University of Minnesota  Administrative Policy

Processing, Documenting, and Approving Financial and Accounting Transactions

Policy Statement

University faculty and staff initiating, preparing, or approving financial and accounting transactions (transactions) must ensure compliance with the justification and documentation standards established by this policy. Units must ensure that transactions are entered accurately and timely in the enterprise financial system (EFS) or interfaced systems by employees who have satisfied the University's prescribed training and assessment requirements and have access to initiate and/or approve transactions in EFS or interfaced systems. This policy governs the processing, documenting, and approval of University accounting transactions that impact balances and amounts that reside in EFS.

Processing Accounting and Financial Transactions

Units must ensure that transactions:

  • are processed in the appropriate EFS module, including general ledger
  • align revenues and expenses with the associated chartfield strings that is in alignment with the documentation
  • reflect the nature or function of what is being recorded
  • accurately record assets, liabilities, and fund balances at the end of an accounting period
  • are entered in accordance with applicable federal, state, grantor, donor or University restrictions
  • are recorded accurately in the proper reporting period

Transactions that originate in a module other than the General Ledger have specific policies and procedures related to the module (see appendix).

Documentation and Justification of Transactions

Transaction initiators, preparers, and approvers must ensure that transaction documentation is complete and transparent. Source documentation must be available in EFS or Perceptive Content and accessible to all transaction approvers. Transaction documentation must support the following:

  • WHO initiated and authorized the transaction and who are the affected individuals or units?
  • WHAT is the transaction for?
  • WHERE did/will the activity take place (if applicable)?
  • WHEN did/will the activity take place (if applicable)?
  • WHY the transaction is necessary and how it relates to or benefits the chartfield string affected or charged?
  • HOW MUCH is the transaction?

Units need not repeat information in the justification that is already included in supporting documentation. The transaction justification provides clarity about the allowability, allocability, reasonableness, and connection to University mission not already apparent within the transaction or supporting documentation.

Units must record transactions accurately, in a timely manner, and completely in accordance with University policy and procedures, as well as with alignment with applicable external agency rules. Accurate recording includes complete and transparent documentation of transactions, as well as the correct use of chart of account codes (fund, deptid, program, project, and account).

Documentation of transactions is inclusive of supporting source documents and narrative justification maintained in EFS or the University’s document retention system (Perceptive Content). 

Transaction Approval

Approvers ensure transactions are appropriate in nature and adhere to University policies and procedures. 

Every approver must ensure they understand the approval capacity in which they are acting when approving accounting and other financial transactions in EFS or interfaced systems. Units should ensure alternate approvers are different than the primary approver.

Approval processes utilized by campuses, colleges, and vice presidential units must be consistent with certified approval requirements on sponsored projects, all requirements for central approvals on certain transactions, and any other special requirements.

Chief Financial Managers (CFMs)

Financial transaction approval authorities and processes within units are designed and performed so that they are consistent, cost-effective, and adhere to the following guiding principles: 

  • Knowledge and authority: Authorized approvers must be those persons who have an understanding of the transaction to ensure its accuracy and consistency with University policy, and who have the authority to approve or deny the transaction. 
  • Segregation of duties: Approval processes must be designed to ensure that a person cannot approve transactions for which they also perform the following functions:
    • commit to or authorize payment for payroll, purchases, travel/expense reimbursements, or cash disbursements;
    • receive or distribute goods, checks, or cash; or
    • record transactions in EFS.

One-Up Approvals

Employees cannot approve their own travel and expense reimbursements or purchases they initiate. Employee travel and business expense reimbursements and purchases of goods or services that could be perceived as personally benefiting an employee must be approved by a person one level senior to the employee requesting reimbursement or initiating the purchase. One-up approval authority can be delegated to an individual other than the initiator; however, accountability cannot be delegated. Both the delegate and the original approver are accountable for the accuracy and validity of any approvals completed.


Module or System Interfaces

Transactions processed through interfaces are exempt from the approval routing specified in the procedures due to existing rules and logic within EFS.

Source Documentation

Source documentation that includes protected information, such as protected health information (PHI) or student education records protected by Family Educational Rights and Privacy Act (FERPA) should be eliminated from files prior to uploading to EFS. Units are responsible for determining the appropriate storage of such information.

Cost Transfers

Exception requests for cost transfers onto sponsored or cost share chartfield strings occurring more than 90 days after the original transaction can be requested and require the completion of the cost transfers exception form, with appropriate justification and approvals.

