CENTRO POBLADO 5 DE NOVIEMBRE

a When a state university anticipates applying for, accepting and receiving a private donation, gift, grant or bequest that may impose a significant fiscal obligation upon the university, such private donation, gift, grant or bequest must be reviewed by the Board of Regents prior to the acceptance of such donation, gift, grant or bequest by the Board or authorization for the state university to accept such donation, gift, grant or bequest pursuant to K.S.A. 76-724. For purposes of this policy "significant fiscal obligation" shall be considered to be a need, at the time of receipt of the donation, gift, grant or bequest, and in reasonable relation to the acceptance thereof, to: (i) seek additional state funding of $50,000 or more, or (ii) seek additional state funding for operating support of a gift building.

b If appropriate, the President and Chief Executive Officer of the Board shall notify other officials of the State including but not limited to the Governor, the Secretary of Administration, the State Director of the Budget, the Attorney General and the Director of Architectural Services of such private donations, gifts, grants or bequests.

Kansas Board of Regents 72 Policy Manual (Rev. 1/20/16) c The chief executive officer of each state university shall seek to verify, with reference to all private

donations, gifts, grants or bequests of real property, that said real property was not the site of or used for the disposal of hazardous wastes or materials.

d When the proposed private donations, gifts, grants or bequests consist of a facility to be constructed for the state university, reasonable efforts should be taken to encourage the donor to make such gift conform to guidelines and procedural manuals of the Director of Architectural Services.

e This policy shall not apply to donations, gifts, grants or bequests made to institutional endowment associations or foundations.

5 FINANCIAL REPORTING

a Annual Financial Report

Each state university shall submit to the President and Chief Executive Officer a comprehensive financial report for the prior fiscal year in accordance with the schedule maintained on the Board of Regents’ website. The President and Chief Executive Officer shall be responsible for recommending to the Board any specific financial report findings that should be further reviewed by the Board. The financial report shall conform to a format determined by the Council of Business Officers. The financial report shall reflect conformity with financial reporting methods and formats promulgated by the American Institute of Certified Public Accountants, the Governmental Accounting Standards Board and the National Association of College and University Business Officers’ Financial Accounting and Reporting Manual for Higher Education unless otherwise provided by state law, practices or procedures.

b Internal Audit Function

i Each state university shall have an internal audit function. The responsibility of the internal audit function is to serve the university in a manner that is consistent with the International Professional Practices Framework (IPPF) promulgated by the Institute of Internal Auditors. Additional resources, tools and guidance should be obtained through the Association of College and University Auditors and the Committee of Sponsoring Organizations.

ii The purpose, authority, and responsibility of each university’s internal audit function shall be defined in a formal written document (internal audit charter) that is approved by each state university’s chief executive officer. The charter shall make clear the purposes of the internal audit function, specify the unrestricted scope of its work, and declare that auditors are to have no responsibility for the activities they audit. The scope of work of the internal auditors shall include review of university controlled affiliated corporations, including a review for potential conflicts of interest and transactions between the university and university controlled affiliated corporations. The charter shall endow internal auditors with the authority to fully and freely access all the university’s records, properties, and personnel relevant to an audit. The charter shall provide that the auditor report directly to the university chief executive officer on all audit matters. The charter shall clearly state that internal auditors shall report directly to the Board Fiscal Affairs and Audit Committee any situation wherein the auditor perceives a conflict of interest with or on the part of the university chief executive officer’s involvement with the subject of an audit. In addition, each state university shall include the charter in university manuals, policies, and procedures as appropriate. Each state university internal audit department shall report annually to the Board’s Committee on Fiscal Affairs and Audit, summarizing the prior year’s activities and audit plans for the coming year. Each state university shall notify the Board’s Committee on Fiscal Affairs and Audit in writing of any personnel change in the position of university internal auditor.

Kansas Board of Regents 73 Policy Manual (Rev. 1/20/16) iii Each state university shall develop and maintain an internal audit plan. At a minimum, internal controls

for the university’s highest risk units, based on public funds exposure, should be assessed on a regular basis.

iv Each completed internal audit reporting material financial weaknesses or fraud shall be submitted to the Board President and Chief Executive Officer who shall be responsible for recommending to the Committee on Fiscal Affairs and Audit any specific audit findings that should be further reviewed by the Committee.

c Non-Public Funds Management Review

i Each state university chief executive officer shall maintain on file at the university a current list and description of the non-public, unrestricted funds under his or her direction or that of direct subordinates.

ii Each state university chief executive officer shall maintain and provide to the Board annually a list of all affiliated corporations (controlled and non-controlled) and a description of their respective governing boards and management structure.

iii Each state university shall annually review the roles of direct subordinates in or with such affiliated corporations for the purpose of identifying potential conflicts of interest. If appropriate and to the extent it is within the chief executive officer’s control, the university chief executive officer shall initiate a plan to either eliminate or manage any identified actual or potential conflicts of interest and shall file the plan with the President and Chief Executive Officer of the Board of Regents.

