8400     INTRODUCTION
(Rev. 12/89)

The term disbursement is the payment process for payroll, purchases, and other expenditures. The State Controller prepares (1) Controller's Warrants and (2) Controller's Transfers for payment of State expenditures (see SAM 8400 Illustration). Controller's Warrants are treated like bank checks. Governmental Accounting, Auditing and Financial Reporting (GAAFR) defines a warrant as "an order drawn by the legislative body or an officer of a government upon its treasurer directing the latter to pay a specific amount to the person named or to the bearer." Claim Schedules, with invoices attached, support the warrants. Agencies file claims with the State Controller for payment of purchases and other expenditures. The directions for processing specific claims are shown in the references below.

References   Types of Invoices
 
8422.101         Freight and Transportation
8422.102         Gasoline and Oil
8422.103         Purchases by Sub-Purchase Orders
8422.104         Contractual Services
8422.105         Blue Printing and Other Reproduction
8422.106         Telephone
8422.112         Telegraph
8422.114         Airline
8422.115         Automobile Rental

Controller's payroll warrants are supported by the Payroll Warrant Register. The State Controller disburses payroll warrants from the State Payroll Revolving Fund to which agency funds are transferred.

Controller's Transfers authorize an increase or decrease of cash between funds or appropriations without a warrant. The State Controller's Office will settle "No Warrant" claims by (1) a Controller's Journal Entry reducing the agency's advance at the service agency or (2) a Controller's Transfer transferring the money if no advance was made at the service agency. (See SAM 8400 Illustration.)

There are other sections of SAM that relate to the Disbursements Section. These sections are provided below:

Sections - Chapters

1. Contracts  - 1200
2. Printing  - 2800
3. Purchases  - 3500
4. Traffic Management  - 3800
5. Transportation Services  - 4100
6. Communications  - 4500
7. Electronic Data Processing  - 4800
8. Uniform System of Accounts  - 7000
9. General Ledger Accounts  - 7600
10. Check Issuance  - 8041
11. Office Revolving Fund (including bank drafts)  - 8100
12. Allotment-Expenditure Accounting  - 8300
13. Payrolls and Fringe Benefits  - 8500
14. Accounting Entries  - 10000
    

8400.1     GENERAL
(Renumbered from 8400 12/89)

Rules and Regulations of the State Board of Control prescribe the method of filing claims for disbursement of moneys from the State Treasury. This section is confined to procedure and routine relating to the preparation and accounting of such claims.

State disbursements normally consist of: (1) expenditures, (2) refunds to payers, (3) advances for office revolving funds, (4) purchases of investments, (5) transfers between funds for non-expenditure purposes, and (6) withdrawals of trust deposits. The following chart shows the normal flow for the authorization, incurrence, and payment of State expenditures.

8400.1 chart

8471.7      GENERAL SERVICES BILLING CODES 
(Revised 9/82)

The Department of General Services provides a five-digit code to agencies, on request, for use in billing Service Revolving Fund services.

Requests for new codes or revisions to active codes must be made on GS Agency Codes Change Request, Form AFS 94A, available from Department of General Services' Accounting and Financial Services, Billing Section, 1116 9th Street, Sacramento, California, 95814.

Completed Form AFS 94A, approved by the agency fiscal officer, should be submitted to the above address.

8421     DISBURSEMENTS BY CONTROLLER'S WARRANTS PAYROLLS
(Renumbered 2/85)

Payroll warrants are drawn on the State Payroll Revolving Fund after transfer has been made to that fund from other funds.  Disbursements from the State Payroll Revolving Fund are not accounted by agencies.  (See SAM Section 8451 and Sections 8500–8599.)

8422     PURCHASE AND EXPENSE CLAIMS
(Revised 12/89)

Purchase and expense claims will be listed on Claim Schedule, STD. 218, and submitted to the State Controller's Office for issuance of warrants.  (See SAM Section 8422.2).
Claims will be submitted to the State Controller's Office at intervals to ensure that no vendor ordinarily will be paid more frequently than twice monthly except freight bills which, whenever possible, must be processed and paid within 21 days from the date of receipt by the State.  This procedure is intended to assure that vendors receive payment within 30 days from the date the goods or services are received or the date of the non-discounted invoice, whichever is later. The procedure of filing claims to pay invoices as soon as possible after goods or services are received often results in an agency paying the same vendor as frequently as 10 or 12 times during a month and will be avoided whenever possible.
Invoices should be audited promptly in accordance with SAM Section 8422.1.  Audited invoices then may be filed alphabetically by appropriation chargeable and by vendor.  At scheduled intervals, the audited invoices may be removed from the alphabetical file and assembled into claim schedules in the manner prescribed in SAM Section 8422.2.  For example, an agency that ordinarily submits claim schedules once weekly to the State Controller's Office may assemble audited invoices from the alphabetical file and prepare claim schedules as follows:

1st and 3rd weeks A–M
2nd and 4th weeks N–Z

Similarly, an agency that ordinarily submits claim schedules twice weekly may assemble audited invoices from the alphabetical file and prepare claim schedules as follows:

1st and 3rd weeks   - Tuesday A–F
                                   - Friday G–L
2nd and 4th weeks  - Tuesday M–R
                                   - Friday S–Z
This procedure has been successfully tested and adopted by several State departments.

8422.1     INVOICES AND VOUCHERS
(Revised 06/08)

Original invoices will be included in claims presented to the State Controller's Office (SCO).  If agencies cannot obtain original invoices, the SCO will accept carbon copies or photocopies.  Invoices marked "Office Copy," "Packing Copy," or "Duplicate Copy" will include the same detailed information as provided on the original invoice, such as items purchased, quantity, delivery address, etc.  In addition, the copies will be accepted by the SCO only if the following information is placed on the copy:

This bill has been checked against our records and found to be the original one presented for payment and has not been paid.  We have recorded this payment so as to prevent a later duplicate payment.

                Signed: ________________________

                                    Accounting Officer               

The first step in the claim procedure is determining that invoices are proper for submission to the SCO for payment.  Invoices will comply in form and content with the rules and regulations of the Victim Compensation and Government Claims Board.  Also, the agency will determine that:

• Items or services invoiced have been received or provided, as evidenced by stock received reports or similar documents or employee verification.
• Payment has not previously been made (this may be accomplished by referring to the agency's remittance advice file or other agency records).
• Invoices comply with provisions of purchase orders, sub-purchase orders, contracts, leases, service agreements, grants, etc.
• Cash discounts have been taken, if applicable.
• Authority exists to obtain the goods or services.
• Freight charges of more than $50 must have supporting prepaid freight bills included in the claim schedule to the SCO.
• Freight charges more than $500 have been approved by the Department of General Services (DGS), Transportation Management Unit (see SAM Section 3852).

Agencies will verify the calculation of discounts, if applicable, price extensions, and sales tax and the arithmetical accuracy of totals on all invoices, including travel expense claims.

The document number providing the purchase authority (e.g. purchase order number, contract number, sub-purchase order number, lease number) will be shown on original invoices submitted to the SCO.

The agency may notify the vendor/claimant of any corrections to invoices by a Notice of Correction of Invoice, STD. 107.  However, the agency must send an Invoice Dispute Notification, STD. 209 as described in SAM Section 8474.1.

Utility services invoices may contain a service period that overlaps two calendar months.   This billing procedure does not cause any problems except at the end of a fiscal year.  For uniformity, agencies will charge utility invoices to the fiscal year in which the majority of the service falls.  For example, if the service period is from June 10 through July 9, the total amount of the invoice will be charged to the fiscal year just ended.  If the service period is from June 21 through July 20, the total amount of the invoice will be charged to the new fiscal year.  If the period of service is of equal duration in each fiscal year, the invoice may be charged to either fiscal year.

Fleet services are billed by DGS on a calendar month basis.  Occasionally minor amounts representing adjustments and delayed billings of the prior year are included in an invoice for the current year.  Under these circumstances, the entire invoice may be charged to the current year appropriation.

For additional information, see the following SAM Sections:

• 0700 et seq. for travel 
• 3800 et seq. for transportation management (freight charges)
• 8113 for additional information on discount invoices
• 8780.1 for additional information on Workers' Compensation invoices

8422.101      FREIGHT AND TRANSPORTATION INVOICES
(Revised 06/08)

Except as provided in SAM Section 3852, all freight and transportation invoices will be submitted to the Department of General Services (DGS), Transportation Management Unit for approval prior to being scheduled for payment.  See SAM Section 3851 for the required documents to be submitted to the DGS, Transportation Management Unit for approval.

Invoices from a motor carrier containing an assignment of interest to a third party will be scheduled for payment payable to the motor carrier.  If requested in writing by the carrier, departments will prepare the remittance advice in the name of the carrier, in care of the third party, who will negotiate the warrants on the basis of its power of attorney from the motor carrier.

Refer to SAM Section 3574.5 for applicability of sales and use taxes on transportation charges which are separately stated on vendor invoices.

8422.102     GASOLINE AND OIL INVOICES
(Revised 12/89)

The original copies of invoices will be filed with the State Controller's Office in claims for payment of credit card purchases. Credit card delivery tags will be retained by the agency for a period of six months from the date the claim is filed for payment. The State Controller's Office, at its discretion, may audit delivery tags in the agency's office to the extent deemed necessary in-lieu of a pre-audit of the tags at the time of approving invoices for payment. Since it is the responsibility of the agency to determine that invoices presented for payment are correct in all respects, the agency will audit the delivery tags to determine the propriety

of charges and correctness of invoices for credit card purchases before filing a claim for payment. The arithmetical accuracy of invoices will be verified as described in SAM Section 8422.1.

Unleaded regular gasoline will be used in all but a few state-owned automobiles. (See SAM Section 3687.1) Invoices and related delivery tags for premium unleaded gasoline, where its use is prohibited, will be adjusted to reflect unleaded regular gasoline prices. The same procedure will be observed for the purchase of oil at more than the Office of Procurement contract price.

