FOUNDATIONS IN UNIVERSITY FINANCE FINANCIAL SYSTEMS ADMINISTRATION

Transcription

1 FOUNDATIONS IN UNIVERSITY FINANCE FINANCIAL SYSTEMS ADMINISTRATION

2 Financial Systems Administration Sterling George Director, Financial Systems Administration Tracey Mui Financial Systems Analyst/ Project Leader Participant Outcomes Identify and understand the source and purpose of entries on your accounts Understand and interpret payroll accruals Be familiar with the basics of year-end processing and what it means to you INDIANA UNIVERSITY 1

3 Agenda Functionality of the Core Accounting Cycle System Generated Accounting Entries Year-End Processing Overview INDIANA UNIVERSITY 2

4 Financial Systems Administration GENERAL LEDGER: Functionality of the Core Accounting Cycle INDIANA UNIVERSITY 3

5 Functionality of the Core Accounting Cycle What is the General Ledger? Tables of data Batch jobs and processes to populate those tables INDIANA UNIVERSITY 4

6 Functionality of the Core Accounting Cycle General Ledger: A collection of tables General Ledger Detail (All the fiddly bits) Sufficient Funds (custom balances by account) General Ledger Balance (Summarized by Object Code into monthly buckets) Open Encumbrances (Outstanding encumbrance amounts) Account Balance (Summarized by Object Code and Balance Type) Reversals (Holds entries to be reversed on a specific date) INDIANA UNIVERSITY 5

7 Functionality of the Core Accounting Cycle The Ledger Entry: the basic unit of GL information. May include: Chart Code Debit/Credit Code Document Number Sequence Number Account Number Fiscal Year Sub-Account Ref Doc Type Object Code Fiscal Period Org Doc Number Ref Origin Code Object Type Transaction Date Sub-Object Code Ref Doc Number Balance Type Post Date Org Ref ID Encumbrance Update Code Amount Document Type Project Code Description Origin Code Reversal Date 6

8 About how many general ledger entries do we post in a month? Use your clicker to submit your answer: A. 1, % B. 10,000 C. 100,000 D. 1,000,000 E. Billions (with a B ) 0% 0% 0% 0% 1,000 10, ,000 1,000,000 Billions (with a B ) INDIANA UNIVERSITY 7

9 Where do ledger entries come from? $ INDIANA UNIVERSITY 8

10 Where do ledger entries come from? KFS Any e-doc with a Pending Ledger Entries tab will send entries to the ledger once approved. They post with the doc type of the originating document (GEC, BA, etc.) and the workflow document number as their document number. Check or Direct Deposit disbursements processed in KFS also generate entries even though they re technically not e-docs. INDIANA UNIVERSITY 9

11 Where do ledger entries come from? KFS Enterprise Feeds Enterprise Feeds are transactions sent to us from other IU systems. SIS (Student Information System): Income and Expenses related to student activity in that system HRMS (Human Resources Management System): Expenses related to Payroll These are large and trusted systems that have their own elaborate validation processes. INDIANA UNIVERSITY 10

12 Where do ledger entries come from? KFS Enterprise Feeds Collector Feeds The Collector (also called ID Billing) is an interface available to departments authorized to send transactions directly to the ledger. These are not e-docs. Most post with doc types beginning with ID or EB. Doc type identifies who sent the charge, for example: ID01: Bloomington Physical Plant ID02: IUPUI Physical Plant ID04: UITS ID22: MAXI Duplicating EB67: SBC Paging They are identified by a document number created by the unit sending the charge, and in most cases they must be contacted directly for more information about the source of a given charge. ID Billing Contacts INDIANA UNIVERSITY 11

13 So where do ledger entries go? Well, here s a hint.... INDIANA UNIVERSITY 12

14 Scrubber Component of the Accounting Cycle that collects entries from multiple sources Enterprise Feeds KFS edocs Incoming data is validated against the Chart of Accounts and business rules Collector Feeds Does the account exist? Is it closed? Is the object code active? Application of missing values. Continuation account processing Clean Entries Error Entries Error entries (entire document) are identified and pulled for correction by Operations staff INDIANA UNIVERSITY 13

