OVERVIEW OF THE BUSINESS CYCLE FLOW OF TRANSACTIONS

Transcription

1 OVERVIEW OF THE BUSINESS CYCLE Business Cycle Name Fixed Assets Principal Business Activities ACQUIRING FIXED ASSETS DEPRECIATING FIXED ASSETS DISPOSING FIXED ASSETS MANAGING FIXED ASSETS MAINTAINING FIXED ASSET REGISTER AND/OR MASTER FILE FLOW OF TRANSACTIONS Departments Account Managers are authorized to spend their budgeted funds in order to accomplish departmental goals. Purchases of goods or services by departments are initiated in two ways; through a Departmental Purchase Requisition (DPR) or a Small Purchase Order (SPO). If a purchase is for less than $5,000, the Project Manager and designated support staff are authorized to participate in the SPO Program, and the purchase is for allowed goods and services, an SPO may be used. Generally, an SPO is prepared by a departmental secretary and is electronically routed for Project Manager approval within the Oracle ERP System. Encumbering and fund approval of SPOs occur at the point of creation. The Project Manager reviews the prepared SPO and electronically authorizes the small purchase. The SPO is then printed and sent via mail or fax to the vendor. For purchases greater than $5,000 or for purchases that are not processed through the SPO Program, a DPR is generated by the department s secretary and is electronically routed to the Project Manager for approval. After the Project Manager approves the DPR, it is routed through Oracle Workflow to the Purchasing Office for handling. As a state agency, the University participates in a program called the Historically Underutilized Businesses (HUB) Program. The departments are strongly encouraged to purchase goods and services from State certified HUB Vendors. HUBs are businesses that are ethnic minority and/or woman-owned. When departments create requisitions using a Grant account (accounts that begin with a 4), after approval by the Project Manager, these requisitions are routed electronically to Grants & Contracts (G&C) accounting for approval via an automated workflow through Oracle. The designated G&C accountant reviews the requisition to verify appropriateness of the transaction in accordance with the terms of the grant. Once the G&C accountant approves the requisition, it is routed to Purchasing via the automated workflow for processing. Additionally, for transactions related to equipment, the G&C accountant will contact Assets Management and verify the category used on the requisition to ensure that items are properly coded so that they can roll up into the corresponding expenditure type and capital object code. This will prevent items from being miscoded and erroneously excluded from the inventory as capital assets (if applicable contingent on State Property Accounting guidelines). Purchasing The President of the University has granted authority to the Materials Management Director to spend institutional funds for purchases of supplies, goods, services, and equipment. The President also authorizes the Materials Management Director to grant authority to Project Managers to perform small purchase order functions in accordance with HOP In order to receive approval, Project Managers must attend purchasing procedures training. Processing for both SPOs and DPRs is as stated in Departments above. DPRs are reviewed by a Purchasing Buyer and/or Procurement Supervisor. Depending on the requested items, handling is in accordance with established purchasing procedures. The Purchasing Office has five Buyers and a Procurement Supervisor with specific commodity assignments and threshold dollar limits. Once an award is made to a vendor, the Buyer prepares a PO from the DPR and submits it electronically to the Materials Management Director (or designee in absence). Once the Director approves the PO, the Buyer receives a notification of approval through Workflow and prints the PO for mailing to the vendor. Corrections or change orders to existing POs are handled in the Oracle System.

