Printed on: 07/22/2017. Please go to http://policy.umn.edu for the most current version of the Policy or related document.

ADMINISTRATIVE POLICY

Processing Accounting Transactions

Responsible University Officer(s):

  • Associate Vice President and Controller

Policy Owner(s):

  • Director of Accounting Services

Policy contact(s):

Date Revised:

August 2012

Effective Date:

October 1996

POLICY STATEMENT

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 are responsible for ensuring 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

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. Departments are still required to maintain documentation and approvals in their department files.

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.

PROCEDURES

FORMS/INSTRUCTIONS

APPENDICES

FREQUENTLY ASKED QUESTIONS

CONTACTS

Subject
Contact
Phone
Fax/Email
Primary Contact(s)
612-625-0126
Overall Policy / Process
Accounting Services
612-624-2513
Document Instructions
University Financial Helpline
612-624-1617
Grants Administration
Sponsored Projects Administration
612-624-5599
Grants Financial Reporting
Sponsored Financial Reporting
612-624-5007

DEFINITIONS

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 should 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 should 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 such.
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.
Grantor
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.
Internal Sales Organizations (ISOs)
A unit that provides goods or services at approved rates, on a regular and 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.
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 nonsponsored 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. 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 are examples. These may or may not cross funds.
Nonsponsored 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.
Resource Responsibility Centers (RRCs)
The organizational units of the University designated as the level at which management accountability exists for budgeting and financial management.
Sponsored Financial Reporting (SFR)
A division of the Controller's Office 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
Transfer of Nonsponsored 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, nor included in ISO/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, Sharing Indirect Cost Recovery Among Collaborating Collegiate Units, for how to handle within the University accounting system.

RESPONSIBILITIES

Accounting Services
  • Review and approve intrafund and interfund transfers of funds on nonsponsored 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 nonsponsored 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.
Preparer
  • 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 nonsponsored 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 disallowed.
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 HSAs to sponsored projects after the effort certification deadline.

RELATED INFORMATION

HISTORY

Amended:
December 2014 - Replaced A-21 reference with OMB Uniform Guidance.
Amended:
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 nonsponsored 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)
Amended:
November 2011 - Updated for PeopleSoft and other subsequent changes in processes.
Amended:
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.
Amended:
June 2004 - Procedure 3.2.4.3 revised to indicate approval process for multiple-line IX documents.
Amended:
January 2004 - Added FFN Approvers Tutorial to Related Information.
Amended:
March 2003 - Procedure 3.2.4.3 updated to reflect current requirements for documentation, justification, and approval.
Amended:
January 2001 - Procedure 3.2.4.2 updated to reflect current requirements for documentation and justification within the IX.
Amended:
December 2000 - Policy, procedures and appendices revised to reflect the use of Historical Salary Adjustments, replacing the Type 38 Journal Voucher.
Amended:
December 1999 - Policy revised to reflect grants management model and certified approver changes. Revised procedure 3.2.4.2 to reflect a primary focus on nonsponsored transactions. New procedure 3.2.4.3 added to reflect a primary focus on sponsored transactions. Changes to Definitions, Responsibilities and Appendices.
Amended
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.
Effective:
October 1996
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