UT Foundation Policies

5.1.1 Objective

To provide policies and procedures on returned checks.

This policy does not apply to gift pledges. Policies and procedures related to pledges to make a gift are set forth in the Advancement Services Policies & Procedures.

5.1.2 Returned Checks

The following general policies apply to returned checks.

1. Previously deposited checks that are being returned from the bank as uncollectible are automatically debited to UTFI’s bank account. The checks are returned to the appropriate department, which will charge an appropriate accounts receivable returned checks fund.
2. A detailed record of returned checks must be maintained at all times.
3. When collections are received for returned checks, an official receipt must be written if the check is redeemed in person. Such funds should then be deposited to UTFI’s bank account and credited to the accounts receivable returned checks account that was initially charged when the bank returned the checks.
4. When collection is made for returned checks, a $10.00 minimum service charge should be assessed and included in the receipt. Returned checks related to donors will not be assessed a service charge.
5. Any service charges collected should be credited to the appropriate income fund when deposited.
6. On a monthly basis, the responsible office must reconcile the returned checks on hand to the amount shown on UTFI’s official records.
7. If a returned check is determined to be uncollectible, the procedures below must be followed to write off the amount from UTFI’s accounting records.

5.1.3 Write-Off of Uncollectible Returned Checks

When a returned check proves to be uncollectible, the department should follow the write-off procedures above. The original returned check should be stapled to the completed WRITE-OFF memo.

5.1.4 Write-Off of Uncollectible Donor

Returned Checks for Gifts
Returned checks resulting from checks deposited for gifts are addressed in the Advancement Services Policies and Procedures and in the Returned Checks section above. After collection procedures have been followed, the department will recommend for write-off the returned checks that have proven to be uncollectible. The checks and the Form T-35 should be submitted to the chief operating officer for write-off. Approval for the write-off must be maintained on file for audit verification. Accounts approved for write-off will be charged against the fund credited on the original deposit and the gift will be removed from the gift records.

Updated: June 1, 2021

5.2.1 Objective

To provide policies for the University of Tennessee Foundation (UTFI) on the methods of prepaying outside vendors for goods and services.

5.2.2 Policy

1. Generally, payment for goods or services cannot be made until after goods are received or services are provided. However, payment or partial payment can be made before goods or services are received for the following: (1) registration for conferences and seminars, (2) purchases of postage, (3) subscriptions to trade magazines and periodicals, (4) purchases of items from specialty establishments requiring that payment accompany the order, (5) advance payments to vendors which would result in documented significant savings to UTFI, and (6) with the written approval of the Chief Executive Officer, or Chief Financial Officer (or designee).
2. Many vendors will waive the advance payment requirement when it is explained that UTFI is a not for profit organization.
3. Upon a request for advance payment that requires the written approval of the Chief Executive Officer or Chief Financial Officer, UTFI departments will forward the request to the Foundation’s Contracts and Purchasing Coordinator via email. Documentation to support the advance payment such as reason advance payment could not be waived, vendor contact and phone number, must be included.
4. Vendor should submit an invoice for payment
5. If payment must be made via credit card, the UTFI Business Office can pay the deposit using the UTFI procurement card.

Updated: June 1, 2021

5.6.1 Objective

5.6.2 General Policies

1. General Principles. Employees of UTFI are expected to take all reasonable precautions to ensure that their outside interests do not place them in conflict with carrying out their duties and responsibilities as employees of UTFI. Generally, a conflict of interest exists when one of the following conditions exists;
   • An employee allows outside interests, financial or otherwise, to interfere with or compromise judgment and objectivity with respect to duties and responsibilities to UTFI and sponsoring organizations.
   • An employee makes UTFI decisions or uses UTFI resources in a manner that results in or is expected to result in:
     • Personal gain or gain for his or her relatives, financial or otherwise; or
     • An unfair advantage to or favored treatment for a third party outside UTFI.
2. State Law. Certain conflicts of interest violate state law and may result in criminal and civil penalties.

5.6.3 Examples of Conflicts of Interest

1. Serving as a member of the board of directors, as a consultant, holding an office or a position, or holding a financial interest in an outside entity where:
   • The employee procures or influences the procurement of goods or services from that entity for UTFI; or
   • The employee uses his or her UTFI position to obtain favored treatment for or to provide an unfair advantage to that entity; or
   • The primary business is the same for which the UTFI exists or the entity competes with UTFI.
2. Soliciting or accepting gifts, gratuities, benefits, or favors of monetary value from a person or an entity:
   • In return for influencing an employee in the performance of his or her UTFI duties; or
   • While being in a position to obtain favored treatment for or provide an unfair advantage to that person or entity.
3. Selling any products or services to UTFI while an employee or within six months after termination of active employment with UTFI.
4. Using confidential or official UTFI information in any manner that could result in personal or financial gain or that provides financial gain or an unfair advantage to a third party. Information may include proprietary data, best practices, information shared in meetings, day-to-day interactions and activities, and conversations related to advancement techniques, practices, alumni, donors, prospective donors and other constituents.

