3305 PR.01 Spend Authorization Process for Expense Advances

Contents

1.     Overview

2.     Spend Authorization Process for Expense Advances

This procedure supports Policy 3305 Expense Advances.  It details the processes applicable to Spend Authorizations, which are the mechanism for requesting, approving, and obtaining Expense Advances.  Note: this procedure uses the term “Expense Advance” as defined in Policy 3305 Expense Advances. Workday uses the term “cash advance” to mean effectively the same thing within its business processes. Please consider these terms interchangeable for purposes of this process.

In addition to creating an Expense Advance, the “Create Spend Authorization” task in Workday allows a Yale individual or their delegate to pre-authorize a specific expense by creating a commitment of funds for that specific departmental expense or activity.  While Spend Authorizations can be created with or without an Expense Advance, this procedure specifically covers the inclusion of an Expense Advance.

Expense Advances may be utilized for the purposes described and authorized in Policy 3305 Expense Advances.  While this procedure covers the process generally applicable to those purposes, certain uses (e.g., Expense Advances for human research study participant remuneration) have additional considerations and requirements.  For specific information, refer to Procedure 3417 PR.01 Human Research Study Participant Remuneration Process.

This section describes the end-to-end process for Spend Authorizations with Expense Advances (specifically, those for travel and expense (“T&E”) purposes) from initiation to closure.  Among other details, it defines the steps necessary to:

• Identify expense needs and estimate future spend;
• Verify the accuracy of open Expense Advances; and
• Ensure the timely clearance of Expense Advances, the proper return of unspent Expense Advances, and the proper decrementing of balances in the general ledger.

A. General Rules and Guidelines for Spend Authorizations with Expense Advances

The general rules and guidelines applicable to Spend Authorizations with an Expense Advance are detailed in Policy 3305 Expense Advances, Section 3305.3.

B. Definitions Applicable to Spend Authorizations with Expense Advances

This subsection defines key functional concepts integral to the execution of the Spend Authorization with Expense Advance process, including acronyms and key process terms/items.

C. Pre-Authorization of a Request to Open a Spend Authorization with Expense Advance

Pre-authorization is recommended before opening a Spend Authorization.  The steps in this subsection outline the recommended process for pre-authorization.

1. The Custodian identifies the need for an expense, as well as a valid and supportable business reason for the expense.
2. The Custodian collaborates with their business office to determine that an Expense Advance is the most appropriate method for obtaining the funds to pay for the expense and that it is impossible or impracticable for the expense to be paid through the standard University procurement methods (see Policy 3201 General Purchasing).
3. The Custodian estimates the future spend to be supported by the Expense Advance.  To assist with this estimate, Form 3305 FR.01 Travel and Expense (“T&E”) Expense Advance Budget Development Form is available.

D. Creation of a Spend Authorization with Expense Advance in Workday

The Custodian (or delegate) creates the Spend Authorization in Workday.  The steps in this subsection outline the process for doing so.

1. General steps for creating a Spend Authorization in Workday can be found at Create/Clear Spend Authorization.
   
   • Specific information for T&E advances:
     
     • Start Date and End Date – use these fields to reflect the dates of the relevant activity(ies) for which the Expense Advance is needed.
       
       • Important Notes:
         
         • The Custodian (or delegate) must be sure to enter accurate dates, as these are used for compliance monitoring. 
         • Expense Advances cannot be funded more than ten (10) calendar days ahead of the start date. 
     • Business Purpose – use this field to select the most appropriate option from the dropdown list.
     • Reimbursement Payment Type – use this field to select the appropriate desired method of funds disbursement.  Available methods of disbursement to the Custodian are as follows:
       
       • Prepaid reloadable debit card (for employee use only) (US Bank $15,000 limit. $10,000 will be loaded on day one and $5,000 on day two);
       • Gift card (physical card) – please also contact Treasury Services (“Treasury”), as additional information may be required;
       • Cash picked up at Treasury (for amounts of $300);
       • Check payable to the Requestor; or
       • Direct deposit to Requestor (as established in the Requestor’s payment elections).
     • Expense Item – select “Travel and Expense Advance” from the dropdown list.
     • Complete other fields, as necessary.
     • Click on box for “Cash Advance Requested.”
2. If the method of payment is a prepaid reloadable debit card and the employee does not already have a card, the Business Office needs to pre-order the card before the Cost Center P2P Approver(s) approve(s) the Spend Authorization.  To do so:
   
   • The Business Office emails treasury.fa1@yale.edu or treasury.manager@yale.edu with the cardholder’s name, address, and last four digits of their Social Security number.
   • The card is mailed to the cardholder’s home address and is embossed with the employee’s name.
     
