SUBJECT:

Recording Transactions between University Accounts

To provide guidelines regarding the use of various financial documents to move funds between two or more university accounts. Specifically addressed here are the Internal Billing (IB), Service Billing (SB), Transfer of Funds (TF), Budget Adjustment Documents, and Distribution of Income and Expense (DI), and General Error Correction (GEC) documents.

Internal Billing and Service Billing

An internal billing (IB) or service billing document (SB) should be used to record the income and corresponding expense for any billings of goods or services between university accounts. These transactions will result in the reflection of income and expense on the financial reports. Offsetting entries to the 8000 (cash) object code are automatically generated "behind the scenes" by the system.

Any non-auxiliary accounts with greater than $ 250,000 in annual billings to other university accounts will trigger a review at the account(s) and will potentially be moved to the Auxiliary Service fund group, and will be designated as a service center (66-xxx-xx) account for purposes of external reporting.

Neither the internal billing nor service billing document should be used for the sale of capital assets between two accounts. Those transactions should be recorded using both the asset transfer (AT) and transfer of funds (TF) documents.

Note: Access to the service billing document must be granted by Financial Management Services (FMS). The process for gaining access is as follows:

1. An organization desiring to use the service billing (SB) document must first obtain the approval of its campus administrator.


2. FMS Operations must receive a request from the department head that will be using the service billing document. This e-mail must include the user ids of the FIS users who will initiate the documents and the account numbers that will receive the income via the document.


3. The originating department must retain documented proof of its agreement(s) with those departments they will charge via the service billing. This is important since the service billing does not route for approval. Conversely, the internal billing document requires no certification, and can be generated by any FIS user. The internal billing routes for approval to the fiscal officer (or delegate) of the account charged.

Offsetting entries to the 8000 (cash) object code are automatically generated "behind the scenes" by the system as illustrated below.

Transfer of Funds

A transfer of funds document is used to record movement of cash between accounts, and is unrelated to billings for goods and services. Transfer of funds transactions would include, but are not limited to sales of capital equipment between university departments (asset transfer document must also be completed), subsidies, budget allotments, and administrative charges. Transfer of funds documents are not to be used for general operating expenses (i.e., rent, utilities, sales and services to other internal organizations, etc). The transfer of funds document requires the use of 99xx object codes. Transfers are not automatically reflected in the auxiliary income statement. They are netted and displayed in the “Net Transfer” line of the auxiliary balance sheet in the “Fund Balance” section, with the exception of the following object codes:

The object codes listed above will automatically appear in the “Income” and “Expense” sections of the auxiliary financial statements.

The following transfers are the most commonly used throughout the university and consist of the following:

1. monthly administrative charges between fund groups to record revenue in one and expenditure in another
   
2. monthly transfers from auxiliary operating accounts to renewal and replacement accounts
   
3. to record an interdepartmental sale of capital equipment
   
4. additions to loan funds
   
5. additions to quasi-endowment funds
   
6. transfers to plant funds for:
   • general or specific plant additions
   • renewal and replacement of plant assets
   • voluntary payments of debt principal
7. to fund non-budgeted accounts from another account for expenses or purchases
   
8. to correct a prior TF. Corrections to a TF should always be done on a TF.
   
9. to transfer funds to close out accounts. (For Contract & Grant accounts, this would include residual balances.)

Note: Contract & Grant fund groups will only use the TF for G, H, and I above.

Budget Adjustment Document

The budget adjustment is a financial planning tool that allows an organization to adjust the current and/or base budget figures for a given account as circumstances may change throughout the fiscal year. For general fund accounts, it is the spending authority for the particular account and/or sub-account.  It may be used to create a budget for a new account established after the beginning of a new fiscal year, as well as to move budgeted funds between two general fund accounts.

When funds are moved between two general fund accounts within the same chart of accounts and sub-fund group, a budget adjustment document should be processed to move budgeted amounts between the two accounts, rather than moving cash via the transfer of funds document.

The document may not be used to adjust budgets or move funds between non-general fund accounts. Also note that in the case of a budget adjustment transaction that crosses income streams, a ledger entries with a doc type of TF on object code 1209 will automatically be generated in the FIS to facilitate the movement of cash. (There is not an actual TF document created.)

Distribution of Income/Expense Document

The distribution of income/expense (DI) document allows for the reallocation of income and expense. For example, credit card charges may be billed to one account and later distributed out to the various appropriate accounts.

The document can also be used to allocated income and/or expenses to sub-accounts.

Offsetting entries to the 8000 (cash) object code are automatically generated "behind the scenes" by the system. Approval of the DI is required of the fiscal officer or delegate of each account appearing on the document.

General Error Correction Document

The general error correction (GEC) document is used to correct inappropriate or incorrect account numbers or sub-account numbers and object codes or sub-object codes in the general ledger. This document identifies specific transactions and changes to the general ledger. When it is possible to reference the specific document number of the transaction(s) being corrected, the GEC should be used rather than the DI. (FMS Contract and Grant Administration always prefers use of the GEC ) By consistently referencing the details of each transaction, the GEC preserves and maintains the audit trail. Offsetting entries to the 8000 (cash) object code are automatically generated "behind the scenes" by the system. Each accounting line must reference the prior document number of the document being corrected. Approval of the GEC is required of the fiscal officer or delegate of each account appearing on the document.

Account: Identifying number for a pool of funds assigned to a specific university organization, for a specific function.

Auxiliary Account: An account (typically in the 60-xxx-xx or 61-xxx-xx range) that furnishes goods or services to students, faculty, staff, or the general public and charges a fee directly related to, although not necessarily equal to, the cost of the goods or services. Fundamentally, an entity managed as a self-supporting activity.

Service Center account: An account in the 66-xxx-xx range that furnishes goods or services to other internal university departments and charges a fee directly related to, and equal to, the cost of the goods or services. Fundamentally, an entity managed as a self-supporting activity that is to operate at breakeven.
           
Auxiliary and Service Center organizations: Indiana University departments that are fully or primarily comprised of auxiliary and/or service center accounts.

See Campus Chart Managers
See Who is my Auxiliary Consultant?
See Monthly Budgeting
See Auxiliary Voucher Documentation