Departmental Accounting Guidelines.doc

					Financial Processes and Guidelines
     for NDSU Departments
               Financial Processes and Guidelines
                    for NDSU Departments
                                                    Table of Contents

                        Table of Contents


A. Entrance & Exit Procedures

B. Petty Cash & Change Funds

C. Bank and Investment Accounts

D. General Ledger

E. Accounts Payable

F. Travel

G. Asset Management

H. Taxes

I.   Record Retention

J.   Audits
                          Financial Processes and Guidelines
                               for NDSU Departments

These guidelines are intended to offer a user-friendly description of NDSU’s business
processes and guidelines primarily for administrative support staff who work in
departments outside the central accounting office. This guide is intended to be
particularly helpful to new department secretaries, accounts technicians, and
administrative assistants who will be working with the Accounting Office, Customer
Account Services, or Office of Grant & Contract Accounting.

The primary purpose of the guidelines is to put all of the procedural instructions for
financial affairs in one place and to take most of the procedural detail out of NDSU’s
Policy Manual, leaving the Policy Manual for higher level policy matters.

As procedures change, these financial guidelines will also be updated. These guidelines
will be maintained on NDSU’s web site. The NDSU-Accounting list-serve will be used
for notification of changes.

These guidelines should be used in conjunction with NDSU’s Oracle/PeopleSoft
Finance Users Manual which includes detailed instructions for using the
Oracle/PeopleSoft Finance Application.

In addition to these guidelines, departments are encouraged to develop and document
their own internal procedures. Departments are encouraged to go above and beyond
these guidelines in establishing their own documentation and internal controls over
financial processes.

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                 Entrance & Exit Procedures

A. Entrance & Exit Procedures

 Introduction

     The Office of Human Resources is responsible at NDSU for new employee
      orientation. Human Resources distributes helpful materials to new staff members
      to assist in getting acquainted with NDSU, including a new employee orientation
      checklist and an employee separation checklist.

             Tip…It is recommended that new departmental secretaries and administrative
              assistants carefully review the new employee checklists to help become
              familiar with NDSU and its policies and procedures – especially to become
              aware of many of the non-financial related issues that would not be covered in
              this document.

         Department secretaries at NDSU must wear a number of hats and have
         considerable responsibility. They need to deal with numerous central
         administrative offices at NDSU and must become familiar with many of the
         policies and detailed procedures.

         A goal of many of the central administrative offices is to continually improve the
         services it offers its customers and improve the efficiency of the financial
         processes. The offices seek to take advantage of information technology to
         perform as much of the technical work as possible. Over the long term, by
         automating tasks as much as possible. We seek to shift roles from gatekeeper/cop
         to business partner/trainer.

         In order to accomplish this role change, there is a need to increase the number of
         electronic accounting transactions and decrease the paper transactions. Examples
         of electronic transactions include direct deposit payments to customers, electronic
         internal billing systems and electronic timekeeping systems.

         In addition, to further improve efficiencies and increase electronic transactions,
         some processes have been changed from centralized input to decentralized
         approach. Under the decentralized approach, departments input their transactions
         directly to the financial systems, rather than typing on a form and submitting to a
         central office for audit and data entry. The more desired and efficient financial

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                   Entrance & Exit Procedures

         processes are those that capture the business transactions at the source. Plans
         are to continue this trend as much as possible.

Access to Oracle 9.0 the financial module

     Before getting security access to the financial module (Oracle 9.0)
         o Does the employee have an ID number?
                  Contacting the Human Resources/Payroll Department is a great
                    resource to finding out how to obtain an employee ID.
                         Phone - (701) 231-8961
                         E-mail –

              o Does the employee have computer and e-mail access?
                    Contact ITS (Information Technology Services) to request
                       computer and e-mail access.
                           Help Desk (701) 231-8685

              o Has the employee taken Data Privacy Training?
                    Data Privacy Training is required before submitting for access to
                       the financial module. There is a link on the Accounting Office
                       website to take the training. The employee will need their
                       employee ID before taking the training.

     Submitting for access to the financial module (Oracle 9.0)
         o There are 3 ConnectND access forms that are available on the Accounting
            website. Instructions on filling out these forms are on the following page.
                ConnectND Access Form-Inquiry Only
                ConnectND Access Form-Inquiry & Accounts Payable Entry
                ConnectND Access Form-Other

                   Each form is designed to the specific roles a staff member may need. The
                   Inquiry Only form is for those that only need to look up information and to
                   run reports.

(Revised December 2008)
                           Financial Processes and Guidelines
                                for NDSU Departments
                                                                       Entrance & Exit Procedures

                   The Inquiry & Accounts Payable Entry form is for those that need to be
                   able to look up information, run reports and be able to enter invoices for
                   payment to vendors outside of NDSU. The Other form would be used for
                   special roles that a person may need in Oracle besides using it for
                   inquiries, reports and/or Accounts Payable entry. Anyone who would
                   need to use this form would need to contact Gary Wawers in Accounting
                   for assistance in filling out this form.

            Instructions for completing ConnectND Finance Access

                   This form is to be used to request access to ConnectND Finance
                   environments. Please complete this form electronically.

                         Indicate the environment that pertains to your request, by placing a
                          mark on the line after Production.

                         Indicate the request type needed. (Examples are a request to add a new
                          user, a request to change a user’s access or a request to delete the
                          user’s access.)

                         Indicate the request date.

                         Indicate the requestor’s full legal name, including middle initial. (No
                          nicknames such as Bob for Robert or Judy for Judith.)

                         Indicate the requestor’s phone number.

                         Indicate the requestor’s Email address.

                         Indicate the requestor’s ConnectND Employee (EmplID) number.

                         Indicate the requestor’s ConnectND Userid, if known.

                         Indicate the requested date of completion for this request.

                         The Roles Required and the Primary Permission List areas do not need
                          to be changed.

                         Requestor’s signature is required. (If an electronic signature is not
                          available, enter the requestor’s name.)

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                           Financial Processes and Guidelines
                                for NDSU Departments
                                                                       Entrance & Exit Procedures

                         Requestor’s signature that Data Privacy training has been completed.
                          (This will be verified by Campus Access Control Officer.) (If an
                          electronic signature is not available, enter the requestor’s name.)

                         Signature of approval must be provided by the Department Head
                          before it is sent for approval. (If an electronic signature is not
                          available, enter the Department Head’s name.)

                         Once all information is completed, save and email to
                 for system access.

                    When the request has been processed, the user will be notified by
                          email by the ConnectND Security group.

            More helpful information on getting started in Finance

     List-Serve
          o A special list-serve is available for department secretaries, administrative
             assistants, account technicians, and business managers who are interested
             in keeping updated on policy or procedural changes in the financial area or
             any other information related to the Financial system itself (NDSU-
                  To be added to the Accounting list-serve, contact Lori Olson in
                           E-mail
                           Phone – (701) 231-7361

     Monthly Reporting Database
        o The NDSU Reporting database website is a tool that employees can use to
            obtain monthly financial information for their departments appropriated
            and local funds. Reports included on the website are monthly budget to
            actuals reports, local fund balance reports, and divisional roll-up reports.
            If you would like access to this reporting tool, please complete the
            "Financial Reporting Database Access Request" form located on the
            Budget website.
                 Access Request form:
                 Financial Reporting Database:

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                               Entrance & Exit Procedures

     Training Resources
         o If training is needed on running reports and entering payables in Oracle,
             contact Michele Kuppich in Accounting.
                  Phone – (701) 231-7823 or
         o ITS (Information Technology Services) offers FREE classes on a variety
             of software applications and technology topics to NDSU faculty and staff
             members. To check out what’s available, class schedules and registration
             information, visit the ITS website.

     Policies
          o Each of these sites are financial related and reference the policies that are
              pertinent to their departments. It is important for all departments to be
              familiar with the contents of these web sites and periodically review the
              sites to become familiar with the staff and policy or procedural changes.
                   Accounting Office
                   Grant & Contract Accounting
                   Purchasing

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                   Petty Cash & Change Funds

B. Petty Cash & Change Funds
Policy 501 - Petty Cash & Change Fund

NDSU departments may maintain small petty cash funds and/or change funds upon the
approval of the NDSU Accounting Office. Prior to establishing such a fund, NDSU is
required by law (NDCC 54-06-08.1), to receive approval of the fund by the North Dakota
State Auditor. Once approved, NDSU departments are required to maintain a petty cash
fund and/or change fund in accordance with guidelines issued by the NDSU Accounting

                                     Department Guidelines

Department Responsibilities:
    Be aware whether your department has a petty cash and/or change fund and
      that is it properly recorded on the Oracle/PeopleSoft general ledger
    Request establishment of new funds through the Accounting Office
    Designate a custodian of the fund
    Make sure the fund is properly safeguarded
    Ensure disbursements are allowable and supported by invoices/receipts
    Make sure reimbursement of expenses are done periodically (and assigned
      the proper expense coding), especially at fiscal year-end so expenses are
      applied to the proper fiscal year
    Allow access to the funds to internal and external auditors for periodic
      surprise counts.

         1. Establishment of the Fund

                           An Accounts Payable Voucher must be prepared and submitted to
                           the Accounting Office to setup a new petty cash or change fund.
                           The department's local fund should be used, along with account
                           code 101001 (petty cash) or account code 102001 (cash on hand),
                           when coding the Accounts Payable Voucher. (This coding will
                           make the petty cash or change fund show up as an asset in the local
                           fund.) The Voucher should include a written justification.
                           According to state law, the state auditor must approve a new petty
                           cash or change fund, regardless of the size of the fund.

                           For the vendor name on the Accounts Payable Voucher, the
                           department should use their department name and add either 'Petty
                           Cash Fund' or 'Change Fund', on the end. For example, 'Electronics

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                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                    Petty Cash & Change Funds

                           Dept Petty Cash Fund'. The Accounting Office will setup an
                           Oracle/PeopleSoft vendor number.

                           The department should notify the Accounting Office to receive
                           instructions on how to close the fund, if it becomes apparent that a
                           petty cash or change fund is no longer needed.

