FMOYrEndTraingMay061.ppt

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University of Hawai’i

Presented byFinancial Management Office

May 17, 2006

YEAR-END AND OTHER

ISSUES

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Order of Presentations

David McClain – President Howard Todo – Vice President for

Budget and Finance/CFO General Accounting Disbursing and Payroll Property and Fund Management Procurement Treasury ORS

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GENERAL ACCOUNTING

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FY2005 Audit Findings:

Finding No. 05-03: Improper Categorization of Expenditures

Two expenditures coded as 3020, Operating Supplies, Educational but should have been recorded as 5600, Rent-Equipment, Other and 7100, Services Non-State Employees

Improper expenditure recording could result in inaccurate amounts reflected in the grant’s modified total direct cost (“MTDC”) base.

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FY2005 Audit Findings:

Audit Finding: Improve Year End Accounts Payable Recording

Annual recurring finding

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Audit Finding: Improve Year End Accounts Payable Recording

Per 2005 audit report, “We noted a deterioration in the year end accounts payable recording process, particularly related to extramurally funded awards.”

$1 mil, $945,000, $838,000, $535,000 attributable to four departments

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Audit Finding: Improve Year End Accounts Payable Recording

Per 2004 audit report, “While the University significantly improved its year-end accounts payable recording”, there were net unrecorded liabilities of $342,000 attributable to one department noted.

$2.8 million in unrecorded accounts payable at June 30, 2003.

$4 million in unrecorded accounts payable at June 30, 2002.

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Audit Finding: Improve Year End Accounts Payable Recording

Accounts payable definition (A8.866):

A liability or amount owed by the University to outside vendors and individuals or University employees for goods and services received or performed but not paid for by the end of the fiscal year.

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Audit Finding: Improve Year End Accounts Payable Recording

Please review APM A8.866-Accounts Payable Listing

Unrecorded liabilities impair the presentation of complete financial information at the fiscal year end.

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FY2006 Year-End Calendar

Please visit FMIS website:http://www.fmo.hawaii.edu/FMIS/for various central office year-end deadlines.

(No exceptions to deadlines will be granted)

FMIS on-line input extended to 6:30pm from May 15th to June 30, 2006 (EXCEPT for deadlines indicated on year-end calendar and per Henry Ito’s email dated May 9, 2006)

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FMIS Website

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FY06 Year-End Accounting Data Required

To present the University’s financial statements on the full accrual basis in accordance with Governmental Accounting and Financial Reporting Standards.

Accrual basis: revenues are recorded when earned and expenditures are recorded when incurred-when goods and services are received but not necessarily paid.

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FY05 Year-End Accounting Data Required

Please review APM A8.671: Year-End Accounting Data

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FY05 Year-End Accounting Data Required

Recording Year-End Accounting Data Memorandum due July 3, 2006.

Memorandum and sample journal vouchers will be sent via email in

June 2006.

Journal vouchers to record Year-End Accounting data required by GALC due by 11:00am, July 14, 2006.

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Recording Year-End Accounting Data Memorandum

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RCUH Reclassification JV-Reminders

RCUH expense to proper object code JVs should be done during the regular year instead of during the year-end accrual period.

Especially for “Project” accounts (year-end process=P) and Fixed asset subcode reclassifications

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RCUH Reclassification JV-Reminders

If RCUH expense reclassifications are recorded during the accrual period (13th month) for SLs with year-end process=P, two additional JVs should be prepared: JV to record expense reclassification in

the new fiscal year JV to reverse expense reclassification

during the accrual period of the new fiscal year

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RCUH Reclassification JV-Reminders

Please input RCUH 6-digit project number in Ref. No. 1 of journal vouchers for:

RCUH expense to proper object code (for expended funds)

RCUH expense to Due from RCUH (for unexpended funds)

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RCUH Expense Reclassification Subcodes

Use subcode 2087**-RCUH Wages to record salaries/wages paid by RCUH

Use subcode 2097**-RCUH Fringe Benefits to record fringe benefits paid by RCUH

**New subcodes 2987, RCUH Wages (7232) and 2997, RCUH Fringe Benefits (7232) available to accommodate budget restrictions for subcode 7232 reclass only

