E-17-14 Agency Cost Center Policies and Procedures

I. Purpose

To provide policies and procedures governing the establishment and use of agency cost centers by registered student organizations and other non-University activities, operations and programs for which the University serves as a fiscal agent. 

II. Policy

1. Agency cost centers will only be established when the following criteria are met:
   1. The purpose of the activity must not contradict the mission of the University.
   2. Student organizations must be registered with the Office of Student Involvement prior to the establishment of an agency account and must re-register annually, preferably by the end of the spring semester. The registered organization must be directly affiliated with a University department and that department’s business officer must agree (by signature approval on the form) to act as a liaison between Accounting and Financial Reporting Services and the student organization. Detailed responsibilities of the department are listed in section III.2 below.  Student organizations seeking application for an agency account must do so through their affiliated University department. 
   3. The responsible person (SAP contact person) must be a University student, faculty member, or staff person, depending on the type of organization. For example, an agency cost center for a student organization must have as its responsible person a student member (preferably an elected officer) of the organization. A professional organization would have a faculty person who is a member of that organization as the responsible person for its agency cost center. The detailed responsibilities of the designated responsible person (SAP contact person) are listed in section III. 1 below.
   4. The activity must not be carried out as a part of a faculty or staff position's functions as a University employee.

   5. Examples of valid agency organizations or activities are the Agronomy Club, Mathematics Graduate Student Council, and a conference held by an external organization for which a University faculty member is responsible and for which any surplus balance will be returned to the organization.

      Any activity related to a program, function or activity of the University must be accounted for in a regular departmental cost center and be handled in accordance with all policies, procedures and regulations of the University. For example, an agency cost center may not be established for a conference sponsored by a University unit or for revenue generated by services performed by University employees as a function of their jobs.

2. Checks deposited to the credit of an agency cost center must be made payable to the organization, not the University of Kentucky.
3. Funds deposited to agency cost centers do not belong to and are not controlled by the University, nor are they considered to be charitable contributions to the University. Funds deposited into an agency cost center are inherently discretionary in nature. 

III. Responsibilities

1. Responsible person (See II.3.a above.)
   1. Approve disbursements. No paying documents will be processed by the University without the approval of the responsible person.
   2. Reconcile the monthly Tableau reports/detail transaction reports to verify that no errors have occurred in the agency cost center and that the account does not have a deficit balance. The Tableau reports/detail transaction reports should be obtained from the affiliated department’s business officer.
   3. Maintain a positive cash balance. As the person responsible for the fiscal affairs of the agency, the responsible person will be personally liable for any overdrafts. Any agency cost center that becomes over drafted will be "blocked" until sufficient cash is deposited to return the cost center to a positive balance. Repeated overdrafts will result in the closure of the cost center by Accounting and Financial Reporting Services.
   4. Pay any liabilities, fines or penalties incurred by the organization.
   5. Use the cost center only for the purposes described on the current Agency Account Information Sheet/Reauthorization Form. Any revised purpose requires a new form that has been properly completed and approved.
   6. Submit renewal requests annually before September 30^th.
2. Department business officer 
   1. Review and authorize organization’s request to create an agency account before forwarding the request for creation. This includes verifying that the organization has registered with the Office of Student Involvement. A current list of registered organizations can be located here. 
   2. Obtain a copy of the photo I.D. of the current responsible person to keep on file with each new agency account request or renewal.
   3. Provide monthly Tableau reports/detail transaction reports to the organization’s responsible person(s) for review. 
   4. Inform the organization’s responsible person(s) of deficit balance status if/when notified of such by Accounting and Financial Reporting Services.
   5. Fund any deficit balance that is not handled in a timely manner by the organization. A discretionary account within the affiliated department must be provided in the event that the deficit has not been covered by the organization.
   6. Ensure that the organization’s responsible person submits a renewal request each fiscal year before September 30^th.
   7. Review expense to ensure funding is available and the expense aligns with the mission of the agency cost center and then approve the Disbursement Request Form.
3. Accounting and Financial Reporting Services
   1. Audit Agency Cost Center Information Sheet/Authorization Forms after authorization by the department and the assigned area business officer. 
   2. Establish and maintain agency cost center master data in SAP, including updating the organization’s responsible person and other fields as necessary during the annual renewal process.
   3. Notify the department business officer, area budget officer and organization’s responsible person(s) when the agency cost center is established or renewed.
   4. Block agency cost centers that have not been renewed within 90 days of each fiscal year (by September 30th).
   5. Distribute balances on any agency cost centers that are dormant for one year. The funds will be disbursed to the surplus funds recipient designated on the most recent establishment/renewal request.
   6. Monitor agency cost centers for deficit balances monthly. Notify the department business officer (SAP responsible person) if a deficit occurs and block the cost center from any further activity until the deficit is cleared.