Amounts collected from employees for unauthorized purchases of gasoline and oil will be deposited in the agency's general cash account (revolving fund account if the agency does not have a general cash account) pending their remittance to the vendor. (See SAM Section 8422.3)

8422.103     INVOICES FOR PURCHASES BY SUB-PURCHASE ORDERS
(Revised 2/72)

Contract numbers, where applicable, will be shown on sub-purchase order invoices. Agencies will enter the explanation "Partial delivery; Order was for _____ (quantity)" on invoices for partial deliveries of items with unit prices governed by quantities purchased. This explanation will permit the State Controller's Office to compare the unit price claimed on the invoice with the contract price.

A detailed vendor-generated document may be used to support sub-purchase order invoices where itemization of goods purchased is not practical. Vendor-generated support documents may take the form of an invoice, cash register tape, sales slip, or ticket. The form should be customary to the vendor's business.

Sub-purchase order invoices will be completed in the usual manner except that a general description may be used in place of itemizing the purchase, e.g., groceries. The support document will be attached to the sub-purchase order invoices form and referenced in the description section. Where possible, reference will be made to a vendor-numbered document.

8422.104     INVOICES FOR CONTRACTUAL SERVICES
(Revised 10/78)

Invoices for contractual services and space rental pursuant to an existing contract or lease will show the applicable contract or lease number, or other data, that will permit positive identification of the contract or lease. The State Controller's Office can then examine the contracts to determine whether the payments are in accordance with the contract terms. All written contracts are filed with the State Controller's Office after execution in accordance with SAM Section 1207.

Original authorizations by lessors to make payments to someone other than the lessor will be forwarded to the State Controller's Office before scheduling invoices requiring such payment. If the lease was originally subject to the approval of the Department of General Services, its notification of approval will be secured before scheduling invoices to the new payee.

Departments will attempt to obtain invoices in advance for all payments to be made under contracts or leases which provide for fixed monthly or quarterly payments, other than for space rentals. As each payment becomes due, the applicable invoice will be removed from the file and scheduled for payment. If the lessor or contractor's names are not on printed billheads, the invoice should be checked for signatures of the lessor or contractor. Remove remaining invoices from the file if contracts or leases are canceled.
 
Board of Control Rule 677(f) permits space rental payments without an accompanying invoice. A listing of the lease payments to be made may be submitted instead of individual invoices. The listing must include the lease number, name of lessor/assignee, location of leased property, amount, period covered by payments, and due date of the payment. The listing format must be approved by the Division of Audits of the State Controller's Office prior to submitting the listing for payments.

Changes (payee, amount, address, etc.) to a space rental lease must be received by Division of Audits of the State Controller's Office by the 22nd of the month in order to make the change effective by the first of the succeeding month.
Invoices for payment on oral agreements should describe fully the nature of the services rendered and the terms or conditions under which payment is to be made and a notation that there is no written agreement.
Where a contract calls for a one-time payment, the Controller's copy of the contract may be attached to the related invoice at the time the claim schedule is sent to the State Controller's Office.  This will facilitate the audit of such claims and expedite payment.  This procedure will not include those contracts which are sent after approval, by the Department of General Services, to the State Controller's Office.

8422.105     BLUEPRINTING AND OTHER REPRODUCTION INVOICES 
(Revised 10/78)

For payment of blueprinting and other reproduction services performed under service agreements, the original copies of vendor's summary invoices that list individual invoice numbers and amounts will be filed with the State Controller's Office.  Supporting invoices will be retained by the agency for a period of six months from the date the claim is filed for payment.  The State Controller's Office, at its discretion, may audit the supporting invoices in the agency's office instead of a pre-audit of the supporting invoices at the time of approving the summary invoices for payment.
The agency is responsible for auditing the individual invoices to determine the propriety of charges and correctness of summary invoices for blueprinting and other reproduction services before filing a claim for payment.

8422.106     TELEPHONE INVOICES 
(Revised 9/90)

Telephone companies will furnish agencies with one copy of toll statements or toll tickets for long distance telephone calls in support of their invoices.  These documents will be retained by the agency together with the agency's copy of the invoice with the file copy of the claim.  The State Controller's Office will request review of the toll statements or toll tickets in any instance wherein it believes that such verification is required.  (See SAM Section 8422.3 for payment of invoices involving personal telephone calls.)
Telephone invoices usually have a service period other than the calendar month.  These invoices will be charged the same way as other utilities as described in SAM Section 8422.1.  This applies to Department of General Services telephone invoices as well as those telephone invoices sent directly to the agency by the telephone company.
Telephone toll statements and toll tickets, including credit card statements, will be approved by the employee making the calls and the employee's supervisor.  Any unapproved charges will be collected from the employee.
State departments are not required to pay the surcharge imposed by the California Emergency Telephone Users Surcharge Law (911).  If a department receives an invoice from a telephone company which includes the surcharge, delete the surcharge amount and schedule the balance for payment.  Departments should inform the telephone companies of the incorrect billings when surcharge assessments recur.

8422.107     VOUCHERS FOR PURCHASE OF FEDERAL SURPLUS PROPERTY 
(Renumbered 2/65)

The Federal Government provides only one copy of listings of items purchased and statements of account.  Since these will be submitted to the State Controller's Office with the claim, agencies will make extra copies for their requirements.

8422.108     REVOLVING FUND INVOICES
(Revised 1/66)

Any invoice or voucher being scheduled to reimburse an office revolving fund will show the applicable revolving fund check number on the face of the invoice or voucher—except that if the revolving fund checks issued to pay the vouchers and invoices in a claim schedule are in consecutive numerical sequence and the vouchers and invoices are in the same sequence, the following statement may be shown on the face sheet of the claim schedule (original and office copies) instead of writing the check number on each invoice or voucher:

 "Paid by revolving fund check numbers ___________
 to ______________ inclusive."

If this is done, the vouchers and invoices contained in such claims will be stamped "Paid by Revolving Fund Check" or marked in some other manner to prevent duplicate payment unless the agency has other means to prevent this.

8422.109     PRIOR FISCAL YEAR CHARGES 
(Renumbered 2/65)

Invoices for purchases by sub-purchase orders charged to an appropriation of a fiscal year prior to the fiscal year in which delivery is received will be explained by noting on such invoices: "ordered in prior fiscal year for immediate delivery."

8422.110     CONSOLIDATION OF REMITTANCE FOR UTILITY BILLS
(Renumbered from 8422.111 12/89)

Agencies that have field locations may find it advantageous to consolidate bills by preparing one remittance to each billing center of the utility company concerned instead of separate remittances to company offices nearest the locations of service.

8422.111     LOCAL GOVERNMENT UTILITY USERS TAX 
(Renumbered from 8422.112 12/89)

Agencies that receive utility bills which include a Utility Users Tax assessed by California local governments will not pay such a tax.  Such agencies will contact the utility and advise it that the State is not subject to the tax.

8422.112     TELEGRAPH INVOICES 
(Renumbered from 8422.113 12/89)

Telegraph companies support their invoices by including either (1) one copy of each telegram or (2) a detail of charges.  The copies of the telegrams and/or detail of charges will be retained by the agency together with the agency's copy of the invoice in the file copy of the claim.  The State Controller's Office will request review of the supporting detail in any instance where it believes that such verification is necessary.
For telegraph companies that do not include a copy of the telegrams with the invoices, agencies may make a specific request to obtain a copy at the time of placing the telegram.  A service charge is assessed for each such request.  Also, in order for an agency's detail of charges to show the sender's (requester's, authorizer's) name or initials, agencies will have to include such information within the first ten characters of the telegram signature block at the time of placing the telegram.

8422.114     AIRLINE INVOICES 
(Renumbered from 8422.115 12/89)

The passenger's copy of an airline ticket will be submitted with the employee's travel expense claim.  Such passenger's copy will be compared with the airline invoice to determine the propriety of the charge.  Any unapproved charges will be collected from the employee.

8422.115     AUTOMOBILE RENTAL INVOICES 
(Renumbered from 8422.116  12/89)

The customer's copy of the automobile rental contract will be submitted with the employee's travel expense claim.  Such copy will be compared with the automobile rental invoice to determine the propriety of the charge.  Any unapproved charges will be collected from the employee

Departments must report to the EDD using the Report of Independent Contractor(s) form, DE542, within twenty days of either (1) making payments of $600 or more or (2) entering into a contract for $600 or more with an independent contractor in any calendar year, whichever is earlier. This information is used to assist State and county agencies in locating parents who are delinquent in their child support obligations. Additional information and the form are available at the EDD website: http://www.edd.ca.gov/taxrep/ee-ic.pdf See SAM Section 7930.

8422.19     REPORTABLE PAYMENTS 
(Revised 2/99)

Sections 6041 of the federal Internal Revenue Code (IRC) and 18637 of the State Revenue and Taxation Code require the state to report certain payments made to individuals, medical and legal corporations, and partnerships when such payments total at least $600 of miscellaneous income and $10 of interest income, respectively.  In addition, the IRC, section 6045(f) requires the State to report any payment to attorneys (including legal corporations) made in connection with legal services.  These include "gross proceeds" (i.e., lump sum payments to attorneys that consist of legal fees and amounts awarded to the client).

State policy requires that reportable payments be identified and reported through a combination of electronic data processes, the state Uniform Codes Manual (UCM), and information provided in the Payee Data Record (STD. 204).  The Department of Finance (DOF), CALSTARS Unit has developed and implemented appropriate procedures to facilitate such reporting, for its agencies, through the Franchise Tax Board (FTB).  Non-CALSTARS agencies that operate their own EDP systems are required to develop and implement similar reportable payment identification systems.  Non-CALSTARS agencies that operate in a manual accounting environment are encouraged to call the DOF, Fiscal Systems and Consulting Unit, if they have any questions.

The chief financial officer of each state agency is designated as the person responsible for ensuring compliance with federal and state tax laws.  Each state agency which makes payments from the State Treasury trust and/or agency funds will comply with the Internal Revenue Service (IRS) and the FTB annual information reporting and income tax withholding (W/H) requirements.  A state agency may arrange to have 1099s, FTB, and IRS reports prepared by a reporting agent such as FTB.  However, the final responsibility will rest with the state agency.

