CSU Legal Manual CSU Legal Accounting, Reporting and Year End Close. The California State University Office of the Chancellor

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1 CSU Legal Manual CSU Legal Accounting, Reporting and Year End Close The California State University Office of the Chancellor

2 TABLE OF CONTENTS Introduction Chapter 1 General Chapter 1 Major Changes Section 1.1: Modified Accrual Basis Accounting v. Full Accrual Basis Accounting Section 1.2: CSU Codes State Fund Codes CSU Funds Fund Attribute Table Key (FNAT) Object Codes Account Attribute Key (AAT) NACUBO Program Code Section 1.3: Data Quality Review Interagency Transactions Reporting Interagency Receivables/Payables (Due To and Due From) to the State Reporting Allowances for Uncollectible Accounts Receivable and Provisions for Deferred Receivables to the State The Legal Edits Table Other Verification Steps Chapter 2 CSU Accounting Chapter 2 - Major Changes Section 2.1: Enterprise Organizations CSU Fund 441: CERF Operation CSU Fund 444: CERF: Campus Partners Legal Manual The California State University

3 TABLE OF CONTENTS CSU Fund 461: TF Associated Student Body Trust CSU Fund 471: Parking Revenue Fund Fines & Forfeitures CSU Fund 531: TF Housing Operations and Revenue CSU Fund 534: TF Campus Union Operations and Revenue CSU Fund 537: TF Auxiliary Organizations Operations and Revenue Section 2.2: Capital Projects Accounting Capital Projects Funding Sources for a Construction Project Capital Projects Allocation Orders, Cash Transfer Letters (CTL) and Filing Claims Capital Projects at Completion Capital Projects Accounting Issues Capital Projects Closing Out the Trial Balance FBC Build America Bonds (BABs) Adjustments to Fund Balance Clearing (FBC) Expiring and Reverting Funds Section 2.3: Banking and Investments Systemwide Investment Fund Trust (SWIFT) Surplus Money Investment Fund (SMIF) Wells Fargo Bank (WFB) CSU Consolidated Investment Earnings Bank of CSU Statement Reconciliation Compiling an Un-reconciled Check List with CFS Appropriate SWIFT Balance SWIFT Negative Balances Campus Sweep Fund Cash Posting Orders (CPOs) Revenue Management Program (RMP) Guideline General Fund Spend Down Centralized Payroll Adjustments (CPA) Determining Cash Transfers to State Fund General Fund Appropriation SWAP Legal Manual The California State University

4 TABLE OF CONTENTS Section 2.4: Capital Planning, Design and Construction (CPDC) Accounting Capital Planning, Design and Construction (CPDC) Accounting Section 2.5: Miscellaneous General Accounting Information and Technology Program Codes Accounting Treatment for Registration Fees Trust Fund Cash Deficit Loans Capital Project Management Fees Process for Reporting Excess Carry Forward Lottery Guidelines for Expenditures Department of General Services (DGS) Prepayments Athletics Health and Augmented Health Services Fees Section 2.6: CSU Risk Management (CSURMA) Accounting Organization CSURMA Coverage Programs Accounting Treatment CSURMA Dividend CSURMA Cash Posting Order (CPO) Process Deductible Recovery Section 2.7: Commercial Paper (CP) Financing <Pending Next Update> Section 2.8: Financial Aid Student Scholarships and Grants Student Fees Funded Financial Aid Separate PeopleSoft Fund for Graduate Business Professional Fee (GBPF) Use of CSU Operating Fund for Scholarship Recording CSU Foundation Scholarships Section 2.9: Sponsored Programs Administration Deferred Grant Revenue Amounts Due to State Agencies Legal Manual The California State University

5 TABLE OF CONTENTS Section 2.10: Accounts Payable Online Payments to the IRS via Electronic Federal Tax Payment System (EFTPS) Escheat Process Escheat Payroll Warrants Section 2.11: Accounts Receivable Allowance for Uncollectible Accounts Receivable Accounts Receivable Write Off Accounts Receivable Collections Section 2.12: Cost Recovery Section 2.13: Fixed Assets Recording Fixed Assets on the Legal Basis Books Reporting Fixed Assets in Accordance with ICSUAM Capital Asset vs. Operating Expense Section 2.14: Encumbrance Processing an Encumbrance Journal Entry Section 2.15: Payroll Escheated Payroll Warrants Processing Journals with FTE How to Calculate a Reasonable FTE (if it is a proration) Sabbatical Leave Forfeitures Section 2.16: Interagency Transaction Process Fund Balance Clearing Interagency Transaction Report Object Codes for Due From/To and Transfers In/Out Section 2.17: Tips & Tricks Frequently Asked Questions PeopleSoft Queries FAST-ED Website Other Useful Links Legal Manual The California State University

6 TABLE OF CONTENTS Chapter 3 FIRMS Submission Chapter 3 Major Changes Section 3.1: FIRMS Overview Section 3.2 Quarterly Submissions Section 3.3: Year-End Submissions Section 3.4: Automated FIRMS Edits/Chancellor s Office Manual Edits Automated FIRMS Edits Chancellor s Office Manual Edits Section 3.5: FIRMS Data Element Dictionary Section 3.6: 2011/2012 Object Code, CSU Fund and Legal Edit Updates Chapter 4 Preparation and Submission of SCO Reports Chapter 4 - Major Changes Section 4.1: SCO Reporting Overview Section 4.2: SCO Legal Reports The SAM 99 File Report 3 Adjustments to Controller s Accounts Report 14 Report of Bank/Savings and Loan Association Accounts Outside of the Treasury System Report 18 Statement of Changes in General Fixed Assets Report 19 Statement of Capital Assets Report 22 Statement of Contingent Liabilities Explanations of Abnormal Balances Section 4.3: State Funds 0890, Federal Trust Fund, and 0942, Special Deposit Fund Legal Manual The California State University

7 TABLE OF CONTENTS Section 4.4 Special Reporting Considerations Reporting Due To/Due From Transactions Occurring Within the CSU Reporting Due To/Due From Transactions With State Agencies Outside the CSU Reporting Transactions with the University of California and Community Colleges Section 4.5: Submitting the Hard Copy Report Package Table of Contents Transmittal and Report Certification Memos Binding Instructions SCO s Year-End Checklist Mailing Instructions Submission of the Report Package to the Chancellor s Office Records Retention Chapter 5 Reserved for future use Chapter 6 Deadlines Chapter 6 Major Changes Chapter 7 Contacts Chapter 7 Major Changes Chapter 8 Year End Instructions Chapter 8 Major Changes Section 8.1: Introduction Section 8.2: Year End Checklist How to use this Section Year End Checklist Legal Manual The California State University

8 TABLE OF CONTENTS Section 8.3: Year End Instructions SWIFT SWIFT Negative Balances Revolving Fund Reclassification Obligations SAM Errors CSURMA IDL/NDI and UI Accrual Process Changes Deductible Recovery Interagency Transaction Process Fund Balance Clearing (FBC) Interagency Transaction Report General Fund and Trust Fund Tie Point RMP Expenditure Offset from GF (FIRMS Object Code ) Year End Reserve Entry PO Rollover Closing Rules FIRMS Submission SCO Reporting Submission of Fixed Assets Data for Proprietary and Fiduciary Funds to the Chancellor s Office Appendices Appendices - Major Changes Appendix 1: Fund Equity Object Code by Fund Appendix 2: Summary of Reporting Mechanism/Reporting Responsibility by Fund Appendix 3: Reports 18 and 19 Templates Appendix 4: Year-End Report File Identification Form Appendix 5: Sample Table of Contents for the Report to the State Controller Appendix 6: Criteria for SCO s Award of Achieving Excellence in Financial Reporting Appendix 7: Transmittal and Report Certification Memos Legal Manual The California State University

9 TABLE OF CONTENTS Appendix 8: SCO s Year-End Checklist Appendix 9: FIRMS Data Integrity Certification Form Appendix 10: Table of Fixed Asset and Accumulated Depreciation/Amortization Object Codes Appendix 11: Template: Schedule of Fixed Assets Nongovernmental Funds Appendix 12: Glossary of Terms Appendix 13: Reserved for Future Use Appendix 14: Template: Report of Bank and/or Savings and Loan Association Accounts Outside the Treasury System (SCO Report 14) Appendix 15: SAM99 Reconciliation Requirements Appendix 16: Template: Report 22, Statement of Contingent Liabilities Appendix 17: Template: Supplementary Information Form for Due From/To Other Funds Appendix 18: SAM99 Submission Checklist Appendix 19: CSU Fund and Object Code Definitions Appendix 20: Abnormal Balance Explanation Template Legal Manual The California State University

10 INTRODUCTION This 2012 edition of the CSU Legal Manual represents the Chancellor s Office continued efforts to serve the ongoing training and accounting guidance needs of the campuses. This year we have incorporated information provided to individual universities over the last 12 months which we feel can be of benefit to the wider campus community. We have added to this edition two appendices. One provides definitions for selected CSU funds, the other provides definitions for selected object codes. Due to the number of funds and object codes the system has and because of limited staff resources, these appendices represent only the start to more comprehensive reference documents. The funds and object codes included in the schedules were chosen because they are either new or because the Chancellor s Office received particular inquiries about them during the year. Adding to what was started this year will be an ongoing project. As was done last year, we are providing for each chapter a listing of the major changes that were made. The major changes documents are intended to help campus users readily identify those topics requiring more emphasis in their review. This edition contains the following chapters: Chapter 1 General Providing an overview of legal basis accounting Chapter 2 Accounting Providing discussions on various accounting issues of general interest Chapter 3 FIRMS Providing guidance on submissions and edits Chapter 4 SCO Reporting Providing instructions related to annual submissions to the state Chapter 5 CFS Reserved for the later addition of information on CFS Chapter 6 Deadlines Providing all key submission deadlines Chapter 7 Contacts Providing the names of people that can provide campuses with additional assistance Chapter 8 Year End Accounting Providing discussions on various year end accounting tasks The manual is the product of a team of contributors at the Chancellor s Office, including: Lilian Audet Su Chen Kelly Cox Cindy Gong Sedong John Roberta McNiel Sherry Pickering Lily Wang Terri Williams Their efforts in updating the document are much appreciated Legal Manual The California State University

11 CHAPTER 1 Major Changes Page # Description of Change Reason for Change No major changes were made to this chapter Legal Manual The California State University

12 CHAPTER 1 GENERAL INFORMATION Section 1.1: Modified Accrual Basis Accounting v. Full Accrual Basis Accounting The CSU maintains its financial records on a legal basis or modified accrual basis of accounting as required by the State of California. Under the modified accrual basis, revenues should be recognized in the accounting period in which they become available and measurable. Expenditures (as opposed to expenses) should be recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term liabilities, which should be recognized when due. The legal basis of accounting is not consistent with Generally Accepted Accounting Principles (GAAP) and is converted to full accrual basis accounting on the CSU s audited financial statements. Under the full accrual basis, revenues should be recognized in the accounting period in which they are earned, and expenses should be recognized in the accounting period in which they are incurred. Section 1.2: CSU Codes The CSU employs a variety of codes in order to account for its activities. This section provides an overview of those codes State Fund Codes The highest level of accounting is the state fund level. Fund accounting is the convention by which resources for various purposes are recorded and summarized in accordance with state laws and regulations. A fund is an accounting entity with a self-balancing set of accounts for recording assets, liabilities and fund equity. Separate accounts are maintained for each fund to ensure observance of limitations and restrictions placed on the use of resources. In the State of California, the Department of Finance (DOF) determines the numbers associated with funds established through legislative action. For example, the General Fund has been assigned the code The assigned codes are used by every state agency recording transactions within the various funds. In our example, every agency receiving General Fund appropriations would reference code 0001 when reporting accounting activity within the fund to the state Legal Manual The California State University

13 GENERAL INFORMATION CSU Funds The next level at which reporting is done at the CSU is the CSU fund level. The CSU has management and external reporting requirements beyond those mandated by the state. For each state fund, the CSU has established one or more CSU funds to provide further detail concerning its operations Fund Attribute Table Key (FNAT) Within PeopleSoft, campuses establish and maintain PeopleSoft funds to manage unique campus activities. The purpose of the FNAT is to connect the campus PeopleSoft funds to a range of attributes as defined on the FNAT Data Table maintained by the Chancellor s Office. Attributes include (but are not limited to): Object Codes CSU Fund Project Code Account Type CSU Net Asset Category State Revenue Code State Sub-Fund Number Appropriation information Fund Processing Type Object codes are the individual FIRMS accounts which capture detailed accounting information concerning each CSU fund s assets, liabilities, fund equity, revenue and expenses. They are the equivalent of general ledger account codes found in any other organization s chart of accounts. (FIRMS is the CSU s corporate accounting system and is further discussed in Chapter 3.) Account Attribute Key (AAT) Within PeopleSoft, campuses establish and maintain PeopleSoft accounts to track unique campus activities. The purpose of the AAT is to connect the campus PeopleSoft accounts to a set of attributes as defined on the AAT Data Table maintained by the Chancellor s Office. Rather than assigning a random number as the key value, like the FNAT, the object code (see section 1.2.4) is equal to the AAT. The attributes include: Object Code State General Ledger Account Number Natural Classification Legal Manual The California State University

14 GENERAL INFORMATION NACUBO Program Code The National Association of College and University Business Officers (NACUBO) is the industry organization for higher education and as such sets accounting standards for its constituents. Traditionally, colleges and universities have described their operating expenses for external reporting purposes by functional categories. NACUBO has standardized those categories to ensure the comparability of higher education financial statements and defines them in their Financial Accounting and Reporting Manual for Higher Education (FARM). They are: Instruction Research Public Service Academic Support Student Services Institutional Support Operation & Maintenance of Plant Scholarships & Fellowships Auxiliary Enterprises The FARM further breaks these categories down into more detailed functional subcategories. At the CSU each functional category is assigned a code, referred to as the Program Group Code, and each subcategory is assigned an identifying number, called the program code. For example, the category Instruction, assigned Program Group Code 01, includes expenses for all activities that are part of an institution's instruction program. Subcategories include: 0101 General Academic Instruction 0102 Vocational/Technical Instruction 0103 Special Session Instruction 0104 Community Education 0105 Preparatory/Remedial Instruction 0106 Instructional Information Technology A complete list of program group codes and program codes can be found in the FIRMS Data Element Dictionary (further discussed in Chapter 3)---see At the CSU, and at least on a monthly basis, NACUBO program codes are automatically assigned to the data in the PeopleSoft CSU Business Unit via an operation referred to as the derivation process. The codes are derived based on a set of four rules as defined by a CSU group with system-wide representation, the Financial Standards Advisory Committee (FSAC). The four rules are: Legal Manual The California State University

15 GENERAL INFORMATION Rule 1: This is based on PeopleSoft s Account Type. The Account Type indicates whether an account is an asset, liability, equity, revenue or expense. The Account Type associated with each PeopleSoft account chartfield is used to look up the associated NACUBO program code. Balance sheet accounts always use the program code associated with this rule. Rule 2: This determines the program code based on the combination of Fund Processing Type and Object Code (also known as the AAT key). The Fund Processing Type defines a group of funds for which the same object codes are valid. Rule 2 looks up the Fund Processing Type and Object Code associated with the fund and account chartfields. If the program defines the combination, the related NACUBO program code will be used. If it is not defined, the program code will be determined by applying Rule 3 and/or Rule 4. Revenue accounts are associated with program codes through application of this rule. However, if a program code cannot be found using Rule 2, a program code will be applied using Rule 1. To illustrate the application of this rule, the object code is described as State E.O.P. Grant Program. The Program Code associated with this object code is 0801, Scholarships, which will be derived through the Rule 2 definition. Therefore, any balance in the object code will be categorized as Scholarships on the financial statements. Rule 3: This rule uses the FNAT to define the NACUBO program code when all expenses of certain funds need to be classified in a particular way. When the program code is defined on the FNAT all expense accounts where the program code was not determined via Rule 2 receive the defined code. For example, the program code 2001, Auxiliary Enterprises Student, includes all expenses for auxiliary enterprise activities primarily intended to furnish self-supporting services to students. Expenses recorded in student auxiliary enterprise programs will receive the program code at the FNAT key level. Rule 3 can also operate where the NACUBO program code has been specified on the PeopleSoft fund chartfield by individual campuses rather than on the FNAT. If the program code is not defined in Rule 3, the program code will be determined by applying Rule 4. Rule 4: This rule determines the NACUBO program code for operating expenses based on the department identification (deptid) chartfield. If the code was not derived through operation of Rules 2 and 3, Rule 4 determines the code to be applied. The distribution of expense to program codes is expressed as a percentage. For Legal Manual The California State University

16 GENERAL INFORMATION example, the Computing Support Department might be distributed 50% Academic Support and 50% Institutional Support. The percentage may also be, and often is, 100% for any given department. Expense accounts are associated with program codes using Rule 2 first. If a program code is not found through reference to Rule 2, the system will apply Rule 3. If it is not found with Rule 3, the system proceeds to application of Rule 4. And, if a code is still not found, the system will use Rule 1. Tables of codes (state funds, CSU funds, object codes, program codes) are located on-line in the FIRMS Data Element Dictionary, Section 1.3: Data Quality Review Before submitting financial data to the Chancellor s Office (via FIRMS discussed in Chapter 3) and preparing reports as mandated by the state (discussed in Chapter 4), it is important that such data undergo a thorough review to ensure all transactions have been properly recorded and classified. Chapter 2 provides guidance to assist campuses in correctly recording their transactions so that similar events are accounted for in a consistent manner across the the system and to ensure the quality of the financial data. Additional information is provided below to assist campuses in achieving a higher level of data integrity Interagency Transactions There are two types of interagency transactions: interagency receivables/payables (the due from and due to accounts) and interagency transfers (transfers in and transfers out accounts). Activity in these accounts taking place within the same state fund should be equal and, therefore, will net to zero (i.e. receivable equals payable/transfer in equals transfer out). If the activity is between different state funds, the entry to the source fund should be in agreement with the entry to the destination fund. As a result of implementing the Revenue Management Program (RMP), which gave the CSU the authority to deposit student fees in the CSU Trust Fund (state fund 0948) and thereby re-engineer many of its accounting practices, it became necessary to identify interagency transactions at the CSU fund level. To do this, object codes were created to easily identify source and destination CSU fund numbers. The choice of object code depends on: (1) Whether the transaction is between state funds or within the same state fund, other than 0948; Legal Manual The California State University

17 GENERAL INFORMATION (2) For state fund 0948, whether the transaction is between CSU funds within 0948 or within the same CSU fund in 0948; (3) Whether the transaction occurs within a campus (intra-agency) or between the campus and the Chancellor s Office (interagency). The table below provides the object codes to be used for the various combinations of transactions. (A) (B) (C) (D) (E) Within the same state Between fund other CSU funds in than 0948 SWAT (2) 0948 (3) Between state funds (1) Within the same CSU fund in 0948 Within campus Due From 1050xx xxx Within campus Due To 2020xx xxx Between campus/co Due From 1051xx xxx Between campus/co Due To 2021xx xxx Within campus Transfer In 5060xx xxx Within campus Transfer Out 6800xx xxx Between campus/co Transfer In 5061xx xxx Between campus/co Transfer Out 6801xx xxx Note 1: Object codes in (A) include valid values in the applicable ranges except those in (B) and (C). Note 2: Object codes and are for the CO's use only. Note 3: Object codes in (D) include valid values in the applicable ranges except those in (E). The Chancellor s Office has implemented an edit in FIRMS which identifies inequalities in interagency accounts. The edit is further discussed in Chapter Reporting Interagency Receivables/Payables (Due To and Due From) to the State On state reports receivables and payables between different state funds are reported in state general ledger numbers 1410.XXXX and 3114.XXXX, respectively. The suffix XXXX for receivables is the fund from which the balance is due; the suffix XXXX for payables is the fund to which the balance is due. Where the receivables and payables arise within the fund, state general ledger numbers 1420 and 3115, respectively, are to be used Legal Manual The California State University

18 GENERAL INFORMATION The receivables and payables should be reported to the state separately and not on a net basis. For example, in the General Fund there may be a Due From Continuing Education ( ) of $100 and a Due to Continuing Education ( ) of $60. Both account balances should be reported, not a net of $40 in Reporting Allowances for Uncollectible Accounts Receivable and Provisions for Deferred Receivables to the State Allowances for uncollectible accounts receivable (state general ledger account 1390) and provisions for deferred receivables (state general ledger account 1600) are associated with their related receivable accounts through the use of suffixes. For example, the Allowance for A/R Abatements is related to Accounts Receivable Abatements, state general ledger account In reporting the allowance balance, the account to be used would be The accounts receivable account number in the suffix is always preceded by a zero. Campuses must be careful to properly map allowances and provisions to the related accounts receivable accounts. It is not appropriate to use one allowance account for all accounts receivable accounts The Legal Edits Table The Legal Edits Table determines the validity of CSU fund, Fund Processing Type, and object code combinations. It is maintained by the Chancellor s Office and is downloaded into PeopleSoft CFS each night via an automated process. Activation of the table is at the option of the campus, but is highly recommended to ensure data integrity. The Chancellor s Office has incorporated these same edits in FIRMS, meaning that campus data failing to comply with the edits will be barred from a clean submission until the errors are cleared. Campuses need to be cognizant of the valid combinations to avoid delay in completing a quarterly submission, particularly at year end. The Legal Edits Table is posted in Excel format on the Chancellor s Office website, along with the procedures followed in updating the CFS table. For more information about the Legal Edits Table, visit the FAST-ED website. After logging on, click the tutorial Legal Edits. Also see the CFS 9.0 User Guide, FIRMS Legal Edits, at asp Other Verification Steps Listed below are other steps that should be taken by campuses to ensure data integrity: Legal Manual The California State University

19 GENERAL INFORMATION Beginning retained earnings, or appropriate fund equity balance, should be checked for agreement with the prior year s ending balance in each CSU fund. FIRMS object code , Fund Balance Clearing Account, should be checked for agreement with the final Fund Balance Clearing Account AD NOAT memo issued by the Chancellor s Office each month. Uncleared collections should be reconciled regularly and should be at or near zero by the last day of the fiscal year. The accounting for Federal Direct Student Loan activity should be confirmed for propriety. Receipts should be recorded as revenue and payments as expenditures on the legal basis of accounting. (This treatment differs from the GAAP basis of accounting. For GAAP, Federal Direct Student Loans are recorded in an agency fund. The fund will have balance sheet accounts only, no income, expense or equity accounts.) A student receivable should not be recorded by the campus for these loans as they are receivables of the Federal government. Expenditure accruals for fiduciary and enterprise funds are to be based upon goods and services received as of June 30; revenue accruals for fiduciary and enterprise funds are to be based upon income earned as of June 30. To receive the Certificate of Excellence in Financial Reporting from the SCO, at year-end these accruals should be within 90% to 110% of the actual amount earned or spent in the following fiscal year. Accruals should be reviewed for reasonableness with the goal of meeting this criteria. They should not result in overspent appropriations. The SCO recognizes revenues only for the current year and immediate prior year. Revenue pertaining to an older period must be coded as prior year. Campuses need to remap FNAT keys for these older revenue transactions to the prior year. The state general ledger account number 2090 (object code or ), Investments Other, may be used only in fiduciary (i.e. trust or agency) funds. It may not be used in governmental or proprietary (i.e. enterprise) funds. If object code or was set up as the default value for all funds in PeopleSoft, then it needs to be reclassified to an appropriate object code before closing. The state general ledger account number 3790, Other Current Liabilities, should not be used in bond funds. Instead, entries mapping to this account number should be analyzed and reclassified to an appropriate liability account (3010, Accounts Payable, 3020, Claims Filed, 3021, Claims in Process). In connection with governmental funds: Expenditures must be reviewed at the program code level to ensure that no program expenditure totals are negative. If negative totals are identified, adjusting entries must be made to clear them. No accruals should be reported in the General Fund. Trial balances for General Fund appropriations should be reviewed and entries should be made to clear any remaining accruals or encumbrances Legal Manual The California State University

20 GENERAL INFORMATION All accounts for reverting appropriations must be cleared before June 30. In connection with enterprise, trust and lottery funds: Adjustments must be made to ensure that no allocation budget balance available for expenditures is overdrawn at the CSU fund/fiscal year level after the year-end accrual entries are posted. The amount in the appropriate equity account (e.g. for 0948, Trust Fund, the appropriate equity account is object code , Fund Balance Continuing Appropriations; enterprise funds use object code , Retained Earnings) in each CSU fund on the current year s pre-closing trial balance must be the same amount as what was reported by the campus on the post-closing trial balance for these accounts in the previous year. The Fund Equity Object Code by Fund table at shows the appropriate fund equity account for each state fund. Reserve entries in FIRMS object code 30401X in CSU fund 485 must be posted to the campus and FIRMS business units in PeopleSoft before running the final FIRMS. Any entries in FIRMS object codes beginning with 30401X must be offset by like entries in FIRMS object code (Offsets for Reserves/Fund Balance) (i.e. the balances in 30401X and must net to zero). Object codes and should not be used for reserve entries. The balances in the Fund Balance Clearing accounts must be reconciled with the June 30 balances reported in a Chancellor s Office coded letter issued in early July each year. All reconciling items must be eliminated before running the final FIRMS. Accounts receivable must be analyzed and adequate reserves for uncollectible amounts must be established. Generally, if a receivable is six months past due, it should be fully reserved, unless there is sufficient support it will ultimately be collected. Accounts past due less than six months should also be reserved if there is reasonable doubt as to collectiblity Legal Manual The California State University

21 CHAPTER 2 Major Changes Section Description of Change Reason for Change All sections Chapter 2 was reorganized. This chapter will be expanded to incorporate accounting information provided to campuses via , as well as guidance distributed in other documents, such as RMP documents. Section Accounting for the Associated Student Fee was added to provide guidance on the use of CSU fund 461, Associated Student Body Trust. To incorporate RMP #21, Associated Student Body Fee, into the manual. Section Section Section Section The transitional instruction in CSU Consolidated Investment Earnings section was removed. Compiling an Un-reconciled Check List with CFS section was added. A note was added regarding prepaid expenses. Department of General Services (DGS) Prepayments section was added. The implementation of the consolidated investment earnings required one year where there was a unique distribution schedule as well as a change to some yearend accruals. Since the transition is complete these details were removed from this section. The section content was distributed in an for GAAP preparation but should be included in the legal manual. Some systemwide contracts have a term that does not coincide with the fiscal year end, therefore campuses may need to recognize prepaid expenses in Legal and/or GAAP. The section describes the process the Department of General Services uses to calculate the prepayment and the journal entry that must be used to record the entry should it occur in the campus Agency Reconciliation Legal Manual The California State University

22 CSU ACCOUNTING Section Section Section Section An Athletics section was added. CSURMA Coverage Programs section content was updated to reflect changes in accounting related to the systemwide cost recovery guideline. The CSURMA Accounting Treatment section was updated to the current version. Use of CSU Operating Fund Scholarship section was added. Report (aka the Tab Run). The SAM99 has been programmed to match a certain journal entry to offset the state posting or an error will occur. Systemwide Financial Standards & Reporting made some changes to object codes to distinguish between revenue derived from selfsupporting and non-self-supporting athletic activities in The section details the definitions of the object codes and adds information about the CSU funds that should be used to record the two types of athletics activity. The changes in accounting due to the systemwide cost recovery guideline implementation impact the Pooled Workers Compensation Program and the Industrial Disability Leave (IDL), Non- Industrial Disability Leave (NDI) and Unemployment Insurance (UI) Program as the expenses may occur in different funds based on the campus implementation option. The accounting treatment was updated to reflect changes in accounting related to the systemwide cost recovery guideline. The CSU Operating Fund may not be used to fund scholarships based on California Constitution Article 16, section 6, that prohibits state agencies from making a gift of state funds. Campuses must not issue scholarships from the CSU Operating Fund Legal Manual California State University

