USAS Profile Review and Cleanup Procedures –
Pass-Through Funds

Background

Pass-through grants as defined under GASB Statement No. 24, Accounting and Financial Reporting of Certain Grants and Other Financial Assistance, are grants received by a recipient government to transfer to or spend on behalf of a secondary recipient and should be recognized as revenues and expenditures/expenses in a governmental, proprietary or trust fund. The only exception to this is if the recipient government serves only as a cash conduit (i.e., has no administrative or direct financial involvement in the program), the grant should be reported as a liability.

To facilitate the agencies’ AFRs and the ACFR, use the specific RTI T-codes that post to revenue and expenditure GLs for pass-through money. The comptroller objects noted below should only be used for recording pass-through activity.

Federal Pass-Through

1. Agency A receives federal money.
   Agency A uses comptroller object 3XXX to record the revenue.
2. Agency A sends some of the federal money to agency B.
   Agency A uses comptroller object 7971 to record a federal pass-through expenditure, non-operating.
   Agency B uses comptroller object 3971 to record a federal pass-through revenue, non-operating.
3. Agency B spends the money by providing services or giving it to the ultimate consumer.
   Agency B uses comptroller object 7XXX to record an expenditure.

State Grant Pass-Through

1. Agency A receives appropriated money for grants.
   Agency A uses comptroller object 3XXX to record a revenue.
2. Agency A sends some of the state grant money to agency B.
   Agency A uses comptroller object 7614 to record a state grant pass-through Expenditure, non-operating.
   Agency B uses comptroller object 3725 to record a state grant pass-through revenue, non-operating.
3. Agency B spends the money by providing services or giving it to the ultimate consumer.
   Agency B uses comptroller object 7XXX to record an expenditure.

For both federal and state grant pass-through money, agencies A and B report transaction 2 as expenditures and revenue on their AFRs. The Comptroller’s office eliminates the revenue for comptroller objects 3725, 3842, 3971 and 3978 and the expenditure for comptroller objects 7614, 7615, 7971 and 7978 so that there will be no double counting on the ACFR.

The roll-up and the name for these comptroller objects are as follows:

Risk Areas

Using comptroller object 3725, 3842, 3971, 3978, 7614, 7615, 7971 or 7978 for non-pass-through funds

Because the revenues and expenditures that post to the above comptroller objects will be eliminated for the ACFR, it is important to use these comptroller objects correctly, so the ACFR accurately reports federal and state revenue.

Reports and Procedures

Report PCU152 – Pass-through funds, CY, comptroller objects 3725, 3842, 3971, 3978, 7614, 7615, 7971 and 7978

Procedures

1. Verify that the comptroller objects that were used are only for pass-through funds.

   The report will show total CY GL activity in the above named comptroller objects. A separate line is shown for each GL account inferred by the T-code. For example, for a T-code that infers four GL accounts, four separate lines are listed for one transaction. From the information given, determine if the comptroller object was used only for pass-through activity.

2. Correct the comptroller object.

   If a wrong comptroller object was used, it must be corrected. It can be corrected at the summary object level by fund, appropriation number and AY.

Example:

This example illustrates the way to correct an incorrect entry using comptroller object 3725 – State Grant Pass-through Revenue when comptroller object 3980 – Operating Fund Transfers should have been used.