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POLICY

Business Expenses

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Purpose of the Policy

New York University (NYU) receives funds from a variety of sources in support of its missions of education, research, public service, and patient care. It receives gifts, grants and contracts, and revenue – from the government, students, alumni, and various agencies – that carry with them fiduciary responsibilities. These responsibilities require the University to maintain operations according to guidelines established by the University’s Board of Trustees, and to comply with applicable federal, state, and local rules and regulations.

This policy is intended to ensure proper stewardship of University funds by providing guidelines for their appropriate use, and by outlining procedures that will help members of the NYU community comply with all applicable rules and regulations.

Scope of this Policy

This policy applies to all faculty and staff of New York University and to every individual who initiates, processes, approves, or records financial transactions that involve University funds.  Entities affected by this policy include all schools, departments, and units of New York University. 

Procedures for Implementation

Introduction to this Policy

Business expenses are those costs that are incurred for activities that benefit the University and advance its missions of education, research, public service, and patient care. Business expenses may take the form of direct payments to individuals or agencies that provide the University with goods or services, or reimbursements to University employees for costs they incur on behalf of the University.

University funds may be used only for business expenses. This policy provides the guidelines on the various expenses for which University funds may be used. It is intended to provide general guidelines to help all employees of New York University specifically to:

• understand their responsibilities related to the protection, use, and management of University funds;

• identify expenses that may be charged to specific University funds;

• determine expenses for which University funds could not be used;

• properly record and report expenses incurred in support of University missions; and,

• ensure consistent compliance with applicable federal, state, and local regulations.

Before incurring or approving any expense on behalf of the University, you must know which expenses are allowable or unallowable under the guidelines of the federal government and which are permissible or nonpermissible according to the policies of the University. To avoid costs for which you will not be reimbursed and to avoid incurring financial risks or liabilities to the University, follow the guidelines provided in this document.

Note: Refer to the policies of your school, department or unit as they may be more restrictive than the University policy. In no case will any school, department or unit policy on business expenses be less restrictive than the University policy.

Stewardship Responsibility

All individuals who incur or authorize business expenses on behalf of the University have a responsibility to ensure that University funds are used appropriately. All employees of the University are expected to exercise due diligence when generating, reviewing, and approving transactions that commit the University to an expenditure.

Transaction Authority

Certain individuals are delegated the responsibility or authority to initiate or enter into transactions that commit the University to spend funds. All individuals incurring, approving, recording or processing payment of business expenses must know the signatory approval structure established in his/her school, department, or unit. This structure ensures that business expenses are properly reviewed.

Conflict of Interest

The Board of Trustees of New York University prohibits those activities or behavior which conflict with the best interests of the University. Transactions therefore between a supplier of goods or services and the University in which a conflict of interest exists are prohibited.

“Conflict of interest” is defined as a situation in which a University official, faculty, staff, or any of his/her family or associates either has an existing or potential financial or other material interest that (1) impairs or might appear to impair his/her independence and objectivity of judgment in the discharge of responsibilities to the University, or (2) may receive a financial or other material benefit from knowledge of information confidential to the University.

For specific rules and requirements established by the Board of Trustees, see the Conflict of Interest Policy of the University.

For additional rules and requirements that apply to sponsored programs, see the Web site of the Office of Sponsored Programs (www.nyu.edu/osp).

University Policies on Purchasing and Expense Reimbursement

To avoid incurring costs for which you may not be reimbursed, or committing the University to costs that cannot be paid using University funds, check the purchasing policies of the University before you incur the expense. Certain expenses may be subject to specific procurement rules and requirements of the government.

Individuals who incur business expenses using personal funds may be reimbursed by the University through Accounts Payable, Office of the Bursar, or their department’s petty cash fund. See the Expense Reimbursement Policy and the Petty Cash Fund Policy of the University for specific guidance. These policies are established to ensure that valid business expenses are reported, recorded, and reimbursed in a consistent manner; and to ensure University compliance with applicable federal, state, and local rules and regulations.

Sponsored Projects

Business expenses charged to sponsored projects are subject to the guidelines provided in this policy, unless the funding agency imposes greater restrictions. The terms of a particular grant or contract should be referred to for guidance on what expenses are allowed.

