|Policy Number: 9.15||Effective Date: 8/5/1998|
|Responsible Unit: Financial Management||Last Revised Date: 7/2/2021|
|Phone: 520-621-9097||Email: email@example.com|
Purpose and Summary
This policy and procedure outline the requirements to establish, monitor, replenish and settle an Operational Advance. Operational Advances are provided to authorized University employees, graduate students, or Designated Campus Colleagues (DCCs) with Affiliate or Associate status working under the supervision of an Authorized Supervisor for expenses such as group travel, field research, payments to research subjects in approved psychological/medical experiments, and various other circumstances where it is not practical to use the campus purchasing and payment system. The Operational Advance may not be used for individual travel purposes. In accordance with 14.11 Travel Funding, Travel Advances for individual approved trips are issued to the traveler.
University Policy, including but not limited to Misuse of University Assets Policy Number 420-0
Internal Revenue Code
This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.
- Approved Recipient. A University employee, graduate student or Designated Campus Colleague with Affiliate or Associate status who requests and receives an Operational Advance to conduct research or business benefitting the University.
- Authorized Supervisor. A Benefit's Eligible (0.50 FTE or greater) managerial-level University Staff member or full-time faculty member who is employed by the University and who has official responsibilities to supervise the work of an Approved Recipient who requests an Operational Advance to conduct research or business benefitting the University.
- Operational Advance: A cash advance used to provide operating funds to an Approved Recipient for business or research expenses where it is not practical to use the campus purchasing and payment system (i.e. payee is not an established vendor in UAccess Financials) nor for the individual to pay and seek reimbursement. Such advances are designed to assist the Approved Recipient in those cases where exact amounts and types of expenditures cannot be predicted, and where a local disbursing function is essential to the project, as in the case of a remote location.
- Operational Advance Custodial Agreement: An agreement in which the Approved Recipient and Authorized Supervisor acknowledge business responsibility for the monitoring and the settlement of the advance, indicating their intent to comply with 9.15 Operational Advance Policy as well as Misuse of University Assets Policy Number 420-0.
- Operational Advance Expenditure Record: A record of all expenditures from an Operational Advance, using the Operational Advance Expenditure Record or an equivalent expense summary, together with supporting documentation.
- Operational Advance Replenishment: The process of submitting receipts and obtaining additional funds, up to the original amount of the Operational Advance. Replenishment does not settle an advance. For final settlement of the advance, see definition for "Operational Advance Settlement" below.
- Operational Advance Request Form: A form signed by the Approved Recipient to obtain Authorized Supervisor and department leadership approval prior to completing the Operational Advance Custodial Agreement. This form ensures the appropriate senior leadership of the department is aware of and accepts the financial risk of issuing an operational advance.
- Operational Advance Settlement: The process of submitting final receipts and/or returning any remaining cash to completely close out the Operational Advance.
- Period of Use: For Sponsored agreements, the dates within which the Operational Advance will be used. The period of use must adhere to the Sponsored agreement's period of performance and should be for the shortest duration possible.
- Prepaid Cards: A card preloaded with funds that is distributed to an individual in exchange for participating in research. Examples include: gift cards/certificates, vouchers, and e-Cards. Prepaid cards should be treated as cash equivalents and proper security protocol should be followed.
- Receipts: Original documentation including itemized amounts and payees, to substantiate expenditures and acknowledge that something has been paid. For group travel, refer to Policy 14.16 Preparing a Travel Expense Report.
- Human Subject Participant: For more information on Human Subject Participants see Research, Discovery, & Innovation, Responsible Conduct of Research Program, Human Subjects Protection Program.
- Field Research off University Property: Research that takes place in a facility or location that is not owned or leased by the University.
- An individual may not receive an additional Operational Advance if the individual is already an Approved Recipient with an outstanding Operational Advance that is past due or that exceeds $10,000. Exceptions to the $10,000 maximum rule require a fully documented interim reconciliation of the advanced funds through the date of the request with no negative findings or written approval of the Authorized Supervisor.
- Operational Advance funds may be used only for the purposes for which they are requested, and cannot be used for expenditures which are prohibited by University of Arizona policy or a sponsor's funding agreement.
- Central Administration may decline to issue an Operational Advance if a determination is made that it would not be in the best interest of the University.
- Any request for an Operational Advance must have Authorized Supervisor and department leadership approval, and the Authorized Supervisor must sign the Custodial Agreement.
- Operational Advances shall be issued for the shortest duration necessary but no more than one year. Exceptions may be made for Operational Advances on Sponsored agreements. For Sponsored agreements, all receipts and supporting documentation must adhere to the sponsor's period of performance.
