B-3. Administration of Budgets
Although the fiscal officer bears the fiduciary responsibility for the account, the administration of a department budget is the responsibility of the account manager, and each account manager is charged with maintaining budget integrity through the fiscal period. If required, account managers must take corrective action to ensure that the operations of the department will be conducted within the funding level approved.
Procedures and Operating Principles
- The fiscal year runs from July 1 – June 30. Operating budgets are distributed in July. The Departmental Workpaper Report shows the July 1 approved budget compared to the prior year budget.
- Accounts may not exceed their budgeted amounts within the fiscal year. Account managers will be required to develop a plan with the account fiscal officer to bring the account in balance before the closing of the fiscal year or to carry forward the over-expenditures to the next fiscal year.
- All auxiliary and self-funded other designated fund group accounts must keep an up-to-date a five-year pro forma worksheet with forward-looking projections to use for long-term planning, pricing, and other financial decisions.
- Unused general fund balances do not carry forward to the next fiscal year. Unused funds are transferred to campus reserves at year-end and are used to fund future "planned use of reserves."
- A monthly reconciliation process is required for all departments at the IU Southeast campus.
- Receipts/documentation must be kept for all expenditures and revenues.
- All cash receipt documents must be accompanied with proof of sales documentation at time of deposit to the Office of the Bursar. Contact Accounting Services for assistance at extension 2216.
- All budget documentation must be kept on file for seven fiscal years plus the current fiscal year.
- Use of funds must conform to all IU financial policies found on the Financial Management Services (FMS) web site.
- The Kuali Financial System (KFS) is used for account transactions and account monitoring. Passwords and access are needed (contact ITor Accounting Services). IfKFS training is needed, contact Accounting Services.
- Indiana University Information Environment (IUIE), accessible via one.iu.edu, is used for all financial reporting. Monthly operating statements should be run and saved from the IUIE (available first of month – notification comes by e-mail) and account transactions should be reconciled by the account manager, or delegate, on a monthly basis at minimum. Each expenditure and revenue transaction must be accounted for with receipts or other appropriate documentation. Contact the fiscal officer in Accounting Services, or appropriate office vendor, when discrepancies are found.
- Expenses should be charged to the correct object code; this reflects the type of expenditure and helps with identifying the department’s true needs and utilization of funds.
- Funds can be transferred within a fiscal year from “like” object codes, e.g., office supplies & expendable equipment (4100) and (5200). Funds cannot be transferred between campus-managed compensation and department-managed non-compensation object codes. Base fund adjustments (permanent reallocations) should be requested at budget hearing time.
- Corrections, as needed, can be made from one account to another (consult with Accounting Services).
- Fiscal approval (VC/fiscal officer) is required to move salary funds out of an appropriated object code.
- Gift expenditures of any kind cannot be made out of university funds.
- Please see the Sponsorship Policy memo for IU’s current policy regarding sponsorship revenue and expenses.
- Departments should develop internal procedures for travel requests and approvals. Fiscal officers approve all travel transactions in Chrome River; see the Travel Management Services website for travel assistance
- Purchasing guidelines should be followed on use of disbursement vouchers, procurement cards, and KFS purchase requisitions. Please see university policy FIN-PURCH-02.
- All procurement card receipts must be submitted in Chrome River (found on one.iu.edu) as each transaction is reconciled and posted to the general ledger. The monthly procurement card statement should be kept on file with receipts for audit records. Contact Accounting Services for assistance with this process.
- A requisition must be initiated to create a purchase order before a good or service is delivered to the campus. After-the-fact purchase orders are a violation of IU policy. For purchasing assistance, contact the fiscal officer in Accounting Services.
- The competitive bid process must be executed on all purchases over $10,000.
- Internal controls – segregation of duties should be maintained if possible when receiving revenue or expending university funds. Contact Accounting Services for evaluation of internal control procedures.
- Hospitality purchases must comply with IU policy – see FIN-ACC-50. For assistance, contact Accounting Services.
- Follow IU Foundation guidelines for IU Foundation expenditures. For assistance, contact the Office of Development at extension 2464.
The budgeting of funds and the recording of transactions are made by use of income and expenditure object codes. For a current object code listing, please see the Accounting Services website and click on “Official Object Code List”.
