6.16 Component Unit Affiliates

Policy Information

Purpose and Summary

The University of Arizona (the University) recognizes the importance of relationships with Component Unit Affiliates in supporting the success of the University. The University desires to preserve the separate and independent status of Component Unit Affiliates, and to ensure that the University and Component Unit Affiliates conduct their business in accordance with all applicable University and Arizona Board of Regents policies.

The Arizona Board of Regents (ABOR) adopted Policy 1-125 Oversight of University Relationships with Component Unit Affiliates. Under this policy, each of the state universities must adopt a policy, consistent with ABOR policy, regarding the establishment and oversight of Component Unit Affiliates.

Source

Arizona Board of Regents Policy, including but not limited to 1-125 Oversight of University Relationships with Component Unit Affiliates
Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity, as amended by Statement Nos. 39 and 61 and any other amendments that become effective after adoption of the policy

Scope

This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.

This policy applies to any organization that meets the definition of a “Component Unit Affiliate” of the University under Arizona Board of Regents Policy 1-125.

Definitions

1. Component Unit Affiliate: As defined by ABOR policy 1-125, any organization or entity that is legally separate and independent from the University that:
   1. Is affiliated with the University through a written agreement, and
   2. Is a component unit for financial reporting purposes as defined by Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity, as amended.
2. Master Agreement: The comprehensive services or affiliation agreement defining the ongoing relationship between the University and the affiliated entity.

Policy

University Agreements with Component Unit Affiliates

1. The relationship between the University and each Component Unit Affiliate must be memorialized through a written Master Agreement that is reviewed by the Office of General Counsel and the President of the University or President’s designee.
2. Any amendment to a Master Agreement with a Component Unit Affiliate must be reviewed by Office of General Counsel and the President of the University or President’s designee.
3. The University will submit all new Master Agreements and amendments to previously submitted Master Agreements to the ABOR board chair, executive director, and counsel.

University Oversight of Component Unit Affiliates

4. The Senior Vice President for Business Affairs and Chief Financial Officer will serve as the senior University official responsible for oversight of University relationships with Component Unit Affiliates and will facilitate communications among ABOR, the University, and the Component Unit Affiliates, as requested.
5. The University will conduct a periodic review of its relationship with each Component Unit Affiliate at least once every five years to determine whether the Master Agreement reflects the needs of the University and is compliant with ABOR policy and applicable law.

University Reports on Component Unit Affiliates

6. The University will provide an annual report on its Component Unit Affiliates to the ABOR University Governance and Operations Committee with the information required by ABOR policy.
7. The University will communicate to ABOR regarding any reasonably suspected material breach of an agreement with a Component Unit Affiliate or any concerns that might threaten or challenge the affiliation.
8. Financial Services will assist with collecting information for the annual report on Component Unit Affiliates using the format and schedule determined by ABOR, and affiliated organizations must cooperate and provide any information or documentation that is required for the annual report under applicable law and policy.

Transactions Between the University, University Employees, and Component Unit Affiliates

9. All transactions between the University and a Component Unit Affiliate must meet the normal tests for ordinary business transactions, including proper documentation and approvals in accordance with existing University policies and procedures.
10. Gifts or payments made to the University shall not be transferred to a Component Unit Affiliate unless accompanying documents demonstrate that the Component Unit Affiliate is the intended recipient.
11. University employees may not receive or accept supplemental compensation, bonuses, or incentive payments from a Component Unit Affiliate, except with the prior approval of the President of the University or the President’s designee.
12. University employees may not serve as an officer of a Component Unit Affiliate without approval of the President of the University or the President’s designee.

Establishing an Affiliated Entity

13. Any individual, department or unit who creates or establishes an organization that is or will be affiliated with the University, or any individual, department or unit who seeks to have the University enter into an affiliation agreement with a separate organization must notify Financial Services and the Office of General Counsel.
14. Financial Services may request copies of any and all documentation related to the proposed affiliated entity, and will determine if the affiliated organization is considered a Component Unit Affiliate under applicable law and policy.

Frequently Asked Questions

1. Can the University enter into affiliation arrangements with outside organizations that are not considered Component Unit Affiliates?
   This policy does not restrict the University from entering into affiliation arrangements with outside organizations that are not considered Component Unit Affiliates. However, the Office of General Counsel should be contacted before entering into any affiliation agreement.  

Related Information

FSM 8.12. Gifts
Arizona Board of Regents Policy Manual
Business Purpose Guide  
Governmental Accounting Standards Board (GASB)

* Please note that sections titled Related Information are provided solely for the convenience of users and are not part of the official University policy.