University of Virginia Process Simplification
Process Simplification Teams and Reports: Completed Teams

Local Expenditure Limits/Approval Authority Team Report to the Steering Committee


October 1, 1997

Team Members
Tim Gillet, Assistant Vice President for Finance and Comptroller
Bill Randolph, Associate Dean for Finance, School of Medicine
Ken Sinarski, Associate Comptroller, Accounting Operations
Sheila Woods, Manager, Accounts Payable
Nancy Pace, Accounting Manager, School of Medicine
Terry Butler, Assistant Manager, Accounts Payable
Myrtle Kidd, Fiscal Technician, Accounts Payable
Katie Thornsvard, Management Intern, School of Medicine

Introduction
In the Spring of 1997, a UVa. Process Simplification team was created to examine policies regarding Dean/Vice President signature requirements on vouchers for meals, lodging, flowers and gifts. It was found that there is not a clear understanding in the University community of the types of expenditures and the dollar amounts which necessitate Dean/VP approval on these vouchers. In addition, the expenditure limits in each category are very low, such that a high proportion of the vouchers are considered "exceptions" and, therefore, require Dean/VP approval. The goal of this team was to suggest ways to reduce the number of vouchers sent to Deans and Vice Presidents for approval and, at the same time, insure reasonable control over the amount of money being expended for these purposes.

Background
Team members conducted a thorough review of all University policies and procedures related to meals, lodging, flowers and gifts. This review revealed that signature requirements vary depending on the:
  • Source of funds (state or local)
  • Dollar amount spent (was it over state or local guidelines?)
  • Purpose (was a meal consumed while traveling, interviewing, fundraising, etc.)
  • Location (out-of-state, in-state, on grounds, off grounds)
  • Meal service (catered or not catered)
  • Number of people attending
  • Special circumstances of the expenditure
This variety of "expenditure scenarios" inevitably leads to confusion and inconsistency in determining the level at which to solicit additional approval.

Team members then reviewed invoices which had already been approved at the Dean/VP level and processed through Accounts Payable. It was discovered that, in many cases, the Deans and VPs had been asked to approve the vouchers simply because the approval requirements for a particular "expenditure scenario" were not known. In actuality, the invoices could have been approved at a lower organizational level (e.g., at the departmental level). Clearly, it is not cost efficient for Deans and Vice Presidents to spend their time approving such routine expenditures.

Recommendation
In order to reduce Dean/VP signature requirements for expenditures using local funds, the team proposes the following measures:
1. Increase the dollar limits for local fund purchases (ledgers 4, 6, and 8) of meals, lodging, flowers and gifts (for retiring or departing employees). The University has flexibility in setting policy for expenditures paid from local funds. Current limits are low, resulting in a large number of "exceptional" vouchers requiring Dean/VP approval.

Item Current Limit Proposed Limit Purpose Restriction
Lodging $150/$200 $250 per day (including all taxes) Business trip or conference lodging
Meals Variable $110 per person per day (No meal to exceed $65; must have receipts for all meals exceeding $24.99) Business-related meals
Gifts $50 $400 Gifts for retiring employees or employees/students leaving University service; Development Office gifts to current and prospective donors
Flowers $25 $100 (including delivery) Death/hospitalization of employee or member of employee's immediate family

Note: Thelocal fund limits recommended above for lodging and meals are inclusive of any dollar amounts permitted on state funds.

Deans and Vice Presidents may impose lower local fund limits within their operating units. If they choose to set lower limits, the policy must be clearly communicated to affected employees and adherence must be monitored by the operating unit.

Decision Point: Will the increased/proposed local limits be the maximum amount allowed for these types of expenditures (gifts, lodging, flowers, and meals) or will higher limits be permitted with Dean/Vice President approval?

2. Remove the length of service condition (5 years) on gifts for employees/students leaving the University.

Decision Point: Can gifts be purchased with local funds for purposes other than those outlined above (e.g., Secretary’s Day)? If so, what level of approval must be solicited (department or Dean/VP level)?

3. Delegate signature authority to a lower organizational level. As long as the expenditure does not exceed the increased local limits (see #1 above), Dean/VP approval would not be required. With increased local limits and delegated signature authority, Deans and Vice Presidents would only have to approve truly exceptional expenditures. In addition, Deans and Vice Presidents would know that vouchers presented for approval would need a thorough review because the expenditures would truly be "exceptional".

4. Eliminate the various "expenditure scenarios" to create consistent policies within major categories. For example, the meal limit would be $110 per person per day regardless of the special circumstances of the expenditure (e.g., location, purpose, catered/not catered, number of people attending event, etc.).
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