SUBSECTION 2.2.6.3
REIMBURSEMENTS

2.2.6.3.1

Reimbursements

Effective Date:

Sept. 1, 1998

Reimbursements are recorded when one agency and/or account initially charges an expenditure/expense that is subsequently charged to another. Generally, the reimbursement is recorded as an expenditure/expense in the reimbursing account and as a reduction of a corresponding expenditure/expense in the reimbursed account. Accounting for reimbursements in this manner results in the expenditure/expense being reported only once and in the proper account. Reimbursements are to be appropriately documented and approved.

Reimbursement reporting is to be used only in circumstances as described above. It is not to be used for interfund loans, interfund transfers, or other interfund transactions.

As described below, reimbursements are coded with Object S and Object T. The sub-object coding should reflect the object of expenditure being offset with the reimbursement. Whereas Sub-objects SZ and TZ "Unidentified" are available for use, it is preferable that an agency allocate charges to the appropriate sub-object of expenditure within Objects S and T on a monthly basis.

Reimbursements are classified into two types:

2.2.6.3.1.a

Intra-agency reimbursements--Intra-agency reimbursements are used to charge for services or supplies provided by one account to another and to distribute administrative overhead charges. In accounting for intra-agency reimbursement transactions, the reimbursed account is to credit expenditures using Object T. The reimbursing account is to account for intra-agency materials supplied or services rendered as Object T and the appropriate sub-object. Intra-agency reimbursements are to be used to record special budgeted allocations involving Accounts 239 "Tort Defense Service Revolving Account," 406 "Salary and Insurance Increase Revolving Account," and 427 "Special Account Retirement Contribution Increase Revolving Account."

NOTE: As of July 1, 1997, agencies will no longer be able to use intra-agency reimbursements to charge for services or supplies provided by one account to another unless required due to budgetary or Federal compliance considerations.

Agencies may request a waiver from complying with specific requirements of this section. The request is to be in writing and be approved in writing by OFM before the waiver takes effect. Waivers automatically expire at the end of the fiscal biennium for which they were granted and are to be re-approved in writing to remain in force.

2.2.6.3.1.a(1)

All budgeted accounts and the following accounts used by higher education agencies - Accounts 143, 145, 147, 148, 149, 443, and 505 which are included with budgeted accounts for purposes of this section - are to use Object T transfers to record intra-agency transfers between said accounts. Reimbursements to budgeted accounts for expenditures/expenses initially made from it which are properly applicable to another budgeted account are to be recorded as a credit to expenditures/expenses using Object T. The reimbursing account is to debit expenditures/expenses using Object T.

The total for Object T transfers in budgeted accounts is to equal zero except as noted below for GL Code 6525 transfers. When transfers of salaries are made with Sub-object TA, the FTEs are to remain with the original Object A expenditure. (Refer to Section 2.2.6.4.5.a and b for illustrative entries.)

For GAAP reporting purposes, payments to proprietary fund type accounts should be recorded as revenues with appropriate revenue source codes. However, as discussed above, intra-agency reimbursements to budgeted accounts are recorded as credits to expense using Object T. Therefore, an additional entry is necessary to adjust to proper GAAP accounting. The GAAP adjustment debits GL Code 6525 "Expense Adjustments/Eliminations (GAAP)," using Object T with the appropriate sub-object and credits GL Code 3225 "Revenue Adjustments/Eliminations (GAAP)" with the appropriate revenue source code. Only in the case of GL Code 6525 transfers is there no corresponding Object T offset. (Refer to Section 2.2.6.4.5.c for an illustrative entry.)

2.2.6.3.1.a(2)

For non-budgeted proprietary accounts (excluding Accounts 443 and 505 which are subject to (1) above), reimbursements are not coded as credits to expenses using Object T. They are coded directly to revenue with appropriate revenue source codes. (Refer to Section 2.2.6.4.5.d for an illustrative entry.)

Intra-agency reimbursements are restricted to between budgeted accounts or between non-budgeted accounts. Object T transfers are not to be made between budgeted and non-budgeted accounts.

2.2.6.3.1.b

Interagency reimbursements--All transactions between state agencies are to be properly accounted for as prescribed in Chapter 39.34 RCW.

The following procedures are to be followed in those instances where a budgeted account or certain account used by higher education agencies - Accounts 143, 145, 147, 148, 149, 443, and 505 which are included with budgeted accounts for purposes of this section - provides goods or services to another agency:

2.2.6.3.1.b(1)

In accounting for interagency reimbursement transactions, the reimbursed agency is to credit expenditures/expenses using Object S. The reimbursing agency is to account for expenditures for interagency materials supplied or services rendered as though they were purchased from an outside vendor. (Refer to Section 2.2.6.4.6.a and b of this manual for illustrative entries.)

NOTE: In budgeted accounts, interagency reimbursements are not to be recorded as revenue nor as recovery of current appropriation expenditures using Revenue Source Code 0715 "Recoveries of Current Appropriation Expenditures." (Refer to Section 2.2.6.4.6.a and b for illustrative entries.)

