Tax & Financial
Purchasing & Other Money Out
Take home message: If you spend money, process payments, or procure goods or services on behalf of U-M, you must ensure you are aware of the fiscal responsibilities and compliance obligations that attach to such activities - and that you understand and act in accordance with the limits of your delegated authority.
- The Standard Practice Guide Policy on Fiscal Responsibilities (SPG 500.01) delineates the key fiscal responsibilities and principles to be followed by every faculty and staff member involved in any financial activity on behalf of U-M. Here are other SPGs relevant to finance.
- Money is paid out by U-M for four main purposes: payroll, financial aid, purchasing goods and services (including services related to travel or hosting), and capital expenses.
- Payroll, through which all staff and faculty are paid, is handled by the U-M Payroll Office.
- Financial aid is handled by the U-M Financial Aid Office (see also the Dearborn and Flint Financial Aid Offices). If a local department pays any financial aid, scholarships or awards directly to students, they must inform the Financial Aid Office, to ensure that the students' eligibility for Federal funding is not affected. See the Financial Aid compliance page for more information.
- The purchase of goods or services is managed by Procurement Services (and further supported by the UMHS Contracts & Procurement Office and the U-M Flint Procurement Department) and is subject to extensive compliance requirements under Regental By-laws, University policies and procedures, and external laws and regulations. [See below]
- The payment (and engagement) of consultants must be managed in accordance with the Standard Practice Guide on Independent Consultants (SPG 507.04). For more information, see the Visitors, Volunteers & Contractors compliance page.
- Capital projects and expenditure are managed through Architecture, Engineering and Construction (AEC). Any architectural or related engineering services must be approved by AEC in accordance with SPG 507.04.
- Conflict of interest laws prohibit U-M employees (as public servants) from being a party, directly or indirectly, to any contract with U-M (the public entity that employs them), unless Regental approval is given. If you, or an outside body that you have an interest in or connection to, are bidding to provide services for U-M, you may have a conflict of interest. Let Procurement Services know about any potential conflicts as early as possible, so that there is time to review the situation and determine whether the Board of Regents is required to approve the transaction, before the transaction occurs. See the Conflict of Interest compliance page for more information.
- Federal sanctions and exclusion lists, like those maintained by the Office of Foreign Assets (OFAC), the General Services Administration (GSA), and the Department of Health & Human Services Office of the Inspector General (HHS-OIG), prohibit U-M from paying any money to certain people, entities or countries. Contact Procurement Services for more information.
- The Standard Practice Guide on Purchasing: General Policy and Procedures (SPG 507.1) sets out the general requirements that must be followed by anyone involved in purchasing anything on behalf of U-M. If you are purchasing something using sponsored funds or grant money, see also the Grant administration compliance page for additional relevant policies.
- Purchasing is carried out through three main mechanisms: via P-Card, more formal procurement, or travel/hosting expenses. Each of these areas are governed by specific rules, and Procurement teams are set up to assist with your specific needs and questions. An overview of how to buy and how to pay are provided on the Procurement Services site.
- As a general rule, goods or services under $5,000 can be purchased without undergoing a competitive procurement process; but they must comply with all applicable laws, policies are procedures, and be in accordance with financial delegations.
- If the purchase involves a signed contract or agreement, then regardless of the value it must be handled by Procurement Services - Department users (at any level) do not have authority to sign contracts and agreements.
- Goods or services over $5,000 require a competitive procurement process, as well as a more formal payment method (no P-Cards).
- P-Cards (Purchasing Cards) are designed to reduce the use of petty cash funds, small dollar purchasing and eliminate the use of personal funds: see the P-Card page for an overview. Only transactions under $5,000 may be processed using a P-Card; and P-Cards should not be used where U-M has an internal service provider for the service you are seeking, or a University contract with a specific supplier. Dues, memberships, conference registrations, subscriptions, travel and hosting events are examples of transactions that may be approved on your P-Card; for more details of what transactions may and may not be charged, see the P-Card page.
- Travel and business hosting expenses are also managed by Procurement Services, as summarized in this Travel and Expense website. Any travel or hosting must be tracked and reconciled through Procurement Services (such as by using the Concur Travel & Expense system), to ensure compliance with tax laws and other requirements. Refer to the Standard Practice Guide on Travel and Hosting (SPG 507.10-2) for more information.
- The payment (and engagement) of consultants must be managed in accordance with the Standard Practice Guide on Independent Consultants (SPG 507.04), and processed through the Purchasing Department following a special procedure. For more information, see the Visitors, Volunteers & Contractors compliance page.
- For information on other forms of ordering and payment (such as Purchase Orders and Non-PO Vouchers) see the Accounts Payable page on "how to pay".
- Procurement Services' Buying Tips and Guidelines is a great overview of some of the key procurement policies and practices. This is a good starting point and reference guide for people who are unfamiliar with purchasing or simply want a succinct refresher.
- There are many laws, regulations, policies, procedures and accounting standards that apply to U-M's purchasing activity. If purchasing is not something you normally do, you should talk to someone who understands all these requirements (either within your own Department, or in Procurement Services) before you engage in any purchasing activity.
- There are also government sanctions and watch-lists that prohibit U-M from making payments to certain people, entities or countries, regardless of the method of payment. There are additional prohibitions that apply when Federal funds are being used (such as grant money, or Health System funds). Contact Procurement Services for more information about these requirements.
- If you have delegated financial authority, it is essential that you understand the scope and nature of your authority, and always act within that authority. If in doubt, consult with Procurement Services or the Office of the General Counsel (OGC).
- All purchases requiring a signed contract or agreement must be handled by Procurement Services. See the FAQs about Business, Contracts & Signature Authority maintained by the OGC.
- If you are purchasing something using sponsored funds or grant money, you must ensure you comply with OMB Circular A-21"Cost Principles for Educational Institutions". See the Grant administration compliance page or Procurement website for more details.
- Any travel or hosting must be processed through Procurement Services, to ensure compliance with tax laws and other requirements: see Procurement's Travel and Expense website for guidance. Travel can also attract other kinds of compliance obligations: see our separate Travel compliance page for more information.
For questions about financial aid, see the contacts listed on the Financial Aid compliance page.