     • Note: Please allow 7-10 business days for the card to arrive.
   • Once the card is received, the Spend Authorization can be processed.
   • Be sure to select “Prepaid Reloadable Debit Card” as the Reimbursement Payment Type.

E. Review and Approval of Spend Authorization in Workday

Once the Custodian (or delegate) submits the Spend Authorization request in Workday, the request routes for approval.  The steps in this subsection outline the process for reviewing and approving the Spend Authorization.

1. The Spend Authorization request routes to the Cost Center P2P 1K Approver’s Workday inbox.  It routes to subsequent approvers based on the amount of the transaction and the individuals’ Workday approval authority limits.
   
   • If the Spend Authorization was created by a delegate, the individual whose name is on the Expense Advance must review and approve the Spend Authorization before the transaction routes to the appropriate Cost Center P2P Approver.
2. When the Cost Center P2P Approver(s) review(s) the Spend Authorization request, they review for the following criteria:
   
   • If the method of payment is a prepaid reloadable debit card, ensure the steps described in subsection 2.D.2., above, were followed.
     
     • Note:  If the card has not been received when the Spend Authorization is approved, Treasury will return the Spend Authorization and request that it be resubmitted when the card is received.
   • Ensure the Spend Authorization is complete and contains all pertinent/required information and documentation.
   • Ensure the transaction is appropriate to approve based on the criteria established in Procedure 1101 PR.06 Approval Authority.
   • Determine if the Custodian has any open T&E Spend Authorizations.  Open Spend Authorizations are identified by an “approved” status in Workday.  These Spend Authorizations require review to ensure they are fully cleared or have Expense Reports pending that will fully clear the Spend Authorization once approved.  To make this determination:
     
     • Run the “Find Spend Authorization/Cash Advances – Yale” report in Workday with the “Find Only Cash Advances” box selected and the “payment Status” parameter of “Approved.”
     • In the report results, review the “Worker” and “Item” columns for any open T&E Spend Authorizations.  If an open Spend Authorization is identified, review the details for that Spend Authorization to determine the next steps:
       
       • If Spend Authorizations show Expense Reports pending approval that will fully clear the Spend Authorization after being approved, then those Expense Reports need to be reviewed and approved before the Spend Authorization is approved.
       • If Spend Authorizations do not show either Expense Reports or Cash Sales pending approval, contact the Custodian to take action by submitting an Expense Report that will need to be fully approved before the new Spend Authorization is approved.
       • If Spend Authorizations have a $0 balance (shown in the “Cash Advance Outstanding Balance” column), close the Spend Authorization by following the steps described in subsection 2.K., below.
       • If there is an exceptional circumstance requiring an additional Expense Advance, email controllers.office@yale.edu to request a policy exception (individuals in the Yale School of Medicine (“YSM”) may also email ysmcontroller@yale.edu).

F. Disbursement of Expense Advances

This subsection describes the process for the disbursement of approved Expense Advances and details the associated responsibilities.

1. Once the Spend Authorization is approved by the Cost Center P2P Approver(s) in Workday:
   
   • If the disbursement is via a prepaid reloadable debit card, funds are loaded to the card after the Spend Authorization is fully approved (US Bank $15,000 limit. $10,000 will be loaded on day one and $5,000 on day two).
   • If the disbursement is cash, the Custodian picks up the funds from Treasury.
     
     • The Custodian monitors the Process History section of the submitted Spend Authorization and proceeds to Treasury when the status shows that the Spend Authorization is pending Treasury approval.
   • If the payment is via gift cards (physical cards), the Custodian picks up the cards from Treasury.
     
