Chapters. 1A. Accounting Financial Reporting and Business Services B. Accounting Financial Reporting and Business Services/Data Control...

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2 Chapters 1A. Accounting Financial Reporting and Business Services B. Accounting Financial Reporting and Business Services/Data Control C. Accounting Financial Reporting and Business Services/Property Administration Sponsored Projects Accounting Central Purchasing Office A. Central Property A. Accounts Payable B. Payroll C. Travel Financial Systems Administration Treasury Services University Accounts Receivable Glossary of Terms

3 CHAPTER 1A ACCOUNTING FINANCIAL REPORTING AND BUSINESS SERVICES (AFR) 1A.00 Introduction A.05 Agency Index (FOPAL) and Plant Index (FOPAL) Introduction A Agency Indexes (FOPALs) Defined A Agency Indexes (FOPALs) Assigning Indexes (FOPALs) A Agency Indexes (FOPALs) Procedures A Agency Indexes (FOPAL) Use of A Plant Indexes (FOPALs) Defined A Assigning a Plant Index (FOPAL) A Demolished, Abandoned, or Destroyed Fixed Assets A Depreciating Capital Assets A Sales or Exchanges of Land A.10 Unrestricted Indexes (FOPALs) Introduction A Unrestricted Indexes (FOPALs) Defined A Accounting Treatment of Current Indexes (FOPALs) A Current Indexes (FOPALs) Maintenance- Unrestricted A Guidelines for Expenditures of Current Indexes (FOPALs)-Unrestricted A Indirect Cost Rate Concepts A Internal Service Center Procedures A Inventory Held for Resale

4 CHAPTER 1A - ACCOUNTING FINANCIAL REPORTING AND BUSINESS SERVICES - ACCOUNTING This chapter provides detailed information on the Administration and Finance Accounting Office. 1A.00 INTRODUCTION Accounting Financial Reporting and Business Services (AFR) is available to assist departmental personnel during various stages of Indexes (FOPALs) administration. This office is responsible for the following activities: Overview: Monitoring unrestricted Indexes (FOPALs), agency Indexes (FOPALs), and plant Indexes (FOPALs) Preparing NMSU's annual financial statements Preparing other financial reports Calculating the Facilities and Administrative (F&A) Rate Serving as audit liaison Maintaining NMSU property, plant, and equipment data Maintaining NMSU's administrative Financial System (FR) Maintaining documentation/support for all accounting transactions Preparing equipment reports to Federal agencies Assigning Indexes (FOPALs) to funds, organizations, programs, or activities combination Creating or terming funds, organizations, programs, activities or account Indexes (FOPALs) Instructions for Requesting New Indexes or New FOAPAL elements The FOAPAL consists of six independent parts. The parts have been grouped together; this grouping is controlled by the assignment of the individual values to a summary Index value. The Index value is six numeric characters that are used for data entry on both on-line forms as well as paper forms. In the Banner system, when an Index is entered, the budgetary string assignment of parts will be filled in on the transactional form you are using. A brief explanation of the parts is as follows: F=Fund. This is the main part of the new string and will account for all Net Asset items such as Cash, Accounts Payable, Fund Balance, etc. It is equivalent to the General Ledger. O=Organization. This part of the string represents the department, college, executive level organization as well as specific funding breakouts. A=Account. The account is the revenue or expenditure code as well as the Net Asset codes for Cash, Accounts Receivable, Fund Balance, etc. P=Program. The program defines how the funds are spent. These categorizations are instruction, research, public service, internal service, auxiliary, etc. A=Activity. This is a special code that will be used to track temporary events at NMSU such as special events concerts. L=Location. This is the building number and room number to be placed on fixed equipment records. Index: The index is a code that groups the FOPAL for ease of data entry and to define the budgetary unit. For all on-line transactions, the campus will enter the Index and an Account. For all transactions, the Fund, Organization, Account and Program values must be entered. An Index value has been assigned to assist in this entry process. For the most part, budgets will be checked at the Fund, Organization and Program level. When requesting new FOAPAL values, it is necessary to determine which part of the FOAPAL does not currently exist in the system. If you have any questions, please call Accounting Financial Reporting and Business Services. NOTE: Throughout the manual, all signatures referred to must be original signatures; facsimile signatures, initials and signing another employee s name are not acceptable for internal control purposes. Remote locations have the option to execute a memorandum of Understanding allowing remote offices to submit color scanned financial documents to the Central Office for processing, in which they agree to maintain all original forms and source documents related to Journal Vouchers, Direct Pay, Reimbursement Vouchers, and IDVs at their respective facility. Remote locations that elect to maintain the original documents will only submit color scanned copies to the Las Cruces campus for processing. 3

