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Board of Trustees

6010 - Accounting of Funds

Purpose of Policy

The objective of this policy is to establish a sound financial policy for the proper handling of Washtenaw Community College funds. The accounts of the College are maintained and reported in accordance with the principles of fund accounting.

Policy Statement

For the purpose of this policy, a fund is defined as an accounting entity with a self-balancing set of accounts for recording assets, liabilities, a fund balance, and changes in the fund balance. Separate accounts are maintained for each fund to insure observance of limitation and restrictions placed on the use of resources. For accounting and reporting purposes, however, funds of similar characteristics are combined into fund groups.

The funds of the College are maintained in two balanced groups. These two groups are current and non-current. The current fund group is composed of funds for carrying out the main functions of the College; whereas, the non-current group is composed of funds that support the activities of the College or is ancillary to the College's central purpose. The yearly financial statement of the two balanced fund groups conforms to the American Institute of Certified Public Accountants' Guide, and the State of Michigan's Manual for Uniform Financial Reporting for Michigan Public Community Colleges. The bases for presentation of financial data are the concepts and principles of accrual accounting, consistency, conservatism, materiality, and matching.

  1. Current Funds: The current fund group, the operating funds used to carry out the primary functions of the College, consists of four subgroups of funds: (1) General, (2) Designated, (3) Auxiliary Activities, and (4) Restricted. Each subgroup is self-balancing.
    1. General Fund: The General Fund reflects institutional activities financed primarily by student tuition and fees, annual appropriations from the State of Michigan, and property tax revenues from the district.
    2. Designated Fund: The Designated Fund is an institutional fund restricted as to operating use by the Board of Trustees or the Administration. The sources of such funds could be virtually any unrestricted revenue that the Board of Trustees or Administration earmarks for the specific operating purpose. Such income might include unrestricted gifts or the income from an endowment whose income may be used for any purpose.
    3. Auxiliary Activities: The Auxiliary Activities Fund records the activities of self-supporting enterprises operated principally to provide services to the student body, faculty, and staff. The fund is used to account for a self-supporting activity that delivers a product or performs a service that is not by itself an instructional or administrative activity.
    4. Restricted Funds: Restricted Funds reflect the institutional activities financed by gifts, grants, and other revenue which must be used for the purpose specified by the donor. The Administration has the responsibility to adhere to the provisions of gift, grant, or contract as specified by the donor. The restricted revenues are recognized only to the extent of the amounts expended.
  2. Non-current Funds: The concurrent fund group, the ancillary funds used to support the College's central purpose, consists of four subgroups of funds: (1) Student Loan, (2) Endowment and Similar Funds, (3) Plant, and (4) Agency. Each subgroup is self-balancing.
    1. Student Loan Fund: The Student Loan Fund consists of direct gifts, income from gifts either designated by the Board of Trustees, Donor, Federal or State program, and mandatory match by the College for Federal or State programs. These funds provide loans to qualified students of the College.
    2. Endowment and Similar Funds: The Endowment and Similar Funds includes gifts to the College that may restrict the use of both principal or income by either the terms of the gift or designation by the Board of Trustees. Endowments and Similar Funds includes Endowment, Term Endowment, Funds Functioning as Endowments, and Annuity and Life Income Funds.
    3. Plant Fund: The Plant Fund consists of the investment in institutional property and financing of the property including indebtedness. The Plant Fund includes unexpended Plant Fund (construction of new facilities), Maintenance and Replacement, Debt Service, and Physical Properties.
    4. Agency Fund: The Agency Fund consists of types of funds which are held by the institution for others. The College may care for the funds from agencies, student organizations, students, faculty organizations, or the College.

Outcomes of Policy Implementation

This policy will ensure that all College resources for various purposes are classified, for accounting and reporting purposes, into funds in accordance with the activities or objectives specified and follow accepted professional accounting and audit standards.

Adopted: February 22, 1966
Revised: February 23, 1982
Revised: December 10, 1996
Under Consideration: 2002
(6010)

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