Non-monetary transactions - barter agreements

Name of Policy: Non-monetary transactions – barter

agreements

Policy Number: 3364-35-01

Approving Officer: President

Responsible Agent: Athletic Director

Scope: All University of Toledo Campuses

evision date: April 29, 2020

Original effective date:

February 1, 2008

New policy proposal

Minor/technical revision of existing

policy

Major revision of existing

policy

Reaffirmation of existing policy

(A) Policy statement

The University of Toledo is committed to following all applicable laws and regulations,

including those laws and regulations that address bartering for the exchange of goods,

services, or assets. The University of Toledo may enter into barter agreements with

another entity for:

(1) Assets/goods provided for services received;

(2) Assets/goods provided for assets/goods received;

(3) Services provided for assets/goods received;

(4) Services provided for services received;

(5) The use of fixed assets (property, plant, and equipment) for assets/goods

or services received; or

(6) The use of fixed assets (property, plant and equipment) received in

exchange for the use of fixed assets provided.

(a) The university will not permit the transfer of ownership of fixed

assets under barter agreements.

(b) Capitalizing fixed assets is not required because there is no change

of ownership in barter transactions.

At no time will an athletic barter/trade agreement conflict with the multi-media rights

agreement with Learfield Communications, Inc. An official copy of the agreement is on

file in the office of legal affairs.

3364-35-01 Non-monetary transactions-barter agreements. 2

(B) Purpose of policy

This policy establishes the directives to account for barter transactions which are the

exchange of goods, services or assets (other than cash) for other non-monetary goods,

services or assets. The exchange can be for similar or dissimilar goods, services, or

assets.

The following procedures are designed to ensure that the university properly documents

and records revenue and offsetting expenses related to barter/trade agreements. Revenue

will only be recognized up to the lesser of cost or fair market value of the service or

product under barter/trade and all barter/trade agreements expire at a maximum of one

year.

(1) Goods/services trade lists

At the beginning of each fiscal year a list of all goods and services that

can be used in a barter transaction with another organization will be listed

with the fair market value of each item listed. A copy of this list will be

kept on file at the Athletic Department and can be reviewed upon request.

(2) Barter/trade agreement

All transactions involving exchanges of goods, services or assets (other

than cash) for other non-monetary goods, services or assets must be

documented on a barter transaction receipt form.

The form will document the goods or services given up and received by

the university.

(a) The barter transaction receipt form should be completed and

signed by the responsible department agents, athletic director,

Associate athletic director and the donor. In the event that the

donor does not sign the agreement a letter will be sent outlining the

agreement with a statement that no response is affirmation that the

vendor is in agreement with the terms of the barter transaction. A

copy of the letter will be kept on file with the barter/trade

agreement.

(b) The barter transaction receipt form will be maintained in the

athletic department and is available for review upon request.

(3) Record keeping/reconciliation

3364-35-01 Non-monetary transactions-barter agreements. 3

The athletic department will maintain a file on each barter agreement

including all invoices, receipts and supporting documentation.

(a) The athletic department will record the value of the barter on the

barter tracking database (spreadsheet). This database is in a

common directory, accessible as a read only document by general

accounting for reconciliation purposes.

(b) The athletic department is required to obtain a detailed receipt for

the value of the goods, services or asset in accordance with normal

accounts payable guidelines. The transaction will be recorded on

the transaction on the barter tracking database.

Department.

(d) A yearly reconciliation should be performed between the athletic

department and the controller’s office to ensure that all

documentation has been received and recorded.

(4) Accounting/finance department

For each good, or asset exchanged, a fair market value must be assigned

by the parties engaged in the transaction, as the good, services, or asset is

considered income under federal tax regulations.

Transactions with person or organizations involving goods, services, or

assets with a fair market value greater than $25,000.00 require approval by

the University of Toledo senior vice president for finance and

administration.

(a) When the copy of the barter transaction receipt is received in

accounting, the revenue and offsetting account receivable is

recorded and recognized as a barter transaction in accordance with

generally accepted accounting principles (GAAP).

(b) When the receipt for a related expense is received accounting will

reduce the receivable and recognize the related expense in

accordance with GAAP.

subsidiary ledger to the barter database. Any discrepancy must be

reconciled within five business days or else the general ledger will

be adjusted to detail, if lower.

3364-35-01 Non-monetary transactions-barter agreements. 4

All barter/trade agreements will expire at a maximum of one year from

date of the agreement. If the barter values are less then one year, the

balance will be written off at the time of expiration. Once the barter

agreement has expired accounting will write off any remaining balance

recognizing the offsetting loss due to barter expiration.

(D) Definitions

Barter exchange. Any person or organization with members or clients that contract with

each other (or with the barter exchange) to jointly trade or barter property or services.

The term does not include arrangements that provide solely for the informal exchange of

similar services on a noncommercial basis as defined by the Internal Revenue Service

(IRS).

Vendor. Any one or any unit that has a signed barter agreement with the University of

Toledo.

Fair Market Value. The price that property would sell for on the open market. It is the

price that would be agreed on between a willing buyer and a willing seller, with neither

being required to act, and both having reasonable knowledge of the relevant facts as

defined by the IRS.

(F) Related form

(1) University of Toledo barter transaction receipt form

Approved by:

/s/

Sharon L. Gaber, Ph.D.

President

April 29, 2020

Date

eview/Revision Completed by:

Athletic Department, SLT

Policies Superseded by This Policy:

• Previous 3364-35-01 effective date

February 2, 2015

nitial Effective Date: February 1, 2008

eview/Revision Date: July 12, 2011;

February 2, 2015, April 29, 2020

ext review date: May 1, 2023