Journal Entries

 
Chapter 2

FINANCE
 Section: 2:190

Journal Entries

Adopted:  08/2007
Revised:  08/17/2016; 09/09/2022

Responsible Office
 Division of Finance

POLICY STATEMENT

The WebApps journal entry (JE) application has five distinct types of entries, each established for specific purposes as outlined below. This policy provides guidance on when to use or not use each type. For help with using the application, contact the Division of Finance -Accounting.

PROCEDURES

The following procedures assist with ensuring compliance with the above policy:

Authorizations

Division business & finance officers authorize individuals to access the WebApps JE by request to the Division of Finance-Accounting.

Entry Types

There are four types of entries:

  • Internal Service Entry (ISE)
    • Use the ISE when one University department provides goods or services to another University department.
    • Only the department providing the service should prepare this entry.
    • Normally, the credit is to 450000 for internal sales & services.
  • Journal Entry (JE)
    • Use the JE to record original accounting transactions, such as:
      • Funding or balance transfers/distributions
      • Investment income
      • Indirect cost adjustments on grants
      • Balance sheet entries such as accruing/deferring revenue/expense or recording/adjusting inventory, etc.
  • Correcting Entry (CE)
  • Use the CE to move posted revenue or non-payroll expenses to the correct chartfield in the current fiscal year. For payroll correcting entries see PCE section below.
  • The CE is designed to provide an audit trail to the original entries. For most transactions, you can record electronic links in the CE to those transactions for easy reference. Use the “Other” reference when there is no electronic link, to reference a line number within a journal, or when there are too many transactions to link to. Include a short description in the Other Reference Type, such as March 03 entries or May 31 balances.
  • Do not use a CE to correct a budget checking (BCM) error. To correct the original journal, contact the Division of Finance-Accounting.
  • All CE’s should be made within two accounting periods (months) after the end of the accounting period in which the original transaction was posted.
  • Payroll Correcting Entry (PCE)
  • Use the PCE when you need to move a posted payroll transaction to the correct chartfield in the current year.
  • Use a Personnel Action Form (PAF) to change chartfields for future transactions.
  • The PCE is designed to provide an audit trail by recording information about the original entry.
  • The PCE automatically calculates the corresponding correction for the university employee benefits for the salary and wage accounts used in the PCE. If the amount of university employee benefits needs to be corrected or changed contact the Division of Finance-Accounting.
  • Do not use PCE to correct a BCM error involving payroll. You must first add a budget to allow the incorrect payroll to pass and then you can use a PCE to move the expense.
  • Payroll verification nature, timing, and responsibilities are discussed further in UM Policy 22303.  See the Payroll Correcting Entry Form for requested corrections on sponsored activity funding or federal program codes that have been processed after the one-year correction period.
  • Transfer Journal Entry (TRE)
  • Use the TRE to transfer funds between chartfields.  Transfers are neither expenditures of the contributing fund nor revenue to the recipient fund.
  • There are three types of transfer journals:
    • Intra Unrestricted Current Fund
      • Between chartfield strings within unrestricted current funds, whether within or between business units.
    • Non-mandatory
      • Move unrestricted funds from one fund to another at the discretion of administrative management, excluding transfers within unrestricted current funds.
      • Transfers within a fund group other than unrestricted current funds should be done as non-mandatory transfers.
    • Mandatory Transfers
      • Move funds as required by a third party external to the University.
  • Only one type of transfer is allowed per journal and only transfer accounts are allowed on a TRE.  Edits are in place to ensure proper usage of accounts and transfers between funds.
  • In order to determine if transfers are allowable between certain funds and to determine the correct accounts to use see the link under Resources below for Accounting Policy Manual 70.15.

Explanation/Documentation

The preparer is responsible for providing clear and complete explanation/documentation of the reason for the entry such that a third party can understand why the entry was made. The preparer should use preparer comments and, as needed, other comments and attachments. Additional explanation/documentation can be placed in the attachment.

Transaction Approval

As needed, preparers should notify approvers when there is an entry for them to review. Approvers should periodically check for unapproved entries, either through the JE application or as part of their review of transactions in Web reporting. Divisions should have procedures to ensure that transactions on their accounts are approved on a timely basis.

RESOURCES

Cross Reference