FUND ACCOUNTING

1
FUND ACCOUNTING

• The Basics of Fund Accounting for Sponsored
  Projects
• Presented at the AURA Meeting on October 6, 2004

2
Fund Accounting What is it?

• Fund Accounting is an accounting method typically
  used by governmental organizations in order to
  properly manage public monies (monies that are
  provided by tax dollars).
• People who manage public monies are generally
  held to a higher ethical standard than those who
  manage private monies.

3
Fund Accounting What is it? (cont.)

• Fund Accounting provides mechanisms for managing
  obligated funds through the budgeting,
  encumbrance, and expenditure processes.
• In Fund Accounting, encumbered and expended funds
  are compared to the budgeted amount in order to
  ensure that accounts do not exceed their budgets.
  

4
Fund Accounting What is it? (cont.)

• Fund Accounting requires that separate Funds/Fund
  Types be established for different sources of
  funds. For example
• Federal government contracts and grants
• State government contracts and grants
• Local government contracts and grants
• Private entities contracts and grants

5
Fund Accounting What is it? (cont.)

• For certain reporting purposes, these fund
  groupings can be combined. For example
• For reporting to UT System and the State of
  Texas.
• For the UTHSC-H Fact Book.

6
Fund Accounting What is it? (cont.)

• Fund accounting also requires that a separate
  account be set up for each award, grant, or
  contract. For example
• Project 0001489, which is an NSF award in the
  Medical School.
• Project 0002597, which is a gift account in the
  School of Public Health.

7
Fund Accounting What is it? (cont.)

• For certain reporting purposes, each project must
  be reported on separately. For example
• Annual or final financial status reports for
  federal contracts and grants.
• Billings/invoices for state contracts.
• Donor reports for gifts and endowments.

8
How can you identify the different funds?

• In FMS, each fund type has an assigned Fund Code.
  For example
• 16000 17999 Auxiliary funds
• 30000 34999 MSRDP designated funds
• 35000 35999 Service accounts
• 36000 36999 Non-MSRDP designated funds
• 40000 41999 State appropriations

9
How can you identify the different funds? (cont.)

• 50000 51999 Federal government contracts and
  grants
• 53000 53999 State government contracts and
  grants
• 55000 55999 Local government contracts and
  grants
• 56000 57999 Private entity contracts and grants
• 58000 58999 Gift funds
• 59000 59999 Endowment funds

10
Basic Rules

• Revenue cannot be transferred between different
  types of funds. For example
• Revenue cannot be transferred (money moved)
  from a federal government contract and grant fund
  to a state government contract and grant fund (or
  vice versa).
• Revenue cannot be transferred from any contract
  and grant fund to a designated fund (or vice
  versa).
• However, expenses can be transferred between
  different types of funds.

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Basic Rules (cont.)

• Within the terms and conditions (restrictions) of
  specific fund types, revenue can be transferred
  within the same fund type. For example
• Revenue can be transferred from one designated
  fund to another.
• Revenue can be transferred from one unrestricted
  gift account to another.

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Re-budgeting Terminology

• From a budgetary standpoint, funding is NEVER
  transferred from revenue to expenses.
• If more revenue has been received than has been
  budgeted, then a budget journal is entered to
  increase both the revenue and expense budgets to
  match the funding that has been received.

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Re-budgeting Process

• If the Budget Overview Panel for CC_Rev is as
  follows
• Revenue estimate 5,000.00
• Recognized revenue 14,638.91
• Available budget -9,638.91
• Collected revenue 14,638.91
• Then the revenue estimate (budget) can be
  increased by 9,638.91.
• And, whenever the revenue estimate (budget) is
  increased, the expense estimate (budget) must
  also be increased.

14
Re-budgeting Process (cont.)

• A budget journal for CC_Rev would need to be
  entered to increase the revenue budget.
• Budget journal transactions require that you
  enter both a revenue account code, and an expense
  account code.
• Using the Generate Expense Budget functionality
  will cause the budget journal for CC_Prj (or
  CC_Org, whichever is applicable) to be generated.

15
Revenue Account/Source Codes

• Another aspect of Fund Accounting is that the
  Revenue Account/Source Codes should match the
  Fund Type. For example
• Revenue account 41500 Federal Government should
  not be used to deposit funds in a Gift Account.

16
FUND ACCOUNTING

• The Basics of Fund Accounting for Sponsored
  Projects
• Presented at the AURA Meeting on October 6, 2004