For guidance on expenses that can or cannot be charged to projects that are funded by the federal government, refer to the Office of Management and Budget (OMB) Circular A-21. Examples of costs deemed unallowable by the federal government (as identified in Section J of the Circular) are listed in Appendix 1. The University however may deem certain federal unallowable costs permissible and identifies in this document those costs for which University funds may be used. Specific requirements apply on how those costs are incurred, recorded, and reported. For more information, see “Federal Allowable and Unallowable Expenses” section in this document.

Also, refer to the Federal Acquisitions Regulations (FAR) for guidance on laws that govern procurement of goods and services, and to applicable state and local regulations that may apply.

For questions related to a specific grant or contract, contact Sponsored Programs Administration (SPA) in the Controller’s Division or the Office of Sponsored Programs.


Allowable and Unallowable Expenses

The University permits the use of University funds for those expenses that support its missions. For details on these expenses, see the “NYU Permissible Expenses” section of this document. For types of expenses that the University will not permit University funds to be used, see the “NYU Nonpermissible Expenses” section.

Certain expenses that the University deems legitimate and permissible may be deemed unallowable by the federal government. The University will permit University funds to be used for such expenses, however, they must be identified and segregated in the University’s general ledger. See the “Federal Allowable and Unallowable Expenses” section for more information.

To ensure that federal guidelines are identified and distinguished from those guidelines specific only to or established by NYU, expenses that are deemed permissible/nonpermissible by the University will be referred to in this document as “NYU permissible/nonpermissible expenses.” Expenses specifically identified in OMB Circular A-21 will be referred to as “federal allowable/unallowable expenses.”

Federal Allowable and Unallowable Expenses

General Comments

NYU receives support from a variety of external sources, including Federal, State and City governments, private foundations, and various industries. The University is therefore required to comply with certain cost accounting and expense allowability policies that the government and other donors have established.

Federal standards, in particular, form the framework for this NYU policy on business expenses because they apply not just to federal funds themselves but to all funds at the University.

Federal standards mandate that certain costs must not be charged directly to a federal fund, or charged indirectly to a federal fund through the University’s facility and administrative (indirect) cost rate. To help determine those costs that the federal government will or will not allow, the Office of Management and Budget (OMB) has issued Circular A-21. The Business Expenses Policy of the University reflects the principles established in the Circular; it details the requirements that apply and provides procedures that will help ensure the University’s compliance to those requirements.

Federal Allowable Expenses

OMB Circular A-21 deems allowable those expenses that are incurred in tasks and functions related to research and development, training and other work at the University that the federal government sponsors (under grants, contracts, or other agreements).

Also, OMB Circular A-21 deems allowable those costs that are reasonable and necessary in activities that support the missions of the University. Facility and administrative costs that are incurred for objectives common to or shared by the University and the federal government (which therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity) are also allowable. Such expenses are considered the government’s “fair share of total costs” and may therefore be reimbursed by the government.

Federal Unallowable Expenses

Federal unallowable costs refer to expenses that are not deemed reimbursable by the federal government under the rules defined in OMB Circular A-21. Such expenses must NOT be charged directly to accounts funded by the federal government, or indirectly through the University’s facility and administrative cost rate. Wherever necessary, the Business Expenses Policy of the University identifies those costs that are unallowable under federal guidelines and provides guidance on how to record and report them (see Appendix 1 for a list of common federal unallowable costs).

All schools, departments, or units of the University are required to be diligent in identifying costs that are deemed unallowable by the federal government.

Segregation of Federal Unallowable Expenses

A federal unallowable cost may be permissible under University guidelines. Flowers and alcoholic beverages are examples of costs that are “unallowable” for federal purposes. However, when deemed appropriate and legitimate under University guidelines, the University may permit such expenses.

Federal regulations require that all federal unallowable costs be segregated in the University’s general ledger so that they can be excluded from the University’s indirect cost submissions. To ensure that an unallowable cost is not inadvertently charged directly or indirectly to federal funds, unallowable costs must be identified, segregated, and charged to appropriate NYU accounts.

Note: It is because of this federal rule on “unallowable costs” that certain requirements in this policy and in the Expense Reimbursement Policy of the University are very specific. To ensure University compliance, all expenses submitted to the University for payment or reimbursement must be (1) justified to establish their business purpose, and (2) sufficiently substantiated by such documents as detailed original receipts to identify the nature of each expense. See the Expense Reimbursement Policy for details on the University’s documentation requirements and for examples of documentation deemed appropriate for specific business expenses.