         2. Designation of Custodian

                           The department head should designate a custodian of the petty cash
                           or change fund.

         3. Disbursement Procedures

                           If the petty cash custodian makes a petty cash disbursement the
                           original receipt or invoice (which contains the date, amount, and
                           nature of the transaction) should be immediately placed in the petty
                           cash box. If the petty cash custodian disburses cash to another
                           employee for a subsequent purchase, the custodian must have the
                           employee sign a petty cash voucher indicating cash was withdrawn
                           from the fund for a later purchase.

                           It is recommended that a petty cash disbursement log be
                           maintained to provide good accountability of the expenses. An
                           example is shown in the Accounting Office web site.

         4. Reimbursement Procedures

                           Use the vendor number that was used to set-up the fund when
                           reimbursing expenditures of the petty cash fund. When
                           reimbursing expenditures, the invoices/receipts should be attached
                           to Accounts Payable Voucher. In addition, the fund, department,
                           expenditure account, program and project (if applicable) numbers
                           should also be shown on the Voucher.

         5. Allowable purchases

                           Allowable petty cash expenses include the following:

                              Expenses (e.g., freight and postage due) that must be
                               immediately paid due to the nature of the item
                              Emergency expenses (e.g., for machine repairs) incurred to
                               support continued daily business operations

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                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                      Petty Cash & Change Funds

                              Expenses incurred where checks and business credit are not
                               available or permitted

         6. Non-allowable purchases

                           Petty cash shall not be used for the following:

                              Salaries or overtime
                              Travel and entertainment
                              Charitable contributions
                              Purchases not allowed under NDSU policies or guidelines,
                               OMB policy or State law.

         7. Internal Control

                           Once established, the petty cash fund should be maintained at the
                           authorized level at all times (i.e., the cash plus receipts in the fund
                           should always equal the authorized amount). Periodically, there
                           will be unannounced counts by internal or external auditors to
                           make sure the fund is maintained at the authorized level.

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                               Bank and Investment Accounts

C. Bank and Investment Accounts
Policy 502 - Bank and Investment Accounts

NDSU shall comply with State Board of Higher Education Policy 810, which establishes
limitations on opening and maintaining bank and investment accounts by all state
agencies and institutions. Only bank and investment accounts authorized by NDSU’s
Vice President for Finance & Administration are to be opened in the name and federal
employment identification number of North Dakota State University. Such authorized
bank and investment accounts are the only accounts that may hold public monies owned
by NDSU.

Student organizations, even if affiliated with NDSU, are not considered part of the legal
entity of NDSU and are not subject to the aforementioned state law. Student
organizations that open their own bank account off campus must apply for their own
federal employment identification number with the Internal Revenue Service.

                                       Department Guidelines

Department Responsibilities
    Refrain from establishing separate bank and investment accounts
    Generally, make department expenditures from University accounts, rather
      than foundation accounts

         1.    Policy interpretation

                   NDSU departments are not allowed to setup or maintain their own bank
                   and/or investment accounts. Monies collected by departmental
                   personnel are usually considered “public monies” under the law. Public
                   monies must be properly deposited in the NDSU’s Customer Account
                   Services department. If a department has a special bank or investment
                   account they must inform the Accounting Office and make full disclosure.

         2. Foundation Accounts

                   There are a number of not-for-profit foundations that are affiliated with
                   NDSU, such as the NDSU Development Foundation, NDSU Research
                   Foundation, NDSU Research and Technology Park, and NDSU
                   Teammakers. These foundations may internally designate monies for use
                   by NDSU departments.

                   It is recommended that NDSU departments process their expenditures
                   through funds on the university’s books, rather than the separate

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                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                Bank and Investment Accounts

                   foundation. Monies held by an affiliated foundation that are to finance
                   an NDSU department’s expenditures should be transferred from the
                   foundation to NDSU. Departments would need to request this transfer.
                   When the monies are deposited in NDSU’s Customer Account Services
                   department they should generally be coded with a revenue
                   Oracle/PeopleSoft account number depending on the original source of the
                   revenue. The most common account codes are as follows:

                                Account 478007 (Gifts from Related Foundations)
                                Account 478015 (Capital Gifts from Related Foundations)
                                Account 472040 (Royalties)

                   There may be some instances where it is more appropriate to expend the
                   Foundation monies through the Foundation’s books. This may be more
                   appropriate due to legal or policy compliance reasons. For example,
                   since alcoholic beverages may not be paid for from university funds,
                   private foundation funds may be used, upon approval of the Foundation.

         3. Student Organization bank accounts

                   Departmental personnel are often asked to serve as advisors to student
                   organizations and may be involved in assisting, or advising the club in
                   financial matters. Student club/organizations should open a bank
                   account, as authorized by their bylaws, officers, or advisors.

                   Banks will require that the club/organization provide a federal employer
                   identification number in order to open a new bank account. Since the
                   club/organization is not legally a part of the NDSU, or the state of
                   North Dakota, the University's federal employer identification number
                   must not be used to open a bank account. The club/organization must
                   obtain its own federal employer identification from the Internal Revenue
                   Service by filing form SS-4 Application for Employer Identification
                   Number. This form is available through the IRS web site .

                   It is advisable to maintain good internal accounting controls over receipts
                   and, especially, disbursements from the bank account. Segregating duties
                   or having two people involved in the transactions is advisable. In
                   addition, requiring two signatures on checks and rotating duties can also

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                 Bank and Investment Accounts

         4. Internal Control

                   Periodically, the Accounting Office will send a letter to local banks to
                   verify that there are no unauthorized bank or investment accounts.

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                          General Ledger

D. General Ledger
Policy 500 – General Ledger

NDSU will use the PeopleSoft/Oracle Financials application as its official accounting
record. The PeopleSoft/Oracle general ledger represents the heart of accounting
information for NDSU. All entries to PeopleSoft/Oracle shall be accurately recorded
and the general ledger must be maintained in accordance with generally accepted
accounting principles.

The Accounting Office maintains primary oversight of the general ledger chart of
accounts (i.e., funds, departments, accounts, projects, and program numbers) to generate
necessary financial information for the divisions, colleges, and departments comprising
NDSU, as well as external customers. The Agriculture Budget Office also sets up
program numbers and capital improvement project numbers for departments in the
Agriculture division. The Grant & Contract Accounting sets up grant project numbers
and scholarship fund numbers. The Budget Office sets up non-agriculture capital
improvement project numbers.

                                  Department Guidelines

Department Responsibilities:
    Be aware of what funds and projects are assigned to the department
    Review financial transactions credited and charged to department’s funds
      and projects
    Become familiar with elements of the Oracle/PeopleSoft chart of accounts
      (described below)
    Coding financial transactions as accurately as possible and using the
      Oracle/PeopleSoft systems to monitor funds and projects
          o Establish procedures to ensure a proper matching of expenses to the
             related revenues in funds and projects
    Monitor general ledger funds and projects assigned to departments as
          o Local Funds
                  monitor balance sheet accounts for accuracy or
                    reasonableness, and awareness of resources available and for
                    planning purposes
                         Maintain funds so that assets meet or exceed liabilities
                           (avoid deficit net asset balances)
                  monitor financial activity (revenue and expense accounts) for
                    accuracy or reasonableness, and awareness and planning
          o Appropriation Funds
                  monitor financial activity (revenue and expense accounts) for
                    accuracy or reasonableness, and for awareness and planning

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                                 General Ledger

                              Certain Agriculture departments using project
                              numbers need to also monitor balance sheet accounts
                     Make sure expenses do not exceed budgets
            o Grant Funds
                     monitor financial activity (revenue and expense accounts) for
                       accuracy or reasonableness, and awareness and planning
            o Monitor funds on a regular and timely basis so if errors exist they can
                be more easily corrected
        Use the information in General Ledger to be aware of department’s available
         resources and as a tool for using resources for maximum effectiveness

         1. Chart of Accounts

              a. Fund Numbers

                   Generally the Accounting Office is the point of contact in setting up new
                   fund numbers.

                   Fund numbers consist of five digits ranging from 00001-89999 and must
                   be assigned by the Accounting Office. The fund number is used to account
                   for assets, liabilities, net assets, revenues, expenses, and transfers related
                   to a particular source or activity.

                   Generally, NDSU has three categories of funds:

                           Local funds – fund ranges 00000 – 29999

                                  Included in the local funds category are:
                                  Recharge Center fund range 22000 – 22999
                                  Local Capital Improvement fund range 28000 – 28999
                                  Financial Aid fund range 50000 – 69999
                                  Restricted Gift fund range 79000 – 79999
                                  Agency fund range 80000 - 89999

                           Appropriation funds – fund ranges 30000 – 39999

                           Grant funds – fund ranges 40000 – 49999

                   Local Funds:
                   Local funds are supported by revenues generated by the university, such
                   as: sales and services, fees, gifts, investment income, bond sales, transfers
                   between local funds, etc…

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                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                                  General Ledger

                   Both balance sheet and income statement accounts need to be managed by
                   departments for local funds. Net asset balances (i.e., assets less liabilities)
                   for local funds need to be maintained in a surplus condition, although
                   minimal temporary deficits are allowable in some cases (i.e., occasionally
                   there are cash flow timing issues for a fund). Assets in local funds need to
                   be closely managed by departments and need to be used wisely in the best
                   interests of the department, college, division, university and state.
                   Although budgets are now established in NDSU local funds, the
                   overriding focus on spending limits is the net assets available in the fund.
                   The university strives to have all local fund net asset balances in a surplus
                   condition at fiscal year-end.

                   Recharge Center funds (also known as Internal Service Funds), are setup
                   for activities where the primary purpose is to sell goods or services to
                   other university departments, rather than external parties. These funds are
                   subject to numerous regulations and require significant monitoring by the
                   Grant & Contract Accounting Office. There are restrictions on the net
                   asset balance in the fund and expenses/transfers must be for activities
                   related to the mission of the fund. The NDSU Accounting Office web site
                   has more detailed guidelines for these funds.

                   In local capital improvement funds the net assets are tracked by project
                   numbers. Separate project numbers are established for each local funded
                   construction project. These funds are for construction projects funded
                   from local sources, rather than appropriations or grants.

