Introduction

Prior year adjustment transactions include restoring prior year encumbrances canceled in error, prior year spending authority to cover refunds, and reimbursements being re-issued in the current year.

Adjustments can be made to correct a wrong Subobject, Budget Unit, Fund, or Grant. Other reasons you would need to make an adjustment include:

• To receive a refund of a payment made in a prior fiscal year.
• To correct an expenditure or revenue to the wrong Grant or Project in the prior fiscal year.
• To correct a reimbursement to a rotary fund in a prior fiscal year.

Prior year adjustments involving key statewide balances that total less than​ $500,000 may be made without prior approval. Adjustments exceeding the $500,000 limit must be approved by the Division of Financial Management, Legislative Services Audit Division, and the State Controller's Office.

Adjustments of agency internal balances can be made without dollar amount or time period restrictions at the agency's discretion. Adjustments must remain in the same appropriated structure (Fund, Budget Unit, and Object).

The Fiscal Policies Manual - Prior Year Adjustments policy defines key statewide balances vs. agency internal balances (summarized below) as well as adjustment procedures.

Key Statewide Balances vs. Agency Internal Balances

The difference between key statewide balances and agency internal balances determine if your agency can make the adjustment or if you must get approval from the Division of Financial Management, the Legislative Services Audit Division, and/or the State Controller's Office.

Key Statewide Balances

Key statewide balances can be considered the cash balance in a statutorily-defined fund that is either non-appropriated or continuously appropriated.  Key statewide balances also include the agency appropriation limitations generally specified by Program and by Object (Personnel, Operating, Capital, and Trustee and Benefits).

Agency Internal Balances

Agency internal balances are balances that may be separated with agency-specific fiscal coding elements, but are not tracked for statewide purposes by budget or other central financial or policy personnel. Idaho State agencies may use statewide accounting system fiscal coding elements, such as Grants, Projects, Subobject Detail, etc., to track balances for reporting purposes.

Prior Year Adustments Affecting Key Statewide Balances 

Adjustments Under $500,000 and Made by December 31

Within the first six months of a fiscal year, you can make your own prior year adjustments to Key Statewide Balances, as long as you process the adjustment by December 31, and the amount does not exceed $500,000. Also, if your adjustment amount is $100,000 or more, you need to report the adjustment to the State Controllers' Office, Reporting and Review at ACFR@sco.idaho.gov.

There are three options for adjusting key statewide prior year balances:

Current Year Adjustment Revenue or Expenditure.

• Use current year revenue or expenditure adjustment transaction codes.
• Enter PY ADJ into the Invoice Number field in STARS to identify the transaction as a prior year adjustment.
• Current year adjustment expenditure transactions may increase or decrease your agency's current year appropriations due to the adjustment crossing your appropriated Fund structure (Funds, Budget Units, or Expenditure Objects). This could result in a lack of appropriation to cover current fiscal year expenditures. Or it could create negative expenditures on the Appropriation file, showing more appropriation that you originally received. STARS programing will allow this, but your agency must keep sufficient documentation for audits.
• If your adjustment amount is $100,000 or more, you will need to report the adjustment to the State Controllers' Office, Reporting and Review section at ACFR@sco.idaho.gov.

Current Year Expenditure Adjustment with Prior Year Reversion Adjustment.
If you want to use current year expenditure adjustment transaction codes, but do not want to affect your current year appropriations, you may request a reversion adjustment. This will allow you to cover the expenditure charge adjustment by reclaiming last year's appropriation amount that was reverted. You can only make the expenditure charge adjustment (e.g., TC 27B) to the same appropriated structure where it was reverted.

NOTE:  The expenditure adjustment must not exceed the allowable reversion amount.  You must absorb the difference in the current year, or go to the legislature for a supplemental appropriation adjustment.

