Instructions for Correcting Prior Year Transactions
Sound accounting practice does not allow for corrections to prior year Operating Ledger (also known as “Income Statement”, or “Revenue and Expense”) transactions using the same account codes that were used on the original transaction in the previous fiscal year. The reason is that at the end of each fiscal year, the net Operating Ledger surplus or deficit in each index rolls forward to the new fiscal year, in the single account code 1900 “Reserves”. Corrections using the original account code will distort the current year’s books.
Please note that the following applies to transactions between unrestricted indexes only.
If corrections to prior year Operating Ledger transactions are necessary, they should be completed via one of the following methods:
- Use the “Change in Reserves” account code, 1903. This option is available if all indexes involved are in the same Fund level 2 and Program level 2. Account code 1903 must be used as the Debit and Credit so that the activity zeroes out in total for this account code.
- Use the “Allocations Other” account code, 1660. This option is available if all indexes involved are in the same Fund level 2 and Program level 2. Account code 1660 must be used as the Debit and Credit so that the activity zeroes out in total for this account code.
- For both of the above options, Budget entries must also be submitted.
- Use Transfer account codes (11xx through 12xx) if the indexes involved are in a different Fund level 2 and/or Program level 2. A Transfer account code must be used as the Debit and Credit so that overall activity in the Transfer account codes zeroes out.
All Transfers must also be budgeted. Keep in mind that the Budget Office may not allow some Transfers, such as from I&G indexes.
- If the circumstances would normally require the use of Transfer account codes, as noted above, you may be able to use account code 8045 “Interdepartmental Support”. Usage of this account code must comply with specific guidelines. Click here to view these guidelines.
There is an exception to the guidelines noted above:
If a correction of a prior year transaction involves a Restricted and an Unrestricted index, then the account codes from the prior year transaction should be used. Balance Forward, Allocation, Transfer, and 8045 entries are not allowed on Restricted indexes.
Additional information on completing the above types of entries can be found by clicking on the following links:
Adjustments, Transfers and Allocations
Fastinfo #511 (Budgeting Transfers)