Office of Risk Management

Risk Management Policy and Procedure Manual

Part 9 Risk Management Accounting

Subject: Fund 999 Loss Accounting (FPPP 35)

  1. Purpose:

    This section was developed as a guideline for the campus risk manager in their claim accounting activities. The information in this section was gleaned primarily from FPPP 35.

  2. Background:

    When claim activity takes place on a UW campus, reimbursement is most often received through one of the various commercial or self-funded insurance programs administered through the System or State Risk Management offices. The Insurance Loss Fund (Fund 999) was established to facilitate the accounting of the receipt and disbursement of proceeds from insured losses without encumbering regular departmental operating funds.

    The accounting procedures developed for the operation of Fund 999 are established in FPPP 35. According to that policy, all receipts and payments relating to the restoration of lost property shall be accounted for through Fund 999. Each institute shall maintain a record of the proceeds and expenditures for each claim submitted with monthly reconciliation.

    Expenditures made prior to receiving the insurance reimbursement can only be used for the purchase of items identical or similar in nature to the lost item or for services required to restore the property to its original state. The institution risk manager shall make certain that the proceeds are used promptly and properly.

  3. Procedures:

    1. Fund Operation

      After an evaluation of the loss by the campus risk manager and System Risk Management, and submission of the initial notice of loss, departments may begin incurring expenses to replace the loss. A replacement expenditure limit should be established by the campus risk manager. The expenditure limit should be an amount relatively certain to be recovered based on the loss evaluation and prior experience. The department may issue requisitions for replacement expenditures against Fund 999 up to the amount of the expenditure limit. Those requisitions must be reviewed by the campus risk manager to ensure similarity in nature between the lost and replacement property. When final settlement from State Risk Management is known, the department may use any excess settlements for completion of loss replacement.

    2. Time Limit

      Because there are a variety of circumstances involved when a loss occurs, and a wide range in the degree of loss, it is impractical to establish a strict limit for expending insurance proceeds. It shall be the responsibility of the campus risk manager to monitor the activity of each loss account on a regular basis. The risk manager shall issue a semi- annual report to the campus chief fiscal officer indicating departments which have not incurred any substantial expenditures against Fund 999 during the past six months. The report should include recommendations on the status of each account. If no additional expenditures are required to restore the loss, or the institution has decided not to replace the loss, the amount of unused insurance proceeds will annually be transferred to UW System Administration Accounting.

      Annually, a memo will go out from the UW System Accounting Office for reconciliation of the campus 999 Fund. The attached accounting forms will be included and the campus risk manager will be expected to complete them. Each claim for the year should be listed and clearly identified including those carried over from a previous year. Third party recoveries and claims not applicable to the State Self-Funded Property Program should be segregated and specifically identified as such.

      A cash transfer or a check should accompany the 999 report form for the total amount of excess funds in closed claim files.

    3. Accounting Procedures

      The campus risk manager will be responsible for the consistent accounting of all deposits and proceeds relating to the restoration of losses. This account should be summarized monthly to reconcile all Fund 999 activity. Preparation of interim reports on Fund 999 activity will be at the discretion of the campus.

Jump to Forms:

Loss Reconciliation Report form or download as an Excel Spreadsheet.
A SAMPLE of the Loss Reconciliation Report form. or download as an Excel Spreadsheet

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Revised 09/02/98