kuali financial systems – financial administrator development series - october, 2006 fund...
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Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Fund Accounting
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Summary of Today’s Topics
• Fund Accounting– Definitions– Value Added– Allowable Activity by Fund
• Function Codes
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
What is Fund Accounting?
Fund accounting is the procedure by which resources for various purposes are classified by accounting and reporting purposes in accordance with activities or objectives as specified by donors, in accordance with regulations, restrictions, or limitations imposed by sources outside the institution, or in accordance with directions issued by the governing board.
AICPA Audits of Colleges and Universities Industry Audit Guide
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Audit Guide Fund Groups
• Unrestricted Current Funds• Restricted Current Funds• Loan Funds• Endowment and Similar
Funds• Plant Funds• Other Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Fund Groups
General Funds
Designated Funds
Restricted Funds
Auxiliary Enterprises
Current Funds
Clearing Funds
Internal Agency
External Agency
Other Funds
Loan Funds
Endowment Funds
Plant Funds
Noncurrent Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Unrestricted Current Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Unrestricted Current Funds
Include those economic resources of the institution which are expendable for any purpose in performing the primary objectives of the institution, i.e. instruction, research, and public service and which have been designated by the governing board for other purposes.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
What is an Auxiliary?
An enterprise that furnishes goods or services to students, faculty, or staff and charged a fee directly related to, although not necessarily equal to, the cost of the goods or services. Basically, an entity managed as a self-supporting activity.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
What is a Service Fund?
An enterprise that furnishes goods or services to other internal university departments and charges a fee directly related to, and equal to, the cost of the goods or services. Basically, an entity managed as a self-supporting activity that is not allowed to make a profit.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Unrestricted Current Funds
• General Funds • Designated Funds
– Continuing Education – Public Service – Internal Research – Other - the Mighty Catch-all – Unrestricted Scholarships
• Auxiliary Enterprise Funds– Auxiliary – Service
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Grid Work
• General• Designated • Auxiliary Enterprises
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Unrestricted Current Funds – Additions
• State Appropriations• Student Fees• Sales and Services
– Academic, Auxiliary & Service
• Recovery of Indirect Cost
• Interest (Gains are questionable)
• Gifts• Rent, Dividends &
Royalties• Endowment Income –
if unrestricted• Other Sources• Transfers In
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Unrestricted Current Funds – Deductions
• Matching Expenditures– Salaries, Wages & Benefits– Supplies & Expense– Travel– Capital Expenditures– Note Payments (lease purchases)– Interest Expense (lease purchases)– Transfers Out
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Unrestricted Current Funds – Assets
• Cash• Investments• Accounts Receivable• Inventories• Prepaid Expenses• Due from Other Funds• Notes Receivable
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Unrestricted Current Funds – Liabilities
• Accounts Payable• Salaries Payable• Accrued Vacation
Liability• Deferred Revenue• Due to Other Funds• Notes Payable
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Restricted Current Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Restricted Current Funds
Those funds expendable for operating purposes but restricted by donors or other outside agencies as to the specific purpose for which they may be expended.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Restricted Current Funds
• Other Restricted– Fellowships – Scholarships – Special State Appropriations– Matching Endowments– Other Restricted
• Contract and Grants – By agency type, I.e. federal, state, foundations, etc.– Cost Share
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Grid Work
• Contracts & Grants
• Other Restricted
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Restricted Current Funds - Additions
• Sales & Services (program income)
• Interest & Gains
• Gifts
• Grants & Contracts
• Endowment Income
• Other Income (program income)
• Transfers In
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Restricted Current Funds – Deductions
• Matching Expenditures– Salaries, Wages & Benefits– Supplies & Expense– Travel– Indirect Cost Recovery– Capital Expenditures– Note Payments (lease purchases)– Interest Expense (lease purchases)– Transfers Out
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Restricted Current Funds – Assets
• Cash• Investments• Accounts Receivable• Inventories• Prepaid Expenses• Due from Other Funds• Notes Receivable
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Restricted Current Funds – Liabilities
• Accounts Payable• Salaries Payable• Deferred Revenue• Due to Other Funds• Notes Payable
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Loan Funds
The loan funds group consists of loans to students, faculty, or staff, and of resources available for such purposes.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Loan Funds
• Gift Agreements specify revolving• Many are temporary and require
repayment of principal & interest• Some specify forgiveness of repayment
under certain conditions• Specific restrictions can exist
– Geographic– Financial status
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Grid Work
• Loans
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Loan Funds – Additions
• Interest • Gifts• Endowment Income• Other Sources
– Government advances
• Transfers In
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Loan Funds – Deductions
• Student Loan Expenditures– Collection fees– Write-offs of loans– Administrative collection costs– Refunds to grantors
• Transfers Out
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Loan Funds - Assets
• Cash• Investments – temporary• Due from other Funds• Notes Receivable
– Face value– Allowance for doubtful loans
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Loan Funds - Liabilities
• Accounts Payable– amounts due collection agencies for fees– Refundable loan amounts
• Due to other Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Endowment and Similar Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Endowment and Similar Funds
• Endowment Funds• Term Endowment Funds• Quasi-endowment Funds• Annuity and Life Income Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Endowment Funds
Endowment funds are funds with respect to which donors or other outside agencies have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity and invested for the purpose of producing present and future income which may either be expended or added to principal.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Term Endowment Funds
Term endowment funds are similar to endowment funds except that, upon the passage of a stated prior of time or the happening of a particular event, all or a part of the principal may be expended.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Quasi-endowment Funds
Sometimes called funds functioning as endowments, quasi-endowments are funds which the governing board of an institution, rather than a donor or other outside agency, has determined are to be retained and invested. Because they are internally designated, the governing board has the right to decide at any time to expend the principal.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Annuity and Life Income Funds
Funds contributed to an institution subject to the requirement that the institution periodically pay the income earned on the assets to designated beneficiaries.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Grid Work
• Endowments and Similar Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Endowments and Similar Funds – Additions
• Interest & Gains– Losses
• Gifts• Other Income
– Income from Asset – Farm Activity, Rental, etc.
• Transfers In
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Endowments and Similar Funds – Deductions
• Supplies & Expense – Payouts on life income funds
• Transfers Out
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Endowments and Similar Funds – Assets
• Cash• Investments
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Endowments and Similar Funds - Liabilities
• NONE
The mission of these funds is to make money, not spend it. Therefore, there tends to be no liabilities since there are no deductions.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Endowments and Similar Funds
• Institutional spending policy• Endowment Income booked directly to
operating account– This is IU specific
• Industry calls for– Prudence– Rational and systematic formula
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Plant Funds
• Construction• Retirement of Indebtedness• Renewal and Replacement• Investment in Plant
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Plant Fund Definitions
• Construction– Funds for acquisition of physical plant– Sometimes called Unexpended Plant
• Retirement of Indebtedness– Indebtedness incurred for plant expansion
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Plant Fund Definitions - continued
• Renewal & Replacement– Funds set aside for replacement of
renewable property• Desktop computer replacement
• Investment in Plant– Location of all assets that have been
capitalized and related to debt
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Grid Work
• Construction• Retirement of Indebtedness• Renewal & Replacement• Investment in Plant
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Construction - Additions
• Additions– State Appropriations– Interest & Gains
• Losses
– Gifts – Grants – federal and state– Bond Revenue– Transfers In
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Construction - Deductions
– Supplies & Expenditures
• Expendable equipment
– Capital Expenditures
• Predominantly building capitalization
– Transfers Out
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Construction – Assets
• Cash• Investments• Accounts Receivable• Prepaid Expense • Due from other Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Construction – Liabilities
• Accounts Payable• Due to other Funds• Notes Payable• Bonds Payable
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Retirement of Indebtedness – Additions
• Interest and gains– Losses
• Gifts• Grants• Transfers In
– Mandatory – Voluntary
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Retirement of Indebtedness - Deductions
• Supplies & Expense– Trustee’s fees and expenses
• Note Payments• Bond Payments• Interest Payments
