Management of Trust Funds

The Financial Regulations specify that it is the Head of Department's responsibility to ensure that all trust funds are maintained in credit.

See also the guidance for Trust Fund Managers

On this page:

• Estimate income required for the coming year
• Monitoring Trust Funds
  • Trust Fund Financial Statements
  • Reading the statement
  • Using the GL Account Enquiry screen in UFS
  • Month End procedures
• Deposit movements
• Year end procedures

Estimate income required for the coming year

Calculate the cost of the activities of the trust over the forthcoming year. For salaries, do not forget to include on costs such as employer's NI and pension contributions, as well as the overhead charge.

Review the amounts of permanent and spendable capital held and estimate the income that these are likely to generate in the form of distributions and interest.

Compare the income available to planned expenditure to ensure funds available are sufficient. Produce budget and expenditure plans accordingly. Any shortfall will need to be met from departmental funds.

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Monitoring Trust Funds

Each month check income and expenditure. Ensure that the funds are being used for proper purposes in accordance with the rules of the specific fund and the University's general charitable purposes.

Trust Fund Financial Statements

The Trust Funds Assistant will prepare monthly Trust Fund Financial Statements, once the GL has been closed, and will distribute them to the managers/administrators of the trust funds.

Once the statements have been received, they should be closely checked to ensure that:

• the trust fund expenditure has not exceeded the income
• expenditure has been charged to the correct trust fund
• the correct stipends (if any) are being charged to the fund

See Appendix A for an example of a Trust Fund financial statement.

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Reading the statement

The statement is divided into three main sections.

Current Capital

This is split into two columns, the first showing the value of the permanent capital, and the second showing the value of the spendable capital.

Income &: Expenditure of Fund

The first column shows the estimated income to be received in the current financial year from the Cambridge University Endowment Fund (CUEF) units held in the fund. This figure is reached by the following:

• adding the number of permanent and spendable Cambridge University Endowment Fund (CUEF) units
• multiplying them by the income per unit for the financial year.

In the example statement:

• 2010/11 income per unit was £1.4543
• The annual income would be (8427+0) x 1.4543=£12,255.39

The second column shows the actual to date income and expenditures figure for the current financial year.

Revaluations and Transfers

This is split into two columns, the first showing movements in the permanent capital, and the second showing movements in the spendable capital in the current financial year.

It is better to wait until the 4th working day before processing deposit movement journals, as the Finance Division need to process journals relating to some Trust Funds, which will affect the balances on those funds.

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Using the GL Account Enquiry screen in UFS

In the GL responsibility, the Account Enquiry Screen is useful for quickly looking up information on your trust funds.

To look up your trust fund:

• In GL Responsibility, select Enquiry then Account
• Enter the accounting periods from and to fields
• In the currency field select GBP unless you need to look up the number of Cambridge University Endowment Fund (CUEF) units that a trust fund holds, in which case type in STAT
• In the account flexfield box, type in the source of funds of your trust fund
• Select "Show Balances"
• To drill down to the information shown for the income received to date from the Cambridge University Endowment Fund (CUEF) from the same trust fund you would enter the source of funds code plus the transaction code e.g. NAAA in the flexfield box.

In the example shown below, we are searching for information on fund KAAC.

The example below shows that the CUEF income has been received by this trust fund monthly.

An Accounts Analysis - Transaction Detail 3 (UFS) report can also be run to show the same information.

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Month End procedures

Each month end, departments should follow the month end timetable issued by the Finance Division and ensure that all Trust Fund transactions are processed before the GL closes (currently on the fifth working day of the following calendar month).

The best report to run off in the GL in order to review the month's activities is the "Transaction Code Balances (UFS)" report.

The parameters that you need to enter are as shown below:

Click on OK and submit the request.

The report will pick up all of your department's Trust Funds and show the activity on cost centre ZZYB, the spendable part of the Trust Fund.

What are the main transaction codes that I need to know about?