23 CSU ACCOUNTING Section 2.9 Section Section Section Section Section Section Sponsored Programs Administration section was added. An Escheat Process section was added An Escheat Payroll Warrants section was added An Accounts Receivable Collections section was added Capital Asset v. Operating Expense was added to help campuses distinguish between a capital expenditure and a repair expense. The American Reinvestment & Recovery Act section was removed. A Sabbatical Leave Forfeiture section was added. The section was added to collect various accounting instructions related specifically to Sponsored Programs Administration. We expect that the information in this section to grow in future periods to cover this topic more thoroughly. To incorporate guidance previously published in RMP Implementation Document 16. To incorporate guidance previously published in RMP Implementation Document 16. To incorporate guidance previously published in RMP Implementation Document 17. To incorporate guidance provided to individual campuses during the fiscal year. The CSU did not receive additional ARRA funds in 2011/12 so this section was deemed obsolete. The section was added to provide instructions for booking this transaction should it occur at a campus. Previously there were no systemwide instructions regarding how this entry should be booked in the ledger Legal Manual California State University

24 CHAPTER 2 CSU ACCOUNTING Section 2.1: Enterprise Organizations The following sub-sections provide selected information related to Enterprise Organizations and related Systemwide Revenue Bond (SRB) accounting CSU Fund 441: CERF Operations Early Start Program A $5 million Early Start set-aside of campus-based Lottery allocations has been made in fiscal year for the first year of the Early Start financial aid program on the basis of campuses pro-rata share of total enrollment. This program can be administered either Self-Support or State- Side. The accounting treatment should be followed using the guidelines outlined in AD Particularly, each campus must report the financial data of this program within a unique Fund using FNAT # This will facilitate the exclusion of these revenues and faculty retirement costs from the Centrally Paid Indirect Cost/State ProRata calculation and distribution. In addition, object code Continuing Education - Special Session-Other should be used to record the CE Fees. If the program is in a future fiscal period then the campus should use object code Operating Revenue Collected in Advance. Therefore going back to the accounting template included in AD , the deferred revenue account would be exchanged for the revenue accounts listed and be populated with entries A1 & B CSU Fund 444: CERF: Campus Partners As required by Education code 89704, All revenues shall be deposited to the credit of the State University Continuing Education Revenue Fund for the support and development of selfsupporting instructional Programs of the California State University. In compliance with this code, CSU has identified a set of CSU funds for the different CERF reporting segments. A newly created CSU Fund CERF Campus Partners has been established to record and report funds allocated to campus partners for continuing the CERF mission. All costs for program reinvestment and support of CERF program by campus partners may to be recorded to this fund. The purpose of CSU Fund CERF Campus Partners is to distinguish CERF operation activities and its reserve balances from Campus Partners. This will allow reserves to be identifiable and reportable. Year-end reporting to Executive Management will reflect reserve balances designated in CERF Campus Partners (444) Legal Manual The California State University

25 Section 2.1: Enterprise Organizations Further information can be found in the CERF Program Reinvestment Allocation Guidelines CSU Fund 461: TF Associated Student Body Trust The ASB Trust - CSU fund 461 was established to facilitate the accounting and reporting of Associated Student Funds. Executive Order 1000 defines agency funds as resources being held in a purely custodial capacity (assets equal liabilities) for Legal and GAAP basis financial reporting. CSU fund 461 falls under the agency fund definition; it collects the ASB fee on behalf of the Associated Students auxiliary organization and transfers the funds to the auxiliary organization. ASB fee revenue collected by the campus as part of the student registration fees is recorded in object code Depository Accounts, Current in CSU fund 461. When the revenue collections are disbursed to the Associated Students auxiliary organization, the campus records the payment against the depository accounts, current object code. If no timing differences exist, the collection of fees and payment to auxiliary organization net to zero in this object code. However, campuses must submit information about the ASB fee on the Chancellor s Office fee report. To facilitate this reporting requirement, the campus may create two separate PeopleSoft accounts to track the gross revenue collections and subsequent payout to the Associated Students auxiliary organization, and map both accounts to the depository object code. As part of the registration fees, the campus may also collect a meal plan fee on behalf of an auxiliary organization (e.g. Associated Students, Enterprises, etc.). Collections for auxiliary organizations should be booked to CSU fund 461 for Associated Students and CSU fund 537 for another auxiliary organization using the same depository account object code as above. Similar to the ASB fee, the campus may create two separate PeopleSoft accounts to track the gross revenue and subsequent payout, and map both accounts to the depository object code. Meal plan fees collected at registration for an auxiliary enterprise (e.g. Housing) are not agency transactions thus the revenue should be recorded in the Housing CSU fund using the appropriate FIRMS revenue object code. As mentioned earlier, CSU fund ASB Trust is an agency fund, thus, all resources (including investment earnings) must be recorded as a liability in the depository accounts, current object code. The depository accounts are classified into current (FIRMS object code ) and noncurrent (FIRMS object code ): Noncurrent depository accounts meet at least one of the following criteria: 1) Not to be used in current operations 2) Restricted for acquisition or construction of noncurrent assets 3) Restricted for liquidating long-term obligations Legal Manual The California State University

26 Section 2.1: Enterprise Organizations 4) Restricted for the use for other noncurrent operation purposes Current depository accounts meet at least one of the following criteria: 1) Expected be expended within one year and used in current operation 2) Used for the acquisition of current assets 3) Liquidated current obligations 4) Used for other current operation purposes Campus financial officers must work with the Bursar s office or Student Accounts Department to make sure the fees are directed to the proper CSU fund and FIRMS object codes. ASB fees are different from student union fees. Student union fees should be captured in CSU fund 534. The two fees should not be co-mingled. There should never be any SRB-related activity recorded in CSU fund CSU Fund 471: Parking Revenue Fund - Fines & Forfeitures The accounting treatment discussed in this subsection should be observed in any occurance of a fine or forfeiture. At the CSU, this is most relevant to Parking Fines & Forfeitures. GASB 33, paragraphs 17 & 18, provide accounting guidance in connection with the recording of fines and forfeitures. Further guidance is offered in GASB Staff Implementation Guide Z This section provides a brief overview of the requirements. Revenue is recognized as follows: If the fine is undisputed, recognition is based on whichever occurs first: Payment (debit cash, credit revenue) or Elapse of the statutory time allowed to dispute the charges (debit receivable, credit revenue). If the fine is disputed, the revenue should be recognized net of estimated refunds from rulings overturned on appeal when the appropriate legal authority rules that the fine is legally enforceable (debit receivable, credit revenue). Fines and forfeitures revenue should be recognized in the same period that the asset is recognized (debit cash / receivable, credit revenue), unless the enabling legislation includes time requirements. If time requirements are imposed, revenues should be recognized in the period when the resources are required to be used or when use is first permitted (debit cash / receivable, credit deferred revenue) Legal Manual The California State University

27 Section 2.1: Enterprise Organizations CSU Fund 531: TF Housing Operations and Revenue Food Services Currently, the majority of CSU universities outsource (subcontract) food service activity to their auxiliary organizations. Due to the high degree of subcontracting and the resulting low volume of financial transactions systemwide, a separate CSU Fund for Food Service activity has not been established. For those campuses that do have Food Service activity provided by their university (and thus have revenues and expenses within their university books), CSU Fund 531 TF Housing Operations and Revenue should be used CSU Fund 534: TF Campus Union-Operations and Revenue Return of surplus Return of surplus (ROS) check(s) to the auxiliary student unions should be recorded to object code , Return of Surplus. Scanned copies of check(s) and all backup should be ed to the Chancellor s Office, specifically Terri M. Williams at tmwilliams@calstate.edu. This is a required PBC (prepared by client) for the SRB audit. Before year-end close, campuses should compare the dollar amount recorded in object code with total checks issued. If the dollar amount doesn t match, the books should be adjusted. The dollar amount in the general ledger for ROS should tie to the check copies, plus any other AP disbursements, such as a wire CSU Fund 537: TF Auxiliary Organizations-Operations and Revenue Proper FNAT CSU fund 537 is mainly used for SRB-related activity. If there are non-srb transactions (deposits held for an auxiliary organization that is not a campus union), the PeopleSoft fund needs a special FNAT key, FNAT # For SRB transactions, FNAT # should be used; this FNAT maps to project SRB00. Capital Leases and Loans Activity For debt issued prior to January 2008 (Capital Leases), no lease receivable is established in legal. The principal payment collected by the university from its auxiliary should be booked to object code , Auxiliary Program Lease Principal Payment, which maps to GAAP account The interest payment should be booked to object code , Income From External Legal Manual The California State University

28 Section 2.1: Enterprise Organizations Investments, which maps to GAAP account Do not record May and June accruals of the auxiliary base rental interest payment in legal. This will be a GAAP accrual. For debt issued after January 2008 (Loans), Senate Bill 855 provides the authority to issue bonds on behalf of auxiliaries. It is now a loan and no longer a capital lease. Since it is a direct loan between the Chancellor s Office and the auxiliary, the campus acts as an agency only and the receipt of auxiliary base rental payments should not have a P&L impact on the campus books. Receipts of auxiliary base rental payments and interest payments should be credited to object code , Uncleared Collections (other current liability). When the payments are remitted to the Chancellor s Office, debit object code Legal Manual The California State University

29 CHAPTER 2 CSU ACCOUNTING Section 2.2: Capital Projects Accounting Capital Projects - Funding Sources for a Construction Project Construction projects must have separate and distinct accounts (sub fund) for each of the different funding sources. Examples of funding sources are: Commercial Paper (CP), RBAN - Short-term debt usually issued to fund projects during construction period. Systemwide Revenue Bonds (SRB) - Long-term debt issued by the Board of Trustees to fund construction projects. General Obligation (GO) Bonds - Legislation approved by voters; also known as Higher Education (HE) Capital Outlay Bond Funds. Lease Revenue Bonds - Administered by Public Works Board for legislatively approved construction projects. Fee Revenue Funds - Housing Fees, Parking Fees, Health Center Fees, Student Union Fees, and CERF Fees. Donor Funds Capital Projects Allocation Orders, Cash Transfer Letters (CTL) and Filing Claims Allocation Orders Campuses receive spending authority through the allocation order process, which is required for all state construction funds: Dormitory Construction Fund (0576), GO/Higher Education Capital Outlay Bond Funds and Lease Revenue Bonds issued through the Public Works Board. Year End Entries for Allocation Orders Pending - All Funds (Auto-Reversing) Allocation orders pending at year end are to be journalized in the appropriate general ledger using the following accounts: FIRMS object code , Allocation Orders - Pending FIRMS object code , Reserve for Allocation Orders Pending If the SCO expenditure allotment is UNDER (less than) the campus expenditure allotment, there will be a CREDIT balance in FIRMS object code If the SCO revenue allotment is UNDER (less than) the campus revenue allotment, there will be a DEBIT balance in FIRMS Legal Manual The California State University

30 Section 2.2: Capital Projects Accounting object code An allocation order pending is a required year-end report. These entries must be reversed July 1 so the option to auto-reverse the entry is a desirable option and will eliminate the need to revisit the entry in the new year. Cash Transfer Letters (CTL) CTLs are needed, for all Bond funds and Revenue Bond Anticipation Note (RBAN) funds, to file a claim schedule, to abate funds (also need Remittance Advice for abatements), or to submit a Plan of Financial Adjustment (PFA). Basically, any transaction that moves money within any bond or RBAN funds needs a CTL. For GO Bond Funds or HE Capital Outlay Bond Funds, CTL forms are available on the CO website CPDC administers the upfront funds and assigns them to each project. They issue a certification letter which directs the campus to the correct CTL to use. For the Dormitory Construction Fund (SCO Fund 0576), the campus will receive the CTL along with the allocation order. Campuses must use a CTL for all Bond and RBAN funds but they do not need a CTL for Fee Revenues or donor funds. The Public Buildings Construction Fund (SCO Fund 0660) is funded through revenue bonds issued by the Public Works Board a CTL is required for all transactions. All CTL s in PBCF 0660 are unique to the project so no two CTL s are the same. CTL s are forwarded to the campus with the Allocation Order. The Allocation Order process begins with Finance & Treasury (F&T) they initiate the process by submitting a Request for Allocation Order (RAO) to the Cash Management Office (CMO). The Allocation Order and the CTL will be issued by the Systemwide Financial Office (SFO) and forwarded to the campus. SFO will also submit a TC-24 Transaction Request to the SCO to setup a budget (Spending Authority) on the campus tab run. The Chancellor s Office Capital Projects Fund Accountant monitors the budgets and expenditures in the campus expenditure accounts and records the campuses expenditures as a drawdown against the allocated budget balance for each fund at month end. Claims When filing a claim against a RBAN or Bond funding source, a CTL must be included or the claim will be rejected. The campus must not file a claim against a RBAN funding source when the RBAN account has been replaced by a Bond, or the claim will be rejected Capital Projects - at Completion Once the capital project is complete the campus needs to send a copy of the Notice of Completion and notify F&T. Once claims and encumbrances have been satisfied, a de Legal Manual The California State University

31 Section 2.2: Capital Projects Accounting allocation order is issued for the remaining balances on the campus s tab run. The remaining Bond funds will be transferred to the Dormitory Interest & Redemption Fund 0578 (DIRF) to be used for interest and principal payments. Any remaining balances in Fee Revenue accounts or donor funds will be returned to campus revenue funds Capital Projects Accounting Issues The most common error made is using the wrong year on CTLs. The campuses sometimes use the incorrect year for revenue accounts on CTLs. This requires the Chancellor s Office capital projects accounting group to make a correcting journal entry for each instance. On July 1 the fiscal year should be changed on the revenue account. Using the correct CTL is very important. The campuses need to make sure their distribution list for people to receive the CTLs is up to date and current Capital Projects Closing Out the Trial Balance FBC The Chancellor s Office capital projects group will work with campuses to close and purge any remaining balances in the system and provide instructions on the proper journal entry to remove fund balances --- see Section 2.2.7, Adjustments to Fund Balance Clearing (FBC). (Contact Bill Pittman at bpittman@calstate.edu, (562) , for further guidance if necessary.) Build America Bonds (BABs) The American Recovery & Reinvestment Act of 2009 (ARRA) created Build America Bonds (BABs). With the 2010B SRB, the CSU issued BABs, taxable debt whereby the CSU will receive a 35% subsidy on bi-annual interest expense payments from the federal government. Campuses will receive their portion of the subsidy via a CPO from the Chancellor's Office that will be dated the same day that the Chancellor's Office received the subsidy. Campuses will continue to be charged the full taxable interest expense amount by the Chancellor s Office through the centrally paid direct costs process. It is very important that campuses book the subsidy payment they receive via the CPO to object code , Other Federal nonoperating grants (ARRA) - direct (noncapital). It is important to remember that BABs proceeds can t be used to pay indirect costs, only capital project direct costs incurred after March 1, All costs, both direct and indirect, incurred prior to March 1, 2009 must be paid from non-babs (2010A series) proceeds Adjustments to Fund Balance Clearing ( FBC) Requests by the Chancellor s Office for the campuses to make adjustments to FBC will cause the campus SAM 99 to be out of balance Legal Manual The California State University

32 Section 2.2: Capital Projects Accounting An example of when such an adjustment is necessary is when a construction project within Fund 0576 has been completed and all cash resources have been fully spent. When this point is reached, there are complementary general ledger balances on a campus s books and on the CO s books. The campus has a debit balance in Object Fund Balance Unappropriated and an offsetting credit balance in Fund Balance Clearing. The CO has a complementary debit balance in and offsetting credit in To bring both ledgers to zero across all accounts, the CO will contact the campus and coordinate a synchronized journal entry. This event is commonly referred to as purging. These synchronized entries will not have an entry processed through the State Controller's Office to match the journal entry that you were instructed to make by the CO. For this reason, your SAM 99 for these funds will be out of balance. There will, however, be an offsetting entry booked on the Chancellor s Office ledgers for these funds. Since the funds connected to this activity are submitted by the Chancellor s Office in a consolidated format to the State Controller's Office, the campus and Chancellor s Office entries will be combined and net to zero. Your campus will then begin next year in sync with the State Controller's records that tie to the amount of cash appropriated for your campus. Contrary to popular thought, the SAM99 electronic file that each campus submits to the SCO at year-end does NOT include Funds 0576, 0580 et al. Thus, the individual out-of-balance conditions are not seen by the SCO. As stated above, the CO submits separate, hard copy reports to the SCO for 0576 et al and in consolidation, the outages are negated Expiring & Reverting Funds Expiring Funds Funds expire at the end of the period of availability and enter the liquidation period. This means that vendor contracts must be in place before the expiration date. No new agreements can be encumbered after the expiration date. Contracts and agreements made prior to the expiration date may be augmented during the liquidation period. Change orders and extra service agreements with existing contracts are authorized during the liquidation period as long as there are unencumbered funds remaining to cover the expenditure. Reverting Funds The budget remaining in an appropriation (BBA) on the reversion date is reverted (liquidated) automatically and returned to the source appropriation. Unless the remaining funds are reappropriated with the new budget they are no longer available for expenditure or reimbursement. All claims against the appropriation must be filed and cleared before the reversion date or the reimbursement may not be honored. Should this happen you need to contact the Chancellor s Office immediately so that it may intervene on behalf of the campus and attempt to resolve the issue Legal Manual The California State University

33 Section 2.2: Capital Projects Accounting Recognizing this should encourage everyone responsible for any capital appropriation to fully understand the funding sources they manage. Reverting funds need additional monitoring over the last six months of availability to insure the funds are encumbered and claimed before the reversion date. It may also become necessary to re-appropriate the funds in order to complete the project. Understanding the pitfalls involved will help you to avoid them. Reappropriation of Reverting Funds In the event that the reverting fund is reappropriated it will still be necessary at year end to record the State Controller s reversion entry. Once the new budget is signed into law, the SCO will reappropriate the budget that was reverted and the campus can restore the BBA. Any encumbrances remaining at year end in the reverting funds must also be liquidated or moved to another funding source. Period of Appropriation Availability SAM 6812 The Governor's Budget includes only those projects or project phases for which funds can be encumbered within the appropriation period. Section 2.00 of the Budget Act states that, in general, appropriations and reappropriations for capital outlay pursuant to that act are available for expenditure for three years (with an additional two years for liquidation), with the exception of appropriations for studies, preliminary plans, working drawings, or minor capital outlay which are available for encumbrance for a single year only. However, a construction appropriation reverts to its source fund at the end of the first year of appropriation availability if the Department of Finance has not allocated the funding through a fund transfer or an approval to proceed to bid. A capital outlay appropriation provided through special legislation is also available for expenditure for three years (followed by a two-year liquidation period), unless otherwise specified or unless the chapter makes the appropriation continuous. Query to find Reverting Funds In PeopleSoft, using query manager, a query to find reverting funds can be created using the following records, fields and prompts Legal Manual The California State University

34 Section 2.2: Capital Projects Accounting Records: Fields: Legal Manual The California State University

35 Section 2.2: Capital Projects Accounting Criteria: Sample Run Prompts: Sample Output: Legal Manual The California State University

36 CHAPTER 2 CSU ACCOUNTING Section 2.3: Banking and Investments Systemwide Investment Fund Trust (SWIFT) SWIFT was established pursuant to legislative authority granted in Ed Code, 89721on July 2, 2007 for the purpose of pooling university cash and investments, providing centralized cash and investment management services, and equitably distributing earnings to the campus participants in the pool. FIRMS object code , Cash Short Term Investments (SWIFT), is used to record transactions that flow through the SWIFT portfolio. It can only be used in the State University Trust Fund (state fund 0948). During the fiscal year, transactions that are posted to revenue, reimbursement, and expense accounts will ultimately be offset by an entry in Cash Short Term Investments (SWIFT) Surplus Money Investment Fund (SMIF) SMIF is a state investment pool for funds held at the Sate Treasurer. Campus funds held in State Funds such as Dorm Revenue fund (0580), Interest and Redemption Fund (0578), the Dorm Construction (0576) or State University Trust (0948) earn SMIF earnings. Under this section we are only discussing those funds held within the State University Trust Fund (0948). FIRMS object code , Fund Balance-Clearing Account, is used to record transactions that flow through SMIF Wells Fargo Bank (WFB) The CSU s cash management is centralized by using one bank, Wells Fargo Bank (WFB). The surplus cash at the bank is invested into one custodial bank, US Bank, but the CSU refers to it as Systemwide Investment Fund Trust (SWIFT). Each campus has been assigned three WFB accounts; a depository, electronic disbursement & controlled (paper) disbursement, which are zero balance accounts (ZBA) that feed into one master concentration account. Every morning, the Cash Management Office (CMO) analyzes the cash activity of every campus to determine the cash position for that day. They calculate the surplus or shortage of available WFB money or net systemwide cash needs. If there is a shortage, a redemption (wire transfer) from US Bank to WFB is needed. If there is a surplus, CMO transfers funds to US Bank from WFB. These transactions do not affect a campus s overall cash/investment balance. Campuses are required to send notices to CMO regarding large electronic cash transactions from WFB Legal Manual California State University

37 Section 2.3: Banking and Investments Notification of these transactions (ACH, wire transfers) should be for items greater than $200,000 and should provide at least 24 hours advance notice. These can be actual or projected amount but must include a value date FIRMS object code , Cash Short Term Investments, is used to record transactions that flow through the WFB and SWIFT CSU Consolidated Investment Earnings Investment earnings are allocated to the SWIFT participants on a quarterly basis. Beginning January 2011 (for the quarter ending December 31, 2010), the earnings of SMIF and SWIFT were combined and allocated to the campuses based on their Average Daily Balance. Distributions are made in the month following the close of the calendar quarter (i.e. October, January, April and July). The concept of combining the SWIFT and SMIF earnings is due to the inequities in the earnings allocations resulting from the different earnings rates of the two investment funds. Campuses should not be penalized for investment decisions made centrally. Campuses are to record the combined earnings to revenue object code : Income from External Investments and no longer utilize the SMIF interest revenue object code : Interest from SMIF (this pertains to enterprise funds investing earnings distributed by CPO only). The cash offset will always be : Cash-Short Term Investments (SWIFT). "Changes in Unrealized Gain/Loss" are not included in the monthly investment earnings calculation and therefore there is no legal entry required for the Changes in Unrealized Gain/Loss. Campuses are to record the investment earnings allocation in the Pooled Investment Fund (CSU fund 541) based on the CPO instructions. Net investment earnings should be then allocated internally within campus funds according to that campus s allocation policy. Campus investment earnings allocations are net of charges (Wells Fargo Bank charges, investment services and Chancellor s Office indirect support). Net income in the Pooled Investment Fund is zero ( no fund balance ) at the end of the fiscal year. Each campus is to establish two funds: one attached to FNAT key to record CSU fund 485 investment earnings and another mapped to to establish CSU fund 541 to record pooled investment activity. A series of accounts are necessary to properly report the SWIFT earnings and campus allocation of earnings as illustrated below: Legal Manual California State University

38 Section 2.3: Banking and Investments Campus Quarterly Earnings Accounting Entries Debit Credit 1 Consolidated Earnings allocation to Campus Fund 541, Acct , Income from External Investments 1,500,000 2 Wells Fargo Bank (WFB) charges to campus Fund 541, Acct , WFB Charges 2,500 3 CO Indirect Support charges to campus of $2,500 Fund 541, Acct , CO Cash Management Overhead 2,500 4 Investment Services charges to campus of $10,000 Fund 541, Acct , Investment Services 10,000 5 Total CPO Distributed to Campus CSU Fund 541 Fund 541, Acct , Cash-Short Term Investment "SWIFT" 1,485,000 Accounting Entries for campus allocation of interest to other funds 5 Campus investment earnings allocation to other funds 1,500,000-2,500-2,500-10,000 = 1,485,000 Fund 541, Acct , Income from External Investments 1,485,000 Fund 541, Acct , Cash-Short Term Investment "SWIFT" 1,485,000 Total Allocation Distributed out of CSU Fund 541 1,485,000 6 In CSU Fund 485, CSU Operating Fund Fund 485, Acct , Cash-Short Term Investment "SWIFT" 700,000 Fund 485, Acct , Income from External Investments 700,000 7 Other CSU Funds in 0948 CSU funds, Acct , Cash-Short Term Investment "SWIFT" 785,000 CSU funds, Acct , Income from External Investments 785,000 Total Allocation Distributed to other CSU Funds 1,485,000 Important! For CSU fund 485, earnings must be recorded in a separate PeopleSoft fund associated with FNAT key , which uses FIRMS Project INTAC RMP-Interest Income Activity Bank of CSU Statement Reconciliation Each campus receives a Bank of CSU statement (SWIFT and Wells Fargo Bank (WFB)) each month. The Bank of CSU statements are distributed by around the 5 th business day. There are two sections of the statement: WFB and SWIFT. The WFB section consists of the sum of the daily transactions for depository activities, controlled disbursements, electronic disbursements and SWIFT activities. The SWIFT section consists of CPO transactions for investment transfers to and from SWIFT and other CPO activities. As a rule of thumb, the Bank of CSU statement is used for CPO transactions and WFB balance verifications. Campuses also receive statements from WFB for each of their accounts. The detail transactions should be reconciled to these WFB statements Legal Manual California State University

39 Section 2.3: Banking and Investments Tips.. Discrepancies in monthly balances between the campus general ledger and Bank of CSU statements are usually caused by bank adjustments that have been netted against that day s ZBA balance for the account. Differences in ACH disbursements are usually caused by adjustments such as ACH rejects that have been netted against the total daily ACH disbursements. Differences in the paper/controlled disbursements can be caused by adjustments due to fraud investigations or checks posted by Wells Fargo Bank as cash paid items and are netted against the total daily disbursement Compiling an Unreconciled Check List with CFS A delivered query may be used to compile an unreconciled check list. The screenprints below walk through the process to create the listing. Note that while checks from a legacy environment should be cleared from the outstanding check lists, it is possible that campuses with particularly long stale dating policies may have a few documents that are outstanding. In those cases, this method for compiling an outstanding check list may be used by running the query in the campus legacy environment and merging the results from the legacy query with the CFS query. Inputs that are needed to successfully complete this task are as follows: Access to CFS, preferably with Query Manager access (Query Viewer is the minimal requirement) Wells Fargo cleared checks file has been loaded to CFS for the month ended. Navigation: Reporting Tools>Query Manager Search for the delivered Un-reconciled Checks query. Select the Edit hyperlink to review the Criteria. The baseline query includes two criteria for Bank Account, if only one is appropriate, delete the second. If the query is modified, save it as a private query Legal Manual California State University

40 Section 2.3: Banking and Investments Run the query and download the results to Excel. Sort the results by Pay Status and eliminate the Stopped payments by deleting the items with a Pay Status of S. If there are any other items with Cleared, Recon or Cancelled Dates that occurred on or before month end, eliminate those rows. Save the results Appropriate SWIFT Balances As authorized by Education Code 89721, the chief fiscal officer of each campus of the California State University shall deposit into and maintain in local trust accounts moneys received in connection with items a l of the Education code. The State University Trust Fund (state fund 0948) is the only fund for which cash can be held locally within SWIFT. Cash balances in governmental funds (e.g. General and Capital Outlay) or other state enterprise funds (0576, 0578, etc.) must be held at the state and cannot be within SWIFT. Therefore, campuses should reconcile SWIFT and WFB cash accounts to ensure that no SWIFT cash has been recorded for non-0948 funds. Typically, during the accounts payable process for claimable funds, the SWIFT account is used until the claims process is completed. Campuses must run the AP claim process on the last day of the fiscal year to clear out SWIFT cash from non-0948 funds. See Chapter 8: Year End Instructions for more detailed information Legal Manual California State University

41 Section 2.3: Banking and Investments SWIFT Negative Balances It is intended that at year end, the Cash Short Term Investments (SWIFT) accounts within each CSU fund should not be negative. To ensure that the campus postings for each CSU fund are not negative, the FIRMS edits process validates the data. During the editing process the campus is notified when a negative balance has been detected. There may be special circumstances in which a fund might be negative, in which case a manual FIRMS override by the Director of Financial Standards and Systemwide Reporting is required. Negative cash balance is usually a result of having a business process that manages FBC and SWIFT as separate cash accounts; one for payroll, FIRMS Object Codes , Fund Balance Clearing (FBC), and another for disbursement and deposits, FIRMS Object Codes , Cash Short Term Investments (SWIFT). To avoid this, campuses are encouraged to implement a campus central sweep fund. This will also facilitate the implementation of several CFS common code modifications one of which is the Interest Distribution Allocation (IDA). IDA was designed to utilize one cash account to distribute the earnings in alignment with the common practice of the Campus Sweep Fund Campus Sweep Fund The Campus Sweep Fund is used to designate a main cash account, object code , to record all transactions, payroll, AP, Student, Financial Aid, etc. which will allow the campus end-user trust funds (all 0948 CSU Funds) to operate out of one cash account. In addition, a designated sweep fund (recommended in CSU Fund 485) is needed to create the offset of the fund balance clearing (FBC) object code, , activity at the state level. Note: Change the Department Offset Groups cash account in PS HR to be the main trust operating cash account, , and no longer use in end-user trust funds. However, it should be noted that some campuses may have payroll activity that posts directly into capital outlay funds via LCD. Since those funds cannot have Cash, the LCD posting would have to be reclassified to within that fund. Should a campus choose not to take this step, PeopleSoft delivered Allocations functionality can clear any entries to in end-user trust funds in exchange for the main trust operating cash account, Legal Manual California State University