15 Scrubber Component of the Accounting Cycle that collects entries from multiple sources Enterprise Feeds KFS edocs Incoming data is validated against the Chart of Accounts and business rules Collector Feeds Does the account exist? Is it closed? Is the object code active? Application of missing values. Continuation account processing Clean Entries Error Entries Error entries (entire document) are identified and pulled for correction by Operations staff INDIANA UNIVERSITY 14

16 The Scrubber Also Generates Entries Enterprise Feeds KFS Edocs Offsets Cost Share Transfers/Encumbrances Collector Feeds Capitalization Clean Entries Error Entries Generated Entries INDIANA UNIVERSITY 15

17 Offsets IU accounts are self-balancing Each account contains assets, liabilities and fund balance All actual and encumbrance transactions on an account have balancing debit and credit entries The object code a transaction offsets to is determined by the document type and balance type of that transaction as defined in the KFS Offset Definition Table. INDIANA UNIVERSITY 16

18 Offsets on E-docs KFS docs generate their own offsets and display them in the General Ledger Pending Entry tab once a document is saved or routed: The general ledger Description for system generated offsets will depend on the system generating the offset Document Origin KFS Non-KFS General Ledger Description TP Generated Offset Generated Offset INDIANA UNIVERSITY 17

19 Commonly Occurring Offsets Most KFS documents impacting a Balance Type of Actuals offset to Cash 8000 Cash in Bank Funds leaving IU usually offset to a liability first 9042 Invoices Payable - DV 9050 Accrued Payrolls Incoming funds not yet received may offset to an asset first 8118 Accounts Receivable Non-Student INDIANA UNIVERSITY 18

20 Which of the following document types will offset to cash (object code 8000)? Use your clicker to submit your answer: 100% A. Disbursement Voucher (DV) B. General Error Correction (GEC) C. Regular Pay from HRMS PeopleSoft D. Both A and C E. None of the above 0% 0% 0% 0% A. B. C. D. E. INDIANA UNIVERSITY 19

21 Cost Share Only for sponsored projects (Contracts & Grants) where a portion of the costs are paid by IU Tracked via special cost share sub- accounts that can only be created by the Office of Research Administration INDIANA UNIVERSITY 20

22 Cost Share Sub-Account INDIANA UNIVERSITY 21

23 Cost Share Transfers Only occur when actual expenses are recorded in the cost share sub-account Income to the cost share sub-account is recorded on object code 9915, Transfer of Funds Revenue The transaction has a description of: Generated Cost Share from account (XXXXXXX) (MM/DD) The source account records a Transfer Out using an object code based on the level of the expense 9920 Transfer of Funds Academic Salaries 9940 Transfer of Funds S&E INDIANA UNIVERSITY 22

24 Capitalization Capitalization: The process of establishing an asset in the plant fund (95 account) for capital purchases Book an asset to the plant fund account associated with the organization making the purchase Organization Plant Fund Account for moveable equipment Campus Plant Fund Account for non-moveable equipment Determine the asset object code based on the object sub type of the 7XXX expense 8610 (CM) Capital Equipment Moveable 8601 (BD) Institutional Plant Buildings The transaction description is set to Generated Capitalization INDIANA UNIVERSITY 23

25 Poster Really 3 separate poster processes rolled into one batch job: Main Posts clean entries and generated entries from the Scrubber ICR Generates and posts Indirect Cost Recovery entries based on account and chart attributes Reversal Reverses previous transactions with a reversal date of today or earlier INDIANA UNIVERSITY 24

26 Indirect Cost Recovery (ICR) Contract and Grant accounts make a special distinction between the types of costs they incur: DIRECT COSTS Costs directly attributable to the project. If we didn t have this project we wouldn't have this cost. Project Staff Salaries Project Supplies Project Travel INDIRECT COSTS Activities or services that benefit more than one project and their benefit to a specific project is difficult or impossible to trace. Administrative Staff Salaries Utilities Office Supplies INDIANA UNIVERSITY 25

27 How ICR is calculated We negotiate a rate with the Federal government and charge them to projects as a percentage of direct costs. x $10 Project 50% Indirect = Supplies Cost Rate $5 of Indirect Cost Expense debited to the grant account $5 of Indirect Cost Revenue credited to an IU Account INDIANA UNIVERSITY 26

