| When the fiscal year end approaches, Auxiliary and Service Center accounts are required to prepare year end financial entries in compliance with university policy I-350 in order to meet financial reporting standards based on accrual accounting principles.
I. General Timing of Year End closing:
A. The fiscal year end for Indiana University is June 30th.
B. First Closing - approximately the 1st week of July.
Standard Reports are available electronically,approximately 2 days after first closing.
Second Closing - approximately one week after first closing.
Auxiliary Closing - July 20th or the first working day following the 20th if it falls on a Saturday or Sunday.
All auxiliary vouchers must be processed and approved by 3:00 p.m. (See ASOP 14.0, Auxiliary Voucher
& Timeliness). The unit's campus administration could require that entries be processed earlier for campus administration's central review.
Final Closing - approx. 5 days after Auxiliary Closing.
C. Operations and Records Management in FMS will determine the university's official schedule for year end closing on an annual basis. The official closing schedule is generally released in mid-May via e-mail notification. Campus administration may also post a closing schedule with earlier deadlines than the university schedule. The campus schedule should be followed first so that campus administration has time to review year end entries prior to the university's posted deadlines.
D. All financial documents processed in the FIS generated prior to June 30th and not approved as of the night of June 30th will be automatically disapproved. (This excludes Auxiliary Vouchers, BSI documents, Journal Vouchers, Cash Receipts, Check Requests (CREQ), Disbursement Vouchers, Non-Check Disbursements, Salary Transfers, Benefit Transfers, and Procurement Card transactions).
II. Specific areas of interest:
Payroll/Vacation Accruals: generally posted the last week of June. The accrued vacation and accrued sick liability for appointed positions in general fund and auxiliary accounts is calculated based on the liability at the end of the calendar year (December 31). The monthly payroll will be paid on June 30. (See ASOP 9.0 Automated Payroll Accrual).
Auxiliary Accounting:
Accrual Entries. It is crucial for all Auxiliary and Service Center accounts to record their accrual entries by year end due to external university financial reporting requirements. All auxiliary voucher entries must be approved by the Auxiliary Accounting Department by July 20th prior to 3 p.m. At year end, the university's financial statements are prepared in accordance with Generally Accepted Accounting Principles and become public documents. (See ASOP 14.0 AV timeliness)
Required Balance Sheet Documentation: All reporting Auxiliary and Service Center accounts are required to submit detailed support for all balance sheet balances at the object code level as of June 30th. Your auxiliary consultant must receive the supporting documentation by July 31st to close the ended fiscal year and begin the next fiscal year effectively. For example, appropriate support for an accounts receivable balance would be a detailed AR aging which has a final balance that agrees to the department’s general ledger accounts receivable balance on June 30th. Auxiliary Accounting will send out an e-mail notification and details related to this requirement prior to year end. (See ASOP 44.0 Balance Sheet Backup)
Inventory: All reporting Auxiliary and Service Center organizations are required to perform a physical count of their inventory for resale annually to ensure an accurate balance on their balance sheet. After the physical inventory is completed, the inventory shrinkage estimate should be re-evaluated and adjusted prior to year end. (See ASOP 10.0 Inventory)
Accounts Receivable:
FIS AR Users: The FIS accounts receivable system does not allow invoices or credit memos to be posted to a previous fiscal year. All invoices and credit memos that should be posted to the current fiscal year must be created and approved prior to July 1. If the invoices and credit memos are not created in June, an accrual entry using an auxiliary voucher is required.
Non FIS AR Users: All Non FIS AR users are responsible for ensuring that the AR balance on the department's balance sheet at June 30th agrees with the total open invoices in the department's approved independent accounts receivable system. The accounts receivable balance in the general ledger should reflect all billings as of June 30th. A copy of these internal records must be sent to your Auxiliary Consultant if your AR balance is $50,000 or greater (see Auxiliary Accounting above).
Allowance for Doubtful Accounts: All units with average accounts receivable greater than $20,000 are required to use the allowance method in accordance with Generally Accepted Accounting Principles. At year end the allowance value should be re-evaluated using the actual write-off amounts of the previous year. (If it has not been necessary to record write-offs on a consistent basis, a unit can average the prior three years write-offs and divide by the average credit sales for the same three years to arrive at an estimated allowance %). (See ASOP 6.0 Allowance for Doubtful Accounts and write-offs for Non-Student Accounts Receivable).
Write-Off of Receivables: Data for the write-off of accounts receivable will be collected and summarized for the Board of Trustees in the first quarter of the next fiscal year. Documentation is required to be submitted to the FMS Accounts Receivable Department and to your Campus administration detailing your write-offs. (See ASOP 6.0 Allowance for Doubtful Accounts and write-offs for Non-Student Accounts Receivable).
Accounts Payable:
Invoices: The invoice date is used to determine the fiