1101 Guiding Principles for University Operations

Policy Sections

1101.1 Business and Internal Control Environment Structure

1101.2 Budget Development and Oversight

1101.3 Financial Management

1101.4 Requestors and Preparers

1101.5 Approval Authority for Operational Transactions

1101.6 Segregation of Duties

1101.7 Accountability

1101.8 Electronic Operational Systems

1101.9 Record Retention

1101.10 Violations

This policy applies to all Yale Community Members participating in University Operations, as defined in Definitions, below.  It establishes the fundamental principles for University Operations at Yale, creating the framework for a sound and ethical business and Internal Control environment.

Yale Community Members participating in University Operations are expected to conduct their activities with integrity, in accordance with the University’s sound and ethical business and Internal Control environment.  Under the leadership of Yale’s officers, University leaders are responsible for ensuring existence of the following:

• Documented and published policies and procedures;
• Appropriate organizational structure, role assignments, and hiring practices;
• Community Members properly trained and held accountable for their assigned duties (see Policy 1010 Training and Other Requirements); and
• Mechanisms to ensure Community Member compliance with policies.

Every Yale Community Member is responsible for adhering to stated University policy.

In support of its mission, Yale is entrusted with funds from numerous sources and conducts complex University Operations.  Yale is committed to ensuring that all Yale Community Members utilize University funds appropriately and exercise their operational responsibilities in accordance with ethical business practices and in compliance with applicable laws, regulations, policies, and other relevant requirements.  This policy establishes the University’s expectations of its Community Members with respect to operational responsibilities.

Approval Authority

Permission granted or delegated to approve University operational transactions.  An approval attests to the appropriateness of the transaction within the University’s mission objectives.  Approval Authority is specific to transaction type (e.g., financial, administrative, etc.).  It is distinct from Signature Authority (discussed in Policy 1104 University Signature Authority).

Approver

A Yale individual granted or delegated Approval Authority.  An Approver’s responsibilities are specific to the transaction type being approved.

Central Process Leaders (“Central Offices”)

The centralized Yale offices responsible for the policies and/or processes under their authority.  Examples of Central Offices include, but are not limited to, Finance, Human Resources, Information Technology Services, and Office of Research Administration.

Institutional Financial Oversight Supervisor

A University leader who, by virtue of their position, is responsible for oversight of the financial operations of the respective schools, departments, units, or other organizational units under their authority.  Institutional Financial Oversight Supervisors include the Senior Vice President for Operations, the Vice President and Chief Financial Officer, the Associate Vice President for Academic Business Operations and Strategy, and the Deputy Dean for Finance and Administration at Yale School of Medicine.

Internal Control

The process, effected by Yale’s leadership, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.

• Operations Objectives: Effectiveness and efficiency of operations and safeguarding of assets.
• Reporting Objectives: Reliability, timeliness, and transparency of internal and external financial and non-financial reporting.
• Compliance Objectives: Adherence to laws and regulations.

Yale’s Internal Control environment is the set of policies, procedures, standards, processes, and structures that provide the basis for carrying out Internal Control across Yale’s operations and that establish clear roles and responsibilities.  It reflects the overall attitude, awareness, and actions of the University’s Community Members.

Preparer

A Yale individual who creates an operational transaction.  A Preparer may either be the same individual as the Requestor or act at the direction of the Requestor.

Requestor

A Yale individual who identifies a need for the initiation of an operational transaction and requests such initiation.  Requestors are also known as Initiators.  A Requestor may either be the same individual as the Preparer or direct another individual to act as the Preparer.

Regional Support Centers

Yale offices providing additional operational support to schools, departments, units, or other organizational units.  Regional Support Centers supplement, but do not replace, Departmental Business Offices.  Examples of Regional Support Centers include, but are not limited to, Yale School of Medicine Finance Office and Faculty Research Management Services.

School and Departmental Administrative/Business Offices (“Departmental Business Offices”)

The distributed Yale offices providing operational support to specific schools, departments, units, or other organizational units.  Departmental Business Offices operate under the authority of their lead administrator, whose authority emanates from their dual reporting lines: 1) their respective Dean, Chair, Director, or equivalent-ranking employee; and 2) their respective supervisor for purposes of institutional financial oversight (i.e., Senior Vice President for Operations, Vice President and Chief Financial Officer, or Associate Vice President for Academic Business Operations and Strategy).

