General Ledger Journal Entry (including IDB) and Supporting Documentation Requirements

Transcription

1 General Ledger Journal Entry (including IDB) and Supporting Documentation Requirements Index Page A. Overview 1) Purpose 2 2) Scope 2 3) General Ledger Journal Entry Role Definitions 2 General Ledger Journal Entry Requestors 2 PeopleSoft General Ledger Journal Entry Initiators 2 Budget Approvers 3 PeopleSoft Compliance & Eligibility Reviewers 3 PeopleSoft Approvers 3 4) General Ledger Journal Entry General Requirements 3 B. Detailed General Ledger Journal Entry Supporting Documentation Requirements 1) Valid (necessary, appropriate, not fraudulent, etc.) 4 2) Complete (fully referenced, fully explained) 5 3) Achieve the intended financial reporting impacts 6 4) Approved by appropriate Dept ID or Project Approver(s) and/or Delegate 6 5) Submission of General Ledger Journal Entry & Supporting Documentation 7 6) Format and Retention Requirements 7 Appendix A 9 Requirements_FINALV1 0.docx p1/9

2 A. Overview Effective August 2, 2011, all general ledger journal entries, including Interdepartmental Billings (IDBs), are subject to these requirements, which stipulate that all expenses be approved by an appropriate signing authority (Budget Approver) as described under the Delegation of Authority Policy, and in accordance with Project team authorizations as established by the Researcher/Project Holder, where applicable. 1) Purpose: To provide clear directions, procedures and specific documentation requirements for general ledger journal entries, including IDBs, for all General Ledger Journal Entry Requestors, PeopleSoft General Ledger Journal Entry Initiators, Budget Approvers, Compliance & Eligibility Reviewers and PeopleSoft Approvers. 2) Scope: General Ledger Journal Entry requirements apply to general ledger journals of all types created for all purposes, for all Business Units, including distributing a charge resulting from the sale of goods and/or services (including IDBs), correction of a prior journal entry, or allocation of expenses or revenues. Supporting documentation requirements apply to each line contained in the journal entry. Since a journal entry may only be used where it has been determined that the transaction cannot be processed through an originating sub-system, this assessment must be done be prior to the creation of a journal entry. 3) General Ledger Journal Entry Role Definitions: General Ledger Journal Entry Requestors Any person who is responsible for preparing and submitting journal entries to the Office of the Controller, or to Research Accounting in the case of Research project transactions, for processing in PeopleSoft, including those prepared on behalf of other individuals. The Requestor must have an understanding of basic accounting principles and have completed the General Ledger Journal Entry (including IDBs) Training Session. Preparing a journal entry includes completion of the General Ledger Journal Entry Request form, populating the template from which the journal is to be uploaded, and compiling and filing adequate supporting documentation as outlined below. The General Ledger Journal Entry Requestor Checklist may be used as an aid to assist in correct journal preparation. Requirements_FINALV1 0.docx p2/9

3 PeopleSoft General Ledger Journal Entry Initiators Any person who will receive general ledger journal entries from Requestors, and who has a PeopleSoft security role permitting them to create, edit, and submit journal entries for approval and posting. Initiators will reside only within the Office of the Controller and Research Accounting. The Initiator will review the IDB entry and supporting documentation for appropriate accounting, appropriate back-up, validation that the entry is balanced, and that appropriate authorizations have been provided. Once the Initiator is satisfied that the journal is complete and should be processed, he/she will submit the general ledger journal in PeopleSoft for combo edit and budget checks, and if successful, submitted for approval. Journal entries which do not pass either the combo edit or budget checks will be sent back to the Requestor for correction and resubmission. The Initiator must have an understanding of basic accounting principles and have completed the General Ledger Journal Entry (including IDBs) Training Session. Budget Approvers For operating funds, the approver is the Department ID budget owner on the journal line(s). For Projects, the approver is the Project Owner (Researcher, Principal Investigator) or his/her delegated signing authority for the Project on the journal line(s). Approvals must be obtained prior to the creation of journal entries in PeopleSoft. PeopleSoft Compliance & Eligibility Approvers For Research project transactions only, Compliance & Eligibility Approvers will review and approve journal entries with respect to compliance and eligibility on behalf of the granting agency or sponsor. PeopleSoft Approvers- Will review and approve the journal entries with respect to adherence to University policies, procedures and guidelines on behalf of the Office of the Controller. PeopleSoft Approvers will reside only within the Office of the Controller. 4) General Ledger Journal Entry General Requirements: a) A journal entry may not be split into multiple entries to avoid approval at the appropriate monetary level(s). b) A journal entry may contain lines which pertain to more than one Dept ID or Project, provided the transactions share the common purpose and intent. c) A journal entry may not have both research related and non-research related transactions in the same journal entry, unless the explicit purpose of the entry is to record a required transfer between the research project(s) and a non-research project or account. To facilitate the requirement for additional compliance reviews of all Research charges and credits, Research transactions (Fund 60 Externally Restricted Research Projects/Activities) must be separated Requirements_FINALV1 0.docx p3/9