                   Scholarships and loans issued by the Student Financial Services
                   department are charged to a separate fund range (# 50000 – 69999). These
                   funds are managed for Student Financial Services.

                   Restricted gift funds are maintained in fund number range 79000 to 79999.
                   The departments generating the gifts manage these funds, with oversight
                   by the Grant & Contract Accounting Office. The revenue source in these
                   funds are typically gifts from private companies that are restricted to a
                   specific study, program, or department, and do not meet the definition of a
                   grant under NDSU Policy 803.

                   Agency funds (fund range 80000 – 89999) are used by NDSU to hold
                   monies as a custodian for organizations that are not part of the university.
                   Examples include student organizations, monies allocated to student
                   government, monies held for the University System Office activities on
                   campus, monies held for counties.

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                            Financial Processes and Guidelines
                                 for NDSU Departments
                                                                                        General Ledger

                       Appropriation Funds:
                       Appropriation funds are supported by a combination of state general
                       funds, tuition, State Land Department income and, in some cases,
                       sales/services income. In the Agriculture entities, separate funds are
                       maintained for general funds and special funds.

                       With appropriation funds the focus is on budgets and expenses. Budgets
                       and expenses in appropriation funds are tracked on a fiscal year basis (i.e.,
                       from July 1 to June 30). In PeopleSoft/Oracle, the Commitment Control
                       module is the primary tool for managing the appropriation budget on a
                       daily basis. There is an on-line inquiry called Budget Overview and a
                       batch report called Budget Transaction Detail that gives the most useful
                       information for appropriation funds. Departments need to manage their
                       budget and keep their expenses within the budget limits in appropriated
                       funds. Departments do not need to be concerned with the balance sheet
                       accounts in appropriation funds.

                       In the Agriculture entities (department range 7000 – 7999), budgets are
                       setup in fund and project numbers combinations. But the department
                       focus is still on budgets and expenses.

                       Grant Funds:
                       In grant funds the fund number itself does not contain very meaningful
                       information. Grant activity is tracked by project number. Grant project
                       numbers are established through the initial setting up of the award by the
                       Office of Sponsored Programs Administration. With grant projects the
                       department’s focus is on budgets and expenses. Budgets and expenses in
                       grant projects are tracked on a project life basis (i.e., the term of the grant
                       award), not a fiscal year basis, in the PeopleSoft/Oracle Commitment
                       Control module. Departments need to manage their grant project budgets
                       and keep their expenses within the budget limits of the grant projects. The
                       Budget Overview inquiry, Budget Transaction Detail report, both noted
                       above in the appropriation fund section, gives useful information for grant
                       projects. In addition, there is a PI report available in PeopleSoft/Oracle
                       that gives excellent information on the financial status of grants.

                       The following table shows the fund number ranges used by NDSU:
                                                                      Commitment    Track      PeopleSoft
                                                                        Contol       or         Fund #s
 Fund Group Description             Division or Dept                    Ledger      Control   Begin   End
 Investment in Plant                                                     Cash        Track    00001   00100
 Renewal & Replacement Reserves     Reserve for future use               Cash        Track    00101   00199

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                               Financial Processes and Guidelines
                                    for NDSU Departments
                                                                                    General Ledger

 Renewal & Replacement Reserves        NDSU nonAg                      Cash     Track     00200   00399
 Renewal & Replacement Reserves        Agriculture                     Cash     Track     00400   00499
 Retirement of Indebtedness            All NDSU                        Cash     Track     00500   00999
 Receivable Holding Fund                                               Cash     Track     01000   01000
 AR Conversion Balances                                                Cash     Track     01001   01001
 Unused                                Reserve for future use          Cash     Track     01002   09999

 Operations-Local Funds                Reserve for future use          Cash     Track     12000   12049
 Operations-Local Funds                General & Admin                 Cash     Track     12050   12099
 Operations-Local Funds                Dining Services                 Cash     Track     12100   12199
 Operations-Local Funds                Varsity Mart                    Cash     Track     12200   12299
 Operations-Local Funds                Residence Life                  Cash     Track     12300   12399
 Operations-Local Funds                Memorial Union                  Cash     Track     12400   12499
 Operations-Local Funds                Wellness Center                 Cash     Track     12500   12599
 Operations-Local Funds                Parking                         Cash     Track     12600   12649
 Operations-Local Funds                Telecommunications              Cash     Track     12650   12699
 Operations-Local Funds                Athletics                       Cash     Track     12700   12799
 Operations-Local Funds                Reserve for future use          Cash     Track     12800   13999
 Operations-Local Funds                Athletics                      Project   Track     15010   15020

 Unrestricted Local
 Department Local-Cash Ledger
 Group                                 All NDSU Departments            Cash     Track     18000   19999
 Department Local-Cash Ledger
 Group                                 Reserve for future use          Cash     Track     20000   21999
 Internal Service Funds                All NDSU Departments            Cash     Track     22000   22999
 Tuition & Institutional Collections                                   Cash     Track     23000   23999
 Department Local-Fund Ledger
 Group                                 Reserve for future use         Fund      Control   24000   24999
 Department Local-Fund Ledger
 Group                                 Reserve for future use         Fund      Track     25000   27999

 Plant Local
 University Local Plant Fund           University Only                Project   Control   28100   28100
 Ag Local Plant Funds                  Agriculture                    Project   Control   28500   28500

 Appropriated - Operating
 NDSU Approp
 NDSU Appropriation Control            NDSU approp only               Fund      Control   30000   30000
 NDSU Institutional Collection
 Control                               NDSU approp only               Fund      Control   30001   30001
 Dept Budgeted Approp Funds            NDSU approp only               Fund      Control   30100   31999
 Special State Treasurer Funds         Other NDSU Approp Funds        Fund      Control   32000   32999
 Reserved                              Reserve                        Fund      Control   33000   33999
 Other Agencies
 Public Service                        ND Forest Service              Fund      Control   34000   34199
 Research                              UGP Transportation Institute   Fund      Control   34500   34999
                                       Ag Appropriations              Project   Control   35000   37999

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                                                                                                  General Ledger

 Capital Improvement Appropriations
                                       University                                   Project   Control   38100   38100
                                       ND Forest Service                            Project   Control   38200   38200
                                       Main Station                                 Project   Control   38500   38500
                                       Dickinson                                    Project   Control   38510   38510
                                       Hettinger                                    Project   Control   38520   38520
                                       Langdon                                      Project   Control   38530   38530
                                       Carrington                                   Project   Control   38540   38540
                                       Williston                                    Project   Control   38550   38550
                                       Central Grasslands                           Project   Control   38560   38560
                                       North Central                                Project   Control   38570   38570
                                       Agronomy Seed Farm                           Project   Control   38590   38590

 Restricted Funds
 Grants & Contracts                   All NDSU Departments                          Grant     Control   40000   49999
 Scholarships & Fellowships           Financial Aid Office                          Fund      Track     55000   59999
 Loan Funds                           Financial Aid Office                           Cash     Track     60000   69999
 Endowment Funds                      All NDSU Departments                           Cash     Track     70000   71000
 Other Restricted (Gift Funds)        All NDSU Departments                           Cash     Track     79300   79999

                                      Reserve for future                             Cash     Control   80000   80999
                                      Dept managed agency funds                      Cash     Track     81000   81999
                                      Student Clubs, Organizations, Associations,
                                      etc                                            Cash     Track     82000   82999
                                      Financial Aid Programs                         Cash     Track     83000   83199
                                      Reserve for future                             Cash     Track     83200   83999
                                      Agriculture                                    Cash     Track     84000   84999
                                      Foundations, System Office                     Cash     Track     85000   85999

                      Frequently Asked Question:
                      How do I establish a new fund or make a change to an existing fund?
                      An NDSU department can either use the spreadsheet form, under
                      “Customer Service and Forms” in the Accounting Office web site, or they
                      can telephone the Accounting Office at 231-7432.

                      Separate funds are recommended when there is an external or internal
                      need to have a separate accounting of a particular activity.

                      Departments need to closely manage their funds and projects. The
                      department should contact the Accounting Office if a fund is no longer
                      needed and/or a fund name needs to be changed.

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                   b. Department Numbers

                   The department number identifies the administrative unit responsible for
                   administering the funds. Department numbers consist of four digits within
                   a range of 0000-7999 and are assigned by the Accounting Office to each
                   administrative unit within the University.

                   A department number is required for every revenue, expense and transfer
                   financial transaction. PeopleSoft/Oracle reports, queries, and on-line
                   inquiries can be run to extract revenue, expense and transfer information.

                   Department numbers are assigned so that the number ranges are grouped
                   in their divisions and colleges, so the numbers reflect the organizational
                   structure of the university.

                   NDSU’s department number structure in PeopleSoft/Oracle is as follows:

                                                          PeopleSoft Dept #s
                   Division                                Begin       End
                   Non-university departments             0000        0999
                   President                              1000        1999
                   Provost & Academic Affairs             2000        2999
                   Finance & Administration               3000        3999
                   Research, Creative Act., Tech Trsfr.   4000        4499
                   Information Technology                 4500        4599
                   Equity, Diversity, Global Studies      4600        4699
                   Reserved for future                    4700        4999
                   Student Affairs                        5000        5999
                   University Relations                   6000        6999
                   Agriculture                            7000        7999

                   Departments should make sure their department name is properly
                   reflected on the administrative system. If there are changes to a
                   department or college name, or a restructuring of the organization,
                   please notify the Accounting Office so the administrative system
                   properly reflects those changes.

                   c. Account Numbers

                   Account numbers are used to track assets, liabilities, net assets, revenues,
                   expenses and transfers. The Accounting Office web site has definitions
                   and guidelines for using the account numbers.

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                   d. Program Numbers

                   A program number consists of a five-digit number and supplements
                   accounting for revenues and/or expenditures by departments that use
                   project accounting systems. Use of the program code is not required in
                   non-agriculture departments, but it is a required code in Agriculture
                   departments due to federal reporting requirements in the Agriculture
                   Budget Office.

