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New York State Accounting System User Procedures Manual

Volume
REVENUE
Volume
IV
Date
07/26/2007
Section Name
Refund of Appropriation - Overview
Section
5.0100
REFUND OF APPROPRIATION

The Refund of Appropriation Expenditure document (AC 1286) is used by agencies to request a credit to an appropriation, for expenditures made from appropriated funds. Following are examples of permissible requests to refund an appropriation in force and the 3-position alpha-code that must be inserted in the Statewide Accumulator field of the expenditure block of AC1286 documents. Agencies are required to data enter the statewide accumulator codes (shown below) on all Refund of Appropriation documents.

  1. PMT - Payments made in error for which a check will not be reissued to the payee. (i.e. overpayments or duplicate payments)
  2. SVC - Personal service expense refunds. This includes personal service reimbursements from non-State entities. A more detailed explanation is outlined in Controls and Special Procedures, Vol.  XI, Special Payments – Fringe Benefit & Indirect Cost Billing, Section 6.0200.
  3. NPS - Other than personal service reimbursements from non-State entities such as insurance recoveries, shared utility services, phone usage, and maintenance or supplies.
  4. INC - Incorrect payee or incorrect amount for which a check will be reissued to the payee.
  5. AUD - All audit disallowances and recoveries.
  6. TSY - Treasury write-offs of checks returned for insufficient funds, return items and direct deposit refund of returned items. (For Treasury use only).
  7. ADV - Reduction and/or close out of agency ‘cash advance’ accounts. (Note: subledgers must be used)
  8. REI - All other refunds not listed in the above categories. Examples include but are not limited to rebates; refunds of deposits; refunds of unearned entitlements; employee reimbursements; refunds and reimbursements authorized in State appropriation acts or permanent statute.

Documentation
State agencies are responsible for initiating the Refund of Appropriation Expenditure and securing the necessary supporting documents. Additionally, the agency is required to input the correct Statewide Accumulator Code on all Refund of Appropriation documents. The primary source of information used in preparing AC1286's is the source document (voucher containing the expenditure cost center and object) that generated the refunded payment and the remittance. All Refund of Appropriation Expenditure documents are subject to review and approval by personnel of the Bureau of Accounting Operations, Office of the State Comptroller; therefore, it is imperative that all refund transactions be fully documented and justified.

Lapsed Appropriations - Object Coding
All expenditure refunds against lapsed appropriations of non federal funds are to be processed as miscellaneous receipts on the Report of Moneys Received (AC909) using revenue cost center and object code 35327. For coding of appropriation refunds to Federal fund appropriations please see the instructions at the end of this section.

Batching and Submitting
To minimize the number of AC1286's submitted to OSC for review and to expedite the processing of these documents; it is requested that similar types of refunds (with the same payee) be combined on a single form. Agencies with remote terminals should data enter these documents into the CAS where they will be automatically suspended. For refunds crediting multiple lines of expenditure codes or payees, the Receipts Continuation (AC2399) and/or Payee Continuation (AC2395) form may be used and attached to the AC1286.

The OSC copy, with supporting documents are batched and forwarded to the OSC Bureau of Accounting Operations together with an error-free batch control list (BCL) stapled on top of the submitted batch. At the same time, the check remittance(s) and Department of Taxation & Finance (DTF) - Treasury copy of the AC1286 (w/o supporting documentation) must be forwarded to the State Treasury for deposit into the State’s general checking account.

Processing
OSC’s Bureau of Accounting Operations reviews the Refund of Appropriation Expenditure document (AC 1286) for completeness and reasonableness. If a requested refund to an appropriation account is deemed proper, OSC will approve and process the Refund of Appropriation Expenditure document (AC 1286) together with any continuation documents. If the refund against the appropriation account is denied, OSC will prepare a Report of Moneys Received (AC909) document and forward a copy to the State Treasury and a copy along with the rejected AC 1286 to the agency.

Once the check is deposited by DTF-Treasury and the AC1286 is audit released at OSC, a JRN040-Refund of Appropriation Expenditure Journal report is generated by the CAS and sent to agency finance offices. This report is provided as confirmation that the AC1286 was processed. The JRN040 should be reviewed daily to ensure the accuracy of the expenditure reduction.

Federal Funds Special Procedures for Refund of Appropriation Expenditure
Refunds received that relate to closed grant awards are to be refunded to the Federal Government following the procedures outlined in Controls and Special Procedure, Vol. XI Accounting for Federal Grants- Refunds and Returns, Section 5.0500.

Refund of Appropriation Expenditure (AC1286)
When a state agency receives a refund for a grant award and a Final Grant Award Status Report (Final Report) has NOT been filed with the Federal awarding agency, the remittance must be submitted with a Refund of Appropriation Expenditure form (AC1286). The agency must also clearly state on the AC1286 that, “A Final Grant Award Status Report has not been filed for this grant award”. The refund recorded by this transaction will reduce appropriated expenditures; will increase the federal fund cash and the unspent appropriation balances. To the extent possible, the cash balance will be used to finance current disbursements. If the Office of the State Comptroller (OSC) performs the draw, OSC will adjust the daily draw accordingly. Refunds and returns must be offset by disbursements within 3-5 days to minimize a potential federal CMIA interest liability and ensure compliance with Single Audit requirements. Those refunds that cannot be offset by immediate program disbursements MUST be refunded to the U.S. Treasury. If an agency uses an electronic system to draw funds, the refund should be processed within that draw system if the federal grant award is still active.

Closed Grant Awards - Report of Monies Received (AC909)
When a state agency receives a refund for a grant award and a Final Report has been filed with the Federal awarding agency, the remittance must be credited in the subfund where the original payment was made by submitting the remittance with a Report of Monies Received form (AC909) using a federal grant (36200) object code. At the same time the AC909 is submitted, the agency MUST also submit a completed Special Charge Voucher (AC916) for returning the funds to the Federal government (US Treasury).

Office of the State Comptroller
Bureau of Accounting Operations
Revenue Accounting/Processing Accounting Section
110 State Street – 9th Floor
Albany, NY 12236
(518) 474-4018

Exception to Completing an AC909 on a Closed Award
In some instances, when the Final Report has been filed and the award is closed, the Federal awarding agency permits recovered funds to be credited to an open year award and used for approved program purposes. Refunds will be processed on an AC1286 as an appropriation credit to an ‘active’ federal fund State appropriation provided for identical program purposes when the State agency:

  • Provides a copy of the federal authorization that permits recovered funds (attributable to a closed award) to be applied as a refund credit to current year grant award authorizations and used for program purposes, and

  • Ensures that the State appropriation language permits refunds, credits or audit disallowances to be credited, OR

  • Provides a special certification in the basis for the requested refund as follows:

“The requested grant award refund represented by this document is permissible under Federal and State rules, regulations and/or statutes governing the receipt and disposition of federal grant funds.”

State agencies are responsible for maintaining documentation to support the disposition of refunds related to ‘closed’ federal awards.