NDSU Policy 170, outlines the rules for paying for meals of staff and guests. These expenses are typically paid via an Accounts Payable Voucher. To help provide the proper documentation for these expenses, a Banquet & Meeting Documentation form must be completed and attached to the Accounts Payable Voucher.
When purchasing either computers or computer software for departments, personal credit cards cannot be used. NDSU will not reimburse personal purchases for these NDSU resources. Instead, other methods should be used in order to avoid sales tax, increase internal controls and transparency. Options include:
- Ordering through ITS (https://www.ndsu.edu/its/help_desk/desktop_support_hub/hardware/preferred_hardware/)
- Contact the NDSU Bookstore
- Direct bill from vendor
- Purchasing card
Reimbursement requests received will no longer be approved by Accounting. If you have any questions and concerns, please contact the Accounting office.
According to Article X, Section 18, of the State of North Dakota Constitution, it is unlawful for the state to “make donations to or in aid of any individual, association or corporation except for reasonable support of the poor, nor subscribe to or become the owner of capital stock in any association or corporation.
- NDSU cannot donate money to a charity or other individual or association, regardless of funding source. Payments made to an individual or association should be for the fair value of goods received or services rendered.
- Some activities and expenses involving donations are more appropriately sponsored and paid for by the NDSU Development Foundation.
Accounting guidelines for expenses indicate payments to external parties classified as donations are unallowable (per State of ND constitution), but sponsorships and advertisements are allowable. It can be difficult to distinguish between the three categories. Definitions used by NDSU Accounting are as follows:
Donations are gifts given to an individual or organization with no expectation of a measurable benefit to the donor. The motive of a donation is usually generosity and the intent is to provide support to what the donor (university department) considers a worthy cause with no measurable expectations of any benefits in return. In accounting terms these payments are considered non-exchange transactions.
Sponsorships are business transactions where financial consideration is given to an organization in return for a measurable benefit, such as event participation or signage. The IRS defines a qualified sponsorship payment as "any payment made by a person or organization engaged in a trade or business for which the person or organization will receive no substantial benefit other than the use or acknowledgement of the business name, logo, or product lines in connection with the organization's activities." The motive for a sponsorship payment is typically to either raise the payee's public profile (i.e., promoting the university), to increase positive awareness of the payee, or to enter into an ongoing relationship with another organization. In accounting terms these payments are considered exchange transactions.
Advertisements are messages or announcements that are usually part of an advertising campaign which are part of an organization's brand promotion. IRS guidance indicates that if the nonprofit organization promotes the sponsor's products or services, then the cost should be accounted for as an advertising expense. The IRS describes other activities that "promote" the sponsor's products or services which include:
- Messages containing qualitative or comparative language, price information, or other indications of savings or value
- Inducements to purchase, sell, or use the products or services
An advertisement and sponsorship is often discussed as the same thing; however a sponsorship is typically regarded as stronger and deeper relationship than a simple advertising exchange of value. In accounting terms, both advertisements and sponsorships are considered exchange transactions.
Whether the university receives a measurable benefit in exchange for its payment is a key point in determining whether a payment is allowable.
In auditing proposed payments of university departments, the NDSU Accounting Office will take the approach noted below:
Accounting will place heavy reliance on the wording used on the invoice or other supporting documentation. For example: if the supporting paperwork indicates the payment is a "donation", the payment will be considered unallowable.
For payments documented or described as "advertising" or "advertisements": since the benefits are typically difficult to prove and document on a voucher, the Accounting Office will need to accept the department's authority and the expense will generally be considered allowable. There can be exceptions to this general rule, such as in cases where the description doesn't make any sense in this category based on the payee or other factors.
Special care needs to be taken with payments that are documented as sponsorships, because of the close connection to donations.
Recall that in the IRS definition of a qualified sponsorship (see above) the organization providing the payment receives no substantial benefit other than the use or acknowledgement of the business name, logo, or product line in connection with the payee's activities. Also recall that with a donation, the payee receives no measurable benefit in exchange for the payment. These definitions result in a critical and fine line for distinguishing a payment as either an allowable sponsorship or an unallowable donation.