                   Program codes are used by departments to track a variety of activities,
                   rather than using separate fund numbers. Some departments use program
                   numbers to track the revenues and expenses of certain courses or
                   workshops. Some use the numbers to track revenue/expenses of certain
                   instructors or programs. Program numbers are assigned by the
                   Accounting Office or the Agriculture Budget Office.

                   General ledger reports and inquiries are available in PeopleSoft/Oracle
                   to obtain information on program numbers.

                   e.     Project numbers

                   NDSU uses a ten-digit project numbers to track grants (project numbers
                   start with FAR00…..), capital improvement projects (project numbers start
                   with FARC0…..), agriculture appropriations (project numbers start with
                   FARG0…..), and athletics camps/clinics (project numbers start with
                   FARA0…..). Other potential uses for project numbers are not currently
                   available. The project number acts like a sub-fund and tracks activity in
                   a more detailed manner than the fund that’s associated with the project

                   The same PeopleSoft/Oracle inquiries, reports, and queries that are used to
                   obtain information about funds can be used to get information on project

         2. Matching of expenses and revenues

                   Many departments have a combination of funding sources: local funds
                   (both for external sales and internal service funds), appropriation funds
                   and grant funds/projects. In charging expenses or assigning costs among
                   funds/projects, it is important for departments to match a fund’s expenses
                   to its related revenues. For example: if goods or services are sold and the
                   revenue goes in fund 10000, the related expenses should be charged to the
                   same fund.

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         3. Transfers between local funds

                   The Interdepartmental Billing (IDB) form is recommended for
                   departments to transfer monies between unrestricted local funds. The IDB
                   form is available on the Accounting Office web site

         4. Correction of transactions

                   Generally transactions should be corrected in the system that was the
                   source of the transaction. If a department wants to change the coding on a
                   payroll transaction, they need to use the payroll retro form so the
                   transaction can be first corrected in the payroll system. The payroll retro
                   correction later will be included in the next payroll’s general ledger
                   posting. For other types of coding corrections, such as accounts payable,
                   the Interdepartmental Billing form may be used with appropriate
                   supporting documentation. If corrections are too numerous for the IDB
                   form to be practical, please contact the Accounting Office to arrange a
                   special spreadsheet upload of the corrections.

         5. Fiscal year-end

                   NDSU’s accounting period ends on June 30th each year. For accounts
                   payable/expenditure purposes, goods &/or services received on or before
                   June 30th are to be paid from funds allocated to that fiscal year. Items
                   received on or after July 1st are proper expenditures of the new fiscal
                   year's budget. The date received is to be included on the receiving report
                   and Accounts Payable Voucher. Documents and accompanying invoices
                   should be separated by fiscal year.

                   Each year the Accounting Office sends out a notice as to the cutoff date
                   when expenditures must be processed to be able to apply back to the old
                   fiscal year. The cutoff date is typically around the third week in July.

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E.        Accounts Payable

NDSU Policy 506
Only valid and authorized expenditures and payables are to be recorded and paid. Accounting procedures

will be implemented under the direction of the Accounting Office to ensure the accuracy of amounts,

coding of general ledger accounts, appropriate timing of payments, and compliance with applicable laws,

regulations and policies.

                                      Department Guidelines

Department Responsibilities:
    Use resources prudently in fulfillment of department mission and in
      compliance with the university policies and guidelines
    Be aware of the appropriate University process for ordering, receiving and
      paying for goods and services
         o For smaller purchases the department is responsible for the complete
         o Larger purchases need to be ordered through the Purchasing Office
    Establish responsibilities so internal controls are strong
         o A minimum of two department employees should be involved in the
            ordering, receiving, entry and approval process, more if possible
         o Ensure all goods and services are received and acceptable before
    Pay invoices accurately and timely
         o Establish procedures so all vendor early payment discounts are used
            and no late payments are made
    Retain invoices and other supporting documentation in accordance with
      NDSU Records Retention requirements

         1. Checks and ACHs (Automated Clearing House - direct deposits)

                   All NDSU Accounts Payable checks and ACHs are generated by the
                   Accounting Office each morning based on Accounts Payable Vouchers
                   and Travel Expense Vouchers that are successfully processed the previous

                   Checks, along with any remittance materials, are mailed by the
                   Accounting Office directly to the vendor or employee the day the check is

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                   generated. The Accounting Office also mails a remit advice, with
                   appropriate remittance materials, to the customers paid via ACH.

                   ACHs will be in the customer’s bank account the second business morning
                   after the AP Vouchers are successfully processed. For example: If an AP
                   Voucher or Travel Expense Voucher is successfully entered on Monday,
                   the money should be in the customer’s bank account by no later than 9:00
                   am, Wednesday.

                   Question: What happens when the bank account is closed?

                           Answer: What happens mostly depends upon the bank. In some
                           cases, the bank will reopen the account and deposit the money. In
                           most cases, the bank will electronically return the money to
                           NDSU's bank account and notify the NDSU Accounting Office.
                           This will take from one to five days, depending on the bank. When
                           the Accounting Office receives notification that money is returned
                           they will follow-up and get payment to the customer by check, as
                           soon as possible. If the Accounting Office shows a direct deposit
                           was made and the funds have not been returned to NDSU,
                           customers can contact their bank to follow-up on what the bank did
                           with the money.

                   When a payment is processed through the Accounting Office, on a
                   receiving report, accounts payable voucher, or travel voucher, the goal in
                   the Accounting Office is for an NDSU payment to be mailed from one to
                   three working days following receipt of the proper form in the Accounting

                   While this goal is adhered to as often as possible, periods of heavy
                   volume, holidays, etc., as well as other circumstances, could delay
                   payments to vendors. The originating department should consider such
                   factors when requesting payments to vendors or individuals.

                           Emergency payments that are to be expedited should be so noted
                           on the form and must be received in the Accounting Office by
                           12:00 (noon) to be eligible for the or next morning check
                           printing run.

         2. ACH (Automated Clearing House - direct deposits) signup

                   Vendors are signed up for the ACH payment method through Vendor
                   Registry in Bismarck. If employees want to be signed up for ACH for

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                   travel or other reimbursements, they should complete the ACH Direct
                   Deposit Authorization Agreement on the HR/Payroll Office web site.
                   (Make sure to check the applicable boxes on this form.)

                           Direct deposit is highly encouraged at NDSU! It saves money
                           and time!

                   Once the direct deposit authorization is in effect, all payments will
                   automatically be deposited into the bank account designated on the form.
                   At least ten days are needed between the receipt of this form and the
                   effective payment date for this authorization. Once the employee or
                   vendor is set-up for ACH deposits, there is no need to complete a new
                   form; unless the bank account information changes, the account is closed,
                   or the financial institution is changed.

         3. Prompt payment

                   The University is required to pay for each acceptable item of property or
                   service on the date required by the vendors. If no date for payment is
                   specified, payment should be made within 45 days after receipt of the
                   invoice. The acquisition of property includes the rental of real or personal

                           Examine vendor invoices closely to find out the payment terms.
                           Look for early payment discounts that may be available and try to
                           take advantage of every discount to save money for your
                           department and the university.

                           Set a goal to never miss an early payment discount and never be
                           late paying a vendor!

                   A vendor may accrue interest on payments overdue at a rate of one and
                   three-fourths percent per month (compounded) unless a different rate is
                   specified under contract. The University is obligated to pay these finance
                   costs except that such fees may not be paid from federally sponsored

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         4. Invoice Payment Methods

                   At NDSU, the procurement method, the type of payee (company or
                   individual), and the goods and/or services all drive the decision on what is
                   the best process for making payment to the customer.

                   Receiving Report
                   When the department initiates the procurement process with a Purchase
                   Requisition, which is sent to the Purchasing Office for Purchase Order
                   creation and distribution, the invoice for goods and/or services is paid by
                   attaching it to a Receiving Report and sending it to the Accounting Office
                   for payment, or they may pay the invoice by directly entering the
                   information to the Oracle/PeopleSoft Finance System, except in situations
                   (see Direct Entry to Oracle/PeopleSoft below).

                   Direct Entry to Oracle/PeopleSoft
                   When the department does not initiate the procurement process with a
                   Purchase Requisition, they may pay the invoice by directly entering the
                   information to the Oracle/PeopleSoft Finance System, except in situations
                   as follows:
                                Payments to Individuals
                                Rents or Lease payments
                                Contract Service Agreements
                                IT equipment over $750
                                Other equipment over $5,000

                   Paper Accounts Payable Voucher
                   In the cases where a Receiving Report or Direct Entry to
                   Oracle/PeopleSoft is not applicable, the invoice should be attached to a
                   paper Accounts Payable Voucher that is routed to the Accounting Office
                   for payment.

         When do departments need to initiate the procurement process on a
         Purchase Requisition through the Purchasing Office?

                   Under Purchasing Policy, Section 400, part 3:

                   NDSU Guidelines
                        3.1 NDSU employees authorized by their respective department
                        or unit can make a single non-repetitive purchase of a good or
                        service in the amount of $2,500.00 or less. Purchases of $2,500.01
                        and above shall be processed through the NDSU Purchasing

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                           3.2 NDSU employees may make purchases from $2,500.01 up to
                           and including $5,000.00 if they are delegated purchasing authority
                           in writing by their respective departmental supervisor and by the
                           Director of Purchasing after proper training has been completed.
                           Requirements include obtaining three (3) informal quotes,
                           awarding the order to the vendor offering the lowest and best bid,
                           and ensuring that quotes are maintained on file and the item
                           cannot be obtained on an existing term contract.

         5. Receiving Report

                   When a Purchase Requisition is created by the department, per NDSU
                   Policy Manual Section 404, a Purchase Order is generated by the
                   Purchasing Department and a copy is sent to the department. (If the
                   department has not been trained on entering an Accounts Payable Voucher
                   involving a Purchase Order, a Receiving Report should be used.)

                   A Receiving Report form, downloaded from the Accounting Office web
                   site, is used by the receiving agent to enter the date received, quantity and
                   condition of the goods, and authorization for payment.