When the report has run off, check the source of funds total at the end of the "Ending Balance" column.

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Deposit movements

Many departments have surpluses that are held on deposit with the University Deposit Account. Departments are responsible for monitoring account and deposit balances and can process deposit movements themselves through a General Ledger journal.

Departments must ensure that trust fund accounts holding monies on deposit, must be checked before each month-end closedown. If the trust fund is:

The deadline for entering deposit movement journals follows closure of the AP and AR modules. The journals must be done by 5pm on the 4th working day after month end.

As part of the month end procedures, the Finance Division will credit the interest due to any trust fund accounts holding money on deposit. This credit will appear in the trust fund account against the transaction code NBAA and will be available to spend or reinvest. The rate of interest varies from month to month as interest rates fluctuate, based on market interest rates.

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Year end procedures

At year end, departments should follow the year end timetable issued by the Finance Division and ensure that all Trust Fund transactions are processed before the GL closes. Additionally, they should be prepared to make adjustments in the final quarter and as part of year end procedures.

Departments should:

• Run off an Accounts Analysis Report on each of their Trust Funds, and check that all the transactions processed during the financial year are correct.
• Carefully check the July Trust Fund Financial Statements distributed by the Finance Division:
• 1st interim statement sent out at the beginning of July that shows the position as at 30th June
• 2nd interim statement sent late August that shows the position as at 31 July
• Final statement sent out September once GL has closed showing the final position as at 31st July
• Consider the investment position of each trust fund.

CUEF unit purchases and sales

Spendable purchases and sales (ZZYB)

The year end purchases and sales of spendable units take place as at 30 June each year.

The Trust Funds Assistant will send a list of all trust funds held, and their investment options, to each School Finance Manager in advance of that deadline. The School Finance Manager will then distribute the lists to each of their departments, and collate the resulting replies from the departments.

Instructions for all requests are then sent back to the Trust Funds Assistant for actioning by the deadline, which will be approximately 16 June each year.

Permanent capital purchases (ZZYA)

As the University's financial year ends on 31 July year end purchases of permanent capital units take place as at 30 September, the next available trading date, each year.

Departments should include a note on their 30 June list for these funds, to show that there will be "no action" as at June. Where there is an instruction that the "managers to be consulted", they need to review these funds again, by early September.

Specific year end instructions for trust funds are determined by the regulations of each fund. The main categories are detailed below.

Trust Funds where the managers should be consulted

For some Trust Funds, regulations state that:

"any unexpended income may be either added to the capital of the Fund or accumulated for use as income in subsequent years, as the Managers shall determine."

The departmental administrators will contact the managers of these funds before the June deadline; to ask them how they would like to invest any surpluses. The managers have the option of purchasing either permanent capital units or spendable units unless the trust fund is a spendable endowment, in which case, only spendable units can be purchased.

Trust Funds where surpluses are capitalised

For other Trust Funds, regulations state that:

"any unexpended income shall be added to the capital of the Fund."

This means that any unused income cannot be spent in a subsequent year. The Trust Funds Assistant will automatically invest any surpluses in permanent capital units at the September quarter end. If the fund is a prize fund, the Trust Funds Assistant will check with the department first whether the prize has been awarded.

Trust Funds where no money is invested

These are normally prize funds where a cheque is received annually from a company and the money is paid out to the prize-winner(s). No investments are held in these trust funds.

Trust Funds where surpluses can be spent in a subsequent year

These funds have regulations which allow any unexpended income to be spent. The department will have the option to either purchase more spendable CUEF units, or place any surplus on deposit.

Overdrawn Trust Funds

If a Trust Fund is overdrawn at the year-end and the fund holds spendable capital units, it is the department's responsibility to sell enough units as at 30 June to cover any deficit. If a fund holds only permanent capital units though, no deficit is allowed, therefore if an overspend occurs, the department is responsible for funding the overspend from one of their departmental accounts.

No Trust Fund should end the financial year in a deficit position

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