Business Policies - Lease/Installment Purchase Agreement Review
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BUSINESS POLICY LETTER
TO: All Members of the University Community 97:26
DATE: September 1997
Lease/Installment Purchase Agreement Review
The financial and legal implications of entering into lease/installment purchase agreements
and to properly record same in the Financial Records System (FRS) must be evaluated
before Lease/Installment Purchase Agreements are executed.
A lease (operating lease) is defined as a contract that grants the University the
use of real or personal property for a specified period of time in exchange for periodic
payments. Generally, the University will not retain an ownership interest in the property
at the end of the lease term.
An installment purchase agreement (capital lease) is defined as a contract by which
the University assumes an ownership interest in the respective property in exchange
for periodic payments over some stipulated period of time. Generally, the University
will have the right to retain an ownership interest in the property at the end of
the lease term.
Prior to the formal execution of a lease or installment purchase agreement by the
University, the full contract document will be routed for review as follows:
- For contracts greater than $50,000 - to the General Counsel’s Office for review of
contractual language. Note: Contracts not exceeding $50,000 may also be submitted to the General Counsel’s Office
for review by the contracting officer.
- For all contracts - to the Controller’s Office for economic evaluation and financial
- For all contracts - to the contracting officer (President or Vice President for Administration
and Finance or other Board of Trustee designee) for final review and contract approval.
- For approved contracts greater than $3,000 - to the Purchasing Office for procurement
action and entry into the On-line Purchasing System.
- For all approved contracts $3,000 or less - to the originator for procurement action
and entry into the On-line Purchasing System.
- For all approved contracts - to the Controller’s Office for financial recording and
- Richard P. Duffett,
- Interim Vice President for Administration and Finance