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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Pass-Through Activity

State Pass-Throughs

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State Grant Pass-Through Funds Overview [+]

In order to facilitate the reporting of state grant pass-throughs, the Comptroller’s office established the following policies:

  1. Agencies must coordinate state grant pass-through transactions with other agencies.
  2. Apply the following general rules:
    • The disbursing agency is responsible for determining the classification of funds:
      1. Pass-through vs. vendor
      2. Federal vs. state
      3. The portions of federal and state
    • The disbursing agency must confirm these decisions in writing to the receiving agency and the receiving agency must record the transactions as determined by the disbursing agency.
    • The receiving agency determines the amount of accruals.
  3. The RTI process is required in recording pass-through accruals between agencies (including between agencies and universities).

    Component universities do not enter USAS entries for state grant pass-throughs made between component universities within the university system. But component universities must report the state grant pass-throughs within the university system in the SPTR web application.

  4. Record cash pass-through transactions based on USAS data found in the Interagency/Interfund Activity report located in the FMQuery–SIRS USAS Research Tools in the General Ledger Reports drop-down menu –or– with the following reports located in FMQuery–SIRS AFR Desk Review in the SEFA/SPTR drop-down menu:
    • PT201 – State Pass-through Activity by General Ledger Account
    • PT202 – State Pass-through Activity by AGL
  5. The Comptroller’s office uses State Pass-Through Reconciliation reports to resolve variances in state pass-through transactions. State Pass-Through Reconciliation reports are available through the SPTR web application. For instructions on using the SPTR web application, see Instructions for the SPTR web application.

    State Pass-Through Reconciliation reports display both sides of each pass-through relationship. Data is presented at the Grant ID level or the USAS summary level. Agencies may access State Pass-Through Reconciliation reports at any time during the State Pass-Through Schedule preparation process. Agencies are encouraged to monitor the reports for imbalances in the days leading up to the Initial Certification on Sept. 1, 20CY.

    After the state grant pass-through initial certification (Sept. 1, 20CY), agencies must coordinate with each other to resolve all remaining pass-through differences at the Grant ID level or the USAS summary level. All pass-through variances must be resolved in order to complete the State Pass-Through Certification on Sept. 28, 20CY. Grantor agencies are responsible for initiating contact if they disagree with the amount reported as pass-through revenue. The grantor agency should be aware that small variances are most likely due to the accrual process.

Note: All Agencies must enter USAS interfund/interagency transactions by close of business (COB) on Sept. 26. If Sept. 26 falls on a weekend, all transactions must be entered by COB on the prior Friday or they will not be processed until Monday, which is past the reporting requirement deadline.

Quarterly Reconciliation

Agencies are highly encouraged to perform reconciliation of pass-through funds on a quarterly basis.

Recognition of State Grant Pass-Through Funds [+]

When your agency receives state dollars from another state agency, classify the interfund activity as a state grant pass-through (subrecipient) or as a vendor/interfund service provided and used type of activity — in other words, a vendor payment. The following is a list of characteristics to help distinguish between a state grant pass-through and a vendor/interfund service provided and used activity.

Characteristics of a State Grant Pass-through From/To Another State Agency Characteristics of Vendor Activity Between State Agencies (Vendor Payment)
The paying/grantor agency received an appropriation with the authority to grant that money to another agency. The receiving agency has contracted to perform a service for, or on behalf of, the paying agency but they did not apply for or receive a grant.
The receiving agency was granted the dollars based on meeting specific qualifications. The paying/grantor agency receives services that are quantifiable based on time, piece completed, etc.
The paying/grantor does not directly receive any consideration or benefit in exchange for the funds. The paying/grantor agency receives some direct benefit for exchange of funds.
Report these funds in AFR line item “State Grant Pass-Through Revenue/Expense”. Report these funds in AFR line item “Other Sales of Goods and Services”.

The following COBJs can only be used when the above characteristics of a state grant exist:

  • COBJ 3725 – State Grant Pass-Through Revenue, Non-operating
  • COBJ 7614 – State Grant Pass-Through Expenditure, Non-operating
  • COBJ 3842 – State Grant Pass-Through Revenue, Operating
  • COBJ 7615 – State Grant Pass-Through Expenditure, Operating

For state grant pass-through revenue and expenditures/expenses, the grant name, agency name and agency number that the grant passed from/to must be identified and included in SPTR. For further assistance, please call your financial reporting analyst.

The classification of the money passed between agencies is the key to accurate reporting by both agencies. The chart below shows examples of current programs/grants from the Texas Higher Education Coordinating Board and how they should be classified for universities.

