Auxiliary Standard Operating Procedures


SUBJECT:

Recording Transactions between University Accounts

SOURCE:

Auxiliary Accounting, Financial Management Services

DATE ISSUED:

January 2008

DATE OF LAST REVISION:

July 2016

ASOP NO:

21.0

RATIONALE:

To provide guidelines for the proper use of Internal Billing (IB), Service Billing (SB), ID Billing (ID), Transfer of Funds (TF), Budget Adjustment (BA), Distribution of Income and Expense (DI), and General Error Correction (GEC) documents.

ASOP:

While each financial document type has a purpose, the user sometimes needs to consider the fund group(s) involved to determine how a particular transaction needs to be processed. Please review Providing Goods and Services to Other IU Accounts Flow Chart for guidance on which document should be used when a unit is providing goods or services to another IU account.

 

Internal Billing, Service Billing and ID Billing

 

An Internal Billing, Service Billing or ID Billing document should be used to record the income and corresponding expense for any billings of goods or services between university accounts except for accounts with sales & services less than $100,000 in annual activity. As of fiscal year 2017, the Service Billing document is also being used, in some instances, as a Distribution of Income and Expense within the same object type code. This exception is allowable until additional functionality can be added to the Kuali Financial System (KFS).

 

The primary differences between the Internal Billing, Service Billing and ID Billing documents are the routing and eDoc generation. The chart below outlines the differences.

 

 

Routing

to Other KFS Users

 

eDoc Generated

Internal Billing

Yes

Yes

Service Billing

No*

Yes

ID Billing

No*

No

*These documents do not route for approval or FYI.

 

The general ledger entries generated from an Internal Billing, Service Billing and ID Billing 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. 

 

Asset, liability and transfer object codes should not be used on these documents. If a department or unit needs to use a “clearing object code”, please use object code 1804 (income clearing). Use of this object code (1804) will eliminate external reporting issues and allows the charges that need to be moved to another object code to be isolated.

 

Internal sales and service activity with greater than $100,000 in annual activity must be recorded in a recharge/service center (66) account. These accounts are expected to internally bill revenue on the Internal Billing, Service Billing or ID Billing documents.

 

Accounts with internal activity under $100,000 will NOT be permitted to use Internal Billing, Service Billing and/or ID billings without prior approval from Chief Accountant or Controller. Activities with less than $100,000 in anticipated internal revenue will be required to use a Distribution of Income and Expense, General Error Correction, or Transfer of Funds documents. For additional information, please refer to RSOP 8.0 – Processing Internal Transactions for Accounts Under $100k.

 

 

The Internal Billing, Service Billing and ID Billing documents should not 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.  Please see Capital Asset Standard Operating Procedure (CSOP) 3.0 for more information.

 

Note: Access to the Service Billing document must be granted by Financial Management Services (FMS). In order to gain access to the Service Billing document, an organization should complete the following steps:

  1. Receive approval of its campus administrator.
  2. Complete the Agreement for KFS Service Billing Document Transactions form.
  3. Scan and email the completed Agreement for KFS Service Billing Document Transactions form to FMS Operations and copy auxiliary accounting and cost accounting using the email addresses below. 

Area

Email Address

FMS Operations

fms_ops@exchange.iu.edu

Auxiliary Accounting

auxacct@iu.edu

Cost Accounting

jvsparks@iu.edu

 

Transfer of Funds

 

The Transfer of Funds document is used to record movement of cash between accounts. The following transfers are the most commonly used throughout the university:

 

  1. Monthly administrative charges, budget allotments, university tax and intercampus transfers
  2. Subsidies
  3. Transfers from operating accounts to renewal and replacement accounts
  4. Recording an interdepartmental sale of capital equipment- This is done in conjunction with the asset transfer document.
  5. Additions to loan funds and quasi-endowment funds
  6. Accruing a cash transfer from a previous month
  7. Lifecycle funding
  8. Matching the commitments and faculty endowment matches (FEMP)
  9. Transferring funds to close out accounts. (For Contract & Grant accounts, this would include residual balances and overdrafts.)
  10. Moving cash from departmental accounts to C&G “Cost Share subaccounts to cover expenditures that occur within those subaccounts.
  11. Debt related transfers (i.e., debt funding, dedicated fee transfer, bond expenses)
  12. Accounts with internal activity under $100,000 will NOT be permitted to use internal billings, service billings and/or ID billings without prior approval from the Chief Accountant or Controller. However, a Transfer of Funds document can be initiated to complete the transaction between university accounts.

 

Note: Contract & Grant fund groups will only use the TF for 9 and 10 above.

 

The Transfer of Funds document requires the use of transfer object codes.

 

The treatment of transfer object codes on the Consolidated University Financial Statements and internal auxiliary reporting are different.

  • Transactions initiated on a Transfer of Funds document are eliminated for the Consolidated University Financial Statements.
  • For internal auxiliary reporting purposes, the transactions initiated on a Transfer of Funds document are typically netted and displayed in the “Net Transfer” line of the auxiliary balance sheet in the “Fund Balance” section. However, certain transfer object codes are shown on the auxiliary income statement because the activity that prompted the transfer represents revenue or expense to the auxiliary/service unit. Please refer to Summary of Transfer Object Codes for a complete listing of where each transfer object code will be reported on the auxiliary financial statements and common usage.