2 Corrections or change orders are routed electronically to the Director for approval. When the merchandise is received, then either a two or three way match is required (See Central Receiving). Ownership of the vendor master files is shared by the Purchasing Office and the Accounts Payable Office. Both offices have assigned personnel that have the ability to create and update the master files. Purchasing guidelines are outlined in the Handbook of Operating Procedures, through and the Materials Management Procedures Manual available at this link. Central Receiving The goods are sent to the University s Central Receiving Department where the items are verified to the packing slip. These orders are called 3-way matches because they require receipt verification from the department. The SPO or the PO is issued out (1 st match), the invoice is sent from the vendor (2 nd match) and finally the department verifies receipt of the goods when Central Receiving personnel deliver the items to the department (3 rd match). For these types of orders, posting of receiving information in the Oracle System is accomplished by the Central Receiving Department. The 2-way match requires only the SPO or the PO to be issued (1 st match) and the invoice to be sent from the vendor (2 nd match). These orders are usually picked up by someone from the department or do not require shipping to Central Receiving such as periodical subscriptions or services. Since these orders do not go through the Central Receiving Department, they cannot post receiving information in the Oracle System. It is the department s responsibility to post the receiving information. Receiving information is posted to the PO record in the Oracle System. The PO record is accessed by the Accounts Payable Office. Assets Management Fixed Asset Additions The Inventory Clerk tags personal property that meets controlled or capitalized asset criteria as stated in the SPA Policy and Procedures Manual, the SPA User s Manual (both of which are generated by the State of Texas Comptroller s Office), and the University s Handbook of Operating Procedures Section USE, ACCOUNTABILITY AND RESPONSIBILITY FOR STATE (UNIVERSITY) PROPERTY. The Inventory Clerk verifies account information for all assets using the UTPA PO Inquiry responsibility through Oracle to identify items purchased from federal accounts (accounts that begin with 41 and 42). Assets that meet the controlled or capitalization thresholds that are purchased from a federal account will be tagged using (a) UTPA tag number and (b) tag number marked as Federal Property. The Inventory Clerk notifies the Fixed Assets Accounting Technician (1) of assets tagged, and asset information is captured through an Assets Management computer database in which asset information is inputted on each item including tag number, item description, serial number, time and date received, and reference purchase order number. The Accounting Technician verifies this list against purchase orders and payments processed in the Oracle PO and AP modules. Additionally, the Assets Manager verifies all capitalized assets on a monthly basis and compares the list of transactions prior to closing the books with the Accounting Technician for accuracy. Asset transactions are imported into FA from AP via the Mass Additions Create process, which is ran on a monthly basis by the Accounts Payable Manager. The Accounting Technician runs the Prepare Mass Additions process and inputs all required information pertaining to each asset into the system, including asset/tag number, serial number, class code, project manager assignment, location, etc. For assets purchased from federal funds, the Accounting Technician will use tag numbers beginning with FED This will identify all assets that were purchased from a federal account; when running reports, this will facilitate tracking all federal assets by including only those assets whose numbers begin with FED. Additionally, Assets Management will request a copy of the award from G&C to maintain proper documentation on the asset. If available, information captured for these assets will include the following in accordance with circular A-110: (a) a description of the equipment, (b) serial number, model number, Federal stock number, national stock number or other identification number, (c) source of the equipment, including the award number, (d) whether the title vests in the recipient or the Federal Government, (e) acquisition date and cost, (f) information to calculate the % of Federal participation in the cost of the equipment, (g) location and condition of the equipment and date the information was reported, (h) unit acquisition cost, (i) ultimate disposition data, including disposal date, sales price or method used to calculate fair market value. NOTE: Most of this information will be available in the award. After the Prepare Mass Additions process is completed, the Accounting Technician also runs the Post Mass Additions process to transfer the assets into the Asset Workbench,

3 which contains the University s inventory. A list of current year capitalized additions from Oracle FA is maintained by the Accounting Technician that is used during monthly reconciliations. Asset additions, retirements, and adjustments are submitted to State on a quarterly basis by running the SPA interface process; these transactions are monitored by the Accounting Technician and reconciled against the AFR at end of year. Land acquisitions, building additions, facilities and other improvement, and infrastructure are entered in Oracle FA on a monthly basis by the Fixed Assets Accounting Technician (2). Construction in progress (CIP) transactions are not entered in Oracle FA until the asset is placed in service (generally when the facility is substantially completed or the building is occupied). Before closing the books, the Assets Manager verifies all capital transactions as listed on the UTPA Ad-hoc Transactions Report-Revised found in the XXEIS General Ledger Reports, and as reflected on the GL funds inquiry screen, which is then exported into Excel. Additionally, the Assets Manager reconciles the entire Investment in Plant fund group on a monthly basis between the list of capital transactions found in the ad-hoc report, GL, FA, and the capital asset reconciliations which are completed by both Accounting Technicians on a monthly basis as follows: FA Accounting Technician (1) reconciles equipment and vehicles (and library books at yearend); FA Accounting Technician (2) reconciles land, buildings, facilities and other improvements, CIP, and infrastructure. Library additions (purchases) are posted in GL on a monthly basis to the Investment in Plant fund group and reconciled by the Assets Manager. At end of year, these items are reversed from GL and entered in FA to ensure proper depreciation calculations, which are automated in Oracle FA using a combination of midyear convention and straight line methods as indicated by UT System. Depreciating Fixed Assets Depreciation expense is automatically calculated and recorded on a monthly basis as part of the end of month closing process. The method (straight line) used to depreciate the assets is taken from the Texas Comptroller s State Property Accounting, and the useful life is based on the class code list determined by SPA. The State Comptroller s Office has prepared a Capital Asset Guide that includes asset category definitions, capitalization thresholds, depreciation methodologies, and examples of expenditures for each class of assets as defined by SPA Depreciation is automatically calculated in Oracle FA and interfaced to GL for posting. Depreciation is posted in GL on a monthly basis by the Accounting Department once the entries are created as part of the end of month closing process. Because this is an automated journal, a paper document is not created or kept for these entries; however, these transactions can be inquired on the system. For AFR purposes, a sample of assets will be selected and depreciation will be calculated manually to ensure that the system s calculations are appropriate. During the testing phase of the Oracle implementation, depreciation calculations that were tested were correct in all instances (UAT, Dev 1, Dev 2, Stage, etc.) Disposing Fixed Assets Obsolete assets are disposed of based on the Texas Comptroller s State Property Accounting guidelines. The University is prohibited from selling/auctioning data processing equipment (i.e. computers). These items are sent to the Texas Department of Criminal Justice to be disposed. All other items are auctioned or donated as permissible by the State of Texas, and UT System Rules and Regulations (Series 80201). As per the National Science Foundation s Award & Administration Guide, unless otherwise specified in a grant, title to equipment purchased or fabricated with federal funds by a college or university will vest in the grantee organization upon acquisition. In the event that title to equipment or property is vested in the Federal Government, such property will be disposed of in accordance with the conditions specified in the grant, if applicable. Public auctions are conducted annually or as required depending on the amount and volume of assets held at the surplus area. Bids for auctioneer services are sent out by the Purchasing Department. Beginning in FY2009, GDA Auction Co. of Texas will conduct auctions on behalf of the University for a contract term of three years; proceeds from the auction are sent to UTPA for deposit. The Accounting Technician verifies that the proceeds reported on the Final Settlement Statement are received and recorded in the financial records.