NYU Nonpermissible Expenses

General Comments

Any expense that does not support the missions of the University and does not reflect proper stewardship is considered by the University as nonpermissible regardless of the source of funds.

When the nonpermissible expenses listed below are submitted to the University for reimbursement or payment, they will be rejected, unless they are justified in a memo as necessary in carrying out a University task or function. The memo should provide a clear explanation of why such an expense should be deemed a business expense, and should be submitted to the “Approver” (the individual responsible for funds being charged) for review and approval. Accounts Payable will not process any payment or reimbursement of nonpermissible expenses unless the memo is attached.

Personal Expenses

Personal expenses refer to those expenses that are not related to any activity of the University, are not required in carrying out an individual’s task or responsibility at work, or do not benefit the University. Personal expenses include, but are not limited to, the following:

-Automobile repairs
-Child care
-Credit card annual fees
-Delinquency fees or finance charges on NYU Travel Card or personal credit cards
-Dues in private clubs
-Frequent flyer and other similar awards for hotel and car rentals
-Grooming services (haircuts and shoe shines)
-Gym and recreational fees, including massages and saunas
-In-room movies
-Medical care
-Pet care
-Telephone charges in excess of what is deemed reasonable for calls to home when on  business travel (see “Expenses Related to Business Travel” section in this document)
-Traffic violation penalties -Upgrades (air, hotel, car, etc.) when traveling on University business

Expenses of Non-employees

University funds cannot be used for expenses of individuals who are not employees of the University, are not affiliated with the University, and whose activities do not advance University missions. Examples include, but are not limited to, the following:

• travel expenses of a spouse accompanying a University employee on business travel (unless the travel itself of the spouse is deemed a legitimate NYU business expense and meets University guidelines)

Note: University funds may be used for expenses related to spousal travel only when circumstances show that the attendance of a spouse was necessary in carrying out a University task or function, or supports University business. Travel must be approved before departure. A memo justifying the travel itself must be provided to the appropriate “Approver” (the individual responsible for funds being charged) and attached to the request for payment or reimbursement submitted to the University. See “Non-Employee Travel” section in this document for more information.

• expenses of students and other individuals affiliated with but not employed by the University

Note: Expenses incurred by students are paid or reimbursed by the University only when (1) the students are also NYU employees and the expenses are related to their employment, or (2) the expenses are related to a specific program and are approved by the department. Expenses by other individuals not employed by the University must meet applicable requirements in order to be paid using University funds. See appropriate sections in this document under “NYU Permissible Expenses” (e.g., Non-Employee Travel; Gifts, Prizes, Awards to Non-Employees; etc.).

Other Nonpermissible Expenses

Other expenses for which University funds cannot be used are:

•  Expenses that should not be paid using personal funds (e.g., independent contractor fees, stipends, cash gifts, etc.; these types of expenses should be charged directly to the University)

• Expenses that will be reimbursed from another source

• Any fraudulent expense

• Any expense prohibited by law (e.g., University funds cannot be used for payments or donations to political organizations or candidates)

NYU Permissible Expenses

General Comments

Expenses that support the missions of the University are deemed valid and therefore permissible. The following sections of the document detail those expenses that are generally deemed permissible.

All schools, departments and units of the University must identify who within their area may initiate expenses as well as inform all concerned on any processes, forms, or approval structures that they may require in addition to those defined in this policy.

When any individual has reason to believe that a transaction is not in compliance with the Business Expenses Policy of the University, it is the responsibility of the individual to seek direction from the Department Head or the Controller’s Division.

Note: In all cases, the Controller’s Division has the responsibility to audit and confirm the permissibility of business expenses.

There are many methods to purchase and pay for business expenses (see Appendix 2 for a general reference table). University employees are advised to use established University methods to incur business expenses. Whenever feasible, a business expense should be paid by the University directly to the vendor through Accounts Payable; procured through a Purchase Order or Low Dollar Order; purchased using the Procurement Card; or, when expenses are related to travel, incurred using the NYU Travel Card or the Business Travel Account (BTA).

Certain expenses may be incurred by University employees in the conduct of University business using personal funds. These expenses may be reimbursed when University and government requirements are met (see the Expense Reimbursement Policy of the University for specific guidance). They may also be excluded from an individual’s taxable income if they meet IRS requirements for an “accountable plan.”

