Please note that in addition to the policy, there is also a new form to review. Please use the link at the bottom to view the form.
Before You Begin
University units serving as liaisons between the University and owners of money held in agency funds are responsible for expending agency funds at the request of the fund owner. They accomplish this by submitting transactions to initiate the expenditure and retaining documentation needed to support the expenditure.
Since these funds are not owned by the University:
- Expenditure limits, rates, and policies applicable to University funds do not apply to agency funds unless otherwise stated in Section 2, Agency Funds.
- State of Illinois procurement regulations do not apply to expenditure of agency funds unless the owner is an agency, office, or unit of the State of Illinois.
- The University may not procure its own goods and services by expending agency funds.
Invoice or other appropriate documentation of the nature and purpose of the expenditure must be obtained and retained by the liaison unit for all expenditure transactions.
To process a gift to the University from the owner of an agency fund, see Process a Transaction between the University and the Owner of an Agency Fund.
To return funds to the owner, rather than expend them on the owner’s behalf, see Return Agency Funds to the Owner.
Methods
Liaison units may not expend agency funds using University purchase orders (Banner or iBuy) unless the owner and University have entered into a contract that provides for use of University purchase orders.
When the recipient of the expenditure is other than a non-resident alien, liaison units may expend agency funds using one of the following methods, provided the related steps outlined in this process are followed:
- Banner journal vouchers, when procuring goods and services from the University.
- P-Cards or T-Cards held by the liaison unit, provided University policies, dollar limits, and controls established for use of P-cards/T-cards are met. P-Cards/T-Cards will not be issued directly to owners of agency funds, and physical possession of cards may not be transferred to non-University personnel. No modifications to system software, profiles, Merchant Category Code groupings, etc. will be made to accommodate card use on behalf of agency fund owners. See Section 7.6 The University Purchasing Card (P-Card).
- University TEM system.
Payments to non-resident aliens will not be processed unless liaison units first obtain needed documentation and confirm the recipient’s legal eligibility to receive payment before agreeing to reimburse or procure services from the non-resident alien. Liaison units that do not wish to facilitate these payments must inform the owner prior to executing their Agency Fund Agreement that:
- The owner may not arrange for services by or reimbursements to a non-resident alien that will be paid for their agency fund, and
- The owner's agency funds cannot be used to pay non-resident aliens.
Tax Exemption
An agency fund owner cannot use the University sales tax number to avoid paying sales tax on purchases with agency funds. Sales tax must be included in all agency fund expenditures for procurement of taxable goods unless the liaison unit has retained on file a copy of the owner’s sales tax exemption letter. The liaison unit must provide the owner’s sales tax exemption number (and letter if requested) to the vendor at the point of purchase.
University stores units may, but are not required to, sell goods to owners of agency funds. Units that sell goods to owners of agency funds must collect and remit sales tax according to Section 18.6 Sales and Use Tax unless the owner or liaison provides a copy of the owner’s sales tax exemption letter.
Begin
To expend agency funds on behalf of an owner, follow the procedures below.
When the recipient of the expenditure is not a non-resident alien:
1. Determine whether to make the expenditure using a journal voucher, P-card/T-card, or TEM.
- Use a journal voucher when:
- Procuring goods or services from a University unit, or
- Correcting an error in the original posting of a Banner transaction as described in Process a Transaction between the University and the Owner of an Agency Fund.
- Use a P-card/T-card when procuring goods or services from an external vendor.
- Use TEM when:
- Procuring goods and services from an external vendor, or
- Reimbursing an individual for payments made on behalf of the owner.
2. Process the transaction:
If using a journal voucher:
- Verify that the transaction is adequately supported as an expenditure made on behalf of the owner and that adequate invoice documentation to explain the purpose of the expenditure is retained in unit files.
- Verify that the expenditure (in conjunction with any other pending expenditures) will not create an overdraft in the agency fund. If an overdraft will be created, obtain additional funding from the owner or discuss with UAFR prior to processing the expenditure.
- When issued for procurement of goods from a University storeroom, assure that sales tax is included in the payment unless the owner’s sales tax exemption documentation (not the University of Illinois sales tax exempt identification number) is provided to the storeroom as required in “Before You Begin” above.
- Process the journal voucher in Banner.
If using a P-card or T-card:
- Verify that the transaction is adequately supported as an expenditure made on behalf of the owner and that adequate invoice documentation to explain the purpose of the expenditure is retained in unit files.
- Verify that the transaction will not violate any University limits or policies for card usage.
- Verify that the expenditure (in conjunction with any other pending expenditures) will not create an overdraft in the agency fund. If an overdraft will be created, obtain additional funding from the owner or discuss with UAFR prior to processing the expenditure.
- When procuring goods, assure that sales tax is included in the payment unless the owner’s sales tax exemption documentation (not the University of Illinois sales tax exempt identification number) is provided to the vendor as required in “Before You Begin” above. Caution: When using a P-Card or T-Card for web purchases, make sure that any University of Illinois sales tax exemption defaults are not applied.
- Process the card transaction with the vendor.
If using the Travel and Expense Management (TEM) System:
- Obtain a completed Request to Disburse Agency Funds from the owner or an authorized representative of the owner organization.
- Verify that adequate invoice documentation to explain the purpose of the expenditure is retained in unit files.
- Verify that the expenditure (in conjunction with any other pending expenditures) will not create an overdraft in the agency fund. If an overdraft will be created, obtain additional funding from the owner or discuss with UAFR prior to processing the expenditure.
- Verify the payee is not a nonresident alien. If the payee is a nonresident alien, follow the appropriate process in the section below.
- Determine payee vendor identification number in the Accounts Payable system and enter it on the Request to Disburse Agency Funds. If the payee does not have a vendor identification number, request one. To determine how to identify or request a vendor identification number, consult Vendor Setup and Update.
- Sign the liaison attestation on the authorization form.
- When procuring goods, assure that sales tax is included in the payment unless the owner’s sales tax exemption documentation (not the University of Illinois sales tax exempt identification number) is provided to the vendor as required in “Before You Begin” above.
- Process the disbursement transaction in the TEM system, attaching the fully completed Request to Disburse Agency Funds and any other documentation needed to support the transaction.
3. Verify that the expenditure is accurately recorded in the agency fund.
When the recipient of the expenditure is a non-resident alien:
1.Verify that payments to the individual are permissible prior to contracting for services from or agreeing to reimburse the individual by following these steps:
- Obtain payee visa status.
- See Payments to Foreign Nationals section of OBFS web site to determine payment eligibility and required documentation.
- Consult with the Office of University Payroll and Benefits (UPB) to address any questions not resolved by referring to the web site.
- When required documents and information have been obtained, submit them to UPB to verify that the payment is permissible.
2. After confirming the payment is permissible, inform the individual that he or she may provide services or acquire goods or services for reimbursement.
3. After the individual has performed the service or acquired the goods or services:
- Verify that adequate invoice documentation to explain the purpose of the expenditure is retained in unit files.
- Complete the Request to Disburse Agency Funds and forward it to UPB to generate the payment.
4. Verify that the expenditure is accurately recorded in the agency fund.
Forms Used in this Procedure
Request to Disburse Agency Funds
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