Journal Voucher Preparation and Review

SUBJECT:

JOURNAL VOUCHER PREPARATION AND REVIEW
NUMBER:

J.3.

DEPARTMENTS & DISTRICTS AFFECTED:

ALL AGENCIES, DEPARTMENTS, AND DISTRICTS
GOVERNED BY THE BOARD OF SUPERVISORS
EFFECTIVE: 1/00
signed
_________________________________
David E. Sundstrom, Auditor-Controller
TABLE OF CONTENTS
1. POLICY
1.1 Purpose
1.2 Authority
1.3 Definitions
2. ACCOUNTING PROCEDURES
2.1 Use of Journal Voucher Form
2.2 Preparation of Journal Voucher Form
2.3 Signature Authority
2.4 Assignment of Journal Voucher Numbers
2.5 Auditor-Controller Review of Journal Vouchers
2.6 Auditor-Controller Approval of Journal Vouchers Over $5,000,000
2.7 Deposit Order Corrections
2.8 Automated Journal Voucher Interface Transactions
2.9 Deadline for Submitting Journal Vouchers
2.10 Restrictions on Transactions Recorded in Certain Funds or Agencies
2.11 Disbursements of Cash
2.12 Treasurer-Tax Collector Investment Transactions
2.13 Corrections of Journal Vouchers or Checks
2.14 Auditor-Controller Only Transactions
EXHIBITS
SUBJECT:

JOURNAL VOUCHER PREPARATION AND REVIEW
NUMBER:

J.3.

DEPARTMENTS & DISTRICTS AFFECTED:

ALL AGENCIES, DEPARTMENTS, AND DISTRICTS
GOVERNED BY THE BOARD OF SUPERVISORS
EFFECTIVE: 1/00
signed
_________________________________
David E. Sundstrom, Auditor-Controller
1. POLICY
Many accounting transactions are recorded on Journal Vouchers. Journal Vouchers are prepared by Auditor-Controller accounting staff and by authorized individuals in various departments and agencies. Collectively, the Journal Vouchers serve as the General Journal for the County of Orange.

To ensure that transactions are recorded according to accounting principles, legal requirements, County policy, and the coding restrictions of the computerized financial information system, Journal Vouchers are reviewed by the General Ledger Unit of the County Auditor-Controller.
1.1 Purpose
The purpose of this procedure is to establish preparation and review guidelines and criteria for approving transactions recorded on Journal Vouchers.
1.2 Authority
Authority
Subject
Government Code Section 26881, and Board of Supervisors' Resolution No. 82-162 dated February 2, 1982
Auditor-Controller prescription of and supervision over accounting forms and methods
Accounting Standards and Procedures for Counties, Sections 3.04, 3.05, and 3.12
Journals, General Ledgers, and Journal Entries
1.3 Definitions
1.3.1 Journal Voucher
Journal Vouchers are documents used to record accounting adjustments, accruals, transfers, and other transactions not automatically recorded through the processing of source documents in the County accounting system. The controls described in this Procedure do not apply to automated interface transactions as described in detail in Section 2.8.