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Notes
  1. Dates of official enactment and amendments: 07/15/04
  2. History: Revised March 19, 2012
  3. Cross References:

About This Policy

Effective Date: July 15, 2004
Issuing Authority: Financial Management
Responsible Officer: University Controller
Office Name: Controller's Division

New York University (NYU) receives funds from a variety of sources in support of its missions of education, research, public service, and patient care. It receives gifts, grants and contracts, and revenue – from the government, students, alumni, and various agencies – that carry with them fiduciary responsibilities. These responsibilities require the University to maintain operations according to guidelines established by the University’s Board of Trustees, and to comply with applicable federal, state, and local rules and regulations.

This policy is intended to ensure proper stewardship of University funds by providing guidelines for their
appropriate use, and by outlining procedures that will help members of the NYU community comply with all
applicable rules and regulations.

This policy applies to every individual who initiates, processes, approves, or records financial transactions that involve University funds.

This policy applies to every individual who initiates, processes, approves, or records financial transactions that involve University funds.

All faculty and staff of New York University.

Entities affected by this Policy

All schools, departments, and units of New York University

These definitions apply to these terms as they are used in this policy.

Approver The individual granted the authority to review and approve (or reject) transactions that require the use of University funds. The signature of the “Approver” on the reimbursement or payment request form signifies that the “Approver” has verified the request for compliance to applicable University
policies.

Business Expenses Charges for goods and services that foster or support the missions of the
University. 

Conflict of Interest A situation in which an individual or any of his/her family or associates either (1) has an existing or potential financial or other material interest that impairs or might appear to impair the individual’s independence and objectivity of judgment in the discharge of responsibilities to the University, or (2) may receive a financial or other material benefit from knowledge of information
confidential to the University.

Documentation, or Substantiation Documents that describe and support a business expense or transaction, such as original receipts or other original vendor-generated documents that show type of expense, amount of expense, and date the expense was incurred. 

Discretionary Funds Funds established as “unrestricted funds” that a school, department, or unit may use for miscellaneous expenses that further support their various missions in accordance with the Business Expenses Policy of the University.  

Federal Allowable Cost Cost identified in Section J of OMB Circular A-21 as reimbursable by the federal
government.

Federal Unallowable Cost Cost identified in Section J of OMB Circular A-21 as unreimbursable by the federal government. Certain expenses deemed unallowable by the federal government may be permitted and reimbursed by the University. Such
expenses must be segregated and charged to appropriate University accounts.

Facilities and Administrative Cost Cost incurred for common or joint objectives that cannot be readily and specifically identified with a particular project or program. Also referred to as “indirect cost.” Facilities and Administrative costs include such items as utilities and other plant costs, and certain general expenses that are to some degree attributable to the
project or program.

Fiduciary Responsibility Responsibility to manage funds in a manner consistent with the missions of
NYU and the conditions specified by external sources when applicable.

Fringe Benefit Property or service that an employee receives from the University in lieu of, or in addition to, regular taxable wages.

Generally Accepted Accounting Principles (GAAP) Fundamental principles of accounting that are used as guidance in the preparation of the University’s financial statements.

Gross Income Refers to items of value received by an employee from the University, including
those reimbursements employees receive for business expenses they incur that do not meet the “accountable plan” criteria.

Indirect Cost See Facilities and Administrative Cost.

Initiator An individual who generates a business transaction.

OMB A-21 A federal circular (issued by the Office of Management and Budget) establishing cost principles applicable to grants, contracts, and other agreements with educational institutions.

Reasonable Not extreme or excessive. A cost may be considered reasonable if the nature of the goods and services reflects prudent action.

Recoverable Cost See “Federal Allowable Cost.”
Reviewer An individual who verifies information and ensures that a transaction complies with the policies and procedures of NYU, and other relevant external guidelines and restrictions.  

Stewardship The careful and responsible management and protection of the University’s
resources, which includes ensuring that resources are used appropriately or used according to applicable policies of the University.

Transaction Any event that involves an exchange of funds, such as paying a bill to a vendor, collecting a fee from a student, or making an interdepartmental charge.

University New York University.

University Funds All funds received from internal or external sources and owned by the University, which carry with them fiduciary responsibilities. These include, but are not limited to, discretionary funds, tuition paid by students, and funds from other sources.

You Any employee of the University, including student employees.

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