5.6.4 Employee Reporting Requirements

1. All staff must have a completed disclosure form on file whether or not they have interests or activities to disclose. Activities include those performed while in a paid status, during compensated leave, or during professional development activities and/or leave.
2. A new disclosure is required at such time during employment when a change in an existing outside interest occurs or before a new outside interest is undertaken.
3. New employees are required to complete and file a disclosure form within 30 days of their effective employment date whether or not they have outside interests or activities to disclose.

5.6.5 Employer Requirements

Objective

Applicability

General Policies

1. 1. The contracting process should allow a minimum of two weeks to have fully executed
   2. Departments shall determine that the services are necessary.
   3. Contracts will generally only be entered into with independent contractors. Independent contractors are individuals or firms that (1) are engaged to perform specific services for a stated fee or contracted amount, (2) provide services to the public, and (3) are subject to UTFI control only as to the end results, and not the methods of obtaining them. NOTE: For purposes of this policy, contracts of employment are not considered to be for personal, professional, or consultant
   4. UTFI may require the contractor to furnish a performance bond or other proof of insurance coverage.
   5. Any service /contract in excess of $10,000 must go through the UTFI contract process.
   6. A formal contract is not required when the cost of the service to be provided is $10,000 or less. Any service / contract from $0-$9999 that requires a signature, must be forwarded to the UTFI Business Office Contracts and Purchasing Coordinator for evaluation
   7. Deposits and prepayments are discouraged and should be avoided at all costs (see 5.2 Advance Payments ).

Term of Contracts

Prohibitions

1. Employees may not receive, directly or indirectly, any amount of the contract as wages, compensation, or gifts in exchange for acting as an officer, agent, employee, subcontractor, or consultant relative to the contract.
2. Contracts with former employees are prohibited for six months after termination. However, this restriction does not apply to individuals who are classified as “friends” or individuals who have a “special appointment” and who have not been paid in the last six months.
3. Contracts with a company or corporation in which an employee(s) of UTFI, the University of Tennessee, Board of Regents, or other agency of the state of Tennessee holds a controlling interest are prohibited during such employment and for six months beyond termination. (An individual with controlling interest owns or controls the largest number of outstanding shares owned by a single individual or corporation, TCA 12-4-101.)
4. Contracts are prohibited with a firm, company, or corporation in which a UTFI employee, his or her spouse, or dependent children has more than a five percent financial interest (excluding stocks or bonds in a publicly held corporation) and when the employee may directly or indirectly influence vendor selection.

Exceptions to Policy

Soliciting Proposals

Verbal Negotiation

Non-Competitive Contracting

1. Contracts shall be let on a competitive basis whenever possible.
2. For contracts $10,000 or higher, departments must justify their vendor choice by providing a detailed explanation of the selection process including price comparisons between vendors if applicable.
3. Reasons for a non-competitive contract:
   1. When only one product or service can meet the specific need and the product or services is available from only one source.
   2. Urgent need prevents competitive methods.
   3. Compatibility or consistency with past acquisitions of products or services is essential (e.g. avoiding additional costs by changing the supplier of product or service).
   4. The contract is for services from a governmental unit, such as a state or federal agency or from a college or university.

Drafting Contracts

Reviewing Contracts

Executing Contracts

Contractors and Conflict of Interest

Data Confidentiality and Security

Non-Discrimination/Illegal Immigrants

5.9.1 Objective

5.9.2 Definition of Gift Personal Property

1. Gift personal property is defined as any non-cash item (other than stocks, securities, limited partnerships, and real property) that is acquired by gift, inter vivos or testamentary trust, or testamentary bequest. Items such as jewelry, rare coins, artwork, furniture, automobiles, and boats are examples of personal property subject to this policy.
2. Gift personal property should not be considered or disposed of as foundation surplus property unless it has been used by a department.   However, if provisions are made at the time of donation to use funds from a gift’s sale after the department, campus, or unit no longer has use for it, the property should be disposed of according to the guidelines in this section.

5.9.3 Disposition

5.9.4 Disposition by Sale

5.9.5 Approval of Disposition

5.9.6 Reporting Requirements

1. The following reporting requirements apply whenever gift personal property is accepted and/or disposed of.
   • For accepting gifts of personal property,
     • The provisions of 6.1 Gift Acceptance, particularly Section 6 concerning gifts of tangible personal property, must be satisfied
     • The CFO must approve the gift in advance of acceptance.
     • Any foundation official who takes delivery of gift personal property must notify the CFO as soon after delivery as possible.
     • Development officials should inform donors of their obligation to file IRS Form 8283 (Noncash Charitable Contributions). The CFO is the only UTFI officer authorized to execute Form 8283 on behalf of UTFI.  See 6.1 Gift Acceptance.
   • Departments, campuses, or units that no longer have use for gift personal property in their custody should notify the CFO as soon as possible.
   • If the foundation disposes of gift items valued above $500 within three years of their receipt, the foundation must file IRS Form 8282 (Donee Information Return) within 125 days after the date of disposition.

