RIT Internal Use Only. Controller s Division Accounting Office Eastman Hall, 6 th floor

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1 R I T Rochester Institute of Technology Controller s Division Accounting Office Eastman Hall, 6 th floor To: University Managers From: Andrea Napoli, Manager of Accounting Operations Date: June 5, 2015 Subject: Fiscal Year 2015: Year End Closing Procedures RIT s fiscal year-end is rapidly approaching. The information in this memo describes in detail the processes University personnel need to know about financial transactions and the fiscal year-end. We need your help! The dates outlined below have been established to ensure that all transactions are properly recorded in the University s financial enterprise system Oracle. This information is used to produce the University s financial statements and to gather the necessary records for the completion of the annual audit. It is important that everyone responsible for financial transactions at the University understands the information in this document and adheres to the established dates and cutoffs. Please review this information with individuals in your department who are involved in the year-end closing process. This memo is also available electronically on the Controller s Office web page: click on Accounting & Financial Reporting and then on RIT Fiscal Year-End 2015 Closing Process and Procedures. We recognize that year-end closing procedures, particularly the charging of year-end invoices and yearend accrual entries, can be confusing. If you, or anyone in your area, have questions or need additional information, please contact me at ext In addition, there will be a year-end workshop where this information will be reviewed in detail and attendees will have the opportunity to ask questions. Year End Workshop Date: Thursday, June 18 Time: 10:00 11:30 am Location: Webb Auditorium Room 1350 Booth Hall What s New in FY15? Accounts Payable Closing June 30 All IPFs, Employee Expense Reimbursements and POs must be submitted by June 26. All Airfare booked with an RIT designated travel agent for travel departure dates prior to July 1, must be expensed by Friday, June 26. Thank you in advance for your assistance. Accounting Operations 1 of 7 Rev: June 2, 2015

2 Significant Year End Processing Dates: Deadline Transaction Type Action Monday, June 29, 4:30 pm Cash receipt deposits and Petty Take all cash receipt deposits and petty cash receipts to Student Financial Services (USC) for the transactions to be reflected on Friday, June 26, 4:30 pm Friday, June 26, 4:30 pm Tuesday, June 30, 4:30 pm Monday, June 29 - Tuesday, July 13 Wednesday, July 1 -Tuesday, July 13 Thursday, July 2, 4:30 pm Monday, July 6, 4:30 pm Monday, July 6, 4:30 pm Wednesday, July 8 Tuesday, July 14, 4:30 pm Friday, July 17 Cash receipts Purchase Order invoices, Invoice Payment Forms Travel Expense Reports, Oracle RIT Employee Expense Reimbursements* All Oracle Online payment entries including Summer Salary, Add Pays, Special Assignments Invoice Payment Forms Travel Expense Reports, Oracle RIT Employee Expense Reimbursements* Journal Entries Accounts Receivable Purchase Order Accruals Preliminary Department Statements Journal Entries Final Department Statements the FY15 June final department statements. The last day that FY15 Purchase Order invoice and Invoice Payment Forms (IPFs) must be received in Accounts Payable to be reflected in the preliminary statements. Please continue to process forms for all expenditures throughout June to ensure Accounts Payable can process paperwork seamlessly and efficiently. The last day that Oracle Online Employee Reimbursements must be entered and approved in AP to be reflected on the preliminary statements *These must have completed supervisory approval in order to be included on preliminary statements. All Oracle online payroll entries for work completed prior to July 1 t must be entered and approved by Jun 30 for salary items to be included on the preliminary department statements. *These must have completed supervisory approval in order to be included on preliminary statements IPFs received in Accounts Payable between June 29 and July 13, for goods and services received on or before June 30, will be automatically accrued by Accounts Payable. Online Employee Reimbursements entered and approved between July 1 and July 13 will be accrued by Accounts Payable *These must have completed supervisory approval in order to be included on preliminary statements. The last day users can process June journal entries for the transactions to be reflected on preliminary department statements. The last day that FY15 invoices may be entered into the accounts receivable system or cash received on or before June 30 may be applied to invoices. Items received in Oracle by Central Receiving on or before June 30, 2015 (i.e., PO s received without approved invoices in the accounts payable system) will be accrued by the CTO. Verify open PO s to ensure that quantities and dates received are correct. Accounting will users when to print preliminary June 2015 department statements and other standard reports. Please do not print your financial reports in advance of this . Review information on your preliminary department statements to determine if adjustments are needed. The last day for users to process JEs for the transactions to be reflected on the final June 2015 department statements. Accounting will users when to print final June 2015 department statements and other standard reports. Please do not print your final financial reports in advance of this since they may not contain complete information. Accounting Operations 2 of 7 Rev: June 5, 2015