42 Section 2.3: Banking and Investments Legal Manual California State University

43 Section 2.3: Banking and Investments Cash Posting Orders (CPO) A Cash Posting Order (CPO) is a mechanism to move SWIFT dollars between campuses, including the Chancellor s Office. The CPO is the required method to collect and disburse funds between SWIFT members (campuses, the Chancellor s Office, CSURMA and CSU Institute) rather than creating invoices and checks. Invoices slow collection and cause timing issues between the two agencies resulting in FIRMS errors. Even more important at year-end, we require a CPO be issued to the Chancellor s Office or campuses instead of invoices. Examples of various CPOs: Redemption/investment in SWIFT (cash positioning) Systemwide Allocation Transfer (SWAT) Request for Cash Transfer Order (RCTO) Cost Recovery Legal Manual California State University

44 Section 2.3: Banking and Investments Systemwide Allocation Transfer (SWAT) is supplemental campus funding used for special projects from the Priority Fund issued by the Systemwide Budget office. SWATs may only be used for Operating Funds (CSU fund 485). The campus will always record to account , SWAT In. Request for Cash Transfer Order (RCTO) is funding transfers to campuses initiated from a Chancellor s Office department (e.g. Academic Senate) for specific campus program funding or additional support. These transactions are issued by the Chancellor s Office Budget department. The RCTO may only be used for Lottery Funds (CSU fund 481) and Operating Funds (CSU fund 485). For Operating Funds transactions, the campus will always record to account and for Lottery Funds transactions the campus will record to account , Transfer In within the campus CSU fund. SWATs and RCTO will only be used to provide allocations to a campus or reallocations between campuses, such as: Awards/Grants Development (faculty & staff development) Travel funding (campus is operating the program) Training funds (campus is operating the program) Assigned time (faculty performs additional duties beyond their regular campus appointment) Stipends Undesignated allocation (Summer Arts, MTSI, CLA Assessment, RIAP, EAP, LMS, QI, Troops to College, ARI, COAST, etc.) Conference sponsorships (no specific expenditures can be identified; funding is for the conference as a whole) There are other situations where campuses and the Chancellor s Office move funds which are not associated with a SWAT or RCTO. These would be used for campus & Chancellor s Office cost recovery. To facilitate systemwide consolidated reporting, CPOs should be recorded as indicated on the memo. o The recipient of the cost recovery should record to the appropriate cost recovery revenue account ( or ). The campus paying the cost should record to the appropriate FIRMS object code as instructed on the CPO and to the proper campus department and fund. Transactions include, but are not limited to: Audit fees Fire Marshall charges Meeting registrations Training (campus is doing work on behalf of a Chancellor s Office project) Travel expenditures (campus is doing work on behalf of a Chancellor s Office project OR a Chancellor s Office department decides to pay for actual travel cost incurred) Legal Manual California State University

45 Section 2.3: Banking and Investments Conference fees or misc costs Proctoring (ELM Reimbursement) Miscellaneous expenses Release time (faculty with instruction appointments that are replaced with another faculty to perform grant activities) Abilene Fees (CSU Network Backbone) ITS expenditures (e.g. Blackboard) Library expenditures (SEIR) CSURMA Premiums CSURMA Campus Reimbursements Note: For registration fees to conferences or seminars, the conference host should complete the CPO request form for all campuses and all attendees. Included in the request can be a list of attendees by campus, along with conference information or completed registration forms. Note: For subscriptions or any other contracts where the contract period extends to the next fiscal year, the appropriate portion should either be recorded in Legal as prepaid expense (FIRMS object code ) or as a GAAP adjustment (711107) at year end. The campus should determine the business practice they should follow Revenue Management Program (RMP) Guideline: General Fund Spend Down The primary objective of RMP was to allow the CSU to define the State University Trust Fund as their primary operating fund. All costs, including payroll, are directed to state fund The intent was that every month a Plan of Financial Action (PFA) would be submitted to move payroll expenditures from Trust to General Fund (GF) in order to spend down the GF appropriation. This process is called the Centralized Payroll Adjustments (CPA). Under the RMP guidelines and goals, the CSU General Fund appropriation will be fully expended by fiscal year end because the total GF payroll is greater than the GF appropriation for the CSU Centralized Payroll Adjustments (CPA) For the 11/12 fiscal year, it was agreed upon with the Department of Finance (DOF) that a PFA transfer in the amount of 1/12th of the total General Fund Appropriation for the budget year will be processed each month to fund the general fund payroll in state fund The individual campus PFA amounts are based upon the campus share of the total prior year Salaries and Benefits reported in FIRMS for the CSU Operating Fund. CMO also transfers funds via wire transfers from SWIFT to fund the non-state supported payroll. A Plan of Financial Adjustment (PFA) is submitted to the state to transfer the payroll expense in state fund 0948 to the General Fund Campuses are to record this PFA as a credit to account in the CSU Operating Fund, CSU fund 485, with a debit to FBC. In the General Fund state fund 0001 entry, campuses are to record a debit to the same account, , with a credit to FBC Legal Manual California State University

46 Section 2.3: Banking and Investments The CO will continue to process monthly PFA s from SCO fund 0001 to SCO fund 0948, CSU fund 485 until the of 4 th quarter of each fiscal year Determining Cash Transfers to State Fund 0948 CMO will initiate periodic transfers from campus SWIFT accounts to State fund 0948 as needed to sustain the minimum balance requirement. The campus transfer amount is determined based upon a combination of factors: Campus historic gross monthly payroll expenditure (using non-furlough values) Campus target month end balance as a share of the total minimum balance requirement Campus current balance in State fund 0948 as of the 20th of each month Amount of State support provided in the monthly general fund PFA The campus State fund 0948 balances will be monitored daily for variances and added to CMO planning assumptions. For campuses with cash requirements, CMO will draw down cash from SWIFT and remit these funds to the state. Simultaneously Accounting will issue a CPO for campuses to record this transaction. Campuses are to record this CPO in the campus sweep fund as a credit to FIRMS Object code , Cash Short Term Investments (SWIFT), and a debit to FIRMS Object code , Fund Balance Clearing. It is important to remember that there is no loss or cost to your campus for these balances deposited in State fund 0948 and the campus balances held at the state continue to earn interest General Fund Appropriation Swap To accomplish the goal to spend down GF some campuses need to exchange General Fund appropriations with SWIFT dollars. This is because a few campuses General Fund payroll is less than their General Fund appropriation. The CSU developed a mechanism to swap General Fund and SWIFT dollars. Campuses whose payroll is less than their General Fund appropriation will have their remaining General Fund appropriation transferred to other campuses. For each general fund appropriation transferred, an equal amount will be transferred back via a Cash Posting Order (CPO). To accomplish this, the Systemwide Budget Office will issue Supplemental Allocation Orders and CPOs during the last quarter of the fiscal year for those campuses involved. This process is evaluated each year to determine if it is needed. Campuses are to record the CPO in state fund 0948, CSU fund 485, and FIRMS object codes below. The direction of the entries will be identified on the CPO : RMP Expenditure Offset : Cash Short term Investments (SWIFT) Campuses are to record the AO in state fund 0001 and FIRMS object code , RMP Expenditure Offset Legal Manual California State University

47 CHAPTER 2 CSU ACCOUNTING Section 2.4: Capital Planning, Design and Construction (CPDC) Accounting Capital Planning, Design and Construction (CPDC) Accounting CPDC is responsible for carrying out the authority of the Board of Trustees in the construction and physical development of CSU campuses and any buildings, facilities, and improvements connected with the CSU. CPDC currently administers two self-insurance programs and builder s risk insurance through Alliant. CPDC also charges administrative fees. Builder s Risk Insurance, through Alliant, provides coverage for materials and project costs during the construction phase. The annual premium is collected either through an invoice or via Plan of Financial Adjustment (PFA) submitted to the State Controller s Office. Campuses paying this premium from State fund 0948 may pay via CPO. Campuses are to record the annual premium to FIRMS object code and to NACUBO program code Seismic Insurance is a CSU self-insurance that provides coverage for damages due to a seismic event during the construction phase. This is designed to cover the 5% deductible under the third party insurance coverage. The annual premium is collected either through an invoice or via Plan of Financial Adjustment (PFA) submitted to the State Controller s Office. Campuses are to record the annual premium to FIRMS object code and to NACUBO program code Campuses should record the claim payments to be reimbursed by CPDC to FIRMS object code and the campus deductible should be recorded in FIRMS object code When the campus receives the claims payment reimbursement from CPDC via CPO, the amount should be credited back to FIRMS object code , which will zero out the claims payment on the campus records. Construction Claims Insurance is a CSU self-insurance designed to cover settlements with contractors after construction on state-appropriated, streamlined funded projects have been completed. The annual premium is collected via Plan of Financial Adjustment (PFA) submitted to the State Controller s Office against the Higher Education Bonds fund. Campuses are to record the annual premium to FIRMS object code and to NACUBO program code Campuses should record the claim payments to be reimbursed by CPDC to FIRMS object code and the campus deductible should be recorded in FIRMS object code When the campus receives the claims payment reimbursement from CPDC via CPO, the amount should be recorded back to FIRMS object code , which will zero out the claims payment on the campus records Legal Manual The California State University

48 Section 2.4: Capital Planning, Design and Construction (CPDC) Accounting Administrative fees assessed by CPDC for construction management as well as the Chancellor s Office accounting overhead should be recorded to FIRMS object code and to NACUBO program code Campuses are either invoiced for these fees or Chancellor s Office submits a PFA to the state to collect the funds. Campuses paying these fees from State fund 0948 may pay via CPO. The State Fire Marshall conducts periodic inspections on all the campuses not related to any capital project. The Chancellor s Office pays the state on behalf of the whole system and collects the reimbursement from the campuses via CPO. Campus payments for the State Fire Marshall services should be recorded to FIRMS object code Services from other Funds/Agencies and to NACUBO program code Land Use Planning and Environmental Review (LUPER) on non-capital projects is another service provided by CPDC. The service fee is collected through an invoice. Campuses should record payments to FIRMS object code and to NACUBO program code Campuses paying this expense out from State fund 0948 may pay via CPO Legal Manual The California State University

49 Section 2.4: Capital Planning, Design and Construction (CPDC) Accounting Illustration of Classification for Revenues and Expenditures for CPDC Accounting Object Code Builder's Risk Insurance (through Alliant) Purpose: Insurance during construction for materials and project costs 1. Payment Payment to Alliant Program Code State Fund CSU Fund 2 Premiums Other Capital Projects (Invoice) /6042/Etc Various OR Higher Education Bonds (PFA) /6048/Etc Various 3 Deductibles Campus Deductible paid to Alliant /6042/Etc Various Seismic Insurance (Excess Earthquake Self Insurance) Purpose - Insurance during construction phase only to cover 5% deductible 1 Premiums Campus Capital Projects (Invoice) Various OR Aux Capital Projects (Invoice) OR Higher Education Bonds (PFA) /6048/Etc Various 2 Payments If delegated, then paid by Campus then: Payments for Claims (to be reimbursed by CPDC) (DR) Campus Deductible /6042/Etc Various 3 Claim Reimbursements Reimbursement for Claim Payments (CPO) (CR) Construction Claims (Self Insurance for State Appropriated "Streamlined Funded" projects) Purpose: Insurance after construction is completed to cover settlements with contractors 1. Premiums Higher Education Bonds (PFA) GO Bond fund Various 2 Payments If delegated, then paid by Campus then: Payments for Claims (to be reimbursed by CPDC) (DR) Campus Deductible GO Bond fund Various 3 Claim Reimbursements Reimbursement for Claim Payments (CPO) (CR) Legal Manual The California State University

50 Section 2.4: Capital Planning, Design and Construction (CPDC) Accounting Object Code Program Code State Fund CSU Fund Administrative Fees Purpose: Construction Management Fee on Captial Projects for CPDC and CO Financial Services Cost Recovery. 1 Other Capital Projects (Invoice) CPDC Admin fees on Capital Projects (Campus) Various CPDC Admin fees on Capital Projects (Aux) Accounting Admin fees on Capital Projects (Campus) Various Accounting Admin fees on Capital Projects (Aux) OR 2 Higher Education Bonds (PFA) CPDC Admin fees on Capital Projects /6048/Etc Various Accounting Admin fees on Capital Projects /6048/Etc Various State Fire Marshal Purpose: State Fire Marshal Inspections on Non-Capital Projects 1 Payment CO makes payment to the state 2 CO Reimbursements CPO to campus for Auxilary Org or Enterprise Op activity Various Note: Capital Project under construction are assessed via CPDC admin fee (above) LUPER Service Fee Purpose: Land Use Planning & Environmental Review on Non-Capital Projects CO Cost Recovery CO Invoice to Campus for Service Fee (Campus) Various CO Invoice to Campus for Service Fee (Aux) Legal Manual The California State University

51 CHAPTER 2 CSU ACCOUNTING Section 2.5: Miscellaneous General Accounting Information and Technology Program Codes As of July 1, 2004 NACUBO adopted new program codes to be used for information and technology expenses within each program code group, for example NACUBO program code 0106 Instructional Information Technology was identified for instructional information technology expenses. These subcategories should be used for formally organized and/or separately budgeted information technology expenses. If a campus does not separately budget and expense information technology resources, the types of costs would be reported in other NACUBO program codes. If a campus must report in the information and technology program codes, some expenses will be easily identifiable and may be derived directly to the appropriate value using a program code override or a department derivation rule 4 setup. However, some expenses incurred by campus departments that should be reported in these program codes will derive elsewhere, like the established department derivation rule 4. The campus can establish an allocation to automate the reclassification of the expenses from the department derivation to the information and technology program codes. This type of reclassification uses a specific set of accounts, typically those associated with FIRMS object codes IT Communications; IT Hardware and Miscellaneous Info Tech Cost, to identify the expenses to be reclassified. Note that this reclassification must be made in the xxcsu business unit so the expenses will report properly in FIRMS. To comply with the reporting requirement, the expenses that did not derive to the information and technology program codes in each program group would be reclassified in the Actuals, Budgets and Encumbrance ledgers Legal Manual California State University

52 Section 2.5: Miscellaneous General Accounting IT Allocation Example: Accounting Treatment for Registration fees It is highly recommended, but not required, that registration fees be recorded according to whether they are for training or for a conference without a training aspect. If the registration fee Legal Manual California State University

53 Section 2.5: Miscellaneous General Accounting is for training, it is highly recommented that the transaction be recorded to FIRMS Object code : Training and Professional Development. However, if the fee is for a conference without a training aspect, it it is highly recommended FIRMS Object Code : Misc Operating Expense be used. In either case, even if the registration fee is associated with travel, it should not be recorded to FIRMS Object code or : Travel. Costs recorded to the travel object code include, but are not limited to, lodging, transportation, meals and incidentals, as outlined by the CSU Travel Procedures G-001. This accounting treatment is prescribed by the Department of Finance Uniform Codes Manual. Examples of CSU Events to be recorded as Training/Professional Development: CSU 101 AP Manager s Meeting Year End Legal and GAAP Training Capital Planning, Design and Constructions (CPDC) Training Procurement and Support Services Officers Association (PSSOA) Training Systemwide Professional Development workshops Financial Officer s Association (FOA) Conference Facilities Management Conference Fitting the Pieces Conferences Auxiliary Officer s Association (AOA) Conference Examples of CSU Events to be recorded as Misc Operating Expense: The Network and Technology Alliance (NTA) Meeting fees Registration Fees for the CSU Education Dean s Meeting Registration Fees for the HRO Meeting Executive Council Retreat Registration Fees for the Student Affairs Council Meeting (VPSA) meeting Trust Fund Cash Deficit Loans In any given year, expenditures may exceed revenues. This would typically occur when carryforward balances (reserves) are expended in a subsequent year based on the business plan for the activity. In a year where a fund has no reserve balance and expenditures exceed revenues, the result is an overall deficit balance. In this case, a loan must be made from another selfsupporting activity on the campus. The loan will not affect the fund balance, but will increase cash and create a liability. Since the loan will be booked at June 30, there will be no accrued interest. A loan document should be created to specify the terms of the loan including interest. As an example, assume a loan to CERF from Parking then the following are journal entries are required Legal Manual California State University

54 Section 2.5: Miscellaneous General Accounting FUND ACCOUNT ACCT DESCR DEBIT CREDIT DESCRIPTION Entry to record loan at June 30: CERF Investments-Other 100,000 CERF Due to CSU 472 -TF Pkg Rev Fd-Parking Fees 100,000 Due from CSU 441 -TF CERF Extended PARKING Education 100,000 PARKING Investments-Other 100,000 Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Entry to record payback of loan next FY: CERF Due to CSU 472 -TF Pkg Rev Fd-Parking Fees 100,000 CERF Income from External Investments 500 CERF Investments-Other 100,500 PARKING Investments-Other 100,500 Due from CSU 441 -TF CERF Extended PARKING Education 100,000 PARKING Income from External Investments 500 Loan from Parking Fund to cover CERF overall deficit for Interest adjustment for loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Interest adjustment for loan from Parking Fund to cover CERF overall deficit for Capital Project Management Fees Campus may charge a project administrative fee for administering a project or multiple projects on its campus. CSU fund TF Capital Project Management Fund has been created to record the revenue and expense related to project administration. The revenue for CSU fund 542 is generated and the expense is incurred from providing a service. At the same time, the CSU fund that used the service also recognizes an expense. If the two CSU funds have separate SCO funds, for Legal reporting purpose, double counting of revenues and expenses is acceptable. If the two CSU funds are within the same SCO fund (e.g. 0948), then one of entries must be eliminated at the Chancellor s Office systemwide level before submitting the year-end results to the State Controller s Office (SCO). Unique object codes will distinguish project management fee from within 0948 vs. project management fee from another SCO fund. 1. Use FIRMS object code for project management fee from within Use FIRMS object code for project management fee from another SCO fund Note: Both revenue object codes must be eliminated for GAAP basis reporting. Campus GAAP coordinator must prepare the proper GAAP adjusting and elimination entries Legal Manual California State University

55 Section 2.5: Miscellaneous General Accounting Process for Reporting Excess Carry Forward Campuses will be required to generate an Expenditure Plan for the operating fund balances in excess of the allowable thresholds as described above and submit to the Chancellor s Office (Systemwide Budget) for review and/or approval of the Executive Vice Chancellor, Business and Finance. Expenditure Plan Timeline: The System-wide Budget Office (Budget Office) shall complete Section I of the Expenditure Plan by Dec 31 and forward to each campus. Each campus shall review Section I Campuses that agree with Section I data shall complete Section II and submit the Expenditure Plan to Budget Office by February 15. Campuses that do not agree with Section I shall send their revision to Budget Office by January 15. Budget Office shall review the changes and forward the revised Expenditure Plan to the campuses by January 31 The Campuses shall complete Section II and forward the Expenditure Plan to Budget Office by February 15. Budget Office shall complete the review and/or approval process by February 28. C:\Documents and Settings\lwang\Deskt Lottery Guidelines for Expenditures The activity funded must represent a bona fide educational experience for student, or result in the development of materials to be used with students, or lead to the development of a program or course. Lottery Funds may not be used to pay faculty salaries for classroom instruction. Lottery funds may not be used to finance increases in the rate of compensation paid to exisiting staff; thus, stipends and hororaira are not permissible. Lottery funds may not be used to finance faculty overload. However, exisiting faculty may work a summer period under a personal service contract. Expenditure of any funds, including lottery funds, which are used for faculty development activities must be in accordance with the collective bargaining agreement, which includes a specific list of development acitvities. Lotery funds should be used to augent an supplement state-funded budget programs so that lottery revenue is not used to replace current and prospective state funding. Lottery funds may be used to pay for part-time instructors when such in structors are hired as replacement faculty for faculty members working for a CSU lottery designated program Legal Manual California State University

56 Section 2.5: Miscellaneous General Accounting Department of General Services (DGS) PrePayments The state books an entry on the Agency Reconciliation Report (Tab Run), described as an advance. The entry establishes a service revolving fund that is an account for charges for printing and procurement services rendered by the Department of General Services (DGS) for state departments and other public entities. The advance provides working capital to the service revolving fund and prevents the agency charged from spending the average monthly amount paid to DGS. The amount charged by DGS varies each year as the average purchases of the campus fluctuate up or down. The process used by DGS to determine if a prepayment should be collected from an state agency is as follows: at the end of April DGS calculates the prepayment by gathering all of the prior year s DGS expenditure activity for each agency then taking 1/3 as the projected prepayment amount. If the projected amount is under $10,000 a prepayment is not assessed. The SAM99 report is programmed so that FIRMS object code and all other objects mapping to State GL account 1730 Prepayments to Other Funds or Appropriations are ignored or not picked up on line 3 Reverse Agency Original Prior Year Accruals. This allows the campus to adjust the advance and fund balance clearing amounts directly to follow DGS without creating an error or adjusting revenue/expense accounts. Campuses should record the advance using this journal entry to Record the Advance: DR Prepay Service Revolving Fund-Services CR Fund Balance Clearing To segregate data that isn t otherwise broken out using SCO subfunds, the SCO uses an attribute called a category code. The Services Revolving Fund or DGS Prepay Advance is booked to category code 98 by the SCO. The SAM99 report is coded to only pick up entries to State GL 1730 in funds marked with category codes 98 or 99 to assist campuses in aligning their data with the State records. The addition of the category code on this transaction means that a unique FNAT key must be created to match the state attributes. Since this transaction is only booked once a year to recognize the change in the advance booked by the SCO, the campus may choose from either of the following options when determining the PeopleSoft fund the entry will be mainatained. To add a fund mapped to category 98. [Recommended] Or To record the advance in a fund not mapped to category 98. Please note that if this transaction is recorded in a fund not mapped to category 98, the SAM99 report will be persistently out of balance by the advance amount Legal Manual California State University

57 Section 2.5: Miscellaneous General Accounting Athletics Self supporting athletics operations should be recorded and reported from CSU fund 496 Other Miscellaneous Trust. Non-self supporting athletics should be recorded and reported in CSU fund 463 Instructionally Related Activity Athletics (Self-Supporting) should be used to record collections in CSU Fund XXX object codes are intended for activity described as Sales & Services of Auxiliary Enterprise, or self-supporting activities. The parenthetical addition reinforces the classification and purpose of the account. Object code Sales & Services of Educational Activities Athletics (non-selfsupporting), was added this fiscal year as there was no home for revenue coming from athletic events when the activity was non-self-supporting. Campuses were forced to use more general accounts, such as , Other Operating Revenues, and , Sales and Services of Educational Activities. As this revenue source could potentially be significant, even if not selfsupporting, it was determined a separate account was warranted. Campuses should reclassify revenue from non-self-supporting athletics events to this object code Health and Augmented Health Services Fees Campuses are required to collect mandatory health services fees charged to all students. The health services fee is intended to provide funding for basic health services provided by a campus. Augmented health services fees are those services offered by the Student Health Center that are elective or specialized in nature and not included in the basic health services provided by a campus. A fee may be charged for the augmented health services but there are no circumstances when the fee charged may exceed the actual cost of providing the services and/or materials. Augmented health services fees are student user fees governed by E.O and must be recorded in CSU fund 485. They can augment the Health Services budget or be recorded in a separate fund. In order to comply with E.O. 943 requirements, a methodology should be established to enable separate reporting of augmented health services revenue and related expenditures should it be required/requested. To comply with both E.O and E.O. 943 a campus must minimally: 1. Account for and track augmented health services revenue/expense within CSU fund Ensure augmented health services fees are mapped to account code Category IV fees Campus funds related to Health Services operations and augmented health services activity should be mapped to FNAT By policy Health Services fees and Augmented Health Services fees must be deposited in the CSU Operating Fund 485, therefore the NACUBO program that should be assigned to the expenses related to this activity should be Along with a unique FIRMS project code that distinguishes these trial balances from other Operating Fund activity on some reports, like the SAM06, FNAT also has a program attribute key Legal Manual California State University

58 Section 2.5: Miscellaneous General Accounting of 0507 that is assigned to the health services expenses recorded in that FNAT through the derivation process Legal Manual California State University

59 CHAPTER 2 CSU ACCOUNTING Section 2.5: Miscellaneous General Accounting Information and Technology Program Codes As of July 1, 2004 NACUBO adopted new program codes to be used for information and technology expenses within each program code group, for example NACUBO program code 0106 Instructional Information Technology was identified for instructional information technology expenses. These subcategories should be used for formally organized and/or separately budgeted information technology expenses. If a campus does not separately budget and expense information technology resources, the types of costs would be reported in other NACUBO program codes. If a campus must report in the information and technology program codes, some expenses will be easily identifiable and may be derived directly to the appropriate value using a program code override or a department derivation rule 4 setup. However, some expenses incurred by campus departments that should be reported in these program codes will derive elsewhere, like the established department derivation rule 4. The campus can establish an allocation to automate the reclassification of the expenses from the department derivation to the information and technology program codes. This type of reclassification uses a specific set of accounts, typically those associated with FIRMS object codes IT Communications; IT Hardware and Miscellaneous Info Tech Cost, to identify the expenses to be reclassified. Note that this reclassification must be made in the xxcsu business unit so the expenses will report properly in FIRMS. To comply with the reporting requirement, the expenses that did not derive to the information and technology program codes in each program group would be reclassified in the Actuals, Budgets and Encumbrance ledgers Legal Manual California State University

60 Section 2.5: Miscellaneous General Accounting IT Allocation Example: Accounting Treatment for Registration fees It is highly recommended, but not required, that registration fees be recorded according to whether they are for training or for a conference without a training aspect. If the registration fee Legal Manual California State University

61 Section 2.5: Miscellaneous General Accounting is for training, it is highly recommented that the transaction be recorded to FIRMS Object code : Training and Professional Development. However, if the fee is for a conference without a training aspect, it it is highly recommended FIRMS Object Code : Misc Operating Expense be used. In either case, even if the registration fee is associated with travel, it should not be recorded to FIRMS Object code or : Travel. Costs recorded to the travel object code include, but are not limited to, lodging, transportation, meals and incidentals, as outlined by the CSU Travel Procedures G-001. This accounting treatment is prescribed by the Department of Finance Uniform Codes Manual. Examples of CSU Events to be recorded as Training/Professional Development: CSU 101 AP Manager s Meeting Year End Legal and GAAP Training Capital Planning, Design and Constructions (CPDC) Training Procurement and Support Services Officers Association (PSSOA) Training Systemwide Professional Development workshops Financial Officer s Association (FOA) Conference Facilities Management Conference Fitting the Pieces Conferences Auxiliary Officer s Association (AOA) Conference Examples of CSU Events to be recorded as Misc Operating Expense: The Network and Technology Alliance (NTA) Meeting fees Registration Fees for the CSU Education Dean s Meeting Registration Fees for the HRO Meeting Executive Council Retreat Registration Fees for the Student Affairs Council Meeting (VPSA) meeting Trust Fund Cash Deficit Loans In any given year, expenditures may exceed revenues. This would typically occur when carryforward balances (reserves) are expended in a subsequent year based on the business plan for the activity. In a year where a fund has no reserve balance and expenditures exceed revenues, the result is an overall deficit balance. In this case, a loan must be made from another selfsupporting activity on the campus. The loan will not affect the fund balance, but will increase cash and create a liability. Since the loan will be booked at June 30, there will be no accrued interest. A loan document should be created to specify the terms of the loan including interest. As an example, assume a loan to CERF from Parking then the following are journal entries are required Legal Manual California State University

