The term “external organization” (EO) refers to any organization that acts on its own behalf. It is not legally part of the university and generally has its own taxpayer identification number (tax ID). Examples include alumni associations and student organizations.
Under specific, limited circumstances, Cornell can act as a fiscal agent for managing funds for an EO. The EO account activity is governed by University Policy 3.16, External Organization Accounts.
We strongly encourage units to consider the administrative burden and financial exposure of managing an external organization account. A Cornell employee must process all transactions made through university systems and the unit must make accounts in deficit whole at year-end if the EO doesn’t have available funds.
The university reserves the right to assess charges, in the event that an EO needs to use Cornell goods or services (e.g., facilities, room rentals, etc.) please refer to University Policy 3.10, Recharge Entities, Ithaca Campus Units, for additional details on billing rates for external organizations.
Opening a New Account or Sub-Account for a New External Organization
To request a new account or sub-account for a new EO, the authorized representatives for Cornell and the EO must complete the application and agreement forms below.
If you need a new account or sub-account that is not related to a new EO, it will not require an application form. For example, if you request a new account to reorganize existing EO sub-accounts, you do not need to submit a new application form.
An authorized representative is a Cornell University employee authorized by an EO to open a university account on the EO’s behalf. The authorized representative or a designee will have signature authority on the account and, therefore, can process transactions on behalf of the external organization.
Forms
The EO's and Cornell's authorized representatives must complete the EO account agreement before completing the application for an EO account. Then, the completed agreement and application forms must be signed by the EO’s and Cornell's authorized representatives and submitted for review and approval to the director of Risk Management and Insurance and the vice president for finance (as delegated by the EVP and CFO).
Submit both completed forms as attachments to your New Account/New Sub-Account e-doc request.
The Office of the Controller retains sole discretion to approve or deny EO account requests and to decline to provide services or transaction processing.
Minimum Criteria for Accounts
External organizations must meet these minimum criteria.
- The organization must exist solely to support Cornell-related activities or serve a mission-related purpose.
- The organization must prove unable to provide financial stewardship of its funds. For example, the EO must demonstrate that it cannot open a bank account or lacks staffing resources to support proper stewardship.
- The organization must agree to execute Cornell’s template agreement detailing Cornell’s financial stewardship support for the organization’s funds.
Examples of mission-related account purposes may include, but are not limited to, the following:
- Cornell alumni clubs or Cornell student associations.
- Cornell University Religious Works (CURW).
- EO membership fees.
- EO event/consortium expenses.
Using EO Accounts
Cornell University does not own the resources in an EO account. While the EO remains the owner of its EO account funds and is solely responsible for how such funds are spent, Cornell reserves the right, at any time, without explanation or justification, to decline providing service or transaction processing at their discretion. Units must make all transactions posted to an EO account on behalf of the EO and under the laws, contracts, and relationships of the EO and all applicable regulations governing these activities.
Account Services
The following university services are available for EO accounts:
- Cash receipts/deposits.
- Cash disbursements/payments.
- Journal/general ledger entries.
- Use of the authorized representative’s procurement card.
- Purchasing through Procurement Services, enterprise units, service facilities, or recharge operations.
To purchase goods or services, a university employee who has access to the university’s purchasing systems must process the transaction, and a university employee must authorize the EO account transaction.
The following services are not available for EO accounts:
- Payroll services.
- Cornell University employees cannot be appointed to and paid directly from an external organization account.
- Discounted bulk-mailing services.
- University corporate credit card services.
- Investment management services.
- University Audit services.
- University Counsel services.
- Tax advisory or tax return filing services, other than as outlined in the EO policy or this procedure (generally limited to sales/use tax remittance).
Transaction Authority
Authorized representatives and Cornell employees with transaction authority on the EO account must follow the terms and conditions established by the EO and ensure that only allowable costs, as defined by the EO, are processed against the EO account.
Transaction Processing Rules
The EO authorized representatives and Cornell employees with transaction authority on the EO account must follow the following transaction processing rules:
- Do not sign contracts on behalf of the EO.
- Do not use Cornell’s sales tax exemptions or tax-exempt status on EO transactions.
- Proactively inform all vendors and third parties of EO’s independent status.
- Do not use EO accounts for Workday costing allocations or KFS salary distributions.
- Collect sales tax on EO transactions when appropriate and remit the tax to the appropriate state.
- Ensure that EO contracts clearly identify Cornell’s limited role as an agent for payment only and that the contract does not require Cornell to assume responsibility or liability for any act or omission of the EO.
Monitoring and Reconciling
The authorized representative and any Cornell employee with transaction authority on EO accounts must:
- Review and reconcile EO account activity monthly.
- Notify the EO before account funds are depleted.
- Monitor EO account balances on a consistent basis and ensure all known EO funds are transferred to the appropriate EO account.
- Ensure the EO fully funds the account at fiscal year-end.
If an EO account is in deficit at fiscal year-end, the department where the authorized representative is employed covers the difference after all known EO funds and uncollected amounts have been transferred. An explanation describing what funds are being used to cover the deficit is required.
Reporting Gift Funds or Endowment Fund Payouts
Annually report to Alumni Affairs & Development (or the Office of Alumni Relations at Weill Cornell Medicine) and the Office of the Controller the gift or endowed funds that have been transferred to an EO account and used per donor restrictions.
Reporting Sales Tax on Goods or Services Sold
If an EO sells goods or services, including digital products or services, and collects any sales, use, gross receipts, or similar taxes, the EO must report the taxable sales and the amount of tax collected or due to their unit finance leader in a timely fashion.
The EO’s unit finance leader will set the precise method and timeline of required sales or similar tax reporting.
All sales or similar tax collected or due by an EO and deposited or recorded in the EO account will be remitted by Cornell University on its sales or similar tax returns under the applicable Cornell tax procedures.
An EO may be separately liable for independent sales, use, gross receipts, or similar tax filing obligations Cornell has remitted. The EO agrees to indemnify and hold Cornell University harmless for any of the EO’s independent sales, use, gross receipts, or similar tax obligations. If a taxable purchase is made, but the EO’s vendor does not charge sales tax, the EO will be charged for the appropriate amount of use tax as determined by Cornell.
Closing EO Accounts
Before closing an account, ensure all known and anticipated expenses have been applied and there are no outstanding purchase orders or encumbrances. To close an account, change the Status to Closed.
Account closing rules:
- Accounts with pending entries cannot be closed.
- All closed accounts require a continuation account.
- Transactions can no longer be posted to closed accounts.
- Only a system supervisor can reopen a closed account.
Any balance remaining in the EO account after completion of the activity (e.g., symposium, consortium, etc.) will be disbursed at the direction of the EO.
Fund balances can be disbursed as follows:
- Cornell University will refund the balance to the EO thirty days after the termination date.
- The EO agrees that all remaining funds be transferred to the university and be considered an irrevocable, unrestricted, charitable contribution to Cornell University.