Program/Grant COBJ Classification* Fund Appn.
* The Advanced Research Program is classified as state grant pass-through revenue, operating. The university determines the revenue classification of the remaining programs. To qualify as operating pass-through revenue, the grant should finance a program the university would not normally undertake. If the pass-through revenue is supplemental to on-going projects and the university would conduct the project regardless of the additional funds, the revenue is classified as non-operating pass-through revenue. Once the university determines the classification of each program, contact your appropriations control officer (ACO) to make sure all of the appropriate USAS screens are updated with the correct COBJs.
TX College Work Study University determination 0001 13155
TX Grant Program University determination 7999 99999
Engineering Recruitment Program University determination 9999 13138
Advanced Research Program 3842 0001 13020
College Readiness Initiative University determination 0001 13132
Top Ten Percent Scholarship Program University determination 7999 99999

Pass-Through Activity Between Universities

Universities must report all state grant pass-through activity that occurs between other agencies and universities on their proprietary operating statements.

State Grant Pass-Through Issues [+]

Vendor Services Provided and Used vs. Subrecipient

At the time the grant is awarded the agency that disburses funds (Agency A) to another agency (Agency B) is responsible for determining if the payment is recorded as a pass-through grant to a subrecipient or a vendor payment. Agency A confirms these decisions in writing on the grant award to Agency B and Agency B records the transaction as determined by Agency A. For state grant subrecipient versus vendor determinations, see Recognition of State Grant Pass-Through Funds.

State vs. Federal Grant Pass-Through

If Agency A determines a payment will be recorded as a grant pass-through transaction, Agency A is also responsible for determining the amount by funding source (such as state and/or federal) and if the payment is recorded as a state grant pass-through or a federal grant pass-through. Agency A should confirm this decision in writing on the grant award at the time the grant is originally awarded. If the funds for the grant program originate from state appropriations, the pass-through is classified as a state grant pass-through. If the funds were initially received from the federal government, the pass-through is classified as federal.

Confirmations Required

Agency A must confirm the above decisions in writing to Agency B and Agency B must record the transaction as determined by Agency A to avoid disputes. Both parties should sign the confirmation.

State Grant Pass-Through Year-End Accrual Policy [+]

Year-End Considerations for State Grant Pass-Throughs

  • Agency A COBJ 7614 or 7615 state grant pass-through expenditure must equal Agency B COBJ 3725 or 3842 state grant pass-through revenue.
  • COBJ 7614 or 7615 and 3725 or 3842 must equal the state grant pass-through amounts on Exhibit II and/or Exhibit IV.
  • The amounts on the DAFR8910 for COBJs 3725 and/or 3842 and 7614 and/or 7615 must equal the pass-through amounts on Exhibit II and/or Exhibit IV.
  • All items on the DAFR8910 must have the proper AGL. All NPs must be corrected prior to fiscal year-end.

USAS Treatment of State Grant Pass-Throughs [+]

Grant Pass-Through COBJs

Below is a chart with the related expenditure/expense and revenue objects.

State Grant Pass-Throughs
Disbursing Agency Receiving Agency
Object Group 39 Description Object Group 38 Description
7614 State Grant Pass-Through Expenditure, Non-operating 3725 State Grant Pass-Through Revenue, Non-operating
7615 State Grant Pass-Through Expenditure, Operating 3842 State Grant Pass-Through Revenue, Operating

Agency General Ledger Accounts (AGL)

At fiscal year-end, state grant pass-throughs must be matched and then eliminated statewide to ensure revenues and expenditures/expenses are not overstated. At the statewide level, state grant pass-through expenditures (7614 and 7615) must equal state grant pass-through revenues (3725 and 3842).

Monthly Monitoring of USAS Pass-Through Activity [+]

DAFR8680 – Detail Account Activity by Fund Report

Make corrections to the AGL in USAS to ensure proper AGL information is recorded if your agency used T-codes that do not allow the AGL or failed to record the AGL on pass-through transactions. Request the DAFR8680 report monthly, that provides document-level detail for pass-through transactions. Items with blank AGLs appear at the top of the report. For more information, see DAFR8680 Detail Account Activity by Fund.

Recording State Grant Pass-Through Expenditure [+]

State grant pass-through expenditure/expense can be recorded in USAS in several ways.

  • When the activity occurs within the state’s Treasury, use the RTI process with T-code 274, state grant pass-through expenditure (7614 or 7615) comptroller objects (see RTI Table 1).
  • When the pass-through is expended to local funds from cash in state treasury funds, use the RTI process with T-code 268 to generate payment (see RTI Table 11).
  • Agencies that do not expend the funds from cash in state treasury funds use generic T-code 642 to record the expenditure when reconciling their AFR to USAS.

