This overview is meant to be a reference guide for you to become familiar with the different types of funds and their purpose within your organization. Most organizations (divisions, schools or departments) only deal with a few of the fund groups/program codes mentioned here. For more detailed information and policies, please see the Financial Topics section of this handbook.
The chart of accounts is the blueprint for the accounting system. It sorts and classifies financial transactions. It also allows for identification of:
Restricted vs. Unrestricted funding
Ownership vs. Agency accounts
In Banner, our financial accounting system, the Chart of Accounts is manifested in the FOAPAL:
are the elements of the FOAPAL.
The fund is a 6 digit code that identifies the source of the revenue, and whether it is restricted or unrestricted funding. It operates as the general ledger. The fund contains information concerning assets, liabilities, revenue and expenditures controls, and fund balances. The fund number is tied to subordinate expenditure organizations used in Banner. Budget, revenues and expenditures that occur in related organization codes create the assets, liabilities, controls, and balances in the fund. The fund to organization relationship can be one to one, or one fund with many subordinate organization codes.
The organization is a six digit code that is essentially where the activity occurs. Budget, revenues, expenditures and encumbrances occur in the organization. Organization codes are assigned to University departments, schools, VP levels and executive levels by use of Banner hierarchy levels. Each organization is associated with a program that identifies whether the activity is related to instruction, research, public service, etc. There are many different types of organizations. Their distinguishing features are discussed in the section below, entitled Index.
The account is also six digits. Accounts identify the type of activity. Banner accounts have nine categories determined by the first digit.
1=Asset Accounts for Funds
2=Liability Accounts for Funds
3=Fund Balances and Control Accounts for Funds
4=Revenue Accounts for Organization Codes
5=Labor (salaries, fringe benefits, etc.) Accounts for Organization Codes
6=Other Cost Accounts (supplies, services, non-labor) for Organization Codes
7=Equipment and Capital Project Construction Accounts for Organization Codes
9=Transfer Accounts for Organization Codes
Banner account 620012, for example, would identify a payment or transaction made for office supplies.
The program is the higher education function code. In Banner, this is a 4 digit code that identifies the expenditure activity as instruction, research, public service, academic support, student services, institutional support, operation and maintenance of plant, scholarships and fellowships, auxiliary enterprises, hospital support, or other activities.
This FOAPAL element is currently not being used by VCU. It could be used in the future to identify certain types of activity that would aid in financial reporting.
The location code is six digit code, used in the Fixed Assets module, that identifies the location of equipment.
VCU customized the Banner accounting system by adding an element called the index. The index is the same six digit code as the organization code. It was created to serve as a short cut that would eliminate users having to enter all of the FOAPAL codes to retrieve Banner forms. Indexes (organization codes) are grouped by type. The first one to three digits identifies the ledger and type of organization. The following is a description of the chart of accounts indexes:
State Fund Indexes-Ledgers 1, 2, 3, 5, 7, and H8. State rules apply to these indexes. State regulations prohibit payments for alcohol, entertainment, social club memberships, Christmas expenditures and gifts or donations. Since these funds belong to the Commonwealth, departments are prohibited from processing expense transfers that charge a state index and credit a local index.
Local Fund Indexes-Ledgers 3, 4 and 6. In this case, the money belongs to University and is generated by gifts, investment income, or income on endowments.
Agency Fund Indexes-Ledgers 880XXX and 882XXX. The cash in these accounts belong to student and faculty organizations. The University has no claim on these funds, but rather acts as the paymaster for the organizations.
The following is a discussion of the individual ledgers found in the VCU chart of accounts..
Ledger 1- Education and General Funds (State Funds)
E&G revenue indexes, 10XXXX, are used with revenue accounts (tuition & fees).
E&G expenditure indexes, 1XXXXX, are used to record operating expenses. These indexes accept revenue and expenditure accounts. This ledger is for budgeted organizations, and it is critical to stay within the adjusted budget. The Adjusted Budget is the expenditure authority.
HQXXXX indexes are reserved for use by the Qatar campus.
Ledger 2-Facililties and Administrative Cost Recoveries (FACR) Funds (State Funds)
Indexes 2XXXXX are restricted in use to research, research support and depreciation set aside. These funds are the result of recoveries of indirect cost associated with sponsored programs. No direct deposits are made to the organization codes. Budget is loaded by Budget & Resource Analysis. Unexpended budget balances can carry over to the next fiscal year, at the discretion of the Vice President.
