Financial Management Services (FMS) continually monitors the financial ecosystem for opportunities to reduce risk and support excellence in financial stewardship. As part of this effort, FMS conducted an assessment in May 2020 of Purchasing Card (PCard), Travel Card (TCard) and Advance transactions that remained unsubstantiated, or uncleared, for over 60 days.  University policy requires substantiation of all business expenses within 60 days of the date of the expense to comply with IRS regulations and sponsor/donor requirements, as well as university stewardship expectations that require timely allocation of expenses to the appropriate PTAs.  

The assessment found that additional measures were necessary to support policy compliance and minimize the possibility of aging transactions. These measures, which are intended to reinforce policy compliance, are detailed below.  

Thanks to close collaboration and partnership with financial leaders across the university, FMS reduced the amount of uncleared transactions by two-thirds by the spring of 2021. This was achieved by providing budget units with aging reports, transaction clearing resources, and support as they worked diligently to clear the aging transactions.

To reduce the amount of aging transactions on our financial statements, FMS is launching a new process that will recur on a quarterly basis starting in Fiscal Year 2022 (FY22) to enforce the timely clearing of these transactions. It is important to note that FMS will charge a fee for each uncleared aging transaction that must be force cleared. FMS plans to provide continued support to the schools and units to manage their aging activity and will look for process improvement opportunities.

Earlier in 2021, in order to ensure that expenses were allocated to appropriate PTAs before the new automatic process begins in FY22, FMS asked budget units to clear any backlog of aging transactions. FMS set a deadline of May 31, 2021 to clear transactions for inactive employees, providing each unit with reports on Advances and PCard and TCard transactions aged over 60 days. FMS is currently in the process of posting any remaining aging transactions for inactive employees to the card’s guaranteed PTA (for PCards and TCards) or to the org’s Accounts Payable (AP) Default PTA (for Advances) through a force clearing process. These force-cleared transactions will be reflected in the aging transactions report distributed in late July.

Budget units must clear their aging transactions (aged 60 days or more) by mid-August, and regularly starting in FY22, to avoid force-clearing fees or other consequences, such as card suspension.

  • Clear Remaining Aging Transactions by August 11: FMS will send budget unit finance leaders a final FY21 aging transactions report listing uncleared aging transactions for active employees by July 20, 2021. Departments must clear all remaining aging transactions listed on the report by August 11, 2021. In September, FMS will post and clear any remaining transactions aged over 60 days and charge budget units $35 for each transaction that is force cleared.
  • Regular Clearing Starting in FY22: After September, FMS will post and force clear aging transactions on a quarterly basis, charging the Guarantee PTA/AP Default Account a $35 per transaction fee. For FY22 clearing deadlines and reminder dates, see the Clearing of Aging Transactions Policy page (which will be available by August 1, 2021).

Note that an expense force cleared to a guarantee PTA reduces the funding available for a unit’s other activities until that expense is moved to the correct PTA. An expense charged to an AP Default PTA (suspense account) must be moved to a valid PTA.

When transactions are force-cleared by FMS, departments lose the opportunity to attach receipts to the transaction within the Expense Requests System or PCard Module. Because all expenses must be substantiated and are subject to audit, departments with force-cleared transactions must retain receipts (or explanations for the lack of receipts) and the business purpose for the expense locally and ensure that documentation is readily available if it is needed.

Per Administrative Guide 5.3.3: Purchasing Cards, verifiers are responsible for reviewing each transaction, ensuring a complete and accurate business purpose and an appropriate account (PTA) to be charged, and for routing the transaction to the appropriate approver as soon as possible within 60 days. Failure to complete verification and approvals within 60 days of transactions will result in card suspension. Additionally, expenditure transactions over 60 days may be reported as taxable income to the card user or the cardholder.

Departments, along  with budget units, are the first line against fraud on Stanford-issued credit cards and with advances. Clearing transactions and advances in a timely manner protects the university from risk and reflects good financial stewardship. These transactions are then approved through the appropriate channels and they create an audit trail and visibility into receipts that are required to meet our IRS Accountable Plan.

Force clearing transactions also creates an administrative burden for units, who must move these transactions from the guaranteed PTA or AP Default PTA to the correct PTA.

Use these resources to identify, clear and monitor aging transactions, and to learn more about how to manage aging transactions.

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