Agency Fund Policy

 

 

Proposed by:	Initially proposed by Associate VP for Finance, but to be handed off for maintenance to the Director of Accounting & Budget Services
Approved by:	Associate Vice President for Finance
Date approved or last reviewed:	February 2003
Frequency of review:	Every two years or as changes are needed
This policy should be read by:	Faculty, students, and staff leaders of professional clubs or organizations who have or wish to request agency funds; Student organization advisors; Accounting & Budget Services staff

 

Note: the person holding the position identified on the “proposed by” line above will be responsible for initiating the periodic review of the document, as identified by the “frequency of review.”

 

Purpose of this policy:

From time to time, students, staff, and faculty have fiscal responsibility (often as Treasurer) for professional organizations that they are involved in.  These organizations are legally separate from the university and are funded from sources independent of the university (e.g. membership dues).  The student, staff, or faculty member serving as treasurer may request that the university act as custodian and in so doing may request Accounting & Budget Services to establish a separate fund (an agency fund) in the university’s accounting system to assist the organization in safekeeping their cash and keeping a running total of their cash balance.  The purpose of this policy is to clarify when an agency fund can be offered and when another sort of arrangement is necessary due to the complexity of the organization’s needs.

 

Definitions/descriptions/abbreviations:

Per FARM Release 97-3, “Agency funds are resources held by an institution acting as custodian or fiscal agent.  The resources are deposited with the institution for safekeeping, to be used or withdrawn by the depositor at will.”  Agency funds are reflected in the university’s financial records as pooled cash with a corresponding liability to the depositing organization. 

 

Regulatory references:

See additional discussion in the Financial Accounting and Reporting Manual (FARM) for Higher Education Release 97-3, section 302.6.

The IRS Instructions for Form 1099-MISC give guidance on 1099 requirements for escrow agent type arrangements.

 

Responsibilities:

Requests for agency funds shall be submitted to the Accounting Operations Coordinator.  The Accounting Operations Coordinator will gather the necessary information from the requestor and working with the requestor will apply the criteria of this policy to determine if the arrangement needed can be satisfied with an agency fund. 

 

If an agency fund is deemed appropriate, the requestor will need to provide the Accounting Operations Coordinator with a list of the persons (include titles or positions, as applicable) with disbursement authority and Budget Administration Web system viewing privileges for the agency fund, including any faculty or staff advisors for the organization.  When positions within the organization change, an officer or faculty or staff advisor will provide the Accounting Operations Coordinator with updated disbursement authority and Budget Admin Web viewing information.

 

If the arrangement needed is more complex than allowed with an agency fund, the Accounting Operations Coordinator will consult with the Director of Accounting & Budget Services and then will recommend an alternative approach to the requestor.  Alternatives include establishing a restricted fund if “sponsored” by the university and approved by the area VP, or advising the group to establish an outside bank account and seek outside accounting support.

 

Policy statement:

 

Agency funds may be established for the convenience of Puget Sound students, faculty and staff when the following conditions exist:

1)    the funds belong to an outside organization (the university has no financial interest) for which a university student, staff or faculty member is the treasurer

2)    the organization is a separate legal entity that accepts all responsibility and liability for its activities

3)    the outside organization is a club, professional organization or fraternal organization

4)    the financial activities of the organization are limited to occasional deposits and occasional withdrawals

5)    withdrawals are limited to on-campus recharges for printing, copies and bookstore purchases and to accounts payable disbursements (withdrawals).

 

Reporting for agency funds is limited to a running balance of the cash and a listing of deposits and withdrawals, not unlike a bank statement.   Fund activity is viewable via the Web to individuals authorized by the outside organization.  Withdrawals may be made by individuals authorized by the outside organization.  Aside from the routine Washington state use tax reporting and IRS 1099 reporting associated with vendor payments made by the university on behalf of the outside organization, the outside organization is entirely responsible for its tax and regulatory compliance and filings.

 

An agency fund may NOT be used:

1)    for organizations that are profit seeking ventures

2)    when the deposit or withdrawal activity is unusually complex and/or voluminous

3)    to process payroll on behalf of the outside organization.