1903 - Change in Reserves Entry

The most common entry made to reserves accounts involves a movement of balance from one index to another to cover a deficit in the index or to fund an index. Another common reason for a reserves entry is to close an index that has a balance but has had no activity in the current year. In other words, the only account with a balance is 1900.

Reserves entries are also used to correct prior year entries. When an error is found in an unrestricted index after the accounting records have been closed for the fiscal year that only affects unrestricted indices, a change in reserves entry is a method to correct the error. These entries use account 1903 on both sides of the entry. The indices involved must be in the same Fund level 2 and Program level 2. If an error is between account codes within the same index, no entry is required.

These entries increase (or reduce) the prior year end remaining balance in the affected indices. They do not affect the expense accounts where the entries originally occurred. These entries must be well documented so the original entry that is being corrected can be identified.