05.02.03 – Expenditure Reallocation and Correction

Section: Finance and Accounting

Area: Expenditure Management

PDF version 

I. PURPOSE

The purpose of this policy is to define the allowable and appropriate method for University departments to use to reimburse another department for goods or services provided by a non-service unit of the University or to correct an expenditure which has posted to the incorrect cost center.

II. POLICY STATEMENT

When a University department reimburses another department for goods or services provided by a non-service unit of the University, the transaction must be recorded through the use of a journal entry. The journal entry will credit the service provider's cost center and will charge the procuring department's cost center. When a University department needs to correct an expenditure which has posted against a cost center improperly, the appropriate process to make this correction depends on the type of transaction (payroll or non-payroll) and the type of funds involved (all state, all local, or state and local). The matrix below indicates the appropriate process to use for each type of expenditure correction:

Non-payroll reallocations must include adequate documentation to indicate when and where the expense originally posted, and thus require a printout or Excel listing from the UGL01074 report with the transaction or balance underlined.

Expenditure corrections must conform to this policy; those not meeting the standards described will not be processed.

III. DEFINITIONS

A. Non-service Units: All University departments not specifically authorized as service centers or auxiliaries.

B. Service Centers: Service departments from which University departments may obtain goods or services via transactions called Service Center Vouchers (MAPP 04.03.01).

IV. LIMITATIONS ON TYPES OF TRANSACTIONS ALLOWED

The following restrictions apply to expenditure reallocations and corrections:

A. Acquisition of goods and services from authorized University service centers and auxiliaries must be made with a Service Center Voucher (MAPP 04.03.01). However, high volume transactions, such as postage, long distance, and telephone charges may be processed through a data feed without a Service Center Voucher.

B. A journal entry may not be used for payroll reallocations and adjustments. The Payroll Reallocation process must be used for those transactions.

C. Equipment and furniture transfers between University departments are not financial transactions; therefore, journal entries may not be used to document such transfers. Appropriate Property Management forms must be used.

D. Reallocations or corrections charging (debiting) state-appropriated cost centers are only allowed when the charge is reimbursable under state purchasing guidelines
(MAPP 04.01.03). Only expenditure accounts may be used with these reallocations. All transactions affecting state-appropriated cost centers must be processed by voucher or payroll reallocation.

E. In accordance with good business practices, the University requires departments to reconcile cost centers on a monthly basis. Consequently, all units must process reallocations and corrections within 90 days of the transaction date.

Reallocations may be processed between 90 and 180 days after the transaction date if the College/Division Administrator determines that the reallocation is necessary and submits a written justification.

Reallocations more than 180 days after original transaction will not be processed unless the transaction meets an exception criteria listed in item G below.

F. Transaction processing deadlines apply to both contract and grant expenditures and non-contract/grant expenditures with the following differences:

1. Non-contract/grant expenditures:

At the end of the fiscal year, the time frame for reallocations is shortened to meet the end-of-year processing cycle.

Prior fiscal year payroll and non-payroll reallocations will not be processed.

Prior year reimbursements must be processed as an equity transfer within allowable funds.

2. Contract/grant expenditures:

Prior fiscal year payroll and non-payroll reallocations will be processed within the processing deadlines.

Prior fiscal year payroll and non-payroll reallocations that also involve non-contract/grant expenditures will be processed within the processing deadlines.

All reallocations of contract/grant expenditures between sponsored projects or between non-contract/grant funds and sponsored projects must be approved by the Division of Research.

G. Exception criteria to reallocation deadlines

1. All expenditures:

a) Account code corrections within a fiscal year

b) Changes in funding source or transfers between sibling projects on capital/construction projects

c) Billing corrections within a fiscal year

d) Liability account clearing within a fiscal year

e) Payroll suspense within a fiscal year

2. Contract/grant expenditures:

a) Account code corrections required for sponsor compliance

b) Changes in funding source

c) Transfers between parent-child or sibling projects

d) Expenditure transfers across fiscal year required for sponsor and/or audit compliance

H. It is the certifying signatory's responsibility to ensure that expenditure transfers to different cost centers are appropriate and in compliance with the requirements or restrictions of the new cost center.

REFERENCES

MAPP 04.01.03 – Vouchers
MAPP 04.03.01 – Service Center and Auxiliary Purchases

Issued: 10/13/1992
Last Reviewed/Revised: 03/03/2022
Responsible Office(s): Finance