Reporting Interfund Activity
Sedong John, Director, Financial Services / SFSR
Kelly Cox, Associate Director, Financial Services / Accounting
Chancellor’s Office
April 23, 2015
Learning Objectives
• This session will provide principles, rules,
guidance and scenarios in determining
when it is appropriate to use:
• Transfer object codes,
• Cost Recovery /Abatement, and
• If and when Loans are to be recorded.
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Revenue/Expense, Transfer, or Loan
• Revenue is inflow of resources recognized at the
point of entry to an organization and expense is
outflow of resources recognized at the point of
exit from an organization. Revenue and expense
should not be recognized multiple times.
• Movement of resources between entry and exit
within an organization is a transfer, loan, or cost
recovery/reimbursement.
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Revenue/Expense, Transfer, or Loan
(cont.)
• Transfer is giving up of resources within an
organization with no expectation of repayment.
• Loan is temporary provision of resources with an
expectation of repayment.
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Reporting Interfund Activity (GASB 34,
paragraph 112)
(a) Reciprocal (exchange) interfund activity
(1) Interfund loans
(2) Interfund services provided and used
(b) Nonreciprocal (nonexchange) interfund activity
(1) Interfund transfers
(2) Interfund reimbursements
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Reciprocal – Services vs. Non-Reciprocal – Reimbursement
Reciprocal – Services
• A sale or purchase of goods and
services between funds for a
price approximating their
external exchange value.
• The recipient fund should record
the receipt of revenue in the
appropriate cost recovery
revenue object codes.
• Interfund activity within the
university should be eliminated
for consolidated legal basis
reports and GAAP financial
statements.
April 2015
Non-Reciprocal –
Reimbursement
• Repayment from the fund
responsible for particular
expenditures for the fund that
initially paid for them.
• The recipient should record the
reimbursement as an abatement
against the original expenditure.
Year-End Legal Training
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Non-Reciprocal – Transfer
• An interfund flow of resources without equivalent
flows of resources in return and without a
requirement of repayment.
• Transfer should be recorded as transfer-out in
the provider fund and as transfer-in in the
recipient fund.
• Transfer of funds from Extended Education to
CSU Fund 485 based on the BOT’s authorization
• Transfer to debt service fund for debt payment.
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Reciprocal – Loan
• Interfund loan amounts provided with a
requirement for repayment.
• Interfund loans should be reported as receivables
(due from) in the lender funds and interfund
payable (due to) in the borrower fund.
• If repayment is not expected within a reasonable
time, the balances should be reduced and the
amount should be reported as a transfer per
GASB 34.
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Principle:
• Money collected should be used for intended
purposes for which it was collected.
• Transfers should be used only when necessary
to meet a CSU policy, BOT resolution, and
external funding requirement (i.e. staging of debt
service or work-study).
• Unless transfer is necessary, the provider fund
should record expenses to their natural
classification to indicate the nature of expenses.
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Enterprise Funds Principle:
• Transfers should be avoided outside of each
Self-Support funds group except for the allowable
transfers described below:
• As required for Debt Service Payment
• Work Study, if the fund is allowed to contribute to
the Work study program, then a transfer out to
CSU fund 409 is allowed.
• CSU policy, BOT resolution, or Legislation.
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Self-Support funds group
“Established CSU fees” per EO 994 section 2.4
• Parking Fees = CSU fund 472-474 (except 471:Fines)
• Student /Campus Union Fees = CSU fund 534-536
• Housing Fees = CSU fund 531-533
• Health Center Facility Fees = CSU fund 452-454
• Extended Education Fees = CSU fund 441-444
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Systemwide Revenue Bond Program
• Transfers should be avoided since the gross
revenues are pledged for debt service and
revenues should be used for the intended
purposes in which it was collected.
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Decision Tree: Interagency Transaction
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Services vs.
Reimbursement
Decision Tree: Interagency
Transaction
• Has a service been provide?
• If yes, record a Cost
Recovery Revenue.
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Services vs.
Reimbursement (cont.)
Decision Tree: Interagency
Transaction
• If No service has been provided,
Abate against the original
expense, if in the current year.
• If the original expense was in
prior year (PY), use PY
Expenditure Adj 690002.
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Services vs. Reimbursement (cont.)
• Cost Recovery Revenue: When a good or service is
provided, the credit should be record to the appropriate
Cost Recovery Revenue object code.
• Abatement: Repayment from Fund B for a particular
expense when Fund A initially paid for them, the credit
should be recorded as an Abatement against fund A’s
original expenditure or prior year expenditure adj.
Ref: Legal Manual Chapter 29 – Section 3.9
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Scenario #1: Construction Expense
• Facilities plans to do a scheduled maintenance
lighting upgrade throughout the grounds on
campus. They determine that each unit; Housing,
Parking, Extended Ed and CSU Operating will
contribute $100,000 to the project.
• How should they record the pooling of these
resources and project expenditures?
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Scenario #1 Construction expense: Answer
101100 – SWIFT Cash
Main
fund
Parking*
EE*
CSU Op*
Housing*
$400,000
($100,000)
($100,000)
($100,000)
($100,000)
($400,000)
$100,000
$100,000
$100,000
$100,000
$400,000
$100,000
$100,000
$100,000
$100,000
607009-Capital Equipment
$15,000
607021-Capital-Design Other
$25,000
607033-Capital-Construction Other
$355,000
607037-Capital-Insurance
Premiums
607033-Capital-Construction
Other
Total Cost Per Program
$ 5,000
* Note: Funding from the other funds is based on campus’ determination
but should be based on a methodical hierarchical cash flow model (ex.
Interest Earnings loss) and only transferred as costs are incurred.
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Scenario #1 Construction expense: Answer
• Why?
• Cost are captured by Established CSU fees
(aka CSU fund) at the Natural classification (aka
the expenditure).
• It eliminates systemwide for both Legal and
GAAP reporting.
• SRB Financial Statements can more readily
report the activity to our bond holders by relying
on campus data.
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Scenario #2: Scholarship Expense
• Extended Education collects tuition fees for their
Spring courses. A portion of these fees the Dean
determines s/he wants to allocate towards a
scholarship program. After going through the
proper campus protocols and determining the
awardees it is time to issue the payments to the
students.
• What is the process to issue these awards to the
students and the related 1098Ts?
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Scenario #2: Scholarship Expense: Answer
• Expend the scholarship award directly out of the
Extended Ed Operating fund (CSU fund 441)
within FOC 609005-Other Student
Scholarships/Grants or more appropriate FOC.
• No transfer to the campus Financial aid fund.
• Cost are captured by CSU fund at the Natural
classification.
• SRB Financial Statements can more readily
report the activity to our bond holders by relying
on campus data.
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www.calstate.edu
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