UC Davis Principles of Regulatory Compliance

Policy

Every employee who conducts university fund transactions must comply with applicable laws, regulations, and special restrictions. To ensure compliance, each Administrative Official should adopt the following Principles and Responsibilities:

Principles
  1. Individuals conducting business transactions shall be held personally responsible and subject to punitive action resulting from intentional violations of laws, regulations, or restrictions affecting the conduct of those transactions.
  2. Anyone who is aware of fraudulent or illegal business transactions conducted in the name of the university shall report them immediately in accordance with UCD PPM 380-17.
  3. Each unit or individual is responsible for the restitution of any disallowance due to noncompliance with laws, regulations, or special restrictions.
  4. Employees conducting university business transactions are responsible for staying abreast of changing legal and regulatory requirements, terms and conditions of agreements, and restrictions applied by funding sources.
  5. Legal and regulatory requirements, as well as any donor-imposed restrictions, shall be maintained on record with the University and be readily accessible.

Details on regulatory compliance principles may be found throughout university policy. Noncompliance with regulations is addressed in UCD PPM 380-17, Improper Governmental Activities/Whistleblower Protection.

Responsibilities: Financial Reporting

Financial reporting in compliance with regulatory requirements includes:

  1. Following Generally Accepted Accounting Principles (GAAP). The basic requirements of these standards as applied at UC Davis include:
    1. Sources and uses of funds must be aggregated by the type of activity they support, and in accordance with any restriction imposed on their use.
    2. Accounting principles must be applied consistently, both within fiscal years and between fiscal years. Campus administrative support departments review financial information to ensure consistent, university-wide application of these accounting principles.
    3. Transactions are classified and recorded consistently.
    4. Revenue and expense must be recorded in the proper accounting period.
    5. Revenue must be reported when earned. In general, revenue is earned when the university provides goods or services. For example, on a cost-reimbursed research grant, revenue is earned as the costs are incurred for the conduct of the research.
    6. Expenditures must be reported when goods or services are received. For example, when laboratory supplies are received, the university incurs the expense. Holding an invoice does not prevent the expense from being incurred.
  2. Reporting to sponsoring entities in accordance with their specific requirements. Federal agencies and entities that serve as conduits for Federal funds require adherence to Office of Management and Budget (OMB) Circulars and/or Federal Acquisition Regulations (FAR). Information on federally funded contracts and grants may be found on the Contracts & Grants Accounting website. Two essential OMB Circulars are:
  3. OMB Circular A-21 ; this circular provides the cost principles for educational institutions. These principles define allowable costs as those which are reasonable, allocable, consistently treated and in conformance with any special limitations. Circular A-21 also defines direct versus indirect costs, and provides guidelines for calculating indirect costs.
  4. OMB Circular A-110 ; this circular provides uniform administrative requirements for grants and other agreements with institutions of higher education, including financial reporting requirements.
  5. Making all financial reporting systems open to regular internal and external audits. External auditors must be cleared and coordinated by the Director, Internal Audit Services who has been designated as UC Davis External Audit Coordinator.
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