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), 2-24-26
Last Date Approved by Board: 2-24-26

The objective of all barter arrangements should be to generate measurable value for Lake Michigan College (the College) by advancing its financial position, enhancing its visibility and reputation, or supporting its enrollment, sales, and promotion/marketing strategies.

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, Finance, who will ensure that appropriate procedures are in place for recording and monitoring the transaction, and the supervising Cabinet member.

The following apply to all barter arrangements:

• Barter arrangements may not be used for actual or perceived personal benefit.
• All barter arrangements must be documented in writing.
• No exchange of cash can be included.
• Goods/services are to be exchanged at a fair value and exchanged for equal value.
• Goods/services acquired must be recorded, tracked, and expensed as used. 
• Barter agreements must be completed within the same fiscal year unless explicit written approval is obtained in advance from the Executive Director, Finance.
• 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”