The purpose of a "transfer" is to either reallocate financial resources amongst funds or to ensure expenditures are recorded in the correct fund. This is accomplished by one of four methods:

• Budget transfer (see Budgeting at McGill section)
• Expenditure transfer
• Prior-Year Expenditure transfer
• Fund transfer

Expenditure Transfers

The purpose of expenditure transfers is to properly attribute costs to a fund. Whenever possible, a transfer should be avoided by charging expenditures to the correct fund(s) when source documents are initially prepared (e.g., purchase order, appointment form, etc.).

It is recognized however that in some instances the transfer of specific expenditure(s) from one fund to another is unavoidable. To fulfill audit requirements and adhere to the generally accepted rules of accounting, the transfer must meet the following conditions to be acceptable:

1. As an overriding principle, the expenditure must be reasonably attributable to the fund being charged.
2. The expenditure being transferred must be adequately documented - the initial charge (e.g. document number, date, vendor name) must be provided. In all cases, there must be a valid reason stated for the transfer. For lump sum or advance agreements that do not relate of a specific expenditures are treated as Fund Transfers.
3. The expenditure being transferred must not have been originally charged in a previous fiscal year. The University's fiscal year runs from May 1 to April 30^th.
4. Expenditures incurred prior to May of any given year, must be processed as a Prior-Year Expenditure Transfer.

Research Grants/Contracts - The type and timing of expenditures must be permissible under the conditions of the fund being charged. Most granting agencies will not allow expenditures incurred prior to the award date or subsequent to the end date, etc.

Expenditure transfers can be prepared either as Intra-Fund (JE15) or Inter-Fund (JE16) transfers and they can use account codes that begin with a ‘7’ (Non-Salary Expenditure account codes). For a list of Non-Salary Expenditure and Salary account codes and respective definitions, refer to the Account Codes page.

Prior-Year Expenditure Transfers

The concept for the prior-year expenditure transfers is the same as the expenditure transfer but it is prepared when we want to correct prior-year expenses. However, they can only be prepared as Inter-Fund transfers (JE16) and they use the special account codes that begin with an ‘8’.

Account codes to be used for prior-year transfers:

1. Revenue
   • 85xxxx (debit and credit)
2. Non-Salary expenditures
   • 87xxxx (debit and credit)

NOTE: Not all expense accounts have special corresponding transfer account codes.

For the authoritative source of Fund Transfer account codes, refer to the PDF file in menu in Minerva.

Fund Transfer

Fund transfers can be defined as a reallocation or contribution of resources that is not associated with specific expenditure(s) or revenue(s). It is the contribution of a spending resource to a fund as a lump-sum.

Examples of fund transfers:

• 1A – 1F fund types
• 1A – 1B fund types

Transfers, where only 1A or 1B fund types are involved, are considered Budget transfers (e.g. 1A-1A/1B-1B fund types).

Fund transfers are prepared as Inter-Fund transfers (JE16) and they use the special account codes that begin with an ‘8’.

When preparing fund transfers, the account codes in the debit and credit sequences must always start with ‘8’. Typically, account code 800001 is used for the credit (transfers in) and 800002 is used for the debit (transfers out). Using a ‘7’ account code will result in Out of Balance in the General Ledger.

The sum of all transfer accounts across all University funds must net to zero.

Fund transfers between trust funds (fund type 80) and other funds, e.g. operating, restricted, endowment and plant funds are strictly prohibited. Use expenditure transfers to accomplish the reallocation of resources to or from a Trust Fund.

Note: 800001 and 800002 should be used to transfer money for contributions and support agreements only. They shouldn’t be used to transfer fund balances. In such cases, expenditure transfers (current and prior year) should be used with the respective 7 or 87xxxx account codes.

Account codes starting with ‘8’

Generic (contributions, agreements)

• 800001 used for credits (transfers in)
• 800002 used for debits (transfers out)
• 800004 used for start-up funds/grants – Credit
• 800002 used for the start-up funds/grants - Debit
• 870714 used for contributions involving endowment spendable income funds ONLY

For the authoritative source of Fund Transfer account codes, refer to the PDF file in menu in Minerva.

