Overview: Life Cycle of a Fund

A fund's life begins when monies are received by Stanford and the use of this money needs to be tracked; it ends when the monies are fully spent and all obligations have been met. In the case of some funds, such as endowments, the principal is required to be invested in perpetuity so the fund never ends. The life cycle of a fund consists of these and several other stages that are dependent on the type of money involved.

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Understanding the Type of Money and Restrictions

Understanding the type of money you have and its restrictions is the first step in managing the fund. Answering these questions will help you achieve this first step:

  • Who is the money from?
  • What can the money be spent on? What are the restrictions on the money?
  • Is it one time money or ongoing?
  • Is there an agreement or other document associated with the money? If so, what are the terms of the agreement or documents?
  • What type of reporting is required?

Once you identify the characteristics of the type of money involved, you can determine the type of fund required for managing and tracking purposes:

  • Sponsored project
  • Capital
  • Service Center
  • Other Fund Types, such as
    • Designated
    • Endowment (Gift)
    • Expendable (Gift)
    • Operating Budget

Resources that provide guidance on the different types of funds include:

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Setting Up the Fund(s) and Associated Projects and Tasks

Once the type of fund is determined, a new PTA account can be requested. PTA accounts include project, task, and award information.

For help setting up a fund, see Overview: PTA Request Process and How To: Request New PTA.

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Managing the Inflows

Inflows of money to a fund may take the form of receipts or transfers in from various sources. A key component to managing these inflows is ensuring that all of the appropriate inflows are received and properly recorded.

Receipts

Receipts are recorded in the Oracle Financials system via the iJournals module. Receipts may include:

  • Interest / Income Earned (i.e. Expendable Funds Pool, Endowment Income Funds Pool)
  • Gifts
  • Program Income, Fees, Miscellaneous Income

Tools and resources associated with managing receipts include:

Transfers In

Transfers In may be:

  • Money from another fund
  • Revenue derived from infrastructure charges

Tools and resources associated with managing transfers include:

Exceptions

For certain types of funds, “budget” is the key management control, and comparing budget to actual expenditures is a more appropriate concept than comparing expenditures to receipts or fund balances. These fund types include:

  • Capital Projects
  • Grants and Contracts
  • Operating Budget

Tools and resources for managing the budget for these funds include:

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Managing the Outflows

Outflows, or “uses” of the money may take the form of expenditures (e.g. purchases of goods or services or salary) or transfers out (e.g. to another fund). Management of these outflows requires ensuring that the transactions are:

  • Appropriate and necessary (reasonable)
  • Consistent with University, donor or sponsor policy, practices and restrictions (allowable)
  • Charged to the PTA that benefited (allocable)

Expenditures

Expenditures include:

  • Purchases of goods or services
  • Salaries and wages
  • Burdens

Tools and resources for managing expenditures include:

  • Various ReportMart3 reports that provide details about individual transactions:
    • FIN_PO_206_AP_Purchase_Order_Detail
    • FIN_PO_207_AP_Requisition_Detail
    • FIN_PO_201_AP_Invoice_Detail
    • FIN_iOU_267_Other_Check_MP_Trans
    • FIN_PCARD_187_Transaction_Detail
    • FIN_JNL_230_Journal_Inquiry
  • ReportMart3 expenditure reports that provide summary information or details of expenses and budgets:
    • FIN_EXP_278_Executive_Summary
    • FIN_EXP_279_Transaction_Detail
    • FIN_EXP_280_Month_By_Month_Drill
  • Commitment Management System (CMS) including CMS reports:
    • 720: PTA Overview
    • 730: PTA Commitment Detail – People
    • 740: PTA Commitment Detail – Goods & Services
    • 800: Month by Month Burn Rate: by PTA
    • 810: Multiple PTA Listing
  • Monthly Review and Quarterly PI Review and Certification
  • Resources: About Burdening

Transfers Out

Transfers out may arise from:

  • Money going to another fund
  • Infrastructure charges

Tools and resources for managing transfers out include:

  • ReportMart3 FIN_FUND_153_Fund_Statement (containing information about transfers and high level summary information about expenses)
  • Resources: About Burdening (for infrastructure charges)
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Managing the Balance

Managing the balance means understanding how much you have left to spend and using the remaining funds prudently. Information to help you monitor fund balances can be found in the Commitment Management System (CMS), Faculty Financial Inquiry Tool (FFIT), and ReportMart3 reports.

While the objective of managing a fund is the same, (i.e. understanding what you have left to spend and using the remaining funds prudently), some fund types are managed using different business practices. For award types which are expected to be temporary holding accounts, such as expense clearing accounts, fund and available balance as well as turnover of activity are important management concepts. In certain other cases, such as sponsored projects, the budget is the key management tool. Understanding the Fund/Award Type will help you determine the best way to manage the monies. Reference Overview: FUNDamentals of Funds.

Available Balance

Certain fund types receive the receipts, transfers, and associated expenditures in the same fund, and therefore it is appropriate to use the fund balance and available balance, and the various components to manage these funds. These types of funds include:

  • Auxiliary
  • Designated
  • Expendable Gift Funds
  • Service Center
  • Endowment Income Funds
  • Cost Sharing Accounts and University Research (at the end of the project)

Tools and resources for managing these funds include:

  • Commitment Management System (CMS) including CMS reports:
    • 710: Account Balances
    • 720: PTA Overview
    • 730: PTA Commitment Detail – People
    • 740: PTA Commitment Detail – Goods & Services
    • 750: Person Commitment Detail
    • 760: Month by Month FTE Commitments by Person
    • 770: Month by Month FTE Commitments by PTA
    • 780: Month By Month Salary/Student Aid Commitments: By Person
    • 790: Month By Month Salary/Student Aid Commitments: By PTA
    • 800: Month by Month Burn Rate: by PTA
    • 810: Multiple PTA Listing
  • Faculty Financial Inquiry Tool (FFIT)
  • ReportMart3 Reports:
    • FIN_FUND_154_YTD_Fund_Balance_Listing (for a higher level view of multiple funds)
    • FIN_FUND_153_Fund_Statement (for individual funds)
    • How to Read a Fund Statement

Turnover and Balance Reviews

Certain types of funds are temporary "holding" accounts and the activity should turnover regularly and the balance should be minimal, reflecting only recent activity that has not been cleared. These fund types include:

  • Accounts Receivable
  • Expense Clearing Accounts (such as organization suspense accounts)

Tools and resources for these types of funds include:

Budget versus Actual (e.g. Variance Reports)

Other fund types are better suited to manage expenditures against their budget, as the timing of the receipts and expenditures are not always in sync and may not be meaningful except at the end of the project or period. For example, many grants and contracts stipulate that billings must be based on actual expenditures, and revenue earned is really a function of expenditures. These fund types include:

  • Capital Projects
  • Grants and Contracts
  • Operating Budget
  • Cost Sharing Accounts and University Research

Tools and resources for these types of funds include:

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Closing the Fund

In general, a fund should be closed when the inflows of money have been exhausted, and all obligations have been met. For specific steps and requirements related to the closing of funds, see Overview: PTA Request Process (Closing a PTA) and Policy Notes: Use of PTAs.

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