Budget and Finance Policy and Procedure Office
A Division of The Office of Budget and Finance
A Division of The Office of Budget and Finance
This procedure establishes the processes, responsibilities, approvals, documentation requirements, internal controls, monitoring activities, and recordkeeping requirements necessary to implement Policy FN34 Miscellaneous General Income & Expenses and Sponsored Residual Balances.
This procedure provides the operational requirements for establishing, managing, monitoring, reconciling, and closing 59-type Internal Orders (IOs) used for miscellaneous income, miscellaneous expenses, royalty activity, licensing activity, conference and event activity, and sponsored residual balances.
This procedure applies to all University employees, business areas, colleges, campuses, administrative units, Principal Investigators (PIs), and offices responsible for creating, approving, recording, monitoring, reconciling, reporting, or closing transactions recorded in 59-type IOs.
Penn State Health and its subsidiaries, and Pennsylvania College of Technology, each having separate governance structures and procedures, are exempt from this procedure unless otherwise specified.
This procedure is issued under the authority granted by Policies AD00 Policy on Policies and FN34 Miscellaneous General Income & Expenses and Sponsored Residual Balances.
This procedure carries the same institutional authority as the associated policy and must be followed by all affected individuals and units.
If there is a conflict between this procedure and the associated policy, the policy prevails unless superseded by law, regulation, sponsor requirements, or contractual obligations.
All defined terms applicable to this procedure are set forth in Policy FN34 Miscellaneous General Income & Expenses and Sponsored Residual Balances.
This procedure does not create, modify, or interpret definitions.
Miscellaneous income, miscellaneous expenses, and sponsored residual balances must be recorded in the System for Integrated Management, Budget, and Accounting (SIMBA) using approved funds, cost collectors, and accounting structures to promote consistency and provide transparency in financial reporting.
All 59-type IOs must:
59-type IOs must have:
Exhibit A: Policy-Procedure Implementation Crosswalk provides a section by section mapping between Policy FN34 Miscellaneous General Income & Expenses and Sponsored Residual Balances and this procedure.
Before requesting 59-type IOs, the Business Area must determine that the activity is permitted under Policy FN34 Miscellaneous General Income & Expenses and Sponsored Residual Balances.
The requester must complete the Internal Order Request Template
Required information includes:
The request must be approved by:
After approval:
Requests for activities not specifically identified in Policy FN34 Miscellaneous General Income & Expenses and Sponsored Residual Balances shall be submitted to the Controllership Team for review before 59-type IOs are established. The request must include business justification, proposed funding source, anticipated financial activity, and supporting documentation sufficient to evaluate the request.
The Controllership Team will review the request for 59-type IOs and may consult with other University offices, as appropriate, to ensure compliance with University policies, sponsor requirements, accounting standards, tax requirements, and applicable laws and regulations.
If the proposed activity is approved, the Controllership Team will authorize the establishment of the 59-type IOs and communicate any applicable requirements or conditions associated with its use. Requests that are not approved may not be established as 59-type IOs.
Policy RA90 Finalization and Closure and Procedure RA2091 Fixed Price Residual Balances govern the closeout of sponsored awards, determinations of residual balance eligibility, sponsor compliance, calculation of residual balances, and approval of residual balance transfers.
This procedure governs the establishment, accounting, financial management, monitoring, reconciliation, reporting, and use of 59-type IOs after an approved residual balance has been transferred in accordance with those requirements.
Research Accounting shall determine whether a sponsored residual balance is eligible for transfer in accordance with Policy RA90 Finalization and Closure and Procedure RA2091 Fixed Price Residual Balances.
Determinations regarding sponsor closeout, completion of project work, fulfillment of sponsor requirements, allowability of residual balances, residual balance calculations, and sponsor approval requirements shall be performed in accordance with Procedure RA2091 Fixed Price Residual Balances.
Only residual balances determined to be eligible for transfer under Procedure RA2091 Fixed Price Residual Balances may be transferred to 59-type IOs and managed in accordance with this procedure.
Requests for residual balance transfers shall be initiated, reviewed, approved, and processed in accordance with Procedure RA2091 Fixed Price Residual Balances.
Following approval under Procedure RA2091 Fixed Price Residual Balances, the Controllership Team records the approved accounting entries within SIMBA and establishes or updates the receiving 59-type IOs, as appropriate.
Residual balances remain University funds and shall not be treated as funds belonging to an individual Principal Investigator. The Business Area is responsible for ensuring expenditures comply with Policy FN34 Miscellaneous General Income & Expenses and Sponsored Residual Balances, applicable sponsor requirements, and University financial policies and procedures.
All expenditures charged to residual balance Internal Orders must follow applicable University financial policies, purchasing requirements, approval requirements, and documentation standards. The transfer of a residual balance does not remove normal University financial controls or spending requirements.
Residual balances may be used for:
Residual balances may not be used for:
When a deficit exists:
Research Accounting notifies Business Area.
Business Area identifies unrestricted funding sources.
