The purpose of this Policy is to set forth the requirements to comply with University policies and State of Alabama Law for the processing of disbursements to vendors and/or reimbursements to University employees or non-employees.
This policy requires all payments to comply with the requirements established by Federal regulations, State laws, and University policies and procedures. Including the following:
- Internal Revenue Code of 1986
- Federal Immigration Laws
- Federal Travel Regulation
- Fly America Act
- Code of Alabama 1975
- Sections 36-7-20 through 23 for in-state travel expenses
- Sections 39-2-2 for public works services
- Sections 41-16-20 for goods and other services
- UA Spending Procedures
- UA Travel Policy and Procedures
- UA Purchasing Policy and Guidelines
- UA P-Card Policy and Procedures
This Policy applies to all invoices and requests for payment submitted to Procurement Services for payment or reimbursement by University faculty or staff.
Exceptions to normal policies may be authorized at the discretion of the Director of Procurement Services and/or the Associate Vice President for Finance with a documented business purpose.
1.0 Available Payment Methods
Listed below are the preferred spending methods for UA expenditures. Review the UA Expenditure Guidelines for further detail and guidance on the appropriate methods of payment for common expenditures. If a department is unable to determine the appropriate acquisition method, contact the UA Purchasing Department.
1. Purchasing Card
The UA Purchasing Card (P-Card) should be used for allowable purchases up to
$4,999.99 per single transaction including freight. For more information regarding purchases via P-Card, see the P-Card website.
2. Purchase Order
Requests for purchases of products and/or services for more than $5,000 must be submitted to the Purchasing Department using a purchase requisition. Purchasing will review the request and will take appropriate action to procure the product or service and will issue the purchase order (PO). For more information regarding purchases via requisition, see the Purchasing website.
3. Departmental Transfer
If payment to the University or a University department (i.e., Continuing Studies, Crimson White) is required, a Departmental Transfer Authorization (DTA) should be completed. See the DTA Form on the Financial Accounting and Reporting Forms website.
4. Expense Report
Concur Expense must be used by UA employees to request reimbursement for allowable expenses and to reconcile any travel related P-Card transactions. For more information, please see the UA Concur website.
5. Payment Requests
Concur Invoice must be used to submit a Payment Request to process payments to vendors or non-UA individuals. Non-UA individuals who incur travel expenses on behalf of the University will be reimbursed via a Payment Request. Payment Requests are used to reimburse out-of-pocket expenses and pay for those goods and services unallowable on the P-Card and excluded from the purchase system. For more information, please see the UA Concur website.
The following types of payments are generally made on a Payment Request; for more information, refer to the specific guidelines for each category within this policy.
2.0 Submitting Expense Reports and Payments Requests
Requests for reimbursement to UA employees via an Expense Report should be submitted within 60 days of the expenditure. Requests for reimbursement after 60 days will be treated as income subject to withholding according to federal tax regulations (26 CFR 1.62-2). Tax withholding will be deducted from a subsequent salary check.
All expenses should be paid by the University directly to the vendor. However, the University recognizes extenuating circumstances may occur that would cause an individual to pay out-of-pocket expenses that must be reimbursed.
Items purchased or reimbursed by the University are property of the University.
If a Payment Request has a deadline or a due date, note this in the Invoice Details Payment Request Description Field.
When preparing Payment Requests, an abbreviated listing of the Banner Account Codes has been included in the Invoice module for processing Payment Requests.
In order for an expense to be approved and processed, the expense must be properly substantiated. Itemized receipts for all expenses greater than or equal to $75 are required, unless otherwise noted.
Appropriate documentation required for payment and/or reimbursement may include the following:
- Canceled check or imaged check copy from bank or online banking system
- Customer copy credit card receipt
- Copy of bank statement plus carbon of check from checkbook
- Credit card statement reflecting charges
- Consult Accounts Payable for other acceptable forms of documentation
If a receipt does not detail the items purchased, a description of each item on the receipt must be given. Additionally, inadequate documentation may require the individual to bear the cost of the request.