5 1A.05 AGENCY INDEX (FOPAL) AND PLANT INDEX (FOPAL) INTRODUCTION This section provides an introduction to Plant and Agency Indexes (FOPALs). Plant AFR is responsible for assigning and maintaining plant fund Indexes (FOPALs) and capitalizing costs, which is the adding of costs from capital projects to the value of the University's fixed or plant assets. AFR will interpret this policy when necessary. Agency AFR is responsible for creating and maintaining agency Indexes (FOPALs). This includes being responsible for the agency Indexes (FOPALs) created for student organizations recognized by the Associated Students of New Mexico State University (ASNMSU) and all other agency Indexes (FOPALs) created through NMSU. AFR will interpret this policy when necessary. 1A Agency Indexes (FOPALs) Defined Agency Indexes (FOPALs) are monies held by an institution acting as custodian or fiscal agent. The monies are deposited with the institution for safekeeping, to be used or withdrawn by the depositor at will. These Indexes (FOPALs) may be held on behalf of students, faculty, staff, organizations, or some other third party (collectively referred to as "organization")1. The University is simply acting as the "bank" for agency Indexes (FOPALs). 1A Agency Indexes (FOPALs) Assigning Indexes (FOPALs) An organization must submit a written request for a new agency Index (FOPAL) to AFR. The Questionnaire for Establishing Agency Indexes (FOPALs) is available on the Administration and Finance website under forms The organization completes the Questionnaire and submits it to AFR for distribution. AFR will decide if the Index (FOPAL) request meets the definition of an agency Index (FOPAL). If it is determined that an agency Index (FOPAL) is appropriate, an Index (FOPAL) will be set up. An authorized person must be assigned to the Index (FOPAL), this person must be a full time faculty or staff employee of NMSU. Once assigned, they will be the contact person and take the roll as Advisor who will be responsible for the financial status of the Agency account at all times. They must have the authority to approve the disbursement of monies for the organization. As Advisor, should the Agency account go into deficit, they will be the point of contact in order to recoup the funds. 1A Agency Indexes (FOPALs) Procedures Direct Pay Requests Direct Pay Requests are to be used for all external Index (FOPAL) purchases made on agency Indexes (FOPALs), including travel. Reimbursement Vouchers cannot be issued on agency Indexes (FOPALs) since they are intended for the reimbursement of expenses paid by a University employee for a University purpose. Use of personal monies by a University employee for an agency Index (FOPAL) purpose can be reimbursed on a Direct Pay Request. Turnaround time for Direct Pay Requests will be in the same time frame as for University check requests. The Accounts Payable Department does not review or audit Direct Pay Requests for agency Indexes (FOPALs), but they will ensure that the top and bottom portion of the Direct Pay Request balances, and that a fiscal monitor's signature is present. The fiscal monitor is responsible for determining that a sufficient cash balance exists and that the Direct Pay Request has the authorized signatures. Since monies in agency Indexes (FOPALs) belong to a third party, most expenditure types will be allowed. NOTE: Vendors are transacting with the organization and not with the University. As such, vendor billings should be made to the name of the organization and not to New Mexico State University. These billings should not be mailed directly to Accounts Payable, but mailed directly to the responsible person for the agency Index (FOPAL). 4

6 Internal Purchases Agency Indexes (FOPALs) can be charged by Interdepartmental Voucher (IDV) when goods and services are purchased from campus departments. If insufficient monies exist in an agency Index (FOPAL) when an IDV is presented for fiscal monitor's approval, the IDV will be returned to the department originating the IDV. It will be the department's responsibility to collect for amounts owed by an organization. Interdepartmental vouchers can be used by agency Indexes (FOPALs) when charging campus departments for sales of goods or services to campus departments. Accounts Receivable The University Accounts Receivable (UAR) Office cannot send invoices to donors, contributors or participants on behalf of an organization holding an agency Index (FOPAL). Petty Cash University Petty Cash Funds cannot be established by agency Indexes (FOPALs). Cash can be withdrawn by completing a Cash Withdrawal form and presenting the form to the Cashier's Office located in the Educational Services Building. As with Direct Pay Requests, the responsible person and fiscal monitor signatures are required before the disbursement of monies. Purchasing Purchase Orders (POs) are not issued for agency Indexes (FOPALs). The issuance of a PO number implies a University legal commitment to purchase. Travel Authorizations Travel authorizations are not issued on agency Indexes (FOPALs). Airline tickets cannot be charged to University agency Indexes (FOPALs) at travel agencies. Travel advances should be made directly from the agency Index (FOPAL) via Direct Pay Request or cash withdrawal. If any portion of student club travel is to be paid from an agency Index (FOPAL) that portion is shown as "cost to external" on the travel authorization. A Direct Pay Request or cash withdrawal for the portion to be paid from an agency Index (FOPAL) can accompany the travel authorization. Payroll Payroll expenditures cannot be charged to agency Indexes (FOPALs) through the University Payroll System, nor can payroll expenditures be transferred into agency Indexes (FOPALs) from a University Index (FOPAL). A University employee acting as a private contractor to an organization, however, may be compensated by Direct Pay Request for services rendered to the organization. Property Equipment purchases in excess of $1,000 should be charged to object code , and, if placed on University premises, tagged by the Property Office as non-university property. If the responsible person of an agency Index (FOPAL) wishes to donate such equipment to the University, a letter must be sent to the Property Office with a copy to the University Advancement Office detailing the donation. Tax-Exempt Status The University's tax-exempt status does not apply to agency Index (FOPAL) purchases. Tax Remittance The University does not assume the responsibility for complying with tax laws on behalf of the organization, such as submission of Federal tax form 1099 or the remittance of New Mexico Gross Receipts tax. 1A Agency Indexes (FOPALs) Use of In general, Agency Indexes (FOPALs) monies are the property of the organization and can be withdrawn or disbursed at its discretion. The University has no liability for the expenses and no claim on the surplus, or Index (FOPAL) balance, unless the remaining surplus has been abandoned. Surplus property is considered abandoned/unclaimed when the fund balance of an Agency Index (FOAPAL) has not changed in 5 fiscal years; and the University has not been formally instructed as to the manner of disbursing the surplus/unclaimed property. 5