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Retirement of Indebtedness - Assets
– Cash
– Investments
– Funds on deposit
– Accounts Receivable
– Due from other funds
– Notes receivable
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Retirement of Indebtedness - Liabilities
• NONE
Retirement of Indebtedness usually does not have any liabilities. Predominantly this is true because there are no operating expenditures involved in the fund group, nor any long term debt.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Renewal and Replacement Funds – Additions
• Interest and gains– Losses
• Gifts • Grants• Transfers In
– Mandatory– Voluntary
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Renewal and Replacement Funds - Deductions
• Supplies and Expense– Expendable Equipment– Maintenance of R&R Items
• Capital Expenditures• Transfers Out – very seldom
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Renewal and Replacement Funds - Assets
• Cash• Investments• Funds on Deposit • Accounts Receivable• Due from other Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Renewal and Replacement Funds – Liabilities
• Accounts Payable• Due to other Funds
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Investment in Plant – Additions
• NONE
You will never see a revenue in Investment in Plant. There is never cash activity
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Investment in Plant – Deductions
• NONE
You will never see an expenditure in Investment in Plant.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Investment in Plant - Assets
• Capital Assets– Land
– Buildings
– Moveable Equipment
– Cataloged Library Acquisitions– Improvements to Land
• Accumulated Depreciation
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Investment in Plant – Liabilities
• Notes Payable• Bonds Payable
Only debt that matches the capital assets
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Other Funds
• Clearing• External Agency• Internal Agency
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Clearing Accounts
• Interim accounts that should close out to –0- at the end of each accounting period
• All activity is ok as long as it is closed out• Used and abused
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Agency Funds
Funds held by an institution as custodian or fiscal agent for others such as student organizations, individual students, or faculty members.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Internal Agency Funds
• Temporary Holding Accounts• Examples:
– FICA– Federal Taxes– State Taxes
• Reported as Unrestricted at June 30
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
External Agency Funds
• Relationship with University mission• RC agreement to sponsor• Contract required
– With employees– Without employees
• Reimbursement to university• Never reported as university resources
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Higher Education Function Codes
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
What are function codes needed for ?
• IPEDS
• Facilities and Administrative Rate
• Internal management of how dollars are spent
• Some states require reporting by function
• Institutions can report expenses in the operating statement by function instead of natural classification
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
Educational and General Function Codes
• Instruction• Research• Public Service• Academic Support• Student Services• Institutional Support• Operation and Maintenance of Plant• Scholarships and Fellowships
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
INSTRUCTION
• General Academic
• Vocational/Technical
• Continuing Education
• Remedial
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
RESEARCH
• Individual
• Project
• Institutes and research centers
NOT equivalent to sponsored research
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
PUBLIC SERVICES
• Community service
• Cooperative extension services
• Public broadcasting services
– not primarily instructional
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
ACADEMIC SUPPORT
• Libraries
• Museums and galleries
• Educational media
• Academic computing
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
ACADEMIC SUPPORT Cont’d
• Ancillary support
• Academic administration
• Academic personnel development
• Course and curriculum development
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
STUDENT SERVICES
• Student services administration
• Financial aid administration
• Student records
• Admissions
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
STUDENT SERVICES, con’t
• Counseling and career guidance
• Social and cultural development
• Student health services
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
INSTITUTIONAL SUPPORT
• Executive management
• Fiscal and business operations
• General administration and logistical services
• Administrative computing
• Public relations/development
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
OPERATION AND MAINTENANCE OF PLANT
• Physical plant administration (and planning)
• Building maintenance
• Custodial services
• Utilities Cont’d
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
OPERATION AND MAINTENANCE OF PLANT
• Landscape and grounds maintenance
• Major repairs and renovations
Note: Not an expenditure category for private, must allocate out to all other functions.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006
EDUCATIONAL AND GENERAL
SCHOLARSHIPS AND FELLOWSHIPS• Grants• Trainee stipends• Prizes and awards• Tuition and fee waivers
NO exchange of services, used as designated by donor