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RCUH Expense Reclassification Subcodes

Refer to the handout for other expense reclassification subcodes

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Handout on Transactions with RCUH

Types of payments to RCUH

RCUH Budget Categories to UH Subcode crosswalk

Table of Account code ranges requiring 3 JVs if expenses are reclassified during the accrual period (13th month)

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Year-End Accounting Data to be recorded by fiscal officers:

Unrecorded accounts receivable: Amount due to the University from the sale of goods or services, credit memos from vendors, and reimbursements of expenditure transactions that is not recorded as an accounts receivable in FMIS (Accounts Receivable System “ARS” and non ARS)

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Year-End Accounting Data to be recorded by fiscal officers:

Allowance for uncollectible accounts: The portion of accounts receivable (including Banner student receivables) that is not on the University’s ARS which is estimated to be uncollectible.

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Year-End Accounting Data to be recorded by fiscal officers:

BANNER Accounts Receivable balance reversal: Revenue and related Banner accounts

receivable for classes, housing, etc. beginning after June 30, nnnn must be reversed.

Revenue fully attributable to next fiscal year is not considered earned as of June 30th.

(Reclass cash payments received to deferred revenue)

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Year-End Accounting Data to be recorded by fiscal officers:

Due from RCUH: Unexpended RCUH G,S,R,B service ordered funds (object code 7232) should be reclassified to Due from RCUH (account control 1560)

Audit Finding No. 02-13: Transactions with Research Corporation of the University of Hawaii

$9 million (approx.) [advance] prematurely recorded as expenditures

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Year-End Accounting Data to be recorded by fiscal officers:

Inventory of supplies: Cost value of un-issued inventorial supplies which are charged to other departments, external agencies or customers as part of departmental operations.

See APM A8.636-Supply Inventory

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Year-End Accounting Data to be recorded by fiscal officers:

Deferred revenues: Revenue collections made in the current fiscal year for services to be rendered entirely in the subsequent fiscal year, e.g. Fall tuition collected in June should be deferred.

Revenue recorded for sessions that cross fiscal years, should be prorated between the two (2) fiscal years.

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Year-End Accounting Data to be recorded by fiscal officers:

Deferred charges/prepaid expenses: Amounts paid as of June 30th for goods and services to be consumed or expended in the subsequent fiscal year, e.g. summer session expenses paid in June should be prorated between the two (2) fiscal years or subscription paid in June for publications of the ensuing year, etc.

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Year-End Accounting Data to be recorded by fiscal officers:

Tuition and Housing Discounts and Allowances (Waivers): Student tuition and housing waivers must be recorded as revenues and contra-revenues. Employee tuition and housing waivers must be recorded as revenues and expenditures.

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GASB Attribute Reminders

Please do not use the “ZZ” Exchange/Nonexchange GASB attribute for any Fund Group 11 or Fund Group 12 accounts.

Fund Group 11 or Fund Group 12 accounts should be either EX (Exchange), MN (Mandatory Nonexchange), or VN (Voluntary Nonexchange).

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FINANCIAL REPORTS WEBSITE

Please visit the Vice President for Budget & Finance/CFO’s website:

http://www.fmo.hawaii.edu/cfo/ for the FY2002, FY2003, FY2004 and

FY2005 audited financial statements

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FINANCIAL REPORTS WEBSITE

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OTHER ANNOUNCEMENTS A year-end FMIS On-Line journal

voucher system is currently being developed to replace the manual accrual journal voucher process.

If completed by June 2006, system will be available for FY2006 accrual journal vouchers/entries and instructions will be distributed.

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Questions/Discussion?

Please contact the General Accounting & Loan Collection Office at 956-8278 if you have any questions or need assistance.