62 Section 2.5: Miscellaneous General Accounting FUND ACCOUNT ACCT DESCR DEBIT CREDIT DESCRIPTION Entry to record loan at June 30: CERF Investments Other 100,000 CERF Due to CSU 472 TF Pkg Rev Fd Parking Fees 100,000 PARKING Due from CSU 441 TF CERF Extended Education 100,000 PARKING Investments Other 100,000 Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Entry to record payback of loan next FY: CERF Due to CSU 472 TF Pkg Rev Fd Parking Fees 100,000 CERF Income from External Investments 500 CERF Investments Other 100,500 PARKING Investments Other 100,500 PARKING Due from CSU 441 TF CERF Extended Education 100,000 PARKING Income from External Investments 500 Loan from Parking Fund to cover CERF overall deficit for Interest adjustment for loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Loan from Parking Fund to cover CERF overall deficit for Interest adjustment for loan from Parking Fund to cover CERF overall deficit for Capital Project Management Fees Campus may charge a project administrative fee for administering a project or multiple projects on its campus. CSU fund TF Capital Project Management Fund has been created to record the revenue and expense related to project administration. The revenue for CSU fund 542 is generated and the expense is incurred from providing a service. At the same time, the CSU fund that used the service also recognizes an expense. If the two CSU funds have separate SCO funds, for Legal reporting purpose, double counting of revenues and expenses is acceptable. If the two CSU funds are within the same SCO fund (e.g. 0948), then one of entries must be eliminated at the Chancellor s Office systemwide level before submitting the year-end results to the State Controller s Office (SCO). Unique object codes will distinguish project management fee from within 0948 vs. project management fee from another SCO fund. 1. Use FIRMS object code for project management fee from within Use FIRMS object code for project management fee from another SCO fund Note: Both revenue object codes must be eliminated for GAAP basis reporting. Campus GAAP coordinator must prepare the proper GAAP adjusting and elimination entries Legal Manual California State University

63 Section 2.5: Miscellaneous General Accounting Process for Reporting Excess Carry Forward Campuses will be required to generate an Expenditure Plan for the operating fund balances in excess of the allowable thresholds as described above and submit to the Chancellor s Office (Systemwide Budget) for review and/or approval of the Executive Vice Chancellor, Business and Finance. Expenditure Plan Timeline: The System-wide Budget Office (Budget Office) shall complete Section I of the Expenditure Plan by Dec 31 and forward to each campus. Each campus shall review Section I Campuses that agree with Section I data shall complete Section II and submit the Expenditure Plan to Budget Office by February 15. Campuses that do not agree with Section I shall send their revision to Budget Office by January 15. Budget Office shall review the changes and forward the revised Expenditure Plan to the campuses by January 31 The Campuses shall complete Section II and forward the Expenditure Plan to Budget Office by February 15. Budget Office shall complete the review and/or approval process by February 28. C:\Documents and Settings\lwang\Deskt Lottery Guidelines for Expenditures The activity funded must represent a bona fide educational experience for student, or result in the development of materials to be used with students, or lead to the development of a program or course. Lottery Funds may not be used to pay faculty salaries for classroom instruction. Lottery funds may not be used to finance increases in the rate of compensation paid to exisiting staff; thus, stipends and hororaira are not permissible. Lottery funds may not be used to finance faculty overload. However, exisiting faculty may work a summer period under a personal service contract. Expenditure of any funds, including lottery funds, which are used for faculty development activities must be in accordance with the collective bargaining agreement, which includes a specific list of development acitvities. Lotery funds should be used to augent an supplement state-funded budget programs so that lottery revenue is not used to replace current and prospective state funding. Lottery funds may be used to pay for part-time instructors when such in structors are hired as replacement faculty for faculty members working for a CSU lottery designated program Legal Manual California State University

64 Section 2.5: Miscellaneous General Accounting Department of General Services (DGS) PrePayments The state books an entry on the Agency Reconciliation Report (Tab Run), described as an advance. The entry establishes a service revolving fund that is an account for charges for printing and procurement services rendered by the Department of General Services (DGS) for state departments and other public entities. The advance provides working capital to the service revolving fund and prevents the agency charged from spending the average monthly amount paid to DGS. The amount charged by DGS varies each year as the average purchases of the campus fluctuate up or down. The process used by DGS to determine if a prepayment should be collected from an state agency is as follows: at the end of April DGS calculates the prepayment by gathering all of the prior year s DGS expenditure activity for each agency then taking 1/3 as the projected prepayment amount. If the projected amount is under $10,000 a prepayment is not assessed. The SAM99 report is programmed so that FIRMS object code and all other objects mapping to State GL account 1730 Prepayments to Other Funds or Appropriations are ignored or not picked up on line 3 Reverse Agency Original Prior Year Accruals. This allows the campus to adjust the advance and fund balance clearing amounts directly to follow DGS without creating an error or adjusting revenue/expense accounts. Campuses should record the advance using this journal entry to Record the Advance: DR Prepay Service Revolving Fund-Services CR Fund Balance Clearing To segregate data that isn t otherwise broken out using SCO subfunds, the SCO uses an attribute called a category code. The Services Revolving Fund or DGS Prepay Advance is booked to category code 98 by the SCO. The SAM99 report is coded to only pick up entries to State GL 1730 in funds marked with category codes 98 or 99 to assist campuses in aligning their data with the State records. The addition of the category code on this transaction means that a unique FNAT key must be created to match the state attributes. Since this transaction is only booked once a year to recognize the change in the advance booked by the SCO, the campus may choose from either of the following options when determining the PeopleSoft fund the entry will be mainatained. To add a fund mapped to category 98. [Recommended] Or To record the advance in a fund not mapped to category 98. Please note that if this transaction is recorded in a fund not mapped to category 98, the SAM99 report will be persistently out of balance by the advance amount Legal Manual California State University

65 Section 2.5: Miscellaneous General Accounting Athletics Two object codes are available in which to record revenue from athletics operations: object code , Athletics (Self-Supporting), and , Sales & Services of Educational Activities Athletics (Non-Self-Supporting). The former maps to Sales & Services of Auxiliary Enterprises on the GAAP financial statements and the latter to Sales & Services of Educational Activities. It is important to determine the nature of the athletics activity (self-supporting v. non-selfsupporting) from which revenue is derived so that the income can be reported properly on CSU s financial statements. These object codes can be used in either CSU fund 463, Instructionally Related Activities, or CSU fund 496, Miscellaneous Trust. The choice of fund is at the discretion of the campus and depends on how the revenue is derived and ultimately used. However, it should be noted that the expenses associated with these revenue streams should also be appropriately classified. Therefore, if the revenue is from self-supporting athletic activities, the expenses should be classified in the functional category Auxiliary Enterprise Expenses (program code 2001); if flowing from non-self-supporting activities, a functional category other than Auxiliary Enterprise Expenses (i.e., 0502 Student Services) should be used. No FIRMS program code has been assigned to the FNAT key for these CSU funds since there may be more than functional category applicable, depending on how campuses use these funds. Therefore it is recommended that campuses derive the appropriate functional category (FIRMS program code) using Rule 3(b) at the PeopleSoft fund level. Derivation via Rule 4 (department ID) may not produce valid results as a single department could generate expenses requiring classification in more than one functional category. As object code is new for FYE 2012 and was created for proper classification in the GAAP financial statements because this revenue source is potentially significant and there was no other object code adequately describing it, campuses should reclassify revenue derived from non-self-supporting athletics events recorded in other object codes (such as , Other Operating Revenues, and , Sales and Services of Educational Activities) to the new object code Health and Augmented Health Services Fees Campuses are required to collect mandatory health services fees charged to all students. The health services fee is intended to provide funding for basic health services provided by a campus. Augmented health services fees are those services offered by the Student Health Center that are elective or specialized in nature and not included in the basic health services provided by a campus. A fee may be charged for the augmented health services but there are no circumstances when the fee charged may exceed the actual cost of providing the services and/or materials. Augmented health services fees are student user fees governed by E.O and must be recorded in CSU fund 485. They can augment the Health Services budget or be recorded in a separate fund. In order to comply with E.O. 943 requirements, a methodology should be established to enable separate reporting of augmented health services revenue and related expenditures should it be required/requested Legal Manual California State University

66 Section 2.5: Miscellaneous General Accounting To comply with both E.O and E.O. 943 a campus must minimally: 1. Account for and track augmented health services revenue/expense within CSU fund Ensure augmented health services fees are mapped to account code Category IV fees Campus funds related to Health Services operations and augmented health services activity should be mapped to FNAT By policy Health Services fees and Augmented Health Services fees must be deposited in the CSU Operating Fund 485, therefore the NACUBO program that should be assigned to the expenses related to this activity should be Along with a unique FIRMS project code that distinguishes these trial balances from other Operating Fund activity on some reports, like the SAM06, FNAT also has a program attribute key of 0507 that is assigned to the health services expenses recorded in that FNAT through the derivation process Legal Manual California State University

67 CHAPTER 2 CSU ACCOUNTING Section 2.6: CSU Risk Management Accounting Organization The California State University Risk Management Authority (CSURMA) is a joint power authority composed of CSU and its auxiliary organizations joined to protect member resources by providing broad coverage and quality risk management services that stabilize risk cost in a reliable, economical and beneficial manner CSURMA Coverage Programs The CSURMA presently has several risk management programs in effect including the Pooled Liability Program, the Pooled Workers Compensation Program, the IDL/NDI/UI Program, the Property Program, the Athletic Injury Medical Expense (AIME) Program, Auto Liability Program and the Auxiliary Group Purchase Insurance Programs. The Pooled Liability Program is designed for CSU campuses to cover their general liability and errors and omissions. The annual premium is collected at the beginning of the fiscal year via a Cash Posting Order (CPO). Campuses are to record the annual premium to FIRMS object code and to NACUBO program code CSURMA s Liability Coverage Program offers each campus the opportunity to reevaluate its deductible every three years; the next deductible change will be effective on July 1, Throughout the policy year, CSURMA makes payment on claims on behalf of the campus. Quarterly, CSURMA Accounting invoices the campuses up to their deductible limit. This function is referred to as the Deductible Recovery process. Campuses are to record the deductible recovery invoice to FIRMS object code and program code The Pooled Workers Compensation Program is designed for CSU campuses to cover their employees workers compensation and employer s liability. The annual premium is collected at the beginning of the fiscal year via a CPO. Campuses are to record the annual premium to FIRMS object code and either to various program codes based on where payroll expenses are incurred (per option 1:Direct Allocation) or to a central campus department within CSU Fund 485 (per option 2: Cost Recovery Plan). No further accounting transactions occur throughout the policy year. The Industrial Disability Leave (IDL), Non-Industrial Disability Leave (NDI) and Unemployment Insurance (UI) Program is designed for CSU campuses to cover their CSU employees disability Legal Manual The California State University

68 Section 2.6: CSU Risk Management Accounting leave and unemployment. The annual premium is collected at the beginning of the fiscal year via a CPO. Campuses are to record the annual premium to FIRMS object code and to NACUBO program code Under the IDL and NDI procedure, campuses incur the cost upfront then are reimbursed by CSURMA based on campus submitted quarterly FIRMS data. IDL and NDI are payments made to employees through the payroll system and should be recorded to FIRMS object code for NDI and for IDL. Campuses are to record the reimbursement for NDI/IDL to FIRMS object code This object code is included in Rule 2 which is mapped to program code 06. The transactions between Campuses and CSURMA will be self-eliminated for systemwide reporting. For the UI program, effective the 4 th Quarter FY2011, CSURMA Accounting has begun paying EDD directly. Due to this change, campuses are no longer required to seek reimbursement from CSURMA. Due to the change in IDL/NDI/UI reimbursement method as discribed above, please look for the general guideline on the CO FS Accounting website: The Property Program is designed for CSU campuses to cover their property except for earthquake incidence. The annual premium is collected at the beginning of the fiscal year via a CPO. Campuses are to record the annual premium to FIRMS object code and to NACUBO program code No further accounting transactions occur throughout the policy year. The Athletic Injury Medical Expense (AIME) Program is designed for CSU campuses to cover injuries sustained by regularly enrolled students who are participants on the intercollegiate team roster. The annual premium is collected at the beginning of the fiscal year via a CPO. Campuses are to record the annual premium to FIRMS object code and to NACUBO program code No further accounting transactions occur throughout the policy year. The Auto Liability Program is designed for CSU campuses to cover their vehicles. The annual premium is collected at the beginning of the fiscal year via a CPO. Campuses are to record the annual premium to FIRMS object code and to NACUBO program code No further accounting transactions occur throughout the policy year Accounting Treatment For accurate and consistent systemwide consolidated reporting, specific accounting treatment for CSURMA activities have been developed. Each transaction on the campus records has an offsetting transaction on the CO records. It is imperative that each transaction is recorded exactly as instructed to achieve the correct consolidated amount Legal Manual The California State University

69 Section 2.6: CSU Risk Management Accounting Illustration of Classification for Revenue/Expenditure Components: FINAL Revised 4/1/2012 California State University, Risk Management Authority Illustration of Classification for Revenue/Expenditure Effective July 1, 2011 Campus Accounting CSURMA Accounting Object Code Program Code Object Code Program Code 1. Premiums General Liability Premiums, AIME Premiums, & Auto Liability Workers' Comp Premiums (A) NDI/IDL & Unemployment Insurance Premiums Property Premiums Other Purchased Premiums Paid Directly to Alliant or Others Payroll Expense NDI Non-Industrial Disability (B) IDL Industrial Disability (B) 3. Reimbursements (1) NDI/IDL Claims Reimbursement/Expenses (CR) (C) Deductibles Reimburse CSURMA for deductibles paid on behalf of the campus for General (CR) 0606 Property deductibles: Campus deductibles per each property loss occurrence (D) (CR) 0606 (D) 5. Claims General Liability Claims (including Aux Orgs) Workers' Comp Claims Dividends (E) (E) (A) (B) (C) (D) (E) WC Premiums should be charged to appropriate funds and programs. It is recommended to use prior year payroll as basis for allocation among funds and FIRMS program codes. Labor Cost Distribution (LCD) will record to the appropriate Fund and FIRMS Programs Code based on Dept ID when payroll expense is occurred. HR subsystem amounts must reconcile to GL This object code is included in Rule 2 which mapped to program code 06. The transactions between Campuses and CSURMA will be self-eliminated for systemwide reporting. This object code will be manually eliminated for systemwide reporting. This object code will map to GASB 35 Natural Class Code Other nonoperating rev/exp and will be self-eliminated for systemwide reporting. (1) Effective 7/1/2011, CSURMA will process CPO quarterly based on campus' submitted FIRMS data. Look for updates on the CO website: Legal Manual The California State University

70 Section 2.6: CSU Risk Management Accounting CSURMA Dividend In years when the CSURMA pool has a trend of continuing positive claims in the campus programs and a fully funded program status, the CSURMA executive committee may approve distribution of program dividends. It should be noted that campuses should not rely on CSURMA dividends as they are only distributed when the pool has met its funding requirements. Due to the Systemwide Cost Recovery initiative, campuses are to record the annual dividend as a contra expense to FIRMS object code The CSURMA Accounting is also to record the debit dividend expense to FIRMS object code For GAAP reporting, both the campus and the CO object codes map to GASB 35 natural class code Other nonoperating revenue/expsense for systemwide elimination CSURMA Cash Posting Order (CPO) Process Effective June 2010, CSURMA Accounting adopted the process to utilize Cash Posting Orders (CPO) as a method to remit/collect payment to/from campus members (Auxiliary member payments will continue to be issued by check or wire). A Cash Posting Order (CPO) is a mechanism to move Systemwide Investment Fund Trust (SWIFT) dollars among the SWIFT members. Due to the CSURMA procedure, general guidelines have been developed to assist campuses with their reimbursement requests. Please refer to the CSURMA CPO Process Overview and CSURMA Reimbursement Request Guidelines located on the Chancellor s Office Financial Services - Accounting website ( ). Check this site regularly for any updates to the process. If you have any questions regarding the above CPO process please CSURMA_Acctg@calstate.edu or call Alice Kim at (562) For more information regarding the year end accrual process for invoices issued after 6/30 for the reimbursement and collection for the current fiscal year, please refer to Chapter 8: Year End Instructions Deductible Recovery The Pooled Liability Program is the general liability for each campus. As mentioned above, the annual premium is collected at the beginning of the fiscal year and each campus selects a deductible limit. Throughout the policy year, CSURMA makes payment on claims on behalf of the campus. Quarterly, CSURMA provides the campuses a report of all their claims payments. Within 30 days following this issuance of this report, CSURMA Accounting processes a CPO to collect the payment up to their deductible limit. Campuses record the deductible recovery CPOs to FIRMS object code and program code Legal Manual The California State University

71 CHAPTER 2 CSU ACCOUNTING Section 2.8: Finanical Aid Student Scholarships and Grants CSU Fund 436: TF-Agency Fund-Miscellaneous Financial Aid and other is an agency fund and therefore should only have balance sheet transaction recorded. When a campus receives scholarship monies in which the scholarship recipients have been determined by another agency, the campus is acting as their agent. Therefore, these funds should be recorded to CSU Fund 436 using a liability object code, Deposit. Upon issuing the scholarship, campuses are instructed to offset this same liability account. No revenue or expenses are to be recorded in conjunction with these types of transactions. CSU Fund 431: TF-Campus Scholarships and Grants-Restricted is a campus scholarship/grant fund. When the determination of the beneficiaries of scholarship is at the discretion of the campus (not by a committee residing at another agency), it is appropriate for the campus to record the receipt as revenue. The revenue should be recorded to the appropriate 503XXX FIRMS object code. The scholarship expense object code, should be used when issuing the scholarship to the recipient. Object code , Nongovernmental and other Financial aid grants, Noncapital should be used when funds are received by the CO Foundation. CSU Fund 435- TF-Miscellaneous Financial Aid-Unrestricted is a campus financial aid fund. When the determination of the beneficiaries of financial aid is at the discretion of the campus (not by a committee residing at another agency), it is appropriate for the campus to record the receipt as revenue. The revenue should be recorded to the appropriate 503XXX FIRMS object code Student Fees Funded Financial Aid Campuses should record various financial aid programs funded from student fees in CSU fund 485 for consistency as well as ease of administration, and monitor the balances to make sure there will be no undesirable consequences in case reserves for financial aid programs might continue to grow. SUG and EOP cash will remain in the CSU Operating Fund 485 and be expensed directly from this fund as disbursed to students. Campuses may establish a separate campus fund that maps to CSU Fund 485 for tracking and reconciliation purposes. Unique object codes shall be used to record SUG and EOP expenditures to differentiate SUG and EOP expenditures from other activity in the CSU Operating fund, making them Legal Manual California State University

72 Section 2.8: Finanical Aid easily visible for CSU budgetary reporting to the State, and allow for proper classification of SUG and EOP amounts for GAAP purposes. Campuses should use FIRMS object code , State E.O.P. Grant Program, and , State University Grant, in CSU Fund 485 for direct expensing of EOP and SUG to students. Student Financials item types should be setup to use fund 485 and these FIRMS object codes for financial aid disbursement purposes. The choice of CSU fund for recording Graduate Equity Fellowship depends on the funding source. If it is paid from student fee revenues in CSU fund 485, as seems most likely, then financial aid expenses for the Graduate Equity Fellowship program should be recorded in CSU fund 485 using object code (State Graduate Fellowship). Campuses may create a separate PeopleSoft account that maps to object code to track Graduate Equity Fellowship expenses separately from other State Graduate Fellowship programs, if any. Restricted miscellaneous financial aid funds should be classified into CSU fund 431 Unrestricted miscellaneous financial aid funds should be classified into CSU fund 435 The Graduate Business Professional Fee (GBPF) and Educational Doctoral (Ed.D.) program should also be accounted for in CSU fund 485 in a way similar to SUG and EOP since these come from student fee revenues as well Separate PeopleSoft Fund for Graduate Business Professional Fee (GBPF) Campuses are directed to set aside 25% to 33% of GBPF as provision for financial aid. For tracking and reconciliation purposes, a separate campus fund should be established within CSU fund 485 for the provision for financial aid. The unexpended balance at yearend should be reported using the object code Fund Balance Designated for Financial Aid to avoid inflating unexpended balance in CSU fund 485 available for general operation. The balance of the GBPF remaining after the set aside is allocated can be recorded in the campus main operating fund Use of CSU Operating Fund for Scholarship The CSU Operating Fund may not be used to fund scholarships based on California Constitution Article 16, section 6, that prohibits state agencies from making a gift of state funds. State University Grants and other needs based grant programs funded by the CSU Operating Fund are not classified as a scholarship or a gift but rather a designated financial aid program approved either by the Legislature through the Budget Act or by Executive Order when authorizing the fee Recording CSU Foundation Scholarships Campuses are directed to record scholarship checks received from CO Foundation to Object code , Nongovernmental and other Financial aid grants, Noncapital. These are nonexchange transactions and require an elimination at the systemwide level, campuses are required to consistently use the same revenue object code to help simplify the systemwide elimination process done at the CO Legal Manual California State University

73 CHAPTER 2 CSU ACCOUNTING Section 2.9: Sponsored Program Administration (SPA) Deferred Grant Revenue Deferred Grant Revenue which is recorded in CSU Fund 465 should use the Object code :Operating Revenue Collected in Advance. This is the same Object Code that should be used in other non-governmental funds (e.g., SCO funds 0948, 0839, 0580), whereas :Revenue Collected in Advance is used in governmental funds (e.g., 0001, 6041, etc.) Amouts Due to State Agengies In the event that a campus has a grant or other contract with other state agency (ex. CalEMA) our receivable and their payable must match at the state level. Each transaction must be reviewed by the Chancellor s Office and the agency involved to ensure proper recording of the interagency transaction. In the case of CalEMA, the CSU is to record the receivables in state fund 0948, in state GL CalEMA will record in state fund 0890, in state GL Further instructions regarding the reporting of interagency transactions to the SCO are available in Section 4.4 of the Legal Manual Legal Manual The California State University

74 CHAPTER 2 CSU ACCOUNTING Section 2.10: Accounts Payable Online Payments to the IRS via Electronic Federal Tax Payment System (EFTPS) Starting January 1, 2011 all campuses were required to implement the EFTPS process when depositing federal taxes to the IRS. When deposits/payments are made to using EFTPS, the campus Wells Fargo account will be directly debited instead of issuing a check to the IRS for federal taxes. For your reference, the implementation documents for EFTPS and Wells Fargo are available as attachments to this section and should be used in the indicated order. 1. EFTPS Account Setup Instructions 2. EFTPS Wells Fargo Account Setup 3. EFTPS Making a Payment Instructions To record payments made via EFTPS the campuses have three options: 1. The payment will be entered in PeopleSoft as a manual journal entry. 2. The payment will be entered through Accounts Payable as a $0 voucher. 3. The payment will be entered through AP as a regular voucher with wire payment. Payment will be recorded when the voucher is entered. Payment Method Wire Transfer is available in CFS in connection to the campus Wells Fargo account as an additional bank setup. (Recommended Approach) An example of recording the payment using option 3 is shown in the following: Legal Manual The California State University

75 Section 2.10: Accounts Payable BANK = WELLS ACCOUNT = ELEC METHOD = WIR ACTION = RECORD PAYMENT DATE = WIRE/EFTPS EXECUTION DATE REFERENCE = Use the tracking or other confirm number provided by Wells or EFTPS ACCOUNTING DATE = WIRE/EFTPS EXECUTION DATE On the wire page of the supporting documentation, I write: RECORDED or ENTERED, DD/MM/YY, USERNAME [Enter the name of the user entering the paymen Legal Manual The California State University

76 Section 2.10: Accounts Payable Escheat Process An escheat is the reversion of property to a governmental entity in the absence of legal claimants or heirs. Escheat property can include stale dated checks. The original funding source should be considered when establishing the pool of stale dated checks that will be part of the escheat process. Payments from student aid funds are intended for students in need. If a check originating from these funds is not cashed promptly, the presumption must be that the need no longer exists. The accounting office working in concert with the office originating the check, should cancel the check, returning the money to the funding source as appropriate, rather than proceeding with the escheat check process. The escheat process in Peoplesoft can be used to remove the remaining stale checks from the outstanding check list. The escheat template should be set up to record the automated entry to a campus liability account mapped to FIRMS Object code Other Current Liabilities. This Peoplesoft Accounts Payable process should always be used to record campus issued checks that have been escheated so that the software can assist the campus by keeping a permanent log of the escheated items on the Payments table. While the process uses a default account to record the accounting entry, the fund is always inherited from the original distribution. This means that the entries made by the software process will be spread across several trial balances. Manual journal entries are made by the campus to move the entries made by the Peoplesoft process to the campus Operating fund. Escheated Check# PS Fund Amount FUND FUND FUND FUND Peoplesoft Escheat Check Process Journal Entry Manual Journal Entry Necessary to Centralize Activity FIRMS Object Code Fund Debit Credit FIRMS Object Code Fund Debit Credit FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND Legal Manual The California State University

77 Section 2.10: Accounts Payable Per GASB standards, only the amounts that are expected to be paid out to claimants should be shown as a liability for financial statement reporting purposes. The offset for the adjustment is recorded in FIRMS Object code Escheat Revenue. Since there is no way to know exactly which payments will be claimed, this adjustment to the liability account will be an estimate made by the campus. Campus historical records should be used to establish a campus methodology for this adjustment. The campus methodology may account for individual checks in the campus liability or the total recorded in the liability account may be a simple percentage of the total escheat pool. The methodology may record items to the liability account based on the type of payment or the original funding source. The complexity and level of detail contained in methodology is controlled by the campus. Examples could include 30% of all payments escheated annually are recorded as a liability based on a review of five years of campus records of payee claims of escheated items or 30% of escheated payments from International Programs CSU fund 464 based on a review of five years of campus records of payee claims of escheated items. Support for the methodology established by the campus and for any adjustments made to the liability account should be provided to the campus GAAP coordinator for review during audit. Manual Journal Entry to Adjust the Escheat Liability FIRMS Object Code Fund Debit Credit Escheat Payroll Warrants Payroll warrants are escheated by the State Controller s Office and credited back to campus state funds. These amounts should be considered in the campus escheat process and methodology even though the campus does not control them. If a payee makes a claim for an escheated pay warrant, the campus should issue the check and submit a claim to the State Controller s Office to reimburse the campus Wells Fargo bank account for the amount. Since the campus fund is likely not set up as a reimbursable fund, meaning the claim will not be issued automatically, check requests for escheated payroll warrants should be clearly marked so that the campus accounts payable personnel will enter the item as a Manual Override Claim (MOC) entry. The California State University assumes that all undelivered salary warrants stem from student fee collections. Salary warrants that remain undelivered for 90 calendar days must be deposited into the campus Wells Fargo bank account and considered in the campus escheat process and methodology. If a payee makes a claim for an undelivered salary warrant, the campus will issue a check from the campus Wells Fargo bank account Legal Manual The California State University

78 IRS EFTPS ENROLLMENT INSTRUCTIONS Prior to starting the enrollment process, applicants will need to obtain and have available the following: 1. The campus Federal Tax ID number and 2. The routing and account information for the campus Electronic Disbursement Account The campus Federal Tax ID may be found in PeopleSoft associated with the 1099 Withholding setup. The individual responsible for the annual preparation of the campus 1099-Misc filing should be able to assist you in locating this information. Use the following navigation to locate the tax ID: Set Up Financials/Supply Chain > Product Related > Procurement Options > Withholding > Report Control Information Page 1 of 10

79 IRS EFTPS ENROLLMENT INSTRUCTIONS Each campus has been assigned a Paper Disbursement account and an Electronic Disbursement account. It is recommended that you use the Electronic Disbursement account for this activity. To locate the Routing Number and Account number refer to the following navigation in PeopleSoft: Banking > Bank Accounts > External Accounts > Look for the account used for ACH payments or Electronic Funds Transfers. If you campus has not established an Electronic Disbursement account in PeopleSoft from which to obtain the routing and account information, you may contact your campus Wells Fargo CEO group administrator or bank reconciliation person for assistance. Page 2 of 10

80 IRS EFTPS ENROLLMENT INSTRUCTIONS Begin by going to the IRS website: Click on the ENROLLMENT Button Page 3 of 10

81 IRS EFTPS ENROLLMENT INSTRUCTIONS Read and ACCEPT the Privacy Act & Paperwork Reduction Act notice Enroll me as a: Click on BUSINESS Page 4 of 10

82 IRS EFTPS ENROLLMENT INSTRUCTIONS Complete the Information for your campus. Click on the for more information **See the page 1 for instructions on where to locate the Federal Tax ID number (EIN) in PeopleSoft. Page 5 of 10

83 IRS EFTPS ENROLLMENT INSTRUCTIONS Complete the banking information from where the funds are to be taken. ** Click the REVIEW button and validate that the information you entered is correct. **See the page 2 for instructions on where to locate the Routing and Account numbers in PeopleSoft. Page 6 of 10

84 IRS EFTPS ENROLLMENT INSTRUCTIONS After clicking the REVIEW button, you will have an opportunity to make changes to the data previously entered. You can make changes, by clicking the ENROLL tab at the top of the page. This will take you back to the orginal screen. Update the required fields. OR you do not have to go back to the Enroll page, instead, You may make any changes to the information displayed by putting your cursor over the information and clicking on it. You will see an EDIT option become available: If all the information is correct, you will be asked to electronically sign the application agreeing to the Authorization Agreements. Here is what you are agreeing to: Page 7 of 10

85 IRS EFTPS ENROLLMENT INSTRUCTIONS Page 8 of 10

86 IRS EFTPS ENROLLMENT INSTRUCTIONS If everything is good, enter your Name and Employer ID number. Click the COMPLETE button. Page 9 of 10

87 IRS EFTPS ENROLLMENT INSTRUCTIONS You will receive an acknowledgment that you have completed the online portion of the application. PRINT OR DOWNLOAD AND SAVE THE.PDF VERSION OF THIS PAGE. It contains your enrollment number which they are advising you to keep. When you receive your letter in the mail, you will be required to login and complete the registration process. Page 10 of 10

88 EFTPS WELLS FARGO ACCOUNT SETUP Fraud Filter Criteria ACH Fraud Filter criteria established for your account. ACH transactions that match the set parameters will be flagged for review or stopped, depending on your account's Service Type. Service Type Indicates the type of fraud filter service applicable to the account listed. Available account types include: Review Pay: Transactions are presented to the customer for a Pay / Return decision. After the deadline for paying / returning the transaction has expired, the item moves to your transaction history, appearing on the Transaction Search Results page with a "Posted" status. Review Return: Transactions are presented to the customer for a Pay / Return decision. After the deadline for paying / returning the transaction has expired, a return for the item will be generated and the item moves to your transaction history, appearing on the Transaction Search Results page with an Auto Return" status. Stop: Transactions are automatically stopped and returned to the originator. They are presented for informational purposes only. Need to set to Review/Return to allow IRS payments to go thru

89 Complete this form: CEO_ACH_FraudFilte r_company_setup.pd Here s a sample:

90 Once completed, contact Customer Support for directions on how to transmit this information to them. Be sensitive that account information is listed and that , fax may not be most secure.