The department submitting the Expense Report or Payment Request should keep copies of all documentation until payment is made in case questions arise.
The University requires that all Expense Reports and Payment Requests be approved by the supervisor of the submitting employee . Additionally, Expense Reports and Payment Requests will be routed to the appropriate budgetary approver(s) based on the FOAPAL information included in the request. Expense Reports and Payment Requests will be routed to the appropriate Foundation approver(s) and/or Contract and Grant approver(s) where applicable.
In order to be reimbursed from Contract and Grant funds, the Expense Report or Payment Request must include an attached signed statement from the principal investigator or project director officially responsible for the contract or grant account; this person may not delegate this responsibility.
Expense Reports and Payment Requests submitted by the University Vice Presidents for Community Affairs and Financial Affairs must be reviewed and approved by the Executive Vice President and Provost. Expense Reports and Payment Requests submitted by the University Vice Presidents for Strategic Communications, Research & Economic Development, Student Affairs, and University Advancement, and the Executive Vice President and Provost must be reviewed and approved by the Vice President for Financial Affairs. Expense Reports and Payment Requests submitted by the President must be reviewed and approved by the Chancellor.
At any point in the approval process, an approver may forward the Expense Reports or Payment Request for additional approvals. Once the additional approval has been provided, the Expense Report or Payment Request will resume routing through the workflow.
By approving the Expense Report or Payment Request, the supervisor is certifying the submitted expenses are in accordance with this policy. An approver may delegate the responsibility of approving Expense Reports and Payment Requests.
All payments should be made via direct deposit. Direct deposit payments are processed daily. In the event that a check must be issued, checks are printed once a week. Payments (check and direct deposit) for Foundations are processed once a week. For all types of payments, allow at least seven to ten business days for processing by Accounts Payable.
Payments should be processed timely. The University does not pay late charges, penalties, or finance charges.
University funds may not be used for the following types of expenses (all Foundation accounts are excluded from this policy unless otherwise noted):
- Alcoholic beverages, set-ups, bartenders, and/or corkage fees.
- Christmas decorations or other Holiday decorations.
- Donations/contributions are generally unallowable.
- Entertainment of UA employees, including retirement and Christmas/Holiday parties or celebrations, except as allowed by UA entertainment policy (refer to Section 6.0).
- Expenditures for athletic, theatre, or similar events as a form of entertainment. Exception: Entertainment of prospective employees and their spouses/companions at University sponsored events or local cultural events.
- Coffee, cream, sugar, soft drinks, cups, napkins, etc., when intended predominantly for consumption/use by University employees, unless otherwise covered by the University’s entertainment guidelines.
Gifts, prizes, and awards may be allowed in situations where it is determined that the expenditures are in the best interest of the University and promote the purposes of the University. For example, gift cards may be provided as an incentive to encourage participation in a UA research study. Additional information may be requested by Accounts Payable regarding the recipients of gifts and/or awards for tax reporting purposes.
Gifts of memorabilia given to donors, visitors, alumni, students and potential students are allowed. Memorabilia includes but is not limited to signed footballs, paperweights, elephants, etc. The memorabilia must be inscribed or imprinted with words and/or pictures identifying the University.
Gifts, cards (e.g., Christmas, holiday, retirement, sympathy, thank you cards, etc.), plaques and awards may be allowed if it is determined that these expenditures are in the best interest of the University and promote the purposes of the University. Documentation of the business purpose of the expenditure must be submitted with the voucher.
Gifts to employees are generally unallowable as this would be considered taxable compensation and reportable on Form W-2.
4.2 Prizes and Awards
Monetary Prizes and Awards
Scientific, Educational, Artistic, or Literary Achievements are taxable income to the recipient.
Awards to University employees must be processed on a personnel action form (PA) through the University payroll system. This includes student-employee awards such as awards for outstanding teaching or research. Consult the Payments to Students Policy for information regarding payments to students.
Plaques, trophies, certificates, etc., are examples of non-cash awards that may be given. Depending on the nature of the award, the award may or may not be taxable income to the recipient.
