Accounting Arrangements for Departmental Development Funds (DDFs)
A Department Development Fund (DDF) can also be referred to as a SIO or MIF - they are the same thing., DDFs allow the department to have sub accounts within a Cost Centre. It is common practice for departments to look at the cumulative balance of an individual DDF, however this causes accounting problems, and departments need to be more mindful of matching income and expenditure in a single financial year across the whole cost centre. If there is a large mis match of income and expenditure it needs to be included in the college plans, otherwise targets will missed. For example, income of £100,000 in a DDF in year 1 with no expenditure will result in a reported profit of £100,000 in that year. In year 2 assuming there is no income, but £89,000 of expenditure, would result in a loss of £89,000 in that year. The balance of income and expenditure in a given year is what is accounted for in a college/department. Using the above example, if the income and expenditure all happened in year 1 there would be a net profit of £11,000, so it is really important that the expenditure and income are matched or that the college plans takes any foreseen discrepancies into account.
It is important to regularly ‘reconcile’ the individual DDFs to the cost centre to get a true picture of activity across the whole account. It is possible for income and expenditure to be posted at cost centre rather than DDF level and this can lead to mis-understandings about the balances available in individual DDF accounts. Departments should look at this on a regular basis and reallocate income and expenditure to the appropriate DDFs.
If you are unsure of the accounting of DDF please refer to your College Management Accountant for further explanation and assistance.