Why are IDB transactions posted to Sponsored Accounts scrutinized by auditors?
The Interdepartmental Billing (IDB) is a University accounting mechanism to charge a department for goods and services provided by another department or a service center. Because the IDB transactions are internal to the University, sponsors may pay special attention to these charges to verify that they are dealt with at arm’s length. The service provider, regardless if it’s a department or a service center, is required, according to OMB Circular A-21, to operate on a break-even basis. This means that sponsors should only bear the cost of service but not a profit built in the IDB charge. To prove that the IDB transactions are conducted at arms length and to comply with the requirement of A-21, the following steps should be followed: • Billing rates should be calculated and published on an annual basis by the service provider • For the same type of good or service, the same billing rate should be applied to all the University departments and all types of accounts. • A billing statement i
Related Questions
- The transactions I generated in ACCOUNTS PAYABLE, ACCOUNTS RECEIVABLE, EQUIPMENT CONTROL, INVENTORY CONTROL, and PAYROLL have not been posted to GENERAL LEDGER. What causes this?
- Does the balance shown on the Accounts Summary page include all transactions that have posted to my account?
- Why are IDB transactions posted to Sponsored Accounts scrutinized by auditors?