Donations in the form of sponsorships may be allowed when the sponsorship is shown to benefit the University. Sponsorships require prior approval from the Director of Accounts Payable to determine the purpose of the sponsored entity and if a beneficial relationship can exist between the University and the sponsored entity or event. The information provided with the sponsorship should explain how the partnership furthers the mission and goals of the sponsoring department and provide further detail regarding the specific benefits the University and/or department will receive for being a sponsor.
It is understood that business and professional discussions and negotiations frequently take place during periods of entertainment. The University of Alabama recognizes that such business entertainment is essential to its operation. It is the desire of the University, however, to place this activity in proper focus, to prevent abuses, and to issue guidelines for these expenditures. In this regard, certain conditions must be met before entertainment expenses will be authorized as necessary and reasonable operating expenses to the University. These conditions are set forth in the following guidelines for Allowable and Unallowable Entertainment.
Consult with Accounts Payable for other entertainment that is not specifically listed in Section 6.1 – Allowable Entertainment and Section 6.2 – Unallowable Entertainment.
The purpose of the entertainment must be University business.
Prospective Faculty and Staff
It is the policy of the University to invite prospective faculty or staff, both spouse/companion, to visit the campus. Travel and all other reasonable and necessary expenses are reimbursed. Entertainment of the prospective candidate and spouse/companion is allowable when it occurs on a reasonable basis associated with a recruitment visit. The faculty and staff involved in this type of entertainment should be essential to the interview process. In situations where the prospective candidate’s spouse/companion is present, it may be deemed necessary to have the spouse/companion of a University faculty or staff member present as well. Under these circumstances, the entertainment expenditures for the spouse/companion of the University faculty or staff member may be reimbursed as well.
In certain cases, it is recognized that entertainment of official University guests is essential. This entertainment should generally be undertaken by administrative officials, deans, department heads, or senior faculty members. Examples of official guests may include the following: visiting lecturers; visitors from foreign countries; representatives of research organizations; visitors from other universities; donors; individuals interested in University programs and development of new programs (both paid and non-paid consultants); and business and community leaders in Tuscaloosa, other Alabama communities, and the state at large who are at the campus on specific business on behalf of the University. The relationship between the visitor and the University staff or faculty attending the function or their area of responsibility must be clearly indicated.
In situations where the University guest’s spouse/companion is present, it may be deemed necessary to have the spouse/companion of a University faculty or staff member present as well. Under these circumstances, the entertainment expenditures for the spouse/companion of the University faculty or staff member may be reimbursed as well.
Other UA Functions/Receptions/Meetings
Official University functions and receptions held by the President for employees, students, alumni, and friends of the University shall be reimbursed as entertainment. Other functions and receptions for employees, students, alumni, and friends of the university may be reimbursed in cases where the business entertainment is essential to the operation of the University.
Pre-game athletic functions for alumni, staff, students and guests shall be reimbursed as entertainment when the purpose of the function is to cultivate potential donors. The purpose of the function must be clearly indicated on the voucher.
Meals and nonalcoholic refreshments may be provided if they are incidental to meetings or trainings. The primary purpose of the meeting or educational/training session in which the meal or refreshments are provided or consumed shall be directly related to the business of the University.
Entertainment of students is allowable.
When providing meals on campus, review the restaurants and caterers on the preferred list located on the Risk Management website. Use of the list is not mandatory but is recommended based on the agreements the University has secured with these vendors.
Departmental social functions in celebration of an event or a holiday or to promote fellowship among constituents are not reimbursable. Examples include retirement, introduction of new staff, and holiday parties.
Entertainment expenditures are prohibited for alcoholic beverages, bartenders, golf green fees, boat rentals, private club dues, or civic group functions. Flowers, fruit baskets, or other related items for individuals are also disallowed. This list is not exclusive but is meant to suggest the types of expenditures that may be prohibited.
No entertainment expenses will be charged to contracts or grants unless such entertainment is specifically authorized by the terms of the contract or grant. (Refer to Section 7.0 – Conferences and Meetings).