Note: Run the Interagency/Interfund Activity reports (located in the FMQuery–SIRS Main Menu USAS Research Tools in the General Ledger Reports drop-down menu) to assist agencies with recording pass-through grant expenditure/expenses. These reports show the amount of cash expenditures/expenses using COBJ 7614 – state pass-through expenditures, non-operating and COBJ 7615 – state pass-through expenditures, operating. Contact your financial reporting analyst for additional help.

Correction of State Grant Pass-Through Expenditure [+]

When a warrant is generated, the AGL is on the expenditure/expense general ledger (GL) account. If there are data entry errors for the incorrect comptroller object code and/or a blank or incorrect AGL, see the following sections that list the necessary correcting entries.

Correcting Blank or Incorrect AGL On Pass-Through Expenditures/Expenses

When correcting pass-through expenditures/expenses with T-codes 407/408 or 467R/467, be sure to use the recipient’s correct vendor number. This allows the Comptroller’s office to properly prepare the cash basis pass-through expenditure/expenses report to help agencies reconcile their pass-through amounts at fiscal year-end.

The process to correct the AGL on pass-through expenditures/expenses is as follows:

If the entries are recorded BEFORE Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL Input GL USAS D23 Fund
To Reverse the Original Pass-Through Expenditure/Expense with a Blank or Incorrect AGL
(Use the COBJ that was input on the original entry)
(1) 4,8 J,K Current Date XXX 407   XX XXXXX XXXX $ XX.XX XXXXX
XXXXXX
Blank or Incorrect N/A XXXX
To Record the Pass-Through Expenditure/Expense with the Correct AGL
(2) 4,8 J,K Current Date XXX 408   XX XXXXX XXXX $ XX.XX XXXXX
XXXXXX
XXXXXXX0 N/A XXXX

Accounting effect of entries recorded BEFORE Aug. 31, 20CY:

Debit Credit
(1) To Reverse the Original Pass-Through Expenditure/Expense with a Blank or Incorrect AGL:    
  0045 CIST $ XX.XX  
  5500 Expenditure Control – Cash   $ XX.XX
(2) To Record the Pass-Through Expenditure/Expense with the Correct AGL    
  5500 Expenditure Control – Cash $ XX.XX  
  0045 CIST   $ XX.XX

After fiscal year-end, if a USAS transaction has a blank AGL that posted to CIST (GL0045) or expenditure control-cash (GL 5500), corrections can no longer be made by reversing the original T-codes because cash transactions cannot be backdated. Therefore, correct the transaction using the expenditure transfer process outlined as follows:

If the entries are recorded AFTER Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL Input GL USAS D23 Fund
To Accrue a Reversal of an Original Pass-Through Expenditure/Expense with a Blank or Incorrect AGL
(Use the COBJ that was input on the original entry)
(1) 4,5,8 J,K 0832CY XXX 467 R XX XXXXX XXXX $ XX.XX XXXXXXX
XXXXXXX
Blank or Incorrect N/A XXXX
Attention: Be sure to note the use of the R (reversal code). This reversal code ensures no interfund receivables/payables are set up for this transaction.
 
To Accrue and Record a Pass-Through Expenditure/Expense with the Correct AGL
(2) 4,5,8 J,K 0832CY XXX 467   XX XXXXX XXXX $ XX.XX XXXXXXX
XXXXXXX
XXXXXXX0 N/A XXXX

Accounting effect of entries recorded AFTER Aug. 31, 20CY:

Debit Credit
(1) To Accrue a Reversal of an Original Pass-Through Expenditure/Expense with a Blank or Incorrect AGL:    
  1049 Interfund Payable – Current $ XX.XX  
  5501 Expenditure Control – Accrued   $ XX.XX
(2) To Accrue and Record a Pass-Through Expenditure/Expense with the Correct AGL:    
  5501 Expenditure Control – Accrued $ XX.XX  
  1049 Interfund Payable – Current   $ XX.XX

Generated Entries Note: T-code 467 posts as of the effective date of this transaction and generates a cash entry (T-code 471) that posts on the system management date. If this entry is backdated, the generated entry posts in the next period.

Correcting COBJ on Pass-Through Expenditures/Expenses

Be especially cautious when correcting COBJs by ensuring the COBJs for Agency A still match the corresponding COBJs for Agency B. For example, if Agency A already confirmed with Agency B that a state grant pass-through COBJ was used and later decides to change the object to a federal grant pass-through COBJ, Agency B must be notified of the change before the interagency deadlines to allow the correction to be made on both sides of the pass-through.

When correcting pass-through expenditures/expenses with T-codes 407/408 or 467R/467, be sure to use the recipient’s correct vendor number. This enables the Comptroller’s office to properly prepare the cash basis pass-through expenditure report to help agencies reconcile their pass-through amounts at fiscal year-end.

