LMC is closing at noon on Friday, October 4 in honor of the passing of our beloved faculty member, Shawn Hisle. The College will reopen at 8am on Monday, October 7.
Barter Arrangements (Policy)
Breadcrumb
Office of Origin: Finance
Responsibility: Chief Financial Officer
Date Adopted: 11-22-11
Dates Reviewed: 1-15-12, 11-20-17, 1-23-18, 3-31-21(C)
Last Date Approved by Board: 1-23-18
The main objective of all barter arrangements should be to provide Lake Michigan College (the College) with financial, sales, or marketing benefits.
To ensure compliance with Generally Accepted Accounting Principles (GAAP) and Internal Revenue Service regulations, no barter arrangement can be entered into without approval of the Executive Director of Finance, who will ensure that appropriate procedures are in place for approving, recording, and monitoring the barter transaction.
The following apply to all barter arrangements:
- Barter arrangements may not be used for personal benefit.
- All must be documented in writing.
- No exchange of cash should be included.
- Goods/services should be exchanged at a fair value and exchanged for equal value.
- Goods/services acquired must be recorded, tracked, and expensed as they are used.
- Barter arrangements may not be entered into that result in acquiring goods/services for which the College has little or no use.
- Additional approvals and controls are often necessary to protect assets in a barter arrangement due to expiration dates, use and authorization, and contract monitoring; these additional controls must be adhered to.
- The cost/benefit must be weighed as it may be necessary to forego additional cash sales to meet a barter obligation (ticket sales, rental space, etc.).
- Depending upon tax laws, bartered goods/services could be subject to sales and income taxes, which are payable in cash.
References:
- Tax Equity and Fiscal Responsibility Act of 1982
- Statement of Financial Accounting Standard No. 63
- Accounting Principles Board Opinion No. 29, “Accounting for Nonmonetary Transactions”