Journal Vouchers

Refer to: DFM

1. PURPOSE.  This circular establishes policy and procedures for the appropriate use of Journal Vouchers (JV) and provides guidance in the proper use, documentation, approval, and recording of JVs.

2. BACKGROUND.  The following Federal laws and regulations pertain to JVs:
   1. Title 31, United States Code, 3512, ?Executive Agency Accounting and Other Financial Management Reports and Plans?
   2. The Federal Managers? Financial Integrity Act of 1982 (Public Law 97-255)
   3. Office of Management and Budget Circular A-123, ?Internal Control Systems?
   4. United States Treasury Financial Manual
   5. Department of Health and Human Services Accounting Manual
   6. General Accounting Office ?Policy and Procedures Manual for Guidance of Federal Agencies,? Title 7 - Fiscal Guidance

3. POLICY.  All financial transactions must initially be charged directly to the correct account, then reviewed and reconciled at several points during the approval process.  The number of adjustments (JVs) to transactions must be kept to a minimum.  Journal vouchers are generated only for previously recorded disbursement or collections transaction.  Each Area Office is responsible for establishing and maintaining appropriate JV accounting and internal controls.

4. DEFINITIONS.
   1. Appropriation.  An appropriation is an authorization by an Act of Congress that permits Federal departments and agencies to incur obligations and to make payments out of the United States Treasury for specified purposes. Appropriations do not represent actual cash set aside by the Treasury.  They are limited amounts that agencies may obligate during a specified time period.
   2. Block Journal Voucher.  A block journal voucher is a summary grouping of accounting transactions with similar data elements, such as fiscal year (FY), common accounting number (CAN), sub-sub activity (SSA), object classification code (OC), cost center (CC), etc., for the purpose of transferring these costs from one budget activity or cost center to a different budget activity or cost center.  For example, if there were 75 document transactions recorded against the hospitals and clinics (H&C) account, all utilizing FY 2003, CAN J450101, and OC 2611 and totaling $120,000, a block journal voucher would summarize the amount of these transactions into one transaction by reversing the total disbursement amount from the FY 2002 H&C with transaction code 237, FY 2003, CAN J450101 OC 2611, and creating a second transaction to record the total disbursements against the Medicaid account using transaction code 190, FY 2003, CAN J459U09 and OC 2611.
   3. Budget Activity.  A budget activity (or sub-activity/program) is a category included in the budget for each appropriation and funding source that identifies the services to be performed or the program activity.
   4. Collections.  Collections include the money collected by the Agency that qualifies as repayment to the appropriation, such as reimbursements and refunds.
   5. Common Accounting Number.  A CAN is a seven-digit number that represents an essential series of data elements categorized as accounting classifications, organizational classifications, geographical designations, and data elements.
   6. Disbursements.  Disbursements include money paid, checks issued, or net of refunds for obligations.  This term may be used interchangeably with ?expenditures,? ?outlays,? or ?liquidated obligations.?
   7. Journal Voucher.  A JV is a method of transferring expenditures or collections from one budget or general ledger account to another budget or general ledger account.
   8. Object Classification Code.  An OC describes the item or services procured.  The OC classifies each transaction by type of obligation/expenditure, such as service, supply, equipment, payroll, etc.
   9. Obligations.  Obligations are the dollar amounts of orders placed, contracts awarded, services rendered, or other liabilities incurred by the Agency (Area) during a given period, that will require disbursements during the same or some future period.

5. RESPONSIBILITIES.
   1. Area Financial Management Officer.  The Area Financial Management Officer (FMO):
      1. oversees the implementation of this policy,
      2. provides guidance to individuals regarding the proper use of a JV, and
      3. is responsible for ensuring that JVs are properly approved.
   2. Service Unit Directors/Program Directors.  Service Unit Directors/Program Directors are responsible for:
      1. initiating a written request for a JV,
      2. maintaining a JV request log,
      3. ensuring that all appropriate supporting documentation is attached to the JV request and the accounting data is accurate, and
      4. validating that the adjustment request has been entered into the accounting system and is correct in the financial reports.
   3. Area Accounting or Budget Officer.  The Area Accounting or Budget Officer:
      1. ensures all JV requests are properly documented and that the JV is signed by the preparer;
      2. maintains a JV log:
      3. in the absence of the FMO, or as designated, approves the JV;
      4. ensures that JVs are entered into the accounting system in a proper and timely manner and reflected in the financial reports;
      5. verifies that JVs are reconciled to the standard form 224, ?Statement of Transactions,? and Area general ledger accounts; and
      6. ensures that all invalid payroll (99999) entries are corrected within 30 days of receipt of the report.  Invalid payroll costs are not reflected in the budgetary accounts; therefore, these costs must be reversed from this account and charged to the proper accounts.  Unless circumstances prevent it, the Accounting for Pay System should be used to correct these transactions.