For the purposes of complying with the reporting requirement, each state agency is a separate reporting entity. Accordingly, each agency shall report under its own unique Federal Employer Identification Number (FEIN).  Some departments may even consider it necessary to file separate reports for certain programs.  Where such separate reporting is deemed necessary, the department should apply for separate FEIN(S) for the appropriate program(s).  To apply for FEIN, call the IRS Forms Distribution Center at (800) 829-3676, ask for a FEIN application (Form SS-4).  Return the completed form to the IRS.

8422.190     Reportable Payment Identification and Classification Requirements 
(Renumbered and Revised 2/99)

1. Required Payee Data Record form, STD. 204.  See 8422.190 Illustration 1 through 8422.190 Illustration 1 (Cont. 1).
   A completed STD. 204 must be obtained whenever a state agency engages in a transaction that leads to a payment to any individual or any entity that is not a governmental entity.  The information provided in this form must be used in conjunction with reportable transaction markers in the UCM (Object section, column "FBR"), to select the payments that are reportable from the payment history files, through electronic data processing methods.
   
   In order to obtain the data necessary to determine what payments are reportable, the STD. 204, must be completed by the vendor and attached to each contract.  For non-contract transactions, this form must be completed by the vendor and retained in the state agency's business services or accounting office as determined by state agency policy.  Information provided by the vendor on this form will include:
   1. Name and address of state agency purchasing vendor services.
   2. Complete business name and address of vendor doing business with the State including owner's name, if a sole proprietorship.
   3. The vendor type and the Taxpayer Identification Number (TIN) as shown.  The TIN is the Social Security Number (SSN) for individual and sole proprietor vendors and the FEIN for all other vendors.
   4. The residency status of the vendor by indicating resident or nonresident as shown.  The reverse side of the STD. 204 provides instructions for making this determination.  Nonresidents are subject to state withholding at the standard rate unless verification authorizing a reduced rate or a waiver is attached to the STD. 204.  (See SAM Section 8422.195 for details.)
   5. The name, title, telephone number, and dated signature of the vendor's authorized representative will be provided.  This signature certifies the accuracy of the information provided.
      State agencies that need to customize the STD. 204 in order to fulfill a unique reporting need of a specific program may submit a request for approval (including a draft of the customized STD. 204) to DOF, Fiscal Systems and Consulting Unit.A copy of the completed STD. 204, for payments to all non-governmental entities will be kept on file at each state agency.  If the STD. 204 is not completed by the payee and the required payee data is not otherwise provided, payment shall be reduced by 31 percent for federal backup withholding and seven percent for nonresident state income tax withholding (refer to SAM Section 8422.195.)  A state agency will not process revolving fund payments or file claims for SCO warrants unless a STD. 204 has been completed by the vendor being paid or federal backup and state income tax withholdings have been deducted from the payment in accordance with SAM Section 8422.195.
2. Payments that will be reported.
   1. Payments for services to medical and legal service corporations and to non-corporate entities (except governmental units) will be reported.  These may include:  fees, commissions, other forms of compensation for services (to the extent not reported on Form W–2), interest, rent, royalties, prizes, awards, and "gross proceeds" connected with legal services.  The STD. 204, is required for all payments (except for payments to governmental entities).
   2. Payments are reportable if all three of the following points can be answered YES:
      1. Payment is within the conduct of trade or business.
      2. Payee is not a corporation (note that all payments to medical corporations for services provided and legal fees (including "gross proceeds") paid to attorneys or legal services corporations are reportable).
      3. Payment is for rents, prizes, awards and services (including construction contract services) rendered and not solely for merchandise.
   3. The following identifies (1) the various recurring payment types that are required to be reported and (2) the box on the Form 1099 MISC in which they are to be reported:
      Box 1 Rent of real or personal property.
      Box 2 Royalties.
      Box 3 Other income (including prizes, awards, and punitive damages not involving physical injury or sickness).
      Box 4  Federal Income tax withheld (backup withholding).
      Box 6 Medical and Health Care payments, including doctors, medical corporations, dentists, audiologists, optometrists, psychologists, psychiatrists, etc.
      Box 7 Nonemployee compensation.
      Prizes and awards for services rendered (e.g. bonuses not reported in W-2).
      Commissions to non-employees.
      Commissions to real estate brokers.
      Consulting fees to non-employees (including travel expenses, per diem, and other expenses not supported by travel claim).
      Professional fees.
      Payments to entertainers.
      Construction service contracts (roads, streets, buildings, etc.).
      Box 11  State income tax withheld
      Box 13  Attorney Fees - Gross Proceeds pursuant to IRC section 6045(f); that consist of (1) amounts intended to be paid to the client; and  (2) amounts intended for the attorney.
      d. Interest (other than tax exempt government obligations; interest by or to nonresident aliens and most foreign entities; corporations; tax-exempt retirement plans, custodians and nominees, brokers, registered dealers in securities and commodities, and U.S. state governments, including their subdivisions and wholly-owned agencies and instrumentalities) must be reported on Form 1099-INT.
3. Payments that are not reported.
   1. Payments to governmental entities.
   2. Payments to corporations for goods and services.  However, payments to incorporated physicians and other health care providers payments to attorneys (including legal corporations) are reported.
   3. Payments for merchandise (including freight, storage, and similar charges) and utilities (such as electricity, gas, oil, water, telephone, telegraph, and similar services).
   4. Payments of non-punitive damages (for physical injury or sickness) awarded by the courts.  However, any interest payment is reportable.
   5. Salaries and wages paid from the State Payroll Revolving Fund or otherwise reported on Form W–2.
   6. Scholarships, fellowships, and stipends (except where such payments are subject to the performance of services).
   7. Per diem and travel expense reimbursements paid to employees or non-employees to the extent supported by approved travel claims.  However, note that effective January 1, 1999, IRC Section 162(a) requires that meal reimbursements for daily travel of less than 24 hours that do not involve overnight stay or the Sleep/Rest Rule, are reportable.
4. Payments that include reportable and non-reportable items.
    When a payment to an individual includes both reportable and non-reportable items, state agencies usually have the option of reporting the total payment or only the reportable portion.  If the agreement is only for a lump sum, then the full amount will be reported (including gross proceeds paid to an attorney in connection with legal services).  However, when a payment includes both non-reportable principal and interest, only the interest will be reported.  When a payment to an external consultant includes a stated amount for travel expenses, per diem, or other expenses, as well as an amount for services, the total amount will be reported.
    Questions regarding the determination of reportable payments and/or the use of STD. 204, should be directed to the FTB, Information Reporting Unit, at:  (916) 845–6304.
   

8422.191     State Agencies Reporting Annual Information Returns 
(Renumbered and Revised 2/99)

State agencies may send their annual information returns to the FTB by the first week in January of the year following the calendar year payment.  FTB will mail a paper Form 1099 to the payee by January 31st and forward magnetic media copies to the IRS by February 28th.  Contact the state agency information reporting coordinator at (916) 845-6304 for additional details.

Agencies that do not use the FTB to transmit information returns must mail a paper return directly to the payee by January 31st and file magnetic media or paper copies to both the IRS and the FTB by February 28th using one of the methods below.

1. Filing 250 or more of one type of return.
   Combined Federal/State Filing Option:  Agencies that file their own Magnetic media returns are encouraged to use the IRS Combined Federal/State Filing Program. An application to participate in this program should be submitted directly to the IRS.  When the application and test tape are approved by the IRS, the agency will annually send their returns to the IRS only. The IRS will then send the designated returns to the FTB on magnetic media.  A copy of the IRS approval should be sent to the FTB, Attn.: Magnetic Media, P.O. Box 942840, Sacramento, CA, 94240-6090.  Contact the IRS at (304) 263-8700 to participate in the program.
   Separate IRS and the FTB Filing Option: Agencies may opt to file magnetic media returns directly with the IRS and with the FTB.  The state agency should contact the IRS at (304) 263-8700 and the FTB's magnetic media unit at (916) 845-3778 for filing details.
2. Filing less than 250 returns of one type.
   Agencies filing less than 250 returns of one type are encouraged to file Magnetic media returns (through the IRS Combined Federal/State Filing Program or separately to the IRS and the FTB).  However, agencies may file paper information returns with the IRS Form 1096 (Return Transmittal Form) and send them to the IRS, Ogden, UT 84201.  The IRS will forward copies of returns filed with the Form 1096 to the FTB.  Do not file paper copies with FTB.

For information regarding the types of payments reportable on a Form 1099, call (800) 829-3676 to request the current year's IRS booklet, Instructions for Forms1099, 1098, 5498, and W-2G or call the IRS Information Reporting Unit at (304) 263-8700 and the FTB Information Reporting Unit at (916) 845-6304.  Also, check the IRS website: http//www.irs.ustreas.gov for forms and publications and the FTB website: http. http://www.ftb.ca.gov/ for information return reporting advice, questions and answers, and forms.

8422.192     Issuing Corrected Information (Form 1099) Returns 
(Renumbered and Revised 2/99)

The ultimate responsibility for filing Form 1099 returns and for ensuring the accuracy of the returns rests with the state agency that made the payment(s) being reported.  Consequently, notwithstanding the Form 1099 processing, filing, and mailing assistance provided to most state agencies by the DOF CALSTARS Unit and the FTB, each State agency is responsible for issuing corrected Form 1099 returns to its payees and to the appropriate tax authorities whenever it is necessary to correct a previously issued Form 1099.

State agencies filing less than 250 corrected returns may do so on paper Form 1099 or on magnetic media.  State agencies filing 250 or more corrected returns must use magnetic media.  Paper copies of all Form 1099s filed must be sent to the taxpayer.

A. Filing Corrected Paper Information (Form 1099) Returns.

Corrected paper Form 1099 returns should be filed with the IRS and a copy mailed to the vendors.  Do not submit copies to FTB.  The IRS automatically shares the data in corrected paper information returns with FTB.