The process to correct the COBJs on pass-through expenditures/expenses is as follows:

If the entries are recorded BEFORE Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL* Input GL USAS D23 Fund
* The AGL number MUST be input on the lines of entry that include pass-through COBJs unless the original transaction had a pass-through COBJ and a blank AGL. See the example to correct blank AGLs. If changing from one pass-through COBJ to another, both lines must have the AGL. If changing from a pass-through COBJ to a non-pass-through COBJ, the AGL must be entered on the first line of entry.
To Reverse the Original Expenditure/Expense with an Incorrect COBJ (Use the COBJ that was input on the original entry)
(1) 4,8 J,K Current Date XXX 407   XX XXXXX Wrong COBJ $ XX.XX XXXXXXXXXXXXXX XXXXXXX0 N/A XXXX
To Record the Pass-Through Expenditure/Expenses with the Correct COBJ
(2) 4,8 J,K Current Date XXX 408   XX XXXXX Right COBJ $ XX.XX XXXXXXXXXXXXXX XXXXXXX0 N/A XXXX

Accounting effect of entries recorded BEFORE Aug. 31, 20CY:

Debit Credit
(1) To Reverse the Original Expenditure/Expense with an Incorrect COBJ:    
  0045 CIST $ XX.XX  
  5500 Expenditure Control – Cash   $ XX.XX
(2) To Record the Pass-Through Expenditure/Expense with the Correct COBJ:    
  5500 Expenditure Control – Cash $ XX.XX  
  0045 CIST   $ XX.XX

If the entries are recorded AFTER Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL* Input GL USAS D23 Fund
* The AGL number MUST be input on the lines of entry that include pass-through comptroller objects codes unless the original transaction had a pass-through COBJ and a blank AGL. See the example to correct blank AGLs. If changing from one pass-through COBJ to another, both lines must have the AGL. If changing from a pass-through COBJ to a non-pass-through COBJ, the AGL must be entered on the first line of entry.
To Accrue a Reversal of an Original Expenditure/Expense with an Incorrect COBJ
(Use the COBJ that was input on the original entry)
(1) 4,5,8 J,K 0832CY XXX 467 R XX XXXXX Wrong COBJ $ X.XX XXXXXXXXXXXXXX XXXXXXX0 N/A XXXX
Attention: Be sure to note the use of the R (reversal code). This reversal code ensures no interfund receivables/payables are set up for this transaction. If a correction needs to be made to the GAAP fund, see Correcting D23 and GAAP Fund On Pass-Through Expenditures/Expense.
 
To Accrue and Record a Pass-Through Expenditure/Expense with the Correct COBJ
(2) 4,5,8 J,K 0832CY XXX 467   XX XXXXX Right COBJ $ X.XX XXXXXXXXXXXXXX XXXXXXX0 N/A XXXX

Accounting effect of entries recorded AFTER Aug. 31, 20CY:

Debit Credit
(1) To Accrue a Reversal of an Original Expenditure/Expense with an Incorrect COBJ    
  1049 Interfund Payable – Current $ XX.XX  
  5501 Expenditure Control – Accrued   $ XX.XX
(2) To Accrue and Record a Pass-Through Expenditure/Expense with the Correct COBJ    
  5501 Expenditure Control – Accrued $ XX.XX  
  1049 Interfund Payable – Current   $ XX.XX

Generated Entries Note: T-code 467 posts as of the effective date of this transaction and generates a cash entry (T-code 471) that posts on the system management date. If this entry is backdated, the generated entry posts in the next period.

Correcting D23 and GAAP Fund On Pass-Through Expenditures/Expenses

If at fiscal year-end an agency realizes the D23 fund(s) and/or GAAP fund(s) are incorrect for a pass-through transaction that was already coordinated and is in balance with the other agency, the Comptroller’s office recommends the following method to correct the error. This discrepancy may occur due to an occasional immaterial coding or data entry error.

