The A-B-C’s of Accounting
Presenters:
1
Agenda
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Fund Accounting
Fund Definitions
Chartfields
Class Codes
Revenue Types &
Transfers
Journals
Q&A
2
FUND ACCOUNTING

What is Fund Accounting?
– The University is a non-profit, governmental entity,
therefore it has to follow the fund accounting
principles.
– The University receives money from many different
sources. The source determines what Fund the money
will be deposited into. The Fund also dictates what kind
of expenditures will be allowable.
3
Two Types of Funds
Funds to be used to strategically
enhance the University, but are
not considered available for
normal operations
Funds available for the normal
operation of the University’s
missions
Operating Funds
Non-Operating Funds
General
10000
Endowment
7XXXX
Gift
30000
Plant
8XXXX
Designated
40000
Agency
90000
Auxiliary
5XXXX
Federal Sponsored
20000
Non-Federal Sponsored
25000
4
Agenda
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Fund Accounting
Fund Definitions
Chartfields
Class Codes
Revenue Types &
Transfers
Journals
Q&A
5
FUND DEFINITIONS
General Fund – 10000

The General Fund contains the economic resources that are
expendable for operating purposes in the following
activities:
– Instruction for credit, i.e. degree earning credit
– Research
– Public service
– Academic support
– Student services
– Institutional support
– Plant operations and maintenance
– Scholarships and fellowships
6
General Fund – 10000 (cont.)

These activities are primarily funded by:
–
–
–
–
State appropriations
Student tuition and fees
Indirect cost reimbursements from research contracts
Departmental revenues related to student lab and course
fees
– Distribution of investment income (UIP)
7
Federal Sponsored Fund – 20000

Funding provided by the federal government for research,
instruction and public service. Activity for this fund is
governed by federal laws enacted by Congress as well as
the rules prescribed by individual contract agreements.
The primary revenue sources for this fund include:
– Federal Grants and Contracts
– Small Distribution of Investment Income (UIP)

All University spending of federal funding is subject to an
annual audit under the guidelines set forth in OMB
Circular A-133. To ensure compliance, all activity
affecting a federally sponsored project/grant should meet
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the terms and conditions of the grant or contract.
Non-Federal Sponsored Fund – 25000


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Funding provided by non-federal government sources,
Charitable Foundations, and State and Local Governments for
research, instruction, and public service. The activity on this
fund is regulated by the individual contract agreements. The
primary revenue sources for this fund include:
– Grants and Contracts from State and Local Government
– Grants from Charitable Foundations
– Contracts from Industry
– Small Distribution of investment income (UIP)
It is the responsibility of the unit receiving the grant/contract to
comply with the guidelines set forth by the sponsor in the
governing agreement when funds are spent.
Departments should ensure that activity is appropriate to the
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grant/contract.
Gift Fund – 30000

Gifts given to the University with specific stipulations on
how the money is to be used. The primary revenue
sources for the Gift Fund include:
– Gifts from outside donors
– Endowment distributions
– University Investment Pool (UIP)
distributions

Revenues in the Gift Fund are expendable and not
permanently invested.
10
Gift Fund – 30000 (cont.)

It is the responsibility of the unit receiving the gift to
comply with the guidelines set forth by the donor in the
governing gift agreement when funds are spent.

Departments should reference an applicable gift agreement
to ensure that activity is appropriate to the gift.

If you have any questions regarding transferring funds into
or out of the gift fund, contact Financial Services.
11
Designated Fund – 40000

Funds internally designated, but otherwise unrestricted
(no identified purpose). Revenue sources include:
– Departmental revenue from non-degree academic
programs such as continuing professional education
(non-degree credit) conferences and seminars
– Investment income from the University Investment
Pool (UIP) and other sources
– Royalty income
– Endowment distributions
– Expenditures are limited to activities designated by
University management
12
Auxiliary Fund – 5XXXX

The Auxiliary funds track activities that are maintained
with revenue from their own operations. Internal service
providers are also auxiliary units. Examples include:
Early Childhood Education
Center
Contract Services
Vending
Parking
13
Auxiliary Fund – 5XXXX (cont.)

