Processing Intragovernmental Transactions

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:

Quasi-External 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:

Reimbursements

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:

Operating Transfers

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
CR Cash 111270

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:    
DR Cash 111270
CR Grants-SSBG-DSS 4325AA

To record the receipt of state funds for the SSBG from DSS

   

Chart of Accounts

The following accounts are used to record intragovernmental transactions:

Account Title

Expenditure

Revenue

Statewide operating transfers 5380XX 4380XX
Agency operating transfers 5381XX 4381XX
Statewide reimbursements 5382XX  
Agency reimbursements 5383XX  
Agency residual equity transfers 5384XX 4384XX
Agency federal funds transfers/receipts 5388XX  

 
For all other transfers, the appropriate expense/revenue account should be used.

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 Management System.
 

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.
 
Refer to the following list of accounts when recording the entry documented in this step:  
Statewide operating transfers 5380XX
Agency operating transfers 5381XX
Statewide reimbusements 5382XX
Agency reimbursements 5383XX
Agency residual equity transfers 5384XX
Agency federal funds transfers/receipts 5388XX
Budget code cash 111260
Cash-in-allotment account 111270

 

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.
 
Refer to the following list of accounts when recording the entry documented in this step:  
Statewide operating transfers 4380XX
Agency operating transfers 4381XX
Statewide reimbusements 4382XX
Agency reimbursements 5383XX
Agency residual equity transfers 4384XX
Agency federal funds transfers/receipts 5388XX
Budget code cash 111260
Cash-in-allotment account 111270

 

 


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