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006.09.1 R1-19-4-710. Interagency/Interfund Transfers

AR ADC 006.09.1 R1-19-4-710Arkansas Administrative Code

West's Arkansas Administrative Code
Title 006. Department of Finance and Administration
Division 09. Office of Accounting
Rule 1. Rules and Regulations of the Financial Management Guide
Ark. Admin. Code 006.09.1 R1-19-4-710
006.09.1 R1-19-4-710. Interagency/Interfund Transfers
Currentness
Generally Accepted Accounting Principles (GAAP) defines transfers as flow of assets such as cash or goods without equivalent flows of assets in return and without a requirement for repayment. GAAP also directs that interfund loans that are not expected to be repaid within a reasonable period be reclassified as transfers.
The initial inflow of cash to the State is recorded as revenue by the receiving agency. Subsequent movements of cash, such as a transfer of grant funds being passed to another agency, distributions of general revenue to agencies, etc. are recorded as transfers out by the transferring agency. The agency receiving the cash records the receipt of funds as a transfer in. Subsequent payments to employees and vendors would be coded to the appropriate budget relevant general ledger account code. Transfers of cash between divisions of an agency or between agencies should not be done by warrant. Exception to this process must be approved in writing by DFA-OA.
Legal fund transfers must be approved and posted by the DFA - Office of Accounting- Funds Group. The procedure for recording these transfers is explained in R1-19-5-101 - TRANSFERS - Fund Transfer Procedures.
Interfund Services or Commodities Provided and Used
GAAP defines interfund services or commodities provided and used as when one fund provides services or goods to another fund which is then charged for these services/goods received. GAAP further directs using this classification when the amount of an interfund charge equals or approximates the external exchange value of the services rendered.
Questions that should be asked to determine if a transaction meets the definition of interfund services provided and used are as follows:
1. Would I purchase this same item/service from an outside source if I was not purchasing it from another state agency? If yes, continue to question 2.
2. Am I paying the other state agency approximately what I would be required to pay an outside vendor? If yes, then this likely meets the definition of an interfund service provided/used.
3. It also may be helpful to consider whether the sale of the goods or services is a normal operating activity of the agency that makes the charge. This step will help separate reimbursements or allocation of costs versus true services provided and used.
To process payments for interfund services or commodities provided using fund transfers, contact your CAFR liaison for assistance. The liaison will provide you with a template and instructions on how to enter the information. The completed template should then be submitted to the DFA-Office of Accounting-Funds Group for posting.
For additional information on interagency transfers, please refer to the Frequently Asked Questions (FAQ's) at http://www.state.ar.us/dfa/accounting/word/faqs.doc
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.09.1 R1-19-4-710, AR ADC 006.09.1 R1-19-4-710
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