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Section 1_ Accounting Adjustments


									Section 1: Accounting Adjustments
Cost Transfers A cost transfer can be used to correct accounting errors, make accounting adjustments or distribute costs recorded in a carrier account to the benefiting activity. Cost transfers are also used to distribute costs that typically originate from the Integrated Facilities System (IFS) to charge customers for facilities engineering support. This type of cost transfer can occur only in unexpired funds. It involves moving the commitment, obligation, accrual, and disbursement. It must be within the same basic symbol, fiscal year, and allotment. It must utilize an EOR in the 2700 series and cannot occur prior to the disbursement being made. All cost transfers must net to zero within each fund type of an activity and at the end of month. Cost transfers that correct accounting errors associated with EOR or APC data elements do not require a SF 1081. Cost transfers that involve changes to the department code, fiscal year, basic symbol, limitation OR fiscal station number require a SF 1081 (Voucher and Schedule of Withdrawals and Credits) unless the disbursement being moved is within the month of occurrence. Reason being that NO treasury reporting has occurred yet. Resource Managers must: (1) Determine that the cost transfer is necessary. (2) Process cost transfers only when the obligation, accrual and disbursement are equal. (3) Determine the dollar amount and the to and from accounts for the transfer. (4) Ensure that the cost transfer does not create a credit balance at the appropriation level and that all cost transfers net to zero. (5) Process the cost transfer through dbCAS unless the transfer involves a payroll EOR and associated man-hour data. For payroll related transfers, send a TL to DFAS-Rome for manual processing using DFAS-Rome Accounting Form 005. (6) Prepare a SF 1081 for cost transfers requiring a SF 1081 and forward it to DFASRome for processing. Resource Managers cannot process a SF 1081 into the accounting system. DFAS-Rome will: (1) Ensure that the cost transfer does not create a credit balance at the appropriation level and that all cost transfers net to zero.

(2) Process the cost transfer in the accounting system when the Resource Manager did not process the cost transfer electronically through dbCAS. (3) Prepare and process a SF 1081 for cost transfers requiring a SF 1081 when the Resource Manager did not provide the SF 1081. (4) Process cost transfer requests from the Resource Manager within two workdays following receipt. (5) Monitor compliance and work closely with customers to ensure the accuracy and timeliness of cost transfer processing. Journal Vouchers (JVs) The DoDFMR, Volume 6a, Chapter 2, Paragraph 020208 provides detailed guidance on the preparation and processing of journal vouchers (JVs) and approval thresholds. Proper preparation of and adequate support for JVs is important to ensure they accurately record a financial event and that documentation for a detailed audit trail exists. If a request for a JV entry is not supported by accurate or proper documentation that justifies why the adjustment is required, it shall be returned to the person submitting the request with an indication of what additional info is required to process it, along with any applicable guidance. Per DFAS-IN Accounting Policy Message 05-18, DFAS accounting activities are required to prepare JVs for adjustments as a result of audit findings and those affecting only general ledger accounts (e.g., accrued annual leave, plant property and equipment). JVs are NOT required for system generated transactions (e.g., STANFINS FAC 4-8) or for adjustments made to correct accounting system input errors. Operational internal controls shall be in place to ensure the proper recording of JVs. These controls shall be in place whether JVs are prepared manually or generated by an automated system. The guidance below identifies specific areas that need added emphasis with respect to JV preparation and processing. (1) All JVs will be sequentially numbered by reporting unit. Each accounting activity or central site will maintain either a manual or electronic JV control log to maintain the integrity of JV entries. The control log must contain at a minimum, the reason code, dollar amount of the JV, date, JV number and any additional information deemed necessary. (2) Documentation shall adequately support the validity and amount of the JV transaction and be sufficient for the approving official and others, such as auditors, to clearly understand the reason for preparing the JV and be able to tell it is proper and accurate. Supporting documentation should be attached to the JV whenever possible and the dollar amount(s) on the JV shall be clearly and readily identifiable within the