University Operations

Activities conducted in furtherance of the administrative, business, financial, and operational functions of the University.

Yale Community Member

An individual who, by virtue of their affiliation with the University, is subject to the policies of Yale University.  Community Members include faculty, staff, and students.  Community Members also include other individuals (e.g., alumni, affiliates, sponsored identities, suppliers) under certain circumstances when the individual’s specific activities or engagements with Yale subject them to some or all of Yale’s policies.

Yale Community Members participating in University Operations are expected to conduct their activities with integrity, in accordance with the University’s sound and ethical business and Internal Control environment.  Every Yale Community Member is responsible for adhering to stated University policy, as well as the Yale University Institutional Standards of Conduct.

Yale’s leadership is responsible for establishing and reinforcing expectations regarding the importance of Internal Control, including expected standards of conduct.  Yale’s leadership structure begins with the Board of Trustees (a.k.a. the “Yale Corporation”) and cascades down through the President, Provost, University Cabinet, Senior Vice Presidents, Deans, Vice Presidents, and other senior faculty and staff.

Central Offices, Departmental Business Offices, and Regional Support Centers all have roles (see Roles & Responsibilities, below) in establishing and supporting the University’s operational framework, which encompasses a sound and ethical business and Internal Control environment.  These offices, as well as individuals in management positions throughout the University (including both faculty and staff) share responsibility for demonstrating leadership behavior that promotes Internal Control and individual accountability.  Expectations of these offices, as well as individuals in management positions, include, but are not limited to, the following:

• Promote an environment that demonstrates and reinforces ethical values and business practices and compliance with the Yale University Institutional Standards of Conduct;
• Promote an environment consistent with Yale’s mission and its commitment to a inclusive, positive, and respectful culture;   
• Communicate to employees that Yale policies and procedures are important and must be followed;
• Communicate training requirements to employees so they are fully aware of their responsibilities, including compliance with Internal Controls;
• Communicate to employees that fraud, conflicts of interest, waste and abuse, and non-compliance will not be tolerated; and
• Monitor the Internal Control processes under their authority on an ongoing basis. 

Reporting Suspected Conduct Violations

Yale Community Members are strongly encouraged to report suspected material violations of University policies and procedures, laws, regulations, sponsor requirements, donor specifications, or other applicable documentation.  Yale Community Members should report suspected violations to both the Director of University Auditing and either a supervisor (in any applicable reporting line), Dean, the Controller, Human Resources, or the Office of the Senior Vice President and General Counsel, depending upon the nature of the violation.  In the alternative, Yale Community Members may report suspected violations anonymously through the Yale University Hotline.  Whether a suspected violation is reported anonymously or otherwise, the University prohibits retaliation against employees who in good faith report possible violations.

On an annual basis, Deans, Chairs, Directors, and equivalent-ranking employees (or their designees) must prepare a budget proposal for their respective schools, departments, units, or other organizational units.  Such budget proposals must be reviewed and approved by the Provost (or designee) and in accordance with the University’s By-Laws.

The expenditure of University funds must be consistent with the approved annual budget.

All funds received by Yale or Yale Community Members, regardless of funding source, are the property of the University and must be deposited in an authorized University bank account and recorded in the University’s financial system (see Policy 2801 Depositing and Recording University Funds).  All assets acquired using University funds, as well as donated assets, are property of the University.  University funds and assets must be utilized consistently with the University’s sound and ethical business and Internal Control environment and should be used only for instructional, research, or other University mission-related purposes.

Any expenditure of University funds must only be made by an individual authorized to expend such funds.  Expenditures must be made in accordance with University policies and procedures, laws, regulations, sponsor requirements, donor specifications, and other applicable documentation.

Only the central Yale Finance office is permitted to, with appropriate institutional and Yale Corporation approval, borrow funds on behalf of the University.

Yale Requestors identify a need for the initiation of an operational transaction and request such initiation based upon the business needs of their role(s).  Requestors, upon requesting initiation of an operational transaction, are responsible for the following:

• Confirming, with personal knowledge, that the transaction complies with University policies and procedures, as well as any applicable laws, regulations, sponsor requirements, donor specifications, and other applicable documentation;
• If the transaction is financial, confirming availability of funds; and
• Supplying all necessary information and/or documentation to complete the transaction, either directly or to the Preparer acting on their behalf.

