1. FIN-ACC-55: Foreign Source Gifts, Contracts, and Revenue-Producing Activities
2. Financial Transaction Substantiation Standard
3. Internal Controls Standard

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Preface

This standard discusses the requirements for reporting on foreign source gifts, contracts, and revenue-producing activities.

The information presented below will provide departments with a general understanding of the federal and state reporting requirements, as well as fiscal officer and unit-level expectations. This standard will also provide a reporting template for departments to use when compiling information semiannually for submission to the Office of the University Controller (UCO).

 

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Introduction

Title I of the Higher Education Act of 1965 (hereafter referred to as Section 117) requires all institutions that process U.S. federal student aid to disclose semiannually to the U.S. Department of Education (ED) specific financial transactions with foreign sources, pursuant to Section 117. In addition, Title 21, Article 49 of the Indiana Code (SEA 388) requires state institutions to submit a disclosure report to the Indiana Commission for Higher Education for the same foreign source information during the reporting period. These federal and state reporting regulations require the reporting of certain gifts, contracts, revenue-producing activities, and other arrangements entered into with a foreign source.

Reporting is required if gifts, contracts, or arrangements meet the following criteria:

• Revenue is expected from a foreign source, and/or
• The agreement with a foreign source involves the university, one of its units, or an affiliated organization receiving money, property, or other tangible benefits from a foreign source for the benefit of the university (“Foreign Source Arrangements”), and
• The expected value of the agreement is $250,000 or more, considered alone or in aggregate with all other gifts from or contracts with the same foreign source in any calendar year from all entities of the university. The aggregated amount includes potential foreign source revenue or benefits received by all university and affiliated entities. Because the reporting threshold is in aggregate, the university has chosen a single transaction threshold of $10,000 to ensure all potential foreign sources are being captured.

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Foreign Source Gifts, Contracts, and Revenue-Producing Activities Discussed in Detail

Data Collection & Solicitation

As defined in policy FIN-ACC-55: Foreign Source Gifts, Contracts, and Revenue-Producing Activities, it is the administrative responsibility of UCO to compile and submit reportable items to the appropriate authority. It is, however, the responsibility of each Indiana University (IU) department, Designated Reporting Unit (DRU), and affiliated organization to report any arrangements established with a foreign source and the expected value of those arrangements to UCO on a semiannual basis.

Every department or affiliated organization of Indiana University is subject to providing foreign source information for reporting purposes. There are three types of organizations designated for foreign source reporting: Designated Reporting Units (DRUs), affiliated organizations, and all other IU department-level organizations. IU units include, but are not limited to Constituent Reporting Units, university administrative units, such as Alumni Relations, and department-level organizations, such as Chemistry.

DRUs, affiliate organizations, and IU fiscal officers from department-level organizations are required to collect financial source records, compile foreign source data relevant to their organizations, and to maintain supporting documentation according to the university’s records retention policy UA-18: University Records Retention and Disposition and the university’s internal standard on Financial Transaction Substantiation.

Additionally, all DRUs, affiliate organizations, and IU fiscal officers are responsible for ensuring proper controls are developed and instituted within their respective organizations to collect, record, and produce the required unit-level data for which they are responsible. Responsible individuals must also create, maintain, and communicate standard procedures within their unit-level organization for collection and submission of foreign gift reporting information to UCO.

Required Reporting Process for Units

The Office of the University Controller (UCO) will rely on all DRUs, affiliate organizations, and IU fiscal officers to report potential foreign source revenue activity. When a unit enters into or receives a new gift, contract, revenue-producing activity, or other arrangement with a foreign source, it is important to be familiar with who the donor/funding agency or customer is and the origin of the potential revenue.

It is also important to ensure that all transactions related to revenue follow the appropriate procedures institutionally, as required:

• All gifts to Indiana University should be made directly to the Indiana University Foundation (IUF) and will be reported by IUF to UCO.
• All sponsored awards should flow through the Office of Research Administration (ORA). Potential foreign source revenue from sponsored awards will be reported by ORA to UCO.
• All foreign source contracts and arrangements should be reviewed by General Counsel in accordance with university policy FIN-TRE-100: Signature Authority and Delegation.
• All payments for students should be processed through the University Bursar via the Student Information System (SIS) and will be reported by the Bursar to UCO.
• All non-student billings to other entities should be processed through the Kuali Financial System (KFS) Accounts Receivable module unless use of a subsidiary accounting system has been approved by UCO.
• All non-student revenue-producing activities should be approved in advance per policy FIN-TRE-121: Establishing and Modifying Revenue-Producing Activities (RPA).

