Financial Integrity and Ethics Policy - Northern Michigan University

An affiliated entity means any company or organization that has a close relationship to the faculty member or employee of the University through shared ownership, control, or influence. The relationship can be through direct or indirect connections, such as common ownership, management, or financial interest. 

The NMU Conflict of Interest Policy requires that any faculty/staff/employee who anticipates conducting business with the University must, on an annual basis, disclose to the University’s Purchasing Department any possible conflict of interest. This also means disclosing any affiliated entity that the faculty/staff/employee anticipates may do business with the University. After the NMU Purchasing department receives the Conflict of Interest notification, the University may contract/purchase from the affiliated entity utilizing normal purchasing/contracting procedures with two exceptions:

Exception 1: Business with a personally affiliated entity
No University faculty or staff may authorize a payment from University funds (e.g. budget, fund, account, and/or procurement card) or submit a contract (limited personal services, services, or other contract) for signature when the payee or contractor is a personally affiliated entity. This means that a person cannot submit a contract with, or authorize payment to, an affiliated entity from a department/organization code that they control and/or supervise. To contract with and/or purchase from a personally affiliated entity, and also pay from an account personally controlled, five criteria must be in place: 

1. All regular procurement processes must be strictly followed. This includes following the required competitive bidding and contract review process;  

2. The affiliated entity must be disclosed to the Purchasing department according to the Conflict of Interest Policy; 

3. The authority to purchase / contract must be pre-approved and documented by an appropriate authority. When the faculty/staff position falls below Vice President level, the authority to purchase must be received from a Vice President. If a Vice President plans to contract/purchase from an entity they are personally affiliated with, they must obtain the President’s approval prior to the contract/transaction. The President must obtain Board of Trustee level of approval prior to the contract/transaction. The NMU Board of Trustees follows its own documented process to ensure that transactions meet ethical and professional standards when a conflict of interest arises; 

4. Approval cannot be granted for “all business going forward.” Each contract/payment must be specifically and appropriately authorized; and   

5. Documentation for the authority to purchase/contract must accompany all requests for contract review and all requests for payment. This includes payment of an invoice or settlement of a Concur expense transaction.  

Failure to comply will result in a report to the Vice President of Finance. A second offense will be reported to the President of the University. Any further offenses will result in a report to the Board of Trustees.

Exception 2: Contracting with or paying large dollar amounts to affiliated entities.
There is no way for most faculty/staff members to know the volume of financial transactions between the University and businesses personally affiliated with other faculty or staff. Faculty and staff may also not be aware that an outside business has any connection to another University faculty or staff member. However, since paying large sums of money to businesses affiliated with University faculty/staff can have the appearance of impropriety, even when no impropriety was intended or exists, special monitoring provisions are in place.

When businesses or entities disclosed through the Conflict of Interest process reach an annual (from July 1 to June 30 fiscal year) amount of over $25,000, the Purchasing Department will pursue specific pre-approval through the Controller before approving any further contracts. The Purchasing Department Head and the Controller will ensure that all relevant bidding and contract review processes have been followed and that no other exception provisions exist, such as contracting for services that the University itself regularly provides. Each contract/payment must be specifically and appropriately reviewed and pre-authorized. Documentation of the approval to purchase / contract must accompany all requests for contract review and all requests for payment, and the amount paid will be included in the Conflict of Interest report prepared by Purchasing. Approval documentation must also be attached for the request to pay related invoices. 

As with Exception 1 above, if the affiliated entity is related to a Vice President, the Purchasing Department Head and Controller will obtain the approval of the President prior to the contract/transaction. If the business entity is related to the President, the Board of Trustees must approve the contract/transaction. The NMU Board of Trustees follows its own documented process to ensure that transactions meet ethical and professional standards when a conflict of interest arises. Approval cannot be granted for “all business going forward.”

Failure to comply will result in a report to the Vice President of Finance. A second offense will be reported to the President of the University. Any further offenses will result in a report to the Board of Trustees. 

Special note about credit card/purchasing card (p-card) transactions to affiliated entities:
Since there is no good mechanism to identify credit card/p-card transactions that would fall under these two exceptions, this type of expense transaction is not subject to preapproval, even if the total dollar amount paid to an affiliated entity is greater than $25,000 per year. However, transactions paid by University p-cards and/or reimbursed through the expense settlement process will still be reported as part of the affiliated entity’s annual financial total on the Conflict of Interest report. Transactions that appear to be specifically structured to avoid the preapproval review process will be reported to the Vice President of Finance and Administration and the President of the University. 

