FY 2013-2014

Year-End Accruals and Deferrals TRAINING SESSION

QUICK OVERVIEW

AP TEAM INTRODUCTIONS

SEND ALL COMMUNICATION TO [email protected]

ACCRUALS

5

Purchase Early

and

continue

to submit approved invoices for payment or vouchering (auto accrual), process manual accruals & deferrals up through

June 20

for processing into LEGAL (posts against budget in MB500) for

June 23

(date to review Data Warehouse)

NOTE: If you submit invoices to AP then do not have to place on the accrual template.

CASH BASIS METHOD

A major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out.

CASH BASIS Bring money in: DR Cash CR Revenue Pay money out: DR Expense CR Cash

8

ACCRUALS

ACCOUNTING METHOD

At fiscal year-end (June 30), generally accepted accounting principles requires income to be recognized in CSUMB books at the time the revenue is earned (but not necessarily received) and records expenses when liabilities are incurred (but not necessarily paid for).

Different Types of POs

•

2-Way Match Usually Blanket POs For services An invoice is matched to the PO.

Does not require receiving in CFS

•

3-Way Match Cannot be a Blanket POs Usually for goods An invoice is matched to the PO and Receiver Requires receiving in CFS

10

FY 2013-2014

BY

JUNE 30, 2014 GOODS & SERVICES

NEED TO BE RECEIVED ON CAMPUS …

TO ACCRUE: Placing the expense in FY13/14 if not paid by 6/30/2014.

PURPOSE:



Practicing Accrual Basis Accounting, by



Placing the expense liability where incurred.



Using Prior Year Funding.



Minimize finding by Auditors.

12

BASIC ACCRUAL CONCEPT

FY 2013 – 2014 FY 2014 – 2015

•

DR – EXPENSE (+)

•

CR - CASH (-)

•

CR – ACCRUAL (-)

•

DR – ACCRUAL (+) Decreases Budget Pay Bill

13

NET EFFECT

FY 2013/2014 DR – EXPENSE

(+)

(An increase in expense, decrease in funding)

FY 2014/2015 CR – CASH

(-)

(A decrease in cash, no effect to funding)

Looks like a regular payment

14

Actuals Ledger Ledger

vs.

GAAP



Actuals Ledger (Legal Books) Departments can view on Data Warehouse (11G)

• • • 

GAAP Ledger Departments cannot view this activity Used by Accounting Department for Financial Reporting It is our responsibility to provide reliable and relevant financial statement

WHAT IS VOUCHERING?

•

Vouchering is when AP enters an invoice into CFS Finance

•

The expense posts and the offset is a liability account in the balance sheet

•

CSUMB pays Vendors, net 30 days

•

The liability is cleared when AP pays the invoice, and cash is decreased

ACCRUALS MAY EITHER BE IN THE FORM OF A. AUTOMATED ACCRUAL ENTRIES 1. VOUCHERING PROCESS 2. GL015 CFS JOB

OR

B. MANUAL ACCRUAL JOURNAL ENTRIES 1. LEGAL (Actuals Ledger) 2. GAAP

A. AUTOMATED ACCRUALS

1. VOUCHERING PROCESS: Invoice vouchered in FY 2013/2014 by 6/30/2014 but not paid by 5/29/2014, which is the last check run of the year.

2. GL015 CFS JOB: If goods are received on a Purchase Order (PO) by 6/30/2014 but not vouchered and paid by 5/29/2014, by running a CFS job (GL015), we will automatically accrue these three-way matches.

