Accounting Services Section (ACT)
POLICY 12
Effective Date: 12/15/2004
Last Modified Date: 12/13/2004
This Policy is issued under the authority of Dennis Press, University Controller, who reviewed and approved its contents as of September 30, 2004.
Purpose
A non-State fund is an account established for deposit and disbursement of funds that are not controlled through the State budget process.
The following statements outline the account policies regarding the establishment of special funds and institutional trust funds (a non-contract or grant trust fund). These funds will be called "trust funds" in the rest of this Policy.
Background
Trust fund legislation was enacted by the 1977 General Assembly and revised in 1998 to include Facilities and Administrative funds (also known as F&A funds or overhead receipts). General Statute 116-36.1 allows the University to establish accounts or trust funds outside State budget codes for certain categories of funds. Departments, organizational units, individuals, or groups may request the establishment of a trust fund that falls within the definitions and criteria outlined in ACT Policy 11, Kinds of Funds, and in this Policy. Requests for trust funds that are funded through contracts, grants, and agreements are processed through the Office of Sponsored Research.
Section 116-36.1(a) of the trust fund legislation states that the "Board of Governors is responsible for the custody and management of the trust funds of The University of North Carolina and of each institution. The board shall adopt uniform policies and procedures applicable to the administration of these funds which shall assure that the receipt and expenditure of such funds is properly authorized and that the funds are appropriately accounted for." The legislation also requires the trust funds to be deposited with the State Treasurer. Section 116-36.1(d) states that trust funds "are subject to the oversight of the State Auditor pursuant to G.S. 147-58 but are not subject to the provisions of the Executive Budget Act except for capital improvement projects which shall be authorized and executed in accordance with G.S. 143-18.1."
Trust Fund Criteria
Each new trust fund (but not contract and grant funds recorded in the Office of Sponsored Research) must be requested from and approved by the Controller. The following conditions must be present to establish an institutional trust fund or special fund:
- The monies (assets) to be placed in the trust fund must meet the criteria as institutional trust funds or special funds.
- The monies may be generated in the course of performing departmental research and public service activities that are not State supported. Detailed periodic accounting reports are not required by external organizations or agencies (such as the Federal government).
- All costs associated with the generation of revenue must be matched with that revenue whether by direct payment of the expense or, if appropriate, by reimbursing another fund that originally incurred the expense.
New Fund Determinates
Requesting a Fund
A fund should be requested when monies are anticipated that qualify under the conditions outlined above.
Sources of significant amounts should not be combined except by type of revenue and purpose of fund. For example, revenue obtained through gifts should be placed in a separate trust fund from revenue generated by contractual services.
Pertinent Information
Each trust fund request is examined carefully and must contain the following information about the proposed fund:
- Description of source of funds and pertinent data or correspondence related to source and purpose
- Purpose of the fund, how it is to be used, in support of what activity or function
- Any restrictions on the types of expenditures allowed
- Any time limits or other information pertinent to the continued existence of the fund
- Name of person authorized to spend the monies
- Name of the fund
- Department number
- Address (include building name and campus box number)
Fund Authorities
After approval of a new fund, Accounting Services will assign an account number and write a fund authority (see ACT Appendix 5). The requesting department will receive a copy of the new trust fund authority, which is to be used as a guide for initiating financial transactions. In those cases in which several function numbers participate in a single fund, copies of fund authorities will be sent to each participating department.
Changes
Anticipated changes in disbursing authority and/or address, fund name, source of funds, or purpose should be reported to Accounting Services so that a revised fund authority may be prepared.
Correspondence
Significant correspondence regarding the trust fund should be copied and forwarded to Accounting Services to be placed in the official fund folder.
A new trust fund should be requested if significant amounts are received that do not fit the description of an existing trust fund.
Closing a Trust Fund
Remaining Balances
If the purpose of the fund no longer exists, the disbursing authority should request that the account be closed. If the conditions of the gift or grant have been fulfilled, unless the grantor has specific instructions, any residual monies, whenever possible, should be used to support a program or purpose of similar nature, or closely related, to the original program or purpose.
Closing of an Inactive Trust Fund
The disbursing authority should prepare and submit a memo describing the status of the fund to Accounting Services so that the fund may be closed.
In lieu of a memorandum, an Account Adjustment Form may be submitted to transfer residual balances to an appropriate trust fund. Please note on the form Account to be Closed.
Additional Information
See also
- ACT Procedure 8, Establishing and Maintaining an Account for a Non-State Fund
- ACT Appendix 5, Fund Authority: Institutional Trust Funds or Special Funds
- ACT Appendix 21a, Instructions for Form AS-100
- ACT Appendix 21b, Institutional Trust or Special Fund Account Request, Form AS-100
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