Reason for Policy

Complete, accurate, and timely transactions with proper documentation and approval is paramount to the integrity of the University’s financial reporting and aides in ensuring stewardship of the University’s resources. University financial transaction documentation must comply with legal, governmental and auditing requirements. Approval of those transactions is a key financial internal control. Providing thorough and complete transaction documentation and ensuring approvals are completed protects and benefits the University in the following ways:

  • Creates a framework allowing the University to maintain stewardship over University resources.
  • Ensures transactions included in the University’s financial statements are accurately reported in accordance with generally accepted accounting principles and other financial reporting requirements and minimizing inefficiencies due to the correction of errors.
  • Provides the framework for a centralized and efficient source for obtaining financial transaction information, while establishing adequate and consistent documentation standards for all financial transactions.
  • Ensures funds provided to the University by stakeholders such as taxpayers, students, donors and sponsors are being used in accordance with University Mission, regulatory requirements, grantor and donor intentions.
  • Safeguards the University against the risks of fraud, misuse of funds, or unsubstantiated expenses, which could result in expense disallowances, repayment of funding, loss of future funding, penalties or fines.
  • Assists compliance with legal and regulatory requirements, as well as compliance with tax regulations that specify requirements for nontaxable reimbursements under an accountable plan versus reimbursements taxable to employees.
  • Manages reputational risks and adverse public perception.
  • Ensures that the benefit to the institution and compliance with regulatory requirements is clearly documented and can be understood by both internal and external reviewers (e.g., new employees, managers, auditors, IRS, the public).


Subject Contact Phone Email
Primary Contact Lori Standafer   [email protected]
Overall Policy / Process Lori Standafer   [email protected]
Document Instructions University Financial Helpline 612-624-1617 [email protected]
Grants Administration Sponsored Projects Administration 612-624-5599 [email protected]
Grants Financial Reporting Sponsored Financial Reporting 612-624-3848 [email protected]
Responsible Individuals
Responsible Officer Policy Owner Primary Contact
  • Controller
  • Director of Accounting Services
  • Lori Standafer
    Director of Accounting Services