Requiring One’s Own Textbook, other Teaching Materials, or a Patented Product
The receipt of royalties or similar profits by a faculty member for having written a textbook or other copyrighted or patented products to be used at Northern Michigan University is not prohibited.  A faculty member producing a textbook, other teaching materials, whether or not copyrighted, or other copyrighted or patented products prepared and designed for the use of any compulsory purchase by the students of Northern Michigan University shall subject the materials to normal departmental procedures as defined in department bylaws. 

Accepting Payments from Students
All money collected from students will flow through their official NMU student account, also known as eBill. To clarify, it is never allowed to charge students extra fees or collect payments, even to share the cost or expense of an extracurricular activity, outside of the official NMU student account. Faculty and staff will not collect cash, or transfer funds via an outside payment method from students to themselves for any reason. Employees and faculty may not require students to purchase goods or services from themselves or any affiliated entity, except as allowed in the “Requiring One’s Own Textbook” provision above. In general, faculty and staff may never require students to make purchases outside the regular NMU student account.  

Accepting or Granting Gratuities or Special Favors
University faculty and employees may not accept or offer gifts or special favors from or to organizations that engage in business with the University. This prohibition applies whenever such an exchange could reasonably be viewed as an improper attempt to influence judgement, actions, or professional duties.

Sometimes educational opportunity discounts are offered to all University faculty and staff. These are not considered “special favors.” For instance, when a conference sponsor offers a discount to employees from any university or any member of a particular organization, it is not a “special favor.”

The University also allows small, de minimis gifts to be exchanged with vendors. For example, an occasional snack, sponsored meal, branded clothing, or small holiday gift may be exchanged or received as long as the exchange does not exceed the current IRS de minimis guideline of $100 per year per person. Also, it is usual and customary for vendors to foster business relationships by discussing services over a meal. Again, the University will allow an employee to accept the business entertainment meal as long as the value is less than $100 per person, per year.  It would be considered usual and customary for two employees to share a meal with a current or potential vendor to discuss services. However, asking a potential vendor to host a table for 10 University employees who each receive a $100 meal would not be in the spirit of this guidance.

Sometimes discount offers will be accompanied by special forms indicating the discount amount and asking for attestation that it is allowed. Completion of these forms and other questions about accepting or granting gratuities or special favors may be directed to the employee/faculty member’s supervisor or the NMU Internal Auditor.
 

Requiring One’s Own Textbook, other Teaching Materials, or a Patented Product
The receipt of royalties or similar profits by a faculty member for having written a textbook or other copyrighted or patented products to be used at Northern Michigan University is not prohibited.  A faculty member producing a textbook, other teaching materials, whether or not copyrighted, or other copyrighted or patented products prepared and designed for the use of any compulsory purchase by the students of Northern Michigan University shall subject the materials to normal departmental procedures as defined in department bylaws. 

Accepting Payments from Students
All money collected from students will flow through their official NMU student account, also known as eBill. To clarify, it is never allowed to charge students extra fees or collect payments, even to share the cost or expense of an extracurricular activity, outside of the official NMU student account. Faculty and staff will not collect cash, or transfer funds via an outside payment method from students to themselves for any reason. Employees and faculty may not require students to purchase goods or services from themselves or any affiliated entity, except as allowed in the “Requiring One’s Own Textbook” provision above. In general, faculty and staff may never require students to make purchases outside the regular NMU student account.  

Accepting or Granting Gratuities or Special Favors
University faculty and employees may not accept or offer gifts or special favors from or to organizations that engage in business with the University. This prohibition applies whenever such an exchange could reasonably be viewed as an improper attempt to influence judgement, actions, or professional duties.

Sometimes educational opportunity discounts are offered to all University faculty and staff. These are not considered “special favors.” For instance, when a conference sponsor offers a discount to employees from any university or any member of a particular organization, it is not a “special favor.”

The University also allows small, de minimis gifts to be exchanged with vendors. For example, an occasional snack, sponsored meal, branded clothing, or small holiday gift may be exchanged or received as long as the exchange does not exceed the current IRS de minimis guideline of $100 per year per person. Also, it is usual and customary for vendors to foster business relationships by discussing services over a meal. Again, the University will allow an employee to accept the business entertainment meal as long as the value is less than $100 per person, per year.  It would be considered usual and customary for two employees to share a meal with a current or potential vendor to discuss services. However, asking a potential vendor to host a table for 10 University employees who each receive a $100 meal would not be in the spirit of this guidance.

Sometimes discount offers will be accompanied by special forms indicating the discount amount and asking for attestation that it is allowed. Completion of these forms and other questions about accepting or granting gratuities or special favors may be directed to the employee/faculty member’s supervisor or the NMU Internal Auditor.