FI0312 – Custody of Third-party Funds

Effective: January 2, 2013
Revision No: 1
Topics:
General Policy Third-Party Funds Subject To University Bond And Audit
Approval Requirements Procedures
Written Procedures Contacts
Objective:

To provide guidelines for University employees who handle third-party funds.

Policy:

General Policy[top]

  1. Occasionally, outside organizations (e.g., student organizations such as fraternities) request the university to handle their funds. The standard practice in these cases is to establish an agency fund in the university's accounting system. Generally, University of Tennessee employees should not serve as custodians for the funds of outside organizations as part of their official duties unless the money is recorded in an agency fund with the university. However, in special situations it may be in the university's best interest for employees to routinely handle an outside organization's funds. In those situations, the campus or institute chief business officer is responsible for determining whether an employee should control third-party funds. The university assumes no liability for the loss or theft of such funds under an employee's control.

Approval Requirements[top]

  1. A written request should be forwarded to the campus or institute chief business officer specifying the scope of the university employee's duties in handling third-party funds, a statement indicating the amount involved, and the reason(s) it is in the university's best interest for the employee to serve as custodian for the funds. The chief business officer must provide written approval for each request before the employee may serve as custodian and will maintain a complete file of all approved custodians for such funds.

Written Procedures[top]

  1. Departments that control third-party funds must develop written procedures addressing documentation of expenditures, proper use of the funds, account reconciliation, separation of duties, etc. These procedures must be reviewed by the campus or institute  chief business officer and campus internal auditor before the employee accepts control of the funds. Employees who control such funds in accordance with this policy should adhere to the appropriate  fiscal policies on receipting, safe keeping, and disbursing of funds.

Third-Party Funds Subject to University Bond and Audit[top]

  1. Effective July 1, 2004, employees who handle third-party funds as part of their official duties are covered under the state's blanket bond policy only when a fund is established in IRIS. If a fund is not established, UT assumes no liability for losses.
  2. Internal auditors will consider these custodial arrangements when developing their audit programs and will perform periodic reviews to ensure compliance with university fiscal policy and adherence to sound internal controls.



PROCEDURES
Knoxville:  http://web.utk.edu/~dfinance/fiscal-policy.shtml
Health Science Center:  http://www.uthsc.edu/policies/w932_document_list.php?app=FSC
Institute of Agriculture:  https://ag.tennessee.edu/Pages/UTIApolicies.aspx
Martin:  http://www.utm.edu/departments/finadmin/procedures.php
Chattanooga: http://www.utc.edu/business-financial-affairs/fiscalpolicies.php
FOR MORE INFORMATION[top]

Ron Maples  (865) 974-2493  maples00@tennessee.edu