Accountable Plan
An accountable plan meets certain IRS regulations for reimbursement of employee expenses. Allowable reimbursements and/or other expense allowance arrangements must meet certain IRS requirements related to business-connection and documentation. Amounts in excess of allowable expenses must be returned in a timely manner. Amounts paid under an accountable plan are excluded from the individual's income. Reimbursements made that do not meet the requirements of the accountable plan are taxable.
Accrued Expense
An expense that must be recorded in the current accounting period with a corresponding accrued liability. Goods or services are received from external entities (non-University units) even if payment for the goods or services will occur in a future accounting period.
Accrued Revenue
Revenue earned from an external entity (non-University department) that must be recorded in the current accounting period with a corresponding receivable and will be collected in a future accounting period. 
Allocable Costs
Cost of goods or services that are chargeable or assignable to a project or an activity based on the relative benefits received.
Allowable Costs
Expenses for goods or services which can be charged to a particular source of funds. Expenses may be deemed allowable by law or regulation; by external parties such as donors or sponsors; or by the University, based on the institution’s risk management profile.
Budget Preparation
The process by which University units enter annual budgets for all non-sponsored funds into the general ledger.
Documentation Standards
Common rules and guidelines that establish the form, type and amount of documentation that is reasonable and appropriate to establish the justification for a transaction. Documentation requirements may include (but are not limited to) the following, depending on the type of transaction:
  • Written explanations containing relevant financial data elements (such as emails, contracts, commitment letters)
  • Detailed receipts, or confirmation of payment
  • Bill of sale, invoice, etc.
  • Excel workbooks with supporting calculations or analysis
Effort Certification
A process used by the University to comply with federal regulations that require the University to verify that salary charges to sponsored projects and other non-sponsored activities were reasonable in relation to the work performed.
An external provider of funds to the University that provides direction on the use of the funds.
Interfaced System
A system that captures the initiation of transactions. Information produced is interfaced with EFS by either an automated feed (ChromeRiver or EFS subledgers) or manual process (eStore of Destiny One Registration System). Data from interfaced system cannot be manipulated prior to entry into EFS.
Internal/External Sales
A unit that provides goods or services at approved rates, on a continuing basis, predominantly to University units or to the general public to support the mission of the University.
Non-Sponsored Funds (NS)
Funding from general operations and maintenance, miscellaneous unrestricted, auxiliaries, internal service organizations, federal appropriations, state specials, and miscellaneous restricted that can be drawn upon to help facilitate a department’s operations.
Prepaid Asset
An expense has been paid for an item purchased from an external entity (non-University department) in advance of its use or consumption. The unused portion of the expense is reclassified and recorded as a prepaid asset.
Retro Distribution
A Retro Distribution is a transaction in the PeopleSoft HRMS system that adjusts the accounting for payroll expenses for an employee. These adjustments credit the chartfield string where the original payroll expenses were recorded and records them to a different chartfield string.
RRCs (Resource Responsibility Centers)
The organizational units of the University designated as the level at which management accountability exists for budgeting and financial management.
Source Documentation
Information that supports the origination and proper reporting of a financial transaction. May include original source documents from an external source, contracts, offer or commitment letters, or calculations based on internal information.
Sponsored Funds
Funds provided by a grant, contract, cooperative agreement, or other financial instrument that are administered by SPA.
Sponsored Project
An externally funded activity that is governed by specific terms and conditions and must be separately budgeted and accounted for subject to terms of the sponsoring organization. Sponsored projects may include grants, contracts, and cooperative agreements, as well as other public service activities.
Records that show details of the Who, What, Where, When and Why to substantiate all expenses reimbursed under an accountable plan as required by the IRS. For hospitality expenses, including entertainment and meals with non-university attendees, the nature, timing and duration of the business discussion and the names of the persons who took part in the entertainment activity must also be part of the substantiation.
Transaction Justification
Narrative explanations that clarify a transaction’s legitimate business purpose or alignment with University mission. May be supplied by supporting documentation and/or written explanation when documentation does not provide adequate clarity or transparency.
  • Inter-Fund Transfer: Transferring resources permanently from a chartfield string in one fund to a chartfield string in a different fund
  • Intra-Fund Transfer: Transferring resources permanently from one chartfield string to another chartfield string within the same fund
  • Mandatory Transfer of Funds: A transfer of resources that arises out of external binding legal agreements related to circumstances such as: 1) the financing of education facilities, debt retirement, interest, and required provisions for renewal and replacement of facilities not financed by other sources; and 2) agreements with agencies of the federal government, donors and other organizations to match gifts and grants. These may or may not cross funds.
  • Nonmandatory Transfer of Funds: A movement of resources (limited to non-sponsored funds) that arises out of the internal decisions of management. These transfers are not required, but represent the movement of funds among accounts for specific purposes. Examples include: additions to loan funds; additions to funds functioning as endowments; general or specific plant additions; prepayments on debt and principal; and additions to departmental funds based on deans' commitments. These may or may not cross funds.
Unallowable Costs
Costs incurred by the University that the Office of Management and Budget (OMB Uniform Guidance) has determined cannot be directly charged to a federally sponsored project, included in the development of the indirect cost rate that is charged to a federally sponsored project, or included in Recharge Center/department recharge rates. These costs must be identifiable with the University’s financial system and excluded from being charged as either a direct or indirect cost to a sponsored project. See Administrative Procedure: Moving Uncollectible Costs to Non-Sponsored Programs, for how to handle within the University accounting system.
Unearned Revenue
Cash is received for revenue before it has been earned; before the goods or services are provided to external entities (non-University units). The unearned portion of cash represents a liability or obligation to deliver the goods or perform a service in the future and is reclassified and recorded as a liability.