                   The original invoice(s) should be attached to the Receiving Report and
                   forwarded to the Accounting Office for processing. If the original invoice
                   is missing, attach a copy noting the reason the original is not available.
                   When capital equipment or minor IT (Information Technology) equipment
                   is being purchased, the fixed asset inventory document should be
                   completed by the department and sent along with the Receiving Report to
                   the Accounting Office.

                   The Receiving Report is found on the Accounting Office web site. If
                   partial shipments are received, or if partial payments are necessary, the
                   Receiving Report can be used for all payments. The Receiving Report
                   should be identified as either a "partial payment" or "final payment".

                   The remittance portion of the invoice, or duplicate invoice, should be
                   attached to the Receiving Report. This remittance invoice will be sent to
                   the vendor with the check to identify what is being paid.

         6. Accounts Payable (AP) Voucher

                   Generally, an AP Voucher may be used for most payments to individuals
                   or companies, unless a Purchase Requisition must be used,

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                                                                              Accounts Payable

                   The AP Voucher must be accompanied by the original invoice(s), and/or
                   other documentation, and sent to the Accounting Office for processing.

                           When using the Excel spreadsheet as the AP Voucher, you must
                           use the Reference Number Generator on the Accounting Office
                           web site to generate a reference number and enter on the upper
                           right hand corner of the Excel spreadsheet. It is important to get
                           a new reference number for each voucher and not re-use
                           previous voucher numbers.

                           The Reference Number Generator can be found on the
                           Accounting Office’s table of forms at:


                           The Reference Number Generator advances one digit each time
                           it is accessed and will create a unique reference number for your
                           Accounts Payable Voucher. If more than one reference number
                           is needed (if more than one Accounts Payable Voucher is to be
                           completed), you should click on the BACK button on your
                           browser (Netscape or Internet Explorer) and then click on the
                           appropriate checkbox again to generate another reference
                           number for your next request for payment form.

                   Detailed instructions for the preparation of the AP Voucher are as

                           a.       Vendor ID or Empl ID – Enter the vendor number by using
                                    Oracle/PeopleSoft Vendor lookup screens (see
                                    Oracle/PeopleSoft User Manual)

                                    For accounts payable purposes, the remit address is the
                                    most important address as this is where the accounts
                                    payable checks or direct deposit stub is mailed.

                           b.       Purchase Order Number – Enter PO # only if form is being
                                    used for payment of a Purchase Order
                           c.       Customer or Account # - Department’s account number
                                    with the vendor
                           d.       Invoice Date – Record invoice date when paying one
                                    invoice only.

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                                                                           Accounts Payable

                           e.    Required Reference # – Record invoice number when
                                 paying one invoice only, if none available, use reference #
                           f.    Vendor Name and Address – Record the vendor’s remit
                                 address on the Oracle/PeopleSoft Vendor System.
                           g.    Remit to Address – Special instructions should be entered
                                 if payment is to be sent to a different address than that
                                 provided in (f) above.
                           h.    Social security number or Federal ID Number - Required if
                                 payment is being made to a non-employee individual.
                           i.    Quantity and Unit Price – Use if applicable.
                           j.    Description – If only one invoice is being paid, give a
                                 description of the item(s) or service(s) for which payment
                                 is to be made. If more than one invoice is being paid, list
                                 each invoice number, invoice date, and amount.
                           k.    Amount – This is the net invoice amount after adjustments
                                 for discounts, and freight. The total of this column must
                                 agree to the charges of the various funds listed.
                           l.    Amount-Account-Fund-Dept-Program-Project – Enter
                                 appropriate information. Program codes are required in Ag
                                 Departments. Charges may be divided between two or
                                 more funds/projects, with the total charged to all funds
                                 equaling the total invoices listed.
                           m.    Signature and approval lines - With regards to signatures,
                                 payment should include the following:
                                          Proper departmental signatures (blue ink
                                             preferred). Faxed signatures are allowed,
                                             however, every effort should be made to obtain
                                             original signatures.
                                          Signature(s) of an authorized individual from
                                             the applicable department(s).
                                          Authorized individuals should utilize their own
                                             signature, rather than signing another person’s
                                             name to a document or using a signature stamp
                                             and initialing.
                                          When reimbursing someone for expenses
                                             incurred, someone other than the person being
                                             reimbursed should authorize payment for the

                   Our auditors prefer that White-Out not be used for alternations.

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                                                                            Accounts Payable

         7.    Direct Entry of Vendor Invoice to Oracle/PeopleSoft

                   a. Efficiency

                           Departments are encouraged to use this method when applicable.
                           With the effort expended in preparing a paper AP Voucher, the
                           department can have the vendor payment entered to
                           Oracle/PeopleSoft and ready for payment themselves on a more
                           timely basis.

                   b. Process

                           Once the goods and/or services are received and accepted, and the
                           vendor invoice is received in the department, the department needs
                           to go through a process to review the invoice, check for accuracy,
                           verify the good and/or services were in fact received and are
                           acceptable. The person taking responsibility for this process
                           should approve the payment by signing or initialing on the
                           APPROVED-DATE line once the invoice is stamped.

                           Each invoice should be stamped as follows:

                                      I/we acknowledge receipt of these goods &/or services.

                                         VENDOR ID #______________________________
                                         SHIPMENT RECEIPT # _____________________
                                         VOUCHER ID #____________________________

                                         (This stamp is available through the Accounting
                                         Office by calling Dorothy at 231-7433.)

                                      Fill in the blanks as follows:

                                         VENDOR ID #: Determined by either looking up
                                         the number in Oracle/PeopleSoft or, if no number is
                                         in the system, please fax the invoice to the
                                         Accounting Office (231-6194) and a Vendor ID #
                                         will be created for the company you are paying. The
                                         Accounting Office will then fax the new Vendor ID
                                         # back to you for minimal delay in paying the

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                                                                             Accounts Payable

                                       There is also a need to fax any remit address
                                       changes or vendor name changes to the Accounting
                                       Office, attention: Renee.

                                       For accounts payable purposes, the remit address is
                                       the most important address as this is where the
                                       accounts payable checks or direct deposit stub is

                                       FUNDING: Oracle/PeopleSoft chartfields used to
                                       charge the expense (Account-Fund-Dept-Program-
                                       Project #s).

                                       APPROVED-DATE: The Accounting Office
                                       requires a minimum of two signatures on the
                                       invoice; one authorizing payment approval and one
                                       indicating who has entered the invoice information
                                       into the system. The individual approving the
                                       payment should sign his/her initials on this line with
                                       the date.

                                       ENTERED-DATE: The Accounting Office
                                       requires a minimum of two signatures on the
                                       invoice; one authorizing payment approval and one
                                       indicating who has entered the invoice information
                                       into the system. Once the invoice has been entered
                                       into the system, the individual who enters the
                                       information should sign his/her initials on this line
                                       with the date.

                                       VOUCHER ID #: This is the voucher number
                                       generated by the system for each invoice as it is

                                3. Alphabetize the invoices you plan to enter as a batch.

                                4. Calculate the batch total (total of all the invoices you will
                                be entering) on an adding machine tape. Initial the tape and
                                write the date on it. (This tape will be used to verify your
                                session total after you have entered your invoices - see #6

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                                  5. Enter the vendor invoice information to
                                  Oracle/PeopleSoft Finance. Entry instructions are in
                                  NDSU’s Oracle/PeopleSoft Users Manual.

                                         After entering the invoice, you will see a system-
                                         generated Voucher ID # number. Write that number
                                         on the line entitled: "VOUCHER ID #". Initial and
                                         date the line entitled: "ENTERED". (After the first
                                         invoice, you will see a session number at the bottom
                                         of the screen. Write that number on your adding
                                         machine tape.)

                                  6. After entering all invoices for a given day, run
                                  Oracle/PeopleSoft query NDU_AP63_VOUCHER_BY_USER to
                                  verify your input. The query results can be downloaded to
                                  Excel, totaled and compared to your adding machine tape;
                                  calculated in #4 above.

                                  If your totals do not agree you can make changes to the
                                  vouchers you entered and then repeat step #6 to verify the
                                  accuracy of your input.

                                  Record Retention: It is necessary for you to keep these
                                  invoices filed. When it comes time for the auditors to come
                                  you will be responsible for pulling the invoices that the
                                  auditor's request. According to the official retention policy
                                  (NDSU Policy 713), departments must retain these invoices
                                  for a total of ten years.

         8. Multiple Disbursement form

                   Rather than generating a number of Accounts Payable Vouchers with
                   the same information (except name, address and amount), a multiple
                   disbursement form is available to more efficiently process payments.

                   Instructions for completing the form:
                                   An Accounts Payable Voucher must be attached to the
                                      front of the multiple disbursement form for processing.
                                   Up to 20 individual disbursements can be listed on one
                                   The form can only be used when a single fund, dept,
                                      account, program and project are to be charged.

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                                                                             Accounts Payable

                                     (Frequently, the nature of the expense does not provide
                                      an invoice or other supporting documentation.)
                                     Amounts should be totaled and listed on the multiple
                                      disbursement form and the total listed on the Accounts
                                      Payable Voucher.
                                     Social security numbers are required on the multiple
                                      disbursement form.
                                     The reference number is to be filled in by the
                                     Names and addresses must be listed in alphabetical
                                     Forms are available on the web at:


         9. Other Accounts Payable topics

                   a. Prepaid Expenses

                           As a sound business practice, goods and services should be
                           received and accepted before payment is made to the supplier.
                           Prepayments are allowed but should be avoided, if possible.

                           Certain transactions are more applicable to prepayments, such as
                           subscriptions, rents and leases.

