Go to Main menuGo to Content

Managing the Fund Groups Used at UofT

The financial activity at the University is managed in, and reported on, using four fund groups: Operating Fund, Ancillary Operations, Capital Fund and Restricted Funds.

Every faculty/division at the University may need to manage and/or report on financial activity in one or more of these fund groups.

Guidelines for the management of the financial activity reported in each of the fund groups are summarized under the following sections:

General

Operating Fund

Ancillary Operations

Capital Fund

Restricted Funds

 

General

Each fund group used at the U of T has certain unique characteristics which impact the following:

  • the application of certain U of T policies and procedures, which impacts the management and reporting of the financial activity specific to each fund group;
  • the set up of the individual accounts in the Financial Information System (FIS); and
  • the set up and consumption of EXPENDITURE budgets set up in FIS and the use of the availability control feature of the Funds Management (FM) module of FIS.
  • transfers between fund groups that are not approved within the annual budget process require Business Board approval. However, due to increased fundraising initiatives where operating funds have been committed to these initiatives, the Provost has been authorized to approve transfers of operating funds to restricted and other funds up to $1 million per instance.

Operating Fund

The operating fund account is used to report on the financial activity generated as a result of the day-to-day activities of a department that are not included in ancillary operations, the capital fund or restricted funds. The financial activity is recorded in fund center accounts in FIS and is managed through the following processes:

Budget allocation/management through the Budget Change Process:

Operating fund budgets are allocated through the budget process, as follows:

  • Annual operating budget allocation of the University’s central revenues and budgeting of additional divisional revenues as outlined in the Budget Implementation – Operating Fund
  • Carryforward of unspent funds in divisional fund center accounts
  • Changes to the budget amounts set up in FIS through the processing of a Budget Change form to reflect:
    • Increased spending power due:
      • to the realization of additional revenues
      • transfer of budget from another operating or ancillary fund center account
    • Decreased spending power due to:
      • mandated budget cuts
      • voluntary budget constraint due to revenue shortfalls
      • transfer of budget to another operating or ancillary fund center account.

Conference financial activity which is reported as part of the operating fund group using FIS fund accounts rather than fund center accounts, are allocated budget as follows:

  • Original budget and any subsequent budget changes are processed by the Financial Services Department based on instructions received from the responsible department,
  • Budget transfers are not permitted using Conference Fund accounts.

For further information, refer to the section on conference accounts.

Budget management/reporting through the realization and management of financial activity:

The EXPENDITURE budget, set up in FIS accounts, represents the anticipated expenditure requirements for an operating division for the fiscal year, and in some cases beyond (i.e. carryforward budget spending plans). The expenditure requirements for an operating division would include:

  • Salary and benefits of faculty and staff
  • Purchase of:
    • Equipment
    • Supplies
    • Contract services, etc

In order to ensure that sufficient budget is maintained to cover expenditure requirements not yet realized, encumbrance accounting is utilized at U of T as follows:

  • Once a “commitment to pay” has been made, sufficient expenditure budget should be set aside to cover the actual payment.
  • At time of payment, the expenditure budget that had been previously set aside, is now made available to cover the actual payment
  • The FIS tools available to ensure that sufficient expenditure budget is set aside are:
    • Purchase Orders
    • Payroll Reserves
    • Manual Reserves

If the operating division found itself in a position where the current expenditure budget was not sufficient to cover the anticipated expenditure requirements, the following options could be considered:

Short term:

Long term:

  • Self-funded revenue generating activities (internal/external invoice)
  • Funding “contributions” from other fund groups (interfund transfers)

Ancillary Operations

The ancillary operation accounts are used to report on the financial activity generated as a result of the day-to-day activities of each of the University ancillary units:

  • Residences
  • Food/Beverage Services
  • Parking Services

Each ancillary operation is considered a self contained business unit and is operated, to a large extent, as a business enterprise. Ancillary operations are:

  • responsible for the generation of sufficient revenue to cover all direct and indirect costs;
  • required to capitalize and depreciate all capital-type purchases, i.e. furnishings and equipment;
  • responsible for the generation of sufficient surplus funds to provide for future unexpected contingencies and maintain balance sheet accounts to track this balance.