If the incorrect D23 fund and the correct D23 fund are both within the same GAAP fund, no entry is required by the Comptroller’s office, although the agency may choose to do the entry if needed for internal purposes. If the GAAP fund is incorrect, the Comptroller’s office requires the agency to make the correction. In both situations, the Comptroller’s office recommends the agency make the correction within their own agency to avoid having to re-coordinate with the other agency

If the D23/GAAP fund is the only error, the agency may leave the pass-through due from/due to as is and run the GAAP fund adjustment through other expenditures/other operating expenses using COBJ 7970 outlined as follows:

If the entries are recorded AFTER Aug. 31, 20CY between different GAAP funds:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL Input GL USAS D23 Fund
To Accrue a Reversal of an Original Pass-Through Expenditure/Expense with an Incorrect USAS D23 Fund & GAAP Fund
(1) 4,5,8 J,K 0832CY XXX 467 R XX XXXXX 7970 $ XX.XX XXXXXXXXXXXXXX N/A N/A Wrong D23 Fund
To Accrue and Record a Pass-Through Expenditure/Expense with the Correct USAS D23 Fund and GAAP Fund
(2) 4,5,8 J,K 0832CY XXX 467   XX XXXXX 7970 $ XX.XX XXXXXXXXXXXXXX N/A N/A Right D23 Fund
To Record a Due From in the Wrong D23 Fund
(3) 8 U 0832CY XXX 662   XX 99999 N/A $ XX.XX N/A XXXXXXX0 0283 Wrong D23 Fund
To Record a Due To in the Right D23 Fund
(4) 8 U 0832CY XXX 663   XX 99999 N/A $ XX.XX N/A XXXXXXX0 1053 Right D23 Fund
To Eliminate System Clearing Created in Step 3
(5) 5 U 0832CY XXX 647   XX 99999 N/A $ XX.XX N/A XXXXXXX0 1049 Wrong D23 Fund
To Eliminate System Clearing Created in Step 4
(6) 5 U 0832CY XXX 646   XX 99999 N/A $ XX.XX N/A XXXXXXX0 1049 Right D23 Fund

Accounting effect of entries recorded AFTER Aug. 31, 20CY between different GAAP funds

Debit Credit
(1) To Accrue a Reversal of an Original Pass-Through Expenditure with Incorrect USAS D23 Fund and/or GAAP Fund    
  1049 Interfund Payable – Current $ XX.XX  
  5501 Expenditure Control – Accrued   $ XX.XX
(2) To Accrue and Record a Pass-Through Expenditure with the Correct USAS D23 Fund and/or GAAP Fund    
  5501 Expenditure Control – Accrued $ XX.XX  
  1049 Interfund Payable – Current   $ XX.XX
(3) To Record a Due From in the Wrong D23 Fund    
  0283 Due From Other Funds $ XX.XX  
  9999 System Clearing   $ XX.XX
(4) To Record a Due To in the Right D23 Fund    
  9999 System Clearing $ XX.XX  
  1053 Due To Other Funds   $ XX.XX
(5) To Eliminate System Clearing Created in Step 3    
  9999 System Clearing $ XX.XX  
  1049 Interfund Payable – Current   $ XX.XX
(6) To Eliminate System Clearing Created in Step 4    
  1049 Interfund Payable – Current $ XX.XX  
  9999 System Clearing   $ XX.XX

Generated Entries Note: T-code 467 posts as of the effective date of the transaction and generates a cash entry (T-code 471) that posts on the system management date. If this entry is backdated, the generated entry posts in the next period.

Recording State Grant Pass-Through Revenue [+]

State grant pass-through revenue can be recorded in USAS in various ways:

  • Agencies recording the activity within the state’s Treasury use the RTI process with T-code 273 and state grant pass-through revenue COBJ 3725 non-operating or 3842 operating. For more information, see RTI Table 1.
  • Agencies recording the activity from the state’s Treasury to an agency for funds held outside the state’s Treasury use the RTI process with T-code 268 and state grant pass-through revenue COBJ 3725 non-operating or 3842 operating. For more information, see RTI Table 11.
  • Agencies not recording local funds to the state’s Treasury must use generic T-code 643 when reconciling their AFR to USAS.

To assist with recording pass-through grant revenue, agencies can run the following FMQuery–SIRS reports (located under the USAS Research Tools in the General Ledger Reports drop-down menu –and– the AFR Desk Review in the SEFA/SPTR drop-down menu):

  • Interagency/Interfund Activity
  • PT201 – State Pass-through Activity by General Ledger Account
  • PT202 – State Pass-through Activity by AGL

Correction of State Grant Pass-Through Revenue [+]

Whether the RTI process is used or a warrant is received, the correct AGL information must be recorded on the revenue GL account. The following sections list the correcting entries regarding any data entry errors that may have occurred due to incorrect COBJ and/or a blank or incorrect AGL.