Because of the importance of clearly supporting university expenses as allowable costs, it will often be helpful for NDSU department officials to document how the proposed sponsorship payment benefits the instructional and/or research mission of NDSU.
In some cases, in the Accounting Office's evaluation of whether a proposed payment is a donation or sponsorship, we may seek additional consultation or approval from either: the respective Vice President, General Counsel or the Office of University Relations.
Per NDSU Policy 152.2, part 2:
Normally, dues and membership fees are the employee's own personal responsibility. The University may pay organization or institutional fees in professional and service organizations when the membership is regarded, either by the organization or the University, as an institutional membership or is otherwise considered directly beneficial to the University. In such cases, all benefits of membership, such as resource materials, belong to the University. All such funded memberships must be approved by the employee's supervisor who has budgetary responsibility for the unit or division. For the colleges of the University, this shall mean the Dean.
Per NDSU Policy 152.2, part 4:
No other funded memberships are authorized unless specifically approved by a Vice President or the President.
Accounting guidelines for expenses indicate payments to external parties classified as donations are unallowable.
According to the Internal Revenue Service, awards to employees are considered taxable wages. Any such payments must be processed through the NDSU Payroll Office.
It is the university’s business practice to pay suppliers directly using one of the many direct payment methods, such as NDSU check/ACH or JPMorgan purchasing card. An employee should only personally fund and receive reimbursements for their individual travel expenses or minor incidental supplies and only when necessary to do so.
Employees personally paying and receiving reimbursement for NDSU expenses is strongly discouraged for the following reasons.
- Internal control
- Reportable transactions
- Compliance with IRS rules/regulations
- Sales tax exemption savings
- Preventing fraudulent activity
All employee travel and other reimbursements must be authorized by the supervisor of the employee receiving the reimbursement.
When an employee makes a purchase, any goods purchased should be shipped to an NDSU address as opposed to the employee's personal address. Reimbursement will only be for the amount paid using either a credit card or a personal check. Purchases made with coupons, vouchers, or gift cards/certificates will not be reimbursed. Contact the Accounting Office before making a purchase if you are unsure if the purchase is allowable.
Travel and other expenses related to fundraising events will be reimbursed by the NDSU Foundation & Alumni Association (subject to Foundation approval) and will not be reimbursed directly by NDSU. Fundraising is one of the primary missions of the Foundation. Fundraising events are conducted for the primary purpose of raising funds.
Travel expenses related to outreach meetings with alumni and friends of the university are allowable expenses that may be reimbursed directly by the university (subject to supervisory approval). These are events where the primary purpose is not fundraising, but meeting and networking with alumni and friends of the university that can benefit the university’s programmatic mission. Departments must consider the public scrutiny over the prudent use of funds on both university and foundation expenses.
There is some gray area between fundraising events reimbursed by the Foundation and other outreach meetings with alumni and others which are reimbursed by the university. Departments can help us in the reimbursement process if the purpose of the meetings is clearly explained. NDSU Accounting may occasionally consult with the Foundation on specific events to make sure the proper process is followed. Fundraising events should be coordinated through the Foundation, as the fundraising arm of the university.
The basis for this interpretation is NDSU Policy 170 (Payment of Meals for Staff and Guests), which is based on SBHE Policy & Procedure 806.1. Fundraising types of expenses often include unallowable types of expenses, such as alcoholic beverages, expenses of spouses or other family members, or expenses of holiday celebrations and events.
In addition, the NDSU Foundation & Alumni Association’s Fund Disbursement Guidelines indicate the following:
Fundraising Expenses: Fundraising is one of the primary missions of the Foundation. A memo of understanding between the University and the Foundation confirms that the Foundation will be primarily responsible for the fundraising and related activities/events. This understanding provides for a more unified and coordinated approach to fundraising for the University. Since expenses related to fundraising are generally considered expenses of the Foundation, they will be directly paid by general support gift funds held at the Foundation for the benefit of the University.