The financial activity is recorded in fund center accounts and is managed through the following processes:

Budget allocation/management through the Budget Change Process:

Ancillary operation accounts receive budget allocations through the budget process, as follows:

  • Service Ancillary Review Group (SARG)
  • Changes to the budget amounts set up in FIS through the processing of a Budget Change form to reflect:
    • Increased spending power due:
      • to the realization of additional revenues
      • transfer of budget from another Ancillary Fund Center or Operating fund account
    • Decreased spending power due to:
      • mandated budget cuts
      • voluntary budget constraint due to revenue shortfalls
      • transfer of budget to another Ancillary Fund Center or Operating fund account

Refer to Budgeting – Ancillary Operations for more information.

Budget management/reporting through the realization and management of financial activity:

The EXPENDITURE budget, set up in FIS accounts, represents the anticipated expenditure requirements for an ancillary operation for the fiscal year only. The expenditure requirements for an ancillary operation would include:

  • Salary and benefits of ancillary staff
  • Purchase of supplies
  • Recording of depreciation charges

In order to ensure that sufficient budget is maintained to cover expenditure requirements not yet realized, encumbrance accounting is utilized at the UofT as follows:

  • Once a “commitment to pay” has been made, sufficient expenditure budget should be set aside to cover the actual payment.
  • At time of payment, the expenditure budget that had been previously set aside is now made available to cover the actual payment
  • The FIS tools available to ensure that sufficient expenditure budget is set aside are:
    • Purchase Orders
    • Payroll Reserves
    • Manual Reserves

If the ancillary unit found itself in a position where the current expenditure budget was not sufficient to cover the anticipated expenditure requirements, the following options could be considered:

Short term:

Long term:

  • Increase in revenue generating activities (internal/external invoice)
  • Funding “contributions” from another ancillary operation or from an operating fund account (interfund transfer)

Capital Fund

The capital fund group is used to report and manage the financial activity relating to the construction and/or acquisition of capital assets (i.e. land, buildings including its furnishings and equipment) by the University and are commonly referred to as Capital Projects.

Capital project accounts are managed centrally on behalf of the sponsoring faculty/division, with the sponsoring faculty/division receiving interim reports on the status of the project.

Each capital project in excess of $2 million must be approved by the University Business Board and must have the following components:

  • A capital expenditure budget which includes the core cost of the project plus the cost of any interim financing required to complete the project
  • An identified source of funding (i.e. donations, grants, divisional funding, etc.) sufficient to cover the capital cost of the project as detailed above

Capital projects between $50,000 and $2 million are approved by the Accommodations and Facilities Directorate (AFD). Projects which are fully or partially funded by government grants or donations are included in the capital fund.

The financial activity is recorded in fund accounts and is managed through the following processes:

 

Budget allocation/management through the Budget Change Process:

Capital project accounts receive budget allocations through the budget process, as follows:

  • Business Board Approval for initial budget set up and any subsequent changes to budget subject to the guidelines provided in the University’s Policy on Capital Planning and Capital Projects Changes to the budget amounts set up in FIS through the processing of a Budget Change form to reflect:
    • Increased spending power due:
      • to the realization of additional funding sources
      • change in scope of the original proposal approved by the Business Board

 

Budget management/reporting through the realization and management of financial activity:

The EXPENDITURE budget, set up in FIS accounts, represents the anticipated expenditure requirements for the entire capital project. The expenditure requirements for a capital project would typically include:

  • Construction costs
  • Financing costs

In order to ensure that sufficient budget is maintained to cover expenditure requirements not yet realized, encumbrance accounting is utilized at the UofT as follows:

  • Once a “commitment to pay” has been made, sufficient expenditure budget should be set aside to cover the actual payment.
  • At time of payment, the expenditure budget that had been previously set aside, is now made available to cover the actual payment
  • The FIS tools available to ensure that sufficient expenditure budget is set aside are:
    • Purchase Orders
    • Manual Reserves

If the capital fund account found itself in a position where the current expenditure budget was not sufficient to cover the anticipated expenditure requirements, the following options, subject to the Policy on Capital Planning and Capital Projects, are available:

Short term:

  • Provide interim funding from a departmental operating account through the “effective” transfer of project costs to the departmental accounts

Long term:

  • Change the scope of the project to accommodate the limited funding resources
  • Lobby for additional funding sources
  • Increase amount of long term divisional funding (i.e. through long-term financing)

 

Restricted Funds

Each restricted fund within the restricted funds grouping is used to report and manage the financial activity relating to monies received by the University which are restricted to certain specified activities.

