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Business and Policy Areas
Business and Policy Areas

Advisory Report 1999-5

July 8, 1999

Accounting and Reporting for Student Clubs and Groups


The position paper that follows was approved in April 1999 by the NACUBO Accounting Principles Council. The paper represents preferred industry practice, and in the absence of any guidance from the Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB), or the American Institute of Certified Public Accountants (AICPA), this document should be followed by all higher education institutions.

Purpose: NACUBO has reviewed certain accountability issues pertaining to the category Agency Funds in NACUBO’s Financial Accounting and Reporting Manual for Higher Education (FARM) and has determined that further guidance is needed as pertains to accounting for funds received as agency funds and general university funds provided in support of agency activities.

Applicability: This position paper applies to all independent and public higher education institutions.

Scope: Agency funds are monies held by an institution acting as custodian or fiscal agent. These funds may be held on behalf of students, faculty, staff, organizations, or some other third party. Institutions often support student, faculty, staff, or other groups with institutional funds at the same time as the students, faculty, staff, or other groups are generating funds through various entrepreneurial endeavors. Guidance has been requested concerning how to account for funds when provided by both the general university and by students, faculty, staff, organizations, or other third party. The FARM Agency Funds category adequately describes appropriate accounting for funds deposited with the institution for safekeeping. The FARM also adequately addresses accounting for institutional funds. However, the FARM does not address the issue of having multiple sources of funding for agency activities. The FARM is being updated to reflect appropriate accounting for multiple sources of funding.

Significance: The FARM will address the appropriate accounting methods for multiple funding of agency activities. This action is for clarification purposes and should not alter reporting categories of the current FARM.

Effective Date: The requirements of this document are effective for all higher education institutions for fiscal years beginning after June 15, 1999, with earlier application recommended.


The following paragraphs will be included in a future revision of the FARM and may be used in the interim for accounting and reporting purposes:

Agency Funds

Agency funds are monies held by an institution acting as custodian or fiscal agent. Agency funds are only reported on the Fund Group Perspective Financial Statements. The monies are deposited with the institution for safekeeping, to be used or withdrawn by the depositor at will. These funds may be held on behalf of students, faculty, staff, organizations, or some other third party. When agency assets are immaterial in amount, the assets and liabilities may be reported as assets and current liabilities of the current funds group. Typical examples of agency funds are deposits by students and student organizations, various breakage deposits, and payroll deductions (for example, taxes, F.I.C.A., insurance, and pension contributions) payable to a third party.

Agency funds often are created in concert with accounts created in the program classifications. For example, students may raise funds and establish an agency fund account for a Biology Club. At the same time, the Institution may decide to support the Biology Club with funds provided from Educational and General Funds. The funds raised by the students should be deposited into an agency account. The Educational and General funds earmarked for the Biology Club from departmental funds would be accounted for in accordance with the Institution’s accounting policies. Normally, the Educational and General funds earmarked would be accounted for in the normal departmental series of accounts.

A general ledger and subsidiary deposit ledgers may be used to account for agency funds, which contain an individual account for each depositor. When the depositor allows monies to be invested, interest income is recorded directly to the depositor’s account.

Agency fund assets include cash, receivables, temporary investments (if allowed by the depositor), and amounts due from other fund groups. Liabilities include accounts payable, amounts due to other fund groups, balances owed to the depositor, and balances owed to third parties. The balance sheet displays the assets and liabilities by major type. Since agency funds are held in trust for others, there is no fund balance. Receipts and disbursements increase or reduce assets and liabilities, and no activity is reported on the statement of changes in fund balances.

Accountability for agency funds usually requires the submission of periodic reports of transactions and balances to the individuals and organizations owning the assets.

The typical balance sheet presentation for agency funds includes:

Assets Liabilities
Cash Accounts payable
Accounts receivable Deposits held in custody for others
Investments (if authorized) Due to other funds
Interest receivable (if accrued)
Due from other funds