Revenues in the fund consist of:
–
–
–
–
Internal recharge from service unit billings
Operating activities
Investment income
Endowment distributions
14
Endowment Fund – 7XXXX

Endowment Funds are long term invested funds
established by either a donor or departmental funds
where only the distributions earned on the investment
may be spent.

If you have any questions regarding
the Endowment fund, contact
Financial Services.
15
Endowment Fund – 7XXXX(cont.)

Funds donated by a donor to be invested in perpetuity. The
interest earned may then be spent on purposes designated
by the donor/unit - also includes funds functioning as
endowment (quasi-endowments).
–
–
–
–
–
–
True Endowment: Funds 70002-74999 and E0001-E9999
Quasi Endowment Restricted: 75000-76999 and Q0001-Q9999
Quasi Unrestricted: 77700-77999 and U0001-U9999
Quasi Permanent: 77000-77699 and P0001-P9999
Endowment Specific: 78500-78799
Quasi Specific: 78800-78999
16
Plant Fund – 8XXXX

Construction Funds (80000)
– Used to track expenses for construction and renovation
projects
– Funding source must be identified prior to project
authorization

Departmental Equipment Funds (82000)
– Used for current or future equipment
purchases/replacements, minor renovation, and other
non-operating expenditures
17
Agency Fund - 90000

The University acts as the custodian for the agency
fund. The balances consist of amounts held for
organizations affiliated with, but not legally part of, the
University. All agencies must maintain a positive cash
balance in the general ledger. Examples include:
–
–
–
–
Alumni Society
United Way
Toastmasters
Student Organizations
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Agency Fund – 90000 (cont.)

Please note the University doesn’t own any of these assets.
The cash and investments on deposit with the UM in this
fund are offset by a liability in the UM financial
statements, i.e. we owe these amounts to the entities that
have deposits in this fund.
19
Agenda
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Fund Accounting
Fund Definitions
Chartfields
Class Codes
Revenue Types &
Transfers
Journals
Q&A
20
CHARTFIELDS
What are Chartfields?
ChartFields are the seven fields used in M-Pathways
to enter, record, and report financial transactions for
the University.
Account The type of transaction. It is NOT the shortcode.
Fund Source and intended purpose of monies and how
they should be spent.
Department ID The academic or administrative unit.
Program Additional reporting layer for the dept.
21
CHARTFIELDS (cont.)
Class The functional nature of the expense.
Project/Grant Identifies a specific pool of money or activity.
Shortcode A shortcode represents a string of chartfield values.
Shortcodes are required to:
•Process payroll transactions
•Gift/development processing
•Order through Marketsite
•Use Concur reimbursement system
•May be used with Service Unit Billings in place of Chartfields
SHORTCODE = CHARTFIELD
239475 = 10000/926400/OPERA/62000
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Agenda
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Fund Accounting
Fund Definitions
Chartfields
Class Codes
Revenue Types &
Transfers
Journals
Q&A
23
CLASS CODES

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Value that identifies the functional nature of an expense
– E.g. instruction, research, scholarship
Essential for external and internal financial reporting
– Audited financial statements
– Facilities & Admin cost proposal for federal sponsored
programs
– State of Michigan reporting
– Various surveys
– Management and departmental reporting
24
CLASS CODES (cont.)
• 1XXXX – Instructional
• 6XXXX – Institutional
Support
• 2XXXX – Research
• 7XXXX – Operation and
Maintenance of Plant
• 3XXXX – Public Service
• 8XXXX – Scholarships and
Fellowships
• 4XXXX – Auxiliary
Activities
• 9XXXX – Auxiliary
Activities
• 5XXXX – Student Services
For additional information on Class, including a
complete list and definition of all Class values:
http://www.finops.umich.edu/accounting/chartf
ields/classoverview

25
CLASS CODES (cont.)
Costs classified as indirect cost recovery excluded (ICRX)
by the federal government must be specifically identified
by using the appropriate Class ending with "X"•
. The most
frequently used categories of ICRX costs are:
- Alumni activities
- Entertainment
- Fund raising
- Hosting (when considered "entertainment")
- Lobbying

- Public relations
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Agenda
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Fund Accounting
Fund Definitions
Chartfields
Class Codes
Revenue Types &
Transfers
Journals
Q&A
27
REVENUE TYPES & TRANSFERS
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Reimbursements
Rebills
Recharges
Revenue
Transfers
Account Codes
Processing Retroactive Salary Distribution Changes
Processing Manual Payroll Journal Entries
Useful Resources
28
Reimbursements