91 Making a Payment Using EFTPS Go to: > Click on Make a Payment Using the information provided by the IRS after completing the registration process and click LOGIN:

92 If you know the tax form number associated with the payment, use ENTER TAX FORM NUMBER OR If you don t know the number, select one from the pull down menu of MOST COMMON FORMS If you don t see the number there, select one from All Forms in numeric order YOU DO NOT HAVE TO DO ALL THREE USE ONLY ONE! Select NEXT. Indicate the type of Tax being remitted, click NEXT.

93 Enter the Payment Amount, Tax Period and settlement date. Click Next. Since I am not making a payment, I did not click next but am assuming you will get some sort of tracking or confirmation number.

94 CHAPTER 2 CSU ACCOUNTING Section 2.11: Accounts Receivable Allowance for Uncollectible Accounts Receivable The Integrated CSU Administrative Manual (ICSUAM), states that debts and accounts receivables balances determined to be uncollectible must be written off in a timely manner. Each campus prepares its own written procedures to implement the system-wide policy. The Governmental Accounting Standards Board (GASB) requires that bad debts be treated as a contra-revenue rather than an expense for financial reporting purposes. The only exception is when the receivable is created through a non-revenue transaction. Under these circumstances, bad debt expense should be charged since there is no revenue to offset. When a receivable stemming from a revenue-generating activity is deemed uncollectible, campuses need to recognize the loss by crediting the appropriate allowance for uncollectible accounts (object code 104XXX) contra receivables account - and debiting the appropriate allowance for doubtful revenue contra revenue account. There are six such accounts: Object Code Description Allowance for Doubtful Higher Education Tuition & Fees Allowance for Doubtful Continuing Education Fees Allowance for Doubtful Sales & Services of Auxiliary Enterprises Allowance for Doubtful Health Facilities/Campus Union Fees Allowance for Doubtful Sales & Services of Educational Activities Allowance for Doubtful Other Operating Revenues For accounts receivable resulting from non-revenue transactions, the accounting entry is a debit to the bad debt expense account (object code ) and a credit to the appropriate allowance for uncollectible accounts. Allowances for accounts receivable representing amounts due an auxiliary (e.g. Associated Students fee revenue) are an exception to the foregoing. When originally recording the amount due, the offset is to a depository account rather than a revenue account. Since agency funds have neither revenue nor expense accounts, should a portion of that receivable be identified as uncollectible, it needs to be charged to object code , Depository Accounts Noncurrent, or Depository Accounts Current, depending on which portion becomes uncollectible Legal Manual The California State University

95 Section 2.11: Accounts Receivable Accounts Receivable Write Off In 1994 the State Controller s Office (SCO) notified all departments and campuses that they are no longer recording payroll accounts receivable. It became the sole responsibility of the campuses at that point to establish and maintain the payroll receivables. SCO clearly spelled out in that policy document that write-offs of $50 or less can be removed from the campus ledger directly and no documents need to be sent to the SCO. In the intervening years, the CSU adopted ICSUAM policy that addresses receivables write-offs policy for the CSU If a campus determines that the receivable recorded in SCO fund 0948 is uncollectible there is no need to send any documents to the SCO regardless of the amount. ICSUAM policy requires that balances determined to be uncollectible in funds other than SCO fund 0948 follow the write off process outlined in the State Administrative Manual Accounts Receivable Collections The Integrated CSU Administrative Manual (ICSUAM), states that collection efforts must be pursued on debts and accounts receivable balances that are valid and past due. Each campus prepares its own written procedures to implement this policy. Campus procedures must describe the collection efforts applicable to each type of past due receivable. In addition, campus procedures must identify the materiality threshold below which collection efforts will not be pursued. Campuses are expected to utilize all reasonable collection methods including direct contact, collection agencies, legal actions and Franchise Tax Board refund offsets, subject to federal and state laws covering collection practices. Note that the State allows recovery of debts by offset against tax refunds even after the State statute of limitations has expired State Controller Funds In the unlikely event of an overpayment to a vendor occurs in connection to a construction project funded from appropriated funds or Systemwide Revenue Bond proceeds, the policies guiding the accounts receivable collections procedures within the State Controller s Funds must be followed. They are section (c) of the Education Code and State Administrative Manual (SAM) sections 8776 through The California State University has the authority under Education Code section to discharge from accountability amounts up to $1,000, so items equal to that amount or smaller should be written-off and should not be forwarded to another state agency for discharge from accountability authorization per SAM section State University Trust Fund Collection efforts will differ between four major groups: employees and the general public; students; Government Agencies and Auxiliary Organizations. In general, a set of progressively demanding past due notifications and a final demand notice should be sent to the debtor prior to forwarding the item to a collection agency or using another collection method Legal Manual The California State University

96 Section 2.11: Accounts Receivable Employee Receivables: Employee receivables generated from payroll overpayments may be collected using payroll deduction only when the repayment method and terms are expressly agreed upon in writing by the employee and the deduction would not reduce the employee s wage below minimum wage for any period covered within the terms of the repayment schedule. Payroll deduction may not be used to collect payroll overpayment receivables from an employee s final paycheck. Student Receivables: ICSUAM Policy authorizes each campus withhold services as a collection tool. Service holds may continue despite a discharge of accountability or write-off as this action does not change the debtors obligation to the CSU. Even if the state statute of limitations on filing a suit or referring debt to a collection agency has expired, the underlying debt can still be recovered by offset against tax refunds. Paper bills should not be sent out to students for amounts under $25; however, e-bills may be generated for amounts under $25. Governmental Agency Receivables: Governmental Agency receivables may involve large sums of money. Special schedules of collection follow-up actions may be established to best fit these circumstances. Auxiliary Organizations Receivables: Collections on receivables between the campus and an auxiliary organization should follow the schedule shown in Table 1 below. If an outstanding receivable with an auxiliary organization cannot be resolved at the 150 day mark, a listing of those items showing the collection efforts to date and any reasons for dispute should be prepared for review by the campus Associate Vice President of Business and Finance or equivalent. The Associate Vice President of Business and Finance or equivalent will determine the next steps the campus will take in following up or writing off the outstanding receivable. The following tables provide standards for collection efforts on employee, the general public and student accounts receivable: Table 1 Employees and the General Public Recommended Actions Required to be Taken 2 nd Billing (Copy of Activity Original) 3 rd Billing Dunning Letter Legal Manual The California State University Stronger Dunning Letter Administrative Action (i.e. Refer to Collection Agency) Days Since 1 st Billed 30 Days 60 Days 90 Days 120 Days 150 Days Amount of Bill Up to $25 X X $26-50 X X X

97 Section 2.11: Accounts Receivable $51-90 X X X X Over $90 X X X X X Table 2 Student Bills Recommended Actions Required to be Taken Activity 2 nd Billing 3 rd Billing Dunning Letter Administrative Action (i.e. Refer to Collection Agency) Days Since 1 st Billed 30 Days 60 Days 90 Days 120 Days Amount of Bill Up to $25 X Over $25 X X X X Legal Manual The California State University

98 CHAPTER 2 CSU ACCOUNTING Section 2.12: Cost Recovery Per the Integrated CSU Administrative Manual (ICSUAM) on Cost Recovery, it is the policy of the California State University (CSU) to recover costs incurred in providing services, products and facilities to other funds, auxiliary organizations and system headquarters. Both direct and indirect costs must be recovered. Recovery of direct costs must be based on actual costs incurred. Recovery of indirect costs must be based on an allocation plan. The campus cost recovery plan addressing direct and indirect costs is approved annually by the Campus Chief Financial Officer (CFO). Each campus must prepare procedures that implement this policy. The policy provides resources and reference materials to assist the campuses with the implementation. In addition to previously established guidelines on cost allocation plan, a systemwide cost recovery guideline on the accounting treatment was created. Effective July 1, 2010, Cost Recovery and Reporting CSU Fund 485 Systemwide Guideline (SW Guideline) document was established in which each campus is required to follow the guidelines set forth within. Section III of the SW Guideline provides guidance and examples on reciprocal activities and exchange transactions. Section IV of the SW Guideline provides guidance on non-reciprocal activities and non-exchange transactions. In general, reciprocal and non-reciprocal activities are recorded in CSU fund 543-Cost Recovery/Reciprocal and Nonreciprocal Campus, and exchange and non-exchange transactions are recorded in CSU fund 544-Cost Recovery/Exchange and Nonexchange Aux Orgs/3 rd Party, unless a more appropriate fund is identified. Campuses should refer to the above policy and guidelines to ensure proper adoption and successful implementation Legal Manual The California State University

99 CHAPTER 2 CSU ACCOUNTING Section 2.13: Fixed Assets Recording Fixed Assets on the Legal Basis Books Chapter 8600 of the State Administrative Manual (SAM) requires state agencies to record the cost of all capital assets in their legal basis accounting records. These standard procedures provide guidance for recording the acquisition, maintenance, control, and disposition of property, including land, buildings, improvements other than buildings, other tangible property, and intangible property. The accounting entries for CSU campuses may not be the same as the accounting entries described in SAM, especially for non-governmental funds, as a result of the CSU s decision to record all fixed assets in CSU fund 501 (General Fixed Asset Account Group), further explained in sub-section Each campus must review their expenditures and capitalize those costs meeting the capitalization criteria for tangible and intangible assets: a unit acquisition cost of at least $5,000 and an estimated useful life of more than one year. The entries to record the capitalization are: In the fund financing the purchase: Debit Expenditures (object code 607XXX for capital projects or for other expenditure types, object codes such as , 619XXX, , etc.) Credit Fund balance clearing (object code ) or Investments (object code ), depending on the type of fund In state fund 0997 (the General Fixed Assets Memo Fund), CSU fund 501: Debit Fixed assets (object code 1100XX) Credit Investment in fixed assets (by funding source) (object code 3020XX) In the GAAP ledger, adjustments will need to be made to reverse the duplicate recording (i.e. once as an expenditure and again as a fixed asset) of the same transaction occurring on the legal books. Additionally, investment in fixed assets needs to be reduced by the current year s depreciation amount and the accumulated depreciation needs to be increased by this same amount in state fund 0997, CSU fund 501: Legal Manual The California State University

100 Section 2.13 Fixed Assets Debit Investment in fixed assets (by funding source) (object code 3020XX) Credit Accumulated depreciation (object code 1100XX) No depreciation expense is recorded in the legal books. Instead, the investment in fixed assets is directly reduced in the memo fund. Therefore, an adjustment needs to be made in the GAAP ledger to record the current year s depreciation expense. A table of fixed asset and accumulated depreciation object codes is provided at Appendix Reporting Fixed Assets in Accordance with ICSUAM In 2010 the CSU adopted a policy, incorporated into the Integrated CSU Administrative Manual (ICSUAM), standardizing the manner in which the entries described in section will be recorded. The policy, titled Capital (Fixed) Assets Reporting to the State Controller s Office, states that all fixed asset activity will be recorded in state fund 0997, CSU fund 501, the General Fixed Assets Memo Fund, regardless of the funding type (Governmental, Proprietary or Fiduciary). Because the state requires fixed assets funded by Proprietary or Fiduciary funds to be recorded in those funds (not in state fund 0997), the Chancellor s Office Systemwide Reporting Group is responsible for recording these fixed assets and the associated depreciation in the Proprietary/Fiduciary funds as part of its preparation of the annual consolidated financial reports issued to the State Controller s Office (SCO). The adjustments made are based on data submitted by the campuses as set forth in section 8 of this manual. Campuses remain responsible for retaining all data and schedules supporting the information submitted to the Chancellor s Office in their files in accordance with the CSU Records Retention Policy Capital Asset v. Operating Expense In determining if an expenditure is for a capital asset or an operating expense, there are actually two perspectives to be considered: (1) the budgetary and (2) the financial reporting. A facilities department will take the budgetary perspective wherein the source of funds is the driver in the determination. This perspective has relevance when reporting to the state on how appropriated funds were used. Expenditures can only be made from the operating budget or the capital budget in accordance with the terms of the appropriation. From a financial reporting perspective, however, other criteria are applied in determining whether any given cost is to be expensed or capitalized. Generally, expenditures from a capital budget are capital for financial reporting purposes. But, the capitalization criteria when expenditures are made from an operating budget need to be carefully examined in determining if such expenditures are to be expensed or capitalized. A good example of this is an expenditure for equipment. The source of funds may be the operating budget, but if the equipment costs more than $5,000 and has a life of more than 1 year, it qualifies for capitalization. The determination as to whether an expenditure is an operating expense or is capital in nature for financial reporting purposes really depends on the details of the project. In determining if an Legal Manual The California State University

101 Section 2.13 Fixed Assets expenditure should be treated as an operating expense or an item to be capitalized, in addition to the criteria set forth in Ch. 13 of the GAAP manual, consideration should be given as to whether that expenditure repairs an existing deficiency, or adds value to an existing asset and/or extends its useful life. For example, in the case of a seismic repair or retrofit, it is possible that the work could extend the life of the structure. If the work can be described as a repair to existing structural members/connections which neither add to the value of the asset or its life, then the costs would not be capitalized. If additions are made to the structure which upgrade its utility and thus its fair market value were it to be sold, the expenditures should be capitalized. To elaborate further: If a new component is able to operate independent of the original equipment (i.e. the new component can remain in service without the functioning of the original equipment), it is treated as a separate asset and depreciated over the life of the component s estimated useful life, regardless of the life of the original asset. If a new component is an improvement in quality to an item of equipment (i.e. adds to its capacity or efficiency) but does not extend its life, it is treated as an addition to the original cost of the equipment. It is depreciated over the remaining life of the original asset. If a new component extends the life of the equipment but does not improve its quality, the useful life of the equipment is adjusted. If a new component merely replaces an old component of the equipment without improving its quality nor extending its useful life, the cost should be expensed. The fact that materials used in a project, for example a roof replacement, are of a higher quality than the original may not in and of themselves result in a conclusion that there is a capital expenditure. The project may merely represent an effort to maintain the building in a usable state and neither extends its life nor so improves the property as to increase its monetary value. Object codes in the 607XXX series generally describe costs associated with construction projects that are capitalized. These codes are allowed in various funds, some categorized as capital outlay funds, some that are not. For example, 607XXX object codes are allowed in CSU fund 485, Operating Fund. The use of these object codes is determined by the nature of the expenditure and not the funding source. If the expenditure is for such things as architectural fees and construction, the charge needs to be to a 607XXX object code. It should be noted operating funds carry a restriction on use for the cost of improvements. Reserves established from student fee revenue, by CSU policy, follow Section 6 of the Budget Act, which states that No more than $100,000 of the funds appropriated for support purposes [emphasis added]...may be encumbered for acquisition or preliminary plans, working drawings, and construction of any project for the improvement of a state facility... It is the use of state Legal Manual The California State University

102 Section 2.13 Fixed Assets appropriations, and, therefore, CSU operating funds, that carries the restriction on improvements. There is no monetary restriction on the cost of repairs. For any given project, a PS fund and/or project code is established by the campus to record the revenue allocated and the expenses incurred. If construction activity is taking place, the expenses will be charged to 607XXX object codes because they are the ones describing the reason for the payment. Object code , Repairs & Maintenance, is used if the reason for the payment is to repair something. This is normally an item of expense and not a capital item Legal Manual The California State University

103 Chapter 2.14: Encumbrance CHAPTER 2 CSU ACCOUNTING Processing an Encumbrance Journal Entry Encumbrance journal entries are processed with the Ledger Group ACTUALS so that they will be edited by campus Combo Edits and controlled by open and closed periods. To enter an encumbrance journal entry, navigate to General Ledger > Journals > Journal Entry > Create/Update Journal Entries and add a journal. Fill in the applicable fields on the Header tab. Click on the Commitment Control hyperlink and select the Encumbrance radio button Legal Manual The California State University

104 Section 2.14: Encumbrance Enter the journal lines and edit the journal. Once the edit process completes successfully to a journal status of V(alid) and budget check status of V(alid), the encumbrance ledger has been updated and no further processing is necessary, or, said another way, the journal does not need to be posted. Encumbrance and pre-encumbrance activity is stored in the Commitment Control ledger. Updates to the Commitment Control ledger are accomplished by processing a transaction to a budget check status of V for valid. Since a journal in a V(alid) status may be deleted, the campus may choose to instruct their technical staff to update the journal status to P(osted). Although PeopleSoft will allow the user to select the option on the journal Header, please note that encumbrance, as well as pre-encumbrance, journal entries cannot be auto-reversed. PeopleSoft generates auto-reversals on marked journals as part of the journal posting process. Since encumbrance and pre-encumbrance journals are never processed for posting, the functionality may not be used Legal Manual The California State University

105 CHAPTER 2 CSU ACCOUNTING Chapter 2.15: Payroll Escheated Payroll Warrants The State Controller s Office issues payroll warrants for CSU employees. Charges for salary and benefits expenses are transmitted to the campuses via a payroll tape. The accounting entries resulting from the monthly payroll processing debit the expenses and credit the campus balance on deposit with the State. In the role of headquarters, the Chancellor s Office tracks the total amount of resources on deposit at the state and the individual campus balances for enterprise-type state funds. Where payroll is the only transaction processed for the campus in a month, the following entry would be made in the Chancellor s Office ledgers. Occasionally employees fail to cash their payroll warrant. Since the state issues the check they track the outstanding warrants and escheat them when they ve expired. The campus will receive notice of the action taken on the warrant and the transaction will be booked on their account at the state. The campus ledger entry would be booked as follows to match the state s action Legal Manual The California State University

106 Section 2.15: Payroll The Chancellor s Office entry would reflect the return of resources to the campus. If the employee requests the replacement of the payroll warrant from the campus or state within a specified period, usually within the first two years, the campus will issue the check from their controlled disbursement account that is held outside of the state and reduce their escheat liability or reverse the posting to escheat revenue. Items aged beyond the specified period may be processed by the Victim Compensation and Government Claims Board (VCGCB), a state agency. Due to the nature of escheat, the issuance of the replacement check by the VCGCB will simply reduce the total resources on deposit at the state. The Chancellor s Office must book the entry listed below and locate the supporting information that indicates the campus. A Cash Posting Order (CPO) will be prepared and processed to reduce the campus balance of the escheat liability (or escheat revenue) at the state to accurately reflect their share of the balance on deposit Legal Manual The California State University

107 Section 2.15: Payroll The Chancellor s Office will book the following entry to reflect the CPO Processing Journals with FTE Salary object codes, except for , Overtime, and , Summer Fellowship Stipend, are required to be reported with the statistic Full Time Equivalent (FTE). Payroll transactions fed from the Human Resources module are posted in the Finance module with FTE. The payroll expenses for one employee are posted with an FTE of one each month. Occasionally adjustment journals must be booked in the general ledger. The fields displayed in the journal entry lines grid are controlled initially for all users by the journal entry template. A standard or default template is maintained centrally in the Common Financial System; however, multiple journal entry templates may exist within PeopleSoft. The fields selected on the standard template or an alternate template and its fields may be viewed by clicking on the Template List link from the Journal Lines tab. Select a template that shows that the fields Stat Code and Stat Amt on the Amount tab are available for entry Legal Manual The California State University

108 Section 2.15: Payroll If the journal entry selected by the user includes the fields on the template list, but they are still not displayed in the journal entry lines grid, the user may have customized the grid. The Customize option is a user-controlled option that can be used to hide or rearrange the field display within a grid to suit the user s preferences. To view the current settings, on the Lines bar, click on the Customize link Legal Manual The California State University

109 Section 2.15: Payroll Verify that the Stat and Stat Amt fields have not been hidden from display in the Journal Lines grid. To reclassify salary to a different chartfield string or make corrections to FTE, enter the chartfield string, the amount, a Stat Code of FTE and the FTE amount in the journal lines How to Calculate a Reasonable FTE (if it is a proration) Since FTE must be posted in any adjustment to salary object codes, except for ,Overtime, and , Summer Fellowship Stipend, occasionally the exact amount of FTE is unknown so a proration must be calculated. It is important to understand that for each month worked a fulltime employee is reported as one FTE. If the employee works for one full year, or twelve months, the total FTE posted to the ledger for that one employee is twelve. When the FTE data is submitted to the FIRMS central repository, the amount of FTE posted to a campus ledger is annualized, or divided by twelve. Any prorated amount of FTE should consider that the total amount posted to the ledger will be annualized, therefore ledger postings to a unique chartfield string for FTE of less than 0.10 (the equivalent of allocating two days from a month for one full-time worker) should be avoided Sabbatical Leave Forfeitures Sabbatical leaves are granted to certain employees for purposes that provide a benefit to the CSU, such as research, scholarly and creative activity, instructional improvement or faculty retraining. The eligibility, terms, and conditions for sabbatical leaves are governed by labor agreements. Promissory notes are drawn at the outset of an approved sabbatical leave that outline the specific terms and conditions applicable for that employee. Additional information regarding sabbatical leaves and the associated promissory notes is available in the payroll processing guidelines If the employee on sabbatical leave fails to return to work at the end of the sabbatical, they owe the campus per the leave promissory note. The amount collected would be recorded as Miscellaneous Revenue in CSU Fund 544, will derive to other non-operating revenue and should not be eliminated for GAAP Legal Manual The California State University

110 CHAPTER 2 CSU ACCOUNTING Section 2.16: Interagency Transaction Process Fund Balance Clearing The Fund Balance Clearing account is used to record transactions that flow through the State Controller s Office (SCO) accounts. In governmental funds (e.g. General and Capital Outlay), it is also used to close legal basis revenues and expenses at the end of each year. It does not represent a true fund balance or a net asset. It is important to understand that, except for the cash held in state fund 0948, the CSU is required to maintain its available funds in the State Treasury, and the way to access these funds is to process a claim with the state. All cash received at the campus as revenue or reimbursement in funds maintained in the State Treasury is sent to the state in the form of a remittance advice. Any expenses or disbursements are ultimately made through the state primarily in the form of payroll charges, journal entries, or claim schedules. It is also important to understand that for legal basis, state appropriations are not recorded as revenues either by the state or by the campuses, and are not recorded in the Fund Balance Clearing account. State appropriations are recorded as budget entries in the State Controller s accounts and in the campus accounts. During the fiscal year, transactions that are posted to revenue, reimbursement, and expense accounts will ultimately be offset by an entry in Fund Balance Clearing. This will be the case if all revenues and reimbursements are remitted, if all expenses are claimed for reimbursement, AND if all the documents have cleared the SCO. Entries for these transactions will be recorded in the campus agency s account on the State Controller s records. For the Special Revenue and Enterprise state funds, the Chancellor s Office and the campus ledger data are reported to the state on a consolidated basis. To accomplish the consolidation, certain account balances must eliminate across each fund as a whole. One crucial tie point between the state ledgers, the Chancellor s Office and the campuses is the reported balance in the object codes , Cash in State Treasury, and , Deposits in SMIF. Campuses report in- and out-bound activity at the SCO in object code , Fund Balance Clearing, an equity account. The Chancellor s Office must maintain an offsetting balance to accomplish the elimination and tie the fund ledger monthly to the and balances reported on the fund reconciliation report furnished to the Chancellor s Office monthly by the State. To accurately maintain the offsetting balances by campus in a fund, the Legal Manual The California State University

111 Section 2.16: Interagency Transaction Process Chancellor s Office uses a combination of the fund reconciliation and electronic file provided by the state to calculate and record the net campus activity, commonly referred to as the cash pickup. To ensure that the campus postings for each fund match the Chancellor s Office calculated balance, the FIRMS edits process contains a table of data reflecting the Chancellor s Office data. During the editing process the campus is notified when an out of balance has been detected. At June 30 th, or the fourth quarter FIRMS submission, the balances between the state ledgers, the Chancellor s Office and the campuses must match or the funds cannot be consolidated without manual adjustments Legal Manual The California State University

112 Section 2.16: Interagency Transaction Process Interagency Transaction Report As the CSU operates throughout the year, there are various transactions that need to be recorded accurately to ensure proper elimination entries are recorded at year-end for state and the CSU Consolidated GAAP Financial Statement. For each type of these transactions, the campus records, the Chancellor s Office or another campus must maintain an offsetting entry to accomplish the elimination and tie the fund ledger monthly to the Chancellor s Office Interagency Transactions Report. This report includes transactions such as Due To/ From, Transfers In/Out or any other account that has an interagency relationship reported on the interagency transactions list. The Interagency Transactions Report is published on a monthly basis by the Chancellor s Office on or before the 5 th workday of each month. To ensure that the campus records the transaction to the correct state fund, CSU fund and FIRMS object code the FIRMS edits process contains a table of data reflecting the Chancellor s Office data. During the editing process the campus is notified when an out-of-balance has been detected. If an out-of-balance is detected, the campus can use the Interagency Transactions Report, published through an ADNOAT, to identify the transactions causing the issue. Balance sheet accounts that are detected as out of balance are reported as warnings during the 1 st, 2 nd and 3 rd quarter. However, during the 4 th quarter these items will be reported as errors. The income statement accounts are reported as errors for all quarters. At June 30th, or the fourth quarter FIRMS submission, the balances between the Chancellor s Office and the campuses MUST match or the transactions cannot be consolidated without manual adjustments Legal Manual The California State University

