Procedure IP2011 - Education Abroad Program Operating Accounts
Office of Global Programs
Policy Steward facilitating procedure: Vice Provost for Global Programs
Table of Contents:
- ESTABLISHING OPERATING ACCOUNTS
- ACCOUNTING FOR OPERATING EXPENSES
- REIMBURSEMENT OF OPERATING ACCOUNTING
- DISALLOWANCE OF SPECIFIC EXPENDITURES
- FINANCIAL OFFICER REVIEW AND RECONCILIATION
- QUESTIONABLE TRANSACTIONS
- CLOSING FOREIGN OPERATING ACCOUNTS
- INCREASING/DECREASING OPERATING ACCOUNT AMOUNTS
- PERIODIC REVIEWS
- AUDITING COORDINATION - FINANCIAL AND PROCEDURAL
- RECORD RETENTION, DISPOSITION AND DESTRUCTION
- CONTACT INFORMATION
- CROSS REFERENCES
Although not encouraged, there may be instances when an Authorized University Representative of an education abroad program may request the establishment of local bank accounts. The purpose of these accounts is to pay the authorized expenses of University educational programs abroad.
In all cases, these foreign operating accounts will be titled "Pennsylvania State University." In addition to the Authorized University Representative, the University's Corporate Controller and Assistant Treasurer may also sign the foreign bank's signature card for the account. It may also be desirable to have a second local individual, a designee of the Authorized University Representative, sign the signature card in case of an illness or absence of the Authorized University Representative. This must be approved by the Corporate Controller.
The bank account is normally to be established in the currency of the foreign location. At no time will the balance in any individual account exceed the equivalent of 40,000 dollars US, unless a higher amount for a program (up to including 80,000 dollars US) is approved in advance by the Assistant Treasurer or Corporate Controller. Under no condition will the balance exceed 80,000 dollars US. These amounts are exclusive of currency fluctuations which may value the account balance in excess of that amount. In addition, total reimbursements to each account during a year will not exceed the program's expenditure budget for that fiscal year.
Monies in these accounts are for the conduct of University business and may not be used for personal gain or convenience, as prohibited by University policy.
When the Authorized University Representative of a Penn State education abroad program identifies a need to establish an operating account, he/she must first obtain the approval from the Director of Education Abroad. If the Director agrees that there is a need, then he/she must seek approval from the University's Corporate Controller and Assistant Treasurer. After approval is granted, the Authorized University Representative of a Penn State education abroad program obtains the necessary papers from a local bank. The papers, along with a written request, are forwarded to the Director of Education Abroad.
If the Director approves the request, he/she forwards th bank documents to the University's Assistant Treasurer and Corporate Controller for final approval and signature. The Director has the bank documents translated, if necessary.
If approval for the account is given, the Corporate Controller and Assistant Treasurer sign the appropriate documents as University Officers. The documents are returned to the Director of Education Abroad. The Director then returns the bank documents to the Authorized University Representative with instructions to establish the account. The bank must be given instructions to send the statements and canceled check to the Finance Office in International Programs.
The Authorized University Representative shall notify the Director of Education Abroad of any important country-specific banking requirements or limitations that affect the University. After the account has been established, the Authorized University Representative must notify the Director of the bank's name, address, bank swift code and the account number.
The Director of Education Abroad, in turn, shall notify the Corporate Controller and the Financial Officer responsible for International Programs of this information and provide the names of the authorized signers on the account.
The Business Manager for International Programs (or an individual designated by the Business Manager) will prepare a form version of the Special Request for Check ( SRFC ) for the initial amount per the instruction on GURU, and Procedure CR2067 - Processing Foreign Currency Drafts. The particular currency type and amount must be specified in the explanation area of the form. The reason for the advance, and the foreign bank name, address, and account number are also noted in the explanation section. The budgetary distribution charge is to the 0207 Accounts Receivable Long Term Advance account. The Long Term Advance must in the the name of a Penn State employee; preferably, this is the University Authorized Representative. This employee's name should be indicated in the description section of the SRFC. There is a fee charged by Accounting Operations and the bank for the cost associated with generating a foreign currency draft. Another budgetary distribution charge to 02-031-xx xx (as applicable), under the appropriate miscellaneous fund number for that fiscal year, is to be indicated for these fees.
Because the conversion rates vary on a daily basis, there is no way that the U.S. dollar amount (necessary for completing the budgetary distribution section of the form) can be known until a foreign draft is obtained by Accounting Operations. The areas of the form that require completion with a U.S. dollar amount must be left blank. (An estimated amount can be placed in the explanation block of the forms, if helpful).
NOTE: The IBIS version of the SRFC form may NOT be used to request payments in foreign currency, since edit checks prevent the processing of an IBIS SRFC with blank dollar amounts.