iv The President and Chief Executive Officer of the Board shall annually review the roles of the state university chief executive officers in or with all affiliated corporations for the purpose of identifying potential conflicts of interest. If appropriate, the President and Chief Executive Officer of the Board shall initiate a plan to either eliminate or manage any actual or potential conflicts of interest and shall submit such plans to the Board Chair and Vice-chair for approval.

v The Board may initiate external management reviews of the use and expenditure of non-public, unrestricted funds held by the university or an affiliated corporation of the university and under the direction of each state university chief executive officer and each state university chief executive officer’s direct subordinates at any time, but such reviews shall be conducted no less than once every 5 years beginning fiscal year 2013. For the once every five year audit, the period under review may be limited to the immediately preceding fiscal year. Additionally, such reviews shall be conducted when there is a change in the chief executive officer. All such reviews shall be contracted by the Board and financed by a transfer of funds to the Board from the state university under review. The university shall request its university non-controlled affiliated corporations having non-public, unrestricted funds that are under the direction of the university chief executive officer or the chief executive officer’s direct subordinates to cooperate in the conduct of such reviews.

vi Each state university chief executive officer shall request the board of directors of each university non- controlled affiliated corporation to conduct an agreed-upon procedure engagement to be performed at the time of its annual independent audit to identify actual or potential conflicts of interest involving unrestricted, non-public funds under the authority or direction of the university chief executive officer or the chief executive officer’s direct subordinates. Agreed upon procedures shall be established by the Board Fiscal Affairs and Audit Committee. The agreed-upon procedures shall include an examination of fund transfers and other transactions between and among the university, its affiliated corporations, and external entities reported on statements of substantial interest forms. The university non-controlled affiliated corporation shall be asked to share a report of each such engagement with the President and Chief Executive Officer of the Board.

Kansas Board of Regents 74 Policy Manual (Rev. 1/20/16) (1) “non-public funds” means any funds expended for the benefit of the state university but not processed through the state financial system, and

(2) “affiliated corporation” shall not include the Wichita State University Board of Trustees. 6 DESIGNATION OF CHIEF FINANCIAL OFFICER

Each state university chief executive officer shall appoint or designate a chief financial officer for the university. Each chief financial officer shall report directly to the university chief executive officer and shall be endowed with authority to effectively perform the standard duties and responsibilities of a chief financial officer, including having a broad knowledge and understanding of all of the institution’s financial and business matters.

7 AFFILIATED CORPORATIONS

a Affiliated corporations are incorporated entities, whether controlled or non-controlled by the university, that are funded solely or primarily by monies other than state funds and the purpose of which is to enhance or support the mission and activities of a state university. Affiliated corporations include, but are not limited to, alumni associations, incorporated student unions, endowment associations or foundations, and athletic corporations.

i University controlled affiliated corporations are affiliated corporations meeting one of the following criteria:

(1) A majority of a quorum of the board of directors, or other committee charged with making decisions on behalf of the corporation, are university personnel or appointed by the state university chief executive officer, or

(2) The corporation is otherwise controlled by the university or the university chief executive officer, as determined by the following considerations.

(a) Does the university chief executive officer appoint voting members to the corporation’s organizational committee (i.e. executive committee, finance committee, audit committee, etc.)? (b) Does the university chief executive officer designate, appoint or hire the corporation’s executive director/chief executive officer?

(c) To what extent does the university chief executive officer have control over the management of the corporation’s day to day operations as well as control of its major decision making processes?

(d) To what extent are public funds used to fulfill the corporation’s responsibilities and mission? ii University non-controlled affiliated corporations are affiliated corporations that do not meet one or

more of the above-listed criteria

b State universities shall not utilize state funds for the operation of non-controlled affiliated corporations. This provision shall not be interpreted to include reasonable fee-for-services arrangements.

8 AUXILIARY ENTERPRISES

a Auxiliary enterprises are self-supporting state university-operated enterprises, which include, but are not limited to, student housing, student health services, unincorporated student unions, and parking.

Kansas Board of Regents 75 Policy Manual (Rev. 1/20/16) b The operation of auxiliary enterprises on campus is authorized when such business is related to the

educational objectives of the university. Before commencing operation of an auxiliary enterprise, the university shall first submit the proposed plan for the financing, operation and management of the auxiliary enterprise to the Board for approval. State funds shall not be used to subsidize the operation of any organization operated as an auxiliary enterprise unless specified by bond covenants or by Board action. c Buildings may not be transferred from auxiliary enterprise restricted use support to general use support

without approval by the Board. 9 SALES OF PRODUCTS AND SERVICES

Any sale of products or services by a state university, its auxiliary enterprises, or an affiliated corporation of a state university (all hereinafter collectively referred to as "institution(s)") is deemed appropriate only if such sale is an integral part of or reasonably related to, an activity which is essential to the fulfillment of the institution's instructional, research or public service missions. Such sales must meet the following criteria:

a Sales of Products and Services to Students, Faculty, Staff, and University Guests

i Institutions may sell products and services to students, faculty, staff, and university guests provided that the products and services satisfy reasonable educationally related or convenience needs of the university community and provided that such products and services are not generally available to persons who are not students, faculty, staff or university guests. University guests are defined as persons who enter a campus for an educational, research, or public service activity, and not primarily to purchase or receive products and services. Sales to university guests shall be related to the guest's purpose or needs while on campus.

ii Institutions may sell products and services to students, faculty, staff, and university guests if the product or service contributes to maintaining the quality of the educational, living, or work environment of the institution. Most crucial to maintenance of quality are efforts that impact positively on student, faculty and staff recruitment and retention, including, but not necessarily limited to: student activity association entertainment; movies; athletic and recreational events and facilities; institutional operation of student health facilities; counseling centers; musical, cultural and artistic activities; and auxiliary enterprise activities.

iii The appropriateness of sales of products and services to students, faculty, staff and university guests shall also be weighed by the availability or nonavailability of the products or services in the community at the time sales were initiated. Availability may be defined in terms of convenience, quality or quantity of service.

iv The sales of products and services to students, faculty, staff and university guests shall be advertised only in media that are aimed or specifically targeted to the university community or by other methods which are limited to the campus.

v Sale or distribution of tobacco products on state university campuses shall be prohibited. (Effective 7-1-10.)

b Sales to the External Community

A product or service may be sold to the external community, only if the following two criteria are met: 1) the product or service must be appropriate for sale; and 2) sale of the product or service must adhere to the appropriate policy on pricing. Any advertising of products or services appropriate for sale to the external community shall be reasonably related in content and cost to the product or service being sold. i Appropriate Sales: The following is a listing of sales to the public that are deemed to be appropriate:

Kansas Board of Regents 76 Policy Manual (Rev. 1/20/16) (1) An institution may sell a product or service that is directly related to the achievement of its institutional mission statement.

(2) An institution may sell a product or service where the sale enhances the academic, cultural, recreational, or artistic environment of the university community. This shall include, but not be limited to: attendance at addresses by public speakers, musical events, athletic events, museum exhibits, and art showings.

(3) Products and services that are by-products of the institution's instruction, research, or public service activities may be sold to the public.

(4) Agricultural and mineral products produced from either research activities or from land owned or leased by the institution may be sold to the public.

(5) An institution may sell food service, but such food service shall be limited to the institution's campus.

(6) An institution may sell clothing and other gift and souvenir items imprinted with the institutional or conference logo, seal, emblem, initials, nickname, mascot or name.

(7) An institution may sell gift or souvenir items related to the operation of university museums or similar facilities.

(8) An institution may sell a product or service if it has specific state or federal statutory authority or mandate to do so.

(9) An institution may provide a product or service pursuant to a grant or contract with a governmental entity to provide such product or service either to the entity or to the public.

(10) An institution may offer a product or service to the external community if such product or service is unavailable elsewhere in the community and is reasonably related to the institution's mission. Unavailability may be defined in terms of convenience, quality or quantity.

ii Sale or distribution of tobacco products on state university campuses shall be prohibited. (Effective 7-1-10.)

iii Pricing Policies

(1) In establishing a price or fee for products or services, the price should generally reflect the direct and indirect costs of the products or services and should minimally reflect the price in the private marketplace. For the purpose of this policy, direct costs include, but are not limited to: all salaries, fringe benefits, supplies, and capital directly attributable to the sale of the product or service. An institution's negotiated federal indirect cost rate shall be used to determine indirect costs.

(2) If the activity is integral to the fulfillment of the institution's instructional, research or public service missions, prices may be established at less than full cost recovery upon approval by the institutional chief executive officer or the chief executive officer's designee.

(3) All contracts offering products or services to other state agencies shall be priced in accordance with Board policy on "Contracts with Other State Agencies, Indirect Cost Reimbursement" in the Fiscal Management and Business Administration section of this Policy Manual.

(4) If a product is an agricultural or mineral product produced either as a by-product of teaching or research activities or as a product of land owned or leased by an institution, such product shall be sold for its market value.

Kansas Board of Regents 77 Policy Manual (Rev. 1/20/16)

c Compliance

i The chief executive officer of each state university shall designate an officer at the Vice Chancellor or Vice President level who will approve the initiation of any new activity or program that will produce sales of products or services, or a substantial change in the type or level of existing sales of products or services, and determine that such activity or program complies with this policy. Each state university shall develop policies and procedures for administrative approval of activities that satisfy the criteria of this policy.

ii The Director of Internal Audit or other designated official at each state university shall review service and product sales on a regular basis and shall report and identify activities to the designated Vice