San Diego County Office of Education District Financial Services Financial Accounting/Reporting welcome

2013-14 YEAR END CLOSING WORKSHOP

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Goal of the Year End Closing Workshop

    To review changes to the closing process due to LCFF.

To review year-end closing entries and transactions. To help ensure that the district’s financial statements are accurate and ready for an audit.

Demonstrate the automated CAT form 2

Section 1

General Accounting Information

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 Who to call protocol –    Financial Accounting & Reporting Staff list for Business Advisory Services Warrant Processing List pg. 1.4-1.7

 County Treasury –    Contacts pg. 1.8-1.34

Resolutions for Fund set up District Funds Conversion Report  Lists Funds and Oracles assigned to your district 6

 Money Processes & Forms –     Deposits GAPS Direct Deposit WARP (Wire Administration & Request Portal) ACH Transfers pg. 1.36-1.45

 Report Ordering –    pg. 1.46-1.51

Month-end & Year-end Chart of Accounts & District Dictionary Rollover Budget Rollovers  CY Revised & Working to Next Year’s Working Rolls can be done now  Any other rolls for 14/15 have to wait until

Friday, July 4 th .

 This is an overnight process - you will see data on

Monday, July 7 th

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Section 2

Closing Schedules

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Important Dates

(pg. 2.2-2.4)

   Friday, June 27 – Final date for all deposits to Wells Fargo Bank by 2 p.m.

Friday, June 30 – Last day for Auditor’s Transfer requests to Financial Accounting by 10 a.m.

Thursday, August 22 – Final day of system access to input FY 2013-14 activity 9

Section 3

Checklists

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Closing Checklists

   Make sure you balance the following prior year accounts:  Account receivable  Due-to/Due-from  Liabilities  Suspense Fiscal Year-end closing checklist (p3.5-3.8) Inventory (p3.9)  Make necessary adjustments to agree with the physical count 11

Closing Checklists

 Before you call in to close:  Make sure District Closing Checklist is done (p3.11-3.14)  SACS FORM RL & CAT FORM are completed  Do not send in a SACS DAT file until after the board meeting 12

Section 4

Entries Made Prior to Closing

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Prepaid Expenditures

(p4.2) Step 1 - Reverse prior year closing entry: Insurance Res xxxx Prepaid Exp. xxxx Goal xxxx Func xxxx Obj 5400 9330 DR 1,500 CR 1,500 Step 2 - Establish current year closing entry: Res Prepaid Exp. xxxx Insurance xxxx Goal xxxx Func xxxx Obj 9330 5400 DR 2,000 CR 2,000 14

   All expenditures must be accounted for in the proper fund  9311 – Due From  9611 – Due To 9311 must equal 9611 If transferring expenditures after June 30, you must use Due To/Due From as the offset instead of cash, see page 4.5 for an example 15

  Districts that still have 9312 and 9612 on their books must be clearing these accounts prior to June 30  Due To & Due From GL account numbers rolling over into the next fiscal year will change (FIS only):  Account 9311 will become 9312 (PY)  Account 9611 will become 9612 (PY) When posting a temp. loan between funds see EC 42603 on page 13.2 for limits 16

   PY AR & AP balances rolled into the current fiscal year:  Account 9201 DR balance  Account 9510 CR balance  Districts should post the related receipts and payments into 9202 & 9511 during the current year At year end, research any difference Write off or post final difference to current year object 17

Fund Check

(p4.7-4.9)

 Check GL accounts and suspense accounts  Must check all accounts by resource  Sample fund check form for all your funds before you close the books (p4.9) 18

Clearing Apportionment Suspense

(p4.10–4.13)  Financial Accounting posts principal apportionment PY recomputations & adjustments to suspense  Suspense must be cleared before closing the year  Check prior year accrual. Difference must be charged to current year account.

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Section 5

Closing Entries & Accruals

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A/R & A/P objects must be ZERO before you accrue for the closing year: FD xx xx Res xxxx xxxx Obj 9202 9201 DR 9,750.64

CR 9,750.64

FD xx xx Res xxxx xxxx Obj 9510 9511 DR 10,475.87

CR 10,475.87

Research differences and determine if activity was charged to a current year object or write-off due to accrual estimate was different than actual.

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 Expenses have to be accrued if goods or services were received by June 30  Debit the expenditure account line & Credit 9510.