For specific instructions regarding the filing of corrected Form 1099 returns on paper, refer to the IRS publication, Instructions for Forms 1099, 1098, 5498, and W-2G.  This annual publication may be requested by calling the IRS at (800) 829-3676, or by downloading it from the website:  http://www.irs.ustreas.gov/.

B. Filing Corrected Magnetic Media Information (Form 1099) Returns.

Corrected magnetic media Form 1099 returns should be filed with both the IRS and the FTB and paper copies sent to the payees.

For specific instructions regarding the filing of corrected Form 1099 returns on magnetic media, refer to the IRS Publication 1220, Specifications for filing Forms 1099, 1098, 5498, and W-2G Magnetically or Electronically. This annual publication may be requested by calling the IRS at (800) 829-3676 or by downloading it from the IRS website (noted above).

For additional information on the filing of corrected Form 1099 returns, please call the FTB at (916) 845-6304 for general information and (916) 845-3778 for technical information.

8422.193     Consequences of Incorrect Information Reporting 
(Renumbered and Revised 2/99)

Under the IRC, a state agency that fails to obtain the TIN or fails to file timely information returns is subject to a penalty of up to $50 per annual information return to a maximum of $250,000.  In addition, the state agency can be assessed a 31 percent federal backup income tax withholding on amounts that were incorrectly reported or were not withheld.  Additional penalties, fines, and interest may be assessed by the IRS and/or FTB.
Payment transactions submitted for processing without the benefit of a fully or accurately completed STD. 204 will not be processed by CALSTARS or other automated state accounting systems unless the state agency responsible has withheld federal backup and state income tax in accordance with SAM Section 8422.195.

8422.194     B-NOTICES 
(Renumbered and Revised 2/99)

Annual information returns reported to the IRS are subject to various computer matching analyses to determine, in part, whether the payee's name and TIN as reported in the Form 1099 matches that in the taxpayer's account in the IRS computer files.  If they do not match, the IRS will send the payor (state agency) a "B-Notice"; i.e., a listing of payees whose TINs (on Form 1099 filed by, or on behalf of, the state agency) are incorrect.

IRS Publication 1281, Backup Withholding on Missing and Incorrect TINs provides detailed guidance on the processing of B-Notices.  When a state agency receives a B-Notice the IRS Publication 1281 requires the following actions:

1. Examine the STD. 204 and verify that the TIN provided under oath by the taxpayer matches that on the B-Notice.
2. If the TIN on the STD. 204 does not match that on the B-Notice, consider the possibility of a coding error and correct your records appropriately.
3. If the TIN on the STD. 204 matches that on the B-Notice:
   1. Send the payee the required B-Notice Letter and a blank STD. 204 within 15 business days.
   2. Begin back-up withholding no later than the 31st day after the date of the IRS notice.
   3. Stop back-up withholding when the payee provides the correct TIN on the STD. 204.
   4. Keep track of each payee cited in a B-Notice in order to determine when the same payee appears in B-Notices twice in three years (the "2-in-3" rule).  Under this rule, the payor agency is required to start backup withholding upon receipt of the second B-Notice and continue until an official stop notice is received from the IRS.

Each state agency's reportable payments coordinator is required to order IRS Publication 1281 for reference in processing B-Notices by telephoning the IRS Forms Distribution Center at:  (800) 829-3676.

8422.195     REPORTABLE PAYMENT INCOME TAX WITHHOLDING 
(Renumbered and Revised 2/99)

Each state agency is responsible for federal backup withholding on reportable payments (as defined in SAM Section 8422.190) and for state withholding on all payments made to nonresidents.  Income tax will be withheld on these payments to vendors, at the rates specified, when the following federal and state requirements are met.
Federal Income Tax Withholding Requirements.
The IRC Section 3406 states that reportable payments to vendors are subject to backup withholding at 31 percent of the payment when:

1. STD. 204, (in lieu of a IRS Form W–9), has not been completed providing certification of correct TIN and exemption.  See instructions on IRS Form W–9.
2. IRS notifies your state agency that your vendor is subject to backup withholding.
3. IRS notifies your state agency that your vendor furnished an incorrect TIN.
4. Vendor fails to certify exemption from withholding on interest and dividends per IRC Section 3406(d).

State Income Tax Withholding Requirements.
Payments to nonresident vendors (except payments for equipment, supplies, and interest) are subject to withholding at seven percent.  A vendor will be considered a nonresident when the nonresident box has been checked on the STD. 204.  This form is required of all vendors doing business with any state agency.

Withholding is not required if:

1. The payments to the vendor are $1,500 or less for the calendar year.  If it is not known whether payments will exceed $1,500 for the calendar year, no withholding is required on the payment.  If it is expected that total payments will exceed $1,500 for the calendar year, withholding must be done on all payments.
2. The payment is for equipment/supplies or interest.
   The withholding rate may be reduced or waived by the FTB.  A copy of the FTB authorization must be attached to the STD. 204 or the seven percent withholding rate will apply.

If the nonresident vendor's activity will be carried on outside (or partially outside) the State of California, the FTB should be contacted at the address provided below for a reduced rate or waiver.

Computation and Remittance of Federal Backup and State Income Tax Withheld.

1. Federal Backup Withholding.
    For each vendor invoice or similar payment document that is subject to federal backup withholding in accordance with paragraph two (Federal Income Tax Withholding Requirements) of this section, the state agency shall compute the federal backup income tax to be withheld by multiplying the invoice amount (or the portion thereof subject to tax) by the 31 percent federal backup withholding rate.  This computation may be performed on the vendor invoice(s) or on a separate computation sheet which should be attached to the invoice(s) and included with the claim schedule.
   The amount computed shall be deducted from the invoice amount, the remainder shall be labeled as the claim schedule payment amount, and shall be equal to the amount shown on the related claim schedule.
   1. Remittance of Federal Backup Amount(s) Withheld.
      For each claim schedule processed, the state agency shall on a separate sheet of paper, prepare a schedule showing the claim schedule number, invoice number, payee name, the invoice amount, the amount subject to withholding, and the amount withheld.  The total amount withheld per this schedule shall be shown, as a separate line item on the claim schedule with the "Internal Revenue Service" as payee.  The Remittance Advice STD. 404, shall show the payee name and address as: Internal Revenue Service, Ogden, UT  84201.  Each state agency shall enter its FEIN, date, and amount paid in the right-hand box (reserved for vendor invoice information) of the STD. 404.  Also, the Tax Deposit Coupon, IRS Form 8109, shall be attached to the STD. 404.
   2. Reporting Federal Taxes Withheld.
       The state agency shall file the Annual Return of Withheld Federal Income Tax, IRS Form 945. Line 2 of this return reports the total amount of federal backup income tax withheld and remitted.
   3. Reconciliation of Withholding, Remittances, and Information Returns.
      Neither the IRS Form 8109 nor the IRS Form 945, provides for vendor/payee information.  That information is provided only in the Annual Information Return, Form 1099.  The IRS performs the necessary reconciliation between the IRS Form 8109, IRS Form 945, and Form 1099 data for their internal review purposes.  State agency accounting staff may perform a reconciliation, for internal use only, of the backup amounts withheld and remitted per the IRS Form 8109, and the amounts reported per the IRS Form 945, and Form 1099.
2. State Nonresident Income Tax Withholding.
    State agencies that make payments to nonresident vendors should obtain FTB Publication 1023 (Non-Resident Withholding - Independent Contractor, Rent and Royalty Guidelines) for forms and filing instructions.
    For each vendor invoice or similar payment document that is subject to state nonresident income tax withholding in accordance with paragraph three (State Income Tax Withholding Requirements) of this section, the state agency shall compute the state nonresident income tax to be withheld by multiplying the invoice amount by the standard seven percent state nonresident income tax withholding rate for nonresident vendors (or the FTB approved lower rate if applicable).  This computation may be performed on the vendor invoice(s) or on a separate computation sheet which should be attached to the invoice(s) and included with the claim schedule.
    The amount computed shall be deducted from the invoice amount, the remainder shall be labeled as the claim schedule payment amount, and shall be equal to the amount shown on the related claim schedule.

8422.196     REMITTING AND REPORTING NONRESIDENT INCOME TAX WITHHELD
(Renumbered and Revised 2/99)

The following forms shall be used to remit nonresident taxes withheld and to report the related annual information returns:

Nonresident Withholding Annual Return, FTB Form 592.  This annual information return is used to summarize all nonresident withholdings for the year and to transmit copy A of FTB Form 592-B to the FTB (see paragraph b (1) below).
Nonresident Withholding Remittance Statement, FTB Form 592-A.  This statement is used to remit amounts withheld to the FTB's Nonresident Withholding Unit.
Nonresident Withholding Tax Statement, FTB Form 592-B.  This is an information return that reports both the total amount subject to withholding and the total amount withheld for the entire calendar year.

1. Remittance of State Nonresident Income Tax Amount(s) Withheld.
   State nonresident income tax withheld shall be accumulated and remitted to the FTB with FTB Form 592-A at the address shown on the form.  This remittance shall be made quarterly and no later than 20 days following the quarter just ended.  For each quarter, the state agency shall prepare a schedule of nonresident tax withheld showing the claim schedule number, invoice number, payee name, the invoice amount, the amount subject to withholding, and the amount withheld.  The totlal amount withheld per the schedule shall be shown, as a separate line item, on the claim schedule and on the Remittance Advice with the "Franchise Tax Board" as payee.
2. Reporting State Taxes Withheld.
   Each year, FTB Form 592-B shall be prepared for each vendor whose California income taxes were withheld by the state agency.
   Form 592-B shall be distributed (as shown below) no later than January 31 for the calendar year just ended.
   1. Copy A—To the FTB with the accompanying FTB Form 592.
   2. Copy B—To the vendor (to be attached to vendor's California tax return to support the credit for tax withheld).
   3. Copy C—To the vendor (for the taxpayer's records).
   4. Copy D—Retained for state agency records.

