TRANSFERS
Transfers differ from expenditures. Expenditures are the recognition of the expending of resources toward the objectives of the respective fund. Transfers are amounts moved between funds to be used for the objectives of the recipient fund. There are two types of transfers, mandatory and non-mandatory. Mandatory and non-mandatory transfers in and out of funds are netted in the financial records in the financial reporting process and therefore are not shown on the face of the financial statements.
Mandatory Transfers
Mandatory transfers are made as a result of binding legal agreements, including:
• Debt reserve requirements,
• Debt retirement (principal and interest),
• Required provisions for renewals and replacements of plant,
• Grant match requirements (ex. Perkins FCC), and
• Donor match requirements.
As an example, transferring funds for a debt reserve requirement mandated by the bond covenant is as follows:
Ledger Fund Group Acct # Acct Descr. Debit Credit
Actuals Unrestricted 722015 Mandatory Trsfr-Out x,xxx
105251 Cash x,xxx Actuals Retirement of Indebt. Fund 105251 Cash x,xxx 490009 Mandatory Trsfr-In x,xxx Non-mandatory Transfers
Non-mandatory transfers are made at the discretion of management, and include:
• additions to loan funds,
• additions to quasi-endowment funds,
• general or specific plant additions,
• voluntary renewals and replacements of plant, and
• transfers to cover operating expenses or fund deficits.
Intrafund Transfers:
Intrafund transfers are transfers between funds within the same fund group. An example would be a transfer of bookstore funds to the student center to help cover operating expenses, which would be recorded as follows:
Ledger Fund Acct # Acct Descr. Debit Credit
Actuals Bookstore 722010 Intratransfer – out x,xxx
105251 Cash x,xxx
Actuals Student Center 105251 Cash x,xxx
490004 Intrafund Transfer-in x,xxx Interfund Transfers:
Interfund transfers are transfers between funds in different fund groups. An example would be a transfer of auxiliary funds to plant improvement funds for the construction of an addition to the student center, which would be recorded as follows:
Ledger Fund Group Acct # Acct Descr. Debit Credit
105251 Cash x,xxx Actuals Plant Improvement 105251 Cash x,xxx 490002 Interfund Transfer-in x,xxx Inter-Institution Transfer:
Account 722024 is to be used for one-time unusual transactions between Institutions and/or the NDUS System Office. It is not to be used for day-to-day transactions that occur in the normal course of business. Examples of when this account would be used are transfers of positions, fte’s and/or programs. Use of this account for any transaction requires the prior approval of the NDUS Director of Financial Reporting.
Transfers to or from Agency Funds:
Because a campus is only acting as fiscal agent with respect to an agency fund, revenue and expenses of agency funds do not appear in the institution’s annual financial statements. Therefore, transfer accounts can never be used when a transaction occurs between the institution’s funds and an agency fund, otherwise transfers in and out would not net to zero in and the financial statements would not balance. Revenue and expense account codes must be used with any activity between the institution’s funds and agency funds.
OTHER ADDITIONS/DEDUCTIONS
With the adoption of GASB 34 and 35 and the subsequent reporting as a “business-type activity”, the additions and deductions accounts are no longer used by the NDUS, except within agency funds.
Agency Funds
Accounts 715005 – 715010 can be used in agency funds in lieu of specific revenue and expense codes, since agency fund activity is not included in the institution’s financial statements. These account codes should not be used in the institution’s other funds, for the same reason noted above.
System Office Transfers
The ND University System office periodically sends state appropriation funds to the institutions for student grant programs, such as SSIG, ND Indian Scholars, ND Scholars and Education Incentive Program. Since the system office makes the determination of which students receive funding, it is considered a pass-through program; therefore, the institution should not be recording revenue and expense. By recording the receipt from the system office and the subsequent payment to the student in the same account, the transaction is netted to zero.
If the institution records these student grant program receipts in an agency fund, account 715005 (Other Additions/Other Deducts) should be used to record the receipt and the subsequent payment to the students. If the institution records the receipts in local funds, either 224002 (Deposits) or 661005 (scholarship expense) should be used to record the receipt and the subsequent payment to the students.
If the institution records these student grant program receipts in an agency fund, account 715005 (Other Additions/Other Deducts) should be used to record the receipt and the subsequent payment to the students. If the institution records the receipts in local funds, either 224002 (Deposits) or 661005 (scholarship expense) should be used to record the receipt and the subsequent payment to the students.
Cost Transfers
A cost transfer is a cost that is originally paid by one department/fund, which is then moved to another department and/or fund. Documentation supporting cost transfers should be included with the journal voucher, or journal entry form. At a minimum, the documentation should include the reference number of the original charge of the cost transfer. The form should always be signed by the authorized individual affirming that the appropriate supporting documentation has been reviewed and is maintained and accessible at the department level or central accounting office.