4 Tags are removed from the equipment by the Inventory Clerk and other Assets Management staff, and are provided to the Accounting Technician so that these items are removed from the Fixed Assets System using a specific disposal code. Gains and losses from the disposition of assets are reported to UT System during the Annual Financial Report. The Assets Manager prepares a reconciliation of gains/losses on sale of capital assets by exporting all transactions from the Fixed Assets System that have a disposal code into an Excel spreadsheet. Those assets with an original cost of $5,000 or greater will be identified for reporting purposes. Managing Fixed Assets Assets Management is required to balance with SPA s records for all capitalized additions, deletions, and other adjustments, but not for controlled assets. Annually, Assets Management provides an inventory of equipment to all Project Managers on an annual basis and requests that they conduct a physical inventory of their assets to verify the accuracy of the list. Project Managers are given a month to conduct this inventory and provide the results to Assets Management. Any discrepancies identified are corrected by the Accounting Technician and the final certification is submitted to the State Comptroller. At year-end and during the Annual Financial Report preparation, the Assets Manager and an assigned Accountant (currently the Accounts Payable Manager) export a year-to-date transaction file using the UTPA Ad-hoc Transactions Report-Revised found in the XXEIS General Ledger Reports and information from GL to verify that all items meeting capitalization rules have been captured in the financial statements. Maintaining Fixed Asset Register and/or Master File The Assets Management Accounting Technicians (2) and the Assets Manager maintain fixed asset registers used for reconciliations. The Accounting Technicians prepare monthly capital asset reconciliations by account and/or by class code from a transactions listing of all purchases made during the month. Reconciliations are verified on a monthly basis and reconciled between FA, GL, and records maintained by the Assets Manager on the Investment in Plant fund group. These files are maintained in the Comptroller s common area within the Fixed Assets folder. Accounts Payable When invoices are received from the vendor, the Accounts Payable department date stamps the invoices in order to comply with the Prompt Payment Law. These invoices are randomly assigned to the AP Clerks for processing. The AP Clerk verifies quantities, amounts, vendor and receiving information prior to processing the invoices for payment. The AP clerk enters these invoices in Oracle in batches; the invoices are matched to a Purchase Order online. The Oracle system does not allow a payment to be processed without posting a receiving date for 3-way match Purchase Orders. The Oracle system does not allow duplicate invoices for a vendor. After invoices are processed, the AP Accountant or AP Manager review the batches and validate these; only the AP Accountant and AP Manager have access to validate transactions. An automated accounting process runs overnight, which creates the accounting entries that are transferred to Projects and GL by another process that runs simultaneously. An AP clerk processes payment batches the following morning. This process selects the payments that are due; only invoices that have been validated will generate a payment. If the payment method is check ; these are selected and a check is generated. If the payment method is electronic, these transactions are uploaded to BOA if the invoices are to be paid via direct deposit. If the payment method is clearing ; these are transactions that need to be sent to USAS (Uniform Statewide Accounting System) if the invoices are to be paid from state funds. Checks are secured in a vault and access is restricted to key personnel. Once checks are printed, the AP Accountant or AP Manager submits a request that creates a Positive Pay File; this file is then sent to the Bank for payee and amount verification. Two student workers put together all payment documentation (state and local) and match to the checks generated or warrants received by the State. The AP Supervisor and the AP Accountant review and approve purchase vouchers on a daily basis and the student workers mail out the checks to the vendors. Object code or account corrections are processed by reversing the original entry and entering the correct one in the distribution form of the invoice in the AP module in Oracle. Corrections for invoices that have been processed from multiple funds are corrected in Accounting. Corrections pertaining to incorrect amounts or wrong vendors are processed by voiding the erroneous check and issuing a new payment to the vendor.

5 The Banner System interfaces with Oracle through feeds that provide the Accounts Payable Office with information to generate refund checks to students and/or Financial Aid disbursements. Accounts Payable guidelines are outlined in the Purchase Voucher Guide and Prompt Payment Act by the State of Texas. The payment request process is initiated by the Accounts Payable Department and is accomplished through six procedures. See W/P