7 Monies that are deemed abandoned/unclaimed will be relinquished to the State. As a property holder per ( the University must report all surplus/unclaimed property that is owed to a New Mexico resident or business. When the purpose of an agency Index (FOPAL) is complete, the Index (FOPAL) must be closed. The responsible person for the agency Index (FOPAL) can authorize the donation of any surplus monies to the University or, if desired, the NMSU Foundation, Inc. Some appropriate uses for agency Indexes (FOPALs): Conferences When a University faculty or staff member is acting as a facilitator for an established organization external to the University, and when the conference is funded entirely from registration fees, with no University contribution. Employee Funds Employee funds are employee-originated funding, which is to be used by and at the employees discretion. Professional and student organizations, such as fraternities and sororities Fund raising activities by and for student organizations are permissible, but such organizations must submit an activity approval form to the Activities Office of Corbett Center before initiating a club fundraiser. However, agency Indexes (FOPALs) cannot be used to record University fund raising activities. University receipts cannot be issued to donors, contributors, or participants of fundraising activities. The organization is solely responsible for the disbursement of monies and compliance with any funding source requirements. There should be no written or implied agreement between donors, contributors, or participants and New Mexico State University. University monies cannot be deposited in agency Indexes (FOPALs) unless approved by the Controller's Office. University expenses cannot be paid from agency Indexes (FOPALs). Any purchase made from a non-asnmsu club agency Index (FOPAL) that is later transferred by journal entry to a University Index (FOPAL) will require Central Purchasing Office (CPO) approval. Agency Indexes (FOPALs), established for ASNMSU clubs or organizations, may share in the cost of ASNMSU expenditures paid from unrestricted Indexes (FOPALs), per ASNMSU policy. Expenditures are first incurred by ASNMSU Indexes (FOPALs); then the portion to be paid by a club Index (FOPAL) is transferred by journal entry. Branch Campus student clubs and organizations may do the same; provided a policy exists that indicates how the clubs will share expenditures. 1A Plant Indexes (FOPALs) Defined The plant Indexes (FOPALs) group is used to account for unexpended plant monies to acquire long-lived assets for institutional purposes; monies set aside for the renewal and replacement of institutional properties; monies set aside for debt service charges and retirement of indebtedness on institutional plant; and the cost (or fair value at time of donation) of long-lived assets (other than those of endowment and similar monies) and the sources from which the cost is funded, including associated liabilities. Four self-balancing subgroups are provided for in the plant monies group; unexpended plant funds, funds for renewals and replacements, funds for retirement of indebtedness, and investment in plant2. 1A Assigning a Plant Index (FOPAL) Any construction, improvement, renovation, repair, or wiring project with a cost greater than $10,000, or the acquisition of land, will be recorded in a plant Index (FOPAL). If a project does not meet the requirements for capitalization and the total project cost is $10,000 or less, the costs can be charged to a current fund Index (FOPAL) and organization. Capitalized projects must be reported in the plant Index (FOPAL). A project requiring the establishment of a plant Index (FOPAL) will be funded by a transfer of monies from an Index (FOPAL) authorized by the department requesting the project services to a new plant Index (FOPAL). Any unspent monies will be returned to the departmental Index (FOPAL) from which the transfer was made. 6

8 The Vice President for Administration and Finance is responsible for determining which departmental proposed projects will be submitted for approval by the Board of Regents for the use of Building Renewal and Replacement monies appropriated by the State. AFR will work with the Office of Facilities and Services, Physical Science Laboratory, or Internal Service Units, all of which generally provide construction, renovation, and repair services, to determine if a project should be capitalized. Costs for any project that meets the requirements for capitalization will be charged to accounts 782xxx or 783xxx. NOTE: If a project does not meet the requirements for capitalization, object codes 744xxx, 754xxx, 7558xx or 76xxxx should be used. 1A Demolished, Abandoned, or Destroyed Fixed Assets Any buildings, structures, or other fixed assets that have been demolished, abandoned, destroyed or damaged by flood, fire, weather or theft should be reported to the Director of CPO, Risk Management. In the case of theft, a police report should also be obtained. Any tagged equipment should be reported to the Physical Property Office in accordance with the Central Purchasing Office (See BPM, Chapter 4 - Central Purchasing Office). 1A Depreciating Capital Assets Capital assets should be depreciated over their estimated useful lives unless they are inexhaustible. The straight-line depreciation method (historical cost divided by useful life) will be used by NMSU. Accumulated depreciation will be summarized and posted to the accounting general ledger each year end. Refer to the NMSU Administration and Finance Capital Asset Guide (See BPM, Appendix 1A.A) for more detailed asset type and threshold information. 1A Sales or Exchanges of Land Sales or exchanges of land must be reported to AFR and the Director of Real Estate, Office of Facilities and Services. 1A.10 UNRESTRICTED INDEXES (FOPALs) INTRODUCTION 1A Unrestricted Indexes (FOPALs) Defined Current unrestricted Indexes (FOPALs) are resources received by an institution that have no limitations or stipulations placed on them by external agencies or donors, and that have not been set aside for loan, endowment, annuity or life income, or plant purposes. Current unrestricted Indexes (FOPALs) include current resources that have internal designations placed by governing boards or institutional management. Any unrestricted resources designated for non-current purposes (loan, endowment, annuity or life income, or plant) should be transferred to those other Index (FOPAL) groups as either mandatory or non-mandatory transfers, depending on the circumstances. All Unrestricted Indexes (FOPALs) are monitored by the AFR department. There are four primary types of Unrestricted Indexes (FOPALs). State funded, tuition and fees Sales and services Internal service Indirect Cost Recovery (Overhead) The Budget Office will process all current Unrestricted Indexes (FOPALs) budget revisions. Budget revisions may result from: Justified increased revenues and increased expenditures; or Requests to carry forward monies from a prior period that are not already included in the current budget 7