Ledger 3-Auxilairy Enterprises (State or Local Funds)
The indexes, in the 3XXXXX range, make their own revenue from sales and services to students, faculty and staff (i.e., food services, housing, intercollegiate athletics, parking, etc.) The fiscal year operating budgets are loaded in these organizations by Budget & Resource Analysis. From a spending perspective, the critical balance is the fund balance in the corresponding general ledger (fund).
Ledger 4-Unrestricted Local Funds (University Local Funds)
4XXXXX indexes are unrestricted in use. No budget is loaded in these indexes, as they are supported by cash. Once it’s spent, it’s gone. Budget balance available equals cash available. Budget balances roll forward each year as adopted and adjusted budget. Due to their nature, these indexes should be the last source of funds used by a department.
Ledger 5-Grants and Contracts (State Funds)
Sponsored activity occurs in 5XXXXX organizations. These indexes are used for sponsored research agreements, either reimbursable or fixed price. The sponsors can be Federal, state or private industry. State rules apply despite the sponsor. Budget is loaded by Grants & Contracts Accounting for both fiscal year and project to date. Journal vouchers for cost transfers to grant indexes must be made within 60 days of the month the original charge posted. Other indexes, within the Grants and Contracts category, but are not sponsored activity are:
FAXXXX series-General Fund Scholarships
FFXXXX series-Financial Aid indexes
SAXXXX series-State Eminent Scholars
SSXXXX series-Foundation Eminent Scholars
AXXXXX series-General Fund Appropriations (SCHEV and other projects funded from appropriation transfers)
CXXXXX series-Service Agreements with other hospitals and universities
WXXXXX series-College Work Study
TXXXXX series-Pool Accounts (excess earnings on fixed price agreements)
Ledger 6-Restricted Local Funds (University Local Funds)
These indexes are restricted in use based on donor requirements. No budget is loaded in these indexes, as they are supported by cash. Once it’s spent, it’s gone. Budget balance available equals cash available. Budget balances roll forward each year as adopted and adjusted budget.
Ledger 7-Plant Funds (State Funds)
Plant funds are used for construction, renovation, or maintenance of land, buildings, and equipment. Series 7XXXXX are indexes used to record capital project expenditures. Also included in Plant Funds are indexes PRXXXX. These are renewal and replacement reserves. For the policy regarding renewal and replacement funds, visit www.controller.vcu.edu/uco/repair-replacement.htm.
Ledger 8-Agency Funds (Agency Funds)
These indexes are used for funds that belong to others, such as faculty and student organizations. The University has no claim on these funds, but rather acts as a paymaster.
There are various indexes within this group:
H88XXX-Index series reserved for Hospital Operating Service Agreements (OSA) with the VCU Health System, which records activity between University service departments and VCUHS (i.e., agreements for human resources services, campus police and facilities maintenance).
H89XXX- Index series for Hospital Clinical, Educational, and Research Service Agreements (CERSA), which records activity between the Health Sciences schools (Nursing, Allied Health Professions, VP for Health Sciences and Dentistry) and VCUHS.
881XXX-Index series reserved for clinical use by the School of Medicine. The University acts as a common paymaster for MCV Physicians (MCVP) services.
880XXX and 882XXX-Index series for student and faculty organizations. This index should be used for legitimate organizations and not to accumulate funds (i.e., coffee fund). This index series is also used for workshops, conferences, seminars, symposiums, and etc., hosted by an outside organization whereas the School or University department serves as the facilitator. Registration fees and related expenditures are recorded in the index. After all expenses are settled, any remaining balances are returned to the outside organization.
HEETF Funds (State Funds)
EFTXXX indexes are used to record Higher Education Equipment Trust Fund (HEETF) expenditures. The Higher Education Equipment Trust Fund was established in 1986 by the General Assembly. The funding is used to purchase equipment for instruction and research. Institutions purchase equipment using their operating funds and are reimbursed by the Trust Fund. The HEETF program significantly reduces the amount of obsolete technology and equipment while providing every student with access to an appropriate level of information and technology.
Assets are items you own, with a probable future economic benefit. Examples include: buildings and capital improvements; inventory; cash; and accounts receivable.
Liabilities are probable future sacrifices of economic benefit arising from present obligations. Stated simply, they are what you owe. Examples for a university include salaries, deferred income and accounts payable.
Net Assets reflect what you are worth. In private industry it’s known as retained earnings. For University accounting purposes, this amount reflects the fund balance.
Operating Revenues are generated by the University. Examples include student tuition and fees, grants and contracts, auxiliary enterprises, and hospital services.