The Director of Education Abroad shall serve as budget administrator to approve the Special Request for Check. Policy FN18 approval rights and responsibilities shall apply.
Accounting Operations generates a foreign currency draft per the provisions of Procedure CR2067 - Processing Foreign Currency Drafts.
NOTE: To expedite the funds transfer to the new bank account, the Director of Education Abroad and the Financial Office for International Programs may request a wire transfer via a memo to the Assistant Treasurer. When the wire is complete, the Assistant Treasurer (or designee) notifies the Business Manager for International Program. Then the Business Manager (or designee) will prepare a Department Journal Voucher ( JVDP ) per the IBIS documentation.
Once established, the Authorized University Representative uses the checking account to pay the expenses of that Penn State education abroad program. As these expenses are paid, the Authorized University Representative retains the appropriate receipts to document the expense transactions. (If for some reason a receipt is not obtainable for an expense, the Authorized University Representative must provide a written explanation of the circumstances. This written explanation shall be considered to be a receipt for the purpose of this procedure.)
When the account gets to the point that (given processing lead time and anticipated expenditures) a replenishment is necessary, the Authorized University Representative forwards the receipts to the Finance Office for International Programs, along with a Reimbursement Request ( Exhibit "A" ). A computer spreadsheet or other generated format would also be acceptable if the format contains the same type of data indicated on the Reimbursement Request). A copy of the receipts and the Request is to be kept by the Authorized University Representative. The Reimbursement Request summarizes expenses paid from the account since it was established or last reimbursed. The Request must also include the bank name, address, bank swift code and account number.
The Business Manager for International Programs gives the Reimbursement Request and the receipts to the Director of Education Abroad for review. The Director of Education Abroad (or designee) reviews the transactions listed on the Reimbursement Request and the attached receipts to assure that all transactions conform to the purpose and rules of the program. Any changes are noted on the Reimbursement Request, and it is given back to the Business Manager for International Programs along with the accompanying receipts.
The Business Manager for International Programs (or designee) prepares a memo from the Director of Education Abroad and the Financial Officer for International Programs to the Assistant Treasurer, requesting a wire transfer. The Business Manager (or designee) obtains the signature of the Director of Education Abroad for the request for wire transfer memo, then sends the memo, the Request for Reimbursement and attached receipts to the Financial Officer.
The Financial Officer (or designee) reviews the Reimbursement Request, receipts, and the request for wire transfer memo to assure that total reimbursements for the program are in accordance with the approved budget and that the receipts reasonably appear to represent business transactions conducive with University policies, controls and sound business practices. (If for either reason, the reimbursement must be adjusted, the request for wire transfer memo, the Reimbursement Request, and the receipts are returned to the Director of Education Abroad. The Director takes any necessary action with respect to the Authorized University Representative, notes any changes on the Reimbursement Request, and a new request for wire transfer memo is prepared for the adjusted reimbursement by the Business Manager for International Programs. If the program's budget has been exceeded, then the Financial Officer will discuss the situation with the Director and take appropriate action (likely, a Budget Amendment will be processed to adjust the program's budget).
If the Financial Officer review indicates everything is in order, the request for wire transfer memo is sent to the Assistant Treasurer. A copy of the request for wire transfer, the Request for Reimbursement, and the receipts are filed in International Programs Finance Office.
NOTE: If an International draft is preferred, then the procedure is similar as outlined under the establishing an operating account. The Business Manager prepares a "form on demand" version of the Special Request for Check charging the appropriate Education Abroad account. The areas of the form that require completion with a U.S. dollar amount must be left blank. The Director of Education Abroad signs the Special Request for Check and forwards it to the Financial Officer for approval who forwards it to Accounting Operations. Accounting Operations generate a international draft per the provisions of the "Processing Foreign Currency Drafts"' procedure.
If either the Director or Financial Officer determines that an expenditure was inappropriate, it shall be the responsibility of the Director to contact the Authorized University Representative and take whatever remedial action the Director determines is necessary commensurate with the severity and historical nature of the problem.
The Assistant Treasurer (or designee) notifies the Business Manager for International Programs (or designee) when the wire transfer is complete, if the reimbursement was done by wire.
The Business Manager for International Programs (or designee) prepares a Departmental Journal Voucher ( JVDP ). The charge is recorded against the appropriate education abroad budget. The Accounting Operations/bank fees are also charged against this budget and credits 00-001-21 UP, fund 92200, and the appropriate bank fund. The Departmental Journal Voucher is routed to the Financial Officer for approval.
The Business Manager (or designee) records the IBIS document number of the JVDP on the copy of the request for wire transfer memo. The copy of the request for wire transfer memo, the original Request for Reimbursement, and the original receipts are filled in the Finance Office for International Programs for 7 years.