Deficit transfer must be completed within the time-frame established under Procedure RA2091 Fixed Price Residual Balances.
Unresolved deficits may be escalated to:
Business Areas provide all documentation necessary to support the transfer request, including sponsor close-out documentation, cost transfers, and any required approvals. Research Accounting coordinates review of the request and verifies eligibility before the transfer is processed.
Once a residual balance has been approved for transfer in accordance with Policy RA90 Finalization and Closure and Procedure RA2091 Fixed Price Residual Balances, Research Accounting shall:
Upon notification of PI separation:
Business Area notifies Research Accounting of the PI's separation.
Research Accounting reviews any required accounting actions.
Business Area, in consultation with the Department Chair or Dean, designates the individual responsible for financial stewardship of the residual account.
Residual funds may continue to be used only in support of the University's academic and research mission.
If accounting transfers are required, Research Accounting processes them in accordance with Procedure RA2091 Fixed Price Residual Balances.
Before recording activity:
Office of Technology Transfer (OTT) reviews agreement.
University Tax Office:
59-type IOs established if needed.
All royalty transactions:
Controllership Team reconciles royalty activity at least annually.
Before activity begins:
OTT approves licensing arrangements.
University Tax Office reviews arrangements when required.
Appropriate IO established.
All licensing transactions:
Controllership Team performs periodic review and reconciliation.
Business Area must:
Business Area must:
Within 60 days after event conclusion:
Before requesting closure of the Internal Order, the Business Area must ensure that all revenues and expenses have been recorded, all outstanding obligations have been resolved, and any resulting deficit has been fully funded using unrestricted University funds.
If conference or event expenditures exceed available revenues, the Business Area must identify unrestricted University funding sources and process the appropriate accounting entries to eliminate the deficit before requesting closure of 59-type IOs. Documentation supporting the funding source and any required approvals must be retained with the reconciliation records.
When balances must transfer:
Reconcile account:
Prepare payment documentation.
Process Non-PO Invoice.
Reduce balance to zero.
The Controllership Team shall monitor "stale" accounts and determine when 59-type IOs should be closed. The Controllership Team is authorized to close 59-type IOs with balances less than or equal to $100.
The following activities are prohibited:
Potential violations must be reported to:
Transactions determined to be non-compliant may be reclassified or reversed.
Business Areas establish controls to ensure:
Transactions may not be intentionally structured to avoid:
Research Accounting, Controllership Team, Office of Sponsored Programs, or other authorized University offices may perform monitoring activities including:
Monitoring activities may be risk-based and performed periodically or in response to identified compliance concerns.
The Controllership Team may periodically review 59-type IOs with no recent activity, completed business purpose, or unresolved balances to determine whether continued use is appropriate. Internal Orders that are no longer needed will be closed in accordance with established financial procedures.
Business Areas are responsible for retaining, as applicable:
Documentation required under Policy RA90 Finalization and Closure and Procedure RA2091 Fixed Price Residual Balances must also be retained, as applicable, in accordance with University records retention requirements.
| Role | Responsibilities |
|---|---|
| Principal Investigator (PI) |
The Principal Investigator is responsible for:
|
| Business Area |
Business Areas are responsible for:
|
| Research Accounting |
Research Accounting is responsible for:
|
| Controllership Team |
The Controllership Team is responsible for:
|
| Office of Sponsored Programs |
OSP is responsible for:
|
| Office of Technology Transfer |
OTT is responsible for:
|
| University Tax Office |
University Tax Office is responsible for:
|
| Shared Services Financial Approver |
Responsible for:
|
| SIMBA Master Data Team |
Responsible for:
|
Failure to comply with this procedure may result in:
Violations of University policy should be reported to the appropriate supervisor, unit manager, Human Resources representative, or the office responsible for the relevant policy or procedure. If these channels are insufficient or unavailable, individuals may submit an anonymous report through the Penn State University Hotline, accessible via the Reporting at Penn State website.
The Controllership Team, Research Accounting, the Office of Sponsored Programs (OSP), Internal Audit, and other authorized University offices may review activities governed by this procedure to verify compliance with University policies and procedures, sponsor requirements, accounting standards, tax regulations, and applicable federal, state, and local laws.
Business Areas are responsible for maintaining complete, accurate, and readily accessible documentation supporting all transactions recorded in 59-type IOs. Upon request, Business Areas must provide documentation necessary to support audit, monitoring, compliance, or financial review activities within the time-frame established by the requesting office.
Documentation may include, as applicable:
The Controllership Team, Research Accounting, OSP, Internal Audit, and external auditors may coordinate audit and compliance activities when transactions involve sponsored programs, royalty or licensing activities, conference and event, or other activities governed by this procedure.
Business Areas are responsible for promptly addressing audit findings, implementing required corrective actions, and maintaining documentation demonstrating resolution of identified issues.
Records created or maintained under this procedure must be retained in accordance with:
Additional questions may be directed to the Office of Records Management.
For questions, additional details, or to request changes to this procedure, please contact the Policy and Procedure Office by submitting a Technical Support Request form.
August 19, 2026