Primary Requestors (e.g., Principal Investigators) may exercise discretion and delegate authority to request the initiation of operational transactions to other appropriate individuals (e.g., trained laboratory personnel).  Secondary Requestors (i.e., the individual(s) receiving a delegation) are responsible for the items bulleted above, but the primary Requestor remains ultimately accountable for the initiated operational transactions.  Note: If secondary Requestors are unable to personally adhere to the items bulleted above, they are responsible for consulting with their Departmental Business Office to obtain the necessary information.

Yale Preparers create operational transactions, either as the Requestor or at the direction of a Requestor.  Preparers are responsible for providing (and obtaining from the Requestor, as needed) all necessary information to complete operational transactions and verifying that transactions are complete.  Preparers, unless they are also the Requestor, are not responsible for the items bulleted above.

Only Yale employees who have been granted Approval Authority in their position, or who have been properly delegated Approval Authority, may approve operational transactions.  Approval Authority is distinct from Signature Authority, which authorizes specific individuals to sign instruments, contracts, receipts, or other documents with external parties that obligate the University (see Policy 1104 University Signature Authority).  Individuals with Approval Authority only must not enter into agreements with external parties, as that is the function of Signature Authority.

Individuals with Approval Authority may exercise discretion and delegate Approval Authority to other appropriate individuals, although the original individuals with Approval Authority remain accountable.  All delegations of Approval Authority must be documented, either through a Yale system electronically or in writing.  Approval Authority granted via an electronic system (e.g., Workday) need not be separately documented or otherwise maintained.

Reviews and approvals of operational transactions must be performed in accordance with the processes and requirements detailed in Procedure 1101 PR.06 Approval Authority.

Adequate segregation of duties is critical to an effective internal control environment.  Segregation of duties provides necessary checks and balances to deter fraud, detect errors, and prevent concealment of irregularities.  The foundational principle is that no employee or group of employees should be in a position to perform all key functions of a transaction or event.  Combinations of two or more of the following functions are considered incompatible duties and must be segregated:

• Initiating/requesting;
• Asset custody;
• Accounting/reconciling; and
• Approval.

To achieve appropriate segregation of duties, no one person should perform any of the following combinations of tasks for a transaction:

• Request/prepare transactions and reconcile balances;
• Order, approve, and receive goods;
• Handle cash and verify deposits;
• Request/prepare and approve the same transaction;
• Request/prepare or approve Supplier Invoice Requests and have the check returned to them; or
• Handle assets and reconcile perpetual records to physical counts.

If these functions cannot be separated, prior approval for an alternative strategy is required (see Special Situations / Exceptions, below).

Yale Community Members participating in University Operations are expected to perform their activities with integrity, in accordance with the University’s sound and ethical business and Internal Control environment.  Yale Community Members are accountable for the role(s) they perform within University Operations, which means they accept responsibility for their actions and are held to the applicable standard(s).  Breaches of this accountability are subject to disciplinary action, as discussed in Section 1101.10.

Yale utilizes electronic operational systems (e.g., financial, procurement, human resources).  Many operational transactions are processed through these systems.  Operational transactions processed through these systems carry the same requirements as all other operational transactions.

Access to these systems and review of that access is governed by Policy 1601 Information Access and Security and its related procedures.  Only those Yale Community Members properly authorized to access these systems may execute operational transactions within the systems.

Records created and/or utilized for University Operations are subject to retention and destruction requirements that vary based on the type and purpose of the record.  Yale Community Members must adhere to the requirements set forth in the University’s Record Retention Schedule.

Yale Community Members in violation of this or other University policies are subject to disciplinary action in accordance with their affiliation to Yale.  Employees are subject to disciplinary action up to and including termination of employment.

Requests for exceptions to this policy require prior approval by the Controller’s Office, in consultation with the Provost’s Office, General Counsel, or an Officer of the Yale Corporation, as appropriate.

Approvers

• Perform critical function of reviewing transactions for which they hold Approval Authority.
• Review and, as appropriate, approve appropriate transactions in accordance with the processes and requirements detailed in Procedure 1101 PR.06 Approval Authority.