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UP NEXT:

Disbursing and Payroll Property and Fund

Management Office of Procurement and

Real Property Management Treasury

Office of Research Services

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DISBURSING and PAYROLL

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Disbursing and Payroll

Miscellaneous Encumbrances (Michael Wong)

Payments to New Employees (Michael Wong)

Accounts Payable (Alan Kimura)

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Miscellaneous Encumbrances

Non-Payroll Mileage Mnnnnnn Relocation Nnnnnnn Student Fellowship Fnnnnnn

& Traineeship Travel Reimbursements Tnnnnnn

Not including Travel Advances Library Purchases

Hamilton/Sinclair Libraries Lnnnnnn

All other Libraries Knnnnnn

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Impact of ePurchasing Issue Miscellaneous Encumbrance Ennnnnn

for non participating UH provider Issue eIDO to encumber XR2nnnn

INTER-DEPARTMENTAL CHARGES for participating UH providers

UTILITIES & OTHER AFPs Annnnnn Issue eAFP to encumber

(GL & Revenue Subcodes cannot encumber) DEPARTMENTAL CHECKING SYSTEM

Issue ePO to encumber Pnnnnnn Or issue eAFP to encumber

Annnnnn

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Payroll & Miscellaneous Encumbrances

Reference: “Fiscal Year-End Procedures for Payroll Encumbrances and Payments/Liquidation” May 12, 2006

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Payroll & Miscellaneous Encumbrances

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Payroll & Miscellaneous Encumbrances (cont’d)

ORDER OF TRANSACTIONS

1. Record payroll expenses for 06/20/06 Pay Date

2. After the 06/20/06 payroll is recorded on 06/16/06, the other payroll transactions will be encumbered as follows:

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Payroll & Miscellaneous Encumbrances (cont’d)

07/05/06 After-the-Fact Payroll (Payroll # F55, F59, F69, F77, F78): only Object Codes 2001, 2011, 2017, 2018, 2019 and related employer fringe costs; encumber on June 19, 2006.

SCOPIS Payroll (F1, F2, F3, & F4) - Scan Sheets submitted for processing by 11:00 A.M. on 06/15/05; encumber on June 20, 2006.

Miscellaneous Encumbrances on form FMIS-35 for work performed up to 06/15/06. This includes (but is not limited to) overtime, night differential, split shift differential, and temporary assignment; encumber by June 22, 2006.

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Payments to New Employees

Departments must accrue (but not necessarily encumber) payroll for new hires if hired before July 1, 2006 and not paid by:

July 15, 2006 for new Faculty & Faculty Overload

July 20, 2006 for new After-the-Fact and Emergency Hires, and SCOPIS (student, casual, and other BOR overload)

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What is an Accounts Payable?

An Accounts Payable (AP) is a liability or amount owed by the University to outside vendors and individuals or University employees for goods and services received or performed but not paid for by the end of the fiscal year June 30, 2006. (APM A8.866)

Applies to all University organizations and all sources of funds.

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AP - What’s the Big Deal?

Past 5 years, cited by independent auditors.

Last year, UH did not improve its year end AP function. Significant increase in unrecorded liabilities (06/30/05)

- Risk Mgt ($945,000) Fund Grp 11- CRCH ($838,138) Fund Grp 12- JABSOM ($1,017,153) Fund Grp 12- Facilities ($573,188) Fund Grp 11

Resulted in distorted financial information at the fiscal year end.

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AP FY2006

FMIS-11, Accounts Payable Listing Form No diskettes - email FMIS-11 Accounts

Payable data to Disbursing as attachment.

No signed FMIS-11 hard copies – email FO certification will be accepted.

June 30th FHMR009B Open Commitment Status by FO report available on-line in Page Center.

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AP FY2006(cont’d)

P-Card Transactions AP will be downloaded (includes P-Card

transactions posted from June 15-30, 2006).

AP will not include P-Card transactions that are still in-transit and have not been posted on PVSNet as of June 30, 2006.

Fiscal Officers are then responsible to record these in-transit/not posted P-Card transactions.

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Questions/Discussion?

Please contact Disbursing at 956-7126 or Payroll at 956-7444 if you have any questions or need assistance.

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PROPERTY and FUNDMANAGEMENT

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INVENTORY ISSUES Fixed asset acquisitions and disposals

have not been properly submitted in the year of occurrence.