Other documents may also be used to record accounting transactions; for example, Deposit Orders are used to record cash receipts. See Exhibit I for an example of the Journal Voucher form. All PC-generated Journal Voucher forms must be in this basic format.
1.3.2 Cost Applied and Interfund Transactions
These are interdepartmental billings, including cost transfers, cost applied transactions, etc., as defined in County Accounting Procedure (CAP) No. J.1., Cost Applied and Interfund Transactions.
1.3.3 Transaction
A transaction is an event that causes a change in the assets, liabilities, fund balance, or retained earnings of a fund. Transactions are recorded as journal entries on Journal Vouchers.
1.3.4 Debit
A debit is an increase to assets or expenditures, or a decrease to liabilities, fund balance, retained earnings, or revenues. Debits are recorded in the left columns of Journal Vouchers.
1.3.5 Credit
A credit is an increase to liabilities, fund balance, retained earnings, or revenues, or a decrease to assets or expenditures. Credits are recorded in the right columns of Journal Vouchers.
1.3.6 Fund
A fund is a fiscal and accounting entity with a self-balancing set of accounts established for the purpose of carrying on specific activities, or attaining certain objectives, in accordance with specific regulations, restrictions, or limitations.
1.3.7 Agency
In the County accounting system, an agency is a designated subset of a fund. Most County departments or agencies use an assigned agency number within the County General Fund.
1.3.8 Operating Transfers Out
Legally authorized transfers of funds from a fund receiving revenue to another fund through which the resources will be expended. Operating transfers out are recorded in the 4800 through 4809 object codes, depending on the number of the fund to which the transfer is being made. Operating transfers out must be appropriated in the Board-approved budget, or a separate Board action is required to provide the necessary appropriations.
1.3.9 Residual Equity Transfers Out
Nonrecurring or nonroutine transfers of equity between funds. Residual equity transfers out are recorded in the 5000 through 5009 object codes, depending on the number of the fund to which the transfer is being made. Residual equity transfers out must be appropriated in the Board-approved budget or a separate Board action is required to provide the necessary appropriations.
2. PROCEDURES
2.1 Use of Journal Voucher Form
The Journal Voucher form is used to record charges from one fund or agency to other funds or agencies, to allocate revenues and expenditures from one fund or agency to other funds and agencies, to record operating and residual equity transfers from one fund to another fund, to allocate expenditures and revenues to different organizations and/or activities within a fund or agency, and to make corrections to other transactions.
2.2 Preparation of Journal Voucher Form
The Journal Voucher form must be filled out completely and conform to the following minimum requirements:
  • Description field is limited to 25 characters.
  • Agency No. of the preparing agency must be filled in.
  • Journal Voucher No. should be left blank and will be completed by the Auditor-Controller General Ledger Unit. (See Section 2.4 of this Procedure.)
  • All required account coding information must be filled in.
  • Cash entries must be posted to the columns labeled "For Cash (8010) Entries Only."
  • The total of debit amounts must equal the total of credit amounts.
  • A detailed description of the purpose of the Journal Voucher must be included in the "Explanation" section of the form.
  • The preparer must sign in the "Prepared By" section, date the Journal Voucher, and include his/her telephone number.
  • Indicate under the "CC:" section who should receive copies of the Journal Voucher.
  • Back-up documentation must be attached to the Journal Voucher to support the amounts included on the form. If the documentation is too voluminous, a reference must be included in the "Explanation" section indicating that back-up for the Journal Voucher is available at the preparing department and referencing the files containing the documentation.
  • The "Approved By" section must be signed by an authorized signer for the department or agency. (See Section 2.3 of this Procedure.)
It is the responsibility of the department/agency staff preparing and authorizing the Journal Voucher to insure that the transaction being recorded is:
  • Legal
  • Budgeted
  • Adequately supported by auditable documentation
2.3 Signature Authority
2.3.1 Authorized Signer
Each Journal Voucher must be signed in the "Approved By" section by a person included on the department's/agency's Authorized Signature List on file with the Auditor-Controller. The signature must appear on the Authorized Signature List for the Funds or Agencies with expenditure or cash reduction transactions on the Journal Voucher, with the exception of Journal Vouchers to record cost applied and interfund transactions. The signer must have specific authority to sign Journal Vouchers, be listed on the Authorized Signature List with authorization to sign in the absence of the Department Head, or be the Department Head. Journal Vouchers prepared for departments or agencies with agency accounting support from the Auditor-Controller must be signed by an authorized person from the accounting staff.
2.3.2 Cost Applieds/Interfund Billings
Some Journal Vouchers record cost applied transactions or interfund billings between agencies or funds. Funds or agencies that are billed on a journal voucher may be controlled by departments or agencies other than the department or agency preparing the Journal Voucher. A person authorized to sign for the billing department or agency recording the reimbursement must sign such Journal Vouchers. The General Ledger Manager shall review such transactions to determine whether they appear to be reasonable before approving the Journal Vouchers and submitting them for processing.
2.3.3 Form of Authorization
An authorized signature may appear in handwritten form or as initials adjacent to typed or machine-printed names. Only original documents will be processed. Photocopies will not be accepted. Journal Vouchers that lack authorized signatures in the correct form will be returned to the submitting department or agency.
2.4 Assignment of Journal Voucher Numbers
The Auditor-Controller General Ledger Unit assigns a Journal Voucher transaction number to each Journal Voucher received. The transaction number identifies the month of processing, the department or agency submitting the Journal Voucher, and the sequential position of the transaction in the month. For example, the fifth Journal Voucher submitted by the Auditor-Controller in October would bear the number JV 003 10-00005.
2.5 Auditor-Controller Review of Journal Vouchers
2.5.1 General Ledger Unit Responsibility
The Auditor-Controller General Ledger Unit Manager or other designated Deputy reviews and signs Journal Vouchers before the documents are submitted for processing.
2.5.2 Journal Voucher Requirements
Certain types of transactions or transactions in certain funds are subject to legal or policy restrictions. The Auditor-Controller shall withhold Journal Vouchers from processing if they violate the following guidelines:
  • Transactions must be logical and correct in form.
  • Debits and credits must be equal for the Journal Voucher as a whole and for each fund.
  • Transactions must be recorded with proper account coding. The account coding must be appropriate for the type of transaction being recorded.
  • The Journal Voucher form must be prepared in the proper form. For example, balance sheet accounts must be in the correct column.
  • Cash entries (8010) must be properly recorded, without Agency account coding, and in the appropriate columns.
  • Adequate descriptions of transactions including a detailed description of the purpose of the Journal Voucher must appear on all Journal Vouchers.
It is the responsibility of the department/agency staff preparing and authorizing the Journal Voucher to insure that the transaction being recorded is:
  • Legal
  • Budgeted
  • Adequately supported by auditable documentation
2.5.3 Large Dollar Amount Transactions
The Auditor-Controller reviews transactions of large dollar amounts to determine whether they create appropriations or cash deficits. Journal Vouchers that would create deficits are withheld until the preparing department or agency can make appropriate adjustments.
2.5.4 Department/Agency Account Monitoring
Auditor-Controller review of Journal Vouchers is not a substitute for departmental/agency monitoring of accounts. All departments and agencies are responsible for frequent inspection of ledgers to verify that no inappropriate transactions are recorded.
2.5.5 Interfund Billings
The Auditor-Controller reviews interfund billings for reasonableness. If a transaction appears to be unreasonable, the department being billed will be called for verification before the Journal Voucher is submitted for processing.

