Transfers are the movement of cash and net position from one fund to another. No goods or services are provided in exchange for the cash transfer. A fund is a self-balancing set of accounts for recording assets, liabilities, net position and changes in net position (revenue, expense and cash transfers). A portion of the assets is cash, and there are occasions when management wants to move cash and net position from one fund to another fund without involving a sale of goods or services between the two FOPPS. Examples include funding a new program for start-up costs, funding a capital construction project, or funding a renewal and replacement reserve. Transfers are further classified as mandatory or voluntary (or non-mandatory).
Mandatory Transfers
Mandatory transfers include transfers from the current funds group to other fund groups arising out of (1) binding legal agreements related to the financing of educational plant, such as amounts for debt retirement, interest and required provisions for renewals and replacements of plant not financed from other sources and (2) grant agreements with agencies of the federal government, donors and other organizations to match gifts and grants to loan and other funds. Mandatory transfers may be required to be made from either unrestricted or restricted current funds.
Voluntary Transfers
Voluntary transfers include those transfers from the current funds group to other fund groups made at the discretion of the governing board or unit management to serve a variety of objectives, such as additions to quasi-endowment funds, additions to renewal and replacement of plant funds, and prepayments on debt principal. Voluntary transfers also may involve the re-transfer of resources back to the current funds. Cash and net position transfers should not be processed by moving revenue or expense.
Restrictions on Transfers
Cash transfers are not permitted between all fund combinations. For example, the transfer of cash from the restricted current fund to the unrestricted current fund changes the nature and financial reporting of that cash. The transfer of cash between an agency fund and any other fund is never allowed, since agency funds represent an outside, private interest and the processing of gifts to the university is guided by various administrative policies.
The Office of University Controller has developed a fund transfer rules table that shows the fund combinations where it is allowable to make cash transfers. To use this table, identify the fund of the FOPPS that is going to give up the cash (the from fund) on the left hand side of the table. Next, identify the FOPPS that is going to receive the cash (the to fund) along the top row of the table. If the intersection of these two funds says yes, then a cash transfer is allowable between the two FOPPS. If the intersection is blank, then a cash transfer is not permitted between the two FOPPS.
There are specific guidelines for processing cash transfer journal entries. Refer to the rules on the OUC’s website or contact CCO for more information.