- The use of Operational Advance funds is subject to Federal, state, sponsor, and/or University audit. The Approved Recipient and the Authorized Supervisor are responsible for the proper disbursement of the funds, receipting, and record keeping according to sponsor and University requirements.
- At the time of Operational Advance Settlement, any expenditure that is disallowed by the sponsor will be charged to the administering department's unrestricted funds.
- Approved Recipients will be required to sign the appropriate Custodial Agreement before receiving the funds, will have fiduciary and professional responsibility for the proper expenditure and receipting of the funds, and may be subject to sanctions for violating University policy in the use of the funds, including legal collection of the debt.
- Approved Recipients and Authorized Supervisors may be subject to University discipline, graduate students may be subject to discipline under the Student Code of Conduct, and Designated Campus Colleagues may lose their status for violations of this or other University policies related use of Operational Advance funds.
- Operational Advance funds may be used to purchase Prepaid Cards for distribution to participants in University research. Prepaid Cards should be purchased from an established business that will honor the card for a specified period of time. Prepaid Cards should contain no additional fees or costs to the participant. Prepaid Cards must be purchased in small increments based on anticipated usage/length of study. Any Prepaid Cards remaining after completion of the research study become the property of the Custodial Agreement Approved Recipient and they may not be used to settle the advance.
- Disbursements to research subjects of cash, cash equivalents, or Prepaid Cards are subject to the following:
- If a subject receives less than or equal to $50 in a calendar year, the University is not required to obtain a Social Security Number and address for tax purposes.
- If a subject receives more than $50 in a calendar year, whether in single or multiple disbursements, the University MUST obtain a Social Security Number and address and provide this information to Central Administration for potential tax reporting purposes.
- Payments to individuals exceeding $600 per year require annual 1099 reporting.
- Payments to nonresident aliens must adhere to policy 9.16 Payments to Nonresident Aliens.
- All expenditures must be logged on an Operational Advance Expenditure Record, or equivalent form, with appropriate supporting documentation.
- Replenishments of Operational Advances do not extend the settlement date of the Operational Advance.
- The Operational Advance must be settled in full by the agreed upon settlement date stated on the Custodial Agreement.
- If the advance is not settled by the due date on the Custodial Agreement, the University may initiate collection action.
- In the event the Approved Recipient responsible for the Operational Advance leaves the University without accounting for the advance, the department associated with the funding account assumes responsibility for the funds, and the University may pursue remedies against the Approved Recipient.
- If receipts have not been submitted, or repayment has not occurred within 120 days following the Custodial Agreement settlement date, per the Internal Revenue Service (IRS) (Treas. Reg. §1.162-2 and §1.162-17), the outstanding amount will be reported as taxable income to the Approved Recipient and will be reported on the individual's Form W-2 or 1099-MISC, as applicable.
- The Approved Recipient must sign an Operational Advance Request Form. The College/Department Business Office or the Recipient will utilize Adobe Sign Workflow to document information about the advance and obtain the Recipient's signature and Authorized Supervisor and department leadership approval.
- In order to document the amount needed, it is recommended that the Approved Recipient provide a schedule of planned expenditures. Depending on the amount and nature of the advance, Central Administration has the right to request a budget for the planned expenditures. The schedule will need to be attached in the "Files" section of Adobe Sign prior to routing the form for completion and signatures.
- For Sponsored agreements, the settlement date cannot be greater than 30 days past the end date of the Period of Use. The settlement date also cannot be greater than 30 days past the term date of the project.
- The Business Office creates and saves a Disbursement Voucher (DV) to the recipient in UAccess Financials utilizing the appropriate account and object code 8310 and attaches the approved Operational Advance Request Form in the Notes and Attachments tab.
- The Payee Name on the DV must agree with the recipient's name on the Operational Advance Request Form and Custodial Agreement.
- The due date on the DV must be no more than 30 days prior to the date funds are needed.
- For Sponsored agreements, the Period of Use should be listed in the Explanation Field of the DV.
- The Business Office completes the appropriate Operational Advance Custodial Agreement, referencing the DV and account number, and ensuring the Recipient’s name, ID, amount and settlement date agree with the Operational Advance Request Form, and utilizes Adobe Sign Workflow to obtain the required signatures of the Approved Recipient and Authorized Supervisor
- Once all signatures have been obtained, the Business Office attaches the final signed Custodial Agreement, as provided by Adobe Sign with the "Final Audit Report" included, in the Notes and Attachments tab and then submits the DV for approval.
- Operational Advances used for research projects that have human subjects/subject pay must have an IRB (Institutional Review Board) approval form attached to the DV before the DV can be approved.