Correcting Blank or Incorrect AGL on Pass-Through Revenues

If a USAS transaction has a blank or incorrect AGL that posted to CIST (GL 0045) or revenue control-cash (GL 5000), correct the transaction using the revenue transfer process outlined below:

If the entries are recorded BEFORE Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL Input GL USAS D23 Fund
To Reverse an Original Pass-Through Revenue with a Blank or Incorrect AGL (Use the COBJ that was input on the original entry)
(1) 5,8 J Current Date XXX 406   XX XXXXX XXXX $ XX.XX N/A Blank or Incorrect N/A XXXX
To Record the Pass-Through Revenue with the Correct AGL
(2) 5,8 J Current Date XXX 405   XX XXXXX XXXX $ XX.XX N/A XXXXXXX0 N/A XXXX

Accounting effect of entries recorded BEFORE Aug. 31, 20CY:

Debit Credit
(1) To Reverse an Original Pass-Through Revenue Deposit with a Blank or Incorrect AGL    
  5000 Revenue Control – Cash $ XX.XX  
  0045 CIST   $ XX.XX
(2) To Record the Revenue Pass-Through with the Correct AGL    
  0045 CIST $ XX.XX  
  5000 Revenue Control – Cash   $ XX.XX

If a USAS transaction has a blank AGL that posted to CIST (GL 0045) or revenue control – cash (GL 5000) and fiscal year-end has already passed, corrections can no longer be made by reversing the original T-codes because cash transactions cannot be backdated. Therefore, correct the transaction using the revenue transfer process below:

If the entries are recorded AFTER Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL Input GL USAS D23 Fund
To Accrue a Reversal of an Original Pass-Through Revenue with a Blank or Incorrect AGL:
(1) 4,5,8 J 0832CY XXX 465 R XX XXXXX XXXX $ XX.XX XXXXXXXXXXXXXX Blank or Incorrect N/A XXXX

Attention: Be sure to note the use of the R (reversal code). This reversal ensures that no interfund receivables/payables are set up for this transaction. If a correction must be made to the GAAP fund, see Correcting D23 and GAAP Fund On Pass-Through Revenues.

To Accrue and Record a Pass-Through Revenue with the Correct AGL:
(2) 4,5,8 J 0832CY XXX 465   XX XXXXX XXXX $ XX.XX XXXXXXXXXXXXXX XXXXXXX0 N/A XXXX

Accounting effect of entries recorded AFTER Aug. 31, 20CY within the same GAAP fund/agency:

Debit Credit
(1) To Accrue a Reversal of an Original Pass-Through Revenue with a Blank or Incorrect AGL    
  5001 Revenue Control – Accrued $ XX.XX  
  0279 Interfund Receivable – Current   $ XX.XX
(2) To Accrue and Record a Pass-Through Revenue with the Correct AGL    
  0279 Interfund Receivable – Current $ XX.XX  
  5001 Revenue Control – Accrued   $ XX.XX

Generated Entries Note: T-code 465 posts as of the effective date of the transaction and generates a cash entry (T-code 469) that posts on the system management date. If this entry is backdated, the generated entry posts in the next period.

Correcting COBJ on Pass-Through Revenues

Be especially cautious when correcting COBJs to ensure that the COBJ for Agency A still matches with the corresponding COBJ for Agency B.

For example, if Agency A already confirmed with Agency B that a state pass-through COBJ was used and now decides to change the object to a federal grant pass-through COBJ or a non-pass-through COBJ, Agency B must be notified of the change before the interagency deadlines to allow the correction to be made on both sides of the pass-through. The AGL only needs to be entered on the side of the transaction with the pass-through COBJ.

If the entries are recorded BEFORE Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL* Input GL Fund
* The AGL number MUST be input on the lines of entry that include pass-through COBJs unless the original transaction had a pass-through COBJ and a blank AGL. See the example to correct blank AGLs. If changing from one pass-through COBJ to another, both lines must have the AGL. If changing from a pass-through COBJ to a non-pass-through COBJ, the AGL must be entered on the first line of entry.
To Reverse an Original Pass-Through Revenue with an Incorrect COBJ
(Use the COBJ that was input on the original entry)
(1) 5,8 J Current date XXX 406   XX XXXXX Wrong COBJ $ XX.XX N/A XXXXXXX0 N/A XXXX
To Record the Pass-Through Revenue with the Correct COBJ
(2) 5,8 J Current Date XXX 405   XX XXXXX Right COBJ $ XX.XX N/A XXXXXXX0 N/A XXXX

Accounting effect of entries recorded BEFORE Aug. 31, 20CY:

Debit Credit
(1) To Reverse an Original Pass-Through Revenue with an Incorrect COBJ    
  5000 Revenue Control – Cash $ XX.XX  
  0045 CIST   $ XX.XX
(2) To Record the Pass-Through Revenue with the Correct COBJ    
  0045 CIST $ XX.XX  
  5000 Revenue Control – Cash   $ XX.XX