3 Fiscal Year 2015 Expenses RIT accounts for expenditures on an accrual basis. This means that expenditures are recognized in the year in which goods are received or services are rendered, not necessarily the year in which they are ordered or the year in which payment is made. Accounts Payable Your department s FY15 budget will be charged for the value of services rendered or merchandise received on or before June 30, Your department s FY16 (next year s) budget will be charged for services or merchandise received on or after July 1, When items ordered on a purchase order are delivered directly to your department, forward Central Receiving documentation as evidence of receipt (i.e. packing slip or invoice) so the information can be updated in the Oracle purchasing system. (Central Receiving contact information: Fax , ext , snlpre@rit.edu.) 1. In April 2015, your department issued a purchase order for 12 boxes of toner, which is received in August The cost of the toner is a FY16 (next year s) expense because the toner was received in FY16 (after June 30, 2015). 2. In July 2015, your department receives an invoice for a reference textbook received in May The cost of the textbook will be charged to your FY15 (this year s) budget since the textbook was received in FY15 (prior to July 1, 2015). Airfare Beginning in FY15, all airfare booked with an RIT designated travel agent has been recorded on a prepaid travel account. Departments must expense all RIT employee and non-rit employee airfare through Oracle Reimbursement for Travel. Payroll Your department s FY15 budget will be charged for all salaries and wages earned on or before June 30, Your department s FY16 (next year s) budget will be charged for all salaries and wages earned on or after July 1, Wages earned in the bi-weekly pay period beginning on May 29 and ending on June 11 will be paid on June 19. The payroll distribution report for June 2015 will reflect these charges. Accounting will process an accrual for June 12 through June 25 (the whole pay period June 12 June 25, earned in FY15 and paid in FY16) prior to the preliminary June closing. Additionally, accounting will process an accrual for June 26 through June 30 (the 5 remaining days in June using the actual wages from the payroll period ending on June 25) prior to the preliminary June closing. The accruals will be automatically reversed in FY16. Regular salaries for faculty and staff paid semi-monthly are not accrued since they will be paid on June 30, 2015 for the period June All Oracle Online Additional Payments, Special Assignments and Summer Salaries must be entered and approved by June 30 to be reflected on your June preliminary department statements. Online entries for work performed in FY15 entered up to July 13 will be reflected on your final June department statements. 1. A student in your department worked 40 hours during the pay period June 12 June 25. The student will be paid $350 (40 X $8.75) on Friday July 3, in FY16. Prior to the preliminary June closing, Accounting will charge the whole $350 to your department s FY15 budget on Accounting Operations 3 of 7 Rev: June 5, 2015

4 the student salary line (71250). In July (FY16), Accounting will reverse the accrual and a credit of $350 will be reflected on the student salary line. The impact on your FY16 budget will be $0 ($350 actual payroll expense paid on July 3 less $350 accrual reversal). 2. A student in your department worked 40 hours during the pay period June 26 July 9. The student will be paid $350 (40 X $8.75) on Friday July 17, in FY16. Prior to the preliminary June closing, Accounting will charge $ (5/14 of $350) to your department s FY15 budget on the student salary line (71250). In July (FY16), Accounting will reverse the accrual and a credit of $ will be reflected on the student salary line. The impact on your FY16 budget will be $0 ($ actual payroll expense paid on July 17 less $ accrual reversal). However, the July amount reflected in for the July 17 payroll would be $ ($ minus $125.00). 3. On June 26, your department processes an online exempt Additional Payment entry for a staff person for extra work performed during the pay period June The Payroll Office will process the Additional Payment amount with the pay date of July 15. This amount will be charged to your department s FY15 budget through an accrual and will be reflected on your June preliminary and final department statements. Prepaid Expenses Sometimes, especially during the latter part of the fiscal year, it is necessary to prepay expenses relating to the following year s (FY16) budget. This often occurs with maintenance and service contracts, fees for seminars, membership dues, and subscriptions. Accounts Payable, after verifying dates of service, will charge these expenses to a prepaid general ledger account in FY15. These payments will not be reflected on your FY15 budget. In July 2015, Accounts Payable will prepare the journal entry (Oracle category = Prepaid) to charge these expenses to the appropriate departments. The payments will be reflected on your FY16 budget. 1. In June 2015, your department issues a purchase order for an annual copier maintenance contract and prepays for the service for the period July 1, 2015 through June 30, Accounts Payable will charge the expense to your department s FY16 budget. 2. In May 2015, it is necessary to pay in advance for a business trip you will take in July 2015 (e.g., hotel reservations, conference registration, etc.), and you prepare an Invoice Payment Form. Accounts Payable will charge these expenses to your department s FY16 budget. 3. In May 2015, you charge a registration fee for a conference being held in August 2015 on your procurement card. Prepare a journal entry (Oracle category = Prepaid) and Accounting - postmyje@rit.edu, indicating the batch name in the subject line. Valid documentation includes: invoice/receipt showing the event date and a copy of the transaction record from ActivePay. Debit the prepaid account with a line description: date of event, name of vendor & invoice #. Credit the appropriate expense account for your department. This entry will be automatically reversed in July 2015, charging the expense to your FY16 budget. Accounts Receivable All income for goods or services provided to an organization outside of RIT during FY15 should be recorded by June 30, even if the payment has not yet been received from the customer. Invoices should be prepared using Oracle Accounts Receivable prior to or when the services are rendered. Alternatively, Accounting Operations 4 of 7 Rev: June 5, 2015