                           If a particular vendor only does business by receiving
                           prepayments, we should make a strong effort to find another
                           vendor. The department will be responsible for their loss if
                           payment is made and the goods/services are not received or

                   b. Banquets & Meeting Expenses

                           NDSU Policy 170, outlines the rules for paying for meals of staff
                           and guests. These expenses are typically paid via an Accounts
                           Payable Voucher. To help provide the proper documentation for
                           these expenses, a special form must be completed and attached to
                           the Accounts Payable Voucher. The form is called Banquet and
                           Meeting Documentation form and is available on the web at:


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                   c. Reimbursement of Moving Expenses

                           NDSU Policy 171, outlines the rules for reimbursing employee
                           moving expenses. A Moving Expense Documentation form must
                           be completed and attached to the Accounts Payable Voucher
                           authorizing employee reimbursement. This form is available on
                           the web at:


                                  This documentation form has further detailed instruction
                                  that can be very helpful.

                   d. Foreign Bank Drafts

                           A special web interactive form is available called Request a
                           Payment in Foreign Currency. The form is available on the web


                   e. Employee purchases

                           Periodically, an employee will pay for some incidental supplies or
                           materials and will need to be reimbursed. This practice should be
                           discouraged, as NDSU will lose the sales tax exemption savings
                           and there is potentially a loss of time away from work.

                           However, if properly approved by the department, and not
                           otherwise outside NDSU policy (e.g., equipment purchases must
                           be processed through the Purchasing Department), the employee
                           may be reimbursed using an Accounts Payable Voucher.

                   f. Employee awards and prizes

                           According to the Internal Revenue Service, awards to employees
                           are considered taxable wages. Any such payments must be
                           processed through the NDSU Payroll Office.

                   g. Dues and memberships

                           Per NDSU Policy 152.2, part 2:

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                                  Normally, dues and membership fees are the employee's
                                  own personal responsibility. The University may pay
                                  organization or institutional fees in professional and service
                                  organizations when the membership is regarded, either by
                                  the organization or the University, as an institutional
                                  membership or is otherwise considered directly beneficial
                                  to the University. In such cases, all benefits of membership,
                                  such as resource materials, belong to the University. All
                                  such funded memberships must be approved by the
                                  employee's supervisor who has budgetary responsibility for
                                  the unit or division. For the colleges of the University, this
                                  shall mean the Dean.

                           Per NDSU Policy 152.2, part 4:

                                  No other funded memberships are authorized unless
                                  specifically approved by a Vice President or the President.

                   h. Employee vs. Independent Contractor

                           Workers determined to be NDSU employees must be paid through
                           the NDSU Payroll Office. Workers determined to be independent
                           contractors with NDSU must be paid through the accounts payable
                           process, under direction of the Accounting Office.

                           If a department has a doubt about the appropriate worker
                           classification, an interactive worksheet is available to complete in
                           order to get a ruling from the Accounting Office. This interactive
                           web form is available at:


                   i. Donations

                           According to Article X, Section 18, of the State of North Dakota
                           Constitution, it is unlawful for the state to “make donations to or in
                           aid of any individual, association or corporation except for
                           reasonable support of the poor, nor subscribe to or become the
                           owner of capital stock in any association or corporation.”

                              1. NDSU cannot donate money to a charity or other individual
                                 or association, regardless of funding source. Payments

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                                 made to an individual or association should be for the fair
                                 value of goods received or services rendered.
                              2. Some activities and expenses involving donations are more
                                 appropriately sponsored and paid for by the NDSU
                                 Development Foundation.

                   j. Promotional Expenses

                           Promotional expenses must withstand the test of public scrutiny.
                           Payments that are made for promotional purposes to external
                           customers, and properly documented, are allowable university
                           expenses. Examples include: cards, flowers, candy, and other
                           small gifts (mugs, clothing, blankets), sponsorship or an event or

                              1. The recipient of the promotional item must be an external
                                 party to NDSU who is a past, current, or prospective
                                 customer. External parties include students (including
                                 student employees), businesses, and other outside
                              2. Current NDSU employees (including terminating or
                                 retiring employees) or departments must be considered
                                 internal parties. Promotional expenses directed to benefit
                                 internal parties are not allowable, regardless of funding
                                      a. Personal gifts to employees, or the employee’s
                                         immediate family, must not be charged to university
                                         funds. A gift in lieu of additional compensation is
                                         not allowable, regardless of funding source.
                                         Examples include: candy, flowers, clothes (not
                                         including required uniforms), mugs, tickets, gift
                                         certificates, cash or checks.
                                      b. Payment of an employee’s required university fees
                                         is not allowable, regardless of funding source.
                                         Example: parking permit.
                                      c. Promotional items received by employees that are
                                         clearly intended for the benefit of external parties,
                                         are allowable. For example: there may be rare cases
                                         where an employee, in a promotional role,
                                         purchases items to later be disbursed as small gifts
                                         for promotional purposes. The employee may be
                                         reimbursed in such cases.
                                      d. An exception to this policy is made in cases of the
                                         employee length of service award and retirement

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                                         awards. (See web site at:
                              3. The promotional expense must support the mission and
                                 purpose of the University. This is a key point that
                                 distinguishes a promotional expense from a donation. A
                                 donation does not further the mission or purpose of the
                              4. University officials must exercise prudent judgment,
                                 common sense, and restraint when determining whether an
                                 expense is appropriate.
                              5. The reason for purchasing promotional items must be well
                                 documented. The explanation must include a description of
                                 what is being purchased (if that is not apparent from the
                                 invoice), the intended recipient, and reason for the

                   k. Work Environment Expenses

                           Expenses incurred that create a positive physical work
                           environment for university employees are allowable. University
                           officials must exercise prudent judgment, common sense, and
                           restraint with these purchases. However, expenses that benefit
                           employees individually are considered personal expenses and are

                               Small appliances that are available to all of a department’s
                                 employees are allowable, such as: coffee pots, toasters, ice
                                 machines, water coolers, microwaves, and refrigerators.
                               Seasonal or holiday office decorations, wall hangings are
                               First aid kit that is available to all of a department’s
                                 employees is allowable.
                               Required uniforms.
                               Pictures or office decorations for an individual’s office or
                                 workstation are considered an employee’s personal expense
                                 and are unallowable, regardless of funding source.
                               Food or supplies for regular daily coffee or lunch breaks
                                 are unallowable, regardless of funding source. Examples
                                 include: coffee, filters, snacks, and donuts.

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                                 Personal hygiene and medical items made available to
                                  individual employees are unallowable, regardless of
                                  funding source.

                   l. Disputes

                           The guidelines noted above relating to: i) Donations, j)
                           promotional expenses, and k) work environment expenses are
                           intended to make available written guidelines to assist departments
                           in distinguishing between allowable and unallowable university
                           expenses. In situations where the Accounting Office disagrees
                           with a department’s interpretation that a payment is an allowable
                           expense under this i), j), and k) of these guidelines, the payment
                           will be routed to the appropriate Vice President for approval.

                                         If the Vice President does not support the purchase,
                                          the employee will need to personally fund the
                                         Some promotional, work environment or morale
                                          building expenses may be more appropriately paid
                                          for by the NDSU Development Foundation.

11. Internal Control

Accounts payable transactions require explicit segregation of duties. The recording of
assets or expenses, and the related liability, should be recorded by employees who are not
involved in the ordering and receiving functions. Many of NDSU’s accounts payable
transactions are processed and audited centrally through the NDSU Accounting Office.
Transactions that are processed only in departments through Oracle/PeopleSoft, are
subject to random audit sampling by either the NDSU Internal Auditor or the Office of
ND State Auditor.

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F. Travel

NDSU Policy Manual, Section 515, represents NDSU’s official employee travel policy.
NDSU Policy Manual, Section 516, represents NDSU’s official travel policy pertaining
to non-employees. These policies show the specific rules and limitations, most of which
are based on state law.
                              Department Guidelines

Department Responsibilities:
    Be aware of NDSU Policies 515 and 516 and submit Travel Expense
      Vouchers that are in compliance with those policies
          o Much of the detailed rules and limits are described in these policies
    Ensure that employees use either the web form (described below) or some
      other internal department method for having out-of-state travel pre-
    Determine the propriety of the trip, most prudent method of travel,
      document justifications
    Departments make their own travel arrangements
          o Use of a travel agent or direct purchase of airline tickets through
             airline or travel service web sites are permitted
          o Contact state fleet services for reserving a state motor pool vehicle.
    Preparation and approval of Travel Expense Vouchers to reimburse
      employee travel expenses, with appropriate supporting documentation
    Departments need to be available to answer any questions as a result of
      audits by either the Accounting Office, Agriculture Budget Office, or
      external auditors
    Work with employees on non-reimbursable expenses

                   1. Travel Arrangements

                           NDSU departments are responsible for making their own travel
                           arrangements. Departments are responsible for determining that
                           the benefit of each trip exceeds travel expense and that the most
                           prudent method of travel is used. Departments may consult with
                           the Accounting Office to discuss options or for other related

                                      a. Commercial Airfare

                                      Purchasing airfare through a local travel agency,
                                      internet travel service, or directly from airlines (internet

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                                   or in-person) is allowable. In some cases the additional
                                   charge by the travel agency may be worth the service.
                                   Supervisory out-of-state travel authorization should be
                                   obtained before making arrangements. Travel agencies
                                   will directly invoice the department which may be paid
                                   like any other vendor invoice. University Procurement
                                   cards may be used for internet purchases. If
                                   employees use their personal credit card they may
                                   include the expense on their travel expense voucher or
                                   be reimbursed by Accounts Payable Voucher if they
                                   make the purchase more than one month before the trip.

                                   Employees are encouraged to acquire E-tickets
                                   (Electronic tickets) whenever possible, due to their
                                   convenience and ease of use. The individual traveling
                                   should carry proper identification when traveling via an
                                   electronic ticket, as they will be required to show ID at
                                   the airport before a boarding pass will be issued.

                                   Travelers are encouraged to take advantage of special
                                   or Super Saver airline rates. A department head may
                                   authorize employees to depart early or return late to
                                   take advantage of these special rates. The cost/benefit
                                   of these arrangements must be documented.

                                   Baggage charges – are reimbursable/allowable
                                   Change fees – are reimbursable/allowable
                                   Other miscellaneous fees - are reimbursable if there is a
                                   justified business purpose for the expenses and if
                                   documented and approved by the department.

                                   Fly America Act – Those individuals utilizing a grant or
                                   contract fund for the purchase of airline tickets should
                                   take note of the Fly America Act. The Fly America Act
                                   (49 U.S.C. Section 40118) requires government financed
                                   air transportation to be "provided by" air carriers holding
                                   certificates of public convenience and necessity as U.S.
                                   flag air carriers. This requirement is applicable to all
                                   federal and federal flow through Grants, Cooperative
                                   Agreements and Contracts, for either domestic or
                                   international travel.

