University of Illinois System
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13.7 ICR Funds Overview

Policy Statement

Units must ensure that indirect cost recovery (ICR) funds are properly accounted for within Banner.

Reason for the Policy

To ensure accurate reporting for the University of Illinois System’s audited financial statements.

Applicability of the Policy

All units who manage ICR funds.

Procedure

To ensure indirect cost recovery (ICR) funds are properly accounted for in Banner, follow the guidelines and procedural steps below.

  1. Understand the types of revenue that are generated and accounted for within the ICR fund.
    1. The ICR fund accounts for revenue generated from facilities and administrative (F&A) rate assessments to sponsored projects. These rate assessments charge sponsored projects for their share of facilities and administrative costs, which are also commonly referred to as indirect costs or overhead. Examples of F&A costs include utilities, building maintenance and operations, infrastructure support costs, and administrative support staff. The revenue generated from F&A Cost Rate assessments is credited to the ICR fund.
    2. ICR funds also account for revenue generated from the tuition remission rate assessments to sponsored projects. These rate assessments are used to charge sponsored projects that utilize research assistants, to ensure that the sponsored project pays for its share of the costs related to tuition waivers that are granted to research assistants who are working on the sponsored project. The revenue generated from tuition remission rate assessments is credited to the ICR fund.
  2. Be able to identify ICR funds in Banner and understand how to segregate different types of ICR activities into separate C-FOP accounting strings.
    1. ICR funds can be identified by examining the fund code segment of the Banner C-FOP. The ICR fund code (which has a 2C fund type) is 200250.
    2. This fund code is shared by all units across the entire system. Thus, each unit must use their applicable organization code and department-specific program code along with the 200250 ICR fund code to distinguish their allocation of ICR funding.
      1. For example, if a UIC unit (which has an assigned organization code of 123000) needs to assign ICR budget to one of their professor’s research program codes (e.g., 123004), then that ICR C-FOP would appear in Banner as 2-200250-123000-123004.
    3. Thus, units will typically need to request a new program code (not a new fund code) when requesting a new C-FOP string to use for their ICR activities. These requests can be made via the Banner Fund, Program, Index Code Request Form.
  3. Understand how ICR funds are budgeted to units and how budget adjustments involving ICR funds are processed.
    1. The applicable university budget offices are responsible for allocating ICR budget across the system. They will assign an expense budget to a unit’s specific organization and program code combination, using the ICR fund code (200250) which is used across the entire system. See below for a high-level summary of how this process works:
      1. The amount of F&A assessed to each grant fund for indirect costs is based on a percentage of the eligible direct expenses on the grant fund.
      2. When the grant fund is assessed for F&A, this indirect cost assessment will be charged to a 1981nn expense account code on the grant fund. The offsetting side of this entry will be a credit to a 3088nn revenue account code to the appropriate ICR C-FOPs based on the distribution code associated with the grant code.
      3. Matching ICR expense budget for F&A ICR revenue is allocated to C-FOPs by the applicable university budget office.
      4. For tuition remission rate assessments, the tuition remission rate is assessed to the grant that benefits from the graduate student’s employment. That amount is then reallocated back to the college in which the graduate student was enrolled via ICR budget, as compensation for the waived tuition generated from the graduate student’s employment. The return to the college will follow each university’s ICR policy.
    2. Given that ICR funds are allocated via expense budget, it is important to understand that any adjustments to or from an ICR C-FOP (such as moving expense budget to a different organization or program code) must be handled via a budget adjustment (as opposed to a lump sum transfer using expense account codes). For further details, see 3.1 Adjust a Budget or contact the applicable university budget office.
    3. Also, be aware of the limitations regarding where ICR funds can be transferred to.
      1. For example, it is unallowable to transfer ICR funding to gift, endowment income, or self-supporting funds.
