FIACCT 07-02_00 Federal Revenues- Overview

Federal Drawdowns

The process that a department or division goes through to request funds from a federal agency. This is usually done through an electronic linking system to the federal government, but there are other methods to make a request for federal funds. The funds are later received by electronic wire transfer or by check.

Customer Account

Combination of a customer code and a billing profile in FINET that is used to identify any person, organization, or entity that owes or pays money to the State of Utah. It will be used to identify individual letters of credit if they are used to make federal drawdowns. If letters of credit are not used to make federal drawdowns, then a customer account will be used to identify the federal agency from which the funds are being received.

Program code

A coding block to identify specific federal funding using a combination of Major Program, Program, Program Period, and optional Phase codes (or approved coding alternative) in a FINET transaction’s DETAIL ACCOUNTING section. See FIACCT 14 Grant Accounting for more detail.

Receivable (RE) Transaction

A transaction in FINET that is used to record accounts receivable. This
transaction also records revenue amounts.

Cash Receipts (CR) Transaction

A transaction in FINET that is used to record all monies collected by the State of Utah. If it is referenced to an RE transaction, it will record the cash received and reverse the accounts receivable amounts recorded originally on the referenced RE. Otherwise, the CR records the cash received and the revenue amount.

Primary Recipient

Refers to the department that receives federal funds and is held accountable by the federal government for its use or expenditure. Accountability would include responsibility for reporting to the federal government, monitoring compliance with federal guidelines, and state budget accountability. The primary recipient generally is the department that initiates the federal grant and receives the federal
funds directly from the federal government.

Refunds

Refunds are recovery of funds previously paid out for federal program purposes. These transactions such as overpayments, duplicate payments, checks recovered from ineligible recipients, etc.) must be handled separately for the Cash Management Improvement Act. (All refund transactions of less than $50,000 are not subject to the interest liability provisions even though they still must be
tracked separately).

A.

Departments and divisions receiving federal funds through the federal drawdown process will be required to use a Receivable (RE) transaction in FINET.

B.

Departments and divisions must establish the date that the federal funds were officially requested (E.g., the date the wire transfer transaction was initiated) and enter that date on a RE transaction when recognizing the revenue and accounts receivable. The RE transaction should be entered the day the request for funds is made.

C.

Billing of federal agencies will be tracked through the use of a Customer Account. If a letter of credit is used to drawdown federal funds, then a separate Customer Account will be used to identify each letter of credit. If letters of credit are not used to drawdown federal funds, then a Customer Account will be used to identify the federal agency from which the funds are received.

D.

Each federal grant will be set up using a program code that includes a combination of Major Program, Program, and Program Period (use of Phase is optional). The use of program codes will tie federal revenue
received to related expenditures for a specific federal grant for tracking purposes. An exemption in using Major Program, Program, and Program Period may be requested. An exemption request shall identify why the federal grant requirements cannot be tracked using the Major Program, Program, Program Period. See FIACCT 14 Grant Accounting for more detail.

E.

When a federal draw is for $25,000,000 or more, the agency should contact the State Treasurer and provide the State Treasurer with the amount of the draw, the bank name, and FINET bank code

F.

When federal funds are received, the agency will establish the date the funds are received and enter that date on a cash receipt (CR) transaction that references the RE transaction to record the cash and reduce or close the RE accounts receivable.

G.

All revenue collected directly from the federal government as federal revenue must be recorded in the proper revenue source in the range of 3000-3999.

H.

Federal revenue received directly from the federal government by one state department, as the primary recipient, that is then transferred to another state department should be recorded as follows (Detailed procedures are in the FIACCT 07-02.12 Transfer of Federal Funds policy):

1. The department that receives the funds (the primary recipient) from the federal government should record it as revenue using the proper revenue source in the range of 3000-3999 and then when transferring it to another department, record the transfer using expenditure object 7521 or 7522.
2. The department receiving the funds from the primary recipient should record the transfer using a revenue source in the ranges of 4695 through 4732 or 4741 through 4742.

I.

A state department that is acting as a collecting agency for another state department that is the primary recipient should record the federal revenue received as follows (Detailed procedures are in the FIACCT 07- 02.13 Department Acting as Collecting Agent policy):

1. Record the receipt of the funds using a cash receipt (CR) transaction to the appropriate revenue source in the range of 3000-3999.
2. Transfer the federal revenue to the primary recipient state department using Internal Transaction Initiator/Internal Transaction Agreement (ITI/ITA) transactions. The collecting department prepares the ITI transaction with the same revenue sources that were used to record the deposit and selects the Receiver/Buyer option in the INITIATOR field. The collecting department obtains at least one valid coding line from the primary recipient and enters the coding on the 2ND PARTY ACCOUNTING section of the ITI.
3. The primary recipient completes the generated Internal Transaction Agreement (ITA), selects the Provider/Seller option in the INITIATOR field with a revenue source in the range of 3000-3999 and program codes that identify specific Federal funding.

J.

Record federal revenue received from local governments or other non-state entities outside the state government, which is used to carry out federally funded programs, as departmental collections using revenue source 2933 – Sub-recipient Of Other Government Federal Revenue or revenue source 2937 – Private/NonProfit Federal Revenue. (Detailed procedures are in the FIACCT 07-02-14 Contract Services with a Non-state Entity policy.

NOTE: In the instance described above, the state, as a sub-recipient of federal funds, is responsible for reporting this information to the federal government through the single audit report.

K.

Record federal funds that meet the definition of pass thru funds with a revenue source in the range of 4750-4758 when received and expenditure object in the range of 7601-7604 when passed on or expended. Pass thru funds are funds passed through a state department to a non-state entity (See detailed procedures for handling pass thru funds in the FIACCT 07-02.11 Receipt of Federal Funds policy. Policies and the criteria that must be met to qualify as pass thru funds are in the FIACCT 07-05-00 Pass Thru Funds policy

L.

Accrue or defer federal revenue at year end. Federal revenue that is earned but not collected will be reported as accounts receivable at fiscal yearend. Federal revenues that have been collected but not earned will be recorded as deferred revenue at fiscal year-end.

M.

Refunds for federal funds expended will be accounted for by departments as a refund of expenditure on a Cash Receipts transaction, using the appropriate expenditure and program coding to reduce the amount of expenditures charged to the appropriate grant. This will result in a reduction in the next federal drawdown by
the amount received as refunds. See the FIACCT 07-02.17 Refund of Federal Funds policy for tracking possible CMIA interest liability.

N.

Requesting federal funds prior to related program expenditures for major programs are no longer allowed by the Federal Government. Departments are to draw down federal funds based on when related program expenditures are incurred. This includes drawdowns to cover administrative costs.