113 Section 2.16: Interagency Transaction Process Object Codes for Due From/To and Transfers In/Out As previously reported in RMP Guidelines Document #13, this section is to assist users in selecting the correct object codes for Due From/Due To and Transfer In/Transfer Out, depending on the type of transaction. The choice of object codes for Due From/Due To and Transfer In/Transfer Out depends on several factors such as whether the transaction occurs between state funds or within the same state fund, and also whether it is within a campus (intra-agency) or between agencies including the Chancellor s Office (inter-agency), In the past, Due From/Due To and Transfer In/Transfer Out were identified at the state fund level. In the new RMP environment, however, as much of the activities previously recorded in the old state funds are moved to Fund 0948 and additional CSU funds are created in Fund 0948, it became necessary to identify the transactions at the CSU fund level within state fund To meet this need, new object codes were created to easily identify source and destination CSU fund numbers for transactions within state fund There are now two sets of object codes available: existing object codes for transactions outside Fund 0948, and new object codes for transactions inside Fund 0948, as summarized in the table below. Existing Object Codes New Object Codes (A) (B) (C) (D) (E) Within the same state Between fund other CSU funds in than 0948 SWAT (2) 0948 (3) Between state funds (1) Within the same CSU fund in 0948 Within campus Due From 1050xx xxx Within campus Due To 2020xx xxx Between campus/co Due From 1051xx xxx Between campus/co Due To 2021xx xxx Within campus Transfer In 5060xx xxx Within campus Transfer Out 6800xx xxx Between campus/co Transfer In 5061xx xxx Between campus/co Transfer Out 6801xx xxx Note 1: Object codes in (A) include valid values in the applicable ranges except those in (B) and (C). Note 2: Object codes , and are for the CO's use only. Note 3: Object codes in (D) include valid values in the applicable ranges except those in (E) Legal Manual The California State University

114 Section 2.16: Interagency Transaction Process Examples: Scenario Entry in Source (Paying) Fund Entry in Destination (Receiving) Fund Outside 0948 State fund 0839 owes money to state fund 0948 within the same campus Outside 0948 State fund 0839 owes money to state fund 0948 between a campus and the CO Outside 0948 Any state fund (except 0948) owes money to iteself within the same campus Outside 0948 Any state fund (except 0948) owes money to iteself between a campus and the CO Outside 0948 Transfer from state fund 0839 to state fund 0948 within the same campus Outside 0948 Transfer from state fund 0839 to state fund 0948 between a campus and the CO Outside 0948 Transfer within the same state fund (except 0948) within the same campus Outside 0948 Transfer within the same state fund (except 0948) between a campus and the CO Inside 0948 CSU fund 496 owes money to CSU fund 485 within the same campus Inside 0948 CSU fund 496 owes money to CSU fund 485 between a campus and the CO Inside 0948 Any CSU fund in 0948 owes money to iteself within the same campus Inside 0948 Any CSU fund in 0948 owes money to iteself between a campus and the CO Inside 0948 Transfer from CSU fund 496 to CSU fund 485 within the same campus Inside 0948 Transfer from CSU fund 496 to CSU fund 485 between a campus and the CO Inside 0948 Transfer within the same CSU fund in 0948 within the same campus except SWAT Inside 0948 Transfer within the same CSU fund in 0948 between a campus and the CO except SWAT Legal Manual The California State University

115 Section 2.16: Interagency Transaction Process Use of Due to/from Object Codes Decision Tree Schema Record a Due To/From YES Within the same campus? NO Within SCO fund 0948? Within SCO fund 0948? YES NO YES NO Use new object codes at the CSU fund level: (the last 3 digits = CSU fund code) Due From 130XXX (xxx = source CSU fund) Due To 230XXX (xxx = destination CSU fund) Use existing object codes: (State fund level) Due From 1050XX Due To 2020XX Use new object codes at the CSU fund level: (the last 3 digits = CSU fund code) Due From 131XXX (xxx = source CSU fund) Due To 231XXX (xxx = destination CSU Fund) (Create only if needed) Use new object codes: (State fund level) Due from 1051XX Due To 2021XX (Create only if needed) Legal Manual The California State University

116 Section 2.16: Interagency Transaction Process Use of Transfer In/Out Object Codes Decision Tree Schema Record a transfer in/out YES Within the same campus? NO YES Within SCO fund 0948? YES Within SCO fund 0948? SWAT? SWAT? YES NO NO YES NO Use existing object codes: Transfer In Transfer Out Use new object codes at the CSU fund level: (the last 3 digits = CSU fund code) Transfer In 570XXX (xxx = source CSU fund) Transfer Out 670XXX (xxx = destination CSU fund) Use existing object codes: Transfer In Transfer Out * *CO Use Only. Campuses should always use for SWAT Transfers Use new object codes at the CSU fund level: (the last 3 digits = CSU fund code) Transfer In 571XXX (xxx = source CSU fund) Transfer Out 671XXX (xxx = destination CSU fund) (Create only if needed) NO YES Within the same State Fund? YES Within the same State Fund? NO NO Use existing object codes: Use existing object codes: (State fund level) Use existing object codes: Use existing object codes: (State fund level) Transfer In Transfer Out Transfer In 5060XX Transfer Out 6800XX Transfer In Transfer Out Transfer In 5061XX Transfer Out 6801XX Legal Manual The California State University

117 CHAPTER 2 CSU Accounting Section 2.17: Tips and Tricks Frequently Asked Questions Banking: Why don t I reconcile to the Bank of CSU statement in the ACH Disbursements and/or paper/controlled disbursements accounts? Differences in ACH disbursements are caused by adjustments such as ACH rejects that are netted against the total daily ACHs. Differences in the paper/controlled disbursements are caused by adjustments such as those due to fraud and checks posted by Wells Fargo Bank as cash paid items that are netted against the total daily disbursements. What is the difference between ACH and wire transfer? A wire transfer is generally an immediate transfer of funds from one account to another. They are processed by the Fed. Most wires are large dollar transfers that weren t necessarily predictable and must be received in a timely manner. Once released, a wire cannot be stopped the receiver would have to actually return the funds to the original sender. ACHs are processed by a network of operators and are usually for smaller, routine, repetitive payments like direct deposit, bill pay, etc. ACH transfers are much less expensive to send than wire transfers because they are batched together and settlement time is much longer. ACHs can be stopped if there is an error, up until settlement actually occurs. Who should I contact if I have questions regarding the bank of CSU Statement? Resource Management Office at cmo@calstate.edu Legal Manual The California State University

118 Section 2.17: Tips and Tricks State Controller s Office (SCO): Will the SCO accept remittances from a campus? Yes. You can wire funds to the State Treasurer s Office and fax over a remittance advice to let them know how to post the funds remitted. Remittance Address: State of California Office of the Treasurer Sacramento, CA Account No: Bank ID# Bank of America NY 555 Capitol Mall, Suite 1555 Sacramento, CA Fax Remittance Advice (TC-30) along with the wire confirmation showing that the wire has been processed to the SCO at (916) NOTE: If the wire amount is more than $5 million, notify the SCO 24 hours before the wire goes through by calling (916) Do we still have to pay Department of General Services (DGS) prepayments? DGS still charges prepayments in state fund 0948 at the beginning of the fiscal year. They will refund the prior year adjustment and charge the current year prepayment. The amount of the prepayment may or may not be the same from year to year. Cash Posting Orders (CPO) How do I transfer funds to the Chancellor s Office or another campus to reimburse them for an expense or provide additional funding? Since the CSU as a system operates out of one bank account, paying by check is like sending a check to ourselves. The CPO is the preferred method to transfer funds between CSU campuses, including the Chancellor s Office. Most auxiliaries are not part of the SWIFT account yet, so payments to and from these auxiliaries cannot be done through CPOs Legal Manual The California State University

119 Section 2.17: Tips and Tricks When should a campus budget office record CPOs? CPOs for SWATs, Transfers In/Out, and Lottery appropriations should be recorded by the Budget Office. Who should we contact if we need help completing the CPO request form? Send an to CSUCOCPOrequest@calstate.edu or Lilian Audet at laudet@calstate.edu. Who should we contact for updates to the distribution list for the campus? Tracy Daniels at tdaniels@calstate.edu or Lilian Audet at laudet@calstate.edu. Who should we contact for questions on the CPO we received? The bottom part of the CPO memo lists the CPO contact person (who requested the CPO) and the accounting contact (for questions on the object codes). To expedite the response to your inquiries, do not reply to the CPO distribution or send the to CMO. I received a CPO transfer from another campus transferring 485 funds? Should there be a SWAT issued? Only Systemwide Budget Office can issue a SWAT. Effective July 1, 2010, if a campus wants to transfer previously allocated 485 funds to another campus via CPO, a SWAT will be requested from the Budget Office to de-allocate from the transferring campus and re-allocate to the receiving campus(es). Instead of using transfers in/out object codes (571000/671000), only object code will be used. Why don t we see a CPO for the auxiliary audit assessment fees? The auxiliary audit assessment fees are no longer billed separately. The campus base budgets have been reduced to cover these audit assessments. Housekeeping How do I close a campus/peoplesoft fund in 0948 to another 0948 fund? Transfer current year revenues and expenses by debiting & crediting each account. For the fund balance, use transfer accounts 570XXX and 670XXX, offset by the cash accounts in the corresponding campus fund Legal Manual The California State University

120 Section 2.17: Tips and Tricks PeopleSoft Queries FIRMS Related Baseline Queries _ST_LVL CSU_GL_ABNORMAL_CREDITS & CSU_GL_ABNORMAL_DEBITS: Allows you to identify your abnormal balances prior to running FIRMS. CSU_GL_AR_ALLOWANCES: Allows you to validate if your allowances between state funds are in line prior to running FIRMS. CSU_GL_DUETO_DUEFROM: Allows you to validate if your due to/from between state funds are in line prior to running FIRMS Legal Manual The California State University

121 Section 2.17: Tips and Tricks CSU_GL_TR_IN_TR_OUT: Allows you to validate if your transfer between state funds are in line prior to running FIRMS. CSU_GL_TRS_570_670_ERRORS: Allows you to validate if your 0948 transfers between CSU funds are in line prior to running FIRMS Legal Manual The California State University

122 Section 2.17: Tips and Tricks FAST-ED Website Username/Password: fasted/fasted4csu Other Useful Links Systemwide Financial Operations FIRMS Data Element Dictionary Bank of CSU Coded Memos Fund Balance Clearing Reports and Allocation Orders Revenue Management Program Website Legal Manual The California State University

123 CHAPTER 4 Major Changes Page # Description of Change Reason for Change 3 10 Section 4.2.1, The SAM 99 File, has been modified to include step-by-step instructions for the creation of the SAM 99 file in PeopleSoft. 12 The list of SCO personnel to be notified upon submission of the SAM 99 file has been updated. Cecilia Li-Szeto is no longer the CSU s primary contact; she has been replaced by Howard Mintz. To enhance the usefulness of the section. Personnel changes at the SCO A reference to new Appendix 18, SAM 99 Submission Checklist, has been added to Section 4.2.1, The SAM 99 File. Campuses are strongly urged by both the CO and SCO to complete the form. The Section 4.4.4, Submitting the Hard Copy Report Package, has been updated to reflect the new requirement for submission of two copies of the Fund Balance Variance Explanation Form. The requirement for explaining abnormal balances to the SCO has been clarified at Section Campuses will need to explain all abnormal balances reported in their governmental fund trial balances. Instructions have been added at 4.4.2, Reporting Due To/Due From Transactions With State Agencies Outside the CSU, in connection with the post-june 30 notification of accruals by other state agencies. The checklist has been added to address SCO concerns regarding the quality of the CSU s SAM 99 submissions. New SCO requirement. Clarification included at request of SCO. Clarification required based on FYE 2011 experience Legal Manual California State University

124 CSU ACCOUNTING Page # Description of Change Reason for Change 24 Section 4.5, Submitting the Hard Copy Report Package, has been updated to reflect the new requirement for submission of two copies of the form Supplementary Information for Due To/From Other Funds. New SCO requirement Legal Manual California State University

125 CHAPTER 4 PREPARATION AND SUBMISSION OF SCO REPORTS Section 4.1: SCO Reporting Overview As an agency of the State of California, the CSU is obligated to comply with certain state reporting requirements as set forth in the State Administrative Manual (SAM) Section The State Controller s Office (SCO) is the agency charged with the task of preparing the state s financial reports on both the legal basis (sometimes referred to as the budgetary basis) of accounting (for internal state reporting purposes) and the GAAP basis (for external reporting purposes). The SCO s Division of Accounting and Reporting issues on an annual basis a set of instructions and deadlines for the submission of agency financial data allowing them to meet their report preparation obligations. The CSU must be in compliance with both the prescribed reporting methods and formats, and submission due dates. It is essential that we report accurately to ensure the state s financial reports fairly present the results of agency operations. This chapter is intended to provide information which will help your campus meet the state s data submission requirements in a timely manner. All deadlines for the various submissions have been set forth in Chapter 6 of this manual. Section 4.2: SCO Legal Reports Each July CSU campuses submit a combination of a data file and hard copy reports to the SCO, accompanied by certifications executed by campus executives confirming the accuracy of the information provided. The SCO requires the following: Report 1 - Report of Accruals to Controller s Accounts (for governmental funds) Report 2 - Accrual Worksheet (for governmental funds) Report 3 - Adjustments to Controller s Accounts (for all funds) Report 4 - Statement of Revenue (for governmental funds) Report 5 - Final Reconciliation of Controller s Accounts with Final Budget Report (for governmental funds) Report 7 - Pre-Closing Trial Balance (for all funds) Report 8 - Post-Closing Trial Balance (for all funds) Report 9 - Analysis of Change in Fund Balance (Statement of Operations) (for nongovernmental funds) Report 14 - Report of Bank/Savings and Loan Association Accounts Outside of the Treasury System (for each agency) Report 15 - Reconciliation of Agency Accounts with Transactions per State Controller (for governmental funds) Report 18 - Statement of Changes in General Fixed Assets (for all funds) Legal Manual The California State University

126 SCO REPORTING Report 19 - Statement of General Fixed Assets (for each agency) Report 20 - Statement of Financial Condition (for nongovernmental funds) Report 22 - Statement of Contingent Liabilities (for all funds) The data required on some of these forms is provided via an electronic file referred to as the SAM 99 file (see sub-section 4.2.1). The SAM 99 file satisfies the data needs of Reports 1, 2, 4, 5, 7, 8 and 15 for governmental funds. Campuses are required to submit in hard copy form for all governmental funds Reports 3 and 22 (if applicable). Additionally, campuses submit in hard copy form Reports 14 and 19 for the agency as a whole and Report 18 for every fund (governmental or proprietary) financing fixed assets. Under a certain circumstance, a manual Report 5, Final Reconciliation of Controller s Accounts with Final Budget Report, is also required. When the SAM 99 file cannot report a reversal of a prior year accrual relating to a reverted appropriation by its appropriation number, a manual Report 5 will be needed to report the current year s expenditure for that appropriation. The SCO requires submission in hard copy form of documents supporting an increase or decrease in appropriation authority reported on Report 5 for governmental funds. This requirement pertains to transactions which occur at year end and which were not reported to the SCO before the close of the fiscal year. Documents supporting Allocation Orders Pending should be included with the hard copy reports for the affected governmental funds and their inclusion should be reflected in the Table of Contents for the hard copy report package submitted to the SCO. To ensure the quality of the SAM 99 file submitted at year end, a monthly SAM 99 reconciliation should be conducted and all differences should be resolved. Appendix 15 provides a table to help campuses determine the level, by state fund, at which the reconciliation should take place. Whether financial data is submitted electronically or via paper, campuses must ensure before submission that the data destined for the SCO is the same as the data submitted to FIRMS. Reconciliation is facilitated in PeopleSoft through review of the CSU to Campus Validation Report, which compares data in the campus business unit (i.e., operating ledger) with the data in the CSU business unit (i.e., legal FIRMS ledger). The report is accessed by clicking on CSU BU Derivation on PeopleSoft s main menu, selecting Reports and then CSU to Campus Validation Report. We recommend campuses check the Report Variance Only option, which returns only those accounts where a difference is electronically identified, and that the report interval be from period 0 to the period of submission. The report should be run on a monthly basis to allow timely resolution of discrepancies. For non-governmental funds (i.e. proprietary or fiduciary funds), the SCO accepts financial data on a consolidated basis. The Chancellor s Office prepares and submits the consolidated reports for each non-governmental fund in hard copy form on behalf of the entire system, drawing all necessary data from the campus FIRMS submissions Legal Manual The California State University

127 SCO REPORTING For a summary of the reporting mechanism (SAM 99 v. hard copy) and reporting responsibility (campus v. Chancellor s Office) for each state fund, see the table at Appendix 2. The following sub-sections provide more detailed instructions on the submission components The SAM 99 File The SAM 99 file is created in PeopleSoft. This section details how that is done and how it is transmitted to the SCO. Before that discussion is begun, however, there are several things to remember about the SAM 99 file: Campuses should make certain the current year s data has been used in its creation. Campuses need to ensure their PeopleSoft data has been updated by the year-end accrual reversal file. This file is provided by the SCO at its website no later than May of each year and contains the summary accrual the SCO booked for each appropriated fund as of the prior year based on the campus SAM99 submission, plus any adjustments to those accruals made by the SCO to equal the SCO s reported ending balance. The file for any given campus is identified by the SCO using the following naming convention: CXXXX.DMMDDYY.accsum, where XXXX is the 4-digit organization code and MMDDYY is the creation date. This file is required to be loaded into PeopleSoft prior to running the year-end SAM 99. While the electronic file to be loaded to PeopleSoft is retrieved by each campus from the Teale FTP server similar to the monthly SAM99 files, a report listing all of the accrual reversal amounts is available on the SCO s website ( listed as the Prior Year Accrual Summary Report. The General Fund should have no accruals at 6/30 since the monies should be fully expended before that date. The sum of General Fund operating expenditures (a total debit) must equal the balance in Fund Balance Clearing (a credit). Campuses should not submit the file if there are any out-of-balance warning messages returned. The data cannot be used by the SCO where debits do not equal credits on the trial balances. The steps in creating the SAM 99 file in PeopleSoft follow: 1. Figure 1A below displays the screen used to begin the process. This screen is accessed by following this path: CSU State & SW Reporting > SAM Reporting > SAM99. Once the screen has been reached, enter the following information: Fiscal Year - This is the fiscal year for which you are running the report. For example, if you are running the SAM99 for fiscal year 2010/2011, the entry to the Fiscal Year field would be Legal Manual The California State University

128 SCO REPORTING Accounting Period - For year end, this is 12. When running a test file, the number of the last closed period should be used. Accr Rev Tape Flag - This refers to the year-end accrual reversal file provided by the SCO discussed earlier in this section. As it is required to be loaded into PeopleSoft prior to running the year-end SAM 99, the box must be checked. Year End Tape Flag - This indicator signifies that you are running your year-end SAM99 report, therefore, the box must be checked. Business Unit - This is specific to each campus and is an identifier for the transactional ledger. Budget Ledger - This is specific to each campus. Once all these entries have been made, press the Run button in the top right corner of the screen. Figure 1A Step #1 in the Creation of the SAM 99 File in PeopleSoft 9.0 with MP After pressing the Run button, the Process Sceduler Request screen will display (see Figure 1B). Verify that the *Type is Web and the *Format is PDF and press OK at the bottom left of the screen Legal Manual The California State University

129 SCO REPORTING Figure 1B Step #2 in the Creation of the SAM99 File in PeopleSoft 9.0 with MP After clicking OK in Figure 1B, the screen will refresh to the run control displayed in Figure 1A with the assigned process instance. Click on the hyperlink to monitor the progress of the job. Once the Run Status displays as Success and the Distribution Status is Posted on the Process Monitor (see Figure 1C below), click on Details to retrieve the.txt and.pdf files (it is recommended that both files be saved). Figure 1C Step #3 in the Creation of the SAM99 File in PeopleSoft 9.4 with MP2 4. Once the Detail link in Figure 1C is clicked, go to the Actions section in the bottom right corner of the Process Monitor screen (see Figure 1D) and click on the View Log/Trace hyperlink to navigate to the output of the process. The resultant screen (see Figure 1E) displays Legal Manual The California State University

130 SCO REPORTING Figure 1D - Step #4 in the Creation of the SAM99 File in PeopleSoft 9.0 with MP4.2 Figure 1E Step #5 in the Creation of the SAM99 File in PeopleSoft 9.0 with MP4.2 The output in the.txt file is the extracted information that will be sent to the State. Once the file is downloaded from the PeopleSoft process monitor, the name of the file must be changed to FISCAL.DMMDDYYA.AGYACR, where MMDDYY is the file transmission date. Once the file is downloaded to a local directory, if the file name looks like this in Windows Explorer (see highlighted file name), Legal Manual The California State University

131 SCO REPORTING then rename it in the required format. After renaming the file, this message will display: Click Yes and the file type will change to AGYACR as shown below Legal Manual The California State University

132 SCO REPORTING If the file extensions are not visible in Windows Explorer, modify the setting by navigating to the Folder Options panel and un-checking the box highlighted below. The file is now ready to be transmitted (sometimes referred to as being FTP d) to the SCO via the Teale Data Center. Figure 2 shows the transmission screen if the campus uses the WS_FTP LE version of the transmission software and Figure 3 shows the transmission screen if the campus uses the WS_FTP Pro version. Each campus has a unique User ID and Password. The passwords for these accounts are required to be changed regularly. If the campus has not done this recently, contact Lorissa Cheney at the Chancellor s Office so the password can be reset (see Chapter 7 for contact information). If the transmission is being performed by a new user or from a new computer, or if a new version of the software is being used, the campus may need to contact Ms. Cheney for assistance Legal Manual The California State University

133 SCO REPORTING Figure 2 Data Transmission Screen (General Tab) WS_FTP LE Figure 3 Data Transmission Screen WS_FTP Pro Upon successful transmission of the file, the campus is required to send a confirming to the SCO addressed to the following recipients: Legal Manual The California State University

134 SCO REPORTING Ross Boyer Rod Renteria Carl Walker Cecilia Li-Szeto Howard Mintz Perry Tseng-Liu The must include the following: Data file name formatted as FISCAL.DMMDDYYA.AGYACR, where MMDDYY represents the file transmission date Organization entity number Campus name Subject as follows: SAM 99 Submission for Agency XXXX Contact person, including name, telephone number and address Record amounts (located on last page of the SAM 99 printed report) Record count (located on last page of the SAM 99 printed report) Figure 4 provides a sample . The campus should receive an acknowledgment of a clean submission from the SCO shortly after it submits the SAM file. If it does not, the SCO should be contacted to confirm status of acceptance (see Chapter 7 for contacts). If the SCO indicates the file is not readable, then it needs to be corrected and resubmitted. Before resubmitting the file, the campus needs to coordinate with Carl Walker or Rod Renteria at the SCO to make sure the SCO has deleted the old file and is ready to receive a replacement Legal Manual The California State University

135 SCO REPORTING Figure 4 Confirming Transmission of SAM 99 File If errors in account balance or classification are discovered after submitting the SAM 99 file, do not resubmit without first coordinating with the SCO. Unless the problem is severe, it may be resolved by providing them with journal entries. Howard Mintz at the SCO is the person to contact; see Chapter 7 for contact information. Campuses are strongly advised to do test submissions prior to year end to ensure a successful transmission of the production file when it is due. The SCO will accept test submissions during a specified time period (see Chapter 6, Deadlines, for current year s interval). When you are submitting a test file, an similar to the one in Figure 4 is required notifying the SCO of the test. On the subject line write TEST SAM 99 Submission for Agency XXXX and note again in the body of the message that you have transmitted a test file. The SCO will let you know if the test has been successful. For testing purposes, use a closed month. DO NOT send data for a partial month as it will cause the SCO to reject the test file. In addition, the test file needs to include prior year reversing entries. To assist campuses in verifying that the SAM 99 transmission is complete, a SAM 99 Submission Checklist is provided at Appendix 18. The Chancellor s Office and State Controller s Office Legal Manual The California State University

136 SCO REPORTING strongly urge campuses to complete the checklist and to retain it in their files as evidence all necessary validation steps have been performed Report 3 - Adjustments to Controller s Accounts Report 3 is submitted in hard copy form by campuses for each governmental fund to which it applies. It identifies any adjustments needed to correct the central records maintained by the SCO as of June 30. This includes reconciling items that involve another state agency, other than the Chancellor s Office, recorded in FIRMS object codes (Adjustments to SCO Accounts Expenditures), (Adjustments to SCO Accounts Revenues) and (Reserve Adjustments SCO Accounts). If there are no adjustments, no report need be submitted. (See subsection for information on reporting the nonapplicability of Report 3 on the Transmittal and Report Certification Memo.) State Forms 576A and 576B, which are available at the SCO s website ( are the vehicles used to report the adjustments, if any (see Figures 5A and 5B for examples of the forms). Form 576A is used to report adjustments to asset and liability accounts; Form 576B is used to report adjustments to disbursement, reimbursement, receipt and transfer accounts. Adjustments should be numbered and the numbers should correspond to an attachment providing a brief explanation for each. The number should be placed in the Account Title column on Form 576A and to the right of the amount on Form 576B. Each explanation must disclose the reason for or the nature of the error and should not merely be a restatement of the correction. Letters previously written to the SCO about any adjustments should not be attached Legal Manual The California State University

137 SCO REPORTING Figure 5A State Form 576A (Report 3) Adjustments to Controller s Accounts Legal Manual The California State University

138 SCO REPORTING Figure 5B State Form 576B (Report 3) Adjustments to Controller s Accounts The CSU generally tries to minimize or eliminate reported adjustments. To do this, all reconciling items between a university s books and the State Controller's records that do not involve another state agency must be recorded as accruals at June 30. The entries are made to Due To (FIRMS object code ) or Due From (FIRMS object code ) Other Funds or Appropriations and the Fund Balance Clearing Account (FIRMS object code ) in the appropriate general ledgers. To demonstrate, assume an expenditure account was charged in error by the SCO to the correct agency but to an incorrect fund, appropriation or budget category. The necessary entry at June 30 would be: Debit Credit Due from Other Funds or Appropriations Fund Balance Clearing Account Now suppose the campus recorded an expenditure which the SCO did not. The entry would be: Legal Manual The California State University

139 SCO REPORTING Debit Credit Fund Balance Clearing Account Due to Other Funds or Appropriations In either case, these entries would be reversed July 1, the beginning of the next fiscal year. Neither entry would be reported on Report Report 14 - Report of Bank/Savings and Loan Association Accounts Outside of the Treasury System Report 14 is a hard copy report listing all bank accounts held by a state agency outside the state treasury system (see Appendix 14 for template). If there are none, the report must still be filed with the words No accounts outside State Treasury written on its face. Campuses will report all Zero Balance Accounts and accounts held at Wells Fargo and US Bank (SWIFT accounts). Information that must be reported include the authority, statutory citation or Department of Finance (DOF) approval date, allowing establishment of the account and the purpose for the account (deposit and disbursement, investment, etc.). The report must be signed by the campus s vice president of administration and finance or a higher official. (Note: Reports 14(b) and 14(c) are no longer required.) Report 18 - Statement of Changes in General Fixed Assets The purpose of this report is to provide the SCO with changes resulting from fixed asset acquisitions and dispositions during the fiscal year. It is prepared in hard copy form for each governmental and non-governmental (i.e. proprietary or fiduciary) fund from which monies were drawn to purchase capital items, defined as items costing $5,000 or more, with a life exceeding 1 year. The asset additions and deletions reported on the Statement of Changes in General Fixed Assets derive from transactions recorded in the General Fixed Assets Group (State Fund 0997). The beginning and ending balances in the General Fixed Assets Group should agree with the balances reported for GAAP, unless GAAP adjustments were recorded after the submission of Reports 18 and 19. Construction Work-in-Progress (CWIP) recorded on your campus books needs to be included on Report 18 in the appropriate classification. CWIP for non-delegated projects is also to be recorded on the campus books. Following are the steps to get the legal basis records in sync with the GAAP records at the beginning of the year and to roll forward Report 18 (see Appendix 3 for report template and further instructions on preparation). Step 1: Start with the prior year s Report 18 ending balance for each depreciable and nondepreciable asset classification and the related accumulated depreciation for depreciable assets. If the prior year s Report 18 ending balances do not agree with the beginning GAAP balances Legal Manual The California State University

