Journal Entry Guidance

Contact: University Accountant

Types of Financial Transactions

Actuals: Transactions record revenues, expenses, assets or liabilities of the university. For example, paying a vendor for supplies, receiving tuition payments from students, or accruing a liability for unbilled goods. Or services that have been received. Frequently, these transactions are recorded to the General Ledger from subsidiary systems that accumulate the original entries (e.g. Payroll, Accounts Payable, BYU Store, Pcard, Physical Plant).

Obligations or Commitments: Transactions reflect purchases that have been ordered but not invoiced from the vendor, generally resulting from the issuance of a Purchase Requisition or Purchase Order. Obligations and Commitments are relieved as vendor invoices are received.

Budget: Transactions record the planned expenditures or planned revenues for a specific time period. Budget transactions are used primarily to show the amounts and categories authorized to be spent. Budget transactions also report available funds from prior periods that may be spent in the current accounting year (e.g. flexible budget, balance forward, encumbrance carryover).

All transactions reported in the General Ledger accounting system originate from:

• Campus subsidiary systems (e.g Payroll, BYU Store, Transact Payments, UCA Receivables, Accounts Payable)
• Campus or central accounting spreadsheet journal entries
• Automatic allocation journal entries calculated from balances in the ledger at month-end
• Budget adjustments

All campus activities are accounted for within Driver Worktags (Cost Centers, Activities, Gifts, Grants, and Projects). Driver Worktags segregate activities into their appropriate fund and program worktag. See the " Fund " section of this web page for a discussion of Fund codes.

Processing Guidelines for Journal Entries, Budget Adjustments, Deficits

Spreadsheet Journal Entries may be used to correct transaction coding errors originating from procurement transactions (e.g. Accounts Payable, Purchasing Card, BYU Store, Signature Card, Physical Facilities, OIT, Print & Mail Services), or other journal entries.

• Subsidiary System coding errors (e.g. Payroll) may require correction by those subsystems rather than through a spreadsheet journal entry - especially if the entry is recurring.
• Payroll error corrections that change tax withholding or W-2 wages, or the spend category a person was hired under must be processed through the Payroll Office. Simple reclassifications from one cost center to another, while retaining the same spend category, may be processed via a spreadsheet journal entry. For more information regarding payroll error corrections see knowledge base article "Salary and Wage Corrections/Transfers"

Budget Adjustments can be used to move funding within FD01 if expenses are properly coded and a deficit will result AND the deficit is to be resolved from another FD01 Driver Worktag. Budget Adjustments are either Temporary or Permanent.

• Permanent Budget adjustments are used when the situation is expected to occur each year.
• Temporary Budget Adjustments are made where the situation only applies to the current year.

Budget Allocations are used to fund for certain educational related and auxiliary activities (FD02) that have been specifically approved by the Church and the Budget Office to come from budgeted funds – Fund FD01 (e.g. cover use of buildings or salaries for activities that would otherwise have been included in the annual FD01 budget). Allocations of this type are recorded by debiting an ledger account/spend category in a central FD01 Cost Center and Crediting Ledger Account 4400/Revenue Category RC4402 Sale of services campus Appropriation in a Fund FD02 cost center. All other support is considered an appropriation allocation and Ledger Account 4000/Revenue Category RC4002: University Allocation is debited and credited in both the Fund FD01 and FD02 Cost Centers. No campus entities should use revenue category RC4402 and RC4002 unless previously approved to do so by the Budget Office.

Deficits or Losses generally must be resolved by obtaining funding from other sources with the following exceptions:

• Fund FD01 deficits can occur for a Cost Center in total, or for any one of 4 expense pools (below). Fund FD01 deficits in total or by expense pool will result in an over-expenditure reduction in the following budget year, thus limiting the available resources for that year. The total budget in the pool is compared to the total expenditures in the pool. IF the pool has a positive balance available, then no over-expenditure reduction is made to that pool. If the balance available in the pool is negative, the deficit amount is taken out of the budget for next year

  • Equipment (Ledger 1625, Spend Category SC6907)
  • Access Equipment (Ledger Account 6900, Spend Category SC6905)
  • Software (Ledger Account 6900, Spend Category SC6933)
  • All Other Accounts - salaries, supplies, student aid, travel and annual flexible budget, budget unallocated and research carryover.

