Reference: Policy Statement 10: Special
and Institutional Trust Funds
Memo: Guidelines on Use of Discretionary Funds (Adobe Acrobat Reader Required)
1XXXXX; 3XXXXX; 9XXXXX. Though discretionary accounts are located in these ranges not all accounts in these ranges are discretionary. Any accounts outside of these ranges are not discretionary accounts.
NO, NO, NO. Non-profit organizations such as the University and Foundations
are governed by Federal Rules that require all expenses to meet the following
Business Connection - expenses paid by the organization or incurred by the employee must tie back to a business purpose to the organization.
Substantiation the employee must substantiate the amounts paid by the organization.
Failure to follow and document these requirements puts both the University/Foundation at risk of IRS audit findings that could result in penalties, interest and loss of taxexempt status. In addition individuals could be subject to penalties and interest if they personally benefited from the transactions. This is in addition to the negative press that would be received.
Legally, these accounts can be used for discretionary items, however, the argument was made by the Office of the President that these funds are necessary to advance research at the institutions and that these funds should be kept by the Universities for this purpose and not be reverted to the State as they were in the past. The understanding is that these funds will be used for direct and indirect research related activities.
No. Discretionary funds generated within service organizations need to be used for related discretionary activities in these areas. In some cases, use of these funds for other purposes could be a violation of bond covenants.
Yes. This is a reasonable expense.
This could be reimbursed from Foundation discretionary funds if justified. However, this should not be reimbursed from university discretionary funds.
Political expenses are not to be paid for with any state funds, including university discretionary funds. This would need to be paid for from the Foundation discretionary funds.
From Foundation discretionary funds - yes. From University discretionary funds
With some exceptions for Medical Faculty Practice Plan funds, all university
discretionary funds must buy off of state-term contracts. Foundation discretionary
funds are exempt from this requirement.
No. This was a personal decision that would need to be funded by the individual.
Maybe. Provided this activity is related to the University, has a written contract and is agreed to by the Department Head or the boss of the person making the commitment, then discretionary funds can be used. If this activity is not approved, then neither university or foundation discretionary funds are to be used.
Yes. Foundation funds are not considered state funds and are not
subject to the state procedures. An example of this is buying furniture off
of state contract where this is permitted with Foundation funds or paying for
political expenses. As noted in #2 above, the expense must still have a business
connection to the Foundation and must be substantiated.
about the ECU Business Manual may be directed to:
Director of Marketing for Business Services
Division of Administration and Finance
(252) 328-6468, ext. 4