Refer to the instructions on FTB Forms 592, 592-A, and 592-B for additional information on the remittance and reporting of nonresident income tax withheld.  Further, state agencies may contact the FTB, Nonresident Withholding Section for additional information.  Please direct all enquires to:

State Agency Withholding Coordinator
Nonresident Withholding Section
Franchise Tax Board
P.O. Box 651
Sacramento, CA  95812–0651
Telephone:  (916) 845-4900  FAX:  (916) 845-4831

8422.2     CLAIM SCHEDULES
(Revised 8/92)

Invoices and vouchers will be separated into the following three groups:  (Separate claim schedules will be prepared for each of the three groups.)

Group 1

All invoices or group of invoices other than Group 2 lease invoices to pay $1,500 or more to one payee.
All invoices to pay any amount pursuant to State agency contracts or leases other than Group 2 lease invoices (excluding items for sub-purchase order covered by Office of Procurement, Department of General Services, statewide contracts, or purchase orders under $1,500).

Group 2

All regular monthly rental invoices for leases of real property.  These will be scheduled separately for each due date.  They will be flagged to show: (1) that they are monthly rental payments; and (2) the due date of the invoices in the schedule.

Group 3

All other payments.  In no case should a payment to a vendor be scheduled in Group 3 if another payment is scheduled to the same vendor in Group 1.  Such invoices should be combined and scheduled in Group 1.  There will be no similar combining for Group 2 payments.

Claimants will be listed on a Claim Schedule, STD. 218 (Continuous), the original of which will be submitted to the State Controller's Office.  If more than one invoice or voucher is to be paid by a single warrant, only the total amount claimed by the claimant will be shown on the STD. 218 (Continuous).  Although operating expenses and equipment invoices may be combined, Workers' Compensation invoices must be kept separate because they are filed against the Personal Services category.  Purchase order numbers will be shown on STD. 218 (Continuous) when applicable.  Contract and lease payments in Group 1 will be identified by entering the letter "c" in the "Purchase Order No." column on the STD. 218 (Continuous).  The number and amount of reportable payments (see SAM Section 8422.19) will be entered on the STD. 218 (Continuous) in the box entitled "Reportable payments per SAM Section 8422.19."  The "number" of reportable payments for this purpose is the number of warrants or revolving fund checks paid, not the number of invoices which are being paid.
Agencies will submit Group 2 schedules to the State Controller's Office from five to 10 working days prior to the due date of the invoice in the schedule.  The State Controller's Office will process them and mail its warrants on the day before the due date or the next preceding workday if the day before the due date falls on other than a workday.  Also see SAM Section 8422.104.
Invoices will not be segregated by type of encumbrance document, if any, that they liquidate. Documents submitted to the State Controller's Office will be arranged as follows:

1. Original and one copy of Claim Schedule, STD. 218 (Continuous).
2. Original copies of invoices and/or vouchers or acceptable copies (see SAM Section 8422.1) arranged in the same order as payees' names are listed on the claim schedule.
3. Adding machine tape attached to the first invoice of a claimant whenever more than one invoice from the same claimant is included in a claim.  All invoices of the claimant will be listed on the tape.
4. Remittance Advice Envelope, STD. 403, containing remittance advice forms and any other material (see SAM Section 8422.3) firmly attached thereto, arranged in the same order as payees' names are listed on the claim schedule.

Claim schedules to reimburse a revolving fund will not list the names of vendors, travelers, etc., paid from the revolving fund.  Invoices and vouchers filed to reimburse office revolving funds may be included in claims filed to obtain warrants payable directly to claimants furnishing goods or services.  Such invoices will be placed at the end of the claim and will be preceded by an adding machine tape supporting the amount shown on the claim schedule as payable to the revolving fund.
All documents in a claim schedule will be bound together at the top by a tape or cord, passed through holes punched in the documents, and tied in a bow knot at the back of the claim schedule.  This will permit easy removal for audit, correction, and any required central mailing of documents by the State Controller's Office.  Be sure that necessary information is not obliterated when documents are punched.  Agencies wishing to use backing sheets may use them only for small size invoices and for those invoices wherein necessary information (vendor's name, address, etc.) would be obliterated if punched.
Agencies will file duplicate copies of STD. 218 (Continuous) and the supporting invoices and vouchers numerically by schedule number.
Claim schedules that include an invoice or claim from an employee authorized to sign claim schedules will not be signed by such employee.  Another authorized employee will sign such schedules regardless of whether it provides for direct payment to the employee or for reimbursement of the revolving fund.

8422.20     STOCK RECEIVED REPORTS
(Revised and Renumbered from 8410 12/89)

The Agency's receiving department will prepare Stock Received Reports, STD. 106, or use an approved Purchase Order document to record receiving information at the time goods are received.  For partial deliveries, a photo copy of the approved purchase order may be used as a stock received report.  The last Stock Received Report for an order should be stamped "Complete" when the order is completely filled.  Reports will be prepared only after carefully checking the quantity, description, and condition of the goods and, whenever possible, will be signed by the person responsible for checking and taking custody of the goods.  When stock received reports are prepared or signed by a person other than the person actually receiving and checking the goods, the person signing the report should take precautionary measures to assure that the goods were actually received and checked.

When  a copy of  the  order is  used as a  stock  received  report, the person  checking  the  goods  will  write  in the  date received, the quantity  received, and  note  any defect in condition.  The  same  procedure  will be used to acknowledge  receipt  of services other than regular  recurring  services, such as utilities.  If  goods  are to  be returned to the  vendor, agencies  will  prepare a Returned  Stock  Report,  STD. 108.  The original stock received report, or signed copy of the order used as a stock received report will be forwarded directly to the accounting office on the day the goods are received.

These  documents  will  provide the  accounting officers  with information  as to  the  identity,  condition,  and net  quantities  of goods  received.  The accounting  officer will compare  the stock  received report to the purchase  order and  invoice.  If these  letter  documents  are not  available for comparison, claims will not be filed for  payment.  The  accounting  office  will indicate on its copy of the stock received report:  (1) the claim schedule number, and (2) the Fiscal Year of the claim.  Stock  received  reports will be filed with the accounting office copies of orders and estimates, unless other methods of filing are  prescribed or are more convenient with respect  to  individual  agencies.   To  determine  whether all  goods  and  services  ordered are  actually received, the agency shall develop procedures to follow up on open purchase documents/contracts. (See SAM Sections 3860–3867 concerning short or damaged shipments and SAM Section 10821 for additional procedures relating to agencies performing stores accounting.)

8422.201     INVOICES CHARGEABLE TO MORE THAN ONE FUND OR APPROPRIATION 
(Renumbered from 8422.202 12/89)

When an invoice must be filed against more than one fund or appropriation because no Plan of Financial Adjustment or re-billing procedure is used, the agency will file the necessary number of claim schedules with the State Controller's Office with the invoice in one claim and cross-references in the other claims. The agency will not return to vendors invoices relating to more than one fund or appropriation and request, in lieu, separate invoices.

8422.202     CLAIMS RECORDED ON ELECTRONIC TAPE  
(Renumbered from 8422.203 7/88)

State Board of Control Rule 622.1 permits State agencies, upon approval of the State Controller, to submit claims recorded on electronic tape. Claims which have the following characteristics ordinarily will be considered for submittal in this manner:

• Large volume of payees;
• Similar in nature or purpose;
• Subject to repetitive handling and processing.

Agencies should contact the State Controller's Office, Division of Audits for additional information and assistance.

8422.23     MASTER COPIES OF CLAIM SCHEDULES  
(Revised 12/89)

The Schedule of Bills Filed, Std. Form 210, will be prepared as a carbon copy of the Claim Schedule, Std. Form 218. An additional copy of the Std. Form 218 may be used in lieu of the Std. Form 210 by agencies that do not use the Std. Form 210 for expenditure distribution. Agencies analyzing expenditures on the Std. Form 210 will summarize the expenditures by allotment for posting to the Allotment-Expenditure Ledger, and if desired, by estimate number for posting to the individual estimates.

8422.24     POSTING SLIPS  
(Renumbered 2/65)

Posting slips may be used by agencies with a large volume of invoices. The posting slip will be fastened to the duplicate copy of the invoice by a glued margin which is separated from the rest of the form by a perforation. All information necessary for posting to accounts and for reference will be entered on these slips. This information, including classification of expenditure, claim schedule number, amount and estimate number, will be recorded on the invoice also by the temporary insertion of a piece of carbon paper. The slip will be separated from the invoice, by tearing along the perforation, after the schedule has been typed. The amounts on these slips will be proved to the total of the schedule and then sorted for posting.

8422.25     WARRANTS PAYABLE TO CLAIMING AGENCY  
(Revised 5/75)

Warrants payable to the agency filing the claim are to be sent by the State Controller's Division of Disbursements to the agency for subsequent deposit in the bank for credit to the agency's office revolving fund account in the centralized State Treasury System. This procedure is applicable to deposits accounted in the General Cash and Agency Trust Cash account as well as those reimbursing the agency's revolving fund. (See SAM Section 8170.) A Remittance Advice, Std. Form 404, will be prepared for each warrant in the claim and submitted with the claim schedule in the manner described in SAM Section 8422.3.

8422.26     WARRANTS PAYABLE TO COUNTIES  
(Revised 9/82)

When payment is to be made to a county, or an agency or office of a county, payment will be made to the County Treasurer (unless there is a statutory basis to do otherwise). Where payment is made to the County Treasurer, agencies will forward to the State Controller's Office: (1) a copy of Remittance Advice (Std. Forms 404, or 404c, or a customized form approved by State Controller's Office–Division of Disbursements and General Services Forms Management, see SAM Section 1601) for mailing the warrant to the County Treasurer; and (2) an extra copy for the County Auditor. The latter will be forwarded to the State Controller's Office in a separate legal-size plain envelope marked "County Auditor's Copy" and stapled to the Remittance Advice Envelope, Std. Form 403. The Remittance Advice will show the name of the State agency filing the claim and properly identify the payment by reference to the invoice, agreement, or subvention program with a legal reference, if pertinent, and subvention program account code. Appropriate abbreviations may be used.