- Central Administration reviews the DV, the routed Operational Advance Request Form, and Custodial Agreement, and any attachments. At that time, if appropriate, Central Administration will approve the DV for final processing and release of funds.
- Employees receiving Operational Advance funds may receive funds via a physical check or direct deposit (ACH) into their designated banking account identified in UAccess Employee. The direct deposit will appear in the Approved Recipient's bank account within 48 hours after the DV is in final status in UAccess Financials. Please contact Accounts Payable should the Approved Recipient require the funds to be wire transferred or deposited into a different personal bank account. Note: If payment is preferred by physical check, the Approved Recipient will be contacted by Accounts Payable when the check is available for pick-up. The Approved Recipient must pick up the check in person at the Accounts Payable office and sign for the check.
- The use of Operational Advance funds should be handled with an awareness of the UAccess Financials account balance prior to and during the period in which the funds are being spent.
Utilizing Adobe Sign Workflow
- Select the appropriate Operational Advance form to initiate the Adobe Sign Workflow.
- In the fields displayed in the workflow, enter a valid University email address for each of the signers. The email addresses MUST be formatted as "@email.arizona.edu".
- If including a schedule of planned expenditures with the Operational Advance Request Form, attached it in the "Files" section of Adobe Sign prior to continuing.
- Click "Send" and complete prefill fields assigned to the sender.
- Review the information on the form for accuracy and click "Send."
- Signers will receive an email notification that their signature is requested. After clicking "Review and Sign" from the email, the signer will be prompted to login to Adobe Sign using their University email address in the "@email.arizona.edu" format, and authenticate using NetID. After authenticating, the signer can complete assigned fields and sign.
- Once the form is complete, the final completed agreement will forward to the signers' University emails.
Maintaining Receipts and Required Documentation
- The Approved Recipient completes the Operational Advance Expenditure Record or an equivalent expense summary form as funds are disbursed and collects all original receipts.
- Payments to individuals, for example subject pay, require each payee's name legibly written or typed. If the individual is paid in cash, or cash equivalent (e.g. prepaid card) instead of by check, the subject must sign to acknowledge receipt.
- If a subject receives more than $50 in a calendar year, whether in a single or multiple disbursements, the University MUST also obtain a Social Security Number and address.
- Payments to nonresident aliens are governed by policy 9.16 Payments to Nonresident Aliens, which contains detailed information about payments allowed and documentation required. Refer to policy 9.16 before payment is made to or on behalf of a nonresident alien as some visa types do not allow payments. For additional details on specific situations please contact Tax Services.
- If the research project is a confidential study, it is not necessary to identify the human subjects by name or SSN. However, an NIH Certificate of Confidentiality or other substantiating document must be provided and the total University wide payment to any individual participating in a confidential study must be less than $600 in a calendar year. The principal investigator should maintain the disbursement record on file and make it available upon request.
- To minimize cash on hand for ongoing activities such as subject pay for research projects, the Approved Recipient should request the minimum possible Operational Advance, and periodically replenish the advance by submitting receipts and receiving additional funds, up to the amount of the approved Operational Advance.
- It is best practice and strongly encouraged to partially settle or replenish advances no more than every 120 days from disbursement activity. For Operational Advances used for subject payments, partial settlements or replenishments by calendar year-end are necessary to assist with accurate 1099 reporting.
- In order to replenish the Operational Advance, the Approved Recipient submits receipts with the Operational Advance Expenditure Record or equivalent to the College/Department Business Office. The Business Office prepares a DV for the amount of the receipts debiting (using the "To" lines) the appropriate account(s) and expenditure object code(s). Include the original DV number for the advance in the Notes and Attachments and submit all documents to Accounts Payable. Accounts Payable then provides additional funds, up to the amount of the approved Operational Advance, to the Approved Recipient .
- Replenishing does not reduce the amount of the original Operational Advance. To reduce the amount of the original Operational Advance, see Settling Advances below.
- The Approved Recipient completes the Operational Advance Expenditure Record or an equivalent expense summary form, organizes and attaches all original itemized receipts substantiating the expenditures in chronological order by type of expenditure then forwards to the College/Department Business Office.
- Partial settlements prior to the due date of the Custodial Agreement are allowed. It is best practice to partially settle advances no less than every 120 days from disbursement activity. For Operational Advances used for subject payments, partial settlements by calendar year-end are necessary to assist with accurate 1099 reporting.
- To process a partial settlement, the Business Office prepares a Distribution of Income and Expense (DI) for the amount of the receipts being settled. See the next step for how to process a settlement in UAccess Financials. Partial settlements reduce the amount of the original advance. Partial settlements can also be completed with a Cash Receipt in the event it is determined a portion of the funds on hand will not be used.
