Budget Principle: 1.06
Subject: Internally Restricted Funds
Last Modified: February 2014
INTERNALLY RESTRICTED FUNDS
DEFINITION
Internally Restricted Funds are restrictions of operating funds from the Net
Assets of the College. There are three types of internal restrictions:
Appropriations, Specific Reserves and Reserve Funds. All three types of internal
restrictions result in a transfer of spending authority into future fiscal years
subject to appropriate approvals.
PRINCIPLE
Appropriations
Where a department has been allocated a budget for a purchase in a fiscal year
and that purchase could not be completed due to circumstances out of the
department’s control, the department may request that the unspent portion of the
budget be appropriated to the next fiscal year.
Specific Reserves
Specific Reserve balances are established at the end of each fiscal period and
recorded under Internally Restricted Net Assets in the College’s financial
statements. The following table presents the accounts and purpose of the
College’s Specific Reserves:
Other projects and
initiatives
Ancillary services
reserve fund
Source of funds available for future projects and initiatives
to invest and improve in the College’s facilities, physical
infrastructure, information, communications and
technology infrastructure, information systems, equipment,
program development and other strategic initiatives. Also
included are funds required to be set aside in order to
comply with Ministry direction or contractual commitment
with a 3rd party.
Source of funds available for the following:
Residence Maintenance – major capital renewal of the
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residence facilities.
Food Services Equipment – renewal of capital equipment
in the Food Services operation.
Ancillary General Reserves – strategic projects and
initiatives, significant one-time capital costs and
contingency for unforeseen losses.
Contingency
reserve fund
Contingency fund maintained at 3% of budgeted operating
revenues to be drawn upon in the event that a major
unexpected loss (greater than $3 million) is realized by the
College.
Employment
stabilization funds
Restricted funds set aside for employee re-training as per
the terms and conditions of current collective agreements
with support staff and academic staff unions.
Other student aid
Restricted funds set aside for student aid.
The Finance and Administrative Services Department determines the balance of
Specific Reserves available to fund Strategic Investment Priorities during the
annual budget development process. Specific Reserves are a source of funds
for Strategic Investment Priorities and are not directly linked to specific
expenditures.
Reserve Funds
Reserve Funds are generally established by the President’s Council to address
long-term, strategic initiatives and major capital projects. They may also be
established to comply with long-term Ministry or contractual covenants.
Reserve Funds are expected to be multi-year commitments with additions and
disbursements in future years.
Non-Ministry and Non-Contractual Reserve Funds which are established for
more than one year will be increased during the year-end process by the
equivalent of the estimated interest that the Reserve Fund would have earned
during the year had the balance forward been invested with the College’s surplus
operating funds.
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PROCEDURES
The College practices a multi-year budget allocation model for Strategic
Investment Priorities. During annual budget development and at each quarter of
the fiscal year, approved budget allocations for Strategic Investment Priorities are
reviewed and projected expenditures updated on a quarter by quarter basis.
Project activities and expenditures may roll over multiple fiscal years provided the
Project Sponsor has approved any amendments to due dates of project
deliverables and completion.
Funding for Strategic Investment Priorities is only required to be approved once
as per the process established by the Finance and Administrative Services
department. Unspent funding may be carried over multiple fiscal periods
provided that the projects are active. Projects that are inactive for more than a
year will be suspended and funding re-purposed to other College priorities.
Appropriations
Funding from the Appropriations balance as at the most recent fiscal year-end
may be requested as follows:

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Requests must be submitted within the first quarter of the new fiscal year
(up to and including June 30th)
Requests may be made to fund purchases initiated in the previous fiscal
year (for example, Purchase Order issued) but not paid until the new fiscal
year.
Requests must be for purchases of $5,000 or greater.
Requests may be submitted to the Director, Finance and Administrative
Services via email or hard copy document format and must include the
following:
o Name and position of requester
o Cost center and object code(s) with unspent funds from previous
fiscal year
o Purchase Order Number (or other appropriate document identifying
commitment made in previous fiscal year)
o Scanned copy of invoice (requester must initiate payment process
as per usual process prior to submitting request for appropriation)
o Amount requested
Director, Finance and Administrative Services will assess request and
advise requester of the decision in writing.
If approved, Finance and Administrative Services staff will process a
journal entry to transfer expenditure from requester’s cost center to
appropriation account.
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Specific Reserves
Specific Reserves are a source of funds for Strategic Investment Priorities.
Individual project requests from Specific Reserves will not be accepted. Finance
and Administrative Services administers Specific Reserve accounts and will
determine when accounts are created and expire.
Authority to Spend:

from Appropriations is granted once the College’s annual budget is
developed with an estimated provision for appropriations and approved by
the Board of Governors.

from Specific Reserves is granted once the College’s annual budget is
developed and approved by the Board of Governors. The annual budget
will include a budgeted Statement of Financial Position. This Statement of
Financial Position will include projected Specific Reserve balances
accounting for planned expenditures from these Specific Reserves.
Budgeted expenditures are included in the Strategic Investment Priorities
schedule of the Annual Budget.

from Reserve Funds requires the approval of the Board of Governors.
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