When the bank statement and canceled checks arrive directly from the bank, the Financial Officer (or designee) compares them with the receipts. Any receipts that are not directly traceable to checks (cash transactions, for example) deserve closer examination. Checks for which receipts have not been forwarded also indicate a problem.
The sequence of check numbers is accounted for and checks are reviewed. Any missing check numbers or questionable checks are referred to the Director of Education Abroad for resolution.
The bank statement is also reviewed. Deposits that result from earlier reimbursements are confirmed. Any unexplained deposits are referred to the Director.
The Finance Office for International Programs retains and files the bank statements and reconciliations for a period of seven years.
The Director of Education Abroad requests an explanation of all questionable transactions from the Authorized University Representative. When the explanation arrives, it is reviewed by the Director and the Financial Officer and any appropriate action is initiated. No reimbursement is to be processed until all questions are resolved. Documentation of questionable transactions and the explanations are retained with the reconciled bank statements.
At the request of the Corporate Controller or Assistant Treasurer to close the bank account, or when either the Director of Education or the Authorized University Representative wish to close the account, the Authorized University Representative returns the final balance to the Business Manager for International Programs as the last check drawn on the account, made payable to "The Pennsylvania State University." Either the final bank statement must evidence the account closure, or separate evidence must be provided indicating the bank considers the account to be closed.
When the check arrives, the Business Manager for International Programs immediately endorses it "For Deposit Only - The Pennsylvania State University" and notates it with budget number 02- 031-XX XX (as applicable). The Business Manager (or designee) pursues conversion from the foreign currency through the Bursar's office according to the instructions in Procedure CR2005 , "Depositing Cash Revenues".
As part of that conversion process, the Business Manager (or designee) will receive notice from the Bursar's office that the check has been converted, and must prepare a Report of Cash Receipts ( ROCR ).
The ROCR shall credit the 0207 advance account. The name of the Penn State employee who held the long term advance will be indicated in the details section of the ROCR, and the advance will be closed out. Because of exchange rate fluctuations, the U.S. dollar equivalent amount may not equal the amount of the recorded outstanding advance. Any variance between the advance amount and the US dollars from the conversion will be charged or credited (as appropriate to budget 02-031-XX XX (as applicable) under the appropriate miscellaneous fund number for that fiscal year.
The Financial Officer shall notify the Corporate Controller in writing or by email of the closure of the foreign account.
When the final bank statement arrives from the Authorized University Representative, the Financial Office (or designee) confirms that the final check was for the proper amount and that the account is closed.
The final bank statement is reviewed and retained for seven years as described earlier for the financial officer.
Either the request for wire transfer or an International draft process for issuing the beginning balance, or the ROCR process for closing an account, shall be used for increasing or decreasing operating accounts, in accordance with the guidelines specified in "Reimbursement of Operating Accounts" and "Closing Foreign Operating Accounts" respectively.
Since the Financial Officer is significantly involved with reconciliations on a continual basis, there is no need for additional reviews. If as a result of such reconciliations, the Financial Officer finds that there is anything questionable about the use of monies or the administration of the operating account, it is his/her responsibility to contact the Director of Education Abroad to ascertain and resolve the situation. If satisfactory explanation or resolution cannot be found, then Auditing, the Assistant Controller/Director of Financial Officers and the Corporate Controller must be notified for guidance and assistance.
The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area, as well as performing an annual audit that is submitted to the Assistant Controller.
Record retention must be managed in accordance with Policy AD35 - University Archives and Records Management , and records schedules approved by the Records Management Advisory Committee, Office of General Counsel, and Office of the President. These retention requirements are the University's retention criteria, either derived or based upon federal, state, and local statute or regulations, industry standards, and business needs. Retention beyond recommended time periods require justifiable reasons and warrant review by the Records Management Officer or designee. All documents must be maintained in such a manner so as to provide ease of access for review, and to provide a suitable audit trail for all transactions.
- Documents subject to a Legal Hold (see AD35, Legal Hold). A legal hold will remain in effect until it is released in writing by the Office of General Counsel.
- Documents under audit or review, either internally or externally. The retention period extends until released by the Corporate Controller's Office. The Financial Officer will be notified regarding any accounts which are under audit; the Financial Officer will be responsible for contacting the department.
Additional questions may be directed to the University Archivist or the Records Management Officer.
For questions, additional detail, or to request changes to this procedure, please contact the Vice Provost for International Programs
- Policy AD22 - Health Insurance Portability and Accountability Act
- Policy AD35 - University Archives and Records Management
- Blue/White Shredding Program
Date Approved: 12/19/2007
Most recent changes:
- Revision 3 - dated 9/11/2007 - renumbered from IS to IP; updated to reflect current operations
Revision History (and effective dates:)
- Revision 2 - dated 9/4/1997 - revised to reflect current operations
- Revision 1 - dated 8/16/1994
- Original - dated 3/13/1981