2.13—Financial Records and Reporting

Policy Number: 2.13
Title: Financial Records and Reporting
Effective: 03/13/2013
Senate Proposal: No
Responsible University Officer: Chief Financial Officer
Responsible Office: Financial Services and Operations

Policy Statement

The University's financial records are maintained in an electronic enterprise resource system using the principles of fund accounting. The financial records are reported in an annual financial report using the guidance of the Governmental Accounting Standards Board (GASB), specifically GASB 34/35 on a University consolidated basis.

Policy Requirements

Financial records will be maintained to insure reporting of University operations is accurate, reliable and free from material misstatements. Financial statements will present, in all material respects, the financial position and respective changes in the financial position in conformity with accounting principles generally accepted in the United States.

The University's financial records are reported in the following fund categories and are listed according to traditional fund hierarchy:

• General Fund
• Designated Fund
• Auxiliary Activities Fund
• Retirement and Insurance Fund
• Expendable Restricted Fund
• Student Loan Fund
• Plant Fund
• Agency Fund

Reason for Policy

This policy brings Michigan Technological University's reporting practices into compliance with GASB, conformity with other institutions of higher education and with new guidelines recommended by professional accounting groups nationally.

Related Policy Information

This information applies to all employees of the University, but is not all inclusive. Consult the controller at 906-487-1931, if you need interpretive or more specific information, or consult the web site of Financial Services and Operations at https://www.mtu.edu/fso/.

Contacts

Definitions

Principles of Fund Accounting - A method of segregating resources into categories, (known as funds) to identify both the source of funds and the use of funds. Nonprofit organizations and government agencies have traditionally used fund accounting to show, in financial statements and reports, how money is spent, rather than how much profit was earned. Unlike profit oriented businesses, which use a single set of self-balancing accounts (or categories), nonprofits can have more than one category (or fund), depending on their financial reporting requirements.

General Fund - A category of resources for those transactions related to academic and instructional programs and their administration. Revenues consist primarily of the State of Michigan appropriation for general operations, student tuition and fees, and recovery of indirect costs of sponsored programs (charges to sponsored projects for facilities and administrative expenses).

Designated Funds - A category of resources for specific purposes which are not restricted by donors or supporting agencies. Use of these funds is determined by the University. These funds include organized departmental funded activities associated with the academic programs, conferences and seminars; gifts designated for specific programs, conferences and seminars; uses by the donor; faculty startup; and Institutional Research and Development (IRAD).

Auxiliary Activities Funds - A category of resources of revenues and expenditures for revenue-producing, self-supporting activities that perform a service for, but are not themselves educational and general activities. Such entities furnish services to students, faculty, staff or the public and charge fees to the users. These funds support the related activities of each enterprise and provide for replacement of facilities used. The funds may be classified into appropriate groups such as housing and related food operations, student centers (such as Memorial Union), other facilities (such as campus store, university images, golf course, ski hill and ice arena), and intercollegiate athletics.

Retirement and Insurance Funds - A category of resources for benefit and insurance transactions, including employee health, retirement and other benefits along with insurance for property, general liability, auto and other insurance coverage. Benefits are funded through interdepartmental charges based on a fringe benefit rate computed to recover actual fringe benefit costs. Insurance costs are funded though transfers from other operating funds such as the General Fund or Auxiliary Activity Fund. Also, this fund maintains an investment portfolio to provide a source of funds intended to satisfy accumulated liabilities.

Expendable Restricted Funds - A category of income from endowed restricted funds, federal contracts and grants and other gifts, grants, and contracts. The use of the funds is restricted for specific purposes stated by the supporting agencies or donors. These funds include sponsored programs, scholarships and fellowships, restricted gifts, and student enterprise and senior design projects.

Student Loan Funds - A category of resources for university and federal sponsored loans to students of the University. If only the income of a fund may be loaned, the principal of that fund will be shown in the endowment and similar funds group. Any income earned from such principal investments will be distributed to the Student Loan Fund as received.

The Student Loan Funds consist of Federal Funds (Perkins) and donor bequests to the University to be used exclusively for qualifying loans to students. All available funds will be used for loans to students, including original funds, earnings on those funds and repayment of the loan.

Plant Funds - A category of resources for transactions relating to investment in physical properties, indebtedness incurred in the financing thereof, and reserves for maintenance and replacement. State capital appropriations, bonds, donor gifts and departmental funding provide sources of revenue.

Agency Funds - A category of resources received by the University to be held or disbursed only on the instruction or on behalf of the person or organization from whom they were received. Scholarship deposits for recipients named by the depositor will also be recorded in this fund. The funds may be separated into various groups such as organization deposits, student deposits, and faculty deposits. Included in this fund are payroll deductions, student organization deposits, professional organization deposits, and scholarship deposits for recipients named by the depositor.

Resources - For this policy, it includes, but is not limited to money and/or assets.

Responsibilities

Accounting Services - Ensures the appropriate recording and reporting of University funds as mandated by federal and state law.

Financial Managers, Chairs, Directors/Deans and Executives - Ensures funds are spent according to University policy and procedures and external restrictions, such as donor and sponsor intent.

Revisions