Skip to main content

Prerequisites

Prior to reading the standard on Transfer of Funds, it is beneficial to review the below sections to gain foundational information:

  1. Accounting Fundamentals Section
  2. Chart of Accounts and General Ledger Section
  3. Financial Statements Section

Preface

This standard discusses elements of the Transfer of Funds document and how it is used internally within Indiana University. Information presented below will walk through a general understanding of the document, including how it looks and how to use it, and lastly will specify requirements and best practices for users of the document.


Introduction

A Transfer of Funds (TF) document is used to move cash between accounts. Transactions between internal departments should use a TF document unless when billing for goods or services in excess of $100,000. The Transfer of Funds document is often used to cover an overdraft, reimburse an account for an expense incurred, provide a subsidy, transfer funds to close an account, fulfill a funding commitment, or to bill for goods and services in aggregate of $100,000 or less. Below are several common examples of transfers at the university:

  1. Monthly administrative charges, budget allotments, university tax and intercampus transfers
  2. Recharge Accounting - Reimbursement of depreciation
  3. Subsidies
  4. Transfers from operating accounts to renewal and replacement accounts
  5. Recording an interdepartmental sale of capital equipment- This is done in conjunction with the asset transfer document
  6. Additions to loan funds and quasi-endowment funds
  7. Accruing a cash transfer from a previous month
  8. Lifecycle funding
  9. Matching the commitments and faculty endowment matches (FEMP)
  10. Transferring funds to close out accounts (for Contract & Grant accounts, this would include residual balances and overdrafts)
  11. Moving cash from departmental accounts to Contract & Grants (C&G) “Cost Share” subaccounts to cover expenditures that occur within those subaccounts
  12. Debt related transfers (i.e., debt funding, dedicated fee transfer, bond expenses)
  13. Accounts with internal activity under $100,000 will NOT be permitted to use internal billings, service billings and/or ID billings without prior approval from the Chief Accountant or Controller, however, a Transfer of Funds document can be initiated to complete the transaction between university accounts

Importance and Impact of Transfer of Funds

Accuracy and the proper use of Transfer of Funds documents are important in ensuring cash balances are correct at account, organization, RC, and campus levels. Inaccurate cash positions can affect account and RC fiscal officer’s decision making. For example, if cash is overstated, a fiscal officer may make cash commitments which they cannot fulfill.

Misuse of Transfer of Funds can also lead to compliance issues. For example, there are many cost accounting restrictions dealing with transfers of recharge/service center accounts. One such restriction is if cash is transferred into a service center account, it may not be transferred out. If a transfer is made in error, it can have a major impact on a service center’s rates and their ability to bill other Indiana University accounts.


Transfer of Funds

There are two kinds of transfers, mandatory and non-mandatory. Mandatory transfers are required to meet contractual agreements. Specific object codes are used to identify these transactions. An example of this type of transfer is moving dedicated student fees to the retirement of indebtedness sub-fund group for principal and interest payments on bonds.

Non-mandatory transfers are allocations of unrestricted cash between entities, which are not required by contractual agreements. An example of a non-mandatory transfer would be if a dean makes a commitment to give a department $500 in support of a mission without expecting reimbursement. Non-mandatory transfers are most commonly used and include:

  • Non-mandatory additions to loan funds
  • Additions to quasi-endowment funds
  • Non-mandatory transfers to plant funds for:
    • General or specific plant additions
    • Renewals and replacements of plant assets
    • Voluntary payments of debt principal
  • Commitments from a campus to subsidize an organization’s operations
  • Cover an overdraft
  • Transfer funds to close out an account
  • Reimbursement for goods or services when billing department is not eligible to use Internal Billing or Service Billing documents

