To provide guidance to Georgia Tech colleges, schools, departments and units as it relates to Agency Funds.
Agency funds are monies held by the Institute acting as custodian or fiscal agent, when the custody of them provides a benefit to Georgia Tech. The monies are deposited with the Institute for safekeeping, to be used or withdrawn by the depositor at will.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 that has a relationship with Georgia Tech. The Institute holds these funds temporarily and has no claim to them.
Before establishing an agency fund, the Georgia Tech should ensure that its relationship with the organization or third party is that of custodian or fiscal agent. A request for an agency account can originate from department acting on behalf of an external organization or from an outside third party.
Because an agency fund represents activity that is related, but not fundamental, to the Institute’s primary missions of education, research and public services, it is important that agency fund treatment is not awarded to activities that are a normal and continuing part of the institution’s mission. For example, Student Housing Fees should not be accounted for as an agency account because Student Housing is fundamental to an institution’s education mission.
The process of evaluating an activity for agency treatment must be in place to ensure the accuracy of the institution’s accounting for agency funds, and to facilitate effective stewardship of funds for which the institution has a fiduciary responsibility. At the same time, ongoing accountability and oversight for agency funds must be established to minimize Georgia Tech’s financial exposure.
This policy applies to all schools, colleges, departments, and units of the Institute.
Criteria for Serving as a Fiscal Agent
The Institute may agree to serve as a fiscal agent for an agency fund only after satisfactorily considering all the following:
- The purpose for the agency fund must relate to, but not be a fundamental aspect of, activities dedicated to the achievement of educational, research and public service goals.
- The agency fund is in the best interests of the institution, taking into account all risk management implications.
- The establishment of an agency fund account is appropriate, according to the circumstances and reporting principles involved.
- An agreement governing the agency relationship is established.
Approval and Establishment of an Agency Fund
The approval and establishment of an agency fund does not:
- Automatically entitle the organization to the use of any institution services, other than the normal administration of funds as it relates to cash receipt and disbursement services.
- Place the agency fund under the institution’s tax-exempt umbrella. Monies accepted for deposit in an agency fund are not considered tax-deductible gifts to the institution. Expenditures from an agency fund are not entitled to the institution’s state sales tax exemption.
- Make the institution liable for any of the organization’s debts, liabilities or actions.
- Continue indefinitely. Agency status is contingent on adherence to all institution policies. The institution has the right to close an agency account at its discretion consistent with agreements between the organization and the institution.
Periodic Review of Agency Funds
The status of each agency fund should be reviewed periodically, at least once a year, for the purpose of ensuring whether the agency status should be suspended or revoked. Circumstances to consider when reviewing agency funds include:
- Failure to adhere to institution policies and procedures.
- The nature of the activities and functions has changed such that agency account status is no longer appropriate.
- Deficit balances that are not remedied on a timely basis.
- In the judgment of the president or designee, suspension or revocation is in the best interest of the institution.
- Inactive balances should not be carried forward indefinitely from year to year, but should be disposed of in accordance with the agency agreement.
The Controller’s Office performs periodic reviews of Agency Funds to ensure accountability and oversight of the funds and to minimize the Institute’s financial exposure. The review is also performed to ensure funds are properly managed and that deficit balances are funded timely. Agency Funds are reviewed more frequently at year end.
Inactive Agency Funds (5 Years)
After five (5) years without activity, unused Agency Fund balances are forwarded to the state as mandated by escheatment laws, unless the disposition of unused balances is covered in the agency agreement. In instances involving federal funds, those funds should be returned to the appropriate federal agency. Complete files should be maintained for all agreements, letters, or other documents, for guidance in the proper handling of the funds. Please refer to the Board of Regents Business Procedures Manual Section 19.1, Unclaimed Property, for additional information.
Agency Funds with Deficit Balances
Individual agency funds should not carry a negative balance outside of short-term timing differences in processing, but under no circumstances should the agency fund groups as a whole have a deficit balance. At the end of the fiscal year, the Institute sets up accounts receivables and notifies donors to fund any applicable deficit balances. Agency funds with ongoing negative balances that are not remedied in a timely manner may be suspended or revoked.
Agency Fund Custodian Responsibilities
The individual designated as the Agency Fund Custodian has the responsibility to ensure that proper documentation procedures are followed for accounts which he / she controls, and to ensure that only authorized expenditures are made from the accounts. Any unauthorized expenditures report should be reported to the Controller’s Office. Further, the Custodian is responsible for exercising appropriate care in reviewing and approving transactions, ensuring the fund is active and resolving deficits timely. Lastly, the custodian is also responsible for providing in writing to the Controller’s Office any information which may change the status of an account. This includes 1) when responsibility for the account is reassigned; and 2) when an account is inactive and should be closed.
The college, school, department or unit is responsible the fiscal management of Agency Funds requested by their unit. This includes reviewing and approving transactions, ensuring the fund is active, resolving deficits timely, and notifying the Controller’s Office of any changes in the fund.
The Controller’s Office is responsible for performing a quarterly review of Agency Funds which includes proper dissolution of inactive agency funds and contacting departments to request funding for deficit balances.
To report suspected instances of noncompliance with this policy, please visit Georgia Tech’s EthicsPoint, a secure and confidential reporting system, at: https://secure.ethicspoint.com/domain/en/report_custom.asp?clientid=7508