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Correcting Entry vs Cost Transfer

There can be some confusion as to when to use a Correcting Entry Request, Cost Transfer Request or a Journal Voucher form.

 Correcting Entry Request

A correcting entry is a journal entry that is made in order to fix an erroneous transaction that had previously been recorded in the general ledger (PeopleSoft Finance).

For example, the wrong fund number was mistakenly used on a previous IB (Interdepartmental Billing) form from the Bookstore.  The wrong fund number was written on the IB form, the error was not intentional. 

Correcting Entries can correct previous errors on the following:

Interdepartmental Billing form(s)

Cash Transfer Request form(s)

Cost Transfer Request form(s)

Correcting Entry Request form(s)

OR other journal entries like FAMIS1/FAMIS2, CATERING, TELECOM/IT, etc…

What if the error was done on an Accounts Payable Voucher, Travel Expense Voucher or online Voucher entry?   A Journal Voucher form would need to be completed. 

A Correcting Entry is not an entry to correct a budget.  In other words, if a transaction was coded to a fund that now needs to be moved because of budget balances in that fund, it is not a correcting entry.  The original transaction was intentionally charged to the original fund, it was not a mistake. 

A Correcting Entry is not an entry to move an expense where default funding was used, like the JP Morgan Card. The intent was to use the default funding, only to re-allocate it later. This would be a Cost Transfer.

A Correcting Entry is not an entry to move an expense where another department(s) will be sharing the cost.  The intent was to use the original funding with or without the immediate knowledge that another department(s) will be sharing in the expense.  This would be a Cost Transfer.

On the form, in the section labeled Details of the Correcting Entry, using the words “it should have been charged to____” or “wrong fund used”, would indicate that the entry is a Correcting Entry.

 Cost Transfer Request

A cost transfer is an after-the-fact transfer of costs.  When one fund has incurred an expense that will then be re-allocated to another fund(s).

For example, if an invoice for lab supplies was paid to one fund, but later needs to be split out between different departments and their funding, this would be considered a Cost Transfer.

Cost Transfers can reference prior:

Accounts Payable Vouchers

Travel Expense Vouchers

Vouchers entered online by a department

Interdepartmental Billing form(s)

Correcting Entry Request form(s)

OR other journal entries like FAMIS1/FAMIS2, CATERING, TELECOM/IT, etc…

 

Cost Transfer transactions would not affect the account code(s) used on prior transactions.  It would only affect the original funding used (fund/department/program/project), moving the costs from one funding to another. 

A Cost Transfer is an entry to move an expense where default funding was used, like the JP Morgan Card.

A Cost Transfer is an entry to move an expense where another department(s) will be sharing the cost. 

When filling out these forms, please be sure to give a very descriptive statement as to the purpose of the entry.  The descriptions should answer the questions of who, what, where, why and when. This is an important step in the auditing process, not only for NDSU, but also to satisfy the auditor requests when they are pulling samples for review.  The Instructions link within the forms provides examples to use as templates in describing the purpose of the entry.

 

Information on all internal accounting forms can be found at: http://www.ndsu.edu/accounting/ap/paymethods/accounting_forms/


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North Dakota State University
ACCOUNTING

Phone: +1 (701) 231-7432 / Fax: (701) 231-6194
Campus address: Old Main 11
Physical/delivery address: 1340 Administration Ave, Fargo, ND 58102
Mailing address: NDSU Dept. 3100 / PO Box 6050 / Fargo, ND 58108-6050
Page manager: Accounting