Account numbers are seven digits in length. The first two digits denote the type of account as summarized below:
Unrestricted General Funds (accounts beginning in 01 – 24)
03 – IU East
05 – IU Kokomo
06 – IU Northwest
07 – IU South Bend
08 – IU Southeast
10 – IU Bloomington
12 – IUPUI
19 – IU President’s Office
Unrestricted Designated Funds
20 – Continuing Education
21 – Public Service
22 – Faculty Research
23 – Other Designated Funds
24 – Scholarship and Fellowships
20 – Scholarships
26 – Fellowships
27 – Special State Appropriations
29 – Other Restricted Accounts
40 to 59 – Sponsored Programs
60, 62, and 65 – Auxiliary Enterprises
63 to 66 – Service Accounts
70 to 99 – Specialty Accounts
Financial Document Definitions
The following electronic KFS documents have been developed to reallocate and expend account funds:
Budget Adjustment: The budget adjustment (BA) document in KFS is used to establish income and expense lines to provide a means to spend funds and receive income on a budgeted account. It can also be used to increase income and/or expense lines on a base budget to indicate an anticipated change in the budget construction process for the following year, on a current budget to indicate anticipated activity in the current year, or both.
A new budget will be created when a new account has been established during the operating year, or when an existing account that did not have a July 1 budget is receiving funding from another source. Budget adjustment documents are made to adjust the base budget when a change in income or expense is anticipated to be ongoing or to adjust the current budget when a change in income or expense is anticipated to be for the current operating year. A budget adjustment is used for an adjustment from one general fund account to another, from one object code to another, and to/from a sub account within a general fund account.
Each account manager’s or delegate’s approval is required for a budget adjustment. Additional approvals may be established within the review hierarchy. For assistance with completing this document, contact Accounting Services or utilize the KFS Support Documentation for individual documents on the FMS website.
Transfer of Funds: The transfer of funds (TF) document in KFS is used to transfer funds (cash) between accounts. The TF could be used to cover an overdraft, reimburse an account for an expense, or to fulfill a funding commitment.
There are two kinds of transfer transactions, mandatory and non-mandatory. Mandatory transfers are required to meet contractual agreements. Non-mandatory transfers are allocations of unrestricted cash between fund groups (e.g., from 08 account to 22 account) which are not required either by the terms of a loan or by other external agreements.
Each account manager’s or delegate’s approval is required for a transfer of funds. Additional approvals may be established within the review hierarchy. For assistance with completing this document, contact Accounting Services or utilize the KFS Support Documentation for individual documents on the FMS website.
General Accounting Adjustment: The general accounting adjustment (GEC) document in KFS is available to adjust accounting string data for transactions. The GEC can be used to correct inappropriate or incorrect account numbers or object codes in the general ledger entry originally processed in KFS. This document identifies specific transactions and changes to the general ledger. By consistently referencing the details of each transaction, the GEC preserves and maintains the audit trail.
Each account manager’s or delegate’s approval is required for a GEC. Additional approvals may be established within the review hierarchy. For assistance with completing this document, contact Accounting Services or utilize the KFS Support Documentation for individual documents on the FMS website.
Disbursement Voucher: The disbursement voucher (DV) document is used to reimburse employees and non-employees for expenses incurred while conducting university business and to pay other vendors for performing a service, or providing material goods for the university. Most often this payment is in the form of a check although direct deposit and wire transfer options may be available. Employees are encouraged to complete ACH authorization through FMS Accounts Payable to benefit direct deposit receipt of reimbursements.
The disbursement voucher may be used in situations in which a payment is not processed through another procurement method, such as purchase order or procurement card. The disbursement voucher can only be used for a one-time payment. It cannot be used to pay installment payments. The limit on all DV categories is $5,000, except compensations for services which is limited to $1,000.
The following is a list of categories where a disbursement voucher may be used:
- Claims and Settlements or Tax Payments (e.g., insurance and worker’s comp)
- Compensations for Services
- Compensation in Respect to Decedent
- Medical, Health Care, or Insurance Payment
- Payment to Research Participant
- Payments for Contractual Agreements
- Prizes and/or Awards
- Refund/Prepayment to Individual or Agency
- Reimbursement for “Out of Pocket” Expenses
- Rental Payment
- Revolving Fund Reimbursements
- Subscriptions, Books, Fees, Resale
- Utilities, Freight, and Postage
The following are some instances where a disbursement voucher cannot be used:
- Travel for a non-employee
- Moving expense Reimbursement
- To reimburse an IU employee for personal services, with the exception of subject payments (using the payment reason “Payment to Research Participant)”.
- To pay university departments. The appropriate document in the FIS would an Internal Billing (IB) document.
- To pay for capital equipment. Contact the Office of Procurement Services for this type of payment.
- To pay for software upgrades. Contact the Office of Procurement Services for this type of payment.