9 Appropriations Appropriations are broad-based Governmental allocations that generally address a large area of funding, rather than a specific task or project. Appropriations are most commonly broken into smaller, internally-designated budgets for managerial purposes, and may be either unrestricted or restricted in nature, depending on whether they are made available to the entire University or to specific areas within the University. With certain exceptions, restricted Federal and county appropriations will be treated like grants and contracts. Unrestricted sources of monies that do not fit into one of the above categories should be discussed with the Controller's Office regarding proper classification. 1A Accounting Treatment of Current Indexes (FOPALs) The following subsections refer to areas where special treatment of unrestricted monies may be required due to the restrictions under which the University accepts those monies. Transfer of Non-Payroll Expense for Unrestricted Indexes (FOPALs) The most common need for a transfer of non-payroll expense is to correct an error. Requests for transfers for unrestricted Indexes (FOPALs) should be submitted to the appropriate fiscal monitor in AFR. The request, generally in the form of a journal entry, should include the following supporting documentation: A copy of the FBM091 where the original transaction occurred. NOTE: if the transfer also affects a restricted Index (FOPAL), a copy of the requisition is requested along with the FBM091 so that the start or end date can be verified with the date the goods/services were received and the description of the goods or services can be verified against the restrictions on the Index (FOPAL). The reason for the transfer Approval of the Department Head and Dean or Director (the same approvals as needed on requisitions). It is the responsibility of the individual requesting an expenditure transfer to verify that the transfer has been properly posted. Prior Year Corrections Prior year corrections will only be processed for material amounts, as a general rule. Research centers/departments should contact their fiscal monitor regarding all prior year corrections. 1A Current Indexes (FOPALs) Account Maintenance Unrestricted To allow purchase requisition processing, unrestricted Indexes (FOPALs) will require a budget in support of the anticipated expenditures. On continuing Instruction and General Indexes (FOPALs), budgets are entered by the Budget Office annually. New Instruction and General Indexes (FOPALs) requests should be submitted to AFR. For continuing Indexes (FOPALs) that are not funded by Instruction and General Monies, departments must send requests to the Budget Office to roll forward budgets equal to unspent monies at year end. New Index (FOPAL) requests should include an estimate of anticipated revenue and expense when submitted to the fiscal monitor in the AFR Office. Each organizational unit will have two unrestricted Indexes (FOPALs) established: one for cost overruns and one for pending grants/contracts if needed. Only those grants/contracts with required direct cost sharing will have individual cost-sharing Indexes (FOPALs). Any deficit balances in cost overrun and pending grants/contracts Indexes (FOPALs) must be covered from unrestricted sources prior to the end of each fiscal year. A transfer of unrestricted monies to the cost overrun Index (FOPAL) from within the organizational unit may be needed. 8

10 The dean or director is responsible for identifying the source of monies to cover cost overruns at the time of the overrun. The fiscal monitor will be responsible for necessary transfers of cost overruns and unapproved or pending expenses between unrestricted and restricted Indexes (FOPALs). Payroll Expenses - Unrestricted If the Indexes (FOPALs) to which an employee's pay has been charged must be corrected after-the-fact, a Human Resources (HR) Labor Redistribution form (LRF) should be processed within 90 days of the pay date. This period should allow time for review of Indexes (FOPALs) and prepare for certification of the employee's level of effort, on an Effort Report. Index (FOPAL) Changes More Than 90 Days from Pay Date - Index (FOPAL) change transactions more than 90 days from the pay date will be reviewed by the responsible Fiscal Monitor to determine if there is an external contractual reason why the Index (FOPAL) change must be processed. If approved, the Index (FOPAL) change will be processed by Journal Voucher using object code to correctly reflect the overrun in FR. No other Index (FOPAL) change transactions greater than 90 days old can be processed because of prior certification on the Effort Report of the employee's funding source and level of effort, which occurs on a semi-annual basis. NOTE: Please be aware that if an employee's salary has not been charged to a restricted sponsored project Index (FOPAL) within 90 days of the date of pay, the University will be unable to bill the sponsoring agency for the expense, either as a direct cost or through the Facilities and Administration Rate. Payroll expense transfers are very difficult to justify to auditors and sponsors; the principal investigator (PI) and/or department head should keep all Index (FOPAL) labor distributions current with work assignments. Acceptable Changes Changes of distribution of workload should not normally be made for any prior pay period. In the following exceptional situations, however, retroactive changes may be warranted: When necessary to correct clerical and data entry errors When subsequent information is received indicating an incorrect original entry When required to properly charge non-federal funds for costs incurred in connection with an award that fails to materialize When a change unrelated to sponsored agreements applies to a closed fiscal year 1A Guidelines for Expenditure of Current Indexes (FOPALs) Unrestricted Unrestricted Indexes (FOPALs) should be spent in accordance with University Policies and Procedures. State Appropriated Indexes (FOPALs) are restricted to instruction and general expenses. Unrestricted sources for Internal Service Indexes (FOPALs) should be spent in accordance with the purpose of the internal service being performed. Unrestricted Indirect Cost Recovery (Overhead) Indexes (FOPALs) should normally be limited to research or public service type of expenditures. Signature Approval on Current Indexes (FOPALs) - Unrestricted University policy requires that the department head and dean or director responsible for any given Index (FOPAL) approve all Purchase Requisitions, Direct Pay Requests, and Reimbursement Vouchers charging that Index (FOPAL) number. This authority may be delegated to other individuals reporting directly to the department head and the dean or director, respectively, with the approval of the superior of the employee electing to delegate signature authority to subordinates. These policies relate to official University documents. 1A Indirect Cost Rate Concepts In general, indirect costs are identified as those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity or any other institutional activity. These costs are accounted for in the unrestricted Index (FOPAL). Indirect Cost Recovery In order to record an additional grant/contract expense as direct costs are charged to grant and contract Indexes (FOPALs), an entry in object code , which represents the portion of indirect costs allocable to those direct 9