5.12.1 Objective

5.12.2 Applicability

5.12.3 Non-Circumvention of University Policy

5.12.4 Developing and Issuing Policy

5.12.5 Exceptions To Policy

5.12.6 Board of Directors

5.12.7 Scanned Documents

5.16.1 Objective

5.16.2 Invoicing And Payment

• Date and amount of request
• Contractor’s name, professional title, and home address
• Name and address of contractor’s present employer
• Contractor’s social security number or federal employer ID number (if not already in IRIS)
• Description and dates of services performed
• Unit of time and rate of pay on which the requested compensation is based
• Name and number of cost center/WBS element to be charged
• Signatures showing the required approvals

5.17.1   Objective

5.17.2   The Accounts Payable Function

1. Processing Payments. One employee should requisition and receive goods and process the invoice for approval.
2. Ledger Reconciliation. An employee who has no responsibility for requisitioning, receiving, or entering invoices to the accounting system should reconcile the department’s accounts payable documentation (such as invoices, internal transfers) to the departmental ledgers each month.

5.17.3   Appropriate Invoices

1. An original invoice is required for all purchases of materials and services.
2. Invoices must be itemized to identify the quantity and price for all items purchased.
3. All invoices must be billed to the University of Tennessee Foundation.
4. Invoices written in pencil will not be accepted by the foundation.

5.17.4   Preparing Invoices for Approval and Payment

1. Upon receipt of an invoice, the date received (month, day, year) must either be written or stamped on the invoice.
2. Invoices must be compared to (1) the delivery ticket (when available) to verify that all materials have been received and (2) the purchase or requisition order to verify quantities and price. If a purchase order was issued, the purchase order number must appear on the invoice. If this number is not preprinted, the department must write it on the invoice.
3. Invoices must be verified for mathematical accuracy. If an error is discovered, the department should either contact the vendor and request a revised invoice or receive verbal approval from the vendor to correct the invoice. If an invoice is revised, the name of the individual with the vendor who authorized the change must be written on the front of the invoice.
4. Prompt payment discounts should be taken whenever possible. Invoices with cash discount terms should receive priority processing to help ensure payment within the discount period. If a difference exists between discount terms on a purchase order and those on an invoice, the discounts most favorable to the university must be taken. Discounts do not apply to freight items.
5. Tennessee sales tax should be deducted. UTFI is only sales and use tax exempt in TN.
6. The cost center/WBS element(s) and appropriate general ledger (G/L) account(s) to be charged must be written on the front of the invoice. (G/L Account List)
7. All departments with the exception of HSC and UTM will scan invoices to the UTFI business office email address for processing. Originals are kept in the departments for a period that complies with the Foundation’s retention policy. The invoices for HSC and UTM will be entered by those departments with the exception of invoices that must be processed centrally (See 5.17.6 below).
8. The invoice information must be entered into the foundation’s accounting system for processing and payment by the UTFI business office for all departments with the exception of HSC and UTM. The document number generated by the accounting system should be written on the invoice.

5.17.5   Approving Invoices for Payment

1. The IRIS User ID Request/Changes Form is used to establish approvers for the accounting system.

1. 1. Upon receipt of materials or services identified on an invoice, an appropriate and properly prepared invoice can be approved for payment.
   2. The employee authorized to approve expenditures for the department must approve by signing all invoices in ink. For departments approving invoices electronically, the approver must sign or initial the invoice and refer directly to it while performing the approval process.
   3. To comply with the Foundation’s retention policy all invoices should be kept in departmental files for one year.

5.17.6   Invoices Processed Centrally

1. 1. Invoices with the amount to be paid shown in a foreign currency. The cost associated with converting the currency to U.S. dollars will be billed to the cost center/WBS element charged for the transactions.
   2. Invoices for personal services.
   3. Invoices to non-resident aliens, even if the amount is in U.S. dollars. A completed I-94 must accompany the invoice or request for payment.
   4. Credit memos when a check is requested from the vendor instead of a credit.

