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Business and Financial Policies and Procedures

Avoiding Problems with Internal Transactions

For an introduction to internal transactions, review the material at Journal Voucher Processing (GL 101) which includes job aids, handouts, an online tutorial, and a participant guide for journal voucher processing. If a transfer involves a grant, consult Cost Transfers in Section 16, Grants & Research Contracts.

All Internal Transactions

Properly Document Internal Transactions
In the Document Text (FOATEXT) of the journal voucher, include:

  • Detailed description of the transaction
  • Reason for the transaction
  • Original Banner document number and its transaction date
  • Preparer name and their 10-digit phone number

Use a Separate Journal Voucher
Use a separate journal voucher for each individual transaction. Do not group multiple transactions in one journal voucher. This provides a clearer audit trail and makes tracking easier.

Record Internal Transactions in the Correct Fiscal Year
As far as possible, record internal transactions/transfers or corrections in the fiscal year that the original transaction posted. Expenses from prior fiscal years cannot be transferred to the current year's state fund. For additional information about transferring expenses to state funds during the lapse period, consult Accounting Frequently Asked Questions.

Select the Correct Rule Code
Be sure to select the correct rule code for the types of funds for each sequence in the transaction. Consult Appendix K: Rule Code List in the participant guide for Journal Voucher Processing (GL 101).

All Internal Transactions

Use Appropriate Account Codes on Both Sides of the Transfer

Transfers between C-FOPs
Use the same account code on both sides of the transfer. For example, if revenue was originally posted to a food sales account code, use the same food sales account code with both C-FOPS when transferring from one to another, rather than another code, such as a miscellaneous income account code.

Corrections of Account Codes within C-FOPs
If a transaction has been posted to an incorrect account code within a C-FOP, use a transfer to correct it. If, for example, revenue has been deposited to a miscellaneous income account code, but should have been a food sales account code, keep the C-FOP the same on both the debit and credit, but change the account code.

Transfers of Revenue
Revenue account codes can only be assigned to transfers involving service plan, self-supporting, or in some cases, agency funds. Revenue account codes cannot be posted to other fund types.

Internal Sales

Always Include a Credit to Revenue and a Charge to Expense

Never record internal sales as a credit to one expense and a debit to another expense.

Do Not Charge Sales Tax

Do Not Record Internal Sales as a Receivable

Record Internal Sales on Fund Type 3E
Fund Type 3E exists to record the sale of goods and services to other units within the University. However, sometimes activities that normally sell to external parties will also sell to other University units. In these cases, consult with University Accounting and Financial Reporting (UAFR) to make sure the internal sales are properly accounted for. For more information on fund types, consult Fund Type Descriptions.

Establish and Charge Internal Sales Rates that Comply with University Guidelines

For additional information, consult Section 22 Self-Supporting/Revenue Generating Activities - Service and Storeroom Activities

Transfers Across Fund Types and Lump Sum Transfers

Do not record transfers of:

  • Surplus balances, revenue, or remaining budget across fund types
  • Budget between self-supporting and other fund types

Doing so prevents the University from maintaining accountability over separate revenue sources as required by fund accounting principles.

Do not use a single account code to record lump sum transfers of expenses or revenues that were originally recorded correctly using multiple account codes. Separate revenue and expense classifications must be retained to prepare accurate financial reports.

Related Policies and Procedures

Section 22 Self-Supporting/Revenue Generating Activities - Service and Storeroom Activities
Section 16, Grants & Research Contracts

Additional Resources

Journal Voucher Processing (GL 101)
Accounting Frequently Asked Questions
Fund Type Descriptions

Last Updated: June 2, 2014 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 2009

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