                                   If you are planning on any travels or are making
                                   arrangements for someone to travel on a Grant
                                   Cooperative Agreement or Contract, the Fly America Act

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                                   may be applicable to the arrangements. It is important to
                                   note this will have a direct effect on international travel,
                                   but may also create problems for domestic travel.

                                   The Comptroller General issued a decision regarding the
                                   Code Sharing (Airline Alliances) of flights by U.S. and
                                   foreign flag carriers utilizing the equipment of the foreign
                                   flag carrier. If a U.S. flag air carrier has an arrangement to
                                   provide passenger service in international air
                                   transportation on the aircraft of a foreign air carrier under
                                   a "code-share" arrangement with a foreign air carrier this
                                   could meet the requirement of the Fly America Act. The
                                   key to meeting the requirements appears to be whether the
                                   ticket is purchased through the U.S. air carrier. If the
                                   ticket is issued through the U.S. air carrier, it would be
                                   eligible for reimbursement. However, if the ticket were
                                   issued by a foreign air carrier, even under a code sharing
                                   arrangement, the ticket may not be eligible for
                                   reimbursement on a Federal Grant, Cooperative
                                   Agreement or Contract. Caution in making arrangements
                                   for foreign travel is warranted.

                                   b.   Vehicle Travel

                                   Employees are encouraged (in some divisions or
                                   departments required) to make use of the State Fleet
                                   vehicles, rather than using a personal vehicle for
                                   traveling on university business. Contact 231-9619 for
                                   motor pool reservations. The motor pool fee will be
                                   electronically charged to the department’s funds. See
                                   NDSU Policy 515 for additional information about
                                   reimbursement rates for personal vehicle mileage

                                   c.   Rental cars

                                   When in travel status rental car expense is
                                   reimbursable/allowable. In addition, gas for car rentals
                                   may be reimbursed with original paid gas receipts.

                                    NDSU, through a E&I purchasing cooperative, is
                                   eligible for corporate rates (discounts) with Enterprise,
                                   Avis, Hertz, and Budget car rental agencies. Contact
                                   the Purchasing department for more information on

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                                       Insurance coverage offered by rental car companies for
                                       travel within the United States is not necessary, not
                                       reimbursable and not an allowable expense. This kind
                                       of insurance is already available through the State of
                                       North Dakota Risk Management Fund, Risk
                                       Management Division.

                                       When renting a vehicle for university use in a foreign
                                       country, the additional liability insurance provided by
                                       the rental agency must be purchased. This is due to the
                                       difficulty and high cost associated with defending
                                       claims in these locations.

                                       Car rental charges from Fargo (or other employee work
                                       stations throughout the state) are not reimbursable. If
                                       an employee chooses to rent a vehicle to travel from
                                       their work station, rather than using a state fleet vehicle
                                       or personal vehicle, the rental car will be considered the
                                       employee’s personal vehicle and they will only be
                                       reimbursed based on NDSU Policy 515, part 4
                                       (Privately Owned transportation).

                                       d.    Refunds

                                       When travel plans change, departments should be on
                                       the alert for refunds that are sent to employees, where
                                       the travel expense was prepaid or already reimbursed to
                                       the employee, to make sure the refund is returned to the
                                       university and credited to the funds charged.

                   2. Employee forms

                           a. Out-of-state travel authorization –web form
                           NDSU Policy 515 details the requirements for seeking
                           management authorization for out-of-state travel. A web form is
                           available for employees to use to request supervisory permission.
                           This web form can be found on the “Out-of-state travel
                           authorization” line on the forms for departments shown in table at
                           the following web address:


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                           This form should be filled out by the employee to request
                           supervisory permission for their proposed out-of-state trip. The
                           applicant’s and supervisor’s email addresses must be filled in
                           properly. When the submit button is clicked, the request goes to
                           the supervisor as an email. The supervisor may need to forward
                           the email to his/her supervisor, if necessary under the policy.
                           Management may use the email system to approve or deny the
                           applicant’s request. The Accounting Office and the President’s
                           Office do not need to see the approval of the out of state travel.
                           For audit purposes, this approval will be presumed if the travel
                           expense voucher is approved when the trip is completed. The out-
                           of-state travel authorization web form is intended as a helpful
                           internal management tool for seeking pre-approval for the
                           applicant’s trip.

                           b. Travel Expense Voucher – web form
                           An Excel spreadsheet form is available for documenting the
                           employee’s travel expenses. All travel vouchers must be sent to
                           the NDSU Accounting Office for audit and processing. Check
                           with your department’s chain of command to determine if your
                           department’s Travel Expense Voucher needs to first be approved
                           in another department. The Travel Expense Voucher must be
                           signed by the employee and approved by the authorized
                           department official.

                           This Excel spreadsheet can be found under “Travel Expense
                           Voucher” on the forms for departments shown in table at the
                           following web address:


                           General instructions for completing and printing the web form are
                           shown on the cover sheet before you get to the form. The travel
                           expense voucher must be filled out as completely as possible.

                   3. Non-employees

                           Non-employee travel rules are far less restrictive compared to the
                           employee travel rules in Section 515. Non-employee travel
                           expenses may be reimbursed to individuals not on the NDSU
                           payroll. To accomplish the reimbursement, an Accounts Payable
                           Voucher should be prepared, using expense account 623200, and
                           submitted to the NDSU Accounting Office for processing.

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                   4.     Internal Control

                             Employees are required to sign their Travel Expense Voucher and
                             certify the correctness of the reimbursement request. Department
                             approval is also required. The Ag Budget Office or the
                             Accounting Office audits all Travel Expense Vouchers.

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                                                                         Asset Management

G. Asset Management
Policy 503 – Asset Management

The University shall maintain accurate records of property, plant, and equipment, in
accordance with generally accepted accounting principles. The University shall comply
with State Board of Higher Education Policy 802.6, part 5.c, which indicates that
University’s must “Be accountable for all funds, property, equipment and other facilities
assigned or provided to the institution to ensure that all are used consistent with laws,
policies or other specific requirements;”.

All additions, deletions, and transfers of property, plant, and equipment shall be properly
authorized. University expenditures for tangible personal property items used actively in
university operations that exceed $5,000 and benefit a period exceeding one year shall be
capitalized and inventoried on an annual basis. Library Books will be capitalized in
accordance with guidelines issued by the University System.

For other policies related to property, plant, and equipment see the following:

         a.        Section 406 - Surplus Property
         b.        Section 700.2 - Taking Equipment Home
         c.        Section 700.3 – Personal Use of State Property
         d.        Section 400 – General Purchasing Procedures (parts 3 & 4, below)

Relevant Purchasing Policies:

Policy 400 - General Purchasing Procedures

Part 3. Personal property, equipment or supplies under $10,000 may be purchased at the
discretion of the institution. When feasible, informal quotes or proposals should be
solicited from more than one vendor. Reasonable steps shall be taken to ensure that
qualified North Dakota vendors have an opportunity to compete for the contract.

Part 4. Consulting services and insurance shall be purchased by negotiation, telephone or
informal written quote or proposal. When feasible, more than one vendor should be
requested to submit prices to ensure appropriate competition. Reasonable steps shall be
taken to ensure that qualified North Dakota vendors have an opportunity to compete for
the contract.

                                   Department Guidelines

Department Responsibilities:
    Ensure that proper University procedures are followed for the acquisition of
      property, equipment, supplies, etc.

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        Manage capital equipment inventory making sure accounting records are
         updated on a timely basis and making sure equipment resources are
         appropriately managed
             o Equipment inventory should only have active items
        Report equipment deletions and transfers timely to the Accounting Office, so
         records are updated
             o Report stolen items to University Police
             o Turn surplus items over to the Purchasing Office, for use by another
                 department or public auction
        Prohibit the personal use of university equipment
        Proper departmental approval must be documented if equipment needs to be
         taken to an employee’s home
        Ensure the department’s annual inventory of equipment items (required by
         state law) is completed by the requested deadlines
        Department personnel should be available to assist in locating equipment
         items for random audit verifications
        Manage and track minor IT (Information Technology) equipment (valued
         between $750 and $5,000)
        Report major equipment additions to Facilities Management to update the
         building’s content insurance coverage

         1. Equipment Policy and Definition

                           NDSU has a fixed asset policy that defines capital equipment as
                           personal property items costing more than $5,000.00. This cost
                           includes freight and installation. Items donated to a university
                           department and valued at more than $5,000.00, must also be
                           accounted for as capital equipment.

                           In addition to capital equipment (valued > $5,000), NDSU
                           separately tracks minor IT equipment (valued between $750 and
                           $5,000). The remainder of these guidelines also apply to IT
                           equipment between $750 and $5,000.

         2. Maintaining accurate records

                           NDSU’s Accounting Office centrally maintains these records on
                           the Oracle/PeopleSoft Finance system. Departments should
                           maintain a file of the inventory document forms pertaining to each
                           equipment item assigned to their department number.

                           All department owned items meeting the above definition should
                           be on the university’s fixed asset record. Departments are

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                           responsible for providing the NDSU Accounting Office with
                           timely and accurate information to keep the Oracle/PeopleSoft
                           Finance system properly up-to-date.

         3. Equipment Addition Procedures

                           University departments must complete the following procedures to
                           inventory an item:

                                 Affix an NDSU inventory tag to the item. Tags are available
                                  from the Accounting Office.

                                 Fill out the necessary information on an inventory
                                  document. Instructions are available from the Accounting
                                  Office. Attach the inventory document to the Receiving
                                  Report (Accounts Payable Voucher or Interdepartmental
                                  Billing form, if applicable) and submit it to the Accounting
                                  Office. When the items purchased are enhancements or
                                  attachments to equipment that is already inventoried, the
                                  inventory number of the existing item should be written on
                                  the receiving report (Accounts Payable Voucher or
                                  Interdepartmental Billing form, if applicable.

                                 The inventory document will be returned after it is included
                                  on the fixed asset records of the University.

