University of Arkansas at Little Rock
Policy Name: Signature Authority Delegation for University Financial Transactions and Documents
Policy Number: LR 217.1
Effective Date: June 30, 2016
Policy
This policy provides guidelines for the appropriate delegation of signature authority, approval, and access for all financial transactions at the University of Arkansas at Little Rock. The purpose of this policy is to establish a sound internal control environment where only individuals with formally delegated signature authority are able to obligate the university with external parties and only authorized administrators and their formal designees approve financial transactions for the university.
Definitions
- Approval Authority. Permission given or delegated to approve financial transactions. This approval attests to the appropriateness of the transaction with the university’s program objectives and budgetary authorizations.
- Contracts/Agreements. Any commitment to exchange money or property, currently or in the future, from or to the university, or to perform services which would require the expenditure of money or use of university resources.
- Fiduciary Responsibility. A duty, created by one’s employment, to act primarily for the university’s benefit in business transactions and matters related to the handling of money or property.
- Financial Transaction. Any exchange involving the transfer of money or property, currently or in the future, from or to the university.
General Principles
The university delegates primary financial and fiduciary responsibility for the university to the vice chancellor for finance and administration who is responsible for establishing a sound internal control environment.
All individuals who are involved in financial transactions within the university have a fiduciary responsibility to safeguard the assets of the institution and ensure the integrity of its accounting records according to the standards set forth by the Arkansas Department of Finance and Administration.
Within each operating unit, the vice chancellor, dean, chair, or department head is responsible for the overall operations of the unit and may delegate financial transaction approval authority to the unit’s lead administrator. Within that structure, the vice chancellor for finance and administration delegates approval authority for execution of certain financial transactions to department lead administrators and managers of business service centers. Such lead administrators and their designees may execute delegated financial transactions.
An electronic or written signature must evidence the approval of all financial transactions. The approval of a financial transaction attests to its completeness, accuracy, and validity. System-executed transactions must carry evidence of approval in the form of the unique NetID of the approver or some other auditable means of identification.
Improper Transactions
Employees that are suspected of perpetrating fraudulent acts may be placed on a paid or unpaid administrative leave during the course of an investigation. Employees found to have participated in fraudulent transactions will be subject to disciplinary action up to and including termination.
Internal Controls
A segregation of duties must be maintained at all times so that no single employee is authorized to both approve a commitment of funds and to authorize the processing of the financial activity that results in a payment.
Unusual Situations
Notwithstanding that a document may be within a person’s delegated authority to bind the university, if the transaction or substance is of an unusual nature or outside the normal course of activities or practices of the university, the transaction or document shall be brought to a higher organizational level for a decision.
Procedures
The following are the university’s significant controls in place to ensure funds availability and proper approvals:
- Payroll Expenditures. The university utilizes an Electronic Personnel Action Form (EPAF) process that requires multiple levels of electronic approvals including the vice chancellor, department head, dean (if applicable), human resources staff member, and payroll staff member before an employee can be set up in the payroll system. The software system control will not allow the processing of a personnel appointment unless an authorized position exists that has a sufficient budgeted salary amount on that personnel line item.
- Requisitions for Purchase. Requisitions for purchase (except contracts with vendor specified terms and conditions, which are processed according to paragraph E below) are submitted electronically to Procurement Services. The electronic requisition must be approved by the next level of authority above the employee that submitted the requisition. The purchase order is issued by the director of Procurement Services and funds must be available on the departmental budget line before a purchase commitment can be entered. These are embedded controls that exist in the university’s financial software system that preclude obligations being incurred unless funds are available.
- P-Card Purchases. Small dollar purchases are initiated by approved P-Card holders. A monthly log of purchases made by a cardholder must be approved by the P-Card coordinator and budget head over that staff member. Further, all card purchases are reviewed by the director of Procurement Services for appropriateness of the purchases. Finally, every P-Card holder is required to attend annual training on the use of the card. If an employee fails to attend the training, their card is deactivated until training is completed.
- Travel Expenses. Pursuant to the university’s travel policy, all travel requires advance approval by the employee’s immediate supervisor. The approved travel authorization is submitted to Procurement Services and the amount of the authorization is encumbered on the employee’s departmental account. If funds are insufficient in that budget, the travel is not approved. Upon completion of the trip, the employee submits a travel claim approved by their department head to accounts payable. The accounts payable staff audits the claim for documentation and adherence to travel policies and compares actual expenses to the limits that were authorized.
- Contracts, Agreements, and MOUs. All university contracts, agreements (including professional service contracts, international student exchange agreements, and software license agreements), as well as MOUs that contain vendor specified terms and conditions are initially reviewed by the contract review manager. The entire document is reviewed for all required language and impermissible clauses and routed to general counsel if required pursuant to the provisions of UASP 300.1. Upon determining the contract, agreement, or MOU complies with all state laws and board policies, the document is executed by either the chancellor or the vice chancellor for finance and administration. No other campus employees are authorized to sign on behalf of the university. As a practical matter, most contracts and agreements are executed by the vice chancellor for finance and administration. Contracts requiring University of Arkansas System staff approval are forwarded to the System vice president for administration for review and signature.
- Construction Contracts. Construction contracts have numerous unique approval requirements promulgated by both the Board of Trustees and the State of Arkansas. The university follows the procedures conveyed in the University of Arkansas Board of Trustees Policy No. 730.1 relative to all construction contracts and agreements. A link to the UA System website relative to construction contracts is as follows: https://www.uasys.edu/wp-content/uploads/sites/16/2017/09/Capital-Construction-Policies-and-Procedures_-8-31-17.pdf
- Special Situations/Exceptions. The university relies on the internal control environment to protect the interests and manage the risks of the university; therefore, exceptions, if allowed, must be approved by the Office of Finance and Administration.
Source: Initial Policy
Revised: March 25, 2013; June 30, 2016
Approved By: Chancellor Joel E. Anderson, March 25, 2013
Custodian: Office of Finance and Administration