13.1 Overview of Fund Accounting at the University of Illinois System

Policy Statement

Units must understand the use of fund accounting at the University of Illinois System and must ensure that all financial transactions are recorded to a proper C-FOAPAL accounting string within Banner.

Reason for the Policy

To maintain a financial reporting structure that can be consistently used across the entire system, which helps ensure accurate financial reporting for the system’s audited financial statements.

Applicability of the Policy

All units with financial activity within Banner.

Procedure

All units with responsibility for managing business and financial activity within Banner should understand both the fund accounting environment of the University of Illinois System and the intricacies of the C-FOAPAL accounting string. In addition, units should be aware of good business practices to follow to ensure compliance with fund accounting guidelines.

Fund Accounting

The University of Illinois System operates on a fund accounting basis. This is a method of accounting commonly used by non-profit and governmental organizations emphasizing accountability (not profitability) to ensure proper stewardship of financial resources as well as compliance with applicable regulations, guidelines, and restrictions associated with the various funding sources that the system receives.

C-FOAPAL Accounting String

To help maintain a financial reporting structure that can be consistently used across the entire system and to ensure accurate financial reporting and compliance with fund accounting principles, the system has developed a chart of accounts (also known as an “accounting string”) that all system units must use to report their financial activity.

The accounting string used at the system is called a C-FOAPAL string. See below for information on each part of the C-FOAPAL accounting string.

C = Chart:

The chart is a one-digit code identifying the applicable university or system office to which the accounting string belongs. There are four available chart codes:

• Chart 1 = University of Illinois Urbana-Champaign
• Chart 2 = University of Illinois Chicago
• Chart 4 = University of Illinois Springfield
• Chart 9 = University of Illinois System Offices

F = Fund:

The fund is a six-digit code identifying the funding source of the financial resources received. To ensure proper accounting and financial reporting, financial resources received by the system must be recorded in separate fund types to denote the funding source, as each fund type has a different purpose depending on the revenue.

For example, financial resources received from state appropriations would be credited to a state fund, while financial resources received from donors would be credited to a gift fund.

O = Organization:

The organization is a six-digit code representing which unit owns and is fiscally responsible for that specific accounting string. The first three digits of the organization code typically designates the college, department, or unit that owns the organization code, while the subsequent three digits further classify the code’s ownership (such as to a particular department within a college, etc.)

For example, if organization code 123000 represented the College of XYZ, then organization code 123001 could represent a certain department (such as the business office) within the college of XYZ.

A = Account:

The account is either a five-digit (for the general ledger) or a six-digit (for the operating ledger) code that designates a transaction as an expense, revenue, funds transfer, asset, or liability. Proper account code usage is crucial for accurate financial and state reporting requirements.

For further information on account codes, see Banner Account Codes.

P = Program:

The program is a six-digit code that has a variety of important financial reporting implications, including the classification of expense transactions to the proper “function” (or purpose) according to standard definitions developed by the National Association of College and University Business Officers (NACUBO). This code also helps distinguish between a unit’s operational activities within fund types that may record multiple activities in a single fund (e.g., state, institutional, self-supporting, service plan, and federal agricultural research funds).

For further information on program codes, see Overview of Banner Program Codes & NACUBO Functions.

A = Activity (Optional):

The activity is an optional three-digit or six-digit code that may be used to track specific financial activities or projects.

For example, if Professor A has three different projects taking place within a particular C-FOAP accounting string, then the professor may want to assign three separate activity codes to each of the activities to separate the financial transactions for each project.

A list of Generic Activity Codes is available for use by any department and for any purpose. A department can also request a new activity code specifically for their own use as well.

Finally, keep in mind that Banner does not require activity codes on financial transactions. So, if units do use activity codes, they need to be careful as there is always a risk of financial transactions posting without the activity code assigned (for example, if the user forgot to include the activity code on a journal voucher transaction).

L = Location (Optional):

The location is an optional six-digit code that is primarily used (but not limited to) in the Fixed Asset module. This code designates the physical location (such as a building and room number) of an asset (such as a piece of furniture owned by the system).

Good Business Practices

Obtain Training

Any employee with responsibility for managing business and financial activity within Banner should be properly trained. The system offers a variety of training resources. See below for a few helpful places to start:

• 1.2 Conducting, Recording and Reporting Financial Activity

Ensure Financial Resources are Recorded within the Proper Fund Type

Financial resources must be recorded in the correct fund type to ensure proper segregation and compliance with fund accounting guidelines. 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 ideally, within the proper accounting period, if possible) 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 that 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 the applicable university budget office.
• The program code utilized for units’ financial transactions should properly reflect the correct NACUBO function.