Financial Services Administration
On March 12, 2009, the Arizona Board of Regents (ABOR) adopted "Guidelines Governing the Relationships between Component Unit Affiliates and Universities under the Jurisdiction of the Arizona Board of Regents" ("Guidelines"). A copy of the Guidelines is attached as Exhibit 1 to this Policy. The Guidelines direct each of the state universities to adopt a policy regarding recognition of affiliated organizations that are treated as “Component Units” under Government Accounting Standards Board Statement No. 39 (“GASB 39”). A copy of GASB 39 is attached as Exhibit 2 to this Policy.
This policy applies to any organization that is classified under GASB 39 as a "component unit" of the University of Arizona. Each such organization is referred to in the policy as a "Component Unit Affiliate."
- A Component Unit Affiliate is not the agent of the University of Arizona and shall not represent or imply that it operates under an agency, partnership, or joint venture relationship with the University. A Component Unit Affiliate must take appropriate steps in dealing with third parties to ensure that such parties understand that the organization is a separate legal entity from the University. Such steps shall include, but not necessarily be limited to, separate business cards, letterhead, appropriate identification of the organization when answering the telephone, telephone directory listings, and signs on offices and buildings.
- Component Unit Affiliates must
- Be legally separate from ABOR and the University of Arizona;
- Be exempt from federal and state income taxation unless otherwise agreed;
- Have governing documents which provide that, upon dissolution, all of the organization's assets shall be distributed to the University or to another tax-exempt organization having purposes substantially similar to those of the dissolved organization;
- Hold economic resources and conduct activities entirely or almost entirely for the direct benefit of the University; and
- Formally agree to abide by the University's current and future policies regarding Component Unit Affiliates.
- The University may periodically review the status of each Component Unit Affiliate to ensure that the organization is operating in accordance with the University's policy regarding Component Unit Affiliates.
- Each Component Unit Affiliate must follow sound fiscal and business practices, and in this connection must
- Be audited annually by an independent certified public accounting firm approved by the University or by one that meets criteria set by the University, if the University wishes to establish such criteria;
- Operate in accordance with an annual budget appropriate for its scope of operations; and
- Ensure that all compensation paid to officers and directors is approved by its board of directors or other governing body.
- Each Component Unit Affiliate must comply with established University procedures regarding approval of restrictive terms and conditions attached to gifts, including but not limited to Financial Services Manual (FSM) § 8.12.
- Each Component Unit Affiliate must agree to indemnify the University from any damages or liabilities that the University may incur as the result of the organization's actions or omissions.
- Each Component Unit Affiliate must comply with established University procedures regarding approval of payments to or for the benefit of University employees, including but not limited to FSM § 6.15.
- All transactions between a Component Unit Affiliate and the University shall meet the normal tests for ordinary business transactions, including proper documentation and approvals.
- No Component Unit Affiliate shall offer any course or seminar in which the name of the University is used without first obtaining the University's permission.
- Each Component Unit Affiliate must maintain general liability insurance, property casualty insurance, commercial/business automobile liability insurance, and directors' and officers' liability insurance in no less than an amount deemed reasonable by the organization's board of directors or other governing board, unless the University agrees that such insurance is not needed.
- Each Component Unit Affiliate must have in place conflicts of interest policies covering relationships both between the organization and its directors, officers, and employees and also between such directors, officers, and employees and persons doing business with the organization.
- Officers and staff members of a Component Unit Affiliate must be bonded in amounts determined to be appropriate by the Component Unit Affiliate's governing body.
- Each Component Unit Affiliate must provide the University with the following items:
- Annually, a copy of the organization's Form 990, except any portion that may be exempt from disclosure under federal statute or Internal Revenue Service regulations (public availability of the Form 990 on the Internet shall be deemed to satisfy this requirement);
- Annually, a copy of the audited financial statements and such other documents as the University may require from time to time and on a timetable as determined by the University; and
- Copies of any amendments to the organization's articles of incorporation or bylaws.
- To the extent provided by written contract between the University and the Component Unit Affiliate, a Component Unit Affiliate may be eligible to receive
- Use of University space, equipment, and administrative/financial services and staff in the performance of the organization's functions;
- The right to use the University's name or logo; and
- Such other rights, services, or benefits as the University may authorize.
- Nothing in this policy restricts the authority of the University to enter into affiliation arrangements with outside organizations that are not considered "component units" under GASB 39, on such terms as the University deems appropriate.
- The University strongly encourages diversity to represent both the broader community constituents and diverse subject matter expertise as may be appropriate to the management of the entity.