizing the University's name or identification number. These accounts are independently reviewed for proper authorization.
- Bequests. The Treasurer's Office records and invests all funds that are designated as endowment and payable directly to The University of Iowa. Beneficiary documents, estate notices, or any communication indicating a possible beneficiary status of bequests and gifts to the University are directed to the Office of the General Counsel for official handling. Wherever justified, the funds are transferred to the University of Iowa Foundation, the University's preferred channel for private gifts.
- Investments — operating, endowment, and quasi-endowment funds. Investment activities are in accordance with the investment policy of the Board of Regents, State of Iowa. (See Board of Regents Policy Manual 2.2.4.) Investment-related fees are assessed to investment pools and may include costs for investment management, banking and custody, and (where applicable) stewardship and donor-related service costs.
- Endowment and quasi-endowment funds.
- Endowments. Endowment funds are invested in perpetuity for the long-term benefit of University programs with the objective of generating a reasonable spending payout while maintaining the real value of funds over time. Spending payouts generated by endowment investments are restricted in use to purposes established by donors. All endowments are invested in a long-term investment pool.
- Quasi-endowments. Quasi-endowment funds are invested for the mid- and long-term benefit of University programs using investment philosophy similar to the endowment. However, in the case of quasi-endowments, the inflation-adjusted value of the principal need not be maintained over time. Based on the intended use of funds, quasi-endowments are invested in either or both the long-term investment pool and/or the intermediate investment pool.
- Authorization. Endowment or quasi-endowment accounts may be established only when authorized by both the University Chief Financial Officer and Treasurer and the Director of Treasury Operations. Additional contributions to established endowment or quasi-endowments accounts also must be authorized by both the University Chief Financial Officer and Treasurer and the Director of Treasury Operations. Endowment determinations are made based upon an interpretation of donor or other restrictions that apply, while quasi-endowment determinations are based upon the proposed long-term uses and intentions of the department. Any request for the establishment of a quasi-endowment must be accompanied by a specific programmatic plan for those funds and should contemplate commitment of the corpus for a minimum of three years.
- Investment earnings. Endowment or quasi-endowment funds deposited with the University are transferred to a fund manager for investment at the next endowment valuation date — usually at the end of the calendar quarter following receipt of the funds. Investment pool earnings will begin accruing to the recipient department at that time. Balances in individual endowment or quasi-endowment income accounts will become part of the University pool investments; earnings on these balances will not accrue to either the fund principal or the associated income account, except where authorized by the Treasurer.
- Spendable income. An amount determined by The University of Iowa's endowment spending rules will be transferred from the endowment or quasi-endowment fund to the associated income account on a quarterly basis. Periodically, in consultation with the Regents' investment advisor, the University evaluates guidelines for income distribution.
Internal procedures are developed by Treasury Operations and approved by the University Chief Financial Officer and Treasurer. For internal procedures and additional information, contact Treasury Operations or refer to the following web address: https://treasury.fo.uiowa.edu/policies-and-procedures.
Effective September 2017, this policy has been revised. For individual changes, see the redlined version.
Salary, Equipment, and Supplies and Services Accounts. Allocations to these accounts are available for the fiscal year beginning July 1 each year and are based on annual budgets approved by the Board of Regents, State of Iowa, and supplemental allocations recommended through regular administrative channels. Supplemental allocations are made with the approval of the Budget Officer in the Budget Management (Web Budget) application.
Charges to salary expense categories are based on payrolls in accordance with approved appointments. Under the fringe benefits pool method, fringe benefits are budgeted and expensed as a percentage of salary or wage costs. All University employees have certain fringe benefits entitlements that are associated with their University appointments. The fringe benefits pool method is a concept involving the establishment of different employee groups, each of which includes employees with similar fringe benefits entitlements. Once the various employee groups are established, the fringe benefits costs of each group are pooled to determine the fringe benefits rate for each group to be used in budgeting and accounting for University fringe benefits.
Charges to equipment and supplies and service expense categories are based on requisitions and vouchers approved by departmental executive officers (and other administrative officers as required) and on University-wide contracts for services (such as telephone service and equipment maintenance service). Requisitions for items to be charged to the current year's budgets must be filed in the Purchasing Department according to the annual close calendar.
In general, free balances in these accounts are not carried forward to the following year but are lapsed as of June 30 each year. A free balance is the balance remaining after deducting the expenditures and outstanding orders (encumbrances) from the departmental allocation(s). Amounts encumbered for outstanding orders as of June 30 each year are carried forward to the following year, with permission, to the extent that June 30 balances are available and providing that delivery and payment is completed prior to October of the following year. Expenditures and commitments are not authorized in excess of the amounts allocated. If, by reason of unforeseen expense, or otherwise, an account is overdrawn on June 30 of any year, the overdraft becomes a first charge against the account for the following year. Amounts are not encumbered for orders outstanding to University stores and service departments as of June 30 each year..
Separate accounts are maintained in the University Business Office for all current restricted, income, and revolving accounts. These accounts receive no allocations from the University general fund and balances do not lapse to the general fund.
Salaries are paid from these funds on the basis of approved budgets in the same manner as for accounts receiving budget allocations. The same procedure and general regulations apply to expenditures from these funds as apply to expenditures from allocated funds.
- Income Accounts. Income accounts are those which are set up for activities or enterprises which are supported solely by the income received from the sale of goods or services. These include a limited number of organized educational activities, auxiliary enterprises, the stores, service departments, and revolving funds.
- Current Restricted Accounts. Current restricted accounts are those set up for funds received from various sources outside the University. These accounts are comprised of grants, contracts, fellowships, and other sponsored agreements received from both federal and nonfederal organizations in support of a wide range of University activities. Also included in the current restricted accounts are gifts to the University to be used for a variety of special purposes.
All charitable gifts, regardless of their form, are to be acknowledged by The University of Iowa in accord with the quid pro quo requirements and substantiation requirements imposed by the Internal Revenue Service. The University has previously designated The University of Iowa Foundation (Foundation; see I-3.6) as its primary development arm and its preferred solicitor and recipient of and channel for private gifts intended to benefit the University. To the extent possible, deans, directors, and departmental executive officers should encourage current and prospective donors to direct their gifts to the Foundation so they may be properly acknowledged for tax purposes and so they may receive consultation and advice on gift and tax procedures appropriate to their needs, including charitable lead trusts, charitable remainder trusts, life estates, and testamentary dispositions.
Monetary gifts payable to the University are deposited by the University department by following deposit procedures established by the University Billing Office, identifying an appropriate University gift account, and including donor information as an attachment. The Grant Accounting Office forwards the necessary information to the Foundation which, in turn, provides official acknowledgment to the donor on behalf of the University. Non-monetary gifts made to the University should also be reported to the Grant Accounting Office with the appropriate donor information. This information will also be forwarded to the Foundation, which, in turn, provides official acknowledgment to the donor on behalf of the University.
- Accounts Receivable. All sales of materials or services must be reported to the University Business Office for collection. Exception to this rule may be made only upon special approval by the University Business Office.