documentation. If it is not practical to attach the supporting documentation, the JV must include a clear description of the precise location of such documentation. (3) All JVs will be maintained in a central location in either a hard copy or electronic format and retained in accordance with records retention guidance (normally 6 years 3 months after the appropriation expires). (4) Include a relevant reason as described in the DoDFMR, Volume 6A, Chapter 2, paragraph 020208.D.1. It is permissible to prepare one JV for a single adjustment or to include multiple adjustments on a single JV. However, there must be a single relevant reason that applies to all adjustments on that JV. (Avoid using acronyms in the description.) (5) The person who prepared the JV can not also approve the JV. (6) DFAS field site directors must ensure that selected JVs are reviewed on a periodic basis, that results of review are documented, and that training is provided on the usage and preparation of JVs. Field site directors may delegate this responsibility. Accruals DFAS-Rome uses an automated accrual program (F Card) within the database Accounting and Reconciliation System (dARS) to automatically create/adjust accruals based on the EOR. Any non-dARS accrual adjustments must be coordinated with DFAS-Rome. For EORs equal to 1###, 21##, 22## and 23##, the accruals should match the obligation. These EORs should be obligated with TA 21 with the exception of stand alone disbursements posted to EOR 13UT (MEDCOM Italian Severance Pay). For EORs not equal to 1###, 21##, 22## or 23## the accruals should match the disbursement. These items should be obligated with TA 23. EORs 46## or 41## should never have an accrual posted. There should be no difference for reimbursable items vs. non-reimbursable items. The accrual should be posted based on the object classification. This ensures proper posting of the accounts payable to the General Ledger. Budget activities must forward proposed interfund supply adjustments associated with EORs 26## and 31## to DFAS-Rome prior to processing. Obligations DFAS-Rome processes automatic adjustments to obligations daily to match disbursements based on DODFMR requirements and DFAS-Rome/customer Accounting Input Agreements. When DFAS has the obligating document and the UMD or NULO is $2,500 or less, DFAS-Rome will obligate immediately using an „I‟ block and notify the fund holder of the action taken. If the UMD or NULO exceeds $2,500 and DFAS has the obligating document, DFASRome will immediately provide the fund holder with a brief explanation of the validity of the

disbursement (to include determining whether or not the payment is a duplicate or an overpayment) and request that the fund holder record an obligation or obligation adjustment within 10 calendar days of notice. If the fund holder does not request additional information or record the obligation within 10 calendar days, then DFAS-Rome will record the obligation using an „I‟ block on the 10th day and notify the fund holder of the action taken. When the UMD or NULO exceeds $2,500 and DFAS does not have the obligating document, DFAS-Rome will immediately inform the fund holder of the UMD or NULO and request that the fund holder either record an obligation or obligation adjustment within 10 calendar days of notice. If the fund holder does not record an obligation or identify that they are not accountable for the obligation within the 10 calendar days, DFAS-Rome will record the obligation on the 10th day using an „I‟ block and notify the fund holder of the action taken. (Reference: DoDFMR, Volume 3, Chapter 8, Section 081207, Simultaneous Disbursement and Obligation, which states “if a disbursement has been made, or about to be made without related obligation previously having been recorded, an obligation shall be recorded immediately in the amount of the disbursement. Disbursement documents in payment of obligations not previously recorded shall be used to record the transaction as an accrued expenditure with a corresponding decrease in the uncommitted and/or unobligated balance of the affected allotment.”) Notwithstanding the 10-day rule, obligations of $100,000 or more – per fund citation or accounting line on the obligation document – shall be recorded and included in the official accounting records in the same month in which the obligation is incurred. If an obligation is not recorded within the specified timeframe, the guidance in the DoDFMR, Volume 3, Chapter 8, Section 0814, Unrecorded Obligations, shall be followed. This guidance provides for the accounting office to forward the fund holder a copy of the obligating document(s) and allows the fund holder 10 calendar days to either record the obligation or demonstrate that it is not accountable for the obligation. If either of these actions is not taken by the fund holder within the 10 calendar days, the accounting office shall record the obligation on behalf of the fund holder and notify them accordingly. Budget Offices should input obligations and/or obligation adjustments using either the database Accounting and Reconciliation System (dARS) or the database Commitment Accounting System (dbCAS). Obligation adjustment in dARS must be on an existing record in the LXG file. A new record should not be created in the LXG file in dARS. Obligations should not be recorded against AMS 9966, suspense (budget clearing) or deposit fund account, or EOR 41## and 46## (exceptions are EORs 4150 and 4601) transactions.

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