11 costs, is either calculated automatically by the accounting system or computed manually by Sponsored Projects Accounting (SPA). All expenses charged to this code as indirect costs must be supportable within the grant or contract and billable to the external sponsor. NMSU separately recognizes income as a part of this transaction. A portion of the indirect costs recovered through this charging mechanism are returned to the unit generating the direct costs as unrestricted income, to be used in support of the unit's research or public service function. The remainder of the indirect cost recovery is retained centrally within the University to help defray the costs associated with the central functions. Unallowable Indirect Cost Pool Expense The Federal Government requires the University to certify that no unallowable costs have been included in the calculation of the Facilities and Administrative (F&A) rate. The guidelines in this section should be used in determining whether or not the expense is allowable. Questions regarding the allowability of specific expenses should be forwarded to AFR. There are many expenses in these categories allowable from other University Indexes (FOPALs), but not allowable components of our indirect cost pool. Special accounts have been established for recording these expenses, and should be used throughout the year for this purpose. In general, these accounts end in 990.Contact the appropriate fiscal monitor regarding the use of these accounts. Examples of Federal unallowable expenses to Indirect Cost Pools for the F&A rate include: Advertising and Public Relations Costs Alumni Activities Bad Debts Compensation for Personal Services Defense and Prosecution of Criminal and Civil Proceedings, Claims of, Appeals and Patent Infringements Donations and Contributions Entertainment Costs Fines and Penalties Goods and Services for Personal Use Housing and Personal Living Expenses Interest, Fund Raising and Investment Management Cost Lobbying Memberships, Subscriptions and Professional Activity Costs Selling and Marketing Student Activity Costs The Federal unallowable costs, which are still University allowable expenditures, should be assigned an account that ends in 990. For example, Federally Excluded Professional Services would have an account of For further details or clarification on any of these items, please refer to OMB Circular A-21 or contact your fiscal monitor. Please keep in mind that these guidelines are only to be used in determining whether or not the indirect costs are allowable. Direct cost items on grants or contracts may be treated differently. Some costs, which would not be allowed in indirect costs, may be allowable direct cost items if specifically allowed by the grant or contract. It is important to remember that even if a particular cost would normally be allowed, it must still be reasonable and conform to the established practices of the University. The fifteen items listed are not meant to be all-inclusive. There are many other unallowable costs such as student aid, foreign travel, Regent's travel and subsistence that will be removed from the F&A rate, in total, by AFR. The items listed are those that require screening at the departmental level. Any questions should be directed to AFR. 10

12 1A Internal Service Center Procedures The University has several internal service center units that charge specific rates for their services to other units on campus. The Internal Service Center Procedure, which defines an internal service center and outlines procedures governing the rate development, is to be referred to when making these decisions. (Appendix 1A-B) All charges are processed on an Interdepartmental Special Charges form. Special form for Catering Services will be used for all changes from the University food service contractors. 1A Inventory Held for Resale Departments that hold inventory for resale will be responsible for submitting a 100-percent physical inventory count on June 30th of each fiscal year. Before the end of the current fiscal year, AFR sends a letter to departments requesting this listing and any information regarding changes in the departments' policies and procedures regarding inventory. AFR is responsible for evaluating and adjusting balances of physical inventories held by departments. Test counts may be conducted as considered necessary. Upon receipt of the list of physical inventory, AFR will do trend analysis to evaluate changes. AFR will then prepare any necessary journal entries to adjust the balance of the inventory in order for the correct amount to be stated before the books are closed for the current year-end. 11

13 CHAPTER 1B: ACCOUNTING FINANCIAL REPORTING AND BUSINESS SERVICES FINANCIAL INFORMATION PROCESSING 1B.00 Financial Information Processing Introduction B.05 Accounting Transactions Input of B.10 Accounting Transactions - Processing of B.15 Financial Systems - Output B.20 Requesting Ad-Hoc Reports