Non Operating Revenues are external to the University. Examples include state appropriations, gifts, and investment income.
Operating Expenditures (expenses) are generally goods and services purchased to meet the mission of the university. Other expenses include those related to running the University, such as salaries and employee benefits. Expenses are grouped by functional categories that explain the use of the funds. These categories are: Instruction, Research, Public Service, Academic Support, Student Services, Institutional Support, Operation and Maintenance of Plant, Scholarships and Fellowships, Auxiliary Enterprises, and Hospital Services. These functional categories are discussed further in the Higher Education Program Codes section of this page.
Encumbrances are firm commitments placed against funds for goods or services not yet received. Most encumbrances are in the form of purchase orders.
The University operates on a Fiscal Year basis, which is the period between July 1 and June 30.
Restricted Resources are unique to non-profit, or public entities. Limitations on the use of funds are external. Examples of sources of these funds, and their restrictions, include donors, contracts and government agencies.
Unrestricted Resources have no external conditions placed on their use. Examples include state appropriations or unconditional gifts.
Designated Restricted Resources are not restricted by the fund source, but may have conditions placed by the Board of Visitors, Office of President, Vice Presidents, etc. Examples include faculty research grants.
University fund accounting tracks the receipt and use of resources by the source of the funds. It is used by all higher education institutions. The following are the fund groups used:
- Current Funds
- Loan Funds
- Plant Funds
- Agency Funds
Current Fund Classifications
Current Unrestricted Funds can be used for any institutional purpose. Following are the funds under this subgroup:
Educational and General Funds-Most General funds are provided by the Commonwealth and are spent within the overall constraints of the approved state budget. Sources of general funds are student tuition, state appropriations, facilities and administrative cost recoveries, and unrestricted gifts. For more information on E&G funds, see Financial Topics.
Sales and Services of Educational Departments-These funds are used to operate organized activities, i.e., income-producing activities operated by departments in connection with the training of students. Examples of such activities are the operations of medical or dental school clinics. These funds are also used for the activities of educational departments.
Sales and Services of Auxiliary Enterprises-These funds are used in the operation of auxiliary enterprises, which are operated primarily for service to students and staff, such as residence and dining halls; intercollegiate athletics; telecommunications; and the parking office. For more information on Auxiliary Enterprises, see Financial Topics.
Student Fees-Student fees represent funds which are used to provide services (student health services, counseling, etc.) to regularly enrolled students.
Hospital Services-These funds are used to support activities associated with teaching hospitals related to the medical schools.
Other Sources- Other sources include income sources which do not fall naturally into any of the other classifications. Examples are royalties on patents, and sales of University Press publications. These funds are used for purposes related to the income source.
Current Restricted Funds are subject to special restrictions established by various outside sources in accordance with the purpose established by the source of a given fund. Following are the funds under this subgroup:
State-State funds appropriated by legislature for special research projects or received under contracts with state agencies. State funds for general operating purposes are classified under Current Unrestricted Funds.
Federal-Federal funds are funds to be used in Federal projects and programs. A major portion of these funds is used for research under grants and contracts. Also, a large amount is used for Federal student aid programs.
Local Government-Local government funds are funds to be used under contract with local governments or tax districts (cities, counties, school districts, etc.).
Private Gifts, Grants and Contracts:
Gifts are funds donated irrevocably for individuals or organizations. Gifts do not involve contractual consideration-such as tangible specified services-provided to the donors by the University. This subgroup is restricted to the enrichment of University programs. However, income consists of current gifts, rather than return on the investment of principal (endowment). Note: Some of these funds are classified as Unrestricted Funds, according to donor designation.
Grants and Contracts are written agreements with external sponsors for training, public service, or non-standardized testing/other services. An agreement which contains one or more the following provisions is generally a grant or contract: (1) a research protocol or other statement of work, (2) a designated period of performance, (3) a budget, (4) an obligation to account for costs incurred and to return unspent funds, and (5) disposition of intellectual property rights. The following are examples of grants and contracts which should not be classified as sales and services: agreements to test a company’s drug or device; sales of survey services (data collection and/or analysis); and service to industry agreements.
Endowment Income-Use of endowment income is restricted to the enrichment of educational and research programs beyond the level that the state is able to provide. Note: Some of these funds are classified as Unrestricted Funds, according to donor designation. Income consists of return on the investment of principal.
Loan Funds are resources used for loans to students, faculty and staff. The principal must be repaid, and interest is usually charged.
Endowments and Similar Funds are generally where the principal is used to earn interest, and the earnings are then moved to current funds to support research, scholarships and special projects. Term endowment funds and quasi-endowment funds also fall in this category.