     • The Custodian monitors the Process History section of the submitted Spend Authorization and proceeds to Treasury when the status shows that the Spend Authorization is approved by Treasury.
   • If the disbursement is a check to the Requestor, the check is mailed to Requestor at the address in Workday or, if special handling is requested, it is sent to Treasury.
     
     • The Custodian receives an email from Accounts Payable when special handling checks are ready for pick up at Treasury.
   • Direct deposits are made to the individual’s bank account as maintained in Workday.
   • Note: Spend Authorizations over $25K are automatically routed to the Controller’s Office for review and approval in Workday before funds are disbursed.  This happens after the Cost Center P2P approval(s).
2. The Custodian ensures that funds are secured appropriately per Policy 2815 Petty Cash Funds.  The Custodian is also responsible for the following:
   
   • Maintaining appropriate supporting documentation for expenditures made from the Expense Advance; and
   • Returning any unused cash to the departmental Business Office to close the Expense Advance.

G. Departmental Business Office Monitoring of Spend Authorizations

Once a Spend Authorization is approved and funds are disbursed, there are several ongoing monitoring activities required to take place.  This subsection details those activities and their associated roles and responsibilities.

1. Once the funds are disbursed to the Custodian, the Business Office begins the monthly review of Spend Authorizations in line with the requirements noted on the FRC.
2. More information on the FRC can be found at:
   
   • Form 1101 FR.01 Financial Review Checklist
   • Key Internal Control Policies, Procedures, Documents, and FRC Trainings
3. The recommended report to facilitate this review is the “Find Spend Authorizations – Yale” Report in Workday.
   
   • Recommended report parameters and items to focus on can be found at:
     
     • Review Open Advances and Spend Authorizations
4. The Business Office reviews open Spend Authorizations for the following criteria.  If any of these criteria are present, the Business Office team member should contact the Custodian to resolve the issue.
   
   • Spend Authorizations open past ten (10) business days after the end date.  Contact the Custodian to ensure all expenses to date have been processed on an Expense Report and determine if the Spend Authorization is still needed.
     
     • If the Spend Authorization is still needed, contact controllers.office@yale.edu to request a policy exception to allow the Spend Authorization to remain open .
     • If the spend Authorization is no longer needed, file a final Expense Report and close the Spend Authorization by following the steps described in subsection 2.H., below.
   • Open Spend Authorizations that have not reached their end date and have not had an interim Expense Report filed within the last thirty (30) days.  Contact the Custodian to request that they submit an Expense Report.
   • Spend Authorizations on sponsored awards that are ending soon and/or have a financial report coming due; Contact the Custodian to request that they submit an Expense Report to ensure expenses are charged timely and the Expense Advance is properly closed once the sponsored award ends.
   • Worker assigned is terminated or on an extended leave of absence and the department requires assistance to properly close an Expense Advance; Contact askfinance@yale.edu for assistance.
   • Review the outstanding balance for accuracy:
     
     • If a discrepancy is identified, research the transaction and/or accounting history to determine what happened.
     • Contact askfinance@yale.edu for guidance on next steps.
5. It is recommended that the Business Office also periodically reviews Spend Authorizations in draft status that need to be submitted or deleted.

H. Submitting Expense Reports and Clearing Spend Authorizations

This subsection describes the processes and responsibilities for submitting Expense Reports and clearing Spend Authorizations.

1. The Custodian (or delegate) creates an Expense Report and associates it with the Spend Authorization.
   
   • Additional guidance on submitting an Expense Report to clear a Spend Authorization can be found at Create/Clear a Spend Authorization.
   • Provide and attach all necessary information, as described in Procedure 3215 PR.02 Yale Expense Management (PCard and Out-of-Pocket Expenses).
   • Note: Spend Authorizations may not be closed on the same day that payment is issued to the requestor.  Please wait a minimum of one day after receiving the payment to close a Spend Authorization.
2. Important Note – “Final Expense Report for Spend Authorization” button:
   
   • If an Expense Report is NOT the final Expense Report for a Spend Authorization, DO NOT select the “Final Expense Report for Spend Authorization” button.  Please see the screenshot below demonstrating the location of this button in the Workday interface.  ONLY select this button if the Spend Authorization is fully expended and/or is being closed.  By clicking the “Final Expense Report for Spend Authorization” button, Expense Reports will no longer be able to be linked to the Spend Authorization.
     