14 CHAPTER 1B: ACCOUNTING FINANCIAL REPORTING AND BUSINESS SERVICES Financial Information Processing 1B.00 FINANCIAL INFORMATION PROCESSING-INTRODUCTION This chapter provides detailed information on the Administration and Finance Financial Information Processing Office. The Administration and Finance Financial Information Processing Office is responsible for the input of all accounting transactions into the Finance System and the subsequent production and distribution of all financial reports. Financial Information Processing is also responsible for scheduling production and Ad-Hoc reports and programs. Please contact your fiscal monitor concerning the processing of other transactions not discussed here or for assistance in processing any transaction. Requests for Finance System documentation may be made of Financial Information Processing or Accounts Payable through the use of the Request for FRS Documentation form when requesting from FRS. The format of the form is self-explanatory and may be used when requesting backup information for entries posted to FRS. Finance documentation, which cannot be provided by Financial Information Processing or Accounts Payable includes, but is not limited to, payroll entries, detail on telephone charges, detail on postage charges, Purchase Requisitions, and Financial Aid Entries. Documentation requests for information from Banner may be made on Request for Banner Finance Documentation form. 1B.05 ACCOUNTING TRANSACTIONS - INPUT OF There is a specific entry form available in Financial Information Processing for each type of accounting transaction. These forms are used to input data to the Finance System. When completing the forms, please type or print legibly in ink. Initials, facsimile signatures, or signing another employee's name will not be accepted. Journal Voucher The Journal Voucher form is used to record a transfer between two Indexes (FOPALs). Items to remember when entering are: Debits must equal credits Fields are limited to length, please enter only that many characters The form is fillable and has edits to help you complete Complete instructions are included with the form. Cash Entry Voucher The Cash Entry Voucher form is used to record cash receipts and/or cash disbursements. Complete instructions are included with the form. Forms are available on the Administration and Finance Website under Reports/Forms New Index (FOPAL) Request This form should be submitted whenever a new Index (FOPAL) needs to be established in the Chart of Accounts. 1B.10 ACCOUNTING TRANSACTIONS - PROCESSING OF Transactions are input into the Finance System through real-time update. Financial Information Processing balances all transactions on a daily basis to assure that all input submitted is properly recorded in the accounting records. Financial Information Processing processes all non-disbursement transactions including Journal Vouchers, Cash Entries, and Interdepartmental Vouchers (IDVs) that are not entered directly by the fiscal monitor. 13

15 Direct Pay Requests and Reimbursement Vouchers are processed through Accounts Payable. 1B.15 FINANCIAL SYSTEMS OUTPUT A variety of financial reports are available to the University on a daily, weekly, or monthly basis. Financial reports are available via e-print on the morning following month-end close. Daily balances may be accessed through the use of the Self-Service Budget Query. If other reporting needs arise, please contact your fiscal monitor. NOTE: Separate documentation is available on all reports available to Finance System users who have access to the on-line inquiry system. To obtain information for training on the use of this system, contact the Center for Learning and Professional Development. 1B.20 REQUESTING AD-HOC REPORTS If a department would like to receive a special Ad-Hoc report from the Finance System, send an to the Administrative Data Management Department at: bfhr_adm@nmsu.edu. ADM will evaluate the request and communicate the expected action. 14

16 CHAPTER 1C: ACCOUNTING FINANCIAL REPORTING AND BUSINESS SERVICES PROPERTY 1C.00 Property - Introduction C Maintenance of Records C Accounts Codes C Reports C.05 University-Owned Equipment C Acquisition C Acquisition: Purchased Equipment C Acquisition: Gifts C Acquisition: Fabricated Equipment C Acquisition: Other C Identification of Equipment C Item Cost or Value C.10 Government-Owned Equipment C Acquisition C Identification of Equipment C Item Cost or Value C Maintenance of Records C Reports C.15 Equipment Rented or Leased with Option to Purchase C.20 Department Head and Principal Investigator (PI) Responsibilities

17 CHAPTER 1C: ACCOUNTING AND FINANCIAL REPORTING PROPERTY ACCOUNTING This chapter provides detailed information on the role of the Accounting and Financial Reporting - Property Accounting Office (herein after referred to as the Property Accounting Office or PA) to record the financial information and maintain the detailed property records related to the University s equipment and software; and Property Accounting s role in supporting the Central Property Office in relation to the physical location and physical inventory of equipment; and supporting the role of Central Receiving to receive, assign and affix bar code labels (tagging) to capital and non-capital equipment on the Las Cruces Campus; and, to assist with the tagging of equipment at the Community College Campuses and remote locations. The Central Property Office and the Central Receiving Office are functions of the Central Purchasing Office. See Section 4A of this Business Procedures Manual (BPM) for a detailed discussion of Central Property. 1C.00 PROPERTY INTRODUCTION This section provides detailed information on the responsibilities of the Property Accounting Office, definitions for Property Policy Applicability, Property Responsibility, and Maintenance of Records. PA establishes procedures for the management and recording of equipment, both capital and non-capital, owned by, or in the care, custody and control of, the Regents of NMSU. Certain property/equipment records are required for the State and Federal Agencies, the NMSU Financial Report, insurance coverage, budgeting, and for equipment use and control purposes. This policy, in compliance with applicable State, Federal, and University policies, prescribes procedures to accomplish these requirements. These procedures apply to equipment belonging to, or in the care, custody and control of, NMSU. Federal sponsorowned property, which is in the care, custody and control of NMSU, is subject to procedures for control of Federal property issued by the Office of Management and Budget (OMB). Title to property/equipment rests with NMSU rather than with individual departments. Departments are assigned property for custody and use and are held accountable and responsible for such property. For purposes of this section, the term asset, equipment and property are used interchangeably and are used to describe capital and non-capital equipment that are included in the property system. The terms asset tag, property tag, bar-code label or inventory tag are also used interchangeably. Definitions for Property Capital equipment (Net Value is included in the Statement of Net Assets): Moveable assets Valued at $5,000 or more With an expected useful life of one year or more Not permanently affixed to a building (i.e. not a function of the building) Assigned a bar code label Non-Capital equipment refers to (Cost is expensed when incurred): Moveable assets Valued at $1,000 to $4, With an expected useful life of one year or more Not permanently affixed to a building (i.e. not a function of the building) Assigned a bar code label 16

