Processing Accounting Transactions
- Director of Accounting Services
- Sherrie Kutzler
This policy governs the use of University accounting transactions that impact balances and amounts that reside in the enterprise financial system (EFS) and originate in the general ledger.
Departments must ensure that accounting transactions are entered accurately and timely in EFS by employees who have satisfied the University's prescribed training and assessment requirements and have access to initiate and/or approve transactions in EFS.
Units must ensure that accounting transactions:
- are processed in the appropriate EFS module including general ledger
- align revenues and expenses with the appropriate activities and associated Chartfield Strings
- 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, or University restrictions
- are supported with proper documentation and approvals
- contribute to the University's overall financial integrity
- support documentation must be retained either in EFS or Perceptive Content.
- refer to: Records Retention Schedule
Transactions that originate in a module other than the General Ledger have specific policies and procedures related to the module (see appendix).
Module or System Interfaces
Transactions processed through interfaces are exempt from the approval routing specified in the procedures.
Reason for Policy
This policy helps the University maintain stewardship over its assets by monitoring and controlling these transactions. Transactions have unique risks in that they have minimal review by external parties. Inaccurate, unauthorized, or undocumented transactions may result in audit disallowances, especially for sponsored project funding.
Accurate transactions will improve the quality of financial reporting, improve compliance with regulatory requirements, and minimize inefficiencies in document correction.
|Primary Contact||Amy Granlundemail@example.com|
|Overall Policy / Process||Accounting Servicesfirstname.lastname@example.org|
|Document Instructions||University Financial Helpline||612-624-1617||controller.umn.edu|
|Grants Administration||Sponsored Projects Administrationemail@example.com|
|Grants Financial Reporting||Sponsored Financial Reportingfirstname.lastname@example.org|
- Accrue Expense
- Goods or services are received from external entities (non-University departments) in the current accounting period, but payment for the goods or services will be incurred in a future accounting period. The expense must be recorded in the current accounting period.
- Accrue Revenue
- Revenue is earned from an external entity (non-University department) in the current accounting period, but payments will be collected in a future accounting period. The revenue must be recorded in the current 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.
- Budget Preparation
- The process by which University units enter annual budgets for all non-sponsored funds into the general ledger.
- Defer Expense
- An expense has been recorded 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 an asset.
- Defer Revenue
- Cash is received and revenue is recorded before it has been earned; before the goods or services are provided to external entities (non-University departments). 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.
- 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. The Grantor provides direction on the use of the funds.
- 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.
- Non-sponsored Resources
- An available balance that can be drawn upon, to help facilitate a department’s operations. Resources can be the result of revenues, transfers-in, and an existing carry-forward balance.
- Recharge Centers (formerly known as Internal Sales Organizations)
- A unit that provides goods or services at approved rates, on a continuing basis, predominantly to University departments and incidentally to the general public. Most, if not all, income for an internal sales organization will be revenue from other departments.
- Resource Responsibility Centers (RRCs)
- The organizational units of the University designated as the level at which management accountability exists for budgeting and financial management.
- A Retro 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.
- Sponsored Financial Reporting (SFR)
- A division of the Controller's Office that is responsible for submitting financial reports and invoices to sponsors to fulfill award requirements.
- Sponsored Projects Administration (SPA)
- A division of the Office of the Vice President for Research, authorized to submit research proposals and receive awards from external sources on behalf of the University’s Board of Regents.
- Sponsored Funds
- Funds provided by a grant, contract, cooperative agreement, or other financial instrument that are administered by SPA and SFR
- Transfer of Non-sponsored Resources
- The movement of resources from one particular Chartfield String to another Chartfield String using transfer in and out accounts.
- 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 Procedure, Moving Uncollectible Costs to Non-Sponsored Programs, for how to handle within the University accounting system.
- University departments within an RRC excluding Accounting Services.
- Accounting Services
- Review and approve intrafund and interfund transfers of funds on non-sponsored Chartfield Strings for journal entries $30,000 or greater.
- Review and provide advice on all transactions as requested.