The form FGAJVCQ allows authorized users* to submit JE15 journal entries (intra-fund transfers).

Intra-fund transfer (JE15) = Transfer within the same fund

*Authorized User = An individual with Banner access to the Finance module (more information).

When to process JE15 journals

A JE15 journal is processed for the purpose of attributing costs within the same fund. The journal corrects a transaction charged to the wrong FOAPAL combination and is considered an expenditure transfer. This journal does not impact the spending power of a fund since the expense was appropriately charged to the fund - only the Account-Activity-Location code combination of the FOAPAL needs to be corrected. If an incorrect fund has been charged for an expense, a JE16 journal must be processed to correct it.

In order to proceed with a JE15 journal, the following conditions must be met:

1. The original expense is from the current year. Intra-fund journals are not processed for transactions posted in prior fiscal years. For funds linked to grants, contact the Fund Administrator – they will determine if the entry is necessary for external reporting purposes.
2. The transaction to correct is a non-salary expense. Adjustments that impact salary accounts must be done as a payroll journal originating from the Payroll Office.
3. The original expense is not an IDC. Inter-departmental charges (IDC) record sales between McGill Units where one McGill Unit provides a service to another McGill Unit. Adjustments for these transactions are processed by the Unit providing the service.
4. Only the Account-Activity-Location code combination needs to be corrected. The appropriate fund was charged in the original expense.

A JE15 journal document has, at minimum, two sequences:

• A credit sequence with the FOAPAL and amount charged in the initial transaction.
• A debit sequence with the FOAPAL and amount that should be charged for the transaction.

The process of preparing JE15 journals (intra-fund transfers) from beginning to end:

1. Identify the original transaction and the FOAPAL combination wrongly charged for that transaction.
2. Make note of the invoice document number along with the supplier's name associated with the transaction – this information must be entered in the JE15 document.
3. Determine the amount of the expense incorrectly charged to the Account-Activity-Location code combination. Be sure to subtract any sales tax rebates received for this transaction - the amount to credit may be lower than the amount originally charged to the FOAPAL.

   TIP: Determining the Amount
   Use the form FGITRND (view the How to Use Banner page) to verify the amount after any sales tax rebates.

4. Determine the correct Account-Activity-Location code combination that should have been charged for the expense.
5. Create a JE15 journal document (intra-fund transfer) in Banner using the form FGAJVCQ (view the How to Use Banner page).
6. Once completed, the JE15 journal will move to the approval and then the posting process.
7. Once the document is approved, it is posted to the ledger. The transaction will appear when querying the fund.
   If the document is disapproved, you will receive a system notification email with the document number and a brief explanation as to why it was disapproved. The journal status will change to "In Process" - you will be able to make changes to the document using the Banner form FGAJVCQ and to re-submit it.

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The form FGAJVCQ allows authorized users* to submit JE16 journal entries (inter-fund transfers).

Inter-fund transfer (JE16) = Transfer between different funds.

*Authorized User = An individual with Banner access to the Finance module (more information).

Before You Begin:

• The form FGAJVCQ is used to prepare Inter (JE16) fund journal entries.
• Special training is required in order to obtain access to preparing adjustments between funds (JE16).
• Type and timing of expenditure must be permissible under the conditions of the fund being charged.
• All JE16 journals must be adequately documented.
• The original expenditure being adjusted is from the current year and not included in financial reports to sponsors.
• Always use an account code that reflects the nature of the expenditure.
• Always use the same expense account code that was originally used (unless an error).
• Ensure that the proposed adjustment has not been previously processed.
• Adjustments to salary related expenses must be done as a payroll journal originating from the Payroll Office.
• Ensure that all rebates are included when adjusting invoices.
• If using the copy journal feature, have the document number of the existing journal which is to be copied or reversed.
• Note that reversal journals should never be completed prior to the original journal being posted.
• When using the copy journal feature, if you forget to check-off the Reverse JV or Copy Text boxes, you cannot "roll back" and correct it. You must re-start the journal and the system will automatically assign a new document number, thereby, leaving the initial J-document number's status as incomplete, which must then be removed/ deleted.