5.17.7   Refunds

1. The foundation returns funds to individuals, institutions and companies for a variety of reasons including: overpayments, duplicate payments, payments received in error, cancellations and some deposits. Each department that issues refunds must develop and follow its own policy concerning the amount and authorization of refunds. These refund policies must be reviewed and approved by the chief operating officer. Departments are responsible for entering their own refunds in IRIS.
2. Each refund must be supported by documentation that includes:
   • the name of the person, institution or company receiving the refund (original payor)
   • the mailing address
   • the reason for the refund
   • the university receipt number or deposit information of when the money was originally received
   • the dollar amount of refund
   • the cost center, fund, WBS element, general ledger account where the refund is to be charged (usually the same cost center, fund, WBS element, general ledger account of the original receipt)
   • the department head’s approval

5.17.8   Prompt Payment

1. The foundation must pay vendors in accordance with the terms of the contract or purchase order. Purchase orders generally specify that payment should be made within 30 days after the merchandise is received. When specific terms are not provided, to avoid interest charges payment must be made within 45 days of receipt of the invoice or date the goods or services were received.
2. Documentation by Department. Departments are responsible for maintaining proper documentation to ensure compliance with the prompt payment. This may be accomplished by performing the following:
   1. Upon receipt of an invoice, the date received (month, day, year) must either be written or stamped on the invoice.
   2. If the invoice is received before the goods, the date the goods are received (or services performed) should be written on the invoice or delivery ticket. Payment terms will begin when the goods are received.
   3. Any other unusual circumstances should also be documented, such as defective goods, partial shipments, grace periods (e.g., library books), etc.
3. Interest Payments to Vendors. Interest payments for delinquent accounts will be made only upon receipt of an original invoice from the vendor and verification that such payment is due. The department is responsible for this verification.
4. The following steps should be followed when paying an invoice that contains an interest charge.
   1. The original invoice and the contract or purchase order number should be referenced on the original interest invoice.
   2. All interest payments must be charged to the cost center/WBS element used for the original invoice.
   3. Information from the invoice for interest should be entered into the accounting system and approved by the department for processing and payment.
5. Invoices for Interest Not Due. If the department determines that an invoice for interest is not due, the department must notify the vendor and provide the necessary documentation and/or reasons to refute the interest charge.

5.17.9   Deadline for Fiscal Year Expenditures

1. 1. Designated personnel in each department must process invoices, payrolls, cash items, travel expenses, and return all undelivered checks prior to the close of the fiscal year.
   2. All expense items incurred before June 30 must be paid in the current fiscal year and may not be held and charged against the following fiscal year.
   3. Outstanding purchase orders greater than $5,000 for which items are not delivered before June 30 will be encumbered against appropriations for the following fiscal year.

Objective

General Policies

Limits

• Invoice Purchases. Single purchases of less than $10,000 may be made from vendors who will provide goods and services on credit without a purchase order and will invoice  UTFI after delivery. Invoices for such purchases should be sent directly to the department receiving the goods or services and processed for payment. All invoices should comply with Fiscal Policy 5.17 Processing Invoices.
• Departmental Purchases with Personal Funds. Purchases made with personal funds should comply with Fiscal Policy 5.145 Miscellaneous Reimbursements
  • Procurement Card Purchases. If a department has a UTFI-issued procurement card, the card may be used for making single purchases of goods or services of less than

Purchases above $10,000

Restrictions on Certain Purchases Personal Use Items

Purchases from UT Central Supply and Bookstores

Purchases From Grant or Contract Funds

Gifts or Consignment of Equipment

5.19.2.1 Objective

5.19.2.2 Purchasing Equipment Under Capital Lease Agreements

1. This policy governs the acquisition of equipment through installment purchases or capital lease agreements. The Financial Accounting Standards Board has issued guidelines to clearly define the accounting treatment for such transactions. Those guidelines are reflected in this policy.
2. Lease Classification. A lease can be classified either as a capital lease or an operating lease. When a lease meets any of the following criteria, it should be classified as a capital lease (installment purchase), and a corresponding asset and liability must be recorded on UTFI records:
   1. Property Ownership. The lease transfers ownership of the property to UTFI by the end of the lease term.
   2. Purchase Option. The lease contains an option to purchase the leased property at a bargain price (significantly lower than the property’s fair value when the option is exercised).
   3. Lease Term. The lease term equals or exceeds 75 percent of the estimated economic life of the leased property.
   4. Rental Payments. The present value of rental payments equals or exceeds 90 percent of the value of the leased property.

3. Required Accounting. Equipment obtained on installment or capital lease agreements should be capitalized (and tagged) and the corresponding liability recorded on official UTFI records.
4. Required Contracts. Purchase orders may not be issued to acquire equipment under an installment or capital lease. Instead, separate installment or capital lease contracts must be completed. These contracts should reflect all pertinent facts and conditions, including provisions or outright purchase of the equipment during the lease term and amortization schedules for the equipment under contract.