     • Note: If the “Final Expense Report for Spend Authorization” button was incorrectly checked on an approved Expense Report, contact askfinance@yale.edu for assistance.
   • If an Expense Report IS the final Expense Report for a Spend Authorization, be sure to select the “Final Expense Report for Spend Authorization” button.  Failing to do so will leave the Spend Authorization open.
   • 
3. Once the final Expense Report for the Spend Authorization is submitted, any remaining cash must be returned:
   
   • The Custodian notifies their Business Office of unspent funds.
   • The Cost Center P2P Approver(s) reviews and approves the Expense Report.
   • Unspent funds are returned via the methods outlined in subsection 2.I., below.

I. Returning Unspent Funds from a Spend Authorization

This subsection describes, based on type of funds received, the processes for returning unspent funds from closed Spend Authorizations.

1. Cash or Check:
   
   • The Cost Center Cash Sale Specialist follows the instructions for “Repaying Unspent Cash Advance Balance on Spend Authorizations” at Accounting Manual – Advances and Spend Authorizations.
     
     • A Cash Sale tracking slip is provided to the Custodian.
     • Additional information is available at Advance Clearing (condensed steps).
   • The Custodian return the funds with the Cash Sale tracking slip, via check or cash, to Treasury.
   • Notice routes to Accounts Payable in Workday for all cash sales using RC153 – Repayment of Cash Advance.  Accounts Payable applies the returned funds to the open Spend Authorization.
2. Payroll deduction
   
   • Custodians may opt to return unspent funds via a payroll deduction. 
   • Business Offices can contact askfinance@yale.edu to initiate the process.  Please include “Payroll Deduction” in the subject line of the email. 
3. Prepaid reloadable debit cards:
   
   • The Business Office emails Treasury Services (treasury.fa1@yale.edu or treasury.fa4@yale.edu) to request that the remaining funds be unloaded from the card.
     
     • Be sure to provide the cardholder’s name, remaining balance amount, and the Spend Authorization number.
   • Treasury unloads the remaining balance from the card and notifies Accounts Payable.
   • Accounts Payable reduces the Spend Authorization’s outstanding balance in Workday.
4. Gift Cards:
   
   • Gift cards cannot be returned to Treasury.  They should instead be moved by the department to a prepaid account to be used appropriately.  Prior to moving funds to a prepaid account, departments should contact the Controller’s Office (controllers.office@yale.edu) for approval and guidance on the appropriate accounting treatment and subsequent responsibilities.

J. Uncollectible Balances on Spend Authorizations

In limited circumstances, a situation may arise in which a Spend Authorization’s remaining balance does not have substantiated expenses and the department is unable to collect the remaining balance.  In such a situation:

1. The Custodian (or delegate) submits an Expense Report to recognize a loss.
   
   • The Business Office must first consult with controllers.office@yale.edu.
   • After consulting with the Controller’s Office, the Business Office follows the instructions at Accounting Manual – Advances and Spend Authorizations.

K. Closing Spend Authorizations

This subsection describes the steps for ultimately closing a Spend Authorization.

1. T&E Expense Advances must be fully cleared/closed within ten (10) business days after the end date of the travel or activity.
2. The Spend Authorization must be closed prior to the relevant Custodian terminating from Yale.
3. If there is no outstanding balance and the “Final Expense Report for Spend Authorization” box is checked in the fully approved final expense report, the Spend Authorization is closed automatically.
   
   • The Workday status changes from “open” to “closed.”
4. A Central mass close process exists that automatically closes Spend Authorizations three (3) months after the end date where the cash advance balance is $0.
5. If the department has a need to close the Spend Authorization more timely, the individual whose name the Spend Authorization is under can do so manually following the steps outlined in Create/Clear a Spend Authorization.