 District will want to set a deadline to submit accruals  District might want to set a materiality limit 22

Example B

(p5.7) Unpaid invoices of $20,000 for merchandise or services received by June 30: Res Books & Sup xxxx Services xxxx Cap Outlay C/L xxxx xxxx Goal xxxx xxxx xxxx Func xxxx xxxx xxxx Obj 4000 5000 6000 9510 DR 6,000 4,000 10,000 CR 20,000 23

Income Accruals

(p5.5–5.6)  Income earned in this fiscal year but not received by June 30 needs to be accrued  Can only accrue revenues that are collectible within one year  Some revenues are not accrued  Examples: property taxes, developer fees, mandated cost reimbursement & deferred maintenance 24

Example

(p5.7) Recalculate LCFF using actual data and accrue the difference between recalculated state aid & receipts A/R State Aid Fund 03 03 Res Obj xxxx 9201 xxxx 8011 DR 100,000 CR 100,00  Gap Funding was 11.78% now 12.00169574% use the new rate when calculating your LCFF accrual  EPA is now 21.0317%  12/13 Annual adjustment in Feb s/b 8019  Post the expenditure report on your website 25

Section 6

Payroll Accruals – 9910’s

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Payroll Accruals/9910’s

Payroll Holding Accounts 9910-000 Payroll 9910-311 STRS 9910-312 STRS CB Plan 9910-321 PERS 9910-322 PERS EPMC 9910-331 Social Security 9910-332 Medicare 9910-333 ARS 9910-340 H&W 9910-350 SUI 9910-360 W/C 9910-370 Retiree H&W 9910-371 OPEB Allocation 9910-375 OPEB Direct 9910-380 PERS Red 9910-390 Other Benefits 27

Payroll Accruals/9910’s – SUI

(p6.5) Step 1 - Current FY General Ledger - SUI expenses for quarter ending 6/30: FD Res Obj DR CR 06 06 xxxx 3501-000 xxxx 9910-350 2,000 2,000 Step 2 - District Journal Entry to set up Current FY accrual: Fund Res Obj DR CR 06 06 xxxx 9910-350 xxxx 9510 2,000 2,000 28

Payroll Accruals/9910’s – SUI

(p6.5) Step 3 - FA will post auditor’s transfer for quarter ending 6/30 to suspense in Subsequent FY: FD Res Obj DR CR 06 06 9999 9999 7999 9110 2,000 2,000 Step 4 - District Journal Entry to clear suspense accrual in the Subsequent FY: FD 06 06 Res xxxx 9999 Obj 9511 7999 DR 2,000 CR 2,000 29

Payroll Accruals

 Same process for STRS & PERS  9910-371 & 9910-375 OPEB accrual process is under Section 12 GASB 30

Section 7

Direct/Indirect Costs

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    Expenses that can be separately identified and charged as part of the costs of a program Transfers of costs normally change the function of expenditures  Examples: Catering, print shop, transportation & field trips 5710 must net to zero at the fund level 5750 must net to zero between funds 32

NCLB School Choice (intrafund): DR 06-00 3010 1110 3600 5710 Title I CR 03-00 0000 0000 3600 5710 Transportation Catering charges (interfund): DR 03-00 0000 0000 2140 5750 Professional Dev CR 13-00 5310 0000 3700 5750 Food Services Print shop (interfund): DR 12-06 XXXX 0001 XXXX 5750 CDC CR 03-00 0000 0000 7200 5750 Undistributed Admin. expenses to developer fees (interfund): DR 25-19 0000 0000 7200 5750 Developer Fees CR 03-00 0000 0000 7200 5750 Undistributed 33

  TABS Workshop available on web cast at http://www.sdcoe.net/business2/dfs/?loc=materials&m=88  Agencywide costs for general management that are not readily identifiable with a particular program but are necessary for the overall operation  Examples: Accounting, budgeting, payroll, personnel, purchasing & warehousing Multiply expenditures in objects 1000 – 5999 less object 5100 by the approved indirect cost rate 34

 Approved rates are posted at the CDE web site at:  http://www.cde.ca.gov/fg/ac/ic/  In manual on p7.6 – 7.10

 Must use the lesser of the CDE approved rate or a grant stated max each year  7310 must net to zero by function & object at the fund level  7350 must net to zero by function & object between funds 35

Sample entry (intrafund): DR 06-00 3010 1110 7210 7310 TITLE I CR 03-00 0000 0000 7210 7310 GF Sample entry (interfund): DR 13-00 5310 0000 7210 7350 Food Services CR 03-00 0000 0000 7210 7350 GF 36