A payment received from an employee or individual who is
paying back the University for a personal or non-University
expense
Non-revenue generating
Recorded as a negative expense against the account the
expense was originally recorded to
Rebates are also recorded as a negative expense against the
account originally recorded to
Example: Using your business phone to make a personal call
29
Examples of Reimbursements
Original Expense (IT Com billing)
Account
Fund Code
DeptID
Program
Code
Class
Project Grant
611500
10000
440400
ADMIN
11100
U008906
Account
Fund Code
DeptID
Program
Code
Class
Project Grant
CRD0831068 08/22/2010
611500
10000
440400
ADMIN
11100
U008906
-0.56 Local calls-Smith
CRD0831069 08/22/2010
611500
10000
440400
ADMIN
11100
U008906
-0.49 Local calls-Jones
Journal ID
Journal Date
SUB2343871 08/22/2010
Dollar Amount
Journal Line Descr
28.21 Service Unit Billings
Reimbursement
Journal ID
Journal Date
Dollar Amount
Journal Line Descr
30
Rebills




Moving an original cost of a good or service from the
department that was charged to the department that used
the good or service
Non-revenue generating
Recommend to bill through Service Unit Billings (SUB)
Rebill activity should be recorded as a reallocation of
expenses instead of revenue using the following options:
31
Rebills continued

Use original expense account on both sides of the journal
entry when moving the expense

Use the contra-expense accounts in the Internal Rebill
ranges (620200 to 620999)
Example: When a department allows another department to
use their copy machine.
32
Rebill Example Using Original Expense Account
Original Expense
Journal
ID
Journal Date
Account
SUB2387
352
12/04/2009
615080
Fund
Code
10000
DeptID
Program
Code
Class
380000
11472
DeptID
Program
Code
Class
Project
Grant
11000
Jrnl Ln
Ref
SUB
Dollar
Amount
Journal Line Descr
252.13 Service Unit Billings
Rebill
Journal
ID
Journal Date
Account
Fund
Code
SUB2387
368
12/04/2009
615080
10000
380000
11472
11000
SUB2387
368
12/04/2009
615080
50000
240000
OPERA
11100
SUB2387
368
12/04/2009
615080
20000
185500
10000
22000
Project
Grant
Jrnl Ln
Ref
Dollar
Amount
Journal Line Descr
SUB
(252.13) Service Unit Billings
U000824
SUB
103.26 Service Unit Billings
F009334
SUB
148.87 Service Unit Billings
33
Rebill Example Using a Contra Account
Original Expense
Program
Code
Journal ID
Journal Date
Account
Fund Code
DeptID
0002348982
12/04/2009
615080
10000
380000 11472
Journal Date
Account
Fund Code
DeptID
Class
Project Grant
11000
Dollar Amount Journal Line Descr
252.13 Rebill Copy Expense
Rebill
Journal ID
Program
Code
Class
Project Grant
Dollar Amount Journal Line Descr
Rebill Copy Expense
0002349007
12/04/2009
620200
10000
380000 11472
11000
-252.13
0002349007
12/04/2009
615080
50000
240000 OPERA
11100 U000824
103.26 Rebill Copy Expense
0002349007
12/04/2009
615080
20000
185500 10000
22000 F009334
148.87 Rebill Copy Expense
34
Recharges
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When a department’s primary existence is to provide
goods and services
Revenue generating
Recharged through Service Unit Billings (SUB)
Recharges operate in the Auxiliary Fund
Should use fund 52000
Departments should have a recharge rate approved by
Financial Analysis
Example: Fairlane Events Center
35
Example of a Recharge
Journal ID
Journal Date Account
Fund
Code
Progra
DeptID m Code Class
SUB2726851 7/12/2010
410000
52000
685100 12134
SUB2726851 7/12/2010
615080
30000
SUB2726851 7/12/2010
615080
SUB2726851 7/12/2010
Project
Grant
92320
Jrnl Ln Ref
Dollar
Amount
Journal Line Descr
SUB
(1,267.50) Service Unit Billings
240000 OPERA 31100 C302289
SUB
200.25 Service Unit Billings
56000
311673
SUB
67.25 Service Unit Billings
615080
10000
185500 LNCUR 11100 U005590
SUB
100.00 Service Unit Billings
SUB2726851 7/12/2010
615080
10000
406800 LDPRG 21000 U000428
SUB
175.00 Service Unit Billings
SUB2726851 7/12/2010
615080
30000
372300 10000
31100 C300049
SUB
250.00 Service Unit Billings
SUB2726851 7/12/2010
615080
56000
318104
31100
SUB
195.00 Service Unit Billings
SUB2726851 7/12/2010
615080
40000
755100 10000
51000 U006476
SUB
160.00 Service Unit Billings
SUB2726851 7/12/2010
615080
50000
686100 12706
92320 U000824
SUB
120.00 Service Unit Billings
31100
36
Recharge Information


