Administrative Procedure 8.641 Administrative Procedure 8.641

Title

Journal Entries

Header

Administrative Procedure Chapter 8, Business and Finance
Administrative Procedure AP 8.641, Journal Entries
Effective Date: June 2016
Prior Dates Amended: July 1982, August 2001
Responsible Office: Office of the Vice President for Budget and Finance/Chief Financial Officer
Governing Board and/or Executive Policy: EP 1.102, Authority to Manage and Control the Operations of the Campus
Review Date: June 2019

I. Purpose

To explain the process for recording accounting related journal entry adjustments in the University Kuali Financial System (KFS).

II. Definitions

Journal Entry Electronic Document (eDoc) - An accounting document used to record financial transactions or adjustments in the KFS. Journal entries should contain at least two accounting lines, and include explanations, references to and attachments of documentary evidence supporting the entries.

III. Administrative Procedure

The KFS uses specialized eDocs to record journal entries. The different eDocs are designed to facilitate accurate recording of adjustments to general ledger accounts.

A.    Types of journal entry eDocs

    1.    Distribution of Income and Expense (DI)

The DI document is used to distribute income or expense from a holding account to one or more appropriate accounts, when one account has incurred expenses or received income on behalf of one or more accounts. A DI can also be used to move income, expenses, assets, and liabilities to other sub-accounts, object codes, or sub-object codes.

        a.    In most cases, the distribution will involve the movement of amounts from one account to another using the same object codes.

        b.    The DI is also used to properly reclassify Amounts advanced to the Research Corporation of the University of Hawaii (RCUH) for service ordered projects
using object code “7232 – RCUH EXPENSE/ADVANCE” to proper object code when spent.

    2.    General Error Correction (GEC)

The GEC is used to correct accounting information that has been posted in the KFS.

        a.    Examples of common usage at UH are:

            1)    Correcting accounts and object codes on a Financial Processing (FP) eDoc, or a PREQ (PO Invoice).

            2)    Account correction for an expense (e.g., supplies were charged to an incorrect account).

        b.    The GEC accounting line includes a reference field for the original entry being corrected. This information provides an audit trail to support the correction and augments documentation attached to the eDoc.

    3.    Transfer of Funds (TF)

The TF is used to transfer funds (cash) between accounts. This document only allows the use of certain “transfer” object codes. Transfers are neither revenue nor expenditures but for accountability purposes, a “transfer-in” behaves like revenue while a “transfer out” behaves like an expenditure. In KFS, these object codes have the following Object Sub-Type Codes:

        a.    TM (Transfers Mandatory) – Transfers required by external third parties or contractual agreements because of:

            1)    Agreements relating to the financing of educational and auxiliary plant, or provisions for renewals and replacement of plant

            2)    Legislation requiring appropriate financing of educational activities

            3)    Legally binding endowment or other agreements

        b.    TN (Transfers Non-mandatory) – Non-mandatory transfers are cash transactions between accounts that are initiated at the discretion of a governing board or management. For commonly used non-mandatory transfer object codes, see Attachment 1.

The from and to accounting lines for a particular transfer should have object codes with the same object sub-type code (e.g. there should not be a transfer between a TM object code and a TN object code). Also, the object code to use on an accounting line should describe the transfer destination account or source account. On the FROM accounting line, the object code should describe the account that the funds are being transferred to. Likewise on the TO accounting line, the object code should describe the account that the funds came from.

    4.    Internal Billing (IB)

The IB eDoc is used to bill for goods or services provided by one university department to another university department, reflecting internal income to the provider and expense to the customer. The IB eDoc should be prepared by the department providing the goods or services since the document does not route to the responsible individual of the income accounting lines.

    5.    Service Billing (SB)

The SB is used to record revenues and expenses between University accounts that have a pre-approved written agreement. The SB records the same transactions as the IB, but because of the pre-existing agreement, the SB eDoc does not route for approval and individuals need KFS authorization to be able to initiate SB eDocs.

    6.    Salary Expense Transfer (ST)

The ST eDoc is used to move salaries and related benefit charges for a given employee for a particular paid date or set of paid dates from one or more accounts to one or more accounts.

An employee may have multiple Employee IDs (Emp IDs), however, only one primary Emp ID. The system only recognizes the primary Emp ID for salary and related benefits transfers. Data entry of the primary Emp ID will provide a listing of the payroll expenses for the selected employee by Paid Date for all associated Emp IDs. Security roles within the system, allow the ST initiator to view and move payroll expenses within their organization structure only.

The ST eDoc is used to correct an employee’s payroll expense that was charged to an incorrect accounting string. This error could occur for a number of reasons, including:

        a.    Someone mis-keyed the payroll information, so the expense was initially posted to the wrong account.

        b.    An employee was paid for work on a grant before the account was established, and the wages were initially posted into another account.

        c.    The wages were initially paid on an expired or invalid account.

        d.    An error was made when the employee was hired.

        e.    A correction occurred in which the account was changed after an employee was paid.

    7.    Journal Voucher (JV)

The JV is used to record adjustments that cannot be effectively recorded by other journal entry eDocs. Access to the JV is restricted to central office accountants.

B.    Fiscal Administrator responsibilities for processing a journal entry eDoc

    1.    All required fields (*) must be completed.

    2.    Provide a detailed explanation for the adjustment in the explanation field.

    3.    Debit amounts must equal credit amounts.

    4.    Attach supporting documentation in the notes and attachments tab.

    5.    Additional reviewers can be added in the ad hoc recipients tab.