Internal Transactions Procedure

This procedure covers guidance for transactions between two different chartfields that represent either a charge for goods or services, or a movement of cash between chartfields. Internal transactions are comprised of the types listed below:

Internal billings: Transactions of goods or services between chartfields, which does not represent a revenue or expense with a party outside of the University. This type is most often used by a service center and uses the internal service entry (ISE) journal type. Alternatively, source types specific to the operation can be used on journal uploads.
Transfers: Movements of cash between chartfields where no goods or services were exchanged represent “non-exchange” transactions. These are often classified as transfers or general revenue allocations (GRA). This transaction type must use the transfer entry (TRE) journal type.

This procedure outlines the accounts to be used for the types above. Transactions of this nature must comply with the following related policies and procedures:

22102 Transfers

22104 Service Centers

Chartfield Usage Procedure

Construction Accounting & Funding Procedure

Entries for the above transaction types should not use the same account on the debit and credit side of the entry. The accounts used in accordance with this procedure are designed to have a separate revenue or “in” account and corresponding expense or “out” account, which should be used on all transactions, excluding General Revenue Allocations. Internal accounting transactions should not be used to correct miscoding of external revenues or expenses, unless specified in this procedure. See the “Correcting Internal Transaction” section on how to correct a miscoded internal accounting transactions.

Internal billing and transfer transactions should occur on a regular basis and avoid being charged and/or spread to other units on an annual basis. It is recommended that transactions occur on a monthly or quarterly basis in connection with the business cycle of the charging unit.

Internal Billing Transactions

Transactions using an internal service revenue account, must use the journal entry type ISE. This is necessary to ensure proper financial statement presentation for the University on a consolidated or business unit basis in which all internal billing transactions must be eliminated. In order to achieve the elimination of internally driven revenues and expenses, the University has a set of revenue accounts that are mapped to an expense line for GAAP reporting that allows the revenues and expenses to offset each other when rolled up into the GASB compliant financial reports. Use of these accounts also allows for each individual chartfield to have a reported revenue when viewed on its own financial statements through PeopleSoft Web Applications financial reports.

The internal revenue accounts ISE entries are often used by auxiliary or service centers, however, these accounts can be used by other departments if the charge is for specific goods and services. Departments that are providing the goods or services are responsible for preparing the ISE entry.

Internal allocations of shared expenses, such as department or division overhead, occur through a full costing account, which represents a charge for services as well, although not charged based on a rate like that used by auxiliary or service operations. Full costing cannot be charged to a grant chartfield. Grants are charged for overhead costs through the negotiated facilities and administrative (F&A) cost rate therefore should not be charged a full costing expense.

Full costing is best suited for units that do not charge for a service specifically, however, their costs are spread amongst other units. Operations that charge for their services, such as internal service centers, should use internal sales and build overhead costs into their established rates rather than using full costing to charge departments.

Internal billing accounts must be used for activity within the University’s reporting entity, and likewise, must not be used to record revenues received from an external party. As such, internal billing revenue accounts are not allowed on cash receipt documents (CRR).

The accounts designated for internally driven transactions are listed as follows:

Internal Billing Transaction Type	Revenue Account (credit)	Expense Account (debit)
Sales of Goods or Services (ISE)	450000 – Internal Sales & Services; or any account in the- range 450000-452999	Accounts designated as expenses that meet the good or service included in the charge 600000-605000 Cost of Goods Sold, or 720001 – 800999 Non-Payroll Expenses
Full Costing (JE)	363100 – Full Costing In	863100 – Full Costing Out

Accruals should not be made for intercompany transactions, meaning, when there is a billing lag, no accounts receivable by billing department or accounts payable by department receiving service; or when there is a prepayment, no deferred revenue by billing department or prepaid by department receiving service. If this occurs, any deficits should be noted, but no entries should be made to the balance sheet as a result.

Custodial funds (6000-6030) & Retirement funds (50XX) should not use the above revenue accounts. Transactions where custodial (agency) funds represent one side of the transaction, should be treated as an external transaction with accounts selected based on the nature of the transaction. This could include gift revenue, sales or services, or other revenue accounts falling outside the internal revenue account range (450000-452999) and would be entered on a JE transaction type.

Transfers (Journal Type – TRE)

Movements of cash between funds where there is no exchange of goods or services. These transactions are internally driven to move cash and/or provide resources to another chartfield. The University has several types of transfers as defined below:

Mandatory: used to move funds as required by a third party (external to the University). This could include debt service payments, required institutional matching on financial aid and/or student loan programs, or transfers as required by an endowment agreement.

Non-Mandatory: used to move unrestricted funds from one fund to another at the discretion of administrative management (excludes transfers within unrestricted current funds). Non-mandatory transfers can serve various purposes, such as increasing the amount of financial aid available to students through voluntary additions to the loan fund, or transferring funds to or from a Quasi-Endowment fund.

