1 welcome to fy 2005 interfund training presenter: frankie ezzat, principal accountant chart of...
TRANSCRIPT
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Welcome to FY 2005 Interfund Welcome to FY 2005 Interfund TrainingTraining
Presenter: Frankie Ezzat,
Principal Accountant Chart of
Accounts & Journal Entry
Processing unit
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AgendaAgenda Introduction Importance of Interfund/Intrafund accounts Interfund Classifications & Definition Financial Presentation of Interfund Transfers Departmental Scenarios of Interfund
Accounts Usage Accounts Quick Reference Contact
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ObjectiveObjective You will understand different classification of
Interfund Transactions You will know the proper usage of interfund
activities from different departmental scenarios You will have an understanding of different
Interfund accounts You will know how the interfund transactions
get reported in the County’s Financial Statements
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Importance of Interfund/Intrafund Importance of Interfund/Intrafund AccountsAccounts
In Fiscal Year 2004, ACO staff Spent enormous amount of timeEvaluating more than 8,000transactions which had caused anout of balance over $86 million in theCounty’s Financial Statements.We need departments’ help whenrecording interfund transactions toensure validity and accuracy of theentries prior to posting in the system.
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Interfund Classifications &Interfund Classifications & Definition Definition (continued(continued)….)….
Classifications
Generally accepted accounting principles
(GAAP) establishes two broad classes for
Interfund activity. Reciprocal Interfund Nonreciprocal Interfund
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund 1) Interfund Loans – Loans between funds
are properly reported as increases and decreases in
assets and liabilities with no effect on activities in
fund financial statements. The lender fund replaces
Cash with Advance To Other Funds while the
borrower fund reports an increase in Cash and
Advance From Other Funds.
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund (continued)…(continued)…
It is common for governments to make
Interfund “loans” with little or no
expectation of repayment. GAAP
specifically require that any portion of an
interfund “loan” that is not expected to be
repaid “within a reasonable time” be
reclassified as a transfer.
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund (continued)….(continued)…. 2) Interfund Services Provided and UsedIt is common for a fund to provide services to one or more others, which then are charged forservices received. Sometimes the amount chargedis equal to the value of the services received. Inother cases, the amount charged does not quiteequal the value of the services received (similar toan exchange-like transaction).
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund (continued)…(continued)…
Interfund Services Provided and Used transactions can only be recorded within Governmental Fund Types.
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Interfund Classifications & Interfund Classifications & DefinitionDefinition Reciprocal InterfundReciprocal Interfund (continued)…(continued)…
Interfund accounts are used when the Service Provider and the Service Receiver are both a Governmental Fund Type but are in different funds.
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund (continued)…(continued)…
To reimburse the Service Provider for the
goods or services it has provided: The Service Provider records an increase
(credit) to an Interfund Revenue account
(Charges for Services Accounts 778000 –
778380).
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund (continued)…(continued)…
The Service Receiver records an increase (debit) in Interfund Expenditure account (Appropriation 3 in Other Charges, Expenditure Accounts 536720 through 537280).
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund (continued)…(continued)…
Note: The Interfund Revenue must
Equal the Interfund Expenditure. Cash is transferred because the Service
Provider and the Service Receiver are
in different funds.
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund (continued)…(continued)…
When Services received and provided are
within the same fund but different
Department IDs, they are called Intrafund.
Note: The fund would still have to be
a Governmental Fund Type.
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Interfund Classifications & Interfund Classifications & DefinitionDefinition
Reciprocal InterfundReciprocal Interfund (continued)…(continued)…
In an Intrafund Transaction to reimburse the
Service Provider for the goods or services it has
provided:
The Service Provider records a decrease
(credit) in an Intrafund account (Appropriation 7,
Expenditure Accounts 571000 through 574200).
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Interfund Classifications & Interfund Classifications & Definition Definition
Reciprocal InterfundReciprocal Interfund (continued(continued
The Service Receiver records an increase
(debit) in an appropriate regular
expenditure account.
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Interfund Classifications & Interfund Classifications & Definition Definition
Nonreciprocal InterfundNonreciprocal Interfund (continued)…(continued)…
1) Interfund Transfer – GAAP define
Interfund transfers as “flow of assets” (such as
cash or goods) without equivalent flows of
assets in return and without requirement for
repayment. Note: This classification can be used for
recording transactions within any Fund Types.
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Interfund Classifications & Interfund Classifications & Definition Definition
Nonreciprocal InterfundNonreciprocal Interfund (continued)…(continued)… Interfund reimbursements are treated as
an adjustment to expenses or expenditures;
that is, an increase in expenditures in the
reimbursing fund and a corresponding
decrease in expenditures in the reimbursement
fund.
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Financial Presentation of Interfund Financial Presentation of Interfund Transfers Transfers (continued)…(continued)…
Inflows of current financial resources from other funds are to be distinguished from a government’s regular revenues. So interfund transfers received from other funds are reported as an Other Financing Sources rather than revenue, and interfund transfer sent to other funds are recorded as Other Financing Uses.
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Financial Presentation of Interfund Financial Presentation of Interfund TransfersTransfers
In the County’s Financial Statement of Revenues, Expenditures and Changes in Fund Balances, the interfund transfers received from other funds are reported as Transfers In and interfund transfers sent to other funds are reported as Transfers Out under Other Financing Sources/Uses.
