Definition
An Accounting Adjustment is (GIM 15 – Transfer of Expenditures Between Budgets):
- Moving an expense from one worktag to another.
- Moving an expense from one spend category to another.
- Correcting other transaction coding errors (e.g., PCA codes).
An Accounting Adjustment should only be done for the following reasons:
- To correct an erroneous charge to an incorrect worktag or spend category.
- To correct an error when the value of the transaction is greater than $10.00.
- To re-allocate expenses where the expense can only be initially coded to one or a few worktags.
An Accounting Adjustmnet is NOT a Financial Management tool to be used to:
- Move costs for budgetary convenience.
- Temporarily post costs on a sponsored award line until a new award line becomes available (use a non-sponsored worktag or request an Advance Award line).
Best Practices to Avoid Accounting Adjustments
- Ensure there are good Internal Controls for coding of expenditures.
- Reconcile worktags in a timely manner.
- Review the Award and applicable regulations to ensure all costs are allowable.
- Ensure that costs allocated across more than one award are treated consistently with other allocated costs.
- Monitor Award lines to ensure funds are expended in accordance with the award.
- Monitor Award lines to track expenditures and available funds.
Best Practices for Accounting Adjustment Documentation
All documentation of Accounting Adjustments should include the following information:
- Why the error occurred and which internal control broke down.
- Steps the department is taking to ensure the error will not happen again.
- The tangible benefit to the recipient worktag.