Fund Accounting
Fund Accounting 101
Lamar University, like most universities, uses fund accounting to properly account for all financial resources received and used. Fund accounting classifies all resources into funds according to specific limitations placed on their use by the resource providers.
Each fund is a self-balancing set of accounts with its own revenues and other additions, expenditures and other deductions, assets, liabilities, and fund balance.
- A change in a fund's balance represents the difference between fund additions and deductions.
- A fund balance is the sum of all previous changes for that fund.
- A fund balance equals the net difference between a fund’s assets and liabilities.
Not all of a fund balance may be available for budgeting or spending. Some part of it may be reserved to offset non-liquid assets such as inventories and accounts receivable or to offset encumbrances.
Available Reserves = Fund Balance - Encumbrances and Reserves for Non-Liquid Assets
Method of Finance Defined
Method of Finance is a fund group of accounts that are funded by appropriations and tuition (statutory and designated), as opposed to accounts that are funded by fees, income generated from sales & services, gifts, or grants. Method of Finance (also referred to as "Method") includes most State or Educational & General accounts and excludes income-generating accounts and Coordinating Board grants.
Method of Finance is the primary focus of the President's Cabinet and the Texas State University System Board of Regents. Decisions made for Method of Finance affect other funds and expenditures, including pay raises and benefits. Policy is more articulated for Method of Finance accounts than for others.