- Monitor accounting transactions for consistency with University policies and procedures.
- Grant exclusions from document approval requirements included in this policy.
- Approve movement of revenue and expense transactions on Chartfield Strings for journal entries $30,000 or greater.
- 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.
- Certified Approver
- Ensure transactions are allowable and appropriate on sponsored projects.
- Cluster Directors
- Set departmental approval requirements.
- Approve and maintain signature authorizations.
- Oversee and monitor all internal transaction activity in own cluster.
- Disbursement Services
- Enter and process approved transactions submitted by University units.
- 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.
- Initiate and prepare all internal transaction documents in a timely manner.
- Document purpose on transactions as required.
- Gain required approvals.
- Enter and process transactions as allowed.
- RRC Managers
- Review and approve interfund transfers of all funds.
- Review and provide advice on transactions as requested by units within the RRC.
- Set RRC level approval requirements for intrafund transfers, revenue movement and expense transfers.
- Approve and maintain signature authorizations.
- Oversee and monitor all internal transaction activity in own RRC.
- Communicate information within RRC related to accounting transactions.
- Pay for movement of expenses that are un-allowed.
- Sponsored Financial Reporting
- Provide information for moving expenses on sponsored projects across fiscal years.
- Enter and process transactions for the movement of revenue for sponsored account transactions.
- Sponsored Projects Administration
- Effort Unit accepts or rejects requests to process Retros to sponsored projects after the effort certification deadline.
- Administrative Policy:Effort Certification
- Administrative Policy:Selling Goods and Services to University Departments
- The University's Chart of Accounts Manual:Chart of Accounts
- Financial Accounting and Reporting Manual (FARM) for Higher Education from National Association of College and University Business Officers (NACUBO)
- Financial System Course List
- Job Aid:Transaction Justification/Documentation Standards for All Non-Sponsored and Sponsored Transactions
- February 2018 - Comprehensive Review. Policy and procedure changes include: Updated owners, contacts and terminology to reflect EFS 9.2 vs. EFS 8.9, Replacement of the word “should” with “must” when appropriate to provide more direction, Added definitions where applicable, Included language to require support documentation for financial transactions to be retained,Added examples to better illustrate the correct accounting for transactions
- December 2014 - Replaced A-21 reference with OMB Uniform Guidance.
- August 2012 - 1. Reduces the burden for accounting staff by simplifying the timeframes and deadlines for processing accounting transactions, and by creating more consistency between sponsored and non-sponsored transactions. (procedures) 2. Eliminates the department head approval on sponsored journal entries. Only the PI and certified approver will need to approve a transaction if occurring after the accounting period. (procedures)
- November 2011 - Updated for PeopleSoft and other subsequent changes in processes.
- June 2008 - Added contact information for Colleen Miller, the Policy Primary Contact and noted that Policy is being revised for EFS at the beginning of the policy, and in the forms and appendices sections. References to retired CUFS forms removed in forms section. Updated COA references to add FY 2008 and general COA reference in Related Information.
- June 2004 - Procedure 18.104.22.168 revised to indicate approval process for multiple-line IX documents.
- January 2004 - Added FFN Approvers Tutorial to Related Information.
- March 2003 - Procedure 22.214.171.124 updated to reflect current requirements for documentation, justification, and approval.
- January 2001 - Procedure 126.96.36.199 updated to reflect current requirements for documentation and justification within the IX.
- December 2000 - Policy, procedures and appendices revised to reflect the use of Historical Salary Adjustments, replacing the Type 38 Journal Voucher.
- December 1999 - Policy revised to reflect grants management model and certified approver changes. Revised procedure 188.8.131.52 to reflect a primary focus on non-sponsored transactions. New procedure 184.108.40.206 added to reflect a primary focus on sponsored transactions. Changes to Definitions, Responsibilities and Appendices.
- December 1998 - Adjusting or Correcting Internal Accounting Transactions procedure and appendix amended. Type 38's are now approved by disbursement services rather than by payroll services.
- October 1996