Interfund billings must be approved as part of the budget process, and agreed upon by both the department/agency being charged and the billing department/agency. Journal voucher charges in excess of arranged amounts should be submitted by the billing department/agency to the department/ agency being charged for review prior to transmittal to the Auditor-Controller for processing. Refer to CAP No. J.1., Cost Applied and Interfund Transactions.
2.5.6 Interfund Loans
The Auditor-Controller verifies that any Journal Vouchers recording interfund loans have been approved by the Board of Supervisors. Journal Vouchers to record loans without Board approval or in excess of approved amounts will be withheld from processing until Board approval is obtained.
2.5.7 Land and Structures and Improvements
Journal Vouchers to record expenditures for land or structures and improvements will not be processed without correct project identification.
2.5.7.1 Land Expenditures, Object 4100
Transactions with expenditures in Object 4100 must include an organization code (ORG) to identify the specific land project or parcel. Land ORGs begin with the letter "L." See CAP No. FA.2., Fixed Asset Expenditure Coding.
2.5.7.2 Buildings and Improvements, Object 4200
Transactions with expenditures in Object 4200 must include an ORG to identify the specific structure being built or purchased. Object 4200 ORGs for most departments or agencies begin with the letter "P." Entries to cost apply 4200 charges using the 4209 account, Buildings and Improvements Reimbursements, must charge the expenditure to Object 4200 in the fund or agency being billed. See CAP No. FA.2., Fixed Asset Expenditure Coding.
2.5.8 Fund Balance Unreserved Account 9990
Transactions involving the Fund Balance Unreserved Account 9990, are not permitted. The only exceptions are Board-approved changes to reserves and transactions in the 101 Overage Fund and 650 School Control Fund.
2.5.9 Operating Transfers and Residual Equity Transfers
The Auditor-Controller verifies that Board-approved appropriations are available for all transactions involving operating transfers out or residual equity transfers out.
2.5.10 Job Charge Correction Journal Vouchers
Special Journal Vouchers for job charge corrections cannot contain any cash transactions. Corrections involving multiple funds must be corrected on conventional Journal Voucher forms. See Exhibit II.
2.6 Auditor-Controller Approval of Journal Vouchers Over $5,000,000
2.6.1 Journal Vouchers Under $5,000,000
If the total of any debit or credit column of a manually prepared Journal Voucher is less than $5,000,000, the General Ledger Manager or other designated Deputy may sign the Journal Voucher after proper review and submit it for processing.
2.6.2 $5,000,000 to $25,000,000
If the total of any debit or credit column is $5,000,000 or above, up to a total of $24,999,999, the Journal Voucher must be
  • reviewed and initialed by the General Ledger Manager or other designated Deputy, and
  • signed by an Accountant/Auditor Manager I or above.
2.6.3 $25,000,000 or Above
If the total of any debit or credit column is $25,000,000 or above, the Journal Voucher must be
  • reviewed and initialed by the General Ledger Manager or other designated Deputy,
  • reviewed and initialed by an Accountant/Auditor Manager or above, and
  • reviewed and signed by a Division Chief, the Chief Deputy or the Auditor-Controller.
2.7 Deposit Order Corrections
Except for H&CD Accounting, corrections to Deposit Orders must be corrected by Journal Vouchers prepared by the Auditor-Controller/Accounts Receivable Unit. A department or agency that desires a Deposit Order correction sends a memo to the Supervisor of the Auditor-Controller/Accounts Receivable Unit referencing the date and number of the Deposit Order to be corrected and explaining the reason for the correction.
2.8 Automated Journal Voucher Interface Transactions
Some transactions are transmitted to the accounting system, and ultimately to the accounting ledgers, as automated interface transactions. The transaction data is entered into departmental computer systems by the preparers. This data is transferred into the central accounting system via computer tape input or other electronic transfers. No paper document is sent to General Ledger for review prior to entry into the system. A hard copy of the transactions is sent to General Ledger for filing after the transactions have been processed.