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

http://www.finance.umich.edu/accounting/recharge
Financial Analysis
Forms
Recharge Vendor Request form
Send completed form to Financial Analysis:
recharge@umich.edu
37
Revenue
Revenue can come from several sources such as:
 Tuition
 Gifts
 Organized activities such as seminars and conferences
 Investments
 Other
38
Revenue Examples
Gift revenue
Journal ID
Journal
Date
Fund
Account Code
DAC02022245 07/01/2010 405075 30000
Progra
Project
DeptID m Code Class Grant
252400 10000
21000 G009154
Dollar
Amount
Journal Line
Descr
-100.00 Gift
Royalty revenue
Journal ID
Journal
Date
Fund
Account Code
CR00352725 12/02/2010 413720
40000
Progra
Project
DeptID m Code Class Grant
587040 10000
21100 U000047
Dollar
Amount
Journal Line
Descr
-1,828.87 Copyright Royalty
39
Transfers
A transfer is used for:



Moving funding (e.g. appropriations)or moving expenses
from one chartfield combination to another
Covering an overdraft
Moving a balance to close a project grant
40
Transfer Matrix

The Transfer Matrix shows users which transfer accounts
to use for the debit and credit of their journal entries in an
easy to read format.
http://www.umd.umich.edu/fileadmin/template/businessaff
airs/files/Financial_Budget_General_Services__FILES/Accounting/TransferMatrix.pdf
41
Valid Account List

The Valid Account List defines for all funds what revenue
and expense accounts are allowable, unallowable,
exceptions, or restricted for Financial Operations use only.

http://www.finance.umich.edu/finops/accounting/quicklink
s/validaccounts
42
Unique Transfer Guidelines




Contact Gift Processing to transfer a gift. They process the
change in the DART system and process a journal entry in
the General Ledger to ensure the systems stay in sync
Cannot transfer funding in or out of the General Funds.
Transfer specific expenses only. Same rule applies to Gift
funds, unless you have provost’s approval.
Transfers to/from the Plant Fund will always use class
code 73000 on both sides
Transfers to/from Endowment Funds are processed by
Financial Operations
43
Determine the Purpose of Payroll
Transfers


Why does the Payroll Expense need to be moved?
– Purpose of transfer indicates proper method to follow
The general purpose:
– The movement of payroll expenses is to report the
effort of the individual’s appointment correctly
44
Processing Retroactive Salary
Distribution Changes

Any change in effort reporting certification to adjust a
prior pay period retroactively
• A change in one or more shortcode(s)
• A change in the % of Distribution among existing
shortcode(s)
• A combination of changes on SC’s and % of
Distribution
• Retroactive changes can affect:
• Current Fiscal Year
• Prior Fiscal Year (up to October 31st of current year)
• Both current and prior fiscal years
45
 Retroactive Changes for Sponsored Funds (20000, 25000)
• Must be requested within 120 days from original
accounting date of transaction in question
 Retroactive Changes for Non-Sponsored Funds
• All changes needed for the prior fiscal year must be
processed on or before October 31st of the current fiscal
year, after that a funding transfer must be processed
instead
 Effort Reporting
• Must be performed for certain individuals, per Federal
Regulations; see Policy on Effort Certification for more
details
http://www.finance.umich.edu/finops/programs/effortrptg/
principles
46
Processing Salary Transfers