28 Indirect Cost Recovery (ICR) is... Complicated. Sometimes we don t get the full rate. Some projects won t pay indirect cost at all. Projects often don t allow indirect on certain direct costs ICR encumbrances exist to aid in available balance projections IU often splits the income from ICR INDIANA UNIVERSITY 27

29 AAAAAAAAAAAARRRG! INDIANA UNIVERSITY 28

30 INDIANA UNIVERSITY 29

31 Identifying ICR Expense Entries The Poster makes one ICR expense entry on the grant account for each direct cost object code with activity that night. The description of that transaction tells you: The % of ICR charged The object code it came from The ICR type code (which controls exclusions) The amount of the original expense the ICR was calculated on CHG % ON 4690 (21) ICR expense appears in object code 5500 or 5501 INDIANA UNIVERSITY 30

32 Identifying ICR Income Entries The Poster makes one ICR income entry on the ICR revenue account for all income generated at a particular rate that day. The description of that transaction tells you: The % of ICR charged The amount of the original expense(s) The grant account the income comes from RCV % ON FRM ICR revenue appears in object code 1803 INDIANA UNIVERSITY 31

33 Automated Reversals Auxiliary Voucher (AV) and Journal Voucher (JV) documents allow a reversal date The Poster automatically reverses these transactions on the specified reversal date The reversal entry is identical to the original except: Debits/Credits reversed AUTO REVERSAL- appended to beginning the Description Post date updates to the reversal date INDIANA UNIVERSITY 32

34 Financial Systems Administration GENERAL LEDGER: Payroll Accruals and Year-End Overview INDIANA UNIVERSITY 33

35 Bi-Weekly Payroll Accruals The Bi-weekly Payroll Accrual is an estimate of payroll expense for days worked in a month that have not been posted to that month. Accrual accounting is required by GASB 34 & 25 for all government, public college and university activities. Accrual entries typically occur in the last few working days of the month. INDIANA UNIVERSITY 34

36 Bi-Weekly Payroll Calendar Bi-weekly payroll 004 Pay Period: Jan 4-17 Pay Date: Jan 30, second Friday following the end of the pay period Bi-weekly payroll 006: Pay Period: Jan Pay Date: Friday, 2/13 (not shown). INDIANA UNIVERSITY 35

37 Bi-Weekly Payroll Calendar Payrolls are booked to the period associated with the pay date: BW 004 entries are booked to January. BW 006 entries would be booked to February. We would accrue for the 10 working days (M-F) earned in January but not posted to January. INDIANA UNIVERSITY 36

38 The first BW payroll in the month shown below ends on the 2 nd (yellow) and is paid on the 15 th (green). The next BW payroll ends on the 16 th (blue) and is paid March 1 st (not shown). How may days should we accrue for the month February? Use your clicker to submit your answer: 100% A. None B. 10 C. 19 D. 20 E. 26 0% 0% 0% 0% None INDIANA UNIVERSITY 37

39 Payroll Accrual Fun Facts! I m going to write an epic poem about these accruals These people are clearly dangerous lunatics and I must escape Woot! Accruals! Is it the end of the month already? INDIANA UNIVERSITY 38

40 Payroll Accrual Fun Facts! BW payroll accruals offset to object code 9050 Accrued Payrolls and don t generate ICR (Indirect Cost Recovery) on grant accounts. The accrual (document type PAYA) and the corresponding reversal (document type PAYN) are created at the same time, they just post in different fiscal periods. The document number for accrual entries is ACCR following by the 2-digit pay run ID(s) being accrued: ACCR0406 is accruing for BW payrolls 04 and 06; ACCR0808 is just accruing for biweekly payroll 08. INDIANA UNIVERSITY 39

41 Payroll Accrual Fun Facts! Use the pay and funding from the most recently paid BW payroll as a benchmark. Includes regular pay earn codes (object codes 2500, 3000, 3500, etc ). Leave pay earn types are also accrued (sick, vacation, military, jury, etc ). Multiply the amounts by the number of pay periods we re accruing for (1.0 for one pay period, 1.5 for a pay periodand-a-half). INDIANA UNIVERSITY 40

42 Year-End Overview Year-End Closing Newsletter Published on Checklist of important Year-End events and a full schedule INDIANA UNIVERSITY 41