140 SCO REPORTING (refer to Note 5 in the prior year s reporting package), do not adjust the beginning balances directly, but enter the GAAP adjustments in the Prior Period Adjustments column. The reason for each adjustment must be explained in a footnote. Additionally, if the adjustment is being made to the Buildings & Building Improvements or Improvements Other than Buildings category and the adjustment is equal to or greater than $1 million, footnote disclosure is required and needs to include: The date the asset was originally acquired; The acquisition cost of the asset; The nature of the adjustment. If the campus did not record any GAAP adjustments, then the GAAP balances should equal the legal balances. Step 2: Record all additions and/or deletions for each asset and accumulated depreciation category. For the categories Buildings & Building Improvements and Improvements Other than Buildings, if an individual deduction is equal to or greater than $1 million, agencies are required to provide the following additional information in a footnote: The date the asset was originally acquired; The acquisition cost of the asset; The nature of the deduction, e.g. sale, demolition Step 3: Record all asset transfers to/from other funds and other agencies. Footnote disclosure is required to provide the following information: The fund the asset was transferred to or from; The agency name the asset was transferred to or from. The ending balance on Report 18 should agree with your campus legal basis records at year end. The current year s ending balances on Report 18 will be the beginning balances for the next fiscal year. There may be current year GAAP adjustments to fixed assets subsequent to the submission of the report to the SCO. These adjustments should be separately reflected from additions and deletions on next year s report as described in Step 1. Upon completion of Report 18 for each SCO fund to which it pertains, the campus will transfer the total fixed assets and funding sources to Report 19. Report 19 is a consolidation of all Reports 18 and should agree with the sum of all Reports 18. For fiscal year ended June 30, 2010 and in response to the requirements of GASB 51, Accounting and Financial Reporting for Intangible Assets, the SCO established new state general ledger numbers for intangible assets. New object codes were created, effective that fiscal year, Legal Manual The California State University

141 SCO REPORTING mapping to these state general ledger numbers. For fiscal year ended June 30, 2011, the Report 18 template was modified to conform to the state s formatting requirements and to incorporate the intangible asset accounts. Capital assets are reported in two sections, Non-depreciable/Nonamortizable and Depreciable/Amortizable. Within each of these sections, each capital asset type is identified as either tangible or intangible. The PeopleSoft Asset Management System incorporated the new report format. Information concerning accounting for intangible assets in accordance with GASB 51 is available in Chapter 13, Capital Assets Guide, of the GAAP Reporting Manual. Right-of-way easements and water, timber and mineral rights should be included in the account Land Use Rights Report 19 Statement of Capital Assets This report accounts for the total fixed assets of an agency and identifies the fund that purchased the fixed assets. Report 19 summarizes the information contained in Report 18 as of June 30. See Appendix 3 for report template. The Report 19 template was modified for FY 2010/2011 to be in compliance with both GASB 51, Accounting and Financial Reporting for Intangible Assests, and the state s formatting requirements. Two groups of assets are listed in the top half of the schedule, one under the heading Tangible Assets, the other under the heading, Intangible Assets Report 22 Statement of Contingent Liabilities This report discloses estimated liabilities, such as federal audit exceptions and pending litigation, and is prepared for each state fund in which such liabilities are identified. These liabilities are not recorded on the books of the campus. Filing of this report is not required if there are no contingent liabilities. However, agencies are required to indicate that there are no contingent liabilities to report in the certification letter to the SCO (see sub-section regarding certification letters). See Appendix 16 for the Report 22 template and completion instructions. Campuses will prepare and submit to the SCO a report for each governmental fund in which contingent liabilities are identified. The Chancellor s Office will prepare a consolidated Report 22 for each proprietary or fiduciary fund where it pertains, including state fund 0948, Trust Fund. To accomplish this, campuses are directed to complete Report 22 for each proprietary or fiduciary fund where applicable and to send them to the CO for consolidation (see Chapter 6 for due date) Explanations of Abnormal Balances The SCO requires campuses to provide written explanations of abnormal general ledger account balances for both governmental and non-governmental funds. For all affected governmental funds, a sheet providing the necessary explanations should be included in the hard copy report Legal Manual The California State University

142 SCO REPORTING package submitted to the SCO for each fund as applicable and the inclusion of the document should be reflected in the package s Table of Contents. As Report 7, the Pre-Closing Trial Balance, is prepared on a consolidated basis for all non-governmental funds, the Chancellor s Office will use the explanations of abnormal balances it collects as part of the fourth quarter FIRMS submission review process for fulfilling this requirement. Section 4.3: State Funds 0890, Federal Trust Fund, and 0942, Special Deposit Fund For campuses that have these funds, SCO reports must be submitted in hard copy form (they are not included in the SAM 99 file). The submission for these funds will include: Report 7 - Pre-Closing Trial Balance Report 8 - Post-Closing Trial Balance Report 9 - Analysis of Change in Fund Balance (Statement of Operations) Report 20 - Statement of Financial Condition Each report must list both the name and report number. The column listing the general ledger account numbers on these schedules should be captioned GLAN (for General Ledger Account Number). For state fund 0890,there should be no fund equity. If the inflows and outflows are not equal, an accrual should be recorded to make them equal. Federal Trust Fund statements with a fund balance remaining will automatically be disqualified from receiving the SCO s Certificate for Achieving Excellence in Financial Reporting. Funds in state fund 0890 have reversion dates and these dates appear on the State Controller's Agency Reconciliation Report (referred to as the tab run ). Funds remitted to the Federal Trust Fund should be claimed back to the campus and deposited to a fund, such as state fund 0948, California State University Trust Fund, where they are held to be expended for the required purpose. Funds not claimed back will revert to the state and the campus will be responsible to the federal government for these amounts. Section 4.4: Special Reporting Considerations In addition to the reporting requirements set forth in the preceding sections, the SCO has additional information needs which campuses must address in their annual filings. These are set forth below: Reporting Due To/Due From Transactions Occurring Within the CSU The SCO requires the provision, on a separate schedule, of a four-digit organization code (also referred to as an agency code) associated with transactions reported in state general ledger Legal Manual The California State University

143 SCO REPORTING account numbers 1410XXXX, Due from Other Funds, and 3114, Due to Other Funds, where XXXX is the state fund from which monies are being paid (due from) or to which the funds are being sent (due to). This information facilitates the SCO s reconciliation of the receivables and payables. Most of the activity in these accounts at the CSU represent transactions occurring within the system and, therefore, they net to zero. However, it remains necessary for campuses to report for each fund the relevant organization code. The SCO provides the template for reporting this information. We have incorporated it into this manual as Appendix 17. Figure 6 is an example of a completed form: Figure 6 - Due To/From Other Funds Supplementary Information Form This requirement pertains even when filing data via submission of the SAM 99 electronic file. The supplementary form must be included in your hard copy report submission (see Section 4.5) Legal Manual The California State University

144 SCO REPORTING Likewise, the organization code associated with transactions in state general ledger numbers 1420, Due From Other Appropriations, and 3115, Due to Other Appropriations, must be reported. However, this is done by adding the code to the end of the account number. For example, an amount due from the Chancellor s Office would be reported as Historically, transactions in state general ledger numbers 1420 and 3115 are recorded in state fund 0948, California State University Trust Fund. Reports for this fund are prepared on a consolidated basis by the Chancellor s Office. Because these are manual reports, the Chancellor s Office will add the necessary organization codes when preparing the trial balances submitted to the SCO. Currently, our automated system does not provide an electronic method for adding the organization codes to these account numbers. Therefore, should a campus need to report receivable/payable transactions within any fund other than 0948, the Chancellor s Office must be immediately contacted for further guidance. Refer to the reporting issues contacts listed in Chapter 7, Contacts Reporting Due To/Due From Transactions With State Agencies Outside the CSU The same reporting requirements as described in Subsection pertain to transactions with non-csu organizations. These transactions are infrequent. However, each year some of the campuses will conduct business with other state agencies, most notably the Department of Justice (DOJ). Because these agencies may not necessarily compute their year-end accruals prior to the CSU s mid-july closing, the interagency liabilities may be understated on our books at June 30. To properly state our interagency liablilities when reporting to the SCO and because the obligations frequently belong in state fund 0948, the Chancellor s Office will be responsible for recording the total amount due on the consolidated manual report for this fund. In connection with unrecorded transactions as of June 30 between campuses and the DOJ,the Chancellor s Office will solicit the information directly from the DOJ necessary to record the accrual. The Chancellor s Office is unable to provide this same service, however, in connection with transactions involving other state agencies as it does not know what transactions have taken place. Therefore, campuses must contact the Chancellor s Office upon being notified by another state agency that a due from or due to is being recorded by that agency, the other side of which was not recorded by the campus as of June 30. The Chancellor s Office contact for this purpose is Su Chen (see Chapter 7 for contact information). Accounts payable and accounts receivable transactions recorded by campuses for each fund as of June 30 should be examined to determine any that occurred with state agencies. Such transactions must be reclassified to the appropriate due to/due from account Legal Manual The California State University

145 SCO REPORTING Reporting Transactions with the University of California and Community Colleges Transactions with the University of California and the state s community colleges are also a rarity. Should they occur, campuses need to record the receivables and payables as follows for state reporting purposes: Receivables Payables University of California State GL 13XX State GL 3010 California Community Colleges State GL 1590 State GL Fund Balance Variance Explanation Form Beginning with fiscal year June 30, 2012, the SCO requires explanations of variances and completion of the Fund Balance Variance Explanation Form (see Appendix 21). The purpose of the Fund Balance Variance Explanation Form is to identify and provide explanations for material variances between prior year (PY) and current year (CY) post-close fund balances. For each of the funds reported in your SAM99 file and for hard copy reports prepared for funds 0890 and 0942, if applicable, please complete the Fund Balance Variance Explanation Form and include it with the other hard copy documents being submitted for that fund. Placement of the form in your package is described at Section 4.5. You do not need to list this form on the certification letter. Material Variance Criteria: Explanations are required for fund changes that meet both of the following two tests: Test 1: Is the difference of CY fund balance less PY fund balance a variance of $1,000,000 or more (this includes increases and decreases of balances over the prior year)? AND Test 2: Is either (a ) the percentage of variance (variance divided by PY) 10% or greater, or (b ) PY fund balance is zero, or (c ) CY fund balance is zero? Material Variance Explanations: Explanations should answer the question WHY is there a variance? Examples of acceptable variance explanations: Revenue (GL XXXX) increased due to a new revenue source per Government Code section XXXX. Expenditures (GL XXXX) decreased as a result of program XX budget cuts/lack of funding/increased federal reimbursements Legal Manual The California State University

146 SCO REPORTING Transfers In (GL XXXX) increased due to additional federal grants administered for the XX program. Examples of unacceptable variance explanations: Revenue increased. Expenditures decreased due to increased encumbrances. Transfer In increased due to federal grants. The Fund Balance Variance Explanation Form is presented in Appendix 21. Section 4.5: Submitting the Hard Copy Report Package The hard copy report package submitted to the SCO in accordance with the schedule set forth in Chapter 6 consists of the following: Cover sheet identifying the campus and its agency number and the fiscal year end (June 30, 20XX) Table of contents Report 3 - Adjustments to Controller s Accounts (only if applicable) Two copies of the Supplementary Information for Due To/From Other Funds (only if applicable) Report 14 - Report of Bank/Savings and Loan Association Accounts Outside of the Treasury System Report 18 - Statement of Changes in General Fixed Assets Report 19 - Statement of General Fixed Assets Report 22 - Statement of Contingent Liabilities (only if applicable) Explanations of abnormal balances Two copies of the Fund Balance Variance Explanation Form Transmittal and report certification memos (by fund) If the campus has state funds 0890, Federal Trust Fund, and 0942, Special Deposit Fund, it must include in its submission the reports listed in Section 4.3. Report preparation has been covered in Section 4.2. The following sub-sections provide information on formatting the table of contents, preparation of the transmittal and report certification memos and instructions for binding and mailing the reports Table of Contents The table of contents lists all state funds, governmental and non-governmental, for which reports are being filed. For each fund, the reports being submitted are listed and the package page Legal Manual The California State University

147 SCO REPORTING numbers at which they can be located are indicated. The table should be divided into two sections, one listing all governmental funds, the other listing all non-governmental funds. Page 1 of the package should provide identifying data for the SAM 99 file. The Chancellor s Office provides a form for this purpose (see Appendix 4). The information provided includes the run date and time, the proof total and record count. Reports for each fund should be presented in numerical order preceded by a Transmittal and Report Certification Memo (discussed further in sub-section 4.5.2). Reports 14 and 19 are prepared for the agency as a whole and not for a particular fund. Therefore, the SCO has asked that they be presented and certified with reports applicable to the General Fund. Reports 3 and 22 and the two copies of the Supplementary Information for Due To/From Other Funds form are filed by fund, but only if there is activity to report. Because the Chancellor s Office consolidates financial information for non-governmental funds, it prepares Report 22 for those funds (see further instructions at sub-section ). Campuses prepare Report 18 for both governmental and non-governmental funds and includes all Reports 18 in their submission. The Chancellor s Office includes fixed asset and accumulated depreciation balances in the non-governmental trial balances it prepares (see Section 2.13 in Chapter 2), but does not prepare Reports 18 on behalf of the campuses. Every Report 18 submitted by a campus must be accompanied by a Transmittal and Report Certification Memo. Campuses need to include for each fund an explanation of abnormal balances, where applicable. Campuses also need to include two copies of the Fund Balance Variance Explanation Form for each fund, even if no explanation is required in the Material Variance Explanation section of the form. Reports for funds or appropriations that reverted prior to the beginning of the fiscal year should not be submitted. A sample Table of Contents is provided at Appendix 5. Campuses should adhere to the format as closely as possible so the CSU can achieve uniformity in its presentations. A copy of the table must be sent via to Howard Mintz (hmintz@sco.ca.gov) at the SCO Transmittal and Report Certification Memos The SCO requires that the reports for each active fund be accompanied by a memorandum, signed by the campus president or an authorized designee (e.g. the vice president of administration and finance), certifying under penalty of perjury the accuracy of the data being submitted. The certification extends not only to the hard copy reports, but for governmental funds, data contained in the SAM 99 file. The memorandum for each fund must provide a Legal Manual The California State University

148 SCO REPORTING complete list of hard copy reports that could be filed (i.e. Reports 3, 18 and 22) with an indication of whether they are enclosed or not applicable. It is not required to list the form Supplementary Information for Due To/Due From Other Funds on the certification (however, it needs to be listed in the Table of Contents for all funds to which it applies). The memorandum for the General Fund will also list the enclosure of Reports 14 and 19. Because these reports are filed for the campus as a whole, the SCO also requires agencies to identify on all other certifications their location (i.e. that they have been filed with the General Fund reports). The signed certification eliminates the need for signatures on individual reports (except Report 14, which must be signed by the vice president of administration and finance or a higher official). Additionally, each memorandum must include the following: Date Agency name Agency number The fund name and number Contact name(s), phone number(s) and address(es) Name and address of the president and vice president, administration and finance (NOTE: These items of information must be present no matter who signs the memorandum.) Failure to provide any of the required information as set forth in this section will result in automatic disqualification for the SCO s Award of Achieving Excellence in Financial Reporting (see Appendix 6 for award criteria). Templates for the certification memorandums are provided at Appendix 7. Template 1 is used for certification of the SAM 99 file and transmission/certification of hard copy reports for governmental funds 1 ; Template 2 is used for transmission/certification of hard copy reports for non-governmental funds Binding Instructions Package specifications are as follows: Reports are to be submitted in one hard cover report booklet. The report cover should be labeled with the following: THE CALIFORNIA STATE UNIVERSITY CAMPUS NAME AGENCY NUMBER YEAR-END REPORTS JUNE 30, 20XX 1 The Chancellor s Office is required to file the certification for the General Fund on the submission date specified by the SCO. This is the date indicated in Chapter 6, Deadlines, for submission of the SAM 99 electronic file Legal Manual The California State University

149 SCO REPORTING All pages should be reduced to 8 ½ x 11 inches. Reports should be organized by fund. Each report should be labeled with the agency name and number and the fund name and number. Each fund grouping should begin with the certification and behind that document should be all applicable reports in numerical order. The two copies of the form Supplementary Information for Due To/From Other Funds should be filed behind Report 3. The pages should be sequentially numbered in large script on the top right-hand side, regardless of the direction the report pages are printed, starting with the first page after the Table of Contents. An index tab should be placed at the beginning of each fund group and labeled with the fund number. Do not use staples SCO s Year-End Checklist Before mailing the package, campuses are strongly advised to consult the SCO s Year-End Reports Checklist to ensure that it is complete and formatted in the prescribed manner. The checklist is available at Appendix Mailing Instructions The hard copy report package should be mailed to: State Controller s Office Division of Accounting and Reporting State Government Reporting PO Box Sacramento, CA Alternatively, it can be hand delivered to: B-08 State Controller s Office Division of Accounting and Reporting State Government Reporting 3301 C Street, Suite 700 Sacramento, CA Campuses should be sure to include their return address on the package. A copy of Report 14 only needs to be provided to the: Legal Manual The California State University

150 SCO REPORTING State Treasurer's Office Securities Clearance Section P.O. box Sacramento, CA Submission of Report Package to the Chancellor s Office Campuses are required to provide the Chancellor s Office with an identical copy of the report package submitted to the SCO. It should be sent to the following address: Chancellor s Office Systemwide Financial Standards & Reporting 401 Golden Shore, 5 th Floor Long Beach, CA This submission must be accompanied by a FIRMS Data Integrity Certification Form signed by the campus s chief financial officer. This form confirms the accuracy of the data submitted to the Chancellor s Office via FIRMS. Do not send this form to the SCO. See Appendix 9 for the form Records Retention Campuses are required to retain a complete set of all reports filed with the SCO for a period of two years or until audited by the Department of Finance, Office of Financial and Performance Audits (FPA), whichever is later. Campuses should not mail year-end reports to the FPA. In addition, campuses should comply with the CSU records retention policy Legal Manual The California State University

151 CHAPTER 3 Major Changes Page # Description of Change Reason for Change 1 Instructions have been added to Section 3.2, Quarterly Submissions, for requesting acceptance of a FIRMS file containing errors identified by the validation report. 1 During fiscal year 2011/2012, FIRMS submission deadlines were removed from the FIRMS Data Submission Guide to the SFSR website. The manual notes this change and provides a link to the information. 5 Added reference to Appendix 20, Abnormal Balance Explanation Template. This is to be used by campuses to report abnormal balances in the pre-close year-end FIRMS submission to the Chancellor s Office. 6 Manual edit verifying the balance in object code , Cash/Short-Term Investments (SWIFT), is zero for state funds other than 0948 in the FIRMS pre-close submissions has been added. 6 The list of manual edits performed on the FIRMS post-close submissions has been expanded. 7 Information concerning newly deactivated and created funds and object codes has been deleted from this chapter and campuses are re-directed to the new location of this information and the location of information concerning newly added and removed legal edits. 8 A reference to the new Appendix 19, CSU Fund and Object Code Definitions, has been added and briefly described. To incorporate guidance communicated during the fiscal year via . Relocation of information. To standardize the submission of abnormal balance explanations, thus expediting the Chancellor s Office review. To inform campuses of an edit that is being performed by the Chancellor s Office. To provide campuses with a complete list of the post-close manual edits being performed. To incorporate information into the manual previously communicated to the campuses. The change allows more timely update of the information and its new location is more accessible. To facilitate locating fund and object code definitions Legal Manual California State University

152 CHAPTER 3 FIRMS SUBMISSION Section 3.1: FIRMS Overview The Financial Information Record Management System (FIRMS) is a corporate financial information management system that allows the Chancellor's Office to fulfill its system-wide financial reporting requirements from campus-submitted data. At the conclusion of each quarter, each campus extracts accounting data from its local financial system and formats the information in a FIRMS compatible format. Data are transmitted electronically to the Chancellor s Office via FIRMS for validation and to fulfill internal information requirements. The data are subjected to edit criteria and are given final acceptance by the Chancellor s Office only when all errors have been resolved. Section 3.2: Quarterly Submissions Campuses are required to submit data to FIRMS on a quarterly basis: for the periods ending September 30, December 31, March 31 and June 30. The June 30 submission is discussed in more detail in Section 3.3, Year-End Submissions. Each quarter s data is cumulative, meaning the September 30 submission includes financial data for July 1 through September 30; the December 31 submission includes financial data for July 1 through December 31; the March 31 submission includes financial data for July 1 through March 31; and, the June 30 submission includes financial data for July 1 through June 30. Each quarter s submission is subject to the automated edits discussed further at 3.4.1, Automated FIRMS Edits. The submission will generally not be accepted by the Chancellor s Office until all errors identified by the program have been resolved. However, on occasion there may be circumstances necessitating the Chancellor s Office override of these errors. In this event, campuses are required to request acceptance of their submission via an directed to the Chancellor s Office FIRMS contacts listed in Chapter 7. The request must explain the reason(s) for the errors and why correction cannot be made. An electronic copy of the FIRMS validation report, with the errors that can t be corrected highlighted, must be attached. The Chancellor s Office, in response to these requests, will either document acceptance of the file containing the error or will provide guidance on correction and request re-submission of a clean file. If an accepted error is repeated in subsequent quarters, the campus must file a new acceptance request in that subsequent quarter, with a copy of the current validation report reflecting the repeated errors and a copy of the previous correspondence explaining the reason for the errors and reflecting the Chancellor s Office acceptance of them. The Chancellor s Office only performs the manual edits detailed at 3.4.2, Chancellor s Office Manual Edits, for the fourth quarter. However, the Chancellor s Office will identify abnormal balances at the conclusion of the 3 rd quarter and report their findings to the campuses in Legal Manual The California State University

153 FIRMS SUBMISSION preparation for year-end procedures. Control accounts will also be checked at the end of the 3 rd quarter to confirm they are not being used to record transactions; exceptions are reported to the campuses. Quarterly submissions are due no later than the 10 th business day following the end of the quarter. Before the end of the first quarter of each fiscal year, the Chancellor s Office updates the specific deadlines for the quarterly submissions at the Systemwide Financial Standards and Reporting (SFSR) website (see the FIRMS Submission Dates and Guidelines option at In addition to the quarterly submissions and so that the CSU s cash position can be regularly monitored, the Chancellor s Office requires monthly FIRMS submissions. For all non-quarterend months, the file is due no later than the 15 th of the month following the end of the previous month. (NOTE: The deadline schedule for quarterly submissions must still be strictly observed.) Although campuses may run a FIRMS edit report for these non-quarter-end months, the Chancellor s Office does not require that the identified errors be resolved. The data does not receive formal system acceptance, but is picked up and archived by Cash Management. Campuses should, at a minimum, be sure the cash balances are correct in these non-quarter-end monthly submissions. Section 3.3: Year-End Submissions For year end, three FIRMS files are submitted by all campuses: 1. Campus Pre-Closing File This file must reflect the status of the accounts after all accruals consistent with legal basis accounting and adjusting entries have been posted, but before closing entries are recorded. Campuses are required to report all assets, liabilities, fund equity, revenues and expenditures. The account balances in the FIRMS file must agree with the preclosing data reported to the SCO as of June 30. The pre-closing file may be submitted two working days PRIOR to closing the accounting records, but no later than the date specified in Chapter 6 of this manual. This provides the Chancellor s Office adequate time to review the submission for data quality, thus preventing the necessity for later reopening the books to correct errors, making adjustments, and reclosing. After the Chancellor s Office verifies the data, closing procedures can commence. 2. Campus Post-Closing File This file must reflect the status of the accounts after the closing entries have been posted. Campuses are required to report all assets, liabilities and fund equities after revenue and expenditure accounts have been closed to fund equity. The account balances in this FIRMS file must agree with the post-closing data reported to the SCO as of June Legal Manual The California State University

154 FIRMS SUBMISSION 3. Auxiliary Organization File In addition to submitting their own financial data via the files described in (1) and (2) of this section, campuses must submit on behalf of their auxiliary organizations pre-closing financial data in FIRMS format. For the submission made in July (see Chapter 6 for auxiliary submission deadlines), the following line items will be required for each auxiliary organization: Total assets Total liabilities Total fund equity Revenues o Federal grants and contracts o State grants and contracts o Local government grants and contracts o Private contributions o Federal facilities and administrative (F&A) cost recovery o State facilities and administrative (F&A) cost recovery o Local government facilities and administrative (F&A) cost recovery o Other facilities and administrative (F&A) cost recovery o Sales and services of auxiliary enterprises o Other revenues Expenses o Salaries and wages o Benefits o Miscellaneous expenses A template is provided for submission of these line items --- go to and click on Aux Org Legal Basis Template. When the data entry into the template is complete, it should be converted to a text file and submitted to FIRMS using the submission process described in the FIRMS Data Submission Guide --- see link below for location. A later submission in October will include more detailed information that should tie to the audited financial statements. (Refer to the CSU GAAP Reporting Manual for details concerning the information required for the October submission.) Various consolidated reports generated from these three files are submitted to the State Controller's Office (SCO), the Bureau of State Audits, the Department of Finance, bond auditors, and other stakeholders. It is, therefore, very important that the necessary steps be taken to ensure the reliability of the data. It is the responsibility of the campus accounting officer/financial manager to immediately notify the Chancellor s Office Systemwide Financial Legal Manual The California State University

155 FIRMS SUBMISSION Standards & Reporting Department of any known errors contained in the files and to coordinate file resubmission with them. For further information concerning the campus FIRMS submission process, see the FIRMS Data Submission Guide at submissions.pdf. Section 3.4: Automated FIRMS Edits/Chancellor s Office Manual Edits The submissions described in Section 3.2 are subjected to two types of edits, those that are built into FIRMS and those performed by the Chancellor s Office Automated FIRMS Edits The automated edits fall into two categories: Edits which check for invalid values; Edits which evaluate the data against established business rules. The first type, the check for invalid values, includes an edit that compares each campus s interagency transfers and interagency receivables/payables transactions against data which are generated by the Chancellor s Office accounting group and which they record in a report known as the Accounts Payable/Accounts Receivable Report. Differences between the interagency transfers and interagency receivables/payables transactions reported by the campus and recorded by the Chancellor s Office in its report will appear on the FIRMS Validation Report. The system also confirms that intra-agency transfers and intra-agency receivables/payables net to zero. The second type, the validation against business rules, checks data compliance against standard business practice. For example, Transactions in the scholarship and fellowship program group can only use financial aid object codes; FTEs can only be associated with salary and wage object codes; Interagency receivables must equal interagency payables. For a complete list of automated edits, refer to the Data Validation section of the FIRMS Data Submission Guide at Chancellor s Office Manual Edits In addition to the edits built into FIRMS, the Chancellor s Office performs manual reviews of certain data included in the year end pre-close file as follows: Legal Manual The California State University

156 FIRMS SUBMISSION Balances in object code , RMP Expenditure Offset, reported by the campuses will be validated against information provided by the Systemwide Budget Office. The rules below are applicable: If there are no SWAP transactions, the transfers between state funds 0001, General Fund, and 0948, Trust Fund, must net to zero on the campus books. If there are SWAP transactions, the transfers between state funds 0001, General Fund, and 0948, Trust Fund, must net to zero at the system-wide level. Type codes associated with governmental and non-governmental accounts receivable will be checked. Object code , Accounts Receivable Revenue, must carry a code of G (for governmental). Object code , Accounts Receivable Operating Revenue, must carry a code of P (for proprietary) or F (for fiduciary). All accounts will be reviewed for abnormal balances, generally defined as: For asset and expense object codes, a credit balance; For liability, equity and revenue object codes, a debit balance. There are exceptions to the general definition. For example, Contra-asset accounts, such as accounts receivable allowances, carry credit balances; Object code , Offset for Reserves/Fund Balance, an equity account, will carry a debit balance; Object codes , Prior Year Expenditure Adjustment, and , Prior Year Surplus Adjustment, can have either a debit or credit balance. The check for abnormal balances will not automatically result in rejection of a campus s data, but campus personnel will be required to supply explanations for the existence of such balances. Appendix 20, Abnormal Balance Explanation Template, is provided to facilitate the documentation of explanations in a standard format for the Chancellor s Office. Information provided by the campus should be in enough detail to allow the Chancellor s Office to evaluate the propriety of the balance. Campuses should also be aware that if abnormal balances exist and are not corrected, the SCO may question them upon receipt of the SAM 99 file (see Chapter 4 for further information about the SAM 99 file) or the hard copy reports prepared by the Chancellor s Office. FIRMS has been programmed to identify all cash and investment accounts possessing credit balances. The system will return a WARNING message rather than an ERROR message. The former does not prevent the campus from making an acceptable (also known as a clean ) submission to FIRMS, but the latter will. Although the campus can complete its year-end pre-close submission with credit balances in cash and investments, Legal Manual The California State University