- The department prepares a DI for the actual expenses incurred. The Organizational Document Number field must reference the original DV number for the advance. The DI should credit the original account object code 8310 (in the "From" line) and debit the appropriate account(s) and expenditure object code(s) (in the "To" line). The Operational Advance Expenditure Record or equivalent summary form and receipts must be forwarded to Accounts Payable with the original DV cover sheet.
- If a balance is due back to the University, do not send cash. The Approved Recipient should submit a check or money order made payable to the University of Arizona. Make the deposit through the Bursar's Office using a Cash Receipt (CR) and the original account and object code 8310. The Organization Document Number field must reference the original DV number for the advance. Refer to 8.10 Cash Receiving.
- If the Approved Recipient spends more than the Original Advance, receipts can be turned in as one package with the DI and a related DV for reimbursement of the amount spent in excess of the advance.
Frequently Asked Questions
- Can an Operational Advance be issued on more than one account?
No, only one account number is permitted for each Operational Advance. If it is necessary to move expenses to another account, the department will need to process the appropriate document in UAccess Financials; refer to the GEC versus DI Guide for guidance.
- If an advance is not settled by the due date on the Custodial Agreement or the Approved Recipient left the University without accounting for the advance and department attempts to settle the advance are unsuccessful, who should the department contact to initiate collection action?
The department should contact the Office of the General Counsel.
- Is payroll deduction from the Approved Recipient an option for settling an advance?
Payroll deduction requires written consent from the Approved Recipient.
- Can an Approved Recipient obtain an extension on the settlement date?
No, the settlement date cannot be extended. The Operational Advance must be settled timely to avoid collection action and taxation. If funds are required past the settlement date, a new Operational Advance must be requested.
- Are copies of the signed Operational Advance Request Form and the Custodial Agreement required to be sent to Accounts Payable?
When utilizing Adobe Sign workflow for electronic routing, copies of the signed Operational Advance Request Form and Custodial Agreement will be attached by the Business Office to the DV in UAccess Financials prior to routing to Accounts Payable. The digital copies of the completed forms attached to the DV will be the official copy for record retention purposes.
- Will a copy of the signed Custodial Agreement be marked "Settled" and returned to me upon final settlement?
No. Evidence of settlement is retained in UAccess Financials and all documents will be retained electronically in accordance with University record retention policies.
- Will the DI or CR be disapproved if the original DV number of the advance is not included in the Organizational Document Number field?
No, the DI or CR will not be disapproved. However, it is important to reference the original DV number in this field when settling the operational advance and when depositing funds due back to the University in order to help expedite review.
- Can I view the forms online after they are routed through Adobe Sign?
Yes. If you are the initiator, the completed form can be viewed in Adobe Sign via the Manage tab.
- Can I send a reminder to the approver if they have not approved within 3 - 5 business days?
Yes. Login to Adobe Sign, navigate to the Manage tab and locate the pending form in your action list. On the screen panel on the right, use the Remind tab to send an official reminder to the approver.
- Can I cancel a routed form?
Yes. Login to Adobe Sign, navigate to the Manage tab and locate the pending form. On the screen panel to the right, click Cancel to discontinue the routing to the individual. Initiate a new workflow to route to a new approver or delegate.
- Is VPN access required for users to approve?
No. Approvers are able to electronically sign/approve via a computer, tablet, or cell phone device without VPN access.
- Can an approver disapprove a request?
Yes. The approver is encouraged to have a conversation with the requestor to discuss and notify the business office to log into Adobe Sign to cancel the routing.
- Is it permissible to delegate approval of the Operational Advance Request Form or the Operational Advance Custodial Agreement?
The Authorized Recipient and Authorized Supervisor must sign the Operational Advance Request Form and Custodial Agreement in order to document acknowledgement and acceptance of the responsibility and liability for the recipient of funds and compliance with applicable policies and procedures. Departmental leadership may delegate signature authority for the Operational Advance Request Form provided the authorized signer has sufficient information and authority to accept the financial risk on behalf of the department.
Designated Campus Colleagues
Operational Advance Forms
Operational Advance Tutorial and Reference
Misuse of University Assets Policy Number 420-0
Policy 9.10 Requisitions/Reimbursements
9.16 Payments to Nonresident Aliens
Policy 14.00 Travel
Bursar's Office – Banking Services
Research, Discovery & Innovation – Research Gateway
EDGE Learning - UAccess Financials Reference Guides, Section 2 - Introduction
* Please note that sections titled Frequently Asked Questions and Related Information are provided solely for the convenience of users and are not part of the official University policy.