EPIC PROCESS:

Conditions:

• The organization uses the Electronic Procurement and Invoicing Center ( EPIC) for procurements. This portal is accessible via Onestart.
• Vendors should send invoices directly to the Accounts Payable office.
• All EPIC transactions are for external payables.

Using EPIC results in the creation of two automatic accounting entries. The first entry records accounts payable and is generated when an invoice is processed as an Accounts Payable office approved Payment Request in EPIC, thus resulting in an accounts payable balance. The second entry records the invoice payment.

Example:

An organization receives office supplies worth $100 and the accounts payable department enters the invoice.

The following entries recognize the liability, match the expense in the period incurred, and then reduce cash when the invoice is paid.

1 ) Recognizing the liability

January	Object Code	Debit	Credit
Office Supplies	4100	$100.00
Accounts Payable	9041		$100.00

2) Paying the invoice and removing the liability

This entry is generated when a Payment Request is disbursed. The timing of this entry is equal to or after the due date recorded on the document.

ACCRUING FOR UNRECORDED EXPENSES

It is important to check the transaction listing report in IUIE for expenses that have been incurred by the unit but not recorded in the FIS by the end of the fiscal period. Any expenses that are identified that need to be accrued for should be done so using the Periodic Method described below.

NON-EPIC PROCESS:

Conditions:

• Payments are made through the Disbursement Voucher process.
• The organization has a payable from another internal account.

Three entries need to be made in order to record and process accounts payable.

• The first entry records accounts payable on an AVAE document.
• The next entry is generated when a Disbursement Voucher, or Internal Billing is processed to pay off the liability.
• The third entry (automatic AVAE) is just a reversal in the following period of the first entry above.

This third entry occurs because the liability is paid in one period and the offsetting expense also hits in the same period. If the entry did not get reversed, the expense would be double the true amount on the general ledger.

• An organization receives goods/services for the month of January as follows
• Vehicle Expenses (paid to IU Motor Pool) (obj. code 4040) = $100
• Advertising (obj. code 4802) = $300
• Purchases for Resale (obj. code 5300) = $200
• The organization then pays the invoices in the following period (February).

PERIODIC METHOD

1 ) Recognizing the liability (January)

2) Issuing the check (February)

3) Automatic reversal of the January entry (February)

Accounts payable – This arises when an account receives goods, supplies, or services in a given month and does not pay for them at the time of purchase. Accounts payable are usually recorded at their face value since the time between purchase and payment is usually short. Note: Encumbrances are NOT accounts payable.

Internal payable – This is a payable within the university (paid for by internal documents).

External payable – This is a payable outside the university (paid for by check, etc.)

Periodic method – Balances are adjusted periodically to reflect changes instead of being kept current through the year.