Intra Fund: movements of monies between chartfield strings within unrestricted current funds, whether within or between Business Units.

Grant Transfers: movements of monies between a grant chartfield string and a non-grant chartfield string made by campus sponsored programs. These movements are for activities that are specific and direct charges and/or movements related to the grant chartfield, such as work-study, SEOG, and fixed price contracts. See grant policies for more on the purpose of these transfers.

General Revenue Allocations: Refers to how the University allocates its core operating funds, primarily from tuition and state appropriations to divisions and departments for instruction, public service, and support activities.

Transfer transactions must use an internal transfer account on both sides of the entry. The table below outlines the majority of transfer types and related accounts to be used for each.

Transfer Transaction Type (TRE)	Revenue (In) Account (credit)	Expense (Out) Account (debit)	Generally Prepared by:
Mandatory Transfers:
Match, Endowment, or Other Required	390000	860000	Endowment by UM System Controller’s Office, Gifts – Campus Advancement, Other – Campus Accounting
Principal Debt Service	390100	861100	UM System Controller’s Office

Non-Mandatory Transfers (between fund groups):
Quasi Endowment or Other	391000	861000	UM System
Maintenance & Repair (M&R)	392300	862300	Campus Facilities or Campus Finance
Continuing Education	393100	863150	Campus Finance

Intra Fund(Current):
Within Same Business Unit	392000	862000	Departments or Campus Finance
Within Same CSD	392100	862100	Departments or Campus Finance
Between GO and Auxiliary & Service Operations Funds	392150	862150	Departments or Campus Finance
Between Business Units	393000	863000	Departments or Campus Finance

Grant Transfers:
Grant Reimbursements	391050	861050	Campus Sponsored Programs
Cost Share	392200		Departments
Fixed Price Contracts	393700	863700	Campus Sponsored Programs
Work Study/SEOG	395000	865000	Campus Sponsored Programs/Campus Finance/UM System Controller’s Office

General Revenue Allocations:
General Revenue Allocation	400000	400000	Campus Finance
Internal Business Unit Alloc	400010	400010	Departments or Campus Finance

Transfers between restriction and unrestricted funds are not allowed. Transfer edits are built into the PeopleSoft Web applications journal entry module to match the transfer rules in the transfer grid. Refer to the transfer grid for a full list of transfer restrictions between certain funds/fund groups.

Split funding on expenses should be coded to invoices as they are paid whenever possible. If an error is found on the chartfield(s) used on the payment, a correcting entry (CE) should be used to charge the appropriate chartfield(s). Transfers should only be used for the purposes of correcting a miscoding if the original transaction was in a prior fiscal year and a project/program to date fund was not used.

Construction Funding Transfers (TRE)

Transfers used to move funds from the source ultimately paying for a construction project (funding source) to the construction project chartfield. While the transfer accounts are used for the movement of cash, this transfer type represents a reimbursement of expenses incurred on the construction project chartfield and is used as a mechanism to put an expense on the funding chartfield while keeping the original construction expenses intact for contract expense management purposes. As such, transfers of this type are allowed between the restricted and unrestricted funds.

Transfer Transaction Type (TRE)	Revenue (In) Account (credit) – Construction Project Chartfield	Expense (Out) Account (debit) – Funding Source Chartfield
Capital Funding:	392400-392800	862400-862800
Unrestricted Fund Sources	392400	862400
Gift Funding Sources	392500	862500
Grant Funding Sources	392600	862600-862601
State Capital Appropriation Funded	392700	862700
Debt Funded	392800	862800

Correcting Internal Transactions

Internal accounting journal entries that are correcting improper coding of the original transaction should “remove” or “reverse” the transaction from the original chartfield with a credit or debit (opposite the original transaction) and debit or credit the new chartfield that should have been included on the original transaction. For example, if department A had a transfer in or internal sales revenue from department B that was too high, an entry would be necessary to debit (reduce) the transfer in or internal sales revenue for department A and credit (reduce) the transfer out or expense account in department B, instead of creating a transfer out or expense entry in department A.

Correcting entries for internal transactions (with the exception of transfers) should use the Correcting Entry (CE) journal type. Transfer correcting entries must use a TRE journal type.

Movements from a clearing fund to the appropriate transaction fund should not follow the internal transaction guidelines. Entries to move from the clearing fund should debit or credit the account used in the clearing fund to “remove” the transaction in the clearing fund and credit or debit (opposite the transaction in the clearing fund) the appropriate account in the designation fund. This treatment is different from the internal transactions outlined in this procedure as it is a correction to the recording of the original transaction.

Reviewed 2026-02-24

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