157 FIRMS SUBMISSION the Chancellor s Office will also identify these balances in its manual review and can request further explanations. Campuses are urged to analyze abnormal balances at the CSU fund level before making their FIRMS and SCO submissions (further discussed in Chapter 4) to ensure the accuracy of the data. Trial balances will be reviewed to confirm control accounts are not being used by the campuses to record transactions. To help campuses identify control accounts in FIRMS, the Chancellor s Office added the words Control Account at the end of each control account s object code description. FIRMS control accounts are used to describe the numbering convention used for a group of accounts. Like the tiered state general ledger accounts in the Uniform Codes Manual, the control accounts provide the logical structure for the detail accounts and may be used for roll-up in summary level reports. For example, is the Other Current Liabilities group of accounts and each object code in the group begins with the digits Therefore, Other Current Liabilities detail object codes include: , Cash Overages; , Uncleared Collections; , Accrued Leave Time; etc. The reserves established in CSU funds 441, CERF Extended Education, and 485, CSU Operating Fund, will be compared both to object code , Offset for Reserves/Fund Balance, and to the fund s equity balance to confirm (1) the reserves and the offset net to zero and (2) the entire equity balance of these funds has been distributed to the reserve object codes, with any residual undesignated amount being credited to object code , Fund Balance-Undesignated/Unallocated. Reserve object codes include: Reserve for Capital Improvement Reserve for Equipment Acquisition Reserve for Program Development Reserve for Future Debt Service Reserve for Facilities Maintenance & Repairs Fund Balance-Designated/Obligations Reserve for Catastrophic Events Reserve for Encumbrances Fund Balance Designated for Financial Aid Cash and investments object codes (101XXX and 102XXX) in capital outlay funds will be checked to confirm their balances are zero. The balance in object code , Cash/Short-Term Investments (SWIFT), will be checked to confirm it is zero for state funds other than CSU funds deactivated within the fiscal year will be reviewed to confirm a zero fund balance as of June Legal Manual The California State University

158 FIRMS SUBMISSION With regard to the post-close submission, the Chancellor s Office will verify the following: The change in asset and liability balances is zero. The sum of the changes in revenue and expense accounts is equal to the sum of the changes in equity accounts. Campuses are closing revenue and expenses to the correct equity account for each state fund. Staff should refer to the schedule Fund Equity Object Code by Fund at Appendix 1 for guidance. Activity in CSU funds pending deactivation after July 1 net to zero. Section 3.5: FIRMS Data Element Dictionary In addition to the FIRMS Data Submission Guide referenced in this chapter, the Chancellor s Office provides an on-line FIRMS Data Element Dictionary at This document provides descriptive information regarding the various data elements used in the system. It serves as a tool for training new staff and is a valuable reference tool for all personnel maintaining the CSU s financial records. The screen for CSU fund provides search options which aid the user in locating the desired information. A user can search for a particular CSU fund. The search will identify the associated state fund. Or, a search can be conducted by state fund to identify all valid CSU funds associated with it. Additionally, searches can be done to find all state or CSU funds which have been deactivated. Section 3.6: 2011/2012 Object Code, CSU Fund and Legal Edits Updates Each year codes are identified which are no longer needed and can be deactivated and transactions occur necessitating the creation of new codes. In previous versions of this manual, this section provided information on new and deactivated codes. In the 2011/2012 fiscal year, the Chancellor s Office began providing this same information at the Systemwide Financial Standards and Reporting (SFSR) website ( Three Excel files are available there: one for newly deactivated or created funds; one for newly deactivated or created object codes; and one for newly allowed or removed legal edits. (For more information concerning the Legal Edits Table, see Section in Chapter 1 of this manual). Each file includes the status of a value (active or obsolete), the FIRMS update date, the effective date of the change, and the reason for the change. The information is updated monthly. The website provides information for current year updates only. Historical data will be maintained as part of Appendix 19 of this manual, CSU Fund and Object Code Definitions. This Legal Manual The California State University

159 FIRMS SUBMISSION appendix is new for 2011 and 2012, but is only a partial listing of funds and object codes. Due to the number of funds and object codes, it was not possible to complete this document in a single year. The Chancellor s Office will continue to add to it until all funds and object codes are defined Legal Manual The California State University

160 CHAPTER 6 Major Changes Page # Description of Change Reason for Change All Chapter has been updated for 2012 deadlines. **Campuses should particularly note changes in the postclose schedule. The SCO has accelerated their reporting schedule and as a result most submission dates to both the CO and the SCO are earlier than they have been in the past.** Legal Manual California State University

161 CHAPTER 6 DEADLINES Pre-close cutoff dates and submission dates for FIRMS and SCO reports for fiscal year ended June 30, 2012 to be observed by the campuses are provided in the table below. DATE DESCRIPTION RECIPIENT FORMAT Pre-Close Cutoff/Issue Dates May 7 June 8, As prescribed Interval for submission of SAM 99 test files SCO 2012 by SCO June 15, 2012 June 15, 2012 Last day for documents to be received by SCO for guaranteed processing prior to year end Last day for requesting CPOs CO contact: Lilian Audet Legal Manual The California State University SCO June 28, 2012 PayTape file available from SCO Campus June 29, 2012 Last day for requesting CSURMA reimbursements (no IDL/NDI requests) CO contact: Alice Kim July 2, 2012 Last day to provide interagency Due to/from information CO contact: Lilian Audet July 4, 2012 Last day for payroll to be posted to the GL (for CSURMA, IDL/NDI CPO) CO contact: Alice Kim/Kelly Cox Last day for issuing CPOs July 5, 2012 CO contact: Lilian Audet July 6, 2012 ITT Report published by CO CO contact: Sylvia Olivas Bank of CSU statement issued July 6, 2012 CO contact: Oliver Ravela Fund Balance Clearing schedule issued July 9, 2012 CO contact: Syliva Olivas CO CSURMA CO CO Campus Campus Campus Campus As prescribed by SCO Excel template As prescribed by the SCO PeopleSoft Post-Close Campus Submission/CO Information Issue Dates July 11, 2012 First date SCO will accept final SAM 99 As prescribed SCO submissions by the SCO July 16, th quarter FIRMS submission CO FIRMS July 20, 2012 Fixed Assets Template CO Excel template

162 Deadlines Report 22 (contingent liabilities) for Excel July 20, 2012 CO proprietary funds template SAM 99 data file and all required hard copy As prescribed SCO July 24, 2012 reports* by SCO SCO financial report revisions for funds As prescribed August 13, 2012 SCO other than General Fund, if required by SCO October 8, 2012 GAAP reporting package** CO Web template Excel SCO GAAP data CO October 12, 2012 template October 23, 2012 FIRMS GAAP submission, final version CO FIRMS * The Chancellor s Office needs to observe two submission dates, one for its SAM 99 data file and one for the consolidated reports relating to non-governmental funds. For 2012, the latter submission date is August 13. The certification for the SAM 99 data file must be filed on July 24. ** This is the due date for the initial submission of the complete reporting package. See the GAAP audit schedule for more complete information. Submission dates to be observed by auxiliaries are provided in the table below. DATE DESCRIPTION RECIPIENT FORMAT July 31, 2012 FIRMS legal basis submission CO FIRMS September 28, 2012 Audited financial statements, with Campus & supplementary schedules CO Hard copy October 31, 2012 IPEDS data submission, GAAP basis CO FIRMS December 3, 2012 Campus president s review of auxiliary financial statements CO Hard copy December 14, 2012 Single Audit Report (A-133) CO Hard copy Legal Manual The California State University

163 CHAPTER 7 Major Changes Page # Description of Change Reason for Change 1 1 Roberta McNiel has been removed as a FIRMS and legal reporting contact and added as the GAAP contact at page 2. Sean Boylan has been removed as the contact for cash management issues, including allocation orders, due to his retirement in December The new contact is Robert Eaton. Oliver Ravela has also been added as a cash management contact, but only in connection with Bank of CSU statements. Changes to this chapter result from personnel changes at the CO and SCO. 1 Contacts for legal accounting issues remain the same, with the addition of one: Sylvia Olivas. Sylvia is the contact for any inquiries concerning the ITT Table and the Fund Balance Clearing Schedule. The titles of all other contacts listed have been updated. 2 Ben Cheng has been removed as the contact for GAAP accounting issues due to his resignation from the CSU in February The new contact is Roberta McNiel. 3 Yves Hepperle replaces Cheryl Kwiatkowski as a secondary contact for FIRMS technical problems. 3 All but one of the SCO contacts, Lina Chan, has changed. The new contacts are listed Legal Manual California State University

164 CHAPTER 7 CONTACTS For further information concerning the topics covered in this manual, the following personnel may be contacted. Chancellor s Office Concerning reporting issues, including FIRMS submissions, tables and edit errors Sedong John Director, Systemwide Financial Standards & Reporting sjohn@calstate.edu Jackie Chamberlin Sr. Manager, Financial Systems, Statutory Reporting & Tax Administration jchamberlin@calstate.edu Su Chen Financial Systems & Reporting Analyst schen@calstate.edu Concerning cash management issues, including allocation orders and Bank of CSU statements Robert Eaton Senior Director, Cash Management Operations reaton@calstate.edu Oliver Ravela (specifically regarding Bank of CSU statements) Banking Services Analyst oravela@calstate.edu Concerning legal accounting issues Legal Manual The California State University

165 Contacts Jean Gill Assistant Controller, Financial Services Accounting Kelly Cox Associate Director, Financial Services Accounting Lilian Audet Manager, Systemwide and CO Accounting Alice Kim Manager, Enterprise and CO Financial Reporting (including CSURMA and CSUI) Terri Williams Manager, SRB and Capital Projects Sylvia Olivas (specifically regarding ITT Report and Fund Balance Clearing Schedule) Manager, CO Reporting Projects Concerning GAAP accounting issues Roberta McNiel Associate Director, Financial Reporting Concerning training or other financial accounting related issues not listed above Lily Wang Director, Management and Accounting Practices Legal Manual The California State University

166 Contacts Sherry Pickering Associate Director, Management and Accounting Practices Concerning SAM 99 FTP issues Amy Ahearn Financial Information Systems Administrator Lorissa Cheney Financial Information Systems Specialist Concerning FIRMS technical problems Khai Nguyen (Primary) Senior DBA Work Cell 8:00 am 10:00 pm 7 days Mary Simeon (Secondary) Senior Programmer/DBA msimeon@calstate.edu Work Cell 8:00 am 10:00 pm 7 days Yves Hepperle (Secondary) Project Development Manager yhepperle@calstate.edu Work Cell Concerning Oracle/PS Finance 9.0 or CFS All tickets entered by campuses as being Urgent will follow the procedures as outlined in CFS Incident Management Procedures located on the CMS website at: Legal Manual The California State University

167 Contacts The Service Center will contact the on-call person relative to any Urgent tickets received after hours. State Controller s Office Lina Chan Section Manager, Budgetary/LegalReporting lchan@sco.ca.gov Cecilia Li-Szeto Administrator I Specialist (Lead) cli-szeto@sco.ca.gov Howard Mintz Associate Accounting Analyst (primary analyst/contact) hmintz@sco.ca.gov Perry Tseng-Liu Associate Accounting Analyst (back-up analyst) stseng-liu@sco.ca.gov Legal Manual The California State University

168 CHAPTER 8 Major Changes Page # Description of Change Reason for Change Update subsection 8.3.5, CSURMA to describe the year end procedures that will be followed for the 2011/12 close 8.3.7, General Fund and Trust Tie Points, has been update to remove ARRA for the fiscal year 11/12. CSURMA will no longer accrue IDL/NDI nor UI. No ARRA was allocated during 11/ Legal Manual California State University

169 CHAPTER 8 Year End Instructions Section 8.1: Introduction This chapter includes information and instructions for year end close. To begin the chapter, the year end checklist section presents an overview of the tasks and milestones campuses should encounter during the year end close process. The Year End Instructions section includes several year end specific subtopics. These sections are listed below so they can be easily identified and accessed SWIFT SWIFT Negative Balances Revolving Fund Reclassification Obligations SAM Errors CSURMA IDL/NDI and UI Accrual Process Changes Deductible Recovery Interagency Transactions Process Fund Balance Clearing Interagency Transaction Report General Fund and Trust Fund Tie Point RMP Expenditure Offset from GF (FIRMS Object ) Year End Reserve Entry PO Rollover Closing Rules FIRMS Submission SCO Reporting Submission of Fixed Assets Data for Proprietary and Fiduciary Funds to the Chancellor s Office Legal Manual California State University

170 Section 8.2: Year End Checklist Section 8.2: Year End Checklist How to use this Section This section begins with reminders of any new steps or entries that need to be considered as part of the campus close procedures as well as some ongoing entries that are problematic for the campuses. The checklist is, in fact, not a list. Instead it provides an outline of the year end closing related tasks and milestones that all campuses will encounter and is organized by month to show approximately when these should take place to close successfully by the required deadline. It is recommended that the campus create, maintain and review a locally maintained year end close checklist that specifically highlights dependent tasks, so that no tasks are forgotten and overall progress towards the close can be tracked and areas for process improvements in future year end closes can be identified Year End Checklist Reminders for Close Close General Fund without accruals or current year Budget Balance Available (BBA) Post entries to reclassify the campus revolving for unpaid claims Do not accrue: Payroll CSURMA campus premiums State University Grant (SUG) Prepare for designated Fund Balance entries for CSU Operating Fund ( ) and CERF ( , 442,443 & 444) Be sure that the designations include and equal post-close equity by CSU funds (441, 442, 443 & 444 must be broken out). Check List April/May Campus allocation of 3 rd quarter SWIFT/SMIF investment earnings 4 th quarter (April, May and June) SWIFT/SMIF interest and unrealized gains (losses) will NOT be distributed for accrual in GAAP Load SAM 99 Accrual Reversal Tape SAM 99 should be run with Accrual Reversal checkbox marked from this point forward Analyze data dependencies for month and year-end entries Legal Manual California State University

171 Section 8.2: Year End Checklist Meet with departments or contact third-party providers to determine dates information will be ready or to identify necessary cut-off dates required to meet deadlines CO will process swap CPO/AO documents to spend down the General Fund. Book entries accordingly. May Upon notification from the CO, submit test SAM 99 Files to the SCO until SCO personnel indicate a clean submission. Collect data and analyze capital leases, capital projects & other potential complex transactions Develop strategy for booking to ledger Review reverting funds Clear any remaining assets, liabilities and encumbrances Confirm current year revenues and expenses will close to Fund Balance Clearing Review closing rules and trees Update for reverting/reverted funds Use PS queries based on reversion date and compare to campus trees Remove from Rollforward Tree to the NO Rollfoward tree Confirm all 0948 funds close to Ensure budget and actuals equal (BBA=0) in the following CSU Operating Fund (CSU fund 485) accounts: Transfers In RMP SWAT Transfers Out RMP SWAT RMP Expenditure Offset from GF Review revenue in CSU Operating Fund Make sure appropriate revenues are recorded Budget and Accounting need to develop a plan for year-end reserve entries For Option 2 Cost Recovery Campuses, Budget and Accounting need to develop a plan for Activity Period 07 adjustments Early June Close and reconcile May data Notify auxiliaries of year-end deadlines see Chapter 6 for specific deadlines Request contingent liabilities list For guaranteed processing, submit to SCO no later than June 15 final claims/pfas/transfer Requests in hand No later than June 27th Review and adjust A/R reserves Remember to use contra-revenue allowance/bad debt accounts Clear all known SAM 99 reconciliation issues Clear all known FIRMS error messages Remember, warning messages usually turn to errors in the 4 th quarter Legal Manual California State University

172 Section 8.2: Year End Checklist No later than June 29 th (or campus scheduled date) Confirm all requisitions are sourced to a purchase order or cancelled Complete final Student System feeds to A/P; prepare for final fiscal year check run Post final ProCard statement Confirm receiving has been completed Close purchasing Record final cash receipts Close cash receipts Perform a final check run/complete final claim processing Close accounts payable July Week 1 Post/reconcile payroll Record all chargebacks All CSURMA reimbursement requests should be ed to CSURMA_acctg@calstate.edu no later than June 29 th. CO data will be communicated to campuses via AD NOAT/CPO for review and/or entry no later than the 5 th business day Non-delegated CWIP / additions to fixed assets (IT infrastructure) Fund Balance Clearing (FBC) 4 th Quarter CSURMA Deductible Recovery CPO Final CSURMA Reimbursement CPO Interagency Transaction Report, including CSURMA IDL/NDI/UI accruals Run and post CSU Year End Obligations process Complete manual obligations Complete fixed assets and retention entries Complete reconciliation of all subsystems to ledger: ARBI, Student, etc. Complete routine month-end journal entries Load WFB bank statement and begin reconciliation Cleared checks/paid SCO claims (CD102)/SAM 99 files Complete bank reconciliation Bank of CSU statement will be distributed no later than the 5 th business day Resolve negative cash balances Complete SAM 99 reconciliation and clear all reconciling items Revolving fund reclassification should Reclassify FBC for claims filed to Due To Trust for Direct Vendor Pay (DVP) State Pay Vendor (SPV) goes to claims filed If needed, accrue FBC entries created by Labor Cost Distribution (LCD) July Week 2 All entries, specifically CSU Operating Fund, now under the supervision of campus budget office to ensure budget is aware of ending balance Legal Manual California State University

173 Section 8.3: Year End Instructions Ensure budget and actuals equal (BBA=0) in the following CSU Operating Fund (CSU Fund 485) accounts: Transfers In RMP SWAT Transfers Out RMP SWAT RMP Expenditure Offset from GF Review revenue in CSU Operating Fund Make sure appropriate revenues are recorded Review General Fund (SCO fund 0001) that only salary PFAs (690003) have been record. BBA should now be zero. Notify CMO immendiated if any balance remains. Clear any remaining FIRMS errors Final review of program/ledger balances Clear any remaining deficits Book reserve entries to CSU Operating Fund ( ) and CERF ( , 442, 443 & 444) Close xxcmp business unit to prevent further entries Generate final SAM 99 File Perform the final FIRMS derivation Close xxcsu business unit to prevent further entries Prepare manual reporting package for management review July 12 th 16 th July 12 - Management review/approval July 13 Latest date for FIRMS submission to CO s SFSR group for 24-hour review July 16 FIRMS submission completed, pre- and post-close Transmit final SAM 99 file to SCO Run purchase order rollover in xxcmp and xxcsu Submit all required SCO reports per instructions in Chapter 4 Submit all CO required reports per instructions in Chapter 4, Section Section 8.3: Year End Instructions SWIFT SWIFT Negative Balances At year end, the Cash Short Term Investments SWIFT accounts within each CSU fund should not be negative. To ensure that the campus postings for each CSU fund are not negative, the FIRMS edits process validates the data. During the editing process the campus is notified when a negative balance has been detected. There may be special circumstances in which a fund might be negative, in which case a manual FIRMS override by the Director of Financial Standards and Systemwide Reporting is required Legal Manual California State University

174 Section 8.3: Year End Instructions If the negative balance is related to the management of two separate cash accounts, one for payroll, account , Fund Balance Clearing (FBC), and another for disbursement and deposits, account , Cash Short Term Investments SWIFT, then a year-end entry to exchange funding sources is required. A suggested process would be to query all PeopleSoft funds within state fund 0948 for cash balances within accounts and Analysis is then needed to determine how much should be moved from SWIFT to FBC or vice versa. Once the amount is determined, process a journal entry to record the cash movement. Note: Each PS fund affected should have the same total cash (sum of FBC and SWIFT) at the beginning (A) and end of the process (H). The adjusting entries within FBC (C) should net to zero. The total of all funds should have the same grand total at the beginning and end of the process. The adjusting entries within SWIFT account (F) should net to zero. The total SWIFT cash of all funds should have the same grand total at the beginning and end of the process. A change to the overall balance will cause out-of-balance issues with your bank reconciliation Legal Manual California State University

175 Section 8.3: Year End Instructions Note: Campuses that have implemented the central cash clearing fund within state fund 0948, where FBC is managed in a campus central fund, should not have this issue. See Chapter 2, section for further information about a campus sweep fund Revolving Fund Reclassification The Revolving Fund (CSU Fund 499) may be used to pay invoices charged to claimable funds, and issue advances if not recorded in the source fund. This fund will typically have a negative cash balance throughout the fiscal year. At year end, this fund must net to zero. This is accomplished by reclassifying all non revolving fund type activities recorded here using Due To/Due From accounts if necessary. Accounting entries will be needed at year end if the SCO checks for all claim schedules that have not been received and deposited by year end. A. The CSU Claim Process The CSU Claim process utilizes a claims clearing account (103xxx) within the revolving fund to track claims that have been issued but not yet reimbursed by the State Controller s Office. In other words, the balance in this account represents all claims that have not yet been paid by the State Controller s Office. During the claims process, vouchers that have been charged to a claimable fund are extracted and posted. This process ultimately establishes a receivable in the claims clearing account and reduces cash within the revolving fund. It is the balance in the claims clearing account that needs to be reclassified to the appropriate Due To/Due From accounts at year end. Following is an example of a claims clearing account balance per the Trial Balance Report for SCO Fund 0948 or CSU Fund 499 or campus PeopleSoft Fund DVP Legal Manual California State University

176 Section 8.3: Year End Instructions After determining the unpaid balance of $395, at year end the campus will need to determine what claims/funds are unpaid. An entry will have to be made for each fund at year end to reclass fund balance clearing and to the revolving fund to reclassify the Accounts Receivable. B. Identifying Outstanding Claims and Associated Due To/Due From Accounts The first thing needed will be to identify the outstanding claims that make up the balance in the claims clearing account. You will then need to determine which DUE FROM account is associated with each claim. The following steps will assist you in obtaining the above information. Build Query 1 1. In Query Manager, search for the baseline query CSU_CLM_DTL_SUBMIT_NOT_RECON 2. Select the icon to Edit the query and click on the Records tab. 3. Add the record CSU_FNAT_ALL_V1 and Join to A = CSU_CLAIM_DTL AP Claim Detail Table Legal Manual California State University

177 Section 8.3: Year End Instructions 4. Add the fields CSU_SCO_FUND and CSU_FUND_TYPE (highlighted) to the existing list of fields selected for the baseline query. 5. SAVE THE QUERY using the defined format for your campus Legal Manual California State University

178 Section 8.3: Year End Instructions Eg. Name: CO_YE_CLM_DTL_SUBMIT_NOT_RECON Description: YE Clm Dtl Submit & Not Recon 6. Run the query and download the results to Excel. Reconcile the output to the claims and ledger balance representing the outstanding claim balance amount. Build Query 2 1. Create a second query to find the Due From accounts created by the campus using the two records CSU_AAT_TBL and CSU_AAT_XLAT. 2. Select the fields shown in the screen print below: 3. Add the criteria CSU_SCO_GL_ACCT like 1410% to display the Due from accounts that the campus has established. 4. SAVE THE QUERY using the defined format for your campus. Eg. Name: CO_YE_CLM_DUE_FROM_ACCTS Description: YE Due From Accts for Unpd Clm 5. Download the query results to Excel. In Excel, label the sheet containing the data from query 2 Due Froms. Move the results of this query into the workbook that contains the results from the outstanding claims query. [CO Only: From the results of query 2 that displays the Due from accounts, delete the row in the output for Account ] Legal Manual California State University

179 Section 8.3: Year End Instructions 6. In the Excel sheet with the output from Query 2, insert a column to the left of the column labeled State GL Account. In the new column, add the header description SCO Fund to describe the data in the column. In the first field in the new column, add the formula =RIGHT(B3, 4). This will extract the SCO Fund from the last four digits of the State GL account. Copy the formula to the remaining cells in the column. 7. In the Excel sheet with the output from Query 1, in the first empty column after the query output, add the header description Due from Reclassification to describe the data in the column. In the first field in the new column, add the formula =VLOOKUP(Q3,'Due Froms'!$A$1:$D$28,4,FALSE). The formula will take the SCO fund associated with the claim and look up the SCO fund from the State GL account in the Due From sheet. When the funds match, the campus PeopleSoft account in column 4 of the table will be displayed as the result of the formula. Copy the formula to the remaining cells in the column. The Reversing Journal Entry Once you have identified the appropriate accounts, you will need to create a REVERSING journal entry. The resulting entry should be made as follows: 1. In the campus revolving fund, debit the Due From account shown in column S (105xxx) and credit the A/R account representing the outstanding claims balance (103xxx). 2. In the campus original claimable fund, debit the campus account representing FIRMS object code Fund Balance Clearing and credit FIRMS object code Due to Trust Fund. At headquarters, the Chancellor s Office must first identify the type of SCO fund before making the second entry indicated above. The criteria for that identification and the correct entry to make as a result of the analysis are recorded in the attached spreadsheet. The entries needed at year end are indicated here in red and as item #4. C:\Documents and Settings\spickering\De Legal Manual California State University

180 Section 8.3: Year End Instructions The end result: Here s an example of the Trial Balance for the revolving fund AFTER the entries have been made. The balance of all unpaid claims for SCO fund 6041 is now in the Due From account Legal Manual California State University

181 Section 8.3: Year End Instructions State Pay Vendor (SPV) Claims A State Pay Vendor (SPV) claim is when a claim has been sent to the SCO asking that the State pay the vendor directly. Any outstanding SPV claims at June 30 must be reclassed with a debit to the campus account representing FIRMS object code Fund Balance Clearing and a credit to the FIRMS object code Claims Filed. REMINDER: For campuses using SPV, unpaid claims may cause Recon Factors on your SAM99 due to timing differences. C. Resources: RMP Training October 24-25, 2007 Materials Tab 4 RMP Revolving Fund and Pooled Investments Located at: Year-End Revolving Fund Closure CSU Fund 499 Located at: Legal Manual California State University

182 Section 8.3: Year End Instructions Obligations Goods and services received by the campus as of June 30 but not yet invoiced, must be obligated, or accrued, for financial reporting. Throughout the year, legal reporting combines posted vouchers not yet paid and encumbrances in State GL account 3010 Accounts Payable. Obligations with an encumbrance require journal entries at year end to reclassify the amount from an encumbrance balance to an Actual ledger balance. Obligation entries related to three-way match purchase orders, that require receiving, are created by an automated process in PeopleSoft called CSU Year End Obligations, also known as the CSUGL015. This process uses information captured in PeopleSoft to combine the purchasing, accounts payable and receiving information to create reversing journal entries to the Actuals and Encumbrance Ledgers to book the obligations. More information about this process is available in the CFS 9.0 Business Process Guide Year-End Encumbrances and Accrual Processing. Obligation journal entries for purchase orders that do not require receiving must be created manually for both the Actuals and Encumbrance Ledgers. Please note that a total of three journal entries will be created to complete this task, one Actual journal entry set to auto-reverse and two Encumbrance journal entries, one dated June 30 and the other dated July 1. For more information about Encumbrance journal entries, please see Chapter 2, Section 2.8. Finally, obligations, goods and services received by the campus by June 30 that are not connected to a purchase order, must be accued to the Actuals ledger via a manual journal entry. Note that the campus may choose to limit the search for obligations for the Legal reporting, opting to speed the Legal close and focus the search for obligations as part of the search for unrecorded liabilities undertaken as part of GAAP reporting process. Minimally, the campus should utilize the automated Year End Obligations process SAM Errors From July 1 st until the campus receives the Accrual Reversal tape from the State Controller s Office (SCO) the Reverse: Agency Original Prior Year Accuals line on the SAM99 is the sum of the period zero balances in Asset and Liability accounts for the state fund. The Accual Reversal tape contains the reversal of the accrual, the Asset and Liability, reported to the SCO via the SAM99 submission in the prior year for funds included on the electronic file, see Chapter 4 SCO Reporting for additional information about the SAM99 submission process. Once the Accrual Reversal tape is received and loaded into PeopleSoft, the Accrual Reversal Tape flag should be used to run the report Legal Manual California State University

183 Section 8.3: Year End Instructions When the Accrual Reversal Tape flag is clicked, the report will replace the campus ledger balances shown on the Reverse: Agency Original Prior Year Accuals line with the balances shown on the SCO tape. While these balances should match, it is possible that the SCO adjusted the campus accruals. When there is a mathematical difference between the Accrual Reversal Tape balance and the campus period zero balances that would otherwise be reported on the Reverse: Agency Original Prior Year Accuals line, the SAM99 indicates there is a difference by populating the SCO Prior Year Accrual Adjustments row on the report with the difference. This is commonly referred to as a 6807 error, referring to the State GL account shown on this line Legal Manual California State University