Plant funds fall into the following subgroups:
Renewals and Replacements
Retirement of indebtedness
Investment in plant
Agency Funds are funds that belong to someone else, but are being held by the University. For example, student organizations will use Agency Funds for their operating funds. This money does not belong to the university, and it is listed on financial reports as a liability.
Current fund expenditure organizations are classified according to program (4 digit Banner program code), which corresponds to the purpose for which costs are incurred. The higher education program classifications are as follows:
The following is a summary of Banner Program Codes. For more in-depth information, see Banner Program Codes.
Instruction (Banner Program Codes 2000-2400)
All current expenditures of instructional departments, including expenditures for research done as a part of regular instructional programs are included under this function. Expenditures for Summer Sessions and University Community programs are also under this function. These expenditures may be for salaries, staff benefits, office expenses and equipment, laboratory expenses and equipment, or other departmental expenses. Museums may be included if they are intended primarily for instruction.
Research (Banner Program Codes 2600-2740)
This function records the expenditures of all separately organized research units, including research institutes, centers, bureaus, laboratories, and stations. Museums are included when their collections are primarily employed by those engaged in research.
Research also includes expenditures for specially budgeted research such as investigations performed under grants and contracts, even in cases in which the research is administered by an instructional department.
Public Service (Banner Program Codes 2800-2810)
This category is used for expenditures for activities intended to serve the general public. Examples of Public Service activities include holding campus cultural events, conferences, consulting, operating museums intended primarily for the public, and providing Cooperative Extension.
Academic Support (Banner Program Codes 3000-3600)
The academic support category includes expenditures incurred to provide support services for the institution's primary missions: instruction, research, and public service. It includes the retention, preservation, and display of educational materials, such as libraries, museums, and galleries; the provision of services that directly assist the academic functions of the institution, such as demonstration schools associated with a department, school, or college of education; media such as audio-visual services and technology services; academic administration (including academic deans but not department chairpersons) and personnel development providing administration support and management direction to the three primary missions; and separately budgeted support for course and curriculum development. For institutions that currently charge some of the expenditures-for example, computing support-directly to the various operating units of the institution, this category does not reflect such expenditures.
Student Services (Banner Program Codes 4000-4500)
This function includes expenditures for services to the student body as a whole. Examples are expenditures for student health services, counseling programs, placement centers, graduation ceremonies, and expenditures of the offices of the registrar, dean of students, and director of admissions.
Institutional Support (Banner Program Codes 5000-5400)
This function includes expenditures of the general administrative offices serving the University as a whole, including all costs of the offices of the Board of Visitors, President, vice-presidents, business officers, accounting officers, personnel managers, etc.
This category also includes various current expenditures of the University as a whole that are of a general character and not related to any specific division, exclusive of the libraries and plant operations. Examples of departments whose expenditures are included in this function are Budget and Resource Analysis, Controller’s Office, Alumni Office, Treasury Services, etc.
Maintenance and Operation of Plant (Banner Program Code 6000)
This heading includes all expenditures for salaries and wages, supplies and expenses, and equipment required to maintain and operate the physical plant used by the University, including janitorial service, grounds maintenance, utilities, and major repairs. Many expenditures are recharged and reported under other functions, such as expenditures for services performed for auxiliary enterprises and for special repairs and maintenance work ordered by specific departments.
Scholarships and Fellowships (6500-6700)
Under this function are all expenditures for scholarships, fellowships, and prizes. Salaries paid to students under special aid programs requiring service from the student, such as the Work-Study Program, are reported not under Student Aid but under the function where services were performed. Scholarship payments of tuition and fees are recorded as Student Aid expenditures and Student Tuition and Fees income.
Auxiliary Enterprises (Banner Program Codes 7000-7225)
This function, intended to be self-supporting, records the gross expenditures of enterprises which are operated primarily for service to students and staff, such as residences and dining halls; student unions, when not operated independently by the students; and intercollegiate athletics, when not operated as a part of the physical education program.
Hospital Support (Banner Program Code 8500)
The hospital support category includes expenditures made for services in the support of the institution’s affiliated teaching hospital, the VCU Health System, through the Operations and Services Agreement (OSA), the Clinical, Educational, and Research Service Agreement (CERSA), and operation and maintenance services for leased space.
Other Activities (Banner Program Codes 9109-9998)
The other activities category includes expenditures for the University’s common paymaster accounts, agency funds (funds held for others), and endowment and similar funds.