If your unit needs to act as an agent to hold non-University funds for an external entity (called the“owner”), you may need to create an agency fund. The chart below provides examples:
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Fund
Type
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Nature of Owner/Activity
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Typical Status of Fund Owner
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9A
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Payroll/benefit withholding, sales tax holding
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Governments, charities, health care providers, pension funds
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|
9D
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Consortia, University-related organizations
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Governments, not-for-profit and for-profit corporations
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|
Hosted conferences
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Not-for-profit and for-profit corporations
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Athletic booster clubs
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Not-for-profit corporations
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|
Academic associations
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Unincorporated associations
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|
Study abroad students
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Individuals
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|
Private financial aid
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Individuals
|
|
9G
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Student organizations (includes some staff and similar organizations)
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Not-for-profit corporations, unincorporated associations
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The information on this page applies only to Fund Type 9D. It does not apply to Fund Type 9A (payroll/benefits, sales tax, or other administrative control agency funds) which are administered by OBFS or Fund Type 9G (organization funds) for which a current process is under review. For information regarding these fund types, contact University Accounting and Financial Reporting (UAFR).
Agency Fund Definition
An “agency fund” is a fund held by the University in a purely custodial capacity as a fiscal agent for the owner of the money. Owners can be individuals, private organizations, or other governmental units.
Role of the University
The University acts as a fiscal agent to hold non-University funds for the owner. The agency fund money is not owned by the University. Owner activities recorded in agency funds must be consistent with the University’s mission of instruction, research, public service, and economic development. If used in collaboration with University programs, agency funds must record only the financial activity of the owner, not the University. Unless separately contracted, the University performs only these basic bookkeeping functions for owners:
- Deposits money in a University bank account:
- Maintains a record of transactions and balances in the Banner general ledger system
- Processes cash receipts, disbursements, and journal entries as directed by the owner
- Reports transactions and balances periodically to the fund owner
- Issues an IRS Form 1099 for disbursements to external parties paid from the Banner agency fund as required by the IRS. The University is not responsible for issuing 1099s to external parties from any other funds held by the owner.
- Reports to the IRS disbursements paid from the Banner agency fund to non-resident aliens
The University does not pay interest on money held in Agency funds. Additional services may be provided by the University at its discretion under an agreement. For additional information, contact UAFR at uas@uillinois.edu.
Inactive or abandoned balances in agency funds will be treated as unclaimed property in compliance with State of Illinois requirements.
Role of a Unit
Before an agency fund can be established, a University unit must agree to act as liaison between the University and the owner. As liaison, the unit may not assume liability or responsibility for the owner’s actions on the part of the University. For additional information on the responsibilities of the unit, consult Comply with Liaison Responsibilities for an Agency Fund.
Role of the Owner
The owner is ultimately responsible for the management of the financial activity accounted for by the agency fund. Owners must:
- Perform regular reconciliation of Banner monthly financial reports. When asked, provide copies of the reconciliation to the unit.
- Supply supporting documentation requested by the University to process transactions.
- Maintain a positive cash balance. If the activity must pay for expenses before revenue is received, the owner must deposit enough money to cover those payments.
- File sales and other tax returns not prepared by the University.
- Maintain organizational documentation, such as income and sales tax exempt status.
- Ensure the organization does not implicitly or explicitly represent itself as a part of the University in publications, through logo use, through use of the University’s tax-exempt status, etc.
- Sign an agreement indicating they understand their responsibilities and agree to follow the University’s terms for holding money as an agent.
Termination of an Agency Fund Relationship
The University may terminate the agency fund relationship at any time.
Resolution of Overdrafts
The University may bill the owner for overdrafts. Owners who repeatedly incur or fail to resolve overdrafts may have their agency fund relationship with the University terminated.
Fees and Penalties
The University may charge owners for University services provided, overdrafts incurred, or otherwise violating terms and conditions of the agency fund relationship.
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