Accounting Services
  • Review and approve various financial transactions based on threshold amounts to ensure proper financial reporting and compliance with financial policies.
  • Establish thresholds for central approval of financial transactions.
  • Consult on financial transactions and assist with issue resolution, as requested.
  • Monitor accounting transactions for consistency with University policies and procedures.
  • Monitor system approvals of financial transactions to ensure compliance with policy.
  • Responsible for escalating within campus, college or vice presidential unit any issues related to allocability, allowability, appropriateness, and/or University policy violations.
  • Departmental approvers complete the first level of review and should complete a detailed review of transactions in EFS, ensuring all information submitted by the transaction initiator or preparer is accurate, includes complete documentation and justification, and recorded to the appropriate reporting period. Review transaction for compliance with all applicable University policies, procedures, and job aides.
  • Ensure all financial transactions submitted for approval contain adequate documentation.
  • Ensure preparer and initiator have processed the transaction accurately.
  • Ensure transactions are allowable and appropriate on sponsored funds or comply with donor intent.
  • Ensure approvals follow expectations outlined in EFS Approver Expectations and Issue Resolution.
Certified Approver
  • Ensure all documents submitted for approval contain adequate justification and supporting documentation as required by this policy, job aids, and related procedures.
  • Ensure transactions are allowable, allocable and appropriate on sponsored projects.
Chancellor, Dean, Department Head, Administrative Officer, or Vice President
  • Delegate appropriate authority to CFMs to ensure that approval processes will function effectively.
  • Accountable for approved transactions regardless of delegation of responsibilities.
  • Endorse and adhere to one-up approval practices within the campus, college or unit.
  • Exercise good judgment when reviewing financial transactions.
Cluster Directors
  • Ensure proper assignment of EFS system approval requirements and maintain non-EFS departmental approval requirements.
  • Oversee and monitor all financial transaction activity in own cluster.
Controller's Office
  • Ensures accuracy and appropriateness of policy. Responsible for timely updates, policy maintenance and related communications, and compliance oversight.
  • Provides guidance and assistance to units in evaluating and determining the allowability of expenses in various situations. Grants exceptions to the policy in situations where one is allowed and requested.
Internal/External Sales
  • Approve initial rates for all new internal sales activity.
  • Ensure ongoing compliance to University Policy and Procedures related to internal sales activity.
  • Ensure annual review procedures are completed.
  • Approve account setup for internal sales activity.
  • Determine handling of gains or losses resulting from internal sales transactions.
  • Develop and update content in internal sales training materials.
One-up Approver
  • Approve transactions that could be perceived personally benefiting to the initiator.
  • Must be at least one level senior to the expense initiator.
RRC Managers
  • Develop and ensure that transaction approval processes used by the campus, college or vice presidential unit conform with University policies and the guiding principles set forth in this policy.
  • Review and provide guidance on transactions as requested by units within the RRC.
  • Communicate information within RRC related to accounting transactions.
  • Ensure individuals with approval authority are knowledgeable on financial transactions and related policies.
  • Identify an alternative funding source for expenses identified as unallowable on restricted funding.
  • Review and approve interfund transfers, as applicable.
  • Oversee and monitor all transaction activity in their units.
  • Ensure transaction preparers and approvers have proper segregation of duties.
  • Accountable for all financial activities including financial oversight, monitoring, financial reporting, policy & compliance, financial operations, communication, and financial leadership for the campus, college, or vice presidential unit.
Transaction Initiator
  • Request the purchase of goods, services or travel; initiates process of procurement.
  • Initiate the transfer of resources, as necessary.
  • Provide supporting documentation and clear and complete business justification for the transaction preparer.
  • In some instances, may be the transaction preparer.
  • Transaction initiator cannot serve as an approver of a transaction which they initiated.
Transaction Preparer
  • Obtain sufficient understanding of financial transaction to prepare in the financial system in accordance with policies and procedures in a timely manner.
  • Coordinate with transaction initiator to prepare and document transaction.
  • Ensure transactions are in compliance with University policy.
  • Ensure transactions are allowable, allocable, and appropriate on sponsored funds.
  • In some instances, may be the transaction initiator.
  • Obtain appropriate financial transaction approvals in EFS and offline as necessary. Approval cannot be from the transaction initiator.
Sponsored Financial Reporting
  • Consult on sponsored related financial transactions and assist with issue resolution, as requested.
  • Submit financial report and invoices to sponsors to fulfill award requirements.
Sponsored Projects Administration
  • Office of Cost Analysis unit accepts or rejects requests to process retros on sponsored projects after the effort certification period has closed.
  • Submit research proposals and receive awards from external sources on behalf of the University’s Board of Regents.
Units (Campus, College or Vice President)
  • Ensure individuals with approval authority are knowledgeable on transactions.
  • Ensure transactions are in compliance with University policy.
  • Ensure transactions are allowable and appropriate on sponsored funds.
  • Ensure transaction preparers and approvers have proper segregation of duties.
University Budget and Finance
  • Review and provide advice on all transactions as requested.
  • Monitor activity (anticipated and after-the-fact) at the Fund / DeptId level through the annual budget process.


July 2023 - New Policy. Replaces the current Processing Accounting Transactions, Documenting Financial/Accounting Transactions, and Financial Transaction Approvals and Routing.