DIRECT PAYMENT Automatic Accrual

RECEIVER INVOICE $ Rec’d by 6/30/2014 Goods or Services Rec’d by 6/30/2014 AP Vouchers but does not pay invoice by 6/30/14 (ACTUALS) AP AUTO ACCRUAL

B. MANUAL ACCRUAL JE 1. LEGAL (Actuals Ledger)

6/23/2014 Accounting Dept processes Manual Accruals, for goods or services received by 6/30/2014, that were not accrued through the automated process: i) DIRECT PAYMENT – Complete Template ii) TWO-WAY MATCH PO – Complete Template iii) THREE-WAY MATCH PO PO closed in error, receiving error or no receiving in CFS by June 30 th - Complete Template

AP Manual Accrual – LEGAL Direct Payment

RECEIVER Goods or Services Rec’d by 6/30/2014 Complete AP Accrual TEMPLATE (ACTUALS) AP MANUAL ACCRUAL Invoice was not received by 6/30/2014 6/25/2014, at 5:00 pm, last day to post in LEGAL

Example of manual accrual (using the full CFS chartstring): Expense AP Cash BBA

________________________________________

FY13/14

– Journal Entry 6XXXXX (Expense Account) Debit (+) $100.00 (100.00) 201800 (Accounts Payable Liability Account) Credit (-) ($100.00)  Note the expenditure posts in FY13/14.

NET BBA FY13/14 ($100.00) FY14/15

– Reverse Journal Entry 201800 (Accounts Payable Liability Account) Debit (+) $100.00 6XXXXX (Expense Account) Credit (-) ($100.00)

FY14/15

– Pay Vendor with Check 6XXXXX (Expense Account) Debit (+) $100.00 108090 (Cash – Wells Fargo) Credit (-) ($100.00)  Note the net effect on expenditures in FY14/15 is zero 100.00

(100.00)

NET BBA FY1415 $0.00

Balance:

_________________________________________ $100.00 $0.00 ($100.00) ($100.00) 22

Accrual Rule of Thumb



Actuals Ledger (Legal Books) Departments to review FY13/14 Data Warehouse on 6/20/2014.

If expense not reflecting as of 6/19/2014, then write up a manual accrual and turn in to Accounts Payable by 5:00 p.m. on 6/20/2014.

23

SERVICE CONTRACTS

Understand your service contract, MOU or agreement.

Know what you are liable for paying by June 30, 2014 to fulfill the agreement.

For example: If paying for services in July (CY) for June activity (PY), then you need to manually accrue June activity.

DO NOT WAIT FOR THE INVOICE/BILL

24

SERVICE CONTRACTS

Look closely at the service dates on your invoice/bill. If crosses fiscal years then only accrue portion for FY 2013/2014 (PY).

Estimate using percentages or ratios as required. Provide calculations with documentation.

25

SCENARIO 1

Department received an invoice for a desktop computer and monitor after the last AP check run for the fiscal year but prior to closing legal books.

What do you do next?

26

SCENARIO 1

Find out if the sensitive equipment have been received by the Receiving Department and when it was received.

Accrual wise, does it matter if

sensitive equipment

is being held by Receiving pending IT release?

27

SCENARIO 1

IT is holding received items for release does not affect the accrual process.

Items have to be received on CAMPUS by June 30, and not necessarily in the Dep’t to be accrued.

What if purchase was made on a payment request and not a 3-way match PO?

28

SCENARIO 1

Then you submit the original approved invoice immediately to AP to voucher in FY13/14.

What if not enough time to get the invoice approved by 6/30/2014?

29

SCENARIO 1

Then place on an ‘AP & Travel Manual Accrual Template’ and submit on June 20, 2014 to be accrued by AP.

I missed the June 20 deadline to submit the accrual … what do I do now?

30

SCENARIO 1

Forward the approved invoices ASAP to AP to voucher in FY13/14 and pay in FY14/15. OR place on the accrual template for posting into LEGAL or GAAP depending on time restraints. List on template that items are sensitive equipment.

31

SCENARIO 2

Can I place an emergency order with Office Max after May 16, 2014?

After May 16 orders will not be on the last merchant bill for FY13/14 which is accrue by AP. Do not place on accrual template for order up through May 16.

32

SCENARIO 2

YES, you can place the order but goods and services have to be received by June 30 in order to accrue (proof of receiving is required).

• • Make sure order did not get on last billing Submit ‘AP & Travel Manual Accrual’ 33

B. MANUAL ACCRUAL JE 2. GAAP

After July 1 st up through to July 10, if goods or services received by June 30 but not accrued in the Legal Books, then will be accrued in GAAP by July 17.