The financial activity for all restricted funds is recorded in FIS using fund accounts and is categorized as either research activity or non-research activity (i.e. trust accounts). These two reporting categories are managed using specific guidelines as follows:

 

RESEARCH ACCOUNTS

These accounts are used to report and manage the financial activity relating to Research done by and/or on behalf of, the University of Toronto.

 

Budget allocation/management through the Budget Change Process:

Research accounts receive periodic budget allocations (through system generated postings) in accordance with the terms stipulated in the Funded Research Digests (FReDs).

Budget changes to a research account, other than the periodic allocations noted above, are rare. If a manual adjustment is required, it is typically processed by the appropriate research accountant.

 

Budget management/reporting through the realization and management of financial activity:

The EXPENDITURE budget, set up in FIS accounts, represents the life-to-date budget allocations released in accordance with the FReD and is used to cover the anticipated expenditure requirements for the specific research project. The expenditure requirements for a research project would typically include:

  • Salary and benefits
  • Equipment and supplies
  • Overhead costs

In order to ensure that sufficient budget is maintained to cover expenditure requirements not yet realized, encumbrance accounting is utilized at the UofT as follows:

  • Once a “commitment to pay” has been made, sufficient expenditure budget should be set aside to cover the actual payment.
  • At time of payment, the expenditure budget that had been previously set aside, is now made available to cover the actual payment
  • The FIS tools available to ensure that sufficient expenditure budget is set aside are:
    • Purchase Orders
    • Payroll Reserves
    • Manual Reserves

If the research fund is in a position where the current expenditure budget was not sufficient to cover the anticipated expenditure requirements, the following options, subject to the FReD, are available:

Short term:

  • Provide funding from a departmental operating account through the “effective” transfer of excess research costs to the departmental accounts

Long term:

  • Lobby for additional funding

 

TRUST ACCOUNTS

These accounts are used to report and manage the financial activity relating to non-research funding (i.e. grants, donations, etc.) which has spending restrictions associated with it (i.e. scholarships, academic chairs, etc.).

 

Budget allocation/management through the Budget Change Process:

Trust accounts funded by donations receive automatic budget allocations when expendable donations are received or when investment income is distributed. Trust accounts funded by grants/contracts receive automatic budget allocations based on the terms stipulated in the agreement with sponsors.

Budget changes to a trust account, other than the periodic allocations noted above, are rare. If a manual adjustment is required, it is typically processed by the trust accountant.

 

Budget management/reporting through the realization and management of financial activity:

The EXPENDITURE budget, set up in FIS accounts, represents the life-to-date expendable donations received and investment income distributed or budget allocations as per sponsors’ agreements, and is used to cover the anticipated expenditure requirements for the specific purpose. The expenditure requirements for a trust account could include:

  • Salary and benefits
  • Equipment and supplies
  • Scholarship awards

In order to ensure that sufficient budget is maintained to cover expenditure requirements not yet realized, encumbrance accounting is utilized at the UofT as follows:

  • Once a “commitment to pay” has been made, sufficient expenditure budget should be set aside to cover the actual payment.
  • At time of payment, the expenditure budget that had been previously set aside, is now made available to cover the actual payment
  • The FIS tools available to ensure that sufficient expenditure budget is set aside are:
    • Purchase Orders
    • Payroll Reserves
    • Manual Reserves

If the trust fund account is in a position where the current expenditure budget was not sufficient to cover the anticipated expenditure requirements, the following options, subject to the specific terms of the funding, are available:

Short term:

  • Provide funding from a departmental operating account through the “effective” transfer of excess research costs to the departmental accounts

Long term:

  • Seek additional funding from donors and sponsors

Last revision August 2007