      2. ICR budget can be transferred from one C-FOP to another C-FOP within the ICR fund. However, these budget transfers would need to be reviewed and approved by the applicable university budget office.
      3. ICR budget may also be exchanged for state budget or other types of institutional C-FOP budget (such as administrative allowance). This arrangement would need to be sent to the applicable university budget office for consideration, depending on budget availability. If approved, these transfers would have to be completed as a budget transfer.
  4. Understand how to locate the budget balance available (BBA) for ICR C-FOPs in Banner.
    1. To locate the available budget balance for an ICR C-FOP, go to Banner page FGIBDST and enter the applicable C-FOP string.
    2. Uncheck the Include Revenue Accounts box within this page, and hit the Go button.
    3. The available budget balance will then appear in the lower right-hand corner of the page, on the Net Total row of the Available Balance column.
    4. For further details on this process, refer to the Finding Your C-FOP Balance webpage.
  5. Ensure ICR funds are expended in support of the system’s mission.
    1. Since one of the primary purposes of ICR funds is to recover F&A costs from sponsored projects, ICR funds can be spent on indirect costs incurred by the system, such as utilities, building maintenance and operations, infrastructure support costs, and administrative support staff.
    2. ICR funds may also be used for general institutional expenditures that support the system’s mission.
  6. Since ICR funds are not meant to account for activities which generate sales revenue, it is typically unallowable to deposit cash, checks, wires, ACHs, or any other type of payment directly to an ICR C-FOP. The only allowable exceptions are as follows:
    1. A unit receives a vendor refund or rebate from a past purchase that posted to an ICR C-FOP. In these cases, it is allowable to deposit the receipt as a credit against the ICR C-FOAP where the related expense was recorded.
    2. A unit receives reimbursement from an employee who erroneously charged the ICR fund for a personal expense (such as a movie rental in a hotel during a business trip that was charged to the ICR fund). In these cases, it is allowable to deposit the receipt as a credit against the ICR C-FOAP where the related expense was recorded.
  7. Ensure that the ICR C-FOP is reconciled on a regular basis and that any discrepancies are corrected on a timely basis once they are identified. In addition, keep in mind that a final reconciliation for June 30 period 12 business is required at the end of the fiscal year, to ensure that any errors are corrected by the close of the fiscal year. This will ensure accuracy for the system’s audited financial statements.
    1. For further details and tips on good business practices surrounding financial reconciliations, see 13.4 Reconciliation of Financial Activities along with UAFR’s Reconciliation of Financial Activities resource page.
  8. Understand how unspent funds within an ICR C-FOAP carry forward to the following fiscal year.
    1. Unspent funds within a Banner ICR C-FOP carry forward to the following fiscal year differently at each university. If unspent balances from the prior fiscal year are carried forward to a particular C-FOP in the following year, that balance can be located in the 109910 budget carryforward account code within Banner page FGIBDST.
    2. For example, if a professor received a $10,000 expense budget in an ICR C-FOP string for research purposes, and if that professor only spent $7,500 within the first fiscal year, and if the university budget office carries that amount forward to the following fiscal year in that C-FOP, then the remaining $2,500 of unspent funds would carry forward to the 109910 budget account code in that same ICR C-FOP the following fiscal year.
  9. Finally, if the ICR activity ever comes to an end (e.g., if a professor leaves the system and their ICR program code will no longer be used), then the unit will need to:
    1. Perform a final reconciliation of the transactions recorded to the ICR C-FOP to ensure all transactions are appropriate and all corrections have been made for any errors, if applicable.
    2. The remaining expense budget on the related ICR C-FOP would also need to be cleared.
    3. Once these issues have been addressed, a termination request would need to be submitted to UAFR at uas@uillinois.edu requesting that the program used with the ICR fund be terminated.

 

Forms Used in this Procedure

Banner Fund, Program, Index Code Request Form

Related Policies and Procedures

3.1 Adjust a Budget

13.4 Reconciliation of Financial Activities

 

Additional Resources

ICR Funds Webpage

Reconciliation of Financial Activities

State of Illinois Legislative Audit Commission University Guidelines

 

First Published: June 2024 | Last Updated: June 2024 | Last Reviewed: June 2024