Responsibilities for Managing University Financial Assets

Policy Statement

This policy outlines the roles and responsibilities of various university officers and organizations in managing the university's financial assets. This policy was developed in compliance with the Amended and Restated Articles of Incorporation and the Bylaws of Carnegie Mellon, donor stipulations, government regulations and generally accepted accounting principles. Carnegie Mellon relies on the integrity and careful judgment of its employees who have financial management responsibilities. The policy reflects the responsibilities of these employees to ensure the long-term financial viability of the university.

Delegated Responsibility

Board of Trustees

By the terms of the Amended and Restated Articles of Incorporation and the Bylaws of Carnegie Mellon University, the university's trustees maintain fiduciary responsibility for the assets of Carnegie Mellon University. The trustees have corporate powers and privileges; that is, they may organize and act as a board of trustees, elect officers and adopt bylaws. The Board of Trustees has delegated responsibility to individual university officers for management of university operating, non-operating and capital assets.

Investment Committee

The Investment Committee of the Board of Trustees is responsible for the investment and reinvestment of funds and the purchase and sale of securities constituting the endowment or other long-term pool assets of the university, and shall prescribe and approve the investment policies for any investment agents acting for the university. In carrying out its responsibility for the investment and reinvestment of funds and the purchase and sale of securities constituting the endowment or other long-term pool assets of the university, the Investment Committee gives the chief financial officer, or chief investment officer, or treasurer, or assistant treasurer such authority as is necessary to carry out the decisions of the committee.

President

The Board of Trustees has delegated responsibility to the president for the management of the university's operating and capital assets. The president, working with the provost, has responsibilities for broad allocation of university resources. The president has direct responsibility for the management of administrative operating assets. Within parameters approved by the Board of Trustees, the president has responsibility for making allocations of such funds and monitoring the overall use of the funds in accordance with university budgetary limits and established university policies and practices.

Provost

The president has delegated responsibility to the provost for the management of academic and sponsored project assets. Within the parameters defined by the president, the provost has responsibility for making allocations of such funds to the academic or research units and monitoring the overall use of the funds in accordance with university budgetary limits and established university policies and practices.

The provost has responsibility for review and approval of all sponsored project agreements to ensure legal and financial terms are acceptable to the university (obligations, commitments, sponsor billing arrangements, subcontractor billing arrangements, cost recovery provisions, etc.).

Where indirect cost recovery is not provided by the sponsor, the provost, in consultation with the chief financial officer, has responsibility for reviewing and accepting justification for performing the work at a financial loss to the university or securing indirect funding from one of the academic or research units.

Faculty Senate

The Faculty Senate serves in an advisory role for the university's overall financial affairs. The chair and vice chair of Faculty Senate's Budget and Financial Affairs Committee attend Board of Trustees Finance Committee meetings.

Chief Financial Officer

The chief financial officer plays a central role in assuring that the university meets its fiduciary responsibility to donors, government officials, employees, students and the general public. As such, the chief financial officer has authority over internal control and financial reporting matters throughout the university.

The chief financial officer evaluates the adequacy and quality of financial reporting to ensure reports submitted by business units meet the standards defined by the president, provost and chief financial officer.

The chief financial officer has responsibility for establishing and monitoring a sound business environment so that various funding sources (such as government agencies, donors, students and bondholders) can confidently provide resources in support of the university's academic mission. To ensure this sound business environment, the chief financial officer develops and monitors university policies related to internal control, financial and accounting requirements, procurement, sponsored project financial administration, indirect costs, service centers, facilities management, administrative system use and human resources.

The chief financial officer ensures the accessibility of financial information for those responsible for financial management. The chief financial officer is responsible for providing training to users of financial information to assure compliance with proper business practices.

Colleges, Divisions and Departments

Each college, division and department must follow university-prescribed procedures to assure that expenditures charged to their accounts are: reasonable and necessary; consistent with established university policies and practices; applicable to the work of the university (including instruction, research and public service); and consistent with sponsor or donor terms, conditions and expenditure restrictions.

Each college, division and department must also follow university-prescribed procedures to assure that revenues generated by the college are: within the university's tax-exempt purpose; consistent with established university policies; supported by consistent, established pricing structures that recover direct and indirect costs (exceptions only as authorized); and can be discharged or completed by university action or delivery.

Deans, vice presidents and department heads are accountable for balancing expenditures against revenues (university allocated or generated from external sources) so that no unfavorable operating results (deficits) are incurred for the college, division or department as a whole.

Colleges, divisions and departments are responsible for reflecting all approved plans and initiatives in their financial budgets and projections.

Principal Investigators

Principal investigators have overall responsibility for the technical and financial management of their projects, in accordance with established university policies and procedures. Principal investigators should have a good understanding of the financial status of their projects to ensure that financial transactions are consistent with the sponsor or donor terms, conditions and expenditure restrictions. It is the principal investigator's responsibility to ensure appropriateness of all direct contract charges. These responsibilities may not be delegated. Principal investigators must inform their dean and/or department head, in advance, of potential funding issues.

If, upon termination of the sponsored project award (contract, grant or other type of support), the project's account is in a deficit position and additional funds are not available from the original sponsor, the principal investigator has responsibility to clear the deficit by securing additional, qualified external funding. If external funding is not available, the principal investigator shall obtain funding from the college or department.

Employees with Financial Responsibility

Within colleges, administrative divisions and departments, staff with financial management responsibilities are accountable for the execution or review of all transactions in accordance with established university policies and procedures. These employees (financial managers) are given latitude in performing their review before or after the transaction has occurred and on a detail transaction or summary account basis, except where prior approval or detail transaction review is required by policy or sponsor (e.g., purchase orders over prescribed thresholds, foreign travel, equipment in certain circumstances, cost sharing, cost transfers, etc.).

It is the financial manager's responsibility to monitor overall expenditures in comparison to revenues and budgets and to notify the dean, vice president or department head when unfavorable variances are expected or incurred. Financial managers may be requested to identify alternate funding sources within the college, division or department to cover unfavorable variances but are not accountable for the overall balancing of the college, division or department's funding as a whole. (See Colleges, Divisions and Departments.)

Financial managers are responsible for providing regular financial reports to the dean, vice president, department head, faculty (where applicable), principal investigators and the university Budget Office. The financial reports shall include actual results, budget, projections and variance analysis. Any expected or incurred deficits must be highlighted on these regular reports. Financial managers are responsible for pursuing explanations for unfavorable variances and documenting plans to eliminate unfavorable variances by fiscal year end or project end, but are not responsible for securing the funding. (See Colleges, Divisions and Departments and Principal Investigators.)

Internal Audit

The Internal Audit department exists to assist university officials and the Board of Trustees in the effective discharge of their responsibilities. Internal Audit is responsible for examining and evaluating the adequacy and effectiveness of (1) the systems of internal control and their related accounting, financial and operational policies and (2) procedures for financial and compliance monitoring and reporting. The director of internal audit has authority to present reports directly to the president of the university and has independent access to the Board of Trustees' Audit Committee. Internal Audit has direct access to all university books and records.

Annual Audit

To assure that the university's assets are protected and that transactions and events are properly recorded, an independent auditor selected by the Board of Trustees audits the annual financial statements.