4 into Research related journals. All other types (operating and non Research Project chartfield strings) may be combined in the same journal entry providing that they share the common purpose and intent. The Initiator will use a specified Source Code to route Research related general journals to the Compliance & Eligibility Reviewer for review on behalf of the granting agency or sponsor. d) Do not include personal information in the journal line description, with the exception of donor information. With respect to FOIP (Freedom of Information and Privacy) requirements, the journal entry should not show the names or IDs of employees together with any other piece of information such as transferring a salary from one account to another. e) General rules for information that must be included in specific types of general ledger journal entries: Expense accruals must first contain the vendor name or vendor ID followed by the purchase order number. Where available, the invoice number and/or packing slip number should be recorded after the purchase order number Revenue accruals must first contain the customer name or customer ID followed by a description of the revenue Revenue deferrals must first contain the customer name or customer ID followed by an explanation as to why the revenue is being deferred Corrections for account coding errors must include the original journal number and the line number(s) being reversed B. Detailed General Ledger Journal Entry Supporting Documentation Requirements: Supporting documentation is prepared by Requestors. It must provide sufficient details to the Initiators, Dept ID and Project Approvers and PS Approvers, such that they are able to efficiently review; and to support the validity, appropriateness, completeness, correctness, compliance and budget authority for each amount. The exact nature of the supporting documentation will vary for each journal entry, but in all cases, regardless of dollar amounts, it must be supportive and relevant to the following key general ledger journal entry attributes: 1) Valid (necessary, appropriate, not fraudulent, etc.) a) Each journal entry must have a completed General Ledger Journal Request form as part of the supporting documentation. It must be submitted as a separate document and at the same time as all the other supporting documentation. b) On the General Ledger Journal Entry Request form, the Journal Purpose field must include a clear description of the event(s) that give rise to the entry and describe how the transaction meets the objective of the entry. The Summary of Purpose field must contain Requirements_FINALV1 0.docx p4/9

5 an overall summary of that purpose which is appropriate to enter in the journal header Description field (first 30 characters will display). 2) Complete (fully referenced, fully explained) a) The amount of each journal line must be shown in the supporting documentation. Where calculations have been made, those calculations must be shown in detail. b) The supporting documentation must clearly show the complete chart field information for each line. c) The Line Description field of the journal entry must contain a relevant description for that line. d) Each journal line with a Project/Activity must have the Analysis Type field completed. e) The supporting documentation must be in the same sequence as the journal lines. f) Where the purpose of the journal is to charge for goods or services (including IDBs), supporting documentation for each Budget Approver must also include the date of and description of services rendered or goods received. g) Where the purpose of the journal is to transfer expenses or revenues, supporting documentation must also include a clear description of the reason for the transfer, and the period of time to which the transfer relates, if applicable. h) Where the purpose of the journal is a correction of a prior entry, proof of the prior entry must also be provided. This must be in the form of detailed transaction reports from a general ledger enquiry, PS query, efin, or Cognos and in all cases must provide the original date, description of charge, amount and chartfield string details. i) When correcting transactions that have been posted in the general ledger, do not attempt to correct them by entering the difference between the correct and incorrect amount. The full line amount containing the error must be reversed as one line item and the correct amount entered as separate line item(s); doing so improves the transparency of the journal entry. j) Where queries or reports form a part of the supporting documentation, the query or reporting tool must be identified (e.g. PeopleSoft, Cognos, efin, etc.) and the parameters used (dates/periods, account chartfields, data source or type, etc.) must be provided. Acceptable: The XXX query analyzes GL data in these 5 departments to identify these (specific types of expenses) that need to be transferred to another department. The query ran on data from (date XXX to date XXX) and represents the required entry for (month, quarter, year, etc.). Not acceptable: I ran the XXX query and it created these numbers. k) Where other source documents form part of the supporting documentation, these may include contracts, agreements, purchase orders, shipping documents, packing slips, communications and any other document that supports the necessity and validity for the journal entry. Externally generated supporting documentation is preferable when available. Requirements_FINALV1 0.docx p5/9