There are certain system controls to prevent fundamental errors in the automated transactions. However, transactions are not reviewed for available appropriations, cash, or other restrictions until after they are processed. Departments and agencies that process automated Journal Voucher transactions are responsible for insuring that the transactions are legal, budgeted, and adequately supported by auditable documentation.
2.9 Deadline for Submitting Journal Vouchers
The daily deadline for submitting Journal Vouchers is 12:00 noon. Journal Vouchers submitted to the Auditor-Controller/General Ledger Unit after 12:00 PM may not be submitted for processing until the following day.
2.10 Restrictions on Transactions Recorded in Certain Funds or Agencies
2.10.1 Professional Consultants Recovery Agency 018
Billings to 018 require approval by CEO/Public Finance.
2.10.2 Employees Retirement Fund 157
Transactions other than payroll transactions are not permitted. The Orange County Employees' Retirement System (OCERS) is separate from the County accounting system for non-payroll transactions. Bills for services are processed by sending invoices to OCERS.
2.10.3 Local Transportation Funds 184 and 187
Charges are not normally recorded against these funds. Journal Vouchers with such billings are reviewed by the Orange County Transportation Authority (OCTA), Auditor-Controller/Claims and Disbursing, and the Auditor-Controller before they are processed.
2.10.4 Victim/Witness Fund 266
Billings to the Victim/Witness Fund 266 should be sent to Superior Court for approval.
2.10.5 Agencies in the Trust Fund 300 Series
Withdrawals from the Trust Fund 300 series agencies can only be recorded by the authorized personnel from the controlling department or agency.
2.10.6 School Control Fund 650
Transactions affecting Fund 650, except for the monthly JV prepared from the Department of Education reconciliation, should be withheld until the Treasurer-Tax Collector has been notified. Only the Auditor-Controller and Treasurer-Tax Collector record transactions for Fund 650.
2.11 Disbursements of Cash
Generally, disbursements of cash from County funds to external entities or individuals must be recorded on checks, electronic funds transfers (EFTs) or wire transfers for which approval is subject to control and review by the Auditor-Controller Claims and Disbursing Section. Cash credit entries on Journal Vouchers are usually only recorded for interfund transfers, with the following exceptions:
  • Corrections of check issuances prepared by the General Ledger Unit cash reconciliation staff.
  • ZBA (zero balance account) distributions for self-insured programs. Board approval for such agreements is required by law. A copy of Board approval for each agreement is maintained in the General Ledger Manager's files.
  • School Control Fund 650 disbursements: Checks issued by the Department of Education are not processed through the County accounting system. The following Journal Voucher entries are recorded to adjust the cash balance in the County accounting system:
  • Monthly disbursements and receipts not posted in the County accounting system: The General Ledger Unit prepares this transaction based on the cash reconciliation report submitted by the Department of Education.
  • NMUSD "sweep" transactions: The Newport-Mesa Unified School District (NMUSD) disburses money from the Department of Education bank account. The Treasurer-Tax Collector prepares Journal Vouchers to record these disbursements, based on information provided by the bank.
  • Disbursements to school districts (wire transfers): The Treasurer-Tax Collector records Journal Vouchers for disbursements from the Department of Education bank account to various school districts. A signed copy of the school district authorization must be attached to the Journal Voucher.
2.12 Treasurer-Tax Collector Investment Transactions
Journal Vouchers from the Treasurer-Tax Collector involving account 8070, Specific Investments, must include attached "Income Summary" schedules showing the sale of investments or "Daily Investments" schedules showing the purchase of investments. The attached schedules should show the funds and dollar amounts for the sale or purchases of investments.

Journal Vouchers with 8070 transactions must display a statement that the transfers do not include any inter-fund sales. This statement must be signed or initialed on the face of the Journal Voucher.
2.13 Corrections of Journal Vouchers or Checks
If a Journal Voucher records a significant correction to a previous Journal Voucher or to a check, the person who signs as Deputy must add a cc to the General Ledger Accounting Supervisor. To provide an audit trail, the General Ledger Accounting Supervisor marks the original document with the corrected entries and the correcting Journal Voucher number. Significant corrections include changes to dollar amounts, funds, agencies, objects, revenue sources, and/or balance sheet accounts.
2.14 Auditor-Controller Only Transactions
Some Journal Vouchers contain transactions that are not entered into the Treasurer-Tax Collector system because they have already been recorded in the Treasurer-Tax Collector's system. Excluded transactions include:
  • Clearing fund entries for outstanding checks (e.g., special P, AP and WE Journal Vouchers)
  • Transactions to cancel "trust" checks from the Trust Fund 300 series agencies
  • School Control Fund 650 entries prepared from the monthly Department of Education reconciliation.
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