If the entries are recorded AFTER Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL* Input GL USAS D23 FUND
* The AGL number MUST be input on the lines of entry that include pass-through COBJs unless the original transaction had a pass-through COBJ and a blank AGL. See the example to correct blank AGLs. If changing from one pass-through COBJ to another, both lines must have the AGL. If changing from a pass-through object to a non-pass-through COBJ, the AGL must be entered on the first line of entry.
To Accrue a Reversal of an Original Pass-Through Revenue with an Incorrect COBJ
(Use the COBJ that was input on the original entry)
(1) 4,5,8 J 0832CY XXX 465 R XX XXXXX Wrong COBJ $ XX.XX XXXXXXXXXXXXXX XXXXXXX0 N/A XXXX

Attention: Be sure to note the use of the R (reversal code). This reversal ensures that no interfund receivables/payables are set up for this transaction. If a correction must be made to the GAAP fund, see Correcting D23 and GAAP Fund On Pass-Through Revenues.

To Accrue and Record a Pass-Through Revenue with the Correct COBJ
(2) 4,5,8 J 0832CY XXX 465   XX XXXXX Right COBJ $ XX.XX XXXXXXXXXXXXXX XXXXXXX0 N/A XXXX

Accounting effect of entries recorded AFTER Aug. 31, 20CY

Debit Credit
(1) To Accrue a Reversal of an Original Pass-Through Revenue with an Incorrect COBJ    
  5001 Revenue Control – Accrued $ XX.XX  
  0279 Interfund Receivable – Current   $ XX.XX
(2) To Accrue and Record a Pass-Through Revenue with the Correct COBJ    
  0279 Interfund Receivable – Current $ XX.XX  
  5001 Revenue Control – Accrued   $ XX.XX

Generated Entries Note: T-code 465 posts as of the effective date of the transaction and generates a cash entry (T-code 469) that posts on the system management date. If this entry is backdated, the generated entry posts in the next period.

Correcting D23 and GAAP Fund on Pass-Through Revenues

If at fiscal year-end you realize the D23 fund(s) and/or GAAP fund(s) are incorrect for a pass-through transaction that was already coordinated and is in balance with the other agency, the Comptroller’s office recommends the following method to correct the error. This discrepancy may occur due to an occasional immaterial coding or data entry error. If the incorrect D23 fund and the correct D23 fund are both within the same GAAP fund, no entry is required by the Comptroller’s office — although the agency may choose to do the entry if needed for internal purposes. If the GAAP fund is incorrect, the Comptroller’s requires the agency to make the correction.

In both situations, the Comptroller’s office recommends the agency make the correction within their own agency to avoid having to repeat the coordination with the other agency. If the D23/GAAP fund is the only error, the agency may leave the pass-through due from/due to as is and run the GAAP fund adjustment through other revenues (for governmental funds)/other operating revenues (for proprietary funds) using COBJ 3970 as shown in the following:

If the entries are recorded AFTER Aug. 31, 20CY between different GAAP funds:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL Input GL USAS D23 Fund
To Accrue a Reversal of an Original Pass-Through Revenue with an Incorrect USAS D23 Fund and GAAP Fund
(1) 4,5,8 J 0832CY XXX 465 R XX XXXXX 3970 $ XX.XX XXXXXXXXXXXXXX N/A N/A Wrong D 23 Fund
To Accrue and Record a Pass-Through Revenue with the Correct USAS D23 Fund and GAAP Fund
(2) 4,5,8 J 0832CY XXX 465   XX XXXXX 3970 $ XX.XX XXXXXXXXXXXXXX N/A N/A Right D23 Fund
To Record a Due To in the Wrong D23 Fund
(3) 8 U 0832CY XXX 663   XX 99999 N/A $ XX.XX N/A XXXXXXX0 1053 Wrong D23 Fund
To Record a Due From in the Right D23 Fund
(4) 8 U 0832CY XXX 662   XX 99999 N/A $ XX.XX N/A XXXXXXX0 0283 Right D23 Fund
To Eliminate System Clearing Created in Step 3
(5) 5 U 0832CY XXX 646   XX 99999 N/A $ XX.XX N/A XXXXXXX0 0279 Wrong D 23 Fund
To Eliminate System Clearing Created in Step 4
(6) 5 U 0832CY XXX 647   XX 99999 N/A $ XX.XX N/A XXXXXXX0 0279 Right D23 Fund

Generated Entries Note: T-code 465 posts as of the effective date of the transaction and generates a cash entry (T-code 469) that posts on the system management date. If this entry is backdated, the generated entry posts in the next period.