6 3) Achieve the intended financial reporting impacts a) For each amount, regardless of materiality, the full chart string must be provided and clearly referenced to a journal line. b) Complete chart strings include the following components: Business Unit, Fund (for Income Statement accounts), Department ID, Account, Internal (optional), Program (optional), Project and Activity (optional). 4) Approved by appropriate Dept ID or Project Approver(s) and/or Delegate a) It is the Requestor s responsibility to ensure that the appropriate Dept ID or Project Approvers have provided their approval. Evidence of the correct approver must be submitted with each transaction. For Project related approvers, an efin screen shot of the header page or the Project Code Validation query will be acceptable. A similar report will be developed for confirmation of operating Dept ID approvers. b) Evidence of all approvals must be submitted. The approval from a Budget Approver must contain the amount, chart field information, detailed description and the completed date of delivery of goods/services within the body of the . Approvals may be in the form of an , or a signed invoice or document prepared by the IDB unit. Recurring and regular transactions for IDB providers only. Recurring and regular transactions are defined as expenses that will be incurred on a pay per use basis and charged out at agreed to rates in accordance with actual consumption, on a timely basis. IDBs may only be used for the distribution of university business transactions, and they may not be used to distribute personal/non university charges to a Budget Owner s Dept ID or Project. Recurring and regular transactions can be pre-authorized at the commencement of a standardized one year period (July 1 to June 30), using the Annual Authorization Process Form for each Department or Project requiring the specified goods or services. This process can be used by the IDB unit (it is optional) to reduce the supporting documentation required for each IDB transaction. Examples of recurring transactions are: 1. Telephone (land lines) charges 2. Snow removal services 3. Printing (for on-going use of Imagine Office departmental printers) 4. Use of specific medical lab services Where the provision of goods or services meets the requirements for use of the Annual Authorization Process, a copy of the Annual Authorization Process form must be obtained as evidence of the Dept ID or Project budget approval for the 1 year duration of the agreement. Once the AAP form is completed and signed by the Budget Requirements_FINALV1 0.docx p6/9

7 Owner, the IDB unit will submit an electronic COPY of the form and evidence of the correct approver to the Office of the Controller. The AAP form will only need to be submitted to the OC once, at the beginning of the agreement duration, and not with each subsequent IDB transaction. This COPY will be saved on a shared (with Research Accounting) network drive for audit and review purposes, to be consulted by the OC or RA when transactions are generated. Each IDB unit will develop an Annual Authorization Form that meets their specific needs. These forms must contain, at a minimum, the information and criteria specified in Appendix A. c) Exceptions whereby Dept ID or Project budget approvals are not required: Benefit allocation GLJEs prepared by the Office of the Controller to allocate benefit costs for non-project and operating project salary charges as authorization and approvals are obtained at the point of hire and are the responsibility of the HCM source system business owner. GLJE s created for the purpose of university level financial reporting, including period end entries. These journals are approved by the Office of the Controller. GLJE s to create asset management depreciation charges and capital adjustments. These journals are approved by the Office of the Controller. GLJE s created to distribute grant and other revenues, overheads, spend allocations from endowments, etc. where such entries are already supported by grant agreements, notice of awards, policy, contracts, etc. 5) Submission of General Ledger Journal Entry & Supporting Documentation The Requestor will submit the General Ledger Journal Entry Request form, the spreadsheet template and all supporting documentation in electronic format to the Initiator via to either: [email protected] for non-research Journals [email protected] for Research Journals Requirements_FINALV1 0.docx p7/9

8 6) Format and Retention Requirements a) Where calculations are performed in Excel, the supporting document must be the Excel spreadsheet. b) Other supporting documentation can be in the form of PDF or Word documents, or in any other format generally supported by the university, but in all cases must be provided to the GLJE Initiator in electronic format. c) Supporting documentation will be electronically attached to the journal entry at time of initiation in PeopleSoft, and will be available for viewing by all Reviewers and Approvers with access to general ledger journals. d) If it is determined by either the originating unit or the Office of the Controller that the backup should not be attached to the GLJE for confidentiality reasons, it will be filed electronically, outside of PeopleSoft, by the Office of the Controller. e) The University must comply with federal and provincial statutory requirements relating to the retention of records. Financial records and supporting documentation must be retained for a period of 7 years (6 previous years plus the current year) for audit verification and review. f) Business units are still required to maintain all financial records and supporting documentation to support their activities for 7 years, or longer, where other requirements for retention may apply. Requirements_FINALV1 0.docx p8/9

9 Appendix A The Annual Authorization Process Interdepartmental Billing (IDB) form used by each IDB generating unit must include the following information: o The Department ID or Project Number for pre-authorization o The Dept ID or Project Approver s name, signature and address o The effective period will be standardized for all IDB units, July 1 to June 30 th annually. Note that where project end date is prior to June 30 th, the project end date shall be the Annual Authorization form s end date. o The IDB Service unit name, location, and contact information ( and telephone) o Detailed description and price list for all goods or services pre-authorized with this form o Dept ID or Project Approver s declaration acknowledging acceptance of the per usage billing for the duration of the agreement, for example: By signing this authorization form, I declare that I have reviewed the schedule of fees as stated herein and agree to be charged for the actual use or consumption of these goods/services for the duration of this agreement, and that sufficient funds have been budgeted to cover these expenses. Where applicable, I am attesting to the eligibility of these goods/services under the grant agreement or contract, for the above named Project. o Dept ID or Project Approver s signature Relevant Links for more information: Delegation of Authority Policy, Team Authorization Form, Tri-Council Guidelines, Requirements_FINALV1 0.docx p9/9