Reclassification of RCUH advances (subcode 7232) involving fixed assets should be processed throughout the fiscal year.

Room number location is now required for all movable assets (if applicable).

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INSTALLMENT CONTRACTS

Installment contracts are defined as agreements to purchase or lease with option to purchase: Involves a series of payments on a debt. Each payment is specified as to principal

and interest (i.e., existence of an amortization schedule).

Have specified due dates on the payments

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INSTALLMENT CONTRACTS Assets and liabilities (installment contract)

are recorded in the FMIS when the asset is first placed in-service

Principal payments that are coded with 5606 or 7706 reduce the installment contract liability

Subcodes 5606 and 7706 operate differently from “regular” expense subcodes. Do not include installment contract principal payment subcodes 5606 or 7706 on your AP listing because the subcodes are designed to reduce the liability rather that increase it.

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SUBCODE CORRECTIONS

Governmental Accounting Standards Board Statement 34 (GASB 34): Only capital purchases are reflected on

the UH’s financial statements as capital assets (subcodes in the 77X0 format).

Controlled property are not reflected on financial statements as capital assets (subcodes in the 77X9 or 77X8 format).

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SUBCODE CORRECTIONS

GASB 34 (Continued) Capital purchases (subcodes in the 77X0

format) are eliminated from the Statement of Revenues, Expenditures, and Changes in Net Assets.

The current year’s depreciation expense is calculated to allocate the cost of the fixed asset over its useful life.

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SUBCODE CORRECTIONS

Special requirements for ORS administered funds : Three JVs will be required to correct

subcode errors if corrections are made after July 1st:

One JV to correct the subcode error in the accrual period.

Second JV to correct the subcode error in the succeeding fiscal year.

Third JV to reverse the correction of the subcode error in prior fiscal year accrual period.

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Construction in Progress (CIP) Reclassification CIP should be properly capitalized and

depreciated in the year of completion. Includes real property as well as

equipment fabrication. Listings have been distributed

periodically to request proper review & update.

Ongoing requirement that requires attention.

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Timeliness of Response

Prompt response needed to ensure proper recordation and/or adjustments

Includes requests for information for P- card purchases, purchase orders, gifts, and deposits

Timely processing of journal vouchers

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Accounting and Reporting for Impairment of Capital Assets and for

Insurance Recoveries

GASB Statement 42

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Reporting of Asset Impairments

Why ? GASB 34/35 (FYE 6/30/2002) University-wide focus rather than a focus

on “funds” Statement of revenues, expenses, and

changes in net assets (Income Statement)

Statement of Net Assets (Balance Sheet) Capital asset depreciation

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Definition

Asset impairment is a significant, unexpected decline in the service utility of a capital asset

Not expected when the capital asset was acquired

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Definition

Asset impairment is a significant, unexpected decline in the service utility of a capital asset

The usable capacity that, at acquisition, was expected to be used.

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Identifying Impairments

Events or changes in circumstance that indicate impairment should be prominent

Generally expected to have prompted discussion by governing board, management, or media

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Common Indicators of Impairment Evidence of physical damage – Fire, flood,

wind, etc. Enactment or approval of laws or

regulations or other environmental factors – water treatment plant

Technological development or evidence of obsolescence – premature closing of a facility

A change in the manner or expected duration of use of an asset

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Alternate Indicator

Use of nonstandard repair parts, such as duct tape or a broom, may indicate that maintenance has been inadequate and that the asset may no longer be able to produce the originally anticipated level of service.

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Impairment Test

The magnitude of the decline in service utility is significant

The decline in service utility is unexpected

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Assets With Impairment Indicators

Depreciation calculations for assets with impairment indicators but do not meet impairment test should be reevaluated Useful life Salvage value

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Has The Impairment Test Been Met? Magnitude Unexpected

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Effective Date

Years beginning after December 15, 2004 June 30, 2006

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Questions/Discussion?

Please contact the Property Fund Management Office at 956-8735 if you have any questions or need assistance.