All transfers of permanent faculty/staff salaries should be
referred to Dearborn HR to handle the appointment
change.
47
Allowable Manual Transfers

The following are allowable manual payroll transfers that
do not require a Retroactive Effort Change:
• Temporary Staff
• Other items not related to base appointment (see next
slide)
48
Allowable Accounts for Manual
Transfers


The following are accounts that are allowable to be used for manual transfers:
• Tuition Related Activity
• Tuition Refunds: 580800 & 581000
• Geo Tuition Grant: 585200
• GSA Tuition Waiver & Adj: 595250 & 597000
• Activity not related to an appointment
• Prize/Award Pmts: 502300
• Moving Expenses: 502500 & 502600
• Royalty Pmts: 584400 & 586000
• Unemployment Comp: 597250
• Non-employee activity
• Prize to non-emp: 581600
• Subject Fee Income – non emp: 582000
• Accounted-For travel expense: 586400
See Valid Account List for appropriate account usage against corresponding
49
Fund
Factors to Consider when moving
payroll



What is today’s date? What is the original accounting
date?
What type of employee is involved with the transfer?
Also, what kind of payment is it, specifically?
When a salary transfer is processed within the GL, an
automatic calculation is also processed using the current
Benefit Recharge Distribution (BRD) rate, which can
change between fiscal years
50
Example 1

Situation: It is October 1st, 2011. It has been determined
that a regular full time professor with a 100% appointment
(40.0 hrs a week) in the Mechanical Engineering
department against short code 111111 should have been
paid out of two short codes (111111 and 222222), split
evenly between the two. The most recent appointment is
for the time period 07/01/10 – 07/31/11.
51
Solution to Example 1

A change in effort certification is required
Tell your staff member to recertify.
52
Example 2

Situation: It is March 13th, 2011. A lecturer that is on the
University’s payroll is compensated an additional payment
of $5,000 for winning an award. This payment is to be
transferred to a different short code within the department.
How will this be processed?
53
Solution to Example 2

A manual JE is required
• Since this transfer constitutes activity not related to
appointment, then a manual JE will be processed at
account 502300.
54
Transfer - Useful Links and
Resources

Standard Practice Guide 501.09:
http://spg.umich.edu/pdf/501.09.pdf
• Policy on Retroactive Salary Distribution Changes

Sponsored Transfer Guidelines:
http://www.finance.umich.edu/finops/programs/effortrptg/
principles

Non-Sponsored Funds Retroactive Salary Distribution
Change:
http://www.finance.umich.edu/finops/programs/rules/retro
salarytsfNonSP
55
Agenda







Fund Accounting
Fund Definitions
Chartfields
Class Codes
Revenue Types &
Transfers
Journals
Q&A
56
JOURNAL ENTRY PROCESS
DEBITS AND CREDITS
$ Amount
Entry Type
Financial Impact
+ Positive
Debit
Expense/Negative Revenue
- Negative
Credit
Revenue/Negative Expense
Balance Sheet Accounts
1XXXXX=Asset, Dr. Balance
2XXXXX=Liability, Cr. Balance
3XXXXX=Equity, Cr. Balance
Income Statement Accounts
4XXXXX=Revenue, Cr. Balance
5XXXXX=Expenses related to salary &
fringes, Dr. Balance
6XXXXX=All other expenses, Dr. Balance
57
JOURNALS
Sample Journal Entry
Acct
Fund
Dept
Prog
Class
P/G
Amt
624350
40000
753060
DISCR
61000
U030441
1500.00
624210
40000
193000
FACAW
21000
U013848
(1500.00)

Transfer Matrix file is a useful guideline on proper account usage
– In this case, per the file, a debit to acct 624350 and a credit to acct 624210 is
appropriate
58
JOURNALS
RESOURCES

Journal upload template
http://www.finance.umich.edu/finops/accounting/forms/upl
oadtemplate

The all funds Valid Account List defines what revenue and
expense accounts are allowable, unallowable, exceptions,
or for Fin Ops use only.
http://www.finance.umich.edu/finops/accounting/quicklink
s/validaccounts

Transfer Account Matrix
http://www.umd.umich.edu/fileadmin/template/businessaff
airs/files/Financial_Budget_General_Services_59
_FILES/Accounting/TransferMatrix.pdf
QUESTIONS
60