Below is a portion of the Revenue Chart of Accounts of the Counties pertaining to aid from other government agencies. (The entire chart is contained in the Accounting Standards and Procedures for Counties manual.) Use of these subvention program account codes on applicable remittance advice will aid counties in accounting for payments.

Account
Code        Description
 
23             State-alcoholic beverage license fees
24             State-aid for aviation
25             State-highway users tax
26             State-motor vehicle in-lieu tax
27             State-trailer coach in-lieu tax
33             State-health-administration
35             State aid for cerebral palsy
36             State aid for mental health
37             State aid for tuberculosis control
38             Other State aid for health
39             State aid for agriculture
40             State aid for civil defense
41             State aid for construction
42             State aid for corrections
43             State aid for county fairs
44             State aid for disaster
45             State aid for veterans' affairs
46             Homeowners' property tax relief
47             Business inventory property tax relief
47.1          Livestock head-day tax reduction
49             State-other
52             Federal-health-administration
53             Federal aid for construction
54             Federal aid for disaster
55             Federal forest reserve revenue
56             Federal grazing fees
60             Federal flood control receipts
60.1          Aid for medical assistance State and Federal
62             State-apportionment of off-highway in-lieu tax

8422.3     REMITTANCE ADVICE
(Rev. 9/96)

A Remittance Advice, Std. Form 404 or other approved Remittance Advice, will be prepared for each payee listed on a claim schedule.

The original (first copy) of the remittance Advice will be placed in a Remittance Advice Envelope, Std. Form 403 (See SAM Section 8422.4), separated and in the same order as listed on the claim schedule.  The duplicate (pink) copy will be filed in the agency accounting office alphabetically by claimant's name.  The payee's correct name and address will be clearly typed on each Remittance Advice in a position to permit the information to appear through the window envelope in which the warrant is mailed. In addition, the following information will be entered on the Remittance Advice form: (1) agency, name and Uniform Code Manual Agency Code Number (2) schedule number, (3) date of invoice, (4) invoice number (purchase order number or contract number if invoice is unnumbered), (5) amount of invoice, and (6) total amount if more than one invoice. Agencies should use care to type the vendor/payee's name consistently on the Claim Schedule and Remittance Advice for each and every payment. Agencies need not enter their address below their name but may do so to enable inquiries to be directed to them more quickly.

Only when the payment is a reportable one (see SAM Section 8422.19) will the three boxes at the bottom of the form be completed.  Warrant numbers will not be shown on any copies of the Remittance Advice form. Reference to individual invoice dates, numbers, and amounts, items (3), (4), and (5) above may be omitted where some other means of notifying the vendor is provided.

The original of the Remittance Advice and the applicable warrant will be mailed to the payee by the Office of the State Controller.  Remittance Advises will provide for delivery of warrants to an agency only where the agency is the payee or for delivery to agency employees.  (See SAM Section 8422.6.)  The Remittance Advice will provide the payee with an identification of the payment.  The Office of the State Controller will send a Controller's Notice of Claim Paid, Form CD–102, to the agency for every Claim Schedule for which warrants were drawn.

Enclosures attached to Remittance Advices are to be kept to a minimum and when necessary, will be folded to warrant size, (7 x 3 1/2 inches), and securely stapled behind the Remittance Advice form.  Material that cannot be folded to warrant size will be mailed separately by the agency.  Special arrangements must be made with the Office of the State Controller for continuing or large-scale problems.  Normally, invoices will be adequately identified on the Remittance Advice and requests shown on invoices asking their return will be ignored.  The exception to this rule concerns vendor requests for the return of punched cards or stubs so they can serve as machine-readable input to an automated data processing system.  Such items will be returned and the related remittance advice usually need not list the invoices or show any other detailed information.

Remittance Advice addressed to payees in other than United States and its possessions, Canada, or Mexico will be stamped on their face, in red ink, by the agency or otherwise identified by the words "FOREIGN MAIL."  The bottom line of the address must show only the name of the country, written in full, and in capital letters.  For example:

Mr. John Smith
123 Russell Drive
London W1p 6HQ
ENGLAND 

OR 

Ms. J. Smith
Apartado 3068
46807 Puerto Vallarta, Jalisco
MEXICO

In the case of payments in part by State Controller's warrant and in part by personal or state checks, agencies will:

1. Clip the check to the back of the Remittance Advice accompanying the Claim Schedule.  The check will be mailed with the warrant by the Office of the State Controller.
   
   OR
   
2. Mail the check to the payee with an explanation that the balance paid by the warrant is being or has been transmitted separately. The Remittance Advice accompanying such check will be cross-referenced to the partial payment by warrant. The Remittance Advice to accompany the warrant will indicate that partial payment has been or will be made by check.

When it is necessary or desirable to notify the payee of a correction in the amount being paid, agencies will prepare a Notice of Correction of Invoice, Std. Form 107, in duplicate. The original of this form will be stapled to the back of the original copy of the Remittance Advice.

Agencies that wish to use a customized Remittance Advice form instead of a STD. Form 404, or other approved Remittance Advice, must have their customized form design reviewed and approved by the Office of the State Controller before they are used.  The size of the customized Remittance Advice must be 7 x 3 1/2 inches.  The paper used must be of a 24 pound weight.  Dot matrix printers shall be adjusted so that the dots touch at the edges.

8422.31     RECORD OF PAYMENTS  
(Renumbered 2/65)

Each agency will maintain an alphabetic file of duplicate copies of payee Remittance Advice and Revolving Fund checks (see SAM Section 8422.3) as a central reference file except where a memorandum record of payments, as described below, is used.  Also, payments will always be recorded on the documents authorizing the expenditure, such as purchase orders, sub-purchase orders, contracts, and service agreements.  These records will be used by the agency to determine that payment has not been made previously.

The maintenance of a memorandum record of payments for recurring services, such as rent and utility bills, is permissive.  A card or loose-leaf form can be used for this purpose. This form should be designed to require the posting of only a minimum amount of information.  Generally, the number of claim schedules and the amount of the bill are adequate.

8422.4     REMITTANCE ADVICE ENVELOPE, STD. FORM 403  
(Revised 9/96)

A Remittance Advice Envelope, Form STD. 403, will accompany each claim schedule submitted by the agency. The envelope will be attached to the back of the claim schedule by a string tied securely with a bow.  The Remittance Advice Envelope is obtainable from Central Stores, Office of Procurement. The envelope will be addressed by the agency to its accounting office to which it is to be returned. If the agency wishes the envelope routed to other than the accounting office, the envelope should be so addressed.  These envelopes will be returned periodically by the Office of the State Controller, by mail to agencies located away from the Sacramento local area. Envelopes returned to the agencies will be reused with subsequent claim schedules.

8422.5     CLAIM CORRECTIONS
(Revised 9/96)

The Office of the State Controller, Division of Audits will prepare a Notice of Claim Correction, Form AUD 16, whenever errors are detected in claims presented to that Office.  The original of each AUD 16 will be forwarded to the submitting agency.  Upon receipt of the Form AUD 16, the agency will record the correction in its claims filed register.

If the invoice is to be returned to the agency for correction, Office of the State Controller, Division of Audits will send the Form AUD 16 and Remittance Advice to the agency with the related invoice.  If the invoice to be returned is one of several for the same payee in one claim schedule, the Office of the State Controller, Division of Audits will correct the Remittance Advice and will send only the invoice and a Form AUD 16 to the agency. The corrected Remittance Advice will be mailed with the warrant paying the adjusted amount. The agency will correct its own copy of the remittance advice. If in order, a new or corrected invoice with a Remittance Advice will be submitted in a subsequent claim schedule.

The Office of the State Controller may correct an invoice and issue a warrant in an amount different from that originally shown in the claim schedule. If such a correction is made a Notice of Claim Correction, Form AUD 16, and a Notice of Correction of Invoice, Std. Form 107, will be prepared by the Office of the State Controller, Division of Audits. The original of the Form AUD 16 and the Std. Form 107 will be sent to the agency submitting the claim schedule.  Upon receipt of these documents, the agency will record the claim correction, correct the agency's copy of the claim schedule and remittance advice.  The original of the remittance advice will be corrected and mailed with the warrant by the Office of the State Controller.

8422.6     DELIVERY OF WARRANTS  
(Revised 9/96)

Warrants will be mailed directly to payees by the Office of the State Controller in envelopes bearing the return address of that office, except those for payrolls, those to be deposited in the claiming agency's centralized State Treasury System account, and those for travel expenses when the agency has not requested central mailing.  See SAM Section 8580 for distribution of payroll warrants.  A warrant for travel expenses will not be routed through the person who prepares or approves the related travel expense claim.  Warrants inadvertently received by an agency will be returned immediately to the Office of the State Controller, Division of Disbursements and Support.  Agencies will instruct payees to return incorrect warrants to the Office of the State Controller if questioned as to proper disposition.

If warrants are returned to the Office of the State Controller, because of incorrect or insufficient address, that office will determine the correct address.  If a warrant is returned to an agency by the payee because it is a duplicate payment or otherwise incorrect, it will be forwarded immediately to the Office of the State Controller, Division of Disbursement and Support, with a memo requesting the desired disposition.  A copy of the memo will be retained in a suspense file pending acknowledgment by the Office of the State Controller, at which time agency records will be adjusted accordingly.  The Office of the State Controller will notify agencies of warrants written by Notice of Claim Paid, Form CD–102.  The Form CD–102 will be checked against the totals of the claims as adjusted for claim corrections.  Agencies will notify the Office of the State Controller immediately of any discrepancy.  An adding machine tape of the Forms CD–102 received during the month will serve as the media for posting to the general ledger.  Warrant numbers will normally be entered on the agency's copy of Schedule of Bills Filed, Std. Form 210. The beginning and ending warrant numbers will suffice if the warrant numbers were written in the same order as the Std. Form 210 and are in one consecutive series.  It is also permissible for agencies to enter the warrant dates instead of the warrant numbers on the Std. Form 210 if they consider it more practical or more convenient to do so. (See SAM Section 8034.2 for endorsement of erroneous warrants and SAM Section 18424.1 for disposition of undelivered warrants.)