Central Offices

• Responsible for the policies and/or processes under their authority, as enumerated below:
  
  • In consultation with the Office of General Counsel, identify laws, regulations, sponsor requirements, donor specifications, and other applicable documentation pertinent to the business processes under their authority.
  • Establish policies and procedures supporting the business processes under their authority, in compliance with any laws, regulations, sponsor requirements, donor specifications, and other applicable documentation.
  • Implement effective and efficient Internal Controls specified by their policies and procedures. 
  • Train Yale Community Members to assist them in understanding their responsibilities and in making informed decisions within the business processes under their authority.
  • Authorize appropriate Yale Community Members to execute transactions within the business processes under their authority.
  • Establish support structures (e.g., published documentation, help desk, contact lists) for the business processes under their authority.
  • Conduct quality assurance assessments for the business processes under their authority.
  • Exercise Approval Authority, when appropriate, over high-risk and/or major transactions

Deans, Chairs, Directors, and equivalent-ranking employees

• Responsible for the operations of their respective schools, departments, units, or other organizational units.
• Prepare annual budget proposal for their respective schools, departments, units, or other organizational units.
• Along with the appropriate Institutional Financial Oversight Supervisor, establish and enforce guidelines for expenditure of University funds, consistent with the approved annual budget and University policies.
• Hold Approval Authority for all operational transactions within their respective schools, departments, units, or other organizational units.
• Delegate Approval Authority for non-financial transactions to lead administrators or other appropriate individuals within their respective schools, departments, units, or other organizational units.

Departmental Business Offices

• Responsible for providing operational support for their respective schools, departments, units, or other organizational units.
• In accordance with authority delegated and recorded by their respective Institutional Financial Oversight Supervisor and their Deans, Chairs, Directors, or equivalent-ranking employees, Departmental Business Offices request, prepare, and/or approve transactions for their respective schools, departments, units, or other organizational units.
• Responsible for compliance with applicable University policies regarding transactions they request, prepare, and/or approve.
• Responsible for enforcing accountability for the Yale Community Members involved with the transactions they request, prepare, and/or approve.

Institutional Financial Oversight Supervisor

• Responsible for oversight of the financial operations of the respective schools, departments, units, or other organizational units under their authority.
• Along with the appropriate Dean, Chair, Director, or equivalent-ranking employee, establish and enforce guidelines for expenditure of University funds, consistent with the approved annual budget and University policies.
• Hold Approval Authority for all financial transactions within the respective schools, departments, units, or other organizational units under their authority.
• Delegate Approval Authority for financial transactions to lead administrators or other appropriate individuals within the respective schools, departments, units, or other organizational units under their authority.

Lead Administrators

• Exercise authority over, and responsible for oversight of, the Departmental Business Office(s) under their authority.
• Hold Approval Authority for all operational transactions within their respective schools, departments, units, or other organizational units (with non-financial authority emanating from their respective Dean, Chair, Director, or equivalent-ranking employee and financial authority emanating from their respective Institutional Financial Oversight Supervisor).
• Delegate Approval Authority for operational transactions to other appropriate individuals within their respective schools, departments, units, or other organizational units

Preparers

• Create operational transactions, either as the Requestor or at the direction of the Requestor.
• Provide (and obtain from the Requestor, as needed) all necessary information to complete operational transactions and verify that transactions are complete.

Regional Support Centers

• Responsible for providing operational support for their respective schools, departments, units, or other organizational units.
• In accordance with their delegated and recorded authority, Regional Support Centers request, prepare, and/or approve transactions for their supported schools, departments, units, or other organizational units.
• Responsible for compliance with applicable University policies regarding transactions they request, prepare, and/or approve.

Requestors

• Identify a need for the initiation of operational transactions and request such initiation.
• Confirm, with personal knowledge, that the transaction complies with University policies and procedures, as well as any applicable laws, regulations, sponsor requirements, donor specifications, and other applicable documentation.
• If the transaction is financial, confirm availability of funds.
• Supply all necessary information and/or documentation to complete the transaction, either directly or to the Preparer acting on their behalf.
• May direct appropriate individuals to serve as Preparers on their behalf.  Requestors remain accountable for the transactions initiated, even when another individual serves as the Preparer.

University Auditing Department

• Responsible for conducting internal audits and evaluations of Yale’s system of Internal Controls.
• Plays a significant role in recommending Internal Controls and providing consultation and advice on Internal Controls, but is not responsible for establishing or implementing Internal Controls.

Yale Community Members

• Responsible for understanding and complying with their roles and responsibilities within University Operations.