5.19.2.3 Procedures

1. Contract.
   1. Terms. UTFI is responsible for securing the most favorable terms whether through an operating lease or a capital lease agreement.
   2. Quotations. The quotations received should include an outright purchase quote as well as lease options.
   3. Review Process. The installment and capital lease contracts will be reviewed by the UTFI Contracts and Purchasing Coordinator. These contracts should include amortization schedules and the rate of interest (implicit or stated).
2. Accounting Entries. The Controller (or designee) will prepare journal vouchers scheduling the installments or leaseholds payable and capitalizing the purchased equipment. Each year end, the installments/leaseholds payable are reduced by the amount of the principal paid during the year under the installment purchase or capital lease contracts.
   1. Invoice Processing.  An invoice will be processed for payment for each installment or lease payment due.  The invoice must show both principal and interest portions of each payment

5.20.1 Objective, Application

To provide policies governing the disposition of real property owned by the University of Tennessee Foundation (UTFI).  Note: the acquisition of real property is covered in 6.4 Real Estate Acceptance Policy. This policy shall cover disposition of all direct ownership in real property (including but not limited to fee simple, life estate, remainder and tenancy in common) and indirect ownership in the form of interests in non‐publicly traded entities (including corporations, partnerships, and limited liability companies) that own exclusively or primarily real property.  Disposition of Interests in entities is also governed by Policy 5.25 Disposition of Closely Held Entity Interests.

5.20.2 General Policy

All real estate acquired by gift shall be sold or otherwise disposed of as soon as possible following receipt and finalization of the transfer to UTFI.  In rare circumstances, UTFI may retain the property according to the gift terms/conditions or for other business reasons, including but not limited to:

1. Real property deemed to have potential for appreciation in value may be retained until the UTFI President & CEO (President) and Real Estate Gift Acceptance Committee determine the property’s value is not likely to materially increase further.
2. Real property accepted subject to restrictions on use or disposition shall be held, managed and disposed of or otherwise administered with due regard to said restrictions.

Gifts of real property not likely to appreciate in value or requiring active management, extraordinary maintenance and/or other carrying expenses shall, unless circumstances otherwise warrant, be recommended for immediate disposition at not less than fair market value.

For disposition of property, also refer to 6.4.4 Due Diligence.

5.20.3 Disposition of Real Property

Disposition of UTFI real property will only occur through an “arms length” transaction in which neither UTFI nor the buyer are under any compulsion or legal obligation to buy or sell the property, with both having a reasonable knowledge of all relevant facts pertaining to the property.  Where UTFI acquires property subject to a right of first refusal, that agreement will be honored if it is legally enforceable and was negotiated at “arms length,” requires purchase at fair market value, and if honoring the agreement is a condition of the gift.

Real property will be listed for sale at no less than its appraised value.

The sale or transfer of real property by UTFI will be handled in a manner designed to eliminate any future liability to UTFI or UT for hazardous substance remediation.  UTFI may convey title to real property only by means of a special warranty deed or (where appropriate) a trustee’s deed without warranties or quitclaim deed.

5.20.4 IRS Requirements

If UTFI sells donated property within three years of the gift date, UTFI must disclose the sale price by filing IRS Form 8282.  In such an event, UTFI will send a copy of the completed Form 8282 to the donor.

5.20.5  Approval of Contracts for Sale

Pursuant to a resolution adopted by the Board of Directors on June 19, 2012, contracts for the sale of UTFI real estate must be approved as follows:

1. If the sale price is at or above appraised value, the President & CEO is authorized to approve the sal The President & CEO shall immediately report any sale he or she approves to both the Real Estate Committee and the Executive Committee.
2. If the sale price is less than appraised value, the Real Estate Committee is authorized to approve the sale pursuant to the following procedure:
   • Information pertinent to the proposed sale (e.g., details of the offer, history of UTFI’s ownership, copies of sales contract or other documents) will be emailed to the committee.
   • The committee shall meet by conference call as soon as practical. The committee is authorized to approve the sale in the conference call.
   • If a member of the committee is unavailable, then the following, listed in order of preference, are authorized to sit on the Real Estate Committee in place of the unavailable member for purposes of acting on the proposed sale:
     • • The Board Chair,
       • The Board Vice Chair, or
       • Any member of the Executive Committee.
3. The Real Estate Committee shall report on all real estate sales to the full Board at the next regularly scheduled meeting.

5.20.6  Disbursement of Proceeds

The net proceeds realized on sale of UTFI property (after payment of closing and other similar costs) shall be disbursed as follows:

1. If UTFI has retained the services of an outside vendor to assist with the acquisition, management and/or sale of real estate owned by UTFI, that vendor’s costs will be reimbursed and fees paid out of the net proceeds pursuant to the terms of the contract with that vendor.
2. UTFI will retain a fee equal to $5,000 or 4.5% of the net proceeds, whichever is greater but in no event more than $225,000.
3. If UTFI assumes a financial investment/risk in property as a part of the management and disposition process, or provides a unique level of expertise, then UTFI will retain an enhanced fee in an amount adequate to reasonably compensate for the risk and/or management obligations undertaken. The need for an enhanced fee will be determined by the UTFI President and the vice chancellor of the campus or unit prior to accepting the gift, and the amount of this fee will be determined at the end of the transaction based upon the amount of work, expenses, and risks assumed by the Foundation.  In no event will the fee exceed 25% of the net proceeds.
4. The remaining proceeds will be transferred to the appropriate gift account to fulfill the donor’s intended purpose.  If there is no designated purpose, then remaining proceeds will be designated for unrestricted use by UTFI.