2.2.6.3.1.b(2)

The amounts billed to other agencies and uncollected at the end of the month and work in process costs not billed at the end of the month are to be recorded as a credit to the appropriate GL Code Series 65XX "Expenditures/Expenses" with Object S and a debit to GL Code 1354 "Due from Other Agencies - Short-Term."

2.2.6.3.1.b(3)

For GAAP reporting purposes, payments to proprietary accounts should be recorded as revenues with appropriate revenue source codes. However, as discussed above, interagency reimbursements to budgeted proprietary accounts are recorded as credits to expense (Object S). Therefore, an additional entry is necessary to adjust to proper GAAP accounting. The GAAP adjustment debits GL Code 6525 "Expense Adjustments/Eliminations (GAAP)," using Object S with the appropriate sub-object and credits GL Code 3225 "Revenue Adjustments/Eliminations (GAAP)" with the appropriate revenue source code. (Refer to Section 2.2.6.4.6.c for an illustrative entry.)

For nonbudgeted proprietary accounts (excluding Accounts 443 and 505 which are subject to the procedures outlined above), interagency reimbursements are not coded as credits to expenses (Object S). They are coded directly to revenue with appropriate revenue source codes. (Refer to Section 2.2.6.4.6.d for an illustrative entry.)

2.2.6.3.1.c

Agencies are to establish procedures to ensure timely, accurate, and cost effective payment of obligations to agencies.

Special attention by all agencies is to be given to the following:

2.2.6.3.1.c(1)

Due Dates - Dates for payments are established by the terms of contracts between the state agencies. If the contract is silent concerning terms or there is no written contract, the terms are net 30 days. The 30 days, or other terms, begin upon receipt of the goods or services or a properly completed invoice, whichever is later. Agency payments are to be made by the due date.

2.2.6.3.1.c(2)

Combined Payments - The number of payments to an agency are to be kept to a minimum by processing the maximum number of invoices with a single payment.

2.2.6.3.1.c(3)

Partial Payments - When agencies accept partial delivery of goods or services without reservation, prompt payment is to be made for the goods or services received upon receipt from the agency of a properly completed invoice or in accordance with contract terms covering the partial delivery.

2.2.6.3.1.c(4)

Disputes - Prompt and proper notification to an agency of receipt of unsatisfactory goods or services or an incorrect invoice defers the due date. The due date is recalculated from the date the problem is corrected. Proper authorization is required when material changes are made.

2.2.6.3.1.c(5)

Records - Billings are to reflect the cost of labor, material and overhead. Records are to be maintained by the vendor agency that provide complete cost billing information and also an audit trail for post auditing. Source documentation should be made available, upon request, for review by the billed agency.

2.2.6.3.1.c(6)

Payment Dates - Payment is made after the goods or services are received. Interagency transactions, like regular transactions, are to be paid on the date specified in the applicable contract documents or, if no date is specified, within thirty days of receipt of a properly completed invoice or receipt of goods or services, whichever is later. Transactions between Treasury and/or Treasury Trust Accounts are to be made by Journal Voucher (A7) (RCW 39.34.140). Transactions between non-treasury type accounts are to be made by check, or other methods acceptable to the agencies involved.

When problems arise with the collection of interagency receivables, agencies are to follow the steps at Section 2.2.6.2.2.d.

Vendor agencies are not to request or require advances from receiving agencies unless the advance was approved in writing by the OFM Director or authorized designee (RCW 39.34.150).

Refer to Section 5.1.2.1 for additional requirements applicable to fiscal year end cutoff.

Refer to Sections 2.2.6.1 and 2.2.6.2 for discussion of transfers and quasi-external transactions.

2.2.6.3.2

Agency Vendor Payment Revolving Account Charges

Effective Date:

Sept. 1, 1998

2.2.6.3.2.a

Account 720 "Agency Vendor Payment Revolving Account" may be used by agencies (RCW 42.26), with the approval of OFM, for the payment of goods or services which are payable from monies other than those maintained in the Office of the State Treasurer.

2.2.6.3.2.b

Use of Account 720 by agencies is to be authorized in writing by the Director of OFM or authorized designee.

2.2.6.3.2.c

Amounts disbursed from Account 720 must be from amounts previously deposited by the agency using the account. These deposits must be from local accounts which are properly chargeable with the disbursement. Amounts to cover disbursements must be deposited prior to actual disbursement. (Refer to Section 2.2.6.4.7 for illustrative entries.)

2.2.6.3.2.d

All amounts accruing to Account 720 as a result of the cancellation of warrants are to be re-deposited in the agency's appropriate local account.

2.2.6.3.2.e

Only the following accounts are to be maintained in the general ledger of Account 720: GL Codes 4310 "Current Treasury Cash Activity (OST Only)," 4325 "Beginning Treasury Cash Balance - Agency Funds," 5199 "Other Liabilities - Short-Term," and the 71XX "In-Process" Series. Subsidiary ledgers are not required. (Refer to Section 2.2.6.4.7 for illustrative entries.)