18 Custodian is generally the NMSU staff that uses equipment belonging to, or in the care, custody and control of, NMSU. The Custodian can also be the person that controls or authorizes the use of equipment to other University staff. Equipment Manager is the departmental staff person assigned to track equipment belonging to, or in the care, custody and control of the responsible department. The Equipment Manager conducts the annual physical inventory or supervises the physical inventory. See Chapter 4B, Section 50 (4B.50) for additional discussion related to the equipment manager. 1C Maintenance of Records The Property Accounting Office (PA) maintains all inventory records through the Sungard Banner Fixed Asset Module. All property in the care, custody and control of NMSU that meets the definition of accountable equipment is recorded in the same manner and under the same rules as those used for recording University-owned inventory. The property system for capital and non-capital equipment provides, at a minimum, the following information: Inventory Control Number Nomenclature (Description) Organization Number Location Code (Building and Room Number) Manufacturer Serial Number Purchase Order Number Cost Partial Purchase Information (To identify property purchased with multiple funds. Separate columns are provided for University and non-university funds. Percentage by source of funds) When applicable, Grant or Contract Number Acquisition Date Equipment manager Custodian There are additional records maintenance requirements for Government-owned equipment as described in Section 1C.10 Government and Externally Owned Equipment. 1C Commodity and Accounts Codes Careful consideration should be given to the selection of commodity and accounts because this is the communication link between departments and the Property Accounting Office for classification of equipment and who holds title to such property. Purchase requisitions that involve the acquisition of equipment are approved by the Department Head to indicate whether the acquisition should be classified as supplies, general expense, capital equipment, and so forth. NOTE: For assistance on correct account and commodity codes, contact the appropriate fiscal monitor. A complete listing of account and commodity codes can be found at http: // 1C Reports PA provides annual equipment or special reports as recorded in the NMSU property system. See Section 1C.10 in this chapter for reporting discussion related to externally owned equipment. 17

19 1C.05 UNIVERSITY-OWNED EQUIPMENT University-owned equipment can be identified by the inventory control number. See Section 1C for more detailed information. 1C Acquisition Equipment/Property procurement should be initiated in accordance with procedures outlined in the BPM, Chapter 4 - Central Purchasing Office. All purchases for equipment will be itemized and priced separately on the Purchase Order (PO) in order to properly identify and tag each individual unit. Use of the University procurement card to acquire taggable equipment is prohibited. Central Receiving, in most instances, receives all equipment having a unit cost of $1,000 or more and assigns a bar code label that is attached to each unit. 1C Acquisition: Purchased Equipment New equipment acquired through the purchasing process is identified on a PO by the use of account codes in the 780xxx series if capital equipment and 740xxx if non-capital equipment. See section 1C for the information recorded in the property system. If the items were not tagged at Central Receiving, then PA will notify Central Receiving who will affix the bar code label to the appropriate unit of equipment. Bar code labels will be mailed to off-campus locations for attachment to off-campus equipment. Accessory Item Any item that facilitates or enhances the operation of plant equipment, but is not essential for its operation, and that, by itself, has no function is an accessory item. To be capitalized, the accessory must have an acquisition cost of at least $5,000 and a useful life of one year or more. Equipment valued at $1,000 to $4,999 will be tagged, but not capitalized. Betterment (Sometimes referred to as an improvement) Betterment is a tangible component or enhancement that is affixed to a piece of capital equipment to extend or enhance the equipment's life or increase its productivity. The betterment cost must be $5,000 or more to be added to the value of the equipment. The price of a betterment is determined by the individual unit price of each component and not on a combination of individual units. NOTE: Replacement of a part of an existing asset by another of like quality is not a betterment, even though the useful life of the asset is maintained or extended. Sensitive Property Equipment that is of a size and nature that makes it vulnerable to theft is considered sensitive and departments should keep an inventory of such units and may affix a property label so long as it is distinguishable from the barcode labels used for the physical inventory process. 1C Acquisition: Gifts Equipment acquired by gift or donation with a fair market value (FMV) of $1,000 or more at the date of donation is assigned an inventory control number and bar-code label. The Vice President for University Advancement will notify PA and Central Property of the gift or donation and provide the (FMV) or each asset donated. Upon receipt of the Central Receiving Worksheet, PA will manually generate a property record and enter the data shown on the worksheet. For additional information, refer to the BPM, Chapter 3, Section 3.25, Sponsored Projects Accounting (SPA). 18

