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UNDERSTANDING FUNDS, ATTRIBUTES AND NEW ACCOUNTS AT UM

A discussion of fund accounting, the various fund groups, account structure and logic, account attributes including financial classifications and source of funds, procedures for opening an account and account flags.

May 2005

UNIVERSITY OF

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WHY AM I HERE?• Do you ever wonder what

type of account to set up?• Do you want to know more

about external and internal restrictions on spending placed on certain types of accounts?

• Do you want to know what budget implications the account types have?

• If you do, then you are in the right place...

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GOALS & OBJECTIVES

• To enable departmental administrators in setting up and managing their accounts.

• To help participants understand the budgetary and fiduciary responsibilities of funds.

• By completion of this session, participants will be able to:

– Understand the basic structure and classification of accounts under Fund Accounting Principles.

– Demonstrate an understanding of the source of funds and functionality of accounts.

– Perform the necessary steps to successfully open new accounts at the University.

– Understand restrictions on using different types of accounts.

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FUND ACCOUNTING

• Allows University administrators to manage resources based on the different types of revenues received by the University.

• Internally University reports on a fund accounting basis (Report 90s are based on fund accounting).

• External financial statements are based on the accrual basis of accounting.

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DEFINITION OF A FUND

• A fund is an accounting entity with a self-balancing set of accounts used to record assets, liabilities, a fund balance and changes in fund balance (revenues and expenses).

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VARIOUS FUND GROUPS• Current Funds

– Unrestricted General– Designated

• Medical• Gables, Marine and South

Campus• University of Miami

Hospitals and Clinics• Anne Bates Leach Eye

Hospital– Restricted

• Sponsored• Gift

• Non-Current Funds

– Loan

– Endowment

– Annuity

– Plant – Agency

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ACCOUNT NUMBERS

• Account Structure and Logic

• Link to Funds– SL account 1st digit

– GL account 2nd digit

– See table in manual

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FUND GROUP 10 UNRESTRICTED - GENERAL

• Activities recorded in fund group

• Year end balancing procedures

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FUND GROUP 2XDESIGNATED

• Activities captured in fund groups

• Year end balancing of funds

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DISTINCTION BETWEEN ASSET TYPES “7R & 7U”

• The asset type attribute is coded on “7” accounts as either R or U.

• 7R - Restricted

• 7U - Designated

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FUND GROUP 30 & 40RESTRICTED

SPONSORED/NON-SPONSORED

• Sponsored– Activities captured in

fund

– Year end balancing

• Gift– Activities captured in

fund

– Year end balancing

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FUND GROUP 50 LOAN FUND

• This fund group is used to account for resources available for loans to students.

• The funding sources for loan funds come primarily from government and donors.

• Loan funds are revolving funds. Thus as students repay loans, the repayment is placed back in the account. As a result, funds are again available to issue loans to other students.

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FUND GROUP 60 AND 70ENDOWMENT & ANNUITY

• Endowment and Similar Funds– Permanent

– Term

– Quasi

• Annuity and Life Income Funds

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FUND GROUP 8XPLANT FUNDS

• Activities captured– Construction and

renovation

– Departmental equipment and surplus reserves

• Year end balancing procedures for funds 81 & 82

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FUND GROUP 90AGENCIES

• Consists of resources held by the University as custodian or fiscal agent for others such as student organizations.

• Restrictions:

– Salaries may not be charged

– Transfers may not be reflected

– May not use UM’s federal or state sales tax ID #s

• Year end balancing procedures

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WHAT IS AN ACCOUNT?

• A functional unit established for a specific purpose with one individual having primary responsibility for it.

• This functional unit is a collection of records which contain dollar data and descriptive data called attributes.

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SUB-OBJECT CODES

• Revenues 0xxx– Conferences 006x

– Student Union Fees0091

– Corporate Gifts 0231

– Foundation Gifts 0232

– Private Gifts 0233

– Auxiliary 07xx

• Expenditures– Direct Costs 1xxx-7xxx

• Personnel Comp 1xxx

• Fringe Benefits 2xxx

• Operations 3xxx

4xxx

5xxx

• Capital6xxx

• Transfers 7xxx

– Indirect Costs 8xxxWeb site to view sub-object code listing is: www.miami.edu/controller

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EXAMPLE OF CODE USAGE

Account # Object Code

139759 1521• Salary expense transaction

(recorded in the subsidiary ledger)

019759 1521• Prepaid asset transaction

(recorded in the general ledger)

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ATTRIBUTES• Account Responsible Person

• Type of fund (fund #)

• Purpose of Account

• Start/End date of account

• Account title

• Department Number

• Asset type-restricted/unrestricted

• Tax purpose

• Financial Class

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CLASSIFICATION STRUCTURES

• Fund– Sub-fund

• Organizational Class• Campus• Asset Type• Tax Purpose• Financial Class

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CLASSIFICATION EXERCISE

• Let’s work through an example…

• Determine total faculty salaries in the Chemistry Dept. paid by Federal Awards.

• What account classification structures are selected to roll up the total?

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FINANCIAL CLASS STRUCTURE

• FINANCIAL CLASSIFICATION– LEVEL I

• Educational and General

• Auxiliary Enterprises

• Patient Care

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SOURCE OF FUNDS• The source of funds establishes where the

resources are being obtained from to fund the account being established. The following are examples of sources.– Program Revenues– Registration Fees– Private, Corporate and Foundation Gifts– Special Academic Programs

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DETERMINING WHAT ACCOUNT TO CREATE

• When creating an account you need to ask yourself the following:

– What is the funding source?

– What is the account going to be used for?

– Is the funding unrestricted, restricted, designated or other?

– What is the financial classification of the account?

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ACCOUNT CREATE FORMS

• You can find the account create forms for unrestricted, designated, restricted, plant and agency accounts on the Controller’s Web Page www.miami.edu/controller

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ACCOUNT FLAGS

• Frozen Flag– Transactions will not

post to the account unless there is an outstanding open commitment for the item.

• Delete Flag– Delete 1 Status

– Delete 2 Status

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CONCLUSION• Is the account

unrestricted, restricted, designated or other?

• What are the budget implications based on the type of account I have set up?

• What is the funding source and account purpose?

• Where do I go to find help with the account create process?

Call the Controller’s Officeat 305-284-4244