Updated: June 1, 2021

5.21.1 Objective

5.21.2 General Policies on Receiving Money

1. Money includes currency and other negotiable documents, such as personal checks, money orders, cashier’s checks, and traveler’s checks, received by a department as a refund, reimbursement, or gift, etc. Credit and debit card transactions are discussed below in this policy. All money received as payments to UTFI must be promptly forwarded to UTFI’s Alumni & Donor Records staff on each campus for deposit or deposited to the credit of the UTFI Account in a bank designated as a UTFI depository. All money must be deposited within three business days of receipt. Expenditures may not be made from money received, and the money may not be retained in a department for its use.
2. Because of the high cost of negotiating foreign checks, UTFI will only accept checks in U.S. dollars drawn on U.S. banks or U.S. branches of foreign banks. The checks must contain ABA encoding (machine-readable codes at the bottom of the check).
3. Departments that receive money should develop written procedures to collect and transmit it to  Alumni & Donor Records staff for deposit or to deposit it into a UTFI depository account.
4. Generally, employees should not serve as custodian for third-party funds (i.e., funds belonging to outside organizations) as part of their official duties.
5. Departments that have established policies for receiving and depositing money that differ from this policy and were approved by the university prior to June 30, 2011, may continue to follow such policies.  If a department wants to deviate from this policy for receiving and depositing money after July 1, 2011, it must obtain the approval of the Chief Financial Officer (CFO).

5.21.3 Recording Money Received

5.21.4 Control Guidelines

1. Checks Made to UTFI or University. All checks in payment to UTFI should be made payable to “The University of Tennessee Foundation” and not to any UTFI or university official or employees. Checks should be restrictively endorsed immediately upon receipt with UTFI’s official endorsement stamp on the reverse left of the check. The receiving department should be indicated on the endorsement stamp. Third-party checks must be endorsed by the individual cashing the check and then stamped with the endorsement stamp before deposit or transmittal.
2. Separation of Duties. When staffing permits, an employee who does not handle money received should perform a monthly reconciliation. A reconciliation consists of comparing the original receipts to the deposit document printed from UTFI’s accounting system and the official accounting records. Employees who invoice customers or record payments in accounts receivable records should not have access to money received. If departments are unable to separate duties as described, the chief financial officer should be contacted to help find an alternate solution.
3. Safekeeping of Money Received. Department heads should see that official funds are protected until deposited or transmitted to Constituent Management staff, as follows:
   1. Proper safekeeping facilities should be used.
   2. Deposits should never be sent through campus mail.
   3. Safe combinations should be changed whenever security is compromised or knowledgeable employees leave the department.
   4. No more than three responsible employees should have access to funds stored.
   5. Currency and checks should not be left overnight in cash registers, drawers, or other unsecured locations.
   6. If a deposit includes large sums of currency and checks, the department should consider:

1. Requesting security officers to transport the deposit
2. Using night depository services

• Making deposits daily (or more frequently)

5.21.5 Frequency of Transmittals and Deposits

5.21.6 Preparing Transmittals to Gift Records

5.21.7 Refund

1. UTFI returns funds to individuals, institutions and companies for a variety of reasons including: overpayments, duplicate payments, payments received in error, cancellations and some deposits. Each department that issues refunds must develop and follow its own policy concerning the amount and allowability of refunds. These refund policies must be reviewed and approved by the CFO. The UTFI Business Office is responsible for entering refunds in IRIS.
2. Each refund must be supported by documentation that includes:
   1. the name of the person, institution or company receiving the refund (original payor)
   2. the mailing address
   3. the reason for the refund
   4. the UTFI receipt number or deposit information of when the money was originally received
   5. the dollar amount of refund
   6. the cost center, fund, WBS element, general ledger account where the refund is to be charged (usually the same cost center, fund, WBS element, general ledger account of the original receipt)
   7. the department head’s approval

5.21.8 Accepting Credit and Debit Cards

5.21.9 Internet Sales

1. Alumni & Donor Records has implemented the Encompass system to handle both online giving and internet sales. Encompass is fully compliant with federal and state laws concerning online transactions and its use has been approved by the university’s internal e-commerce audit group.  Any UTFI office wishing to engage in internet sales should contact the Senior Director for Information Technology for access to the Encompass system.

