UC Davis Principles of Financial Management

Policy

In order to accomplish the university’s mission and vision to promote teaching, research, public service, and patient care, Administrative Officials must manage various resources in an efficient and cost-effective manner.

Whenever applicable, Administrative Officials shall adopt the following Principles and Responsibilities to ensure sound financial management:

Principles
  1. An annual (current) budget must be established to accomplish the following:
    1. Prioritize unit goals and objectives to guide deployment of resources.
    2. Measure current financial performance.
    3. Compare actual and planned (budgeted) expenditures.
    4. Review variances to identify significant transaction errors and to detect substantial changes in circumstances or business conditions.
  2. A budget must be attainable, reasonable, realistic, and aligned with programmatic goals.
  3. The following principles should guide the budget process: fairness, openness, clarity, understandability, stability, consideration of performance, focus on priorities, and balance between centralization and decentralization of responsibility and authority.
  4. Units, as part of a public university, have a special stewardship obligation to process properly and accurately all receipts and disbursements of funds; to account for all financial resources received and used; to ensure that all financial transactions conform to legal requirements and administrative policies and are recorded in accordance with generally accepted accounting principles for colleges and universities; and to provide reports that present to university administrators and the public a complete picture of the university's funds and their uses. The compliance requirement includes all university policies, external laws and regulations, funding source restrictions, and terms and conditions of agreements. Following established financial procedures will ensure compliance with Generally Accepted Accounting Principles. (UC Accounting Manual).
  5. Units must operate within their current year operating budget. If expenditures exceed budget, the financial manager must analyze the variance, identify the cause, and develop a plan to eliminate deficit balances.
  6. Actual financial results must be compared to the budget on a regular basis to ensure expenditures are consistent with the budget, that charges against the fund are appropriate, and that projected revenues are being realized.
  7. When actual financial results vary significantly from the budget, Administrative Officials or their designees, as appropriate, must determine the cause, evaluate the activity, and take corrective action.
  8. Each unit must evaluate the financial and programmatic consequences before a new activity is started, or a current activity is changed or eliminated, and must ensure that the anticipated benefits are greater than the costs.
  9. Administrative Officials must provide adequate safeguards to protect against the loss or unauthorized use of University assets.
  10. Details on Financial Management may be found in the UCD PPM Financial Management and Services section.
Responsibilities - Planning And Budgeting

All planning and budgeting activity should include:

  1. A mission statement with objectives for each unit that are simple, direct, attainable, and include measurable goals.
  2. A thorough process for identifying, prioritizing, implementing and evaluating activities required to achieve the university’s objectives and goals.
  3. An annual budget process aimed at reevaluating current and future budget sources and uses.
  4. A consistent method for gathering and analyzing data.
  5. Sufficient detail and descriptive narrative to clearly portray how all unit operations are being financed. Detail should include:
    1. All funding sources
    2. Revenue/allocation estimates
    3. Major expenditures by category
    4. Major assumptions and forecasting methods used
    5. Significant changes in current activities
    6. Contingency plans
  6. A method of identifying and assessing financial and organizational risks.
  7. Maintaining positive cash flow by processing timely revenues and expenses, and staying out of deficit circumstances.
Responsibilities - Monitoring And Evaluating Financial Data

The Kuali Financial System (KFS) and the Payroll Personnel System (PPS) are the official financial and payroll systems of UC Davis. Departments may have their own sub-systems of paper timesheets, documents, spreadsheets and databases, or combinations of paper and electronic documents. These departmental financial sub-systems must be reconciled to the official records in KFS and PPS to ensure accuracy and validity, and must include:

  1. Monthly financial reports that accurately represent the unit’s financial status. These reports must:
    1.  Identify revenue sources and categorized expenditure data.
    2.  Provide budget to actual comparisons.
    3. Identify trend activity and problem areas.
    4. Highlight exception items.
  2. A method that enables the reconciliation of sub-system financial and payroll data through KFS and PPS to supporting documentation.
  3. A method of reviewing financial transactions in KFS and PPS at the end of each accounting period (i.e., monthly) to ensure that charges and credits are valid and that adequate supporting documentation is available.
  4. A method to determine and document the cause of significant deviations.
  5. A method for taking corrective actions that include:
    1. Revising budgets and associated plans to reflect changing business conditions
    2. Changing or eliminating activities
    3. Obtaining additional funding
    4. Modifying goals and objectives
    5. Correcting transaction errors
    6. Implementing new control procedures
    7. Documenting managerial decisions that depart from the budget
Responsibilities - Safeguarding University Assets

University assets must be safeguarded from loss or unauthorized use. Adequate safeguards include:

  1. A physical inventory of all inventorial equipment must be conducted at least once every two years in accordance with UCD PPM 330-11. All discrepancies must be promptly reported and investigated.
  2. Documentation and approval of any adjustments to the asset records (UCD PPM Section 350.)
  3. Regular and periodic examinations of delinquent account balances and follow-up collections or write-off actions and procedures (UCD PPM 330-90.)
  4. The assurance that all cash or cash equivalent collections are handled in a timely manner. All cash shortages and excesses must be promptly reported to a supervisor, who must investigate them immediately (UCD PPM 330-55.)

All suspected misuses or improper governmental activities must be reported promptly in accordance with UCD PPM 380-17 and UC Business and Finance Bulletin G-29.

Responsibilities - Appropriate Use Of Space And Equipment
  1. All building space is considered to be an allocable resource subject to continual evaluation in order to achieve the optimal campus-wide level of utilization.
  2. Except for student governments, formal allocations are not made to student organizations. Deans and department chairs, however, may authorize the incidental use of facilities by student organizations, if in their judgment, that use of space contributes to the goals of the college/school or department.
  3.  Formal instructional activities will be scheduled on a first priority basis, but insofar as possible will be scheduled so as to minimally preclude students and faculty from participating in the full range of cultural and academically related activities available during the evening hours and on weekends.
  4. Administrative and service unit space requirements are evaluated on the basis of operational requirements and the requirements of staff personnel assigned to the unit.
  5. Department chairs may, at their discretion, recognize the contributions of emeritus professors, post-doctoral and visiting scholars in non-pay status and graduate students in non-pay status through the assignment of office space. The State space standards do not recognize these positions.
  6. The department head, and the Principal Investigator if a contract or grant is involved, have the primary responsibility for the care, maintenance, records, and control of materiel in their custody and/or all property acquired under the terms of a contract or grant.
  7. Use of university materiel, or property in the care and custody of the university, by university employees for personal purposes is not allowed except with the approval of the Chancellor or designee.
  8. The university is not responsible for loss of or damage to personally owned equipment. Under no circumstances shall university funds be used to purchase component parts or assemblies for installation in employee-owned equipment.
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