Meals held prior or subsequent to a business function are not reimbursable.
The Entertainment Expense Form should be completed and submitted with the Payment Request or the Expense Report for any entertainment expenditures. Completing this form will ensure that entertainment expenditures are documented to show the following:
- Identification of the person or group to be entertained, including the relationship of the persons in attendance to the particular aspects of the University program that will be benefited. This information includes titles, committee names, the field of interest of the person or group being entertained, the reason for inviting the visitor(s) to campus, and other relevant details. If a small group is being entertained (10 or fewer), the names of all persons attending must be shown; for larger groups, only the name or names of the honored guest or guests must be indicated, with the number of persons attending.
- A statement as to the reason or purpose of the entertainment, including the purpose and benefits of the program to the University must be clearly indicated and understood by anyone outside the department reviewing the voucher. If the function that included the entertainment is held away from the University campus, an agenda for the function must be attached. If entertainment includes only UA employees, an explanation as to why it had to occur at breakfast, lunch, or dinner is necessary.
- The date and place of entertainment.
Concur will also allow for a list of attendees to be added to an Expense Report or Payment Request. If you can include all required information above in the Expense Report or Payment Request, the Entertainment Expense Form does not have to be attached.
Reimbursement for meals in excess of $25 per person requires a restaurant receipt that itemizes the food and beverages. Credit card slips are not acceptable documentation for meals in excess of $25 per person.
This category includes the costs of conferences, workshops, meetings, and seminars conducted by the University when the primary purpose is the dissemination of technical information. This includes costs of meals and other necessary expenses.
In the case of conferences, workshops, meetings, and seminars conducted by the University and supported by income from registration fees, allowable entertainment expenses will be reimbursed.
The statement “Covered by Income” should be entered in the description or business purpose explanation.
Conferences, workshops, meetings, seminars, retreats, etc., that are not supported by income may be conducted and may be limited to University personnel or expanded to include both University and non-UA participants.
Meal or refreshment expenses associated with these groups will require documentation of the business purpose including that the function is essential to the operation of the University and that provision of meals/refreshments is incidental to the function rather than the primary purpose of the function.
Professional services are customized services consisting of specialized intellectual or creative expertise based on personal skills or ideas provided for a fee.
Fees for services performed by UA faculty, staff and students are generally paid through the payroll system. These individuals are classified as employees rather than independent contractors. Refer to the Payroll Services website for detailed instructions.
The IC Form is used by a department to request approval to pay an individual for services outside of the payroll system. The IC Form must be submitted to the UA Tax Office and approved prior to an individual performing any services for which a fee payment is expected, including guest speaker fees. Refer to the Tax Office website for more information.
A Professional Service Agreement may be required. Refer to the Contract Management website for more information.
To the extent that the vendor wishes to be compensated for associated business expenses such as travel, those costs may be paid directly to the vendor or to a third party vendor such as a hotel or travel agency. Expenses shall be paid in compliance with UA Travel Policy.
Requests to pay professional service fees should be submitted to Accounts Payable using a Payment Request. As documentation with the Payment Request, the following should be attached as applicable. Refer to the Professional Service Matrix for details for specific types of services.
- Agreement/contract and/or invoice*
- Approved IC form, if required
- Expense documentation/receipts (if expenses are reimbursed in addition to the fee)
*When funds from a state of Alabama grant or contract or federal agency passed to the University through a state agency are used to pay for professional services, an invoice from the professional is required as documentation, in addition to the other requirements of this section.
Payment of professional service fees cannot be made in advance.
9.0 Relocation/Moving Expenses
Departments may approve the payment of a relocation allowance for new faculty and staff in order to help defray the costs associated with moving or temporary living expenses. This payment is at the discretion of the appropriate dean, director, department head, or authorized designated personnel.
There are two types of relocation allowances; one or both may be used at the discretion of the department. Pursuant to the Tax Cuts and Jobs Act, effective January 1, 2018, all relocation expenses provided for new faculty and staff are taxable.
