Processing Intragovernmental Transactions
An intragovernmental transaction requires the transfer of funds between two agencies or units of the North Carolina state government. One objective of the North Carolina Accounting System is to provide agencies with a standard way of processing these transactions.
This processing method must:
There are six types of intragovernmental transactions:
Note: Transfers to, and receipts from, Central Payroll are not recorded as intragovernmental transactions.
A quasi-external transaction resembles a normal buyer/seller relationship where one agency buys goods or services from another. It is the most frequently used intragovernmental transaction.
The following are examples of quasi-external transactions:
A reimbursement occurs when the legal responsibility of one fund is paid by another fund. At a later date, the original fund will be reimbursed.
The following are examples of reimbursements:
An operating transfer is a transfer between funds where one fund is accountable for the operating costs of another. The first fund is responsible for the initial receipt of funds, while the second is authorized to use these funds to finance its operations.
The following are examples of operating transfers:
Residual Equity Transfers
A residual equity transfer is a non-recurring or non-routine transfer of equity between funds.
The following are examples of residual equity transfers:
Federal Grant Transactions
A federal grant transaction occurs when federal money is received in the Federal Budget Code and transferred to the Operating Budget Code.
The following is an example of a grant transaction:
State Grant Transactions
A state grant transaction occurs when an agency awards a state grant to another state agency or entity. The agency receiving the state grant revenue records the transaction using account number 4325AA. This account identifies the grant title and the agency awarding the grant.
The following is an example of a state grant transaction and the resulting entries.
|The entry for the disbursing fund, Division of Social Services General Fund, is as follows:|
|DR||Directed Grants - SSBG-Division of Aging||5364AA|
To record SSBG funds to the Division of Aging
|The entry for the receiving fund, Division of Division of Aging-General Fund, is as follows:|
To record the receipt of state funds for the SSBG from DSS
Chart of Accounts
The following accounts are used to record intragovernmental transactions:
|Statewide operating transfers||5380XX||4380XX|
|Agency operating transfers||5381XX||4381XX|
|Agency residual equity transfers||5384XX||4384XX|
|Agency federal funds transfers/receipts||5388XX|
Processing Intragovernmental Transactions
The intragovernmental process will be implemented in two phases. The first phase is discussed in this section. The second phase, which will be implemented sometime in the future, will eliminate the check-writing process and integrate the North Carolina Accounting System (NCAS) with the OSC-Cash Management System (CMS).
Recording Quasi-External Transactions
During the first phase, the process of recording quasi-external transactions will follow normal operating procedures for writing checks and depositing cash. The CMS currently requires checks to be generated for all quasi-external transactions.
The following steps are used to
record quasi-external transactions in both the North Carolina Accounting System and Cash
|Step 1||The selling agency generates an invoice. The invoice is sent to the receiving agency.|
|Step 2||The selling agency enters a journal entry in
the North Carolina Accounting System Budgetary Control module to record the change to
accounts receivable and revenue.
Note: Some agencies may have an accounts receivable interface that feeds receivable and revenue transactions in the NCAS.
|Step 3||The buying agency receives the invoice and enters it in the North Carolina Accounting System Accounts Payable module. The agency also runs a payment cycle to generate the check, which is sent to the selling agency.|
|Step 4||The buying agency makes the appropriate cash requisition entry in the CMS. The buying agency also enters a journal entry in the North Carolina Accounting System to record the movement of cash from the allotment account to the disbursement account.|
|Step 5||When the selling agency receives the check, it enters a journal entry in the North Carolina Accounting System Budgetary Control module to record the receipt of cash. The agency also makes the appropriate cash deposit entry in the CMS.|
Recording Reimbursements, Operating Transfers, Residual Equity Transfers, and Grant Transactions
The current cash management policy supports two methods for processing reimbursements, operating transfers, residual equity transfers, and grant transactions. One method uses checks to transfer funds, while the other relies on journal entries to record the transfer of funds. Both methods use the North Carolina Accounting System, as well as the Cash Management System. To determine which method to use, refer to the appropriate section in the State Cash Management Manual.
When generating checks, the
following steps are performed to record reimbursements, operating transfers, residual
equity transfers, and grant transactions.
|Step 1||Using the appropriate invoice screens in the North Carolina Accounting System Accounts Payable module, the transferring agency records the amount of the transfer. A payment cycle is executed to generate the check, which is sent to the receiving agency.|
|Step 2||The transferring agency makes the appropriate entry in the CMS to record the movement of cash from the allotment account to the disbursement account.|
|Step 3||When the receiving agency receives the check, it makes a journal entry in the North Carolina Accounting System Budgetary Control module to record the deposit, as well as the appropriate cash deposit entry in the Cash Management System.|
The following steps are performed
when using a journal entry to record reimbursements, operating transfers, residual equity
transfers, and grant transactions.
|Step 1||The transferring agency enters the transfer amount on the CMS Request for Transfer of Funds screen.|
|Step 2||The transferring agency records an entry in the
North Carolina Accounting System to debit the appropriate intragovernmental account and
credit the appropriate cash account.
|Step 3||The receiving agency completes the transfer on the CMS Request for Transfer of Funds screen, reflecting the appropriate budget code.|
|Step 4||The receiving agency records an entry in the
North Carolina Accounting System Budgetary Control module to debit the appropriate cash
account and credit the appropriate intragovernmental account.