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OFFICE of PROCUREMENT and REAL PROPERTY MANAGEMENT

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Year-End Processing Deadlines

Office of Procurement and Real Property Management

(OPRPM)

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Purchases Exceeding FO Authority

Submission Deadlines Contracts and Purchase Orders

Construction related projects 12/31/05 Goods and/or Services that require competitive solicitation

04/03/06 Sole Source 04/13/06 Exempt Purchases 05/01/06

(and short term leases) Contract Modifications (including renewals) 05/01/06

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Purchases Exceeding FO Authority (cont.)

Interdepartmental Orders (IDOs)05/12/06

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Encumbrance Posting

By OPRPM for All Funds (6:30 pm) 06/16/06

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ePurchasing

Office of Procurement and Real Property Management

(OPRPM)

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ePurchasing Processing Deadlines

Purchases w/in FO Authority

Posted or Due To

Time Date

G Funded: Electronic POs and IDOs Hard Copy POs

ePurchasingDisbursing

11:00 am11:00 am

06/19/0606/19/06

Non-G Funded: Electronic POs and IDOs Hard Copy POs

ePurchasingDisbursing

11:00 am11:00 am

06/30/0606/29/06

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ePurchasing Processing Deadlines

ePurchasing posting server will be disabled at 6:30 pm on June 30, 2006 for system maintenance

Application server (creating REQ, transfer to PO) will be re-activated for FY07 processing on July 5, 2006; time TBA

Posting server will remain de-activated until FMIS is enabled around July 11, 2006

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P-Card

Office of Procurement and Real Property Management

(OPRPM)

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P-Card Usage at FY-End

Last Day for P-Card Usage 06/14/06 Download to FMIS of May 15, 2006 – June 14, 2006 P-Card Transactions (after 4 pm) 06/15/06 Scheduled posting to FMIS 06/16/06

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P-Card Usage at FY-End (cont.)

Any transaction posted to PVSNet between 6/15/06-6/30/06 will be recorded as accounts payable by system; FO’s to review for proper account coding.

If P-Card usage required during “down” period, June 15-30, 2006, notify Henry Ito ([email protected]), Joyce Teraoka ([email protected]) or Gwen Won ([email protected])

P-Card Usage may resume 07/01/06

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Questions/Discussion?

Please contact the Office of Procurement and Real Property Management at 956-8687 if you have any questions or need assistance.

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TREASURY OFFICE

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e-Deposits Reminders

If you get an error message “Technical Difficulties,” use FMIS screen 024 to verify posting of Udoc and check for duplicate postings. Correcting JVs to GALC via Treasury by 7/3/2006, 4:30 pm

Search for In Process Udocs in eDeposits. Review and post by 7/3/2006, 12:00 pm

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e-Deposit Reminders (cont.)

Do not create any FY07 deposits in eDeposits. Wait until FMIS is brought up for FY 07 processing on July 11, 2006.

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Other Reminders DMs

Finalized and recorded by 07/03/06, 5:30pm

JVs for bank debit and credit memos and credit card chargebacks Correcting JVs to GALC via Treasury by

07/03/06, 4:30pm REX to General fund accounts (G011-199F)

Record via eDeposits by 06/21/06, 3:30pm

Unrecorded direct bank deposits Record via eDeposits by 07/03/06,

12:00pm eDeposits will be disabled thereafter

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URL: https://boh.webcashmgmt.com/phcp/servlet/LoginServletOrganization ID: 1996000354User ID: genusrPassword: uhfisca7

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Click on Payments and Reporting

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Click on Reporting > Credit Transactions Report

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Enter date rangeChoose Sort sequence and Select 0001055569Display

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Sample DisplayCredit Transactions Report

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Questions?

Please contact Treasury Office at 956-8526 if you have any questions or need assistance.

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OFFICE OF RESEARCH SERVICES

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Questions/Discussion?

Please contact the Office of Research Services at 956-5893 if you have any questions or need assistance.

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THANK YOU!

Your assistance in the proper recording of financial information throughout the year and at year-end is greatly appreciated!