ADMINISTRATIVE PROCEDURE

Originating Accounting Transactions

A. Transferring of Resources

  1. Determine the purpose and nature of transfer being initiated and if it is allowable
    • Mandatory intrafund or interfund transfers
    • Nonmandatory intrafund transfers
    • Nonmandatory interfund transfers

      Transactions involving:

      • Internals Sales Organizations:
        In addition to this policy and procedures, refer to Administrative Policy:
        Selling Goods and Services to University Departments
      • Nonmandatory interfund transfers that involve unrestricted and restricted funds are considered not routine and should be processed on an exception basis. Due to restrictions placed on restricted funds and the need to maintain the integrity of these funds, RRC approval is required on these types of transfers.
      • Transfer transactions between Agency funds and other University funds should not be processed.
      • Under most circumstances, expenses incurred before a sponsored project is established cannot be transferred to the sponsored project.
        Refer to Administrative Policy: Charging Sponsored Costs Outside the Award Period
  2. Initiate and prepare the transaction
    • Verify that sufficient resources exist in the Chartfield String creating the transfer out to avoid creating deficits.
    • Select appropriate transfer account pairs (600xxx and 610xxx) based on the type of transfer being initiated. Refer to the Chart of Accounts for appropriate account pairs and corresponding definitions.
    • Prepare and enter the journal entry in the general ledger with the transfer in (account 610xxx) total equal to the transfer out (account 600xxx) total. The justification for the journal entry should be documented in the Header Long Description field of the journal entry, which includes the business purpose and answer the questions: who, what, where, when, and why.
      Refer to Job Aid:
      Transaction Justification/Documentation Standards for All Non-Sponsored and Sponsored Transactions
  3. Obtain approvals
    • The general ledger will route the journal entry for applicable level of approvals.
    • Nonmandatory interfund transfers that involve unrestricted and restricted funds require RRC approval.
    • Non-sponsored journal entries $30,000 or greater will be routed to Accounting Services for central approval.
    • Sponsored journal entries require Sponsored Financial Reporting's approval.
    • Preferred method of imaging documentation is ImageNow.

B. Initiating Balance Sheet Transactions

  1. Determine the type of transaction being initiated and if it is allowable

    Balance sheet accounts are used to record assets and liabilities in the general ledger and are to be used for the following specific purposes:

    • Accruing Expense or Revenue
    • Deferring Expense or Revenue
    • Recording an Asset
    • Recording a Long-Term Liability

      Transactions involving:

      • Sponsored funds: Only Sponsored Financial Reporting may process.
      • Activity that is typically entered into a module should be initiated accordingly. However, if the accounting period is closed and the transaction is material or significant to the department, a journal entry may be warranted.
      • Control accounts (e.g., Account 200100, Accounts Payable) are designated for module purposes only and consolidated entry accounts (e.g., 150099, Inventory Consol Entry) are designated for financial statement preparation only. Other accounts should be chosen in lieu of these.
  2. Initiate and prepare the transaction

    Use the following examples and journal entries as a guide to record the appropriate transaction with balance sheet accounts in the general ledger. Prepare and enter the journal entry in the general ledger. The justification for the journal entry should be documented in the Header Long Description field of the journal entry, which includes the business purpose and answer the questions: who, what, where, when, and why.

    Refer to Job Aid:
    Transaction Justification/Documentation Standards for All Non-Sponsored and Sponsored Transactions
    • Accrue Expense

      Example: Department A purchases and receives $50,000 worth of uniforms to be recorded to Fund/DeptID/Program/Account 1000-12345-20000-720104 from a vendor and hasn’t received an invoice to enter. It is the end of accounting period 12 and it is expected the invoice will arrive to be entered into period 1 of the next fiscal year. The department should record the expense when incurred.

      Journal Entry:

      Record Expense:

      Enter in Period 12 – the journal entry should reverse in Period 1.

      Dr.1000-12345-20000-720104$50,000 
      Cr.1000-12345-20000-200111 $50,000
    • Accrue Revenue

      Example: Department B provided $75,000 worth of services to an external entity. This transaction is associated with Fund/DeptID/Program/Account 1100-56789-20450-520601. Department B missed the cut-off of accounting period 12 to enter an invoice into the Accounts Receivable module and should record the revenue in the fiscal year it was earned

      Journal Entry:

      Record Revenue:

      Enter in Period 12 - the journal entry should reverse in Period 1.

      Dr.1100-56789-20450-520601$75,000 
      Cr.1100-56789-20450-110016 $75,000
    • Defer Expense

      Example: Department C purchased a three-year license covering FY2011-FY2013 at a 15% discount for $150,000 and paid the invoice. This transaction was coded to Fund/DeptID/Program/Account 1000-98765-20000-720312 in FY2011. Department C should record the expense in accordance with the license period.

      Journal Entries:

      Reduce expense, record as deferred expense:

      Enter in FY2011 a prepaid expense for two years of the license period ($50,000 * 2):

      Dr.1000-98765-20000-130102$100,000 
      Cr.1000-98765-20000-720312 $100,000

      Enter in FY2012 an adjustment to reduce the prepaid expense balance to reflect only one year of the unused license period.

      Dr.1000-98765-20000-720312$50,000 
      Cr.1000-98765-20000-130102 $50,000

      Enter in FY2013 an adjustment to remove the remaining prepaid expense balance.

      Dr.1000-98765-20000-720312$50,000 
      Cr.1000-98765-20000-130102 $50,000
    • Defer Revenue

      Example:Department D received $25,000 in refundable conference fees from registrants in period 3 for a conference to be held in period 6. The department deposited the money it received in Fund/DeptID/Program/Account 1100-96325-20450-520603. Department D should record the revenue in the period of the conference.

      Journal Entry:

      Reduce revenue, record as deferred revenue:

      Enter in Period 3 – the journal should reverse in Period 6.

      Dr.1100-96325-20450-520603$25,000 
      Cr.1100-96325-20450-220100 $25,000
    • Record an Asset

      Example: Department E purchased and received $300,000 in textbooks that are held for resale. The purchase was coded to Fund/DeptID/Program/Account 1100-45678-20450-740101. During a periodic inventory count, it was determined $250,000 worth of textbooks was sold. Department E would like to record the remainder of textbooks to inventory.

      Journal Entry:

      Reduce expense, record as inventory:

      Enter in period when inventory count was completed.

      Dr.1100-45678-20450-150100$50,000 
      Cr.1100-45678-20450-740101 $50,000
    • Record a Long-Term Liability

      Example: Department F entered into a third-party financed capital lease for a vehicle. Cash was received from the third-party to pay the car dealer. The original receipt of money was recorded to 1100-12345-20450-520601 and needs to be reclassed to a capital lease liability.

      Journal Entry:

      Reduce revenue:

      Enter cash received as a capital lease liability

      Dr.1100-12345-20450-520601$50,000 
      Cr.1100-12345-20450-230110 $50,000
  3. Obtain approvals
    • The general ledger will route the journal entry for applicable level of approvals.
    • Non-sponsored journal entries $30,000 or greater will be routed to Accounting Services for central approval.
    • Sponsored journal entries require Sponsored Financial Reporting's approval.
    • Preferred method of documentation is ImageNow.

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