9.1 Moving Allowance
A moving allowance is a lump-sum, taxable payment to an employee. It is intended to help defray relocation costs, such as:
- Moving household goods/personal effects from the former residence to the new residence (packing, shipping, storage, moving company, U-Haul, etc.)
- Transportation, lodging, meals for the employee and members of his/her household while traveling from the former home to the new home
- House-hunting trips after the individual has accepted the job offer, but before the actual move
Interview trips, before the individual has accepted the job offer, are part of the recruiting process and should be reimbursed or paid directly by the department. Interview trips are not part of the moving allowance.
9.2 Moving Allowance Payment Options
Prior to Employment Start Date
If the individual elects to receive the payment prior to the employment start date, the allowance payment will be processed through Accounts Payable using the Concur Invoice Payment Request. When submitting in Concur, the allowance should be charged to Moving Allowance – 78147, and a copy of the offer letter stating the amount of the moving allowance must be submitted as documentation as well as evidence that the offer has been accepted.
No taxes will be withheld at the time of the payment, but all applicable taxes will be withheld from the employee’s payroll when active. Departments will need to communicate to the individual that his or her first paycheck(s) will have taxes withheld related to the moving allowance.
Note that house-hunting trips will not be reimbursed separately and should be included as part of the moving allowance.
In the event that an individual has accepted his or her moving allowance prior to the official start date and does not become an employee of the University, it is the department’s responsibility to recoup any payments to the individual.
After Employment Start Date
If individuals elect to receive the payment after the employment start date, the allowance will be processed through payroll as a one-time payment using an ePA on the supplemental payroll. For this option, applicable taxes will be withheld at the time of payment with no impact on subsequent paychecks. A copy of the offer letter and/or the Approval Request for Relocation Allowance form stating the amount of the moving allowance, must be submitted as documentation. Note the appointment PA must be received before any supplemental PAs will be paid.
9.3 Temporary Living Allowance
A temporary living allowance is a series of taxable payments provided to an employee that is intended to help defray living expenses for a period of time after the employee’s relocation, such as:
- Temporary quarters (hotel accommodations, house or apartment rent, etc.)
- Meals in connection with temporary quarters
- Travel costs for the employee to make additional trips back to the old residence (for example, if the employee’s family remains at the old residence for a period of time after the employee has moved to the new location to start work)
9.4 Temporary Living Allowance Payment
Temporary Living Allowances will be processed through the payroll system as well using an EPA with applicable taxes withheld at the time of payment. This type of allowance will be processed as multiple payments on the regular monthly payroll schedule. A copy of the offer letter and/or the Approval Request for Relocation Allowance form that stipulates the amount and duration of the temporary housing allowance must be submitted.
Stipends are allowances paid for travel or living expenses to participate in a University-sponsored program or conference. Some examples include summer programs for high school students or in-service workshops for teachers.
When submitting Payment Requests for stipend payments, detailed information must be provided to indicate the nature of the stipend. For example:
- Is the stipend intended to cover expenses such as travel, room, and board?
- Is the recipient a student or a participant in a training workshop or seminar?
- Is the recipient performing any services for the university?
If services are being performed, the payment should be reclassified as wages or professional service fees.
The University encourages faculty and staff membership in organizations that will promote advancement of instruction, research, and public service and enhance the professional standing and development of its faculty and staff. With the approval of the dean or corresponding non-academic area head, faculty and staff memberships that are within the guidelines outlined below are allowable.
Faculty and staff memberships paid for with departmental funds should return demonstrable benefits to the division/department in terms of its mission. In general, memberships must be in the name of the University with no benefits accruing to any particular individual or department. However, in cases where an individual membership will benefit the University, the individual membership will be allowable. The benefits to the University through both institutional and individual memberships should include:
- Receipt of scholarly journals, professional publications, and employment information
- Professional Development
- Contract and exchange of information with other professionals in the area of interest
- Instructional Enhancement
- Scholarly research and creative work
Costs of membership in any civic or community organizations are unallowable unless a legitimate business purpose exists.
