Transfers of budget should not be used to reimburse expenditures. Underlying the whole concept of transferring budget is a basic financial principal: whenever possible, expenditures should appear where they actually occur.
We are aware of the practice of departments transferring portions of their budget to other departments to reimburse expenditures. This practice distorts permanent financial records. It leaves a lasting appearance that the transferring department operated at a lower expense level than it actually did, and that a lesser amount of resources was needed to provide a certain level of service when in actuality, more resources are needed.
In this example, the recipient of the extra budget has expenditures that are higher than what was actually necessary to support their current level of service. It will appear that the receiving department is spending more money for a certain level of service that best practices might indicate is too high.
While one can rationalize switching budgets – each unit keeps its own books and can provide the correct detailed information, the fact remains that the university’s central financial system is the official financial record. It is used for retrieval of data as requested and reviewed by the President and his staff for decision making and allocation of university resources. It is also the data that is accessed and used by the Chancellor’s Office for similar purposes.
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