Agencies will prepare a Remittance Advice, Std. Form 404, or other approved remittance advice form, in duplicate, for each payee listed on a Claim Schedule, Std. Form 218, for which a warrant will be drawn. The originals of remittance advices will be submitted along with the claim schedule to the Office of the State Controller and will be submitted with "NO WARRANT" claim schedules.

Emergency payments, extenuating circumstances, and unusual type transactions may require that warrants be delivered to payees by the agency rather than be mailed to payees by the State Controller's Office. Delivery of such warrants to the agency may be requested under a "Special Handling" procedure.  Special handling requests will be kept to a minimum and will be approved only when absolutely necessary or when a practical central mailing procedure cannot be devised.

Requests for special handling will be made on a Request to Deliver Warrant to Agency form, STD. 8, (Rev. 2/86), in duplicate. A special handling request form will be 5 1/2 x 8 1/2 inches and green. This form will show: (1) name of the agency requesting the warrant, (2) payee, (3) amount of the warrant, (4) agency representative, (5) reason why the warrant should be delivered to the agency, and (6) claim schedule number.  A Request to Deliver Warrant to Agency will be approved by the Office of the State Controller only when signed by a person authorized to sign claim schedules.

The original of the Request to Deliver Warrant to Agency will be stapled face up to the top side of the Remittance Advice Envelope form, STD. 403.  The duplicate copy of the form will be retained by the requesting agency in a suspense file pending receipt of the warrant from the State Controller's Office.  When a Request to Deliver Warrant to Agency form is used the Remittance Advice will not accompany the claim schedule.

Requests for special handling of warrants and for correction or deletion of invoices after a claim schedule has been submitted to the State Controller's Office may be made by telephone or other method.  Telephone "stop requests" will be made to the State Controller's Office, Division of Audits, Claim Record Unit.  Stop requests will be approved only for valid reasons and will be kept to a minimum.

Whenever possible, the agency will request correction or deletion of an invoice or claim rather than requesting delivery of the warrant to the agency. Stop requests will not be approved if it is possible to meet the agency's need by returning the invoice to the agency or by correction of the invoice or claim by the State Controller's Office.

8422.7      INVOICES PAYABLE FROM REVERTED APPROPRIATIONS
(Revised 2/98)

Pursuant to Government Code Section 16304.1, after an appropriation has reverted, any unpaid encumbrance against the appropriation may be paid from any current appropriations available for the same purposes.

Invoices payable from a reverted appropriation, for which a current year appropriation is available for the same purposes, will be assembled into a claim schedule containing only this kind of invoice.  Reverted year invoices will not be commingled with other invoices.
The following statement will be placed on the original copy of the claim face sheet.

I hereby certify that the invoices contained herein are valid obligations of the State of California and were not paid before the applicable appropriation reverted. In accordance with Government Code Section 16304.1, the invoices may be paid from this current appropriation which is available for the same purpose.  Signed___________________________  Title____________________________

The claim schedule will be submitted to the State Controller's Office for payment.

Invoices payable from reverted appropriations, for which no current year appropriation is available for the same purposes, will be submitted to the State Board of Control in accordance with SAM Section 8710 for Legislative claims.

8423     CLAIM FOR DAMAGE TO OR STOLEN EMPLOYEES' PERSONAL PROPERTY 
(Revised 11/98)

Government Code Section 19849.8 permits agencies to pay for the repair or replacement of damaged personal property worn or used by the employee in the course of employment (eyeglasses, hearing aids, dentures, watches, or articles of clothing). Government Code Section 19850.6 permits agencies to reimburse or provide an employee with replacement of stolen personal property required for the performance of work.  See Department of Personnel Administration Rule 599.725.

There are instances when employees bring personal property to the workplace for personal use. Repair, replacement, or reimbursement of property not used on the job is not considered to be the responsibility of the state.

For stolen property, the choice of reimbursement or replacement is up to the employee's department but the employee's preference must be considered before a decision is made.  Employees must provide their department with an inventory of all personal property used on the job prior to the loss.  The California Highway Patrol must be notified and a copy of the theft report shall accompany the claim.  Any claims of $500 and above for stolen property must have the prior approval of the Department of Personnel Administration.

Agencies will approve claims under this section only when the circumstances of such loss clearly indicate that reimbursement is proper.  Each claim for damage to or stolen personal property will include:

1. A report describing the incident that caused the damage or the circumstances surrounding the theft.
2. For damaged items, a receipted bill for repairs.  If the article is damaged beyond repair, a statement of the actual value of the article at the time of damage and the reason it could not be repaired.
3. For stolen items, a statement that the value of the property was verified by inspecting the original sales records, current price lists, or other appropriate methods.
4. A certification by the employee that:
   1. The item was required for work.
   2. The loss or damage occurred at the worksite, the workbase, or enroute.
   3. There was no employee carelessness or negligence and all foreseeable precautions were taken.
      
   All three stipulations in this certification must be made or the claim will not be approved. If they are met, an agency may pay the cost of replacing, repairing, or reimbursing the value of the item.
5. Approval by the employee's supervisor including:
   1. Confirmation of the facts stated by the employee.
   2. Recommendation for reimbursement or replacement.
   3. A statement of measures taken to prevent recurrence of the theft or damage.

Payments should not be made when recovery is possible under worker's compensation laws.

8424     REFUND CLAIMS 
(Revised 12/89)

Refund claims will be presented on Claim Schedule form, STD. 218.  The STD. 218 will contain a list of claimants, statutory authority for the refunds, and a statement of the reason for each claim.  The procedures stated in SAM Sections 8243, 8422.4, 8422.5, and 8422.6 relating to remittance advices, claim corrections, and delivery of warrants also apply to refund claims.

8425     CLAIMS TO ESTABLISH REVOLVING FUND ADVANCES 
(Revised 12/89)

Claims to establish revolving fund advances will be presented on STD. 218.

In lieu of withdrawing advances from each new appropriation and repaying the last preceding appropriation, departments may request that revolving fund advances be transferred in effect from appropriation to appropriation by Controller's Journal Entry.

8426     STOP PAYMENT OF ERRONEOUSLY ISSUED WARRANTS
(Revised 9/00)
Government Code Section 17051.5 assigns the responsibility to stop payment on State warrants to the agency that initiated the warrant.
To initiate a stop payment on warrants erroneously issued to the wrong payee or in the wrong amount and warrants which the authorizing agency deems necessary to withhold payment, agencies must submit a memorandum requesting stop payment to the SCO, Division of Administration and Disbursements, P.O. Box 942850, Sacramento, CA 94250-5871. The memorandum must include the following:

1. Agency name
2. Contact person and phone number
3. Agency address
4. Warrant number
5. Issue date
6. Dollar amount
7. Payee name
8. Four digit fund number
9. Reason for stop payment

The SCO will accept a fax memorandum; however, the original must be sent immediately to SCO.  The supervisor of the SCO Post Issuance Unit will accept a verbal stop payment request in urgent situations.

Upon receipt of the memorandum, SCO will verify the status of the original warrant.

1. If the warrant has been cashed, SCO will send a photocopy (front and back) with the memorandum to the authorizing agency.
2. If the warrant is still outstanding, SCO will place a stop payment on the original warrant.  The authorizing agency will receive a journal entry to show the redeposit of funds.
   

8426.1     LOST OR DESTROYED WARRANTS
(Revised 9/00)

Departments will use a Request for Duplicate Controller's Warrant/Stop Payment form, STD. 435, to request a duplicate warrant to replace a lost or destroyed warrant.  See 8426.1 Illustration.  Departments will not issue an office revolving fund check to replace a lost or destroyed warrant except for a payroll warrant.

The STD. 435 is a three page form including:

 Page 1 - The legal affidavit requesting a duplicate warrant.
 Page 2 - Instructions to the payee.
 Page 3 - An optional agency notification of duplicate warrant issued and mailed.

The department that authorized the original warrant (authorizing department) will complete the top portion of the STD. 435. The pertinent data should be typed or legibly printed. If the information is not legible, SCO will return the form to the department.

The authorizing department will mail STD. 435 to the payee to complete the certification.  The warrant payee will complete and mail STD. 435 to the SCO, Division of Administration and Disbursements.

The authorizing department may fax a STD. 435 to the payee with instructions that the payee complete the form in non-black, ball point ink.  This is to ensure that the SCO receives STD. 435 with original signatures. If it cannot be ascertained whether an original signature is affixed to STD. 435, SCO will return the form to the authorizing department.

Upon receipt of the properly executed STD. 435, SCO will verify the status of the original warrant.

1. If the warrant has been cashed, SCO will send a photocopy (front and back) with STD. 435 to the authorizing department.
2. If the warrant is still outstanding, SCO will place a stop payment on the original warrant and issue a duplicate warrant within 7 working days.  The duplicate warrant will be mailed directly to the payee.
   If the authorizing department wants notification that the duplicate warrant was issued and mailed, the authorizing department must complete page 3 of STD. 435, Agency Acknowledgement of Issuance of Duplicate Warrant.  The SCO will date stamp the acknowledgment when the duplicate warrant is issued and mailed to the payee and forward it to the authorizing department.

In cases of theft, the authorizing department will complete STD. 435 as instructed above.  The authorizing department will mail or fax STD. 435 to the payee and fax a copy to SCO.  A stop payment will be placed immediately to prevent redemption of the original warrant.  It is incumbent upon the authorizing department to instruct the payee that if the original warrant is recovered, it is not to be cashed.  The original warrant will not clear the banking system.  Use this process only when the payee has reported theft of a warrant.

See Government Code Sections 17090–97 regarding lost or destroyed warrants.

8426.1 ILLUSTRATION
8426.1 ILLUSTRATION (cont. 1)
8426.1 ILLUSTRATION (cont. 2)

8426.2     LOST OR DESTROYED PAYROLL WARRANTS
(New 9/00)

Departments may issue office revolving fund checks to replace lost or destroyed payroll warrants but only after completion of the forms as required below.