5 your department should prepare a journal entry in FY15 to debit the department s accounts receivable account XX.XXXXX XXXXX and credit the appropriate departmental income account XX.XXXXX.XXXXX.XX.XXXXX Example: 1. IPI provides research testing for 3M Corporation on May 15, Although 3M is not expected to pay until July, an invoice should be processed through Oracle Accounts Receivable or a journal entry prepared to record the transaction. The entry will debit accounts receivable and credit corporate contracts income If at the end of June, the invoice amount remains unpaid, it will remain in accounts receivable and a reconciliation of the balance sheet account will be required. For additional information regarding account reconciliations visit the Controller s web page at Deferred Income When RIT receives income in advance of providing the service it is considered Deferred Income. The income is recorded in the year the service is rendered, not when the payment is received. If you receive a payment in FY15 for services to be provided in FY16, record the income in your department s deferred income account: XX.XXXXX XXXXX When the service is rendered in FY16, prepare a journal entry to debit deferred income and credit your department s income account. 1. In April 2015, Gates-Chili High School made a deposit to reserve the Field House for their high school graduations for 2016 through In 2015, the Field House will record the deposit in their deferred income account. In 2016, after the first graduation ceremony, they will debit their deferred income account and credit their income account for the amount of the deposit received for year 1. They will continue this process for each of the subsequent years until FY 2018 at which time all revenue will be recognized. 2. In June 2015, several alumni made reservations and paid the fee to attend the 2015 Brick City Weekend. In June 2015, Alumni Relations will record the fee in their department s deferred account 01.XXXXX XXXXX In October 2015, after Brick City Weekend, Alumni Relations will prepare a journal entry to debit the deferred income account and credit revenue. Processing Year-End Invoices, Invoice Payment Forms & Travel Expense Reimbursements: Procurement Services & Accounts Payable will accrue Purchase Orders, Invoice Payment Forms, and Travel Expense Reimbursements for FY15 starting Wednesday July 1 until Monday, July 13 at 4:30 p.m. The goods or services must have been received by June 30 and the travel date must have started on or before June 30. Purchase Orders: At the close of business on Tuesday, June 30, purchase orders received in Oracle by Central Receiving on or before June 30 and not yet invoiced will be automatically accrued by the Procurement Services Office. These items will be charged to your department s FY15 budget through the accrual process and will be reversed automatically in FY16. When the invoice arrives, it will be processed and paid in FY16, with no impact to your FY16 budget. If items were delivered directly to your department, bypassing Central Receiving, fax a copy of the packing slip or invoice to Receiving at ext on or before June 30. Receiving will update the purchasing system and the item will be accrued automatically. Accounting Operations 5 of 7 Rev: June 5, 2015

6 For purchased services, send an to Central Receiving and request that a receipt be entered for the amount of the services rendered through June. Invoice Payment Forms: Departmental Action Required For all goods and/or services received on or before June 30 for which the vendor has not provided an invoice, departments should prepare an accrual journal entry (Oracle category = Year-End Accrual) and Accounting - postmyje@rit.edu, indicating the batch name in the subject line. Valid documentation includes: packing slip/receipt showing the receipt date. Debit the appropriate expense account for your department and credit the accounts payable accrual account: When the actual invoice is received, indicate on the face of the invoice Accrued FY15. This is an important step it will prevent Accounts Payable from accruing the invoice a second time; the payment will be processed with no impact to your FY16 budget. Example: 1. Your department contracted for consulting services provided during April and May The consultant has not sent an invoice, and cannot be reached in July. Prepare a Year-End Accrual journal entry with the anticipated amount due to the consultant. This amount will be charged to your FY15 budget through the accrual process and reversed in FY16. When the invoice arrives, mark it prominently with Accrued FY15 prior to sending to Accounts Payable. The invoice will be paid in FY16. Procurement Card Purchases The closing date for items to appear on your June procurement card statement from PNC is June 30. If you make last minute purchases the transactions may not be charged against your FY15 budget. On Monday July 6 th Accounting will download from ActivePay all entries with a transaction date of June and a post date of July and prepare an accrual journal entry (Oracle category = Year-End Accrual) to debit the expense account on the ActivePay transaction (if not the default account you must change it in ActivePay prior to July 6 th ) and credit the accounts payable accrual account. This should eliminate the need for individual departments to prepare accrual JEs. Example: 1. You purchased lab supplies at Home Depot on your procurement card for $ on June 30. The charge does not appear on your PNC statement but it does appear on-line (ActivePay) on July 2. Accounting will prepare a Year-End Accrual journal entry for $ The amount will be charged against your FY15 budget through the accrual process and be reversed in FY16. When July billing information is received from ActivePay, the lab supplies will be charged to your department in FY16, with no impact to your FY16 budget. Encumbrances When an item is purchased on a purchase order, encumbrance entries are made automatically in the general ledger to record the anticipated expenditure. An encumbrance is not an expense; it is for information and budget planning purposes only. The actual expense is not charged to your department s budget until the merchandise or service has been received and the invoice is paid. 1. In June 2015 you ordered two cases of toner for your copier. When the requisition was placed and the purchase order generated an encumbrance was recorded on your department supply line. The toner was delivered on June 19, and the invoice was approved for payment in Accounts Payable on June 26. At that time, the encumbrance will be reversed and the actual expense will be recorded on the ledger. Accounting Operations 6 of 7 Rev: June 5, 2015

7 2. In June 2015 you ordered special forms to be delivered in August This expense will be charged to your FY16 budget since the order will be received after June 30, The amount of the order will be encumbered at the time the order is placed and it will be reflected on your June department statement in the encumbrance column. The actual expense will be recorded in FY16 when the special forms are received and the invoice is approved for payment. Open encumbrances at June 30 will be carried over into FY16. Special Format for June Preliminary and Final Department Statements There is a special year-end department statement with an Available Balance Column that does not include encumbrances (Working Budget YTD Actual = Available Balance). Use this column to determine the actual balance remaining on each line of your budget. The column for Permanent Budget has been removed. For planning purposes only, there is a second available balance column that does include encumbrances (Working Budget Encumbrances YTD Actual = Available Balance w/ Enc.). The report is called RIT FY15 Dept Stmt. Assistance with Year-End Processes If you have questions or require assistance, you may contact the following individuals: Subject Name Extension Agency Accounts (Projects beginning with a Gary Maccarone XXXX) Budget Entries Chris Monaco Capital Equipment Statements (Project 84200) Kerry Phillips Department Statements, Encumbrances Gary Maccarone Fixed Assets & Plant Project Accounts Jane McGrath-Briggs Gift & Endowment Projects (2, 6 & 7 XXXX) Pricilla Schiffhauer Grants & Contracts (3XXXX, AXXXX-PXXXX projects) Sponsored Programs Accounting See SPA directory: Invoice Payment Forms Journal Entries, Petty Cash, Deposits, Internal File Feeds On-line Employee Expense Reimbursements On-line Travel Expense Reimbursements Payroll Expenses Procurement Card Purchases including BTA & GTA Accounts Purchase Order Invoices Jackie Hughes Yancey Moore Catrina Sapp Gary Maccarone Mary Kay Tyner David Drollette Mary Kay Tyner Kitty Stappenbeck Kitty Stappenbeck Christa Abugasea Valerie Russell Janet Bristol Yancey Moore Purchase Order Accruals Sherry Lupo Special & Designated Projects (1XXXX) Gary Maccarone Vendor System Contracts/External File Feeds Gary Maccarone r/sponsored/assignments.html Accounting Operations 7 of 7 Rev: June 5, 2015