13.1 Overview of University Fund Accounting

Policy Statement

Units should understand the fundamentals of fund accounting, how fund accounting at the University of Illinois System works, and how they need to process financial transactions within Banner (which is the University of Illinois System’s official system of record) using the appropriate fund accounting guidelines.

Reason for the Policy

The system receives funding from a variety of sources that have varying levels of restrictions and guidelines which must be followed. As a non-profit governmental institution, the system uses fund accounting to properly categorize these resources, which helps the system monitor and comply with these various restrictions and guidelines.

Applicability of the Policy

All units that have financial activity within Banner.

Procedure

Any employee with responsibility for managing business and financial activity within Banner should be properly trained. The system offers a variety of training resources, such as Introduction to Banner and Finance and Accounting & Financial Reporting Training Materials. Units should also refer to 1.2 Conducting, Recording and Reporting Financial Activity for a description of the accounting environment at the system. Employees are also encouraged to contact University Accounting and Financial Reporting (UAFR) with any accounting-related questions.

In addition to being properly trained, see below for several good business practices to follow that will help ensure compliance with fund accounting guidelines.

Ensure Financial Resources are Recorded within the Proper Fund Type

To ensure that the variety of financial resources that the system receives are properly segregated in compliance with fund accounting guidelines, it is essential to ensure that these resources are recorded within the correct fund type. For example:

• Student tuition is typically recorded in the Income Fund.
• Donations are typically recorded in a gift fund.
• Sales of goods and services are typically recorded in a self-supporting or service plan fund.

Ensure Financial Transactions are Recorded Using the Proper Accounting Standards

It is important to ensure that all financial transactions are recorded within Banner using the proper accounting standards. For example:

• To ensure accuracy and timeliness of financial data within Banner, it is important to record all financial transactions correctly and completely within Banner (including both the operating ledger and general ledger) during the proper fiscal year and accounting period in which the transaction occurred.
• All sales should be recorded to an applicable revenue account code (not as a credit to an expense account code) on the appropriate fund type.
• All expenses should be recorded to an applicable expense account code which accurately reflects the purpose of the expenditure.
• All fund transfers should be processed using the applicable funds transfer account code.
• Budget transfers should be processed via your university budget office.
• The program code utilized for your financial transactions should properly reflect the correct NACUBO function.

Additional Resources

1.2 Conducting, Recording and Reporting Financial Activity
University Funds

Last Updated: January 15, 2020 | Approved: Senior Associate Vice President for Business and Finance | Effective: January 15, 2020