If a payroll warrant is lost or destroyed:

1. Before delivery to the employee, the department must complete a Proof of Lost or Destroyed Payroll Warrant and Request for Issuance of Duplicate Warrant form, CD 113 A or B.  Detailed instructions are in the Payroll Procedures Manual, Chapter I, Section 320.  The duplicate warrant will be mailed to the department.
2. After delivery to the employee, the employee must complete the certification on a Request for Duplicate Controller’s Warrant/Stop Payment form, STD. 435.  The department will complete STD. 435 with the departmental address in the upper left-hand box.  This will ensure the duplicate warrant is sent to the department.

The duplicate warrant will be deposited to reimburse the office revolving fund. 

If an employee overpayment occurs, departments must follow collection procedures as outlined in SAM Section 8776.7.

8427     WARRANTS—FORGERIES 
(Revised 2/98)

When a payee maintains that the proceeds from a paid state warrant were not received, the State Controller’s Office (SCO), Division of Disbursements and Support, will furnish photocopies of both sides of the warrant.  If after reviewing the endorsement, the payee alleges that the endorsement is a forgery, the payee must write to the SCO informing them that a forgery has been committed.  All pertinent data, including the original warrant, may be turned over to SCO, Special Investigations, for review and possible investigation.  If it appears that the endorsement is a forgery, the SCO’s Division of Disbursements and Support will be informed and all pertinent data, including four (4) photocopies of the original warrant, will be forwarded to the State Treasurer’s Office (STO), Item Processing.

The STO will then send three copies of the Forged Endorsement Affidavit, STO-CA-0034, to the payee to be signed.  All three copies must be signed in ink.  The payee’s signature must be either witnessed by two disinterested parties or notarized.  All three copies must be signed by witnesses; one notarized copy will suffice.  The payee is to return all three copies to STO.  Upon receipt of the completed affidavits, the signatures are compared with the endorsement on the warrant as a final check before requesting repayment of the money from the applicable bank.  After receiving the funds from the bank, STO will authorize SCO to reissue the warrant.

8451     DISBURSEMENTS BY CONTROLLER'S TRANSFERS PAYROLLS
(Renumbered 2/65)

Agencies will account payroll disbursements from Notices of State Payroll Revolving Fund Transfer, Form CD–62. See SAM Sections 8500–8599.

8452     PLANS OF FINANCIAL ADJUSTMENT 
(Renumbered from 8456 12/89)

A Plan of Financial Adjustment (PFA) is a formal plan whereby any state agency, which is supported by more than one fund or appropriation, may make financial adjustments between funding sources for services rendered, supplies used, or for a proper proportion of other expenses.

A PFA eliminates the use of multiple claim schedules for an invoice or payroll charge applicable to more than one fund or appropriation.  In using PFA, expenditures which are chargeable to more than one fund or appropriation are paid from only one of the funds or appropriations.  The fund or appropriation making the payment is reimbursed by the other funds or appropriations through a written request for a transfer of expenditures (financial adjustment) to SCO.  Upon receipt of the request for financial adjustment, SCO will make the transfer of expenditures by Controller's Journal Entry or Controller's Transfer.  Transfers of the former type are for adjustments between appropriations from the same fund while the latter type are for adjustments between appropriations of different funds.  See SAM Section 8715 for accounting for PFA.

PFA are not intended to be a means of providing working capital advances, or overcoming cash flow problems nor are they to be used to distort interest earnings or potential interest earnings between funds.  Transfers (financial adjustments) are to be made on a monthly basis.  Transfers of financial adjustment between funds will be made on an estimated basis when a material interest earnings loss will occur in the fund from which payments are made.
Departments are required to maintain separate accountability for each fund and/or appropriation covered by the PFA.  This is a basic fundamental of governmental accounting.  See SAM Section 8715.  Funds and appropriations require separate accounting by law and approval of a PFA in no way changes this requirement.  PFA, related transfers, and detail supporting transfers are subject to audit by the Office of the Auditor General and SCO, Division of Audits.

8452.1     PREPARATION OF PLAN OF FINANCIAL ADJUSTMENT
(Revised 5/95)

Government Code Section 11251 is the general statute that authorizes the use of a PFA.  Other statutes which authorize the use of a PFA for specific funds are: Government Code Section 16365 for the Federal Trust Fund; Education Code Section 12060 for the Vocational Education Federal Fund; and Health and Safety Code Section 111 for the Public Health Federal Fund.

The format to be used for a general PFA is contained in SAM Section 8452.1 Illustration 1; and for the Federal Trust Fund, SAM Section 8452.1 Illustration 2.  Each PFA must follow this format.  Of course, the statute references, funds, and appropriations will vary.  Also, each PFA requested under Government Code Section 11251 should request approval only from the State Controller.

The following items are to be included in a PFA:

1. The first paragraph should include a request for approval of PFA, and a statement of the period of time for which PFA is to be effective.  This period of time can be for a limited period (one, two, three years) or it can be continuous from year-to-year as SAM Section 8452.1 Illustration 1 indicates.  Departments should review their PFA each year and cancel those PFA which are no longer needed by notifying SCO, in all cases, and DOF only for those requiring their approval.
2. Identify the funds and/or appropriations covered by PFA.  If PFA is to be continuous and one of the appropriations covered by the plan is appropriated yearly, care should be taken to identify the yearly appropriation and not the specific appropriation of a particular year.  For example, the ten digit item code (_____-_____-_____) numbers of a support appropriation should be used to identify a department's yearly support appropriation and not the year and chapter number of the current budget act.  If the appropriation covered is made by other than budget act legislation, the year and chapter must be stated.
3. Also to be included is a declaration by the department that a cost allocation plan will be used to allocate the costs covered by the PFA.  A description of the cost allocation plan and the types of costs covered must be filed with the State Controller.  Those departments that have more than one PFA only need to file one cost allocation plan description unless a different plan is utilized for each different PFA.  The description should include the type of costs being allocated and the methodology used to allocate the costs.  Refer to SAM Section 9205 through 9228 for guidelines on allocating costs.  Although these sections refer to allocating line-item costs to programs, the same principles apply to allocating shared costs between funds and/or appropriations.
4. The frequency of transfer requests between the funds and/or appropriations covered by PFA must be included.  Transfers must be made monthly.  The period covered by the transfer must be clearly stated.  For example, if an estimated transfer is submitted for July, it must indicate JULY ESTIMATES.  When the estimate is cleared, the transfer request must indicate JULY ACTUAL.

8452.1 Illustration 1

State Controller
Division of Accounting
3301 C Street, Suite 506
Sacramento, CA 95816

Attention: _______________, Chief

(Department/Board/Commission)
(address)

PLAN OF FINANCIAL ADJUSTMENT (No. _____)

We request that you approve the following Plan of Financial Adjustment (PFA) under Government Code Section 11251 to begin _________________________ and to continue until _________________________, unless amended or rescinded.

1. As used herein, the following terms have the meanings set forth below:
   a. "Agency" means the Department of _______________.
   b. "Primary Appropriation" means the main Budget Act appropriation for the support of the Department (e.g., Item _____-_____-_____).
   c. "Special Appropriation" means any appropriation other than the main support appropriation in the Budget Act or an appropriation from other legislation (if Budget Act Special Appropriation, state item ___-___-___; if other legislation, state Chapter __________, Statutes of __________).
   d. "Covered Expenditures" means the expenditure incurred by the department properly chargeable to the Primary Appropriation or Special Appropriations.
   
2. All covered expenditures may be paid, in the first instance, from the Primary Appropriation.
   
3. On the basis of data set forth in the records maintained by the Agency and in accordance with the plan of cost allocation employed by it, the Agency will determine and record the amounts expended from the Primary Appropriation that are properly chargeable to the Primary Appropriation or Special Appropriations.
   
4. Once a month, the department will file a request with the State Controller to transfer from the Primary Appropriation as established under "1," above, an amount which equals expenditures determined under "3," above which are chargeable to the Special Appropriations.
   
5. At any time after the end of a period covered by previous requests for transfer of funds, the Agency may file with the State Controller requests for transfer to make final adjustments after the close of such period.
   
6. Requests for transfer under this plan will be accompanied by such supporting detail as may be normally required by the State Controller.

Requests for transfers under this plan will be addressed to the State Controller, Division of Accounting, 3301 C Street, Suite 506, Sacramento, CA 95816, and will be certified in the following language:

I hereby certify under penalty of perjury that I am duly appointed, qualified and acting officer of the herein named State agency, department, board, commission, office or institution; that the within transfer is in all respects true, correct, and in accordance with all applicable provisions or restrictions in the Budget Act or other statute pertaining to the particular appropriation.

Approved by State Controller

By                                                (Signature)                                     

Title                                               (Title)                                            

Date                                              (Telephone)                                    

Telephone                  

8452.1 Illustration 2

                              , Director                                   Honorable                                    
Department of Finance                                               State Controller
(Appropriate Budget Unit)                                           Division of Accounting
915 L Street                                                                3301 C Street, Suite 506
Sacramento, CA 95814                                               Sacramento, CA 95816

PLAN OF FINANCIAL ADJUSTMENT

We request that the State Controller and the Director of Finance approve this plan under provision of the Government Code Section 16365 for the Department of ____________________ to transfer and account for expenditure of Federal fund held in the Federal Trust Fund. The plan is to become effective July 1, 19___, and to continue until amended or rescinded.

1. As used herein, the following terms have the meanings set forth below:

a. "Agency" means the Department of ________________________.

b.   "Appropriation(s)" means the Agency's appropriation which is current during the period covered by a request for transfer hereunder and has in it the spending authority of the Federal funds covered by this plan.  The appropriation(s) covered by this plan is (are):

Sample:  Primary appropriation, General Fund. Note: If the plan is to cover several appropriations, an attachment may be used.

c. "Federal Trust Fund Accounts" means the specific ac