Accounting effect of entries recorded AFTER Aug. 31, 20CY between different GAAP funds

Debit Credit
(1) To Accrue a reversal of an original Pass-Through revenue with an incorrect USAS D23 Fund and GAAP Fund    
  5001 Revenue Control – Accrued $ XX.XX  
  0279 Interfund Receivable – Current   $ XX.XX
(2) To Accrue and Record a Pass-Through Revenue with the Correct USAS D23 Fund and GAAP Fund    
  0279 Interfund Receivable – Current $ XX.XX  
  5001 Revenue Control – Accrued   $ XX.XX
(3) To Record a Due To in the Wrong D23 Fund    
  9999 System Clearing $ XX.XX  
  1053 Due To Other Funds   $ XX.XX
(4) To Record a Due From in the Right D23 Fund    
  0283 Due From Other Funds $ XX.XX  
  9999 System Clearing   $ XX.XX
(5) To Eliminate System Clearing Created in Step 3    
  0279 Interfund Receivable – Current $ XX.XX  
  9999 System Clearing   $ XX.XX
(6) To Eliminate System Clearing Created in Step 4    
  9999 System Clearing $ XX.XX  
  0279 Interfund Receivable – Current   $ XX.XX

Cash Conduit – Proper Fund Type for Reporting of Pass-Throughs [+]

Per GASB 24, agencies often receive grants and other financial assistance to transfer to, or spend on behalf of, a secondary recipient. These amounts are referred to as pass-through grants. Record all cash pass-through grants received by an agency in the financial statements.

As a general rule, pass-through grants are recognized as revenue and expenditure or expenses in a governmental, proprietary or trust fund. In those infrequent cases when an agency serves only as a cash conduit, the grant is reported in an agency fund (FT09).

An agency serves only as a cash conduit if it merely transmits grantor-supplied moneys without having administrative or direct financial involvement in the program.

An agency has administrative involvement if, for example, it:

  • Monitors secondary recipients for compliance with program-specific requirements.
  • Determines eligible secondary recipients or projects, even if using grantor-established criteria.
  • Has the ability to exercise discretion in how the funds are allocated.

An agency has direct financial involvement if, for example, it:

  • Finances some direct program costs because of a grantor-imposed matching requirement.
  • Is liable for disallowed costs.

Important Note: GASB found when considering administrative and direct financial involvement, that agencies will report few, if any, pass-through grants in agency funds. For more information, see GASB 24.

Pass-Through Refund from Funds Held Outside the State Treasury Prior to August 31, 20CY [+]

Agencies are required to use an RTI for transfers of funds between agencies when both funds are within the state’s Treasury and for transfers between agencies with funds outside the state’s Treasury. However, it is not possible to use the RTI process prior to August 31, 20CY to record pass-through refunds from funds held outside the state’s Treasury (local funds) to funds held in the state’s Treasury. Therefore, the receiving agency coordinates with the disbursing agency to determine the correct AGLs and COBJs to record the pass-through refund using USAS journal entries. This facilitates proper recoding on both agencies for the reconciliation of pass-throughs.

Agencies must use the RTI process for fiscal year-end entries. Use RTI Table 4 to record a fiscal year-end pass-through decrease accrual for funds in the state’s Treasury and funds held outside the state’s Treasury.

Receiving agency processing refund BEFORE Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL* Input GL FUND
* The AGL must be input on the lines of entry that include the pass-through COBJ.
To Record Refund of Pass-Through Expenditure
(1) 4,5 D MMDDYY XXX 180   XX XXXXX 7614 or 7615 $ XX.XX N/A XXXXXXX0 N/A XXXX

Accounting effect of receiving agency processing refund BEFORE Aug. 31, 20CY:

Debit Credit
(1) To Record Refund of Pass-Through Expenditure    
  0045 CIST $ XX.XX  
  5500 Expenditure Control – Cash   $ XX.XX

Disbursing agency processing refund BEFORE Aug. 31, 20CY:

Seq No Batch Type Doc Type Eff Date Fin Agy TC R AY PCA COBJ Amount Vendor No AGL* Input GL FUND
* The AGL must be input on the lines of entry that include the pass-through COBJ.
To Record Refund of Pass-Through Revenue
(1) 4,5 U MMDDYY XXX 643 R XX XXXXX 3725 or 3842 $ XX.XX N/A XXXXXXX0   XXXX
To Record Funds Held Outside the State’s Treasury
(2) 4,5 U MMDDYY XXX 645   XX XXXXX N/A $ XX.XX N/A N/A 0040 XXXX

Accounting effect of disbursing agency processing refund BEFORE Aug. 31, 20CY:

Debit Credit
(1) To Record Refund of Pass-Through Revenue    
  5100 GAAP Revenue Offset $ XX.XX  
  9999 System Clearing   $ XX.XX
(2) To Record Funds Held Outside the State’s Treasury    
  9999 System Clearing $ XX.XX  
  0040 Cash In Bank   $ XX.XX
Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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