 

The Year-End Transfer of Funds document is only available during year-end close. The year-end version allows the user to initiate a Transfer of Funds document and post it into the previous fiscal year after July 1st. The same business rules apply to the Transfer of Funds and the Year-End Transfer of Funds, the only difference between the two documents is the routing. The Year-End Transfer of Funds document does not route to the fiscal officer but does route to a FMS workgroup for approval.

 

Budget Adjustment Document

 

The Budget Adjustment is a financial planning tool that allows an organization to adjust the current and/or base budget amounts for a given account as circumstances may change throughout the fiscal year. 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, a Budget Adjustment document should be processed rather than moving cash via the Transfer of Funds document. Also note, on general fund accounts, in the event that a Budget Adjustment transaction crosses responsibility centers (RC), a ledger entry with a doc type of Transfer of Funds on object code 1209 will automatically be generated in KFS to facilitate the movement of cash.  (There is not an actual Transfer of Funds document created.)

 

The Budget Adjustment document may not be used to move funds between non-general fund accounts.

 

The Year-End Budget Adjustment document is only available during year-end close. The year-end version allows the user to initiate a Current Budget Adjustment and post it into the previous fiscal year after July 1st. The same business rules apply to the Budget Adjustment and the Year-End Budget Adjustment document.

 

Distribution of Income and Expense Document

 

The Distribution of Income and Expense document allows for the reallocation of income or expense. For example, credit card charges may post to one account and later distributed out to the various appropriate accounts.  The Distribution of Income and Expense transaction should be limited to using the same object code category on the FROM and TO side of the document.

 

Note: Technical changes to the Distribution of Income and Expense document will not be added in fiscal year 2017; however, they are likely in the future. To the extent possible, we would recommend you begin using this standard as soon as possible.

 

Object Code Category From Side

Object Code Category To Side

Asset

Asset

Expense

Expense

Income

Income

Liability

Liability

 

It should never reflect income to one department and expense to another department.  That would be a sale of a good or service and the Internal Billing, Service Billing, or ID Billing document should be used.  

 

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

 

Offsetting entries to the 8000 (cash) object code are automatically generated "behind the scenes" by the system. The Distribution of Income and Expense document requires the approval of the fiscal officer or delegate of each account appearing on the document.

 

Accounts with internal activity under $100,000 will NOT be permitted to use internal billings, service billings and/or ID billings without prior approval from the Chief Accountant or Controller. However, a distribution of income/expense document can be initiated to move costs between university accounts (expense to expense).

 

The Year-End Distribution of Income and Expense document is only available during year-end close. The year-end version allows the user to initiate a Distribution of Income and Expense document and post it into the previous fiscal year after July 1st. The same business rules apply to the Distribution of Income and Expense and the Year-End Distribution of Income and Expense document, the only difference between the two documents is the routing. The Year-End Distribution of Income and Expense does not route to the fiscal officer but does route to a FMS workgroup for approval.

 

General Error Correction Document

 

The General Error Correction 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. When it is possible, reference the specific document number of the transaction(s) being corrected. Office of Research Administration (ORA) always prefers use of the General Error Correction. By consistently referencing the details of each transaction, the General Error Correction preserves and maintains the audit trail. Offsetting entries to the 8000 (cash) object code are automatically generated "behind the scenes" by the system. Where feasible, each accounting line should reference the prior document number of the document being corrected. Approval of the General Error Correction is required of the fiscal officer or delegate of each account appearing on the document.

 

Accounts with internal activity under $100,000 will NOT be permitted to use internal billings, service billings and/or ID billings without prior approval from the Chief Accountant or Controller. However, a General Error Correction document can be initiated to move costs between university accounts.

 

The Year-End General Error Correction document is only available during year-end close. The year-end version allows the user to initiate a General Error Correction document and post it into the previous fiscal year after July 1st. The same business rules apply to the General Error Correction document, and the Year End General Error Correction document, the only difference between the two documents is the routing. The Year-End General Error Correction does not route to the fiscal officer but does route to a FMS workgroup for approval.

DEFINITIONS:

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

 

Auxiliary Account – An account 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.

 

Auxiliary and Service Center organizations – Indiana University departments that are fully or primarily comprised of auxiliary and/or service center accounts.

 

Recharge/Service Center account – An activity that furnishes goods or services to another Indiana University department for the convenience of the university and charges a fee directly related to, and not more than, the allowable cost to provide the goods or services.       

CROSS

REFERENCE:

 

Campus Chart Managers

Who is my Auxiliary Consultant?

ASOP 13.0 - Monthly Budgeting

Auxiliary Voucher Documentation

Providing Goods and Services to Other IU Accounts Flow Chart

RESPONSIBLE

ORGANIZATION:

 

Auxiliary Accounting, Financial Management Services