6. PROCEDURES.
   1. Initiating a JV Transaction.
      1. Journal Vouchers are initiated for the following reasons:
         1. To transfer expenditures from one budget or general ledger account to another budget or general ledger account.
         2. To transfer collections from one budget to another.
      2. All JVs prepared outside of the Area finance office (i.e., Division of Financial Operation) must be signed by the requesting office before being forwarded to the Area finance approving official.
   2. Block JVs.  Block JVs are permitted provided appropriate documents/reports are attached to the JVs, summarized by CAN, SSA, OC, CC, FY, and location.
   3. Maintenance of Cost Center Integrity.  If a JV is used to transfer funds from one sub-sub activity to a new sub-sub activity and there is no CAN that has the same cost center in the new sub-sub activity within that location, a new CAN must be created before proceeding with the JV.  The purpose of this procedure is to ensure an accurate Medicare & Medicaid (M/M) cost report.
   4. Numbering.  This numbering process will be used to standardize JV numbers across all accounting points within the IHS. The standardized JV number should be placed in either the Collection field or the Schedule field, depending on the transaction codes.  It should also be placed in the Document Number field, when possible.  If a particular document is being journal vouchered, the document number, not the JV number, will need to be placed in the Document Number field.  The standard numbering system will be JV02AP0303:
      1. JV03 - The letters JV, then the fiscal year. Note: In FY 2004, the JV number will be JV04.
      2. AP - The area accounting point.
      3. 0303 - A four-digit, unique number within the AP.  The location code can be incorporated, if desired.  However, it is anticipated that this will be a consecutive number starting with 0001.
   5. Journal Voucher Logs.  All Area and service unit accounting offices must maintain JV logs that contain every JV number used.  The service unit log is used to tracks all JV requests.  The JV numbers in the service unit JV log may be cross-referenced with the Area JV numbers.  This is shown in the CORE report for tracing documents to ensure that actions are taken with the request and for reconciliation purposes.  Additionally, the service unit JV log book is used for internal control records.
   6. Forms and Contents.  Either the electronic version (Circular Exhibit 2003-03-A) or the manual version of JV Optional Form (OF) 1017-G (09-79) Title 7, General Accounting Manual 90107-410 (Circular Exhibit 2003-03-B) may be used to transmit the information.  The form must be completed as specified in 6.F.1 through 6.F.7 (below).
      1. The assigned JV number from the JV number log and date of the JV request should be affixed to the JV request.
      2. The JV shall contain the appropriation of the adjustment transaction.
      3. Each JV shall include, or have attached, a narrative explanation of the purpose or reason for the adjustment.
      4. The JV shall contain accounting information that illustrates the transfer of expenditures or disbursements such as, appropriation, budget activity, document number, CAN, FY, OC, and amount.
      5. The totals entered in the debit and credit columns must match.
      6. When transferring between appropriations, a summary total for each appropriation shall be listed on the JV.
      7. The preparer shall sign and date the JV.
      8. When adjusting a transaction that is partially disbursed, only the disbursed portion may be transferred using a JV.  The remaining obligated amount may be adjusted by de-obligating and re-obligating the document with the correct accounting codes.
   7. Supporting Documentation.  The JV requestor shall ensure that all supporting documentation is attached to each JV request.  Supporting documentation consists of one or more copies of:
      1. financial reports showing the disbursement or collection transactions and document numbers;
      2. CORE reports or screen printouts (before and after the JV is posted);
      3. JV requests, i.e., an e-mail or memorandum from the service unit/program, signed by the Service Unit Director/Administrative Officer or Program Director;
      4. the financial reports indicating that funds are available for the account being charged or debited; or
      5. the Web-based Financial Reporting System, Accounting for Pay System, or Data Flowback Printouts.
   8. Verifying and Approving.
      1. The FMO or the Accounting Officer or their designee is responsible for verifying the validity and accuracy of the JV and supporting documentation.
      2. The FMO or the Accounting Officer or their designee must sign the JV indicating approval for further processing.
   9. Document History Records.
      1. Entries shall be made to the accounting system only after the JV has been approved by either the FMO, Accounting Officer, or their designee.
      2. The JV shall be processed using the original transaction information, i.e., document number, FY, CAN, OC, and dollar amount.
      3. All JVs processed in the accounting system and reconciled with the reports shall be maintained in the Area accounting branch with all supporting documentation attached, including history records.
   10. Reconciliation.  Once the JV has been processed in the accounting system, JV preparers shall verify the financial reports to confirm that each transaction of the JV has been accurately entered into the system and into the correct accounts.  A copy of the ?CORE schedule query screen? screen print will be attached to the non-payroll JV.
   11. Adjustments.  Adjustments shall be made to the appropriate financial records (i.e., commitment registers) to record the adjusted transactions, if necessary.  The CORE reports or on-line queries shall be used to validate the adjustments.  For example, any transfers to an M/M account must agree with the approved M/M spending plan.  If necessary, the M/M spending plan shall be amended to accommodate the adjustments.

7. SUPERSEDURE.  None

8. EFFECTIVE DATE.  This circular is effective on the date of signature.