1. LINK Program Self-Supporting Funds University Accounting & Financial Reporting
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

2. Presenter Roger Fredenhagen, CPA
Self-Supporting and Financial Analysis Coordinator
Phone:
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

3. Fund Accounting – Definition
An accounting system used by non-profit & governmental organizations which emphasizes accountability (not profitability) to ensure proper stewardship and expenditure of financial resources received in compliance with applicable regulations, guidelines and restrictions associated with the funds received
Financial resources received are recorded in a collection of different fund types, with each fund type having a different purpose depending on the source of revenue
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

4. Fund Accounting – Definition (cont.)
Segregating these financial resources into separate fund types helps properly classify and monitor resources appropriated, awarded, contributed, and entrusted to the University
Properly classifying and monitoring these financial resources into separate fund types enables compilation of accurate financial statements which help illustrate how the University meets its mission of teaching, research, public service, and economic development
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

5. C-FOAPAL Overview C-FOAPAL
Chart: At which University (location) is the operation located?
Fund: Where is the money from?
Organization: Which department does the funding belong to?
Account: What is the natural classification of the transaction? In other words, what type of expense was purchased or what type of revenue was earned?
Program: What is the functional classification of the transaction? In other words, how will the activity be presented on our financial statements and how does it coincide with the University’s mission?
Activity: Optional code used for tracking short-term projects.
Location: Optional code used to identify physical location of assets.
C-FOAPAL
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

6. What are Self-Supporting Funds?
Self-supporting funds are used for recording revenue and expenses generated from the sale of products or services to University departments, students/faculty/staff, or the general public.
Managed as business-like operations which relate to or enhance the University mission and which have the objective of generating sufficient revenue from sales to finance the costs required to generate the revenue.
Per LAC Guidelines & State Finance Act, these types of funds are to operate at an approximately break-even basis and should not be used for discretionary purposes
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

7. How are SSFs Identified in Banner?
Self-Supporting fund codes range from –
Fund Types:
3E: Sales to other University units
3J: Sales to students/faculty/staff
3M: Sales to students/faculty/staff when bond financing is involved in the activities (e.g., bookstores, housing operations, student unions)
3Q: Sales to customers who are external to the University, such as sales to the general public, sales to other institutions/companies, etc.
Self-supporting funds use unique program codes (as opposed to generic program codes such as 19nnnn that are used on gift funds)
Example:
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

8. What Types of Transactions are Allowed on Self-Supporting Funds?
Revenue from sales to customers
Make sure sales are recorded to an applicable revenue account code
Expenditures directly related to the revenue generation
For example, payroll of the employees who provided the services or the purchase of goods which were being sold
Transfers to a plant fund for equipment reserves, etc.
For example, reserves to replace equipment which is used in a self-supporting operation
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

9. Tips for Properly Managing Self-Supporting Funds
Make sure your SSF operations approximately break- even over time to ensure compliance w/ LAC Guidelines
Review rates charged to customers at least once every 2 years
Record sales to applicable revenue account code, not as a credit to expense
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

10. Tips for Properly Managing Self-Supporting Funds
When selling to external customers on credit, use Banner Accounts Receivable module (or obtain an approved exemption if necessary)
Use expense account code , “Purchase of Goods for Resale”
Use FGITBSR in Banner to find current cash, liability, and fund balance
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

11. Tips for Properly Managing Self-Supporting Funds
Collect and remit sales tax when selling tangible property
Review policy for reporting for Unrelated Business Income (UBI) tax
Perform a physical count on 6/30 of every year of any inventory for resale on hand
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

12. Tips for Properly Managing Self-Supporting Funds
Record any accrual, deferral, and/or inventory adjustments as they occur using the Fact Sheet tool
Assign proper entity codes to any equipment used in SSF activities
Ensure that any revenue-generating activities operating through a SSF is a legitimate University activity. See Account for Financial Activity of Revenue-Generating Events for more details.
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

13. Establishing & Terminating SSFs
Requesting New SSFs
Terminating SSFs
Units should asking for termination if:
Original purpose of fund has changed
No revenues/expenses in recent years
Activity has ended
Old funds cannot be used for new activities!
Complete Fund, Program, Index Request form
Rate calculation
Multi-year budget
Surplus/Deficit Plan
Any revenue-generating agreements, contracts, or other documentation
Attestation statement
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

14. Excess Funds Overview
Required Calculation per Legislative Audit Commission Guidelines
Calculation analyzes by entity, not individual fund
Top funds are assessed excess funds & excess balance lapses to Income Fund
Work with Budget Office to receive re-allocation of funds as State budget
Rule of thumb: two months of operating expenses
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

15. More SSF Tips… Match revenues and expenses
Include any related salaries and wages
Review rates
Report payables and deferred income on year-end Fact Sheets
Plan prior to year end!
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

16. Sales Tax Overview Taxability of Purchases Taxability of Sales
Exempt from sales & use taxes in Illinois
Not exempt from Hotel Operators’ Occupation Tax
Taxability of Sales
Sales of tangible property are subject to sales tax
Textbooks, t-shirts, food, fundraisers
Students, employees, alumni, other individuals
Submit Sales Tax Reporting Form
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

17. Unrelated Business Income Tax (UBIT) Overview
Exempt from income taxes on normal, related university activity
UBIT Examples
Advertising income (including advertisements provided in conjunction with sponsorships)
Real property rental income with services provided
Personal property rental income (such as tower rentals to cell phone providers)
Sales of campus recreation services to alumni
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

18. Resources 22 Self-Supporting/Revenue Generating Activities
Fund Type FAQs
UAFR Reference Materials
Banner Account Codes
Accounting & Financial Reporting Forms
Sales Tax Procedure
Sales Tax Policy
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

19. Self-Supporting Funds
Roger Fredenhagen
John Laroe
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

20. Sales Tax Contacts Roger Fredenhagen Benjamin Liles Terry Thompson
Benjamin Liles
Terry Thompson
Brenda Sutherland
OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

21. Questions? OFFICE OF BUSINESS AND FINANCIAL SERVICES –
UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING