FMO Newsletter-March 2023

This issue of the Financial Management Office Newsletter includes information about the following:

The Financial Management Office Newsletter is distributed monthly.  Should you have any questions about this newsletter, contact Amy Kunz via email: amykunz@hawaii.edu.

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Quarterly Interest Rate for Late Vendor Payments

Target Audience: Fiscal Administrators and Fiscal Support Staff

Pursuant to Section 103-10 of the Hawai`i Revised Statutes, the interest rate for obligations related to goods delivered or services performed remaining unpaid after 30 days is equal to the prime rate for each calendar quarter plus two percent. The interest rate is adjusted quarterly using the prime rate as posted in the Wall Street Journal on the first business day of the month preceding the calendar quarter. Please refer here for the 2nd quarter interest rate and calculation.

Should there be any questions regarding this change, please call the Disbursing Office at (808) 956-5535.

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Proposed Updates to AP 8.685 – Cancellation or Replacement of UHGA Checks to Include Procedures for Rejected ACH Payments

Target Audience: Fiscal Administrators and Staff

We are proposing updates to AP 8.685 – Cancellation or Replacement of University of Hawai‘i General Account (UHGA) Checks to include procedures for the handling of rejected ACH payments.  In order to streamline the process, instead of fiscal administrators preparing a GALC-625 to cancel a rejected ACH payment, we are proposing that once notified by the bank that an ACH payment has been rejected, General Accounting will automatically cancel the payment in KFS.  The cancellation will accurately and timely reflect the return of funds to the account.  Fiscal administrators will be notified of the cancellation and will be responsible for updating the vendor’s information and for the reissuance of the payment.

The following is a draft of the added procedures for review:

E.  Rejected ACH Payments – Other

  1. Bank of Hawai‘i notifies UH of a rejected payment via the ACH Return Report.
  2. Procedures for Disbursing
    • Cancel ACH profile.
    • Email the FA regarding cancellation with a cc to General Accounting.
  3. Procedures for General Accounting
    • Cancel the ACH payment in KFS.
    • Confirm via email that the payment has been cancelled, so the FA can verify funds are available the following day.
  4. Procedures for Fiscal Administrator
    • Notify payee of the rejected ACH and requirement to update information.
    • Submit DV payment edoc upon completion of payment information updates.

Should there be any questions or concerns, please contact Karen Morimoto at karenhm@hawaii.edu. After feedback is incorporated, the plan is for the revised policy to take effect in April 2023.

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How to Avoid Dangling Encumbrances on Closed Purchase Orders

Target Audience: KFS Users

Uncleared encumbrance balances for closed purchase orders (PO) are generally the result of rounding errors due to split funded purchases (e.g. multiple accounts or multiple object codes for a single PO line).  Some of the common rounding differences are due to the following:

  • If the Item Line total is an odd number and the split between Accounting Lines is 50/50, the extra penny needs to be assigned to 1 account.  It was determined that the PO/POA and the PREQ does not always assign the penny to the same account, resulting in a +/-$0.01 encumbrance error.
  • Accounting Lines may be split by percent rounded to 2 decimal places (xx.xx%) or by $ value rounded to the nearest cent ($xx.xx).  This sometimes causes encumbrance errors due to rounding between multiple Accounting Lines.

Whenever feasible, it is recommended that a separate PO Item Line be used for each Accounting Line.  For example, if you were purchasing 15 cases of 8.5×11 paper for 2 different departments:

Instead of specifying one item line with split accounting:

It is recommended to specify 2 items lines with one account for each item line:

It is understood that in certain circumstances using a separate PO Item Line for each accounting line may not be practicable (e.g. it may confuse the vendor if a PO has 2 Item Lines to purchase 1 piece of equipment which will be funded by 2 different accounts).

If you find an encumbrance error while reconciling your accounts, please submit a Trouble Ticket so that we can assist you with the correction process.

If you have any questions, please refer to the FAQs on our website or contact the Fiscal Services Office at fissrv@hawaii.edu.

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