IV. Procedures

1. Establishing an agency cost center
   1. The organization’s responsible person(s) must carefully read the policies and procedures concerning the duties and liabilities of the responsible person to determine if they are willing to be held accountable for the agency cost center. Each person listed as a “responsible person” on the establishment/renewal request must sign the form.
   2. With the exception of the cost center number, fund and cost center create date which will be entered by Accounting and Financial Reporting Services, completely fill out the Agency Cost Center Information Sheet/Agency Cost Center Information Sheet/Authorization Form.
      1. Surplus funds in a professional agency account will usually be given to a national organization of which the UK chapter is a member. Organizations should address this question in their by-laws and may decide that any remaining funds left in the cost center if the group disbands will be donated to another organization with similar objectives, given towards a scholarship account, etc. 
      2. Surplus funds may normally not be disbursed to a University department, employee or student. However, student organizations may designate in their by-laws that surplus funds should be transferred to a specific departmental restricted account as a gift.
   3. Obtain signature approval from the department business officer with whom the organization is affiliated, provide a copy of a photo I.D. belonging to the organization’s responsible person(s) to the department business officer and forward the completed form to the appropriate area budget officer. The area budget officer will review and approve the request then email it to Accounting and Financial Reporting Services at masterdata@uky.edu.   
2. Deposit of funds
   1. Deposits of funds must be made through Treasury Services, University Financial Services, Room 356 Peterson Service Building using a University cash transmittal form. Instructions on making deposits, deposit options, using the form and general information on internal controls can be found in the Treasury Operations Manual, Business Procedure E-2-1.
   2. Journal vouchers (JVs) may not be used to credit agency cost centers without prior approval by Accounting and Financial Reporting Services although they can be used to charge a cost center as noted below. 
3. Expenditure of funds
   1. Disbursements are generally made using the University's Disbursement Request Form and must be authorized by the responsible person (contact person in SAP) and approved by the department business officer (i.e., on the Disbursement Request Form, the responsible person signs as the Authorizing Official and the department business officer signs as the Approving Official).
   2. State sales taxes must be paid on all purchases through the agency cost center unless the organization has obtained its own Kentucky sales tax exemption.
   3. The Disbursement Request can be used only as a payment document and not as an ordering device. 
   4. Organizations may use some University services such as printing, and in these instances a JV will be used to charge the cost center. The agency’s responsible person (contact person in SAP) must verify that sufficient funds are available and approve all expenditures prior to requesting the service. 
   5. Payments through the University system for payroll are allowed with special approval. This approval is granted only after the organization has signed a contract with Payroll Services. This contract must be reviewed and approved by the Office of Legal Counsel. If the organization requires payroll validity on their agency account, the organization’s responsible person should contact Payroll Services to begin the approval process.
4. Reauthorization
   1. Prior to the ending date listed on the cost center, the Agency Cost Center Information Sheet/Authorization Form must be completed, signed, approved, and forwarded to the area fiscal officer who will forward the request, if approved, to Accounting and Financial Reporting Services. This requirement is a condition for the continued usage of the cost center.
   2. At any time during the year when there is a change in the responsible person or any other information, the Agency Cost Center Information Sheet/Authorization Form must be used. Complete only the sections that are changing then sign, approve and forward to Accounting and Financial Reporting Services via the area fiscal officer.
5. Termination of an agency cost center
   1. By the organization or contact person
      1. Bring the balance of the cost center to zero by either spending all the funds in the account or preparing a Disbursement Request payable to the organization specified under the description on the Agency Cost Center Information Sheet/Authorization Form.
      2. Complete the Agency Cost Center Information Sheet/Authorization Form and indicate the Block/Delete box at the top of the form. Submit the completed form to Accounting and Financial Reporting Services via the area fiscal officer. 
   2. By Accounting and Financial Reporting Services
      1. Reasons for termination
         1. Misuse of cost center - an example would be a deposit of University funds into the agency account.
         2. Repeated overdrafts of the cost center.
         3. Failure by the organization to have the cost center reauthorized annually.
      2.  Procedure
         1. A cost center will be blocked immediately when one of the events listed above occurs. This prevents any further activity on the cost center.
         2. If a surplus exists in the cost center, Accounting and Financial Reporting Services will create and authorize a Disbursement Request  payable to the organization specified on the Agency Cost Center Information Sheet/Authorization Form.
         3. If the cost center is over drafted, the responsible person (contact person in SAP) will be contacted and will be expected to fund the deficit.
         4. When a cost center has been blocked because the reauthorization form has not been received by Accounting and Financial Reporting Services by June 30th, there will be a grace period (through September 30^th) before it is terminated.