43 Year-End Overview Prior to June 30 Accrued Vacation and Sick Liability Notices to the ListServ encouraging document approvals and the timing of DV payments Fiscal Year Ends on June 30 Enroute KFS e-docs (Type FP) are disapproved Take a snapshot of the Chart of Accounts Year-end versions of the following docs are made available on 7/1: General Error Correction Distribution of Income/Expense Budget Adjustment Transfer of Funds Salary Transfer Benefit Transfer INDIANA UNIVERSITY 42

44 Which of the following is true of Year-End documents? Use your clicker to submit your answer: A. They post to the fiscal year that has just ended 100% B. They do the same routing as their non-yearend versions C. They re available until December 31 st D. All of the above are true 0% 0% 0% A. B. C. D. INDIANA UNIVERSITY 43

45 Year-End Documents Anyone with basic KFS access can initiate them Post entries to the prior year Don t do Fiscal Officer routing Do Organization Review routing but only if it s been set up for the specific YE doc types (YEGE, YEDI, etc.) not normal doc types (GEC, DI) or parent doc types (KFS) Are disapproved at the end of Final Close if not fully approved. INDIANA UNIVERSITY 44

46 Year-End First Close 2 nd business day after the July 4 th holiday AP invoices dated June 30 or earlier and received at least one day prior to first close will post to the prior year (Post Back Period) Year-end documents processed by First Close post to period 12 of the prior year Research Admin asks that docs involving C&G accounts be processed during First Close Operating statements and campus year-end reports are generated the day after First Close June depreciation is run a few working days after First Close INDIANA UNIVERSITY 45

47 Year-End Second Close Typically one week after First Close Deadline for entries to 68 (clearing) accounts Year-end documents approved during Second Close post to Period 13 of the prior year Campus year-end reports are generated the day after Second Close INDIANA UNIVERSITY 46

48 Year-End Final Close Scheduled to leave 5 business days at the end of July after Final Close Deadline for entries on year-end documents. YE docs are disabled after Final Close. Year-end documents approved during final close post to Period 13 of the prior year. Year-End documents not approved by Final Close are manually disapproved. Final June operating statements and campus year-end reports are generated the day after Final Close. Prior year adjustments are limited to Journal Voucher users after Final Close. INDIANA UNIVERSITY 47

49 Year-End Balance Forwards Organization Reversions and Carry Forwards Controls what happens to current budget and cash balances on General Fund Accounts. Do positive/negative balances carry forward in the same account in the new year? Or, do balances revert to a defined account? Encumbrance Forwards Copies outstanding encumbrances into the new fiscal year. Close Nominal Activity Closes income and expense to fund balance in the year being closed. Beginning Balance Forwards Carries forward balances for Assets, Liabilities, and Fund Balance as Financial Beginning Balances. Carries forward balances for Income and Expense on all Grant Accounts as C&G Beginning Balances. There s a corresponding Labor Ledger version of this job to carry labor balances forward for C&G accounts. INDIANA UNIVERSITY 48

50 What Can You Do To Ensure a Smooth Year-End? Be aware of deadlines, system and campus. Consult the Year-End Schedule If you re processing transactions, be aware of where your documents are in routing. If you re approving transactions and will be out of the office, consider updating routing as needed to keep docs moving. Year-End docs don t do fiscal officer routing, so check Organization Review Where possible, try to identify and fix problems before year-end. INDIANA UNIVERSITY 49

51 Which of the following is NOT true about year-end processing? Use your clicker to submit your answer: A. Invoices received and dated June 30 or prior can post back to the prior year during first close. B. Activity on C&G accounts should be completed by first close. C. Year-end documents post activity to the prior year while the normal set of e-docs conducts business in the new year. D. New year balances for assets, liabilities, fund balance and encumbrances won t be fully updated until the last few days of July. E. All of the above are true. 100% 0% 0% 0% 0% A. B. C. D. E. INDIANA UNIVERSITY 50

52 Takeaways 1. Basic understanding of what the General Ledger is 2. Familiarity with behind-the-scenes processes that generate GL entries 3. Why we use payroll accruals and how they re determined 4. Understanding of Year-End timing and processes INDIANA UNIVERSITY 51