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Avoiding Purchasing Pitfalls

Statement from the Dean of the Penn State College of Education regarding purchasing policies.

Last revised: Sept. 2003


We conduct a tremendous volume of purchasing each year in the College and the related transactions are an essential part of what we do to advance our mission. The overwhelming majority of these transactions are routine and fit well within the University’s established policies and procedures. However, there have been a few instances recently where difficulties have surfaced, and I hope the observations I make here will help us avoid future problems. The consequences can be quite serious and there are too many instances throughout higher education where purchasing irregularities have risked the future of entire academic programs.

The fundamental point to keep in mind is that the University has a fiduciary responsibility to monitor and regulate the uses of all funds that are entrusted to its care. All expenses regardless of whether they are charged to general funds or to a specific sponsored project are of interest to Federal auditors. Direct charges to grants and contracts are subject to the specific terms and conditions set forth by the funding agency for the project and must be “reasonable, allocable and allowable” on the project. But it is also true that all expenses charged to general funds become part of the research base for the University and figure in the calculation of the facilities and administrative (F&A) rate (which is sometimes called the indirect or overhead cost rate) that is charged to sponsored projects.

There are full-time Federal government auditors at the University Park campus whose job it is to monitor and review both the direct charges to Federal grants and contracts and the general fund charges that are part of the F&A cost calculation. In addition, the Federal government requires an annual audit that examines the entire University’s financial system. An annual judgment is made about the security of our system and the related policies and procedures. It is essential for Penn State to pass muster on these audits and this translates into a University interest in ensuring that all Colleges and units follow established purchasing policies. The University’s ability to pursue its fundamental mission is at stake. Suffice it to say that we are living in a period of heightened sensitivity to accounting irregularities.

In the College of Education, we are fortunate to have a wealth of resources to help individuals avoid difficulties with the various purchasing policies and procedures that we need to follow. These resources exist at both the Department and College levels. For example, each Department has a staff member who is responsible for purchasing, and at the College level, the Finance Office and the Office of Education Research are staffed to provide assistance. I encourage you to take advantage of these resources. It is much easier to avoid difficulties in the first place than to correct errors after the fact. In particular, it is important to check carefully before you charge what you think is a University purchase to a personal credit card (e.g., an airline ticket or a piece of computing software or hardware).

Here are some basic guidelines to follow:

1. Know the staff member in your Department who is responsible for purchasing and consult with this person before making what you think is a University purchase.

2. Do not use your personal credit card for University purchases and understand that the one exception to this is the cost of personal meals and lodging while you are traveling on University business.

3. Remember that the University has a fiduciary responsibility for all purchases with University funds and that you need to be able to demonstrate that a particular charge is “reasonable, allowable and allocable.”

Please join me in making a special effort to avoid those awkward instances where we have to answer questions about purchases that have been made. If you have any questions, please let me know or be in touch with our financial officer, Emily Martell, our contracts and proposal specialist in the Office of Education Research, Tamara Fetterolf, or the staff member in your Department who is responsible for purchasing. Many thanks.