You must process any reversion adjustments or supplemental appropriation requests through your agency's budget analyst in the Division of Financial Management.  The legislature then must approve the supplemental appropriation adjustment.  

a.  You can use current year revenue or expenditure adjustment transaction codes.

b.  You should enter PY ADJ into the Invoice Number field in STARS to identify the transaction as a prior year adjustment.

c.  In addition, to request a reversion adjustment (TC 021/021R), you should process the adjustments in the same batch as the expenditure adjustment.   

d.  You must process offsetting reversion adjustment amounts (TC 021/021R) in the current fiscal year. Your adjustment and reversion transaction codes must have the same structure. (For example, TC 27A & TC 021 must have the same Appropriation structure and the TC 27B & TC 021R must have the same Appropriation structure.) You must submit a reversion form to request approval for a reversion adjustment through the Division of Financial Management. If the amount was reappropriated instead of reverted in the prior year, you do not need to do the reversion adjustment. (The amount will already show in the PY Reappropriation bucket on the Appropriation file.) In this case, both the prior year reappropriation and the expenditure adjustment are in the same budget fiscal year and transaction year.

e.  If your adjustment amount is $100,000 or more, report the adjustment to the State Controllers' Office, Reporting and Review section at ACFR@sco.idaho.gov.

f.  The Division of Financial Management (DFM) will determine the impact of an individual adjustment versus an accumulative $500,000 adjustment. This will depend on the impact to the key statewide balances.

     2.  SCO Prior Year Adjustment.

If your agency wants the adjustment to show as a prior year adjustment to cash and equity, you can use this option. As long as this adjustment is made during the first six months, you can ask the State Controller's Office to make this adjustment. We recommend using this option when preparing a Grant to be purged.

• The adjustment must meet the same criteria as option 2 (above). Expenditure charges cannot exceed the amount reverted in the prior year.
• Send your request through the DSA helpline at servicedesk@sco.idaho.gov.

a.  Be sure to supply pertinent information for backup documentation.

b.  If your adjustment amount is $100,000 or more, report the adjustment to the State Controllers' Office, Reporting and review section at ACFR@sco.idaho.gov.

NOTE:  Options 1 and 2 post to revenues (GL 4100) or expenditures (GL 4200).  The SCO prior year adjustment transaction codes will only post to cash and equity.  The SCO will use TC 341 for revenue adjustments and TC 340 for expenditure adjustments. The Grant and Project files are automatically updated by TCs 340 and 341.      

Adjustments Over $500,000 or Made After December 31

Your agency should not make revenue or expenditure adjustments to Key Statewide Balances without prior approval if the adjustment is after December 31 (regardless of the amount) or if the amount is $500,000 or more (regardless of the time period).

Send notification to the DSA Helpline at servicedesk@sco.idaho.gov. SCO will contact the necessary personnel (DFM, LSO, etc.) to determine the recommended adjustment process.  SCO will then contact your agency with the decision.

Also, if you identify an adjustment after December 31 that is $100,000 or more that affects key statewide balances, notify the SCO Bureau of Reporting and Review at ACFR@sco.idaho.gov. 

If the SCO Bureau of Reporting and Review Bureau determines that they should record the adjustment for State Controller financial reporting purposes (statewide ACFR), they will contact the JFAC co-chairs with the adjustment(s) proposal and seek their interim approval for the adjustment. If the co-chairs approve the adjustment, the SCO will adjust the ACFR information in the adjusted beginning balances for the next year reporting. Your agency will still need to request legislative approval before posting to the STARS financial files.

Prior Year Adjustments Affecting Agency Internal Balances

Agency Internal Balance Not Crossing Appropriation Structure

Your agency can record revenue or expenditure adjustments that offset only Agency Internal Balances (does not affect Budget Units, Funds, Appropriations, etc.), regardless of the six-month period or the $500,000 amount limitation. You do not have to notify SCO of these adjustments.

There are two options to adjust these prior year agency internal balances:

1.  Current Year Adjustment Revenue or Expenditure Transaction Codes.
    Use this option if you do not care that the revenue or expenditure adjustment posts to the current fiscal year information.