20 Acquisition of gifts that involve hazardous materials or contain regulated hazardous components must be approved by Environmental Health and Safety (EH&S). Examples of hazardous materials/regulated hazardous components include: any chemicals, paints, photography supplies, mercury, radioactive material, radiation producing devices such as x-ray machines, etc. Departments will notify EH&S in writing prior to acceptance of hazardous materials or regulated hazardous components. EH&S staff will evaluate the potential long term expense and regulatory liability related to acceptance of hazardous materials or regulated hazardous components donations in making a determination for NMSU acceptance. Contact information for EH&S is MSC 3578 and C Acquisition: Fabricated Equipment Upon completion of fabricated equipment within a department, the following guidelines should be followed. Prepare a memorandum to the Property Accounting Office listing: A complete description of the item Location of equipment Custodial department and Index (FOPAL) number(s) charged Value - this should include the purchase price of all materials, supplies and fixtures used, any freight charges, as well as any labor costs for construction and installation Serial number and/or model number if assigned The Property Accounting Office will assign an Inventory Control Number for the equipment built. Account 785xxx should be used when acquiring components for fabricated equipment if the final cost is expected to be $5,000 or more. If the fabricated unit is expected to be less than $5,000, but at least $1,000, then account code should be used. The Property Accounting Office will generate transaction reports of fabricated equipment supply purchases to determine the need to tag fabricated equipment. Whenever a piece of equipment is completed, Property Accounting will furnish all necessary information to the agency contract administrator, provided the fabricated unit will be owned by the external agency. The Property Accounting Office will enter the item in the property system and will direct Central Receiving to affix a bar code label and complete a Receiving Worksheet. If fabricated equipment is externally owned and the agency provides an inventory tag, the tag will be affixed next to the bar code label on the subject equipment. 1C Acquisition: Other Construction Contracts or Work Order Equipment Office of Facilities and Services (OFS) will report equipment acquired under construction contracts or work orders to the Property Accounting Office. Equipment is listed and priced by OFS if it is different than the purchase order used to acquire the equipment. The PA will assign an inventory control number and direct Central Receiving to affix a bar code label to all equipment over $1,000. Found Equipment Equipment previously reported to the BOR as missing, will be reported to the Property Accounting Office. The custody is assigned to the using or responsible department. If the equipment had a depreciable value in excess of $1,000 when it was written off as missing, PA will manually generate a property record and add the inventory control number to the property system. Acquisition of Surplus Property Equipment secured through the New Mexico Federal Property Assistance Program will be assigned a bar code label and recorded in the property system if the FMV of each unit acquired is $1,000 or greater. 19

21 These procedures will be used for all funds, including outside agency funds if the particular contract or grant permits the acquisition of surplus property. 1C Identification of Equipment University Inventory All capital and non-capital equipment is identified with a bar code label and assigned an inventory control number. It will remain so identified as long as it is in the care, custody and control of the University. Inventory tags are removed or obliterated from the equipment only when sold, scrapped, or otherwise disposed of. The inventory control number is not changed even if custody of the equipment is transferred through an ICR Should the bar code label be accidentally or mistakenly obliterated, defaced or removed, the equipment will be marked again with the original bar code number. Bar code label prefixes are assigned as follows: U - University owned F - Federal Government owned S - State of New Mexico owned P - Privately owned The application of the bar code label to the equipment is the responsibility of the Central Receiving Office; however, this function may be delegated to the receiving department or the department having custody when deemed appropriate. The bar code label is applied to the actual unit unless the size or nature of the unit makes it impractical, or the equipment is an accessory and attached to, or otherwise a part of, a unit of tagged equipment, and is required for its normal operation. In the latter case, such items are entered and described on the property record of the equipment to which, or of which, it is otherwise a part. The bar code label should be affixed to the equipment adjacent to the manufacturer's nameplate as long as it is readily visible. Otherwise, the bar code label will be affixed in a clearly visible location and not in a position requiring movement of the equipment for tag number verification. Easily moved component parts of a system valued at $1,000 or more must be individually tagged. In the case of a PC, the CPU and the monitor will be tagged separately should each unit cost $1,000 or more. Should the monitor be less than $1,000, and acquired at a significantly different time than the CPU, it will be treated by the responsible department as Sensitive Property. The value of Sensitive Property is not added to the value of tagged equipment and account 740xxx should be used when acquiring such units. University Property Other Than University Inventory Each department is responsible for University property valued at less than $1,000. The responsible department will tag all Sensitive Property with a departmental tag unlike that used by the Central Receiving Office. The department will maintain a list of Sensitive Property. 1C Item Cost or Value Recording Value The Property Accounting Office records the value of equipment acquired through Purchase Orders (POs). In recording equipment value, the following rules apply: Acquisition cost is $1,000 or more per unit Freight charges are added to the acquisition cost or value of capital equipment Installation or assembly costs should be added to the value of the equipment Any customs duty charge should be added to the value of the equipment Any cash discount should be deducted from the value of the equipment Trade-ins do not reduce the value of equipment. If the equipment being traded-in has a University bar code number, the bar code number should be referenced on the Purchase Order 20