Colleges and corresponding non-academic areas may establish more restrictive guidelines for the payment of individual memberships within the guidelines presented above.
In situations where vendors require payment in a foreign currency, the department should submit the Payment Request with the amount in the applicable foreign currency. The Payment Request is then processed and approved as described in Section 2.0, including approvals. When the charge is recorded to the account, it will be in the name of the bank or foreign exchange from which the draft was obtained.
If a draft is required, the department should allow at least seven to ten business days for Accounts Payable to order and receive the draft in foreign currency. Accounts Payable then sends the draft and any necessary attachments to the vendor.
Both federal immigration laws and tax laws place a number of restrictions on payments made to foreign visitors. Violation of these laws can result in serious consequences for both the foreign visitor and the University.
When making arrangements to host a foreign visitor, the department must confirm that the visitor has an appropriate visa status. The University cannot make any payments to a foreign visitor who is not properly authorized under federal immigration laws. For more information, see the Capstone International Services website.
In general, all monies paid by the University to a foreign visitor (other than expense reimbursements documented by receipts) are taxable, unless exempt under the provisions of a tax treaty with the visitor’s country of residence or under a provision of the Internal Revenue Code. The University is required by law to withhold federal income tax from payments that are not exempt.
Before hosting a foreign visitor, the department should contact the UA Tax Office so that a tax analysis can be performed. This analysis is necessary to determine the visitor’s tax status and to ensure that any applicable tax exemptions are granted. Refer to the Tax Office website for more information.
If the payment is for expense reimbursement only, this should be stated on the Payment Request, and receipts should be attached.
For payments other than expense reimbursements, additional requirements may apply. For example, tax withholding may need to be charged, or the visitor may need to sign a tax treaty exemption form. Specific instructions will be provided by the Tax Office when the tax analysis is completed.
For professional service fees, in addition to the above restrictions, payments to foreign visitors are subject to the general guidelines outlined in Section 8.0 – Professional Services. This includes guest speaker fees.
Even if not directly charged to the federal government (i.e. charged instead to a departmental operating account), expenditures considered to be federal unallowable costs must be separately identified in the accounting records so that these costs can be appropriately treated in the University’s indirect cost rate proposal. These costs are generally identified by the fund, organization, or account code, increasing the importance of selecting the appropriate elements of the FOAPAL for any transaction. Federal unallowable costs that may be allowable for non-federal purposes but require special accounting treatment include:
- Advertising and public relations: Federal unallowable advertising and public relations costs include the following:
- Costs of meetings, conventions, convocations, or other events related to non-federal activities of the entity. Costs of promotional items and memorabilia, including models, gifts, and souvenirs.
- Costs of advertising and public relations designed solely to promote the institution.
- All other advertising and public relations costs not for the recruitment of personnel for performance on a federal award or another specific purpose necessary to meet the requirements of a sponsored agreement or general liaison with news media and government public relations officers necessary to keep the public informed on matters of public concern.
- Alumni activities: Costs incurred for, or in support of, alumni activities and similar services are unallowable for Federal cost purposes.
- Commencement & Convocation costs: Costs incurred for commencements and convocations are unallowable for Federal cost purposes.
- Entertainment costs: Costs of entertainment, including amusement, diversion, and social activities and any associated costs (e.g. travel) are unallowable for the federal indirect cost rate calculation and should be recorded in account codes 73XXX so they can be easily excluded from the indirect cost rate analysis.
- Fundraising: Costs of organized fundraising, including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred to raise capital or obtain contributions, are unallowable for Federal cost purposes.
- Lobbying: The cost of certain influencing activities associated with obtaining grants, contracts, cooperative agreements, or loans is an unallowable cost. Other political costs, membership in organizations whose primary purpose is lobbying, and/or inappropriate lobbying costs are also unallowable.
- Club membership: Costs of membership in any country club or social or dining club or similar organization are unallowable for Federal cost purposes.
- Selling and marketing: Costs of selling and marketing any products or services of the University are unallowable for Federal cost purposes.