•     You can use current year revenue or expenditure adjustment transaction codes.
•     You should enter PY ADJ into the Invoice Number field in STARS to identify the transaction as a prior year adjustment.

2.  SCO Prior Year Adjustment Transaction  Codes. 

     Use this option if you are adjusting old cash and equity, or for preparing a Grant to be purged.

     If your agency does not wish to affect current year revenues, expenditures, or appropriations, you may ask 

     the State Controller's Office to make this prior year adjustment.Send your request to servicedesk@sco.idaho.gov. Be sure to supply pertinent information for backup documentation.

NOTE:  Options 1 and 2 post to revenues (GL 4100) or expenditures (GL 4200).  The SCO prior year adjustment transaction codes will only post to cash and equity.  The SCO will use TC 341 for revenue adjustments and TC 340 for expenditure adjustments. The grant and project files are automatically updated by TCs 340 and 341.

Other Prior Year Expenditure Adjustments

Prior Year Encumbrance Finalized or Cancelled In Error

If you finalized or cancelled a prior year encumbrance in error, you can request SCO to restore the balance that was liquidated. This must be done in the same year the error occurred. The document being restored must have a zero balance, and the maximum amount allowed to be restored would be the difference between the Liquidations and the Collections/Payments.

• Send a request to the SCO DSA Helpline at servicedesk@sco.idaho.gov requesting SCO to re-open a prior year encumbrance. The SCO will restore the balance that was liquidated using TC 305.
• Include your Agency Number, the encumbrance Document Number, and the BFY of the encumbrance.

Refund or Reimbursment of an Expenditure Made in a Prior Year

Refunds or reimbursements are not subject to Idaho Code limits. This includes items such as:

• Refund of a prior year payment.
• Refund of an overpayment to a vendor.
• Third-party reimbursement of a prior year payment, including payroll.
• Return of an advance payment made in a prior year.
• Refund for defective goods paid for in a prior year.

You should deposit refunds or reimbursements as a “receipt of refund for overpayment of prior year expenditure".  STARS will treat the refund/reimbursement as revenue. This will not increase current year appropriation. To record a refund or reimbursement you should:

1. Deposit the refund amount using TC 106 and Subobject 3635.
2. If you are planning on re-issuing the payment to replace the refund or reimbursement, you can make an adjustment to cover the re-issuance.
   At the time of re-issuing the payment, you should adjust the prior year refund using TC 106R and TC 105. You can adjust this amount only up to the amount of the original refund/advance payment or the new payment, whichever is less. The TC 105 will restore your spending authority to cover the re-issued payment.  
   
   NOTE:  The TC 230 payment and the TC 105 adjustment will net to zero in the current year if the new payment is equal to or less than the refund. TC 230 increases expenditures and TC105 reduces expenditures. Therefore, you will not affect current year appropriation. 

Correct a Reimbursement of a Rotary Fund

If you find a reimbursement of a Rotary Fund made in a prior fiscal year for more than it should have been, you can enter a regular rotary fund reversal (TC 730R/735R), since Rotary Fund amounts are normally immaterial.

Adjust a Reimbursement Made to Outside Funds (outside bank account)

You can adjust a reimbursement made to outside funds (an outside bank account) made in a prior fiscal year. To do this:

1. Write a check out of the outside funds (outside bank account)
2. Create a deposit with the check using TC 106 and Subobject 3635.
3. If needed, you may also be able to adjust a reappropriation amount. If the transaction had been done correctly, and the amount would have been reappropriated into the next fiscal year, then you can do a reappropriation adjustment. To do this:
   Use a TC 012 (prior year reappropriation) to re-establish the reappropriation amount, as if the payment had not been made in the prior year. This can be done as long as you complete the adjustment by December 31 and the amount is under the $500,000 limitation. After the six months or greater than $500,000 limit, the reappropriation increase will require legislative approval.