Internal Audit may validate through data analytics if units have properly reported all potential foreign source revenue activity. Results identified through this process are submitted to UCO for any follow-up actions they deem necessary.

Specific Steps for Reporting to UCO

All potential foreign source gifts, agreements, or contracts which exceed $10,000 that may generate future revenue should be reported by the fiscal officer to UCO semiannually. Additionally, any actual revenue transactions generated during the accounting period from foreign sources that exceed $10,000, which have not previously been reported, should be submitted to UCO according to the timeline listed below.

Timeline

Step	July Reporting Period	January Reporting Period
Transactions or Agreements Between	1/1 through 6/30	1/1 through 12/31
UCO Reminder Email to DRUs and IU Departments	6/15	12/15
UCO Request Email to DRUs and IU Departments	7/5	1/5
DRU and IU Departmental submissions due to UCO	7/11	1/11
Foreign Gift Committee Review	7/28	1/28
Federal and State Report Submission Deadline	7/31	1/31

The procedural compliance requirements are outlined as follows:

1. Complete the Foreign Source Reporting Template with the necessary information found in the foreign source agreement, contract, award, grant, or gift.
   • Foreign source name and address
   • Amount of gift received or contract total expected
   • Date of gift or date range of contract
   • Any contract and gift restrictions
   • Domestic party or sponsor, if applicable

If you have interpretation questions, contact the UCO Foreign Source Reporting group at forsrcgc@iu.edu and UCO will advise or consult with the Office of General Counsel to answer your question.

2. Send the completed spreadsheet to the UCO Foreign Source Reporting group at forsrcgc@iu.edu no later than July 11th and January 11th each year. The January submission should be an accumulation of the unit’s activity for the entire prior calendar year since the compliance threshold is based on a calendar year basis.
3. The departmental fiscal officer must keep documentation of all agreements according to the university’s records retention policy UA-18: University Records Retention and Disposition and the university’s internal standard on Financial Transaction Substantiation.

A UCO representative assigned to the oversight of foreign gift reporting will request potentially reportable information from DRUs prior to each submission semiannually. This information is also requested from university departments if they have had previous foreign source reportable items during the prior two calendar years.

Units are sent a reminder email to continue compiling information for the applicable reporting period in the month prior to report submission. Timely and accurate reporting by all organizations to UCO is necessary for properly complying with the required federal and state reporting deadlines.

Example Scenario:

The chemistry department discusses a potential agreement in March 2023 with University of Manchester (UK- foreign source), signs a contract agreement on April 7, 2023, for $55,000 (April 2023 to June 2023).

Step 1: The chemistry department fiscal officer fills out a spreadsheet with above information from the agreement.

Step 2: The chemistry department fiscal officer sends the spreadsheet with this and any other agreements to the UCO Foreign Source Reporting group at forsrcgc@iu.edu by July 11 for compilation verification and reporting.

Step 3: The chemistry department fiscal officer keeps documentation of all agreements for at least five years for review and audit purposes.

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Requirements and Best Practices

This section outlines general requirements and best practices related to recording foreign source gifts, contracts, and revenue-producing activities.

Requirements

Semiannually

1. The fiscal officer must review all funding received by the unit and report any gifts, contracts, grants, or awards from foreign sources to UCO on a semiannual basis.
2. Fiscal officers must submit their unit’s full spreadsheet of potentially reportable items that exist no later than July 11, 202X or January 11, 202X, for each reporting cycle.
3. If UCO requests additional information about a potentially reportable item, reporting units should respond timely (within two business days).
4. Fiscal officers should communicate foreign source reporting requirements at least semiannually to department personnel to ensure faculty and administrators are aware of the regulations.
5. All Constituent Reporting Units (CRUs) must attest to compliance with the requirements of IU policy FIN-ACC-55: Foreign Source Gifts, Contracts, and Revenue-Producing Activities annually through the sub-certification process.

Best Practices

1. Notify the UCO Foreign Source Reporting group at forsrcgc@iu.edu of potentially reportable items over $10,000 within one month of the signed agreement or receipt of foreign source revenue.
2. Respond to questions from the UCO Foreign Source Reporting group within 24 hours during the reporting months of January and July to facilitate full compliance with federal and state reporting deadlines.
3. Document internal control procedures and training provided to your unit related to the review of funding received from foreign sources.