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University of Houston - Victoria

Office of the Vice President for
Administration and Finance

SECTION: FISCAL INDEX: B-2
SUBJECT: EXPENDITURE/REVENUE REALLOCATION OR CORRECTION

POLICY

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 another unit of the university or to correct an expenditure/revenue which has been posted to the incorrect cost center.

This policy involves non-cash transactions between all university departments, with restrictions on fund sources as prescribed. Expenditure/revenue reallocations or corrections must be within the same fiscal year.

Expenditure/revenue reallocations or corrections must conform to this policy and the companion procedures; those not meeting the standards described will not be processed.

PROCEDURES

When a university department reimburses another department for goods or services provided by another 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/revenue which has posted against a cost center improperly, the journal entry is also the appropriate procedure to use. Through the processing of this entry, the institution will credit and debit the proper cost center(s) for the expenditure/revenue involved.

Limitations on Types of Transactions

The journal entry may be used only for the specific purposes described. The following restrictions apply to its use:

  1. The journal entry may not be used for employee payroll reallocations and adjustments. The Payroll Reallocation Form must be used by the department for reallocation/adjustment transactions. The Payroll Reallocation Form is then forwarded to the Budget Office for approval and final entry into PeopleSoft. (References)
  2. 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.

All expenditure/revenue reallocations and corrections should be processed within 90 days of the original transaction date or the closing date of the fiscal year end adjustment period, whichever comes first.

Expenditure reallocations are generally initiated by a department providing the services or goods reimbursable by a journal entry. It is the responsibility of that department to complete the journal entry, indicating the cost center(s) to be credited, using the account originally charged. The correct cost center(s) to be charged (debited) using the appropriate expenditure account, must also be indicated and the journal entry approved by the authorized signatory for the credited cost center.

Examples may include telephone, postage, or copy machine expenses charged to the service department’s operating budget which should be appropriately recharged to (reimbursed by) a specific user cost center.

Expenditure corrections are generally initiated by the department responsible for the cost center(s) to which incorrect charges have been made. The journal entry is completed, indicating the cost center(s) to be debited (with correct expenditure account) and credited and approved by the individuals having signature authority for the cost center to be (debited) charged.

Accounting Note:

  1. A debit enters the expense on the correct cost center.
  2. A credit removes the expense from the incorrect cost center.

Revenue corrections are generally initiated by the department responsible for the cost center(s) to which incorrect deposits have been made. The journal entry is completed, indicating the cost center(s) to be credited (with correct revenue account) and approved by the individual(s) having signature authority for the cost center to be (debited) charged.

Accounting Note:

  1. A credit enters the revenue on the correct cost center.
  2. A debit removes the revenue from the incorrect cost center.

The completed journal entry is entered into PeopleSoft workflow and electronically approved by the appropriate source. Supporting documentation for the expenditure/revenues reallocation or correction charges is attached in PeopleSoft showing the original cost center charged; normally, a copy of the PeopleSoft report with the affected expenditures is sufficient.

REFERENCES

Payroll Reallocation Form

Approved by:

Signature Obtained     07/23/13
Philip Castille, Ph.D.   Date
President

Next review date: July, 2016
Origination: Finance Department

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