1. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Fund Accounting

2. 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

3. 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

4. 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

5. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Fund Groups

6. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Unrestricted Current Funds

7. 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.

8. 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.

9. 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.

10. 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

11. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Grid Work General Designated Auxiliary Enterprises

12. 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

13. 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

14. 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

15. 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

16. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Restricted Current Funds

17. 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.

18. 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

19. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Grid Work Contracts & Grants Other Restricted

20. 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

21. 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

22. 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

23. 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

24. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Loan Funds

25. 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.

26. 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

27. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Grid Work Loans

28. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Loan Funds – Additions Interest Gifts Endowment Income Other Sources –Government advances Transfers In

29. 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

30. 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

31. 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

32. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Endowment and Similar Funds

33. 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

34. 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.

35. 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.

36. 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.

37. 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.

38. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Grid Work Endowments and Similar Funds

39. 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

40. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Endowments and Similar Funds – Deductions Supplies & Expense –Payouts on life income funds Transfers Out

41. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Endowments and Similar Funds – Assets Cash Investments

42. 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.

43. 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

44. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Plant Funds

45. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Plant Funds Construction Retirement of Indebtedness Renewal and Replacement Investment in Plant

46. 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

47. 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

48. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Grid Work Construction Retirement of Indebtedness Renewal & Replacement Investment in Plant

49. 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

50. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Construction - Deductions –Supplies & Expenditures Expendable equipment –Capital Expenditures Predominantly building capitalization –Transfers Out

51. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Construction – Assets Cash Investments Accounts Receivable Prepaid Expense Due from other Funds

52. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Construction – Liabilities Accounts Payable Due to other Funds Notes Payable Bonds Payable

53. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Retirement of Indebtedness – Additions Interest and gains –Losses Gifts Grants Transfers In –Mandatory –Voluntary

54. 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

55. 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

56. 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.

57. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Renewal and Replacement Funds – Additions Interest and gains –Losses Gifts Grants Transfers In –Mandatory –Voluntary

58. 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

59. 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

60. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Renewal and Replacement Funds – Liabilities Accounts Payable Due to other Funds

61. 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

62. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Investment in Plant – Deductions NONE You will never see an expenditure in Investment in Plant.

63. 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

64. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Investment in Plant – Liabilities Notes Payable Bonds Payable Only debt that matches the capital assets

65. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Other Funds

66. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Other Funds Clearing External Agency Internal Agency

67. 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

68. 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.

69. 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

70. 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

71. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Questions

72. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Higher Education Function Codes

73. 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

74. 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

75. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 EDUCATIONAL AND GENERAL INSTRUCTION General Academic Vocational/Technical Continuing Education Remedial

76. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 EDUCATIONAL AND GENERAL RESEARCH Individual Project Institutes and research centers NOT equivalent to sponsored research

77. 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

78. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 EDUCATIONAL AND GENERAL ACADEMIC SUPPORT Libraries Museums and galleries Educational media Academic computing

79. 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

80. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 EDUCATIONAL AND GENERAL STUDENT SERVICES Student services administration Financial aid administration Student records Admissions

81. 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

82. 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

83. 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

84. 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.

85. 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

86. Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Questions on Function Codes?