Reversions and carry forwards are computed at year-end to handle excess budgeted resources or deficits. The process is governed by a set of rules (sometimes known as 'lapsing rules'). These rules may be self-imposed or mandated by an outside funding source such as the state, federal government, or a sponsoring agency. This process is intended to encourage good fiscal practices. The process is comprised of three primary actions:
• Budget Reversion: A pair of pending ledger entries is generated for the year being closed. One entry adjusts the budget in the actual account. The other adjusts the budget in a budget reversion account.
• Budget Carry Forward: At least one pair of pending ledger entries is generated for the next fiscal year. For each pair the accounts remain unchanged. However, one uses the beginning budget cash object code, and the other uses the carry-forward object code (if carrying forward by object code) or the unallocated object code (when consolidating carrying forward transactions).
• Cash Reversion: Two pairs of pending ledger entries are generated for the next fiscal year. One moves the cash out of the actual account and into a cash reversion account. The other moves the corresponding fund balance out of the actual account and into a cash reversion account.
The reversion/carry forward rules are defined in the organization reversion function via two standard documents called the Organization Reversion (ORGR) document and the Organization Reversion Category (ORGC) document.