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Finance & Accounting

BPM-213 Correction of Income & Expense Items

Revised May 1, 2009

CORRECTION POLICY

Any correction of income and/or expense items between ChartFields should be made within two accounting periods (two months) after the end of the accounting period in which the original transaction posted; e.g., if a transaction posts with a February 2 date, any corrections must be made by the end of the accounting period for April.  Because of federal regulations, appropriate justification must be documented for all correction entries made.  Every effort should be made to record corrections in the fiscal year in which the original entry occurred.

This policy applies to all income and both salary/wage and non-salary/wage expense transactions.  The non-salary/wage expenditures apply to all sources including internal service charges.  This policy is organized into three different procedures that may be necessary to correct transactions;  1) salary and wage for sponsored programs activities (including cost share), 2) salary and wage for non-sponsored programs activities, and 3) income and non-salary expense items.

CORRECTING SALARY AND WAGE FOR SPONSORED PROGRAMS ITEMS

Entry Required

Entries for payroll/benefits expense must be made using the UM Web Applications Payroll Correcting Entry (PCE).

Effort Reporting System

The University's effort reporting system required by federal regulation (OMB Circular A-21) is produced from the financial system.  When the University's effort reports have been certified and subsequently a PCE is required that conflicts with the effort report, additional activities and documentation may be required.  Discrepancies between the certified effort report and the financial records could lead to audit disallowances, significant fines and financial sanctions.

PCE procedure for sponsored programs activity after the timeframe described above:
  1. The department must document that the expense proposed by PCE is allowable on the project by completing one of the following PCE request forms (the "form") provided below:
  2. The department must document that the expense proposed by PCE directly benefits the project and represents a more accurate allocation of expense to the project than the existing expense allocation.
  3. The proposed PCE must be compared to the existing certified Effort Verification Report (EVR). If more than a 5% difference in any funding line will result, a recertification of the EVR will be required if the request for a late PCE is approved (see item 8 below).
  4. The form and any documentation must be reviewed and approved by:
    1. The individual whose payroll is changing;
    2. Principal Investigator or approved signer for the funding source(s);
    3. Department chair or equivalent for a) and b); and
    4. Dean or equivalent for a) and b).
  5. The department must forward the documentation to Sponsored Programs Office (SPO) and notify their SPO accountant who will assess the impact of the PCE on the project (e.g., refunds to sponsor, resubmitting final financial reports on closed projects, etc.).
  6. If the proposed payroll adjustment covers multiple pay periods within a single EVR, the department should forward all the documentation in one package to SPO for review of the PCE(s).
  7. The SPO accountant handling the project will review the documentation and provide a recommendation to SPO management. SPO management will review the documentation and recommendation, and make a preliminary decision of whether the proposed PCE is appropriate.
  8. If the proposed PCE changes funding on the current certified EVR so that any funding line changes by more than 5%, SPO will reprint the original EVR for recertification by the individual.
  9. Upon return of the recertified EVR, the SPO will complete a final review. If approved, the SPO will make a late PCE and notify the department of the Journal ID. If not approved, the SPO will notify the department of the reason(s).

CORRECTING SALARY AND WAGE FOR NON-SPONSORED PROGRAM ITEMS

Entry Required

Entries for payroll/benefits expense must be made using the UM Web Applications Payroll Correcting Entry (PCE).

PCE procedure for Non-Sponsored Programs activity after the timeframe described above:
  1. Documentation prepared by the department for the proposed PCE must be reviewed and approved by:
    1. Authorized signer for the funding source(s);
    2. Department chair, or equivalent; and
    3. Dean, Vice Chancellor, Vice President, or equivalent for a) and b).
  2. The department must document the expense proposed by PCE by completing one of the PCE request forms provided below:
  3. The signed documentation must be forwarded to the Accounting Office for approval.
  4. If approved, the Accounting Office will make a late PCE and notify the department of the Journal ID. If not approved, the Accounting Office will notify the department of the reason(s).

NOTE:  The Accounting Offices may use discretion to temporarily modify or provide exception to the approval process for non-sponsored programs PCEs.

CORRECTING INCOME AND NON-SALARY EXPENSE ITEMS

Entry Required

Correction of income and non-payroll/benefits expense may be made using the UM Web Applications Journal Entry (Correcting Entry).

Approvals Required

Income Items - correcting entries for income items must be approved by an authorized representative of the department responsible for the ChartFields from which the income is being reduced.

Expense Items - Correction requests for expense items must be approved by an authorized representative of the department responsible for the ChartFields to which the expense is being increased.