Section 9

Categorical Programs

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Federal

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State

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Pass-Through

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 Grant (Deferred Revenue – D resources)  Entitlement (Fund Balance – F resources)  Difference is how revenue is recognized  See SACS Resource Code Query to find out which applies to each resource 

http://www.cde.ca.gov/fg/ac/ac/

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Example 1 - Lottery funds transfer Fd Res Obj DR CR 03 1100 03 1100 06 6300 06 6300 9110 1,000 8782 9110 100 8782 1,000 100 Example 2 - Step A ROP funds (non-lottery) transfer Fd Res 06 9025 Obj DR 9110 1,000 CR 06 9025 8782 1,000 Step B flex/sweep ROP Fd Res 06 9025 06 9025 03 0000 03 0000 Obj DR 8990 1,000 9110 9110 1,000 8990 CR 1,000 1,000 40

 Use CAT Form to track your federal, state and local categorical programs  Calculates deferred revenue, receivable, ending balance  On-line video training available 41

Entries to Make After Completing the CAT Form

(p9.13-9.14) Step 1 - Closing Entry Unearned revenue: Title I Def. Rev Res 3010 3010 Obj 8290 9650 DR 10,000 Step 2 - Entry in the Subsequent Year Clear unearned revenue: Res Def Rev 3010 Obj 9650 Title I 3010 8290 DR 10,000 CR 10,000 CR 10,000 42

Entries to Make After Completing the CAT Form

(p9.13-9.14) Step 1 - Closing Entry Accounts Receivable: Acct Rec.

Lottery Res 6300 Obj 9201 DR 5,000 CR 6300 8560 5,000 Step 2 - Entries in the Subsequent Year Clear Suspense: Res Obj DR Suspense 9999 8999 7,500 Lottery Lottery 6300 6300 9202 8560 CR 5,000 2,500 Clear Accounts Receivable: Res Lottery 6300 Lottery 6300 Obj 9202 9201 DR 5,000 CR 5,000 43

Entries to Make After Completing the CAT Form

(p9.13-9.14) Step 1 - Closing Entry Accounts Payable: Spec Ed Acct. Pay.

Res 6535 6535 Obj 8590 9510 DR 3,000 CR 3,000 Step 2 - Entries in the Subsequent Year Accounts Payable: Pay Invoice: Res Obj Spec Ed 6535 9511 DR 3,000 Spec Ed Clear Payable: 6535 9110 Spec Ed Spec Ed Res 6535 6535 Obj 9510 9511 DR 3,000 CR 3,000 CR 3,000 44

Section 10

Deferred Maintenance

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 Funding previously received for the Deferred Maintenance (DM) program is included in LCFF  The Deferred Maintenance Fund, Fund 14 in SACS, is classified as a special revenue fund  GASB 54 specifies that use of a special revenue fund is appropriate only if a substantial portion of the fund’s inflows are restricted or committed revenue sources and expected to continue  Many LEA Boards committed the DM revenue and appropriately recognized it directly in fund 14 using object 8091  Can no longer be recognized in 8150 and interfund transferred to fund 14 46

 LEAs who receive funding from the State School Facilities Program must contribution 3% of total general fund expenditures including Other Financing Uses to the Restricted Maintenance Account (RMA) 8150  EC 17070.766 allows LEAs to reduce RMA contribution to 1% (temporary flexibility)  Effective July 1, 2015, flexibility ends & districts must deposit a least 3%  EC 17070.75 allows an LEA’s contribution to its RMA over 2.5% to be counted towards its DM contribution  If DM contribution goes directly to fund 14 then does not count 47

 If DM is moved back into general fund then general fund expenditures will increase and so will the reserve requirement  CDE sees some possible solutions:  Change statute 17070.75(b)(1) Establish a restricted account within the general fund  Reclassify the fund 14 to be a capital projects fund so interfund transfer are ok 48

Section 11

Reserves

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 Reserves are accounts earmarked for a portion of a fund balance to indicate that it is not available for other expenditures       Revolving cash Stores Prepaid expenditures Restricted program balances Economic uncertainty Other Designations 9130 = 9320 = 9330 = 9711 9712 9713 9740 9770 9780  Reserves could also be designations by the Board 50

 Fund Balance Classifications - hierarchy based upon the level of constraint placed upon the use of resources.