The Foundation’s Fund Disbursement Guidelines are approved by the NDSU President as well as the Foundation’s CEO.
NDSU Policy 171, outlines the rules for reimbursing employee moving expenses. A Moving Expense Documentation form must be completed and attached to the Accounts Payable Voucher authorizing employee reimbursement.
As a sound business practice, goods and services should be received and accepted before payment is made to the supplier. Prepayments are allowed but should be avoided, if possible.
Certain transactions are more applicable to prepayments, such as subscriptions, rents and leases.
If a particular vendor only does business by receiving prepayments, we should make a strong effort to find another vendor. The department will be responsible for their loss if payment is made and the goods/services are not received or acceptable.
See additional guidance on proper accounting under General Ledger / Prepaid Expenses
Promotional expenses must withstand the test of public scrutiny. Payments that are made for promotional purposes to external customers, and properly documented, are allowable university expenses. Examples include: cards, flowers, candy, and other small gifts (mugs, clothing, blankets), sponsorship or an event or activity.
- The recipient of the promotional item must be an external party to NDSU who is a past, current, or prospective customer. External parties include students (including student employees), businesses, and other outside organizations.
- Current NDSU employees (including terminating or retiring employees) or departments must be considered internal parties. Promotional expenses directed to benefit internal parties are not allowable, regardless of funding source.
- Personal gifts to employees, or the employee’s immediate family, must not be charged to university funds. A gift in lieu of additional compensation is not allowable, regardless of funding source. Examples include: candy, flowers, clothes (not including required uniforms), mugs, tickets, gift certificates, cash or checks.
- Payment of an employee’s required university fees is not allowable, regardless of funding source. Example: parking permit.
- Promotional items received by employees that are clearly intended for the benefit of external parties, are allowable. For example: there may be rare cases where an employee, in a promotional role, purchases items to later be disbursed as small gifts for promotional purposes. The employee may be reimbursed in such cases.
- An exception to this guideline is made in cases of the employee length of service award and retirement awards. (See web site at: http://www.legis.nd.gov/information/acdata/pdf/4-07-18.pdf .)
- Another exception to this guideline is the “Campus Kudos” program sponsored by NDSU Staff Senate where a certificate of appreciation, along with a $10 Bookstore gift card, is given to students, staff and faculty. These gift cards must be charged to a local fund.
- The promotional expense must support the mission and purpose of the University. This is a key point that distinguishes a promotional expense from a donation. A donation does not further the mission or purpose of the university.
- University officials must exercise prudent judgment, common sense, and restraint when determining whether an expense is appropriate.
- The reason for purchasing promotional items must be well documented. The explanation must include a description of what is being purchased (if that is not apparent from the invoice), the intended recipient, and reason for the purchase.
- The department should collect appropriate documentation to verify the intended recipient received the promotional item, for example, a record showing the promotional item given, the date received and the signature of the recipient.
Expenses incurred that create a positive physical work environment for university employees are allowable. University officials must exercise prudent judgment, common sense, and restraint with these purchases. However, expenses that benefit employees individually are considered personal expenses and are unallowable.
Allowable, items not in an employees' office or workstation, but available to all of a department's employees, such as a break room or common area:
- Small appliances, such as coffee pots, toasters, ice machines, water coolers, microwaves, and refrigerators
- First aid kit
- Required uniforms
- Seasonal or holiday office decorations and wall hangings
Unallowable, items for an employee's use are considered a personal expense, regardless of funding source:
- Pictures or office decorations for an individual’s office or workstation
- Food or supplies, examples include, but are not limited to the following: coffee, coffee filters, snacks, donuts, plates, cups, utensils, napkins....
- Personal hygiene and medical items made available to individual employees, such as Kleenex, Tylenol, sunscreen, Band-aids....