1. Additionally, each department using Encompass, departments must develop procedures specific to its Internet enterprise in coordination with the CFO. Written procedures are required to ascertain that funds collected via the Internet are deposited into recognized UTFI depositories in a timely manner.

5.21.10 Credit and Debit Card Deposits

1. 1. POS Terminal Transactions. Cardholder and transaction information is swiped or keyed into a POS terminal and electronically submitted to the card processor (bank) for authorization or approval. At the close of each business day, the department reconciles all transactions processed through the POS terminal to the actual sales drafts and transmits the batch of transactions to the card processor (bank) for settlement.
   2. Internet Transactions. Cardholder and transaction information is captured via the Internet and transmitted electronically to UTFI’s processor for authorization or approval. Each day at a predetermined time, all approved transactions are submitted to the processor for settlement. Each department or unit will receive a daily batch release report detailing all transactions processed by its Web site. This report must then be reconciled with orders received and processed during the same time period.

5.21.11 Credit and Debit Card Refunds and Chargebacks

5.22.1 General Reserve Funds

1. 5% of the annual operating (including salaries & benefits), or
2. 20% of the endowment management fee,

5.22.2  Real Estate Operations Reserve Fund

5.22.3  Gift Annuity Reserve Fund

5.22.4 Distinct Funds

5.24.1   Objective

5.24.2   General Policies

1. This policy applies to (l) staff, (2) contractors and vendors while conducting UTFI business and (3) others who use UTFI resources or information with or without authorization. UTFI will investigate all allegations of fraud, waste or abuse by internal or external parties. Any employee of UTFI found to be involved in fraud, waste, or abuse as defined in this policy is subject to disciplinary action, up to and including termination, and criminal prosecution when warranted.
2. UTFI will consult with the state Comptroller’s Office to determine if the University of Tennessee Audit and Consulting Services or UTFI’s external auditor will investigate suspected acts of fraud, waste, and abuse by employees. If warranted, an investigation will be conducted and written report issued. The report will be sent to appropriate UTFI officials for administrative action, with copies to the UTFI Finance and Audit committee, Chief Financial Officer (CFO), legal counsel, human resources, and the state Comptroller.
3. UTFI employees are responsible for ensuring that resources entrusted to them by UTFI are used ethically, prudently, and for their designated purpose. Employees with managerial or supervisory duties are responsible for creating an environment that encourages integrity and deters dishonest behavior. UTFI employees, contractors or vendors, and others who use UTFI resources or information are responsible for reporting fraud, waste, or abuse regarding UTFI resources, whether by members of the UTFI community or outside parties. When circumstances warrant, employees who fail to report fraud, waste, or abuse are subject to disciplinary action. Employees who knowingly make false accusations are also subject to disciplinary action.
4. When fraud, waste, or abuse is known or suspected, management should determine whether an employee may be involved.
5. All employees have a duty to cooperate with UTFI and/or state or federal investigations of fraud, waste, and abuse. Failure to cooperate may result in disciplinary action, up to and including termination of employment.

5.24.3   Definition of Fraud, Waste, and Abuse

1. Fraud, waste, and abuse, for the purpose of this policy, include illegal, improper, wasteful, or fraudulent activities regarding UTFI resources. Examples include, but are not limited to:
   • Theft or misappropriation of funds, supplies, property, or other resources
   • Improper and wasteful use of resources
   • Forgery or alteration of documents
   • Bribery or attempted bribery
   • Unauthorized use of records
   • Unauthorized alteration or manipulation of computer files
   • Unauthorized use of logos, trademarks, copyrights, etc.
   • Falsification of reports to management or external agencies
   • Pursuit of a benefit or advantage in violation of UTFI’s conflict of interests policy
   • Improper handling or reporting of financial transactions
   • Authorizing or receiving compensation for goods not received or services not performed
   • Authorizing or receiving compensation for hours not worked
   • Willful violation of laws, regulations, or contractual obligations when conducting UTFI business
   • Falsification or unauthorized alteration of time or leave records.

