1 welcome to fy 2005 interfund training presenter: frankie ezzat, principal accountant chart of...

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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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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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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 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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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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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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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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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


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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Reciprocal InterfundReciprocal Interfund (continued(continued

The Service Receiver records an increase

(debit) in an appropriate regular

expenditure account.

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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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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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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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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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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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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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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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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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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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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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Answer: Regular accounts

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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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Answer: No Fund 10000-11014 should have recorded

to a regular expense account instead of account 551200- Ops Out.

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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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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.

1 welcome to fy 2005 interfund training presenter: frankie ezzat, principal accountant chart of...

Documents

interfund trainingpresenter

services accounts

service provider

different funds

expenditure accounts

theborrower fund

governmental fund types

lender fund replacescash