                                 Equipment purchases from Federal funds valued at more
                                  than $5,000, must be tagged with a "Property of North
                                  Dakota State University-Federal Funds" identification tag.
                                  These tags will be provided by the Accounting Office.

         4. Equipment Deletion Procedures

                           Equipment deletions must be reported to the NDSU Accounting
                           Office as soon as possible. To report a deletion the department
                           must retrieve the inventory document from the department file and
                           complete the bottom portion of the form, indicating the reason for
                           the deletion. The document must be approved by the department

                           Stolen equipment should be reported immediately to the University
                           Police and the Accounting Office. The University Police will

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                           complete a stolen property report and a copy should be attached to
                           the inventory document when it is turned into Accounting.

         5. Equipment Transfer Procedures

                           When transferring equipment between departments, the inventory
                           documents need to be forwarded to the department receiving the
                           equipment. A memo or email needs to be sent to the Accounting
                           Office with the following information: item number(s), new
                           department and location.

         6. Annual Inventory

                           To comply with state law, each department is expected to perform
                           an annual inventory of its equipment. The department head will
                           be expected to certify as to correctness of the department’s
                           equipment listing. Detailed inventory instructions are sent out
                           each year by the Accounting Office.

                           It is important to only have equipment that is useable on the
                           department’s inventory.

         7. Taking Equipment Home

                           The university has a policy (NDSU Policy 700.2) outlining the
                           instances when it may be appropriate for an employee to take
                           university property to their home for job related reasons.

         8. Personal Use of Equipment

                           The university has a policy (NDSU Policy 700.3) prohibiting the
                           personal use of university property.

         9.    Surplus

                           The university has a policy (NDSU Policy 406) indicating how to
                           handle property which is surplus to the needs of the department.

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         10. Internal Control

                           Periodically, there will be unannounced spot checks by internal
                           auditors, or state auditors, to make sure the equipment items
                           reported on the department’s records exist, properly tagged, and on

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H. Taxes
Policy 504 - Taxes

North Dakota State University is a tax-exempt organization under Section 115 of the
Internal Revenue Code.

Under state law (NDCC 57-39.2-04), NDSU is exempt from sales taxes applicable to
purchases, rentals and leases of tangible personal property that is purchased and shipped
to NDSU or is purchased from a North Dakota vendor.

                                    Department Guidelines

Department Responsibilities:
    Take advantage of the NDSU’s state sales tax exemption on all purchases, as
    Be aware of potential situations where state sales taxes should be charged to
      customers, collected and reported
          o Consult Accounting Office regarding questions
          o Coordinate collection and reporting with Accounting Office
    Be aware of potential situations where unrelated business income taxes apply
      and notify the Accounting Office
    Make sure that an appropriate tax acknowledge letter is sent to donors when
      tax exempt donations exceeding $250 per year are received by the

         1. State Sales Tax Exemption

                   Departments should not pay state and local sales taxes to vendors. If a
                   vendor includes these taxes on an invoice, the taxes should be deducted
                   from the amount paid to the vendor. The amount of sales tax deducted
                   and NDSU’s tax-exempt number should be noted on the Accounts Payable
                   Voucher or receiving report, if paying a vendor using one of these forms.

                   NDSU’s state sales tax exemption number is E-5411. It is proper for a
                   department to inform a vendor of this number if requested. A copy of the
                   actual certificate is shown on the Accounting Office web site.

                   The University is exempt from sales tax only when a University check is
                   issued directly to the vendor applying the tax. Reimbursement may be
                   made to employees or other for sales taxes paid while incurring an
                   expense on behalf of the University.

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         2. W-9 form requests from vendors

                   Departments are authorized to fill out an IRS W-9 form but should contact
                   the Accounting Office for assistance if they are unfamiliar with the correct
                   information to be entered. If the information is not entered correctly, a
                   mismatch will occur between the IRS and the vendor and this could
                   complicate future business transactions between the vendor and NDSU.
                   The department may also send the W-9 to the Accounting Office for
                   completion or the Accounting Office can provide pre-completed W-9
                   forms for the department to have on hand to respond to requests from

         3. Acknowledging Tax-Exempt Donations

                   In regards to donations, NDSU is a tax-exempt organization under Section
                   170 of the Internal Revenue Code. Donations made directly to the
                   University are tax deductible.
                   Any department directly receiving a donation in excess of $250 must
                   notifiy the Accounting Office so a tax acknowledgement letter can be
                   sent to the donor.

                   Internal Revenue Service regulations require that donations greater
                   than $250, and made directly to NDSU, be followed up with a letter
                   from NDSU to the donor acknowledging the tax-exempt contribution.
                   The NDSU Development Foundation will take care of the tax
                   acknowledgement letter in the more common case where a donation is
                   made out to the Foundation.

         4.        Unrelated Business Income Taxes

                   Even though NDSU is exempt from Federal income tax under section 115
                   of the Internal Revenue Code as an instrumentality of the state of ND,
                   NDSU must pay income taxes on any income generated from activities
                   that are not substantially related to the exempt purpose of the university.
                   As a Land-Grant institution NDSU was created to serve three basic
                   functions: resident education, research and extension.

                   In order for an activity to be considered unrelated business income (UBI),
                   the following elements must exist:

                              The activity is a trade or business that is conducted with a
                               profit motive – The activity is priced above cost and is
                               operated to generate income.

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                              The trade or business is regularly carried on – The activity is
                               conducted on a regular basis and is not a one-time event.
                              The conduct of the activity is unrelated to the tax exempt
                               purpose of education, research and extension.

                   NDSU currently engages in a number of activities that are treated as
                   unrelated and tax is paid on the net income from these activities. Tax
                   expenses are billed back to the department generating the income.

                   Examples of potential UBI activities include:

                              Operation of a parking lot for private events
                              Operation of a fitness center for the general public
                              Advertising to the general public
                              Sales of excess utilities
                              Rental of space to the general public
                              Sales of goods/services to the general public
                              Operation of a cafeteria for catering to the general public

                    Departments should be on the alert for any revenue generating
                   activities, unrelated to the mission of the University, that are currently
                   proceeding or planned, and contact the Accounting Office for a ruling
                   as to whether the activity should be reported to the IRS.

         5.        Other tax forms

                   The University central financial offices are responsible for generating and
                   distributing all required tax forms to its customers. Examples include: W-
                   2 forms (issued by the Payroll Office to all employees), 1099-misc forms
                   (issued by the University System to independent contractors and certain
                   other vendors), 1098-T forms (issued by Customer Account Services to
                   students for purposes of claiming Educational Tax Credits such as the
                   Hope and Lifetime Learning Tax Credit).

                   IRS 1099-MISC forms are issued to contractors and other vendors that
                   provide services or contracts.

                   The Departments are required to send an Accounts Payable Voucher to the
                   Accounting Office for any vendor providing services or contracts. The
                   Accounting Office will then set up the vendor for withholding. W-9’s will
                   be sent to the vendors by the Accounting Office at this time.

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments

         6.        State sales tax collections and reporting

                   Certain NDSU sales to customers are subject to North Dakota sales tax
                   collection and reporting. Taxable sales by departments must be
                   reported to the Accounting Office on a monthly basis for inclusion in
                   the University’s sales tax report. Questions regarding NDSU’s sales tax
                   filing and payment procedures should be directed to the Accounting
                   Office. Questions about whether sales tax should be collected on a
                   particular sale may be directed to the North Dakota Office of State Tax
                   Commissioner in Bismarck. Their telephone number is 701-328-3470 and
                   their e-mail address is Information may also be obtain
                   from their web site

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments
                                                                            Record Retention

I.       Record Retention

SOURCE: NDSU President
     1. The records retention period is the length of time records must be retained. NDSU
        will retain a State Board of Higher Education approved Records Retention
     2. The Records Retention Schedule specifies the criteria for the management of
        active records, provides for the systematic transfer of inactive records from the
        active storage areas to inactive storage areas, specifies the length of time records
        need to be maintained, and establishes the proper destruction method for those
        obsolete records.

                   2.1 The "Instructions for Completing Records Disposal Request" and the
                   "Records Disposal Request Form" are included in the Records Retention
                   Schedule, which is currently under revision. If you have any questions
                   concerning records disposal, please contact Michael J. Robinson,
                   University Archives, at 701-231-1017 or

     3. Generally if a department is not a primary or official record holder, records need
        only be retained for departmental operating purposes. Records may also be
        maintained to document policies and procedures, and for reference to archival
        value, etc.
     4. Decisions on what to retain and for how long should take into account the legal,
        audit, administrative, fiscal, and historical considerations, as well as state and
        federal laws, affecting the record.
     5. To assure compliance with all regulatory agencies as well as the Records
        Retention Schedule, the internal auditor of the University may be contacted
        regarding either the retention or disposition of records.

Department Guidelines

See Records Management Website:

(Revised December 2008)
                          Financial Processes and Guidelines
                               for NDSU Departments

J. Audits



SOURCE: NDSU President
    1. North Dakota State University supports an Audit & Advisory Services Office
       (formerly internal auditing) as an independent appraisal function. The office
       examines and evaluates University business and administrative activities. The
       primary objective of the Audit & Advisory Services office is to assist all levels of
       management of the University in effective discharge of their responsibilities.
       Audit and Advisory Services furnishes analyses, recommendations, counsel, and
       information concerning the activities and records reviewed. To provide for the
       independence of Audit & Advisory Services activity, the internal auditor reports
       to the Vice President for Finance and Administration, with direct access to the
       NDSU President. In carrying out the duties and responsibilities of the office, the
       internal auditor has (absent any legal privilege) full and unrestricted access to all
       University activities, records, property, and personnel. In addition, the internal
       auditor is responsible for measuring and evaluating the effectiveness of
       managerial controls.

Department Responsibilities & Guidelines

        In addition to the University’s internal auditor referred to in the above NDSU
         policy, audits on NDSU are also frequently conducted by the Office of the State
         Auditor, and periodically by other external private, state or federal auditors. It is
         the responsibility of departments to cooperate with these audits and provide any
         information requested as timely as possible.

(Revised December 2008)

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