Restricted Funds 1. Nonspendable  Revolving cash  Stores  Prepaid expenditures  9130 = 9711 9320 = 9712 9330 = 9713 All Other Nonspendable Assets 9719 2. Restricted  Restricted Balance 9740 51

Unrestricted Funds 3. Committed - board action  Stabilization Arrangements  Other Commitments 9750 9760 4. Assigned - designated official(s)  Other Assignments 9780 5. Unassigned  Reserve for Economic Uncertainties 9789 52

In the general ledger, Stores - 9320 has a balance of $5,000. When the physical inventory was taken, the actual stock was valued at $ 5,500.

District journal entry: Step 1 - Increase balance in Stores Fd Object DR CR 03 03 9320 4000 500 500 Stores Supplies Step 2 - Set up reserve 03 03 9799 9712 5,500 Total Reserves 5,500 Reserves for Stores 53

Section 12

GASB

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GASB 63

 GASB 63 - Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position  Very uncommon but Common Core SS  Certain transactions subject to deferred recognition do not meet the definition of assets or liabilities

CURRENT 9100–9499 Assets 9400–9499 Capital Assets PROPOSED 9100–9489 Assets 9400–9489 Capital Assets 9500–9699 Liabilities 9660–9669 Long-Term Liabilities 9490–9499 Deferred Outflows of Resources

9490 Deferred Outflows of Resources

9500–9689 Liabilities 9660–9669 Long-Term Liabilities 9690–9699 Deferred Inflows of Resources

9690 Deferred Inflows of Resources 55

GASB Coming Soon

 GASB 65 - Items Previously Reported as Assets and Liabilities  Effective in 2013-14  9650 in now Unearned Revenue  GASB 68 - Accounting & Financial Reporting for Pension Plans  Effective in 2014-15  Unfunded liabilities PERS & STRS 56

Section 13

Temporary Borrowing 57

 Temporary borrowing between funds  Must conform to EC 42603  Must have governing board approval  Must be repaid either in the same fiscal year or in the following fiscal year if borrowing was initiated within final 120 days of fiscal year  Sample resolution provided on website & page 13.3

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Due to / Due From

(p13.2) Step 1 - Setting up the interfund loan Fund Object DR CR 03 9311-013 100,000 03 9110 100,000 13 13 9110 9611-003 100,000 100,000 Step 2 - Repayment of internal borrowing Fund Object DR CR 03 03 9110 9311-013 100,000 100,000 13 13 9611-003 9110 100,000 100,000

(Due from fund 13)

(Due to fund 03) 59

Section 15

Audit

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 Recommend that a binder or a electronic file be designated for copies of documents that the auditor will need  A list of documents is provided  LCFF Certification  CALPADS report 1.17

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Section 16

Accounting Updates 62

LCFF Changes

 Resources closed to 13/14 revenue inc.8980

 1300 Class Size Reduction K–3 (optional Resource)    2200 Continuation Education 2400 Juvenile Court/County Community Schools 2410 Juvenile Court   2420 County Community Schools 2430 Community Day Schools    7090 Economic Impact Aid (EIA) – State Compensatory Education (SCE) 7091 Economic Impact Aid – Limited English Proficient (LEP) 7250 School Based Coordinated Program (SBCP)   7230 Transportation: Home to School 7235 Transportation: School Bus Replacement  7240 Transportation: SD/OI 63

LCFF Changes

    Objects:  All LCFF revenue in 8011 none in old flexed accounts 8590 or 8015  No 8091 transfers to special ed or community day No 8092 or 3800s for PERS reduction No 7615 or 8915 for transfer to DM fund 14 replaced with 8091 transfer No 8434 CSR 64

LCFF Changes

 Post transfers/payments to COEs for district students in programs operated by the COE using Goal 0000 and Object 7142, Other Tuition, Excess Costs  COEs should record the payment received from districts using Object 8710, Tuition  Not a contracted service 5100/5800 65

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Common Errors

(p16.2-16.5)

Incorrect use of abatements  5 allowable abatements CSAM 560  Current year expenditures only - no prior year  5100 subagreements for instructional services only  Payments to services providers >$25k per contract  Affect indirect cost  Function 7700 - Centralized Data Processing  Computer/Information Technology  SIS, FIS, PeopleSoft, etc.

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Goals

 ROP, Perkins, CTE, & other vocation ed.  MOE - Federal funding at risk  6000 = ROP for K-12  4630 = ROP/vocational ed/CTE for adult ed. fund 11  3800 = all other CTE/vocational ed.

 Perkins/CTE - 3515, 3540, 3550  Adult Ed. = 4000 to 4749  MOE - Federal funding at risk  Fund 11 67