On July 1, 2021, the University of Illinois and many other governmental and higher education institutions were required to change the way leases are recorded and reported. All leases longer than 12 months including all renewal options are required to be broken out into principal and interest components. Originally, it was determined the principal and interest breakout would be the responsibility of the unit making or tracking payments on the lease. After a brief trial period and feedback from units, it is determined recording the principal and interest components move to University Accounting and Financial Reporting (UAFR). Centralizing this function relieves units of this additional responsibility saving them resources. It also provides a consistent and efficient means to meet GASB 87 reporting requirements.
How does this change unit activities?
- Refrain from making further interest adjustments. For those who have received prior communication regarding principal and interest breakouts of their unit’s leases, please disregard those communications and resume making and recording payments to one account code for lease principal (e.g. 157100-158600).
- When filling out a contract request or requisition within Contracts Plus that contains a leasing component greater than 12 months including all renewal options, please select the checkbox within the request that indicates the existence of a leasing component. If you are unsure whether your request contains a leasing component, please reach out to the contacts listed below for assistance.
- Continue to provide UAFR with any applicable lease information and ensure that payments made match the amount contracted. Because interest amounts and recorded assets/liabilities are based specifically on rent payments listed within the contract, it is essential that payments made follow the contract. If payments are made that differ from contracted amounts, UAFR will reach out to obtain information or justification for the differences.
- UAFR will complete required split between principal and interest annually around fiscal-year end, and will notify units promptly.
Contact
Any questions about leases or the changes referenced above should be directed to:
Danielle Stoner
Financial Accounting & Reporting Analyst
dstoner@uillinois.edu
217.300.1631
Courtney Englehardt
Associate Director of Financial Reporting
hampton2@uillinois.edu
217.244.8739
