The University, at the request of the Trustees, adopted a policy on transaction authority designed to provide a general framework for understanding who can bind the University to transactions with third parties. The policy accomplishes three things: (1) it clarifies the delegation of authority individuals employed by Princeton University have been delegated to bind the University to agreements with outside parties and to make and receive commitments on the University’s behalf; (2) it specifies dollar limits applicable to University employees’ further delegation of the authority they have been given; and (3) it notes situations where consultation with others within the University is encouraged before an individual binds the institution to an agreement or commitment.
The Transaction Authority Policy provides a general framework, anticipating that specific policies may provide more detailed guidance. For example, the authority to buy and pay for goods and services must comply with the Office of Finance and Treasury’s policies, which sets out who has the authority to approve payments charged to University accounts (i.e. payment authority). Payment authority is different from transaction authority, and both are required before processing a payment by the University. Binding the University to an agreement usually precedes initiating a payment under the agreement.
The Transaction Authority Policy germinated from a periodic review of the University’s bylaws by the Board of Trustees. The Trustees requested that the University review how authority to commit the University to agreements and other obligations with outside parties flows from the Trustees to those who transact business on behalf of the University. In April 2006, the Executive Compliance Committee (ECC) asked a small project team to assess transaction authority at the University. In June 2007, the project team issued the Transaction Authority Report to the Board through its Audit & Compliance Committee, and the recommendations were adopted by the University. The ECC then asked a working group to implement the recommendations of the report over the 2007-2008 year. The working group distilled the report into a Transaction Authority Policy and developed additional tools and resources. The Transaction Authority Policy, sponsored by the Executive Vice President and the Provost, became effective July 1, 2008.
On behalf of the ECC, the Office of the General Counsel serves as a point of contact for individuals who have questions pertaining to the Transaction Authority Policy. Please address inquiries or requests for guidance to Yoo-Kyeong Kudo, University Counsel, at email@example.com.