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Departmental Scenario ExercisesDepartmental Scenario Exercises
Determine if there is anything wrong with the JE
Identify the incorrect line Offer Resolution
See Flow Chart Illustration 2.0
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Departmental ScenariosDepartmental ScenariosScenario #1 - TLMA fund 20000-31305rendered road Services (Rider St. project # B40493) for EDA fund 21350-19002. Required entries? Debit Credit20000-31305-101100 -Cash $12,22120000-31305-778010-Intf. Rev $12,22121350-19002-536800-Intf. Exp $12,22121350-19002-101100- Cash
$12,221 Is This Entry Correct?
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Departmental ScenariosDepartmental Scenarios
Scenario #1 (continued)…(continued)… Answer: Yes
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Departmental ScenariosDepartmental Scenarios (continued)...(continued)...
Answer: Yes The interfund transactions are
between two Special Revenue Funds.
Interfund Revenue = Interfund
Expenditure
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Departmental ScenariosDepartmental Scenarios (continued)...(continued)...
Scenario # 2 – Legal services rendered by
the County Counsel fund 10000-15001 to
Western Riverside Regional Conservation
fund 51630 – 935200.
To record legal services rendered by County
Counsel to WRRC for June of Fiscal Year
2004.
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Departmental ScenariosDepartmental Scenarios
Scenario # 2 (continued)…(continued)…Entries recorded in the system are asfollows: Debit
Credit10000-15001-101100-Cash $3,60710000-15001-778160- intf. Rev $3,607
51630-935200-524700-Prof Svs. $3,60751630-935200-101100-Cash $3,607 Is This Entry Correct?
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Departmental ScenariosDepartmental Scenarios
Scenario # 2 (continued)…(continued)…
Answer: No The interfund transactions are
between the General Fund and a Fiduciary
Fund. Regular Revenue and Expenditure
accounts are to be used for this entry.
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Departmental ScenariosDepartmental Scenarios (continued)...(continued)...
Scenario # 3 – Legal Services were renderedby County Counsel fund 10000-15001 to Planningdepartment fund 10000-31201. The entries are asfollows: Debit Credit10000-15001-101100- Cash $5,00010000-15001-778160-Intf Rev $5,00010000-31201-572800-Intra Exp $5,00010000-31201-101100- Cash $5,000Is This Entry Correct?
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Departmental ScenariosDepartmental Scenarios
Scenario # 3 (continued)...(continued)...
Answer: NoThe transactions are within same fund numbers. County Counsel should have recorded adecrease (Credit) in appropriation 7 (Accounts571000-574200) instead of Interfund RevenueAccount 778160. Planning should have used a regular expense account.
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Departmental ScenariosDepartmental Scenarios (continued)...(continued)...
Scenario # 4 - Clerk Recorder fund10000-12002 bills EDA fund 32700-934001For their recording services. EntriesRecorded are as follows: Debit Credit10000-12002-101100- Cash $1,50010000-12002-778200-Intf Rev $1500 32700-934001-535220-Taxes $1,50032700-934001-101100-Cash $1,500Is this entry Correct?
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Departmental ScenariosDepartmental Scenarios
Scenario # 4 (continued)…(continued)…
Answer: No
The transactions are between Capital Project
Fund and General Fund. Fund 32700 should have recorded an
Interfund Expenditure instead of regular
account 535220-Taxes.
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Departmental ScenariosDepartmental Scenarios (continued)...(continued)...
Scenario # 5 – Information Technology
fund 45500-74001 bills for system support
services they provided ACO fund 10000-
13001. The entries should be recorded as Interfund accounts
ORRegular accounts
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Departmental ScenariosDepartmental Scenarios
Scenario # 5 (continued)…(continued)…
Answer: Regular accounts
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Departmental ScenariosDepartmental Scenarios (continued)...(continued)...
Scenario # 6 – ACO records RealignmentCounty Match From fund 10000-11014 To MH fund10000-41002. Entries recorded are as follows:
Debit Credit10000-11014-551200- Ops Out $126,00010000-11014-101100-Cash
$126,00010000-41002-101100-Cash $126,00010000-41002-573100-IntraExp. $126,000
Is This Entry Correct?
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Departmental ScenariosDepartmental Scenarios
Scenario # 6 (continued)…(continued)…
Answer: No Fund 10000-11014 should have recorded
to a regular expense account instead of account 551200- Ops Out.
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Departmental ScenariosDepartmental Scenarios (continued)...(continued)...
Scenario #7- Form 11 directs E/O to process totalpayment of $60,151 from Third District PublicFacilities Developer Agreement fund 30558-110350 to Riverside Waste Mgmt. fund 40200-45001. Entries recorded are as follows:
Debit Credit30558-11035-536780- Intf. Exp. $60,15130558-11035-101100- Cash $60,15140200-45001-101100-Cash $60,15140200-45001-781540-Contrb. Fr. $60,151Is This Entry Correct?
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Departmental ScenariosDepartmental Scenarios
Scenario # 7 (continued)…(continued)…
Answer: No Fund 30558-11035 should have used
“Contribution To Other Funds” Account
Instead of Interfund Expenditure account
536780.
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ContactContact For any questions regarding this
presentation or any questions on Interfund/Intrafund, Please contact Frankie Ezzat at 5-3851
For any questions regarding any Interfund/Intrafund journal entry, please contact Gladys Smith 5-8569 or Michelle Pantoja at 5-9461.