5.24.4   Reporting Fraud, Waste or Abuse Involving University Employees

1. Employee Reporting Requirements. Employees should report suspected fraud, waste and abuse regarding UTFI resources to their supervisor, the CFO, the UTFI President and CEO (President), the University of Tennessee internal audit department (Audit and Consulting Services, 865-974-6611), or the State of Tennessee hotline (1-800-232-5454). Employees who suspect or detect such activity shall not initiate investigations on their own nor alert the suspected individual(s) of an impending investigation.
2. Departmental and Other Management Reporting Requirements. Upon receipt of a report of suspected fraud, waste or abuse, any supervisor, the CFO or the President must immediately relay the report to the Chair of the UTFI Finance and Audit Committee and may also relay the report to the University of Tennessee internal audit department (Audit and Consulting Services, 865-974-6611), or State of Tennessee hotline (1-800-232-5454). Management personnel who suspect or detect such activity shall not initiate investigations on their own nor alert the suspected individual(s) of an impending investigation.
3. Taxpayer or Other Citizen Reporting Requirements. A citizen who suspects or detects fraud, waste or abuse regarding UTFI resources should contact the University of Tennessee Audit and Consulting Services (865-974-6611) or the State of Tennessee hotline (1-800-232-5454).
4. Retaliation Prohibited Against UTFI Employees. Employees who report fraud, waste or abuse shall be free of intimidation or harassment when reporting matters of public concern, including offering testimony to, or testifying before, appropriate legislative panels. No department head or other management official, employee exercising supervisory authority, or other employee or contractor shall recommend or act to discharge, demote, suspend, reassign, transfer, discipline, threaten or otherwise discriminate against a UTFI employee regarding the employee’s evaluation, promotion, compensation, terms, conditions, location or privileges of employment, nor may any employee or contractor retaliate against another UTFI employee because the employee, or a person acting on behalf of the employee, reports or attempts to report, verbally or in writing:
   1. The willful efforts of such persons or contractor to violate a state or federal law, rule or regulation that had or would have had a material and adverse effect upon program operations or program integrity, or the willful efforts to conceal such a violation.
   2. Acts constituting fraud against UTFI, state, federal government, public, or any fellow employees.
   3. The willful misappropriation of gift resources.
   4. Acts posing an unreasonable and specific danger to the health or safety of the public or employees.
   5. Acts constituting gross mismanagement of a program, gross waste of gift funds, or gross abuse of authority.

5.24.5   Confidentiality

5.24.6   Recovery of Assets

1. Voluntary Return or Repayment. Generally, action to recover losses should not be taken until an investigation has been completed. At any time, however, UTFI officials may accept voluntary offers to reimburse UTFI for losses due to alleged employee dishonesty. Repayments should be appropriately receipted and deposited to a cost center/WBS element. Officials accepting repayment should inform the employee that such offers will not cause an investigation to stop, relieve the employee of liability for future claims, nor prevent prosecution under criminal law.
2. Demand for Repayment. If an investigation concludes that an individual’s or entity’s actions have resulted in loss of UTFI assets, the chief operating officer, after consultation with legal counsel, should demand repayment from the person or entity. The demand may be verbally or by letter.
3. Withholding of Salary and Wages. If an employee is charged with gross misconduct, UTFI may recover losses due to the employee’s actions by withholding part or the entire amount owed from the employee’s paycheck. The amount to be withheld must be communicated to the employee in writing. The written communication must also explain the employee’s right to appeal pursuant to section 7.2.6 of 7.2 Disciplinary Action. Even when an appeal is filed, the paycheck will be held to the extent allowed by law pending the outcome. In addition, because employees who are terminated for gross misconduct lose unpaid sick and annual leave, they may not use this leave to pay debts to UTFI.
4. Legal Action. When full recovery of assets attributed to fraud, waste, or abuse by employees, other individuals, or entities is not realized from other means, the COO may initiate legal action on behalf of UTFI.

5.24.7   Prosecution Under Criminal Law

5.24.8   Settlement

5.24.9  Annual Statements

5.25.1 Objective

5.25.2 Definition of Closely Held Entity Interests

5.25.3 General Policy

1. Interests deemed to have potential for appreciation in value may be retained until the UTFI President & CEO (President) and Executive Committee determine the property’s value is not likely to materially increase further.
2. Interests accepted subject to restrictions on use or disposition shall be held, managed and disposed of or otherwise administered with due regard to said

5.25.4 Disposition

5.25.5 Approval of Disposition

1. If the sale price is at or above appraised value, the President is authorized to approve the The President shall immediately report any sale he or she approves to the Executive Committee.
2. If the sale price is less than appraised value and does not exceed $5,000,000, the Executive Committee is authorized to approve the sale pursuant to the following procedure:
   • Information pertinent to the proposed sale (e., details of the offer, history of UTFI’s ownership, copies of sales contract or other documents) will be transmitted to the committee.
   • The committee shall meet by conference call as soon as practi The committee is authorized to approve the sale in the conference call.
3. The Executive Committee shall report all sales to the full Board at the next regularly scheduled meeting.
4. If the sale price is less than appraised value and exceeds $5,000,000, the Board must approve the

5.25.6 IRS Reporting Requirements

5.25.7 Disbursement of Proceeds

1. If UTFI has retained the services of an outside vendor to assist with the acquisition, management and/or sale of the entity interest, that vendor’s costs will be reimbursed and fees paid out of the net proceeds pursuant to the terms of the contract with that
2. UTFI will retain a fee equal to $5,000 or 5% of the net proceeds, whichever is greater, but in no event more than $25,000, and