The process of preparing JE16 journals (inter-fund transfers) from beginning to end:

1. Identify the original transaction and the FOAPAL combination wrongly charged for that transaction.
2. Make note of the invoice document number along with the supplier's name associated with the transaction – this information must be entered in the JE16 document.
3. Determine the amount of the expense incorrectly charged to the Fund-Account-Activity-Location code combination. Be sure to subtract any sales tax rebates received for this transaction - the amount to credit may be lower than the amount originally charged to the FOAPAL.

   TIP: Determining the Amount
   Use the form FGITRND (view the How to Use Banner page) to verify the amount after any sales tax rebates.

4. Determine the correct Fund-Account-Activity-Location code combination that should have been charged for the expense.
5. Create a JE16 journal document (intra-fund transfer) in Banner using the form FGAJVCQ (view the How to Use Banner page).
6. Once completed, the JE16 journal will move to the approval queue(s) and then the posting process.
7. Once the document is approved, it is posted to the ledger. The transaction will appear when querying the fund.
   If the document is disapproved, you will receive a system notification email with the document number and a brief explanation as to why it was disapproved. The journal status will change to "In Process" - you will be able to make changes to the document using the Banner form FGAJVCQ and to re-submit it.

The form FGAJVCQ allows authorized users* to submit IDC journal entries (inter-departmental charges).

Inter-departmental charge = Charges for goods and/or services rendered by one internal unit to another internal unit.

*Authorized User = An individual with Banner access to the Finance module (more information).

When to process IDC journals

An IDC journal is processed for the purpose of recording an internal sale between McGill units, where one unit (Service Center) provides services and/or goods to another unit - this is considered an inter-departmental charge. Should an IDC be processed in error (a wrong FOAPAL is charged), the Service Center must process another IDC journal to correct it.

IDCs are not to be confused with transfers. The purpose of a "transfer" is to either reallocate financial resources amongst funds or to ensure expenditures are recorded in the correct fund.

In order to proceed with an IDC journal, the following conditions must be met:

1. A McGill Service Center rendered goods and/or services, in full, to another McGill unit. If goods and /or services have been partially rendered, an IDC should not yet be processed.
2. The internal sale is a non-salary expense.
3. If correcting an IDC, the expense was incurred during the current fiscal year. IDC journals are not processed to correct IDCs posted in prior fiscal years. For funds linked to grants, contact the Fund Administrator – they will determine if the entry is necessary for external reporting purposes.

An IDC journal document has, at minimum, two sequences:

• A credit sequence with the Service Center's FOAPAL and the amount to be received for the internal sale
• A debit sequence with the FOAPAL and amount to charge for the received goods and/or services from the internal sale

Note: Service Centers which have large transaction volumes every month may be set-up to submit Feeds. Feeds are electronic files transmitted to Financial Services containing large lists of transactions to be posted to FOAPALs.

The process of preparing IDC journals (inter-departmental charges) from beginning to end for Service Centers:

1. Goods and/or services to an internal McGill unit have been rendered, in full, and a FOAPAL to charge for this internal sale has been obtained.
2. Create an IDC journal document (inter-departmental charge) in Banner using the form FGAJVCQ (view the How to Use Banner page).
3. Once completed, the IDC journal will move to the approval queue(s) and then the posting process.
4. Once the document is approved it is posted to the ledger. The transaction will appear when querying the fund.
   If the document is disapproved, the Service Center (individual who completed the document) will receive a system notification email with the document number and a brief explanation as to why it was disapproved*. The IDC journal status will change to "In Process" - the Service Center will be able to make changes to the document using the Banner form FGAJVCQ and to re-submit it. The Service Center may be contacting the internal unit for additional information prior to re-submitting the IDC journal document.

Expenditure transfers Decision Grid

Internal Charges - Charging a good/service to another Department/Unit

Internal Charges – Charging a good/service to a Trust Fund