2 Ways Posted to GAAP

A manual accrual gets into GAAP:

One way is through Accounts Payable.

a. In the current year, AP reviews all invoices to see if goods or services have been received by June 30 th . b. If should be accrued, then given to Accounting to journal the accrual.

35

2 Ways Posted to GAAP

A manual accrual gets into GAAP: Another way is by the Departments: By July 15 th , if no invoice received on goods or services received June 30 th , then the Department submits the ‘AP Manual Accrual Template’.

36

MANUAL ACCRUALS Cont’d

Departments do not need to include the following payments on the template:

• • • • • • • • • • • •

Airline Tickets (BTA) prior to May 26 Arrowhead CA Technology Agency invoices DGS (Department of General Services) Enterprise (CRBTA) prior to May 26 *Office Max & Office Depot for the month of June where rec’d by 6/30 Payroll (GAAP Accrual Only except for ESF) ProCard June file for 5/16-6/16/2014 only ProCard Use Tax June file only for 5/16-6/16/2014 ProCard purchases Travel with cash advances and prepaid travel Utilities, i.e. DGS and Central Plant Unvouchered, approved invoices sent to AP with proof of receiving *Unless not on the final statement that posted to the GL and goods or services received by 6/30

37

MANUAL ACCRUALS Cont’d

Accounting and Departments will not accrue since 12 months of activity is posted to GL for FY13/14 (June 1-May31)

• • • • •

Cost-Per-Click Merchant Fees Office Max TeleCom Postage

Difference between KEEP OPEN PO LISTING and AP MANUAL ACCRUAL LISTING

• •

Open PO Listing:

By sending Procurement an ‘Keep Open PO Listing’ you request that your prior year purchase orders are not closed for FY2013/2014. Deadline date for this is 5/30/2014.

Do not confuse with the Manual Accrual Template that AP requires

TYPE Direct Payment PO 2-way Match PO 3-way Match PO NO YES YES

ACTUALS ACCRUAL

Receiver in CFS (Goods or Services) Receiving not required in CFS (Actual goods or services rec’d by 6/30/2014) Invoice *YES rec’d by 6/30/2014 Receiving not required in CFS (Actual services rec’d by 6/30/2014) Receiving is required in CFS by 6/30/2014 (primarily goods) *YES rec’d by 6/30/2014 NO Would be an auto accrual if AP has Invoice to voucher AUTO ACCRUAL * Invoice Vouchered not paid by AP *Invoice Vouchered not paid by AP Run CFS Job (GL015). Require receiver but not invoice.

MANUAL ACCRUAL Invoice not rec’d or sent to AP -Complete Template Invoice not rec’d or sent to AP -Complete Template PO closed in error. Did not accrue automatically -Complete Template

GAAP ACCRUAL

NOT POSTED TO ACTUALS GAAP ACCRUAL PO FY 13/14 PO Open (All Funds) RECEIVER INVOICE YES Goods or Services rec’d by 6/30/2014 Approved invoices to AP by 7/10/2011 guarantee

DEFERRALS

42

Accounting Deadlines

PREPAID EXPENSE

Prepaid Expense definition: Amounts that are paid prior to the period they cover (Paying FY14/15 expense in FY13/14).

– – – – – – – –

Prepaid Expenses can include:

–

Travel (follow earlier instructions)

– – – –

Insurance (insurance accounts only) Licenses (use same account # of item purchased that is being licensed) Memberships (account # 660804 – except Library Acquisitions) Maintenance Agreements (use same acct # of item purchased agreement for) Postage (accounts # 660014, 660015 & 660016 - depends on type) Rent (account # 660831) Services (account # 613001 & 613813) Space Rental (account # 660041) Subscriptions (account # 660804 except CSUMB Library Acquisitions) Telephone bill (account # 604001) Utilities (account # 605000-605005 depends on type) Warranties (use same account # of item purchased warranty for)

43