If funding is to be obtained from another cost center to resolve deficits or losses, care must be taken to assure the purpose restriction for that source is consistent with the expenses incurred in the deficit Cost Center. This is particularly important because it may be necessary to demonstrate to donors, management or the administration that expenditures can properly be associated with the funding provided to the deficit Cost Center.

To enhance the management of expenses incurred, where initial transactions have been coded properly, it is generally best to move support to the expense rather than moving expenses to available support. This may be done by moving dollar amounts equal to specific expenses or round dollar amounts that are supported by at least that level of actual expense in the deficit cost center. Movement of support should not occur unless there are deficits.

Entries to move funding support to resolve deficits should identify the offsetting cost center in the Memo field of the journal entry.

For example:

To transfer support to resolve Dept X deficit

When moving support from a Fund FD01 Cost Center to another Cost Center, the dollars moved from the Fund FD01 expense category (e.g. supplies or travel) must not be more than the actual expenses in the receiving cost center and the purposes of both cost centers must be consistent.

There are three options to move support to cover deficits:

• · Use the Spend Category (reclass) to keep individual regular spend categories pure in both the providing and receiving Driver Worktag. In this approach use the reclass spend categories to record an expense debit in the Driver Worktag that will provide the support and a credit to a corresponding same reclass spend category in the deficit Driver Worktag. Revenue spend categories (RCXXXX) should never be used for providing this funding. This option retains the original entries in the regular expense spend category. This approach is preferred where a fund FD01 Driver Worktag is “selling their services or supplies to another Cost Center. Desired exceptions should be discussed with Financial Services.
• Use the same account numbers for debit/credit amounts on both sides of the transaction. This allows greater granularity of account presentation where it is deemed necessary (e.g. the balances in individual wages, supplies and travel accounts will be displayed net of the support transactions)
• · Funds transfers (Ledger Account 9250) keep the spend categories pure in both the providing and receiving Driver Worktag. Fund Transfer may never be used with Awards/Grants (AWXXXXX or GRXXXXX) or Projects (PJXXXXX) or driver worktags in funds FD01, FD03, FD2x (contact General Account (or Regulatory Accounting for FD2x) regarding these funds). Funds may not be transferred out of a Fund FD04 driver worktag without the approval of the Budget Office. Funds can be transferred into Fund FD04 from FD02, FD03, and FD2x using the 9250-ledger account. For more information regarding the Fund FD04 rules contact General Accounting.
  Fund 20 Rules.

Projects: Projects (PJXXXXXXXXX) must account for specific expenditures. Construction projects may not receive 9250 funds transfers.

Use of RCXXXX Revenue Categories: When products or services are sold, campus units should properly assign sales to either Sales or Sales-Taxable.

• Sales-Campus Units means that products or services are sold from one BYU department to another BYU department
• Sales-Off Campus Units means that products or services are sold to students, faculty, or other non-BYU customers
• Sales-Taxable means that products or services are taxable when sold from one BYU department to students, or other non-BYU department customers

Agency Driver Worktags (Fund FD07) These are not owned by the University. Thus, no budget adjustments, funds transfers or journal entries should be processed on their behalf.

• The ONLY transactions that should occur for the Agency Driver Worktags are cash receipts at the Cashier’s Office and Agency Driver Worktag check payments by the Managers. Other situations requiring entries should be discussed with your University Accountant.
• · There should be no purchase orders, purchasing card transactions, direct billings, (etc.) issued on behalf of an Agency driver worktag.

Options When Operating Unit is Overspent

Last Modified: December 27, 2024