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Administrative Procedure 8.671 Administrative Procedure 8.671



Title

Year-End Accounting Data

Header

Administrative Procedure Chapter 8, Business and Finance
Administrative Procedure AP 8.671, Year-End Accounting Data
Effective Date:  March 2016
Prior Dates Amended:  June 1987, June 2002
Responsible Office:  Office of the Vice President for Budget and Finance/Chief Financial Officer
Governing Board and/or Executive Policy:  EP 1.102, Authority to Manage and Control the Operations of the Campus
Review Date:  August 2018

I. Purpose

To provide guidance on recording the accounting data necessary at fiscal year-end for the preparation of financial statements in accordance with accepted accounting principles.

During months one (1) through twelve (12) of the fiscal year, the University generally records revenues and expenses on a cash basis.  Some revenues are recorded on an accrual basis when the departments issue accounts receivable invoices using the University’s Accounts Receivable systems (KFS A/R and CGIN).  For the presentation of the University’s fiscal year-end financial statements, however, both revenues and expenses must be recorded on the full accrual basis of accounting in accordance with Governmental Accounting and Financial Reporting Standards.  Accruals and other year-end adjustments are recorded during the thirteenth (13th) month of the fiscal year.

II. Definitions

Accrual basis - The basis of accounting under which revenues are recorded when earned and expenses are recorded when incurred (generally, when goods and services are received but not necessarily paid).

III. Administrative Procedure

Year-end accounting data is recorded by the departmental fiscal administrator, central offices such as the General Accounting and Loan Collection office (GALC) and the Office of Research Services (ORS), and by system- generated accounting entries.

A.  Common Transactions Recorded by Departmental Fiscal Administrators

Use the Year-End JV Worksheets provided by GALC and attach supporting documentation showing detailed information for each journal voucher (JV).

    1.  Unrecorded accounts receivable

The amount due to the University from the sale of goods or services, credit memos from vendors, and reimbursements of expenditures.

        a.  Revenue related receivables, generated by the sale of goods and the providing of services, are billed by departments.  JVs must be prepared to record all unrecorded accounts receivable amounts if invoices were not recorded into the financial system by the close of the twelfth (12th) month.  This procedure also applies to departments using the University’s Accounts Receivable system (KFS A/R).

        b.  Credit memos are notices from vendors stating the amounts owed to the University for various reasons, including the return of goods.  A credit memo is considered a receivable until paid by the vendor or applied at a later date to a subsequent invoice from the vendor.

        c.  Reimbursements of expenditures (REX) are charges (expenditures) to an account which are recovered in a subsequent fiscal year.

    For general fund accounts (UH Appropriations G011 to G3xx), monies received for a prior year expenditure shall lapse to the State general fund.  General fund REXs should be recorded using the department’s G000 account.

    2.    Allowance for doubtful accounts

The portion of the accounts receivable that is not on the University’s Accounts Receivable system (KFS A/R) which is estimated to be uncollectible.  An allowance for uncollectible accounts arises when the probability of collecting on the receivable is presumed low.  Six months is considered ample time to exhaust departmental collection efforts.  Attach supporting documents showing the account code, invoice number and date, customer name, and amount.

    3.  Unearned revenues

Revenue collections made in the current fiscal year for services that will be rendered in the subsequent fiscal year (e.g. summer session tuition collected in June for sessions that cross fiscal years should be prorated between the two (2) fiscal years).

    4.  Prepaid expenses

The amounts paid as of June 30th for goods and services which will 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 fiscal year, etc.).

    5.  Merchandise/supplies inventory
The cost of merchandise or supplies on hand as of June 30th.  Refer to Administrative Procedure AP 8.636 Supply Inventory.

    6.  Tuition and housing waivers, scholarship discounts and allowances

The tuition and housing revenues for scholarship related payments and tuition waivers for the fiscal year must be recorded as contra-revenues.  Employee tuition and housing waivers must be recorded as revenues and expenses.

B.  Common Transactions Recorded by Central Offices and System-Generated Entries

    1.  Accrued interest receivable

Interest accrued as of June 30th on time certificates of deposit and investments since the last interest payment date.

    2.  Accounts payable

A liability for amounts owed by the University for goods or services received as of June 30th.

    3.  Accrued payroll and fringe

A liability for wages earned by employees but not paid as of June 30th (e.g. lagged payroll, SCOPIS, etc.).

    4.  Accrued vacation

A liability for vacation accumulated by employees but not paid as of June 30th.

    5.  Accrued ORS contracts and grants receivables

ORS contracts and grants receivable accruals record unbilled contracts and grants revenue and should be generated after all related expense accruals are recorded to ensure completeness.

    6.  Allowance for doubtful accounts for KFS A/R and contracts and grants invoices

If accounts receivable invoices are created through the University’s Accounts Receivable systems (KFS A/R and CGIN), GALC and ORS will produce the “Allowance for Doubtful Accounts” entries.

For ORS project accounts, the allowance for doubtful accounts is comprised of all receivable balances for awards with stop dates in prior fiscal years, plus receivable balances, if any, for awards with stop dates in the current fiscal year that have been determined to be unrecoverable.

    7.  Non-imposed fringe

Employer’s share of fringe costs that are absorbed by the State for General Funds (Gxxxxx), certain Special Funds (S397xx), Federal Work Study Programs (F223xx), Federal USDA Direct Appropriations (F26x & F27x), and other non-imposed federal programs (F230).

    8.  Reclassification of negative accounts receivable

Negative accounts receivable for sponsored projects are reclassified as advance from sponsors.

    9.  Elimination of internal service transactions

Internal service funds are used to account for the financing of goods or services provided by one program or department to other programs/departments of the University.  The charge or fee is determined on a cost-reimbursement basis.  The internal service fund is set up primarily for the University’s benefit as an economic and efficient alternative to purchasing the goods or services independently by each department from external vendors.  The elimination entry would remove the “doubling” up effect of expenses recorded by both the provider and user of the internal service.  Revenues of the provider would reduce the appropriate expenses such that allocated (reimbursed) expenses are reported only once on the University’s financial statements.

IV. Delegation of Authority

There is no specific administrative delegation of authority.

V. Contact Information

    
General Accounting and Loan Collection, 956-8278, or uhgalc@hawaii.edu
Website:  http://www.fmo.hawaii.edu/general_accounting/index.html

VI. References

    A. Link to superseded Executive Policies in old format https://www.hawaii.edu/policy/archives/ep/
    B. Link to Administrative Procedures in old format https://www.hawaii.edu/policy/archives/apm/sysap.php

VII. Exhibits and Appendices

None

Approved

    Signed    
    Kalbert Young    
    March 18, 2016    
    Date    
    Vice President for Budget and Finance/Chief Financial Officer

Topics

fiscal year-end; cash basis; accrual basis; accounts receivable

Attachments

None