Embedded Rules for the TF Document

  • There must be at least one accounting line in the From section and one accounting line in the To section
  • The total in the From line(s) must equal the total in the To line(s) the Accounting Lines tab
  • $0 balances are not allowed in the amount section of the TF document
  • Negative amounts are not allowed (unless it is an Error Correction TF)
  • KFS automatically generates cash object code offset entries as defined by the information entered into the document.
  • Only transfer object codes are allowed to be used on Transfer of Funds documents. A list of transfer object codes is provided further down the page.
  • The two object sub-types available to be used on Transfer of Funds documents must balance independently. They are Mandatory Transfer (MT) and Non-Mandatory Transfer (NT)
  • The following transactions are unallowable on Transfer of Funds documents:
    1. Transfers between clearing fund accounts (68-XX-XXX) and university funds
    2. Transfers between agency fund accounts (97-XX-XXX) and university funds
    3. Transfers between restricted and non-restricted funds
  • There are additional compliance rules associated with Recharge Accounting. These can be found in the Recharge Accounting section.

Object and Sub-Object Code Usage for Transfer of Funds Documents

Only specific object codes may be used on a Transfer of Funds document. The majority of non-mandatory transfer object codes are within the range 9900 – 9999. Non-mandatory transfers have an object sub type of “TN”. Mandatory transfer object codes are used by a select group at Indiana University and should not be available for general use. Mandatory transfer object codes have an object sub type of “MT”.

Due to the limited number of transfer object codes available, tracking can be difficult. If a greater order of granularity is required for an entity’s needs, sub-object codes can be implemented at the account level. This will allow an entity to have separate buckets for specific transfers and will be broken out on financial statements at the object code level.

Along with mandatory/non-mandatory classifications of object codes, there are also certain transfer object codes that hit the fund balance section of the balance sheet and some that flow through the income statement. Below are tables of all transfer object codes separated by this distinction.

The following transfer object codes will appear in the income statement and fund balance section respectively:

Object Code Object Code Name Object Sub-Type Example Usage
9903 Indirect Cost Income TN Transfer of residual amounts and overdraft coverage
9912 Administrative Charge Income TN Monthly administrative charges between fund groups
9916 Transfer In - Revenue TN Recording of 'revenue' for the sale of goods or services - typically used when estimated internal activity is less than $100,000/year
9918 Budget Allotment Income TN Monthly budget allotments between fund groups; monthly University Tax
9919 Transfer In Accrual TA Accruing a transfer in of cash from previous period (only used on Accrual Vouchers)
9920 Transfer of Funds - Acad Salary TN auto-generated cost share entries and HR transfers
9923 Transfer of Funds - Acad Assist TN auto-generated cost share entries
9924 Transfer of Funds - Prof Salary TN auto-generated cost share entries and HR transfers
9925 Transfer of Funds - Cler Salary TN auto-generated cost share entries
9930 Transfer of Funds - Wages TN auto-generated cost share entries
9940 Transfer of Funds - Sup & Exp TN auto-generated cost share entries and lifecycle funding
9951 Administrative Charge Expense TN Monthly intercampus transfers (budget office); monthly administrative charges within units
9952 Admin Charge - Campus TN Monthly administrative charges
9953 Admin Charge - Unit Admin TN Monthly University Tax
9954 Transfer of Funds - Fee Rem TN auto-generated cost share entries
9955 Transfer of Funds - Indirect Cost TN Transfer of residual amounts and overdraft coverage
9956 Transfer of Funds - Fringe Benf TN auto-generated cost share entries
9957 Transfer of Funds - Retirement TN auto-generated cost share entries
9958 Transfer of Funds - Fell & Scho TN auto-generated cost share entries and Matching the Promise Campus Match
9959 Transfer Out 20% Reallocation TN auto-generated cost share entries
9960 Transfer of Funds - Travel TN auto-generated cost share entries
9966 Transfer In - Expense TN Recording of 'expense' for goods or services
9977 Budget Allotment Expense TN Monthly intercampus transfers (budget office); monthly University Tax
9978 Transfer Out Accrual TA Accruing a transfer out of cash from previous period

Object Code Object Code Name Object Sub-Type Example Usage
1663 Plant Transfer Income TN Transfer book value of assets from one plant fund account to another
1697 Mandatory Trnsf/ Principle/Int MT Debt funding - used by Treasury only
1698 Mandatory Trnsf Ded Student Fees MT Dedicated fee transfer for bonds - used by Treasury only
1699 Transfer In TN Bond expenses (Treasury); EOY account adjustments for State of Indiana CG funds
9915 Transfer of Funds TN One-time subsidies and departmental commitments
5163 Plant Transfer Expense TN Transfer book value of assets from one plant fund account to another
5197 Mandatory Trnsfr Principal/Int MT Debt funding - used by Treasury only
5198 Mandatory Trnsfr Dedicated Stud Fees MT Dedicated fee transfer for bonds - used by Treasury only
5199 Transfer Out TN Bond expenses - used by Treasury only
9900 Transfer Out TN One-time subsidies and departmental commitments
9970 Transfer of Funds - Capital TN To record the indepartmental sale of capital equipment. (This is done in conjunction with an asset transfer document.)
9979 Transfer of Funds - Unapp Bal TN Faculty Endowment (FEMP) matches, overdraft coverage

For a more comprehensive Excel version of these object codes, refer to the Summary of Transfer Object Codes.

Additional Restrictions for Recharge/Service Center Accounts

Transfers In: A recharge/service center 66 account can receive a subsidy through a Transfer of Funds document to help cover expenses, however, any excess subsidy will not be allowed to be transferred out of that 66 account. Once funds have been transferred into a recharge/service center 66 account, they cannot be transferred out for any reason other than what is cited below in the Transfers Out section.

Transfers Out: With the exception of a transfer out of depreciation to the dedicated renewal and replacement 92 account, transfers out of a recharge/service 66 account are not allowed.

As a best practice, if a recharge unit chooses to fund depreciation (reimburse expense) the units that have capital assets should annually transfer out cash in the amount equal to or less than their depreciation expense. This transaction is conducted using a Transfer of Funds document from the 66 account to the 92 account and the intent is to fund future capital purchases.

Please include a detailed description on the KFS Transfer of Funds document that includes the depreciation period (i.e. “Transferring depreciation expense for FY 2015”).

Recharge/service center units that have debt service should contact recharge accounting regarding Transfers of Funds.


Where is the Transfer of Funds Document Located?

See below for instructions on how to locate the Transfer of Funds document.

Transfer of Funds documents are located in Kuali Financial System (KFS), which can be found in One.IU. Search for “Kuali Financial System” and select Kuali Financial System (Authorized Users). Mark this app as a favorite by clicking the heart icon next to the start button. Select Start.

Screen displays the One.IU page

Once in the Kuali Financial System (KFS), users will see all available tiles. Navigate to the Financial Processing Module.

The tile expands, which displays all financial processing options. Selecting Transfer of Funds will generate a new Transfer of Funds document and take you to the document.

Once in the document, users will see that it is comprised of only the standard financial transaction document tabs and does not have any unique tabs of its own. Below is an example of a new Transfer of Funds document.


Requirements and Best Practices

Requirements

  1. Review and become familiar with the material on this page; as well as, the reference material prior to completing a Transfer of Funds document.
  2. Ensure supporting documentation for each document is adequate, prior to approving. For further information on the substantiation of Transfer of Funds documents, refer to the individual Financial Statement sections.

Quarterly Activities:

  1. Fiscal officers should review transfers to and from their accounts on a quarterly basis, at a minimum, to ensure accuracy of data.

Annual Activities:

  1. During year-end close, fiscal officers should review all transfers to and from their accounts and make any necessary corrections during the year-end close period. Also, any transfers intended to post in the current year must be submitted on a Year-End Distribution of Transfer of Funds (YETF) document. Please refer to individual financial statement sections for more information.

Best Practices

  1. Fiscal officers should review transfers to and from their accounts on a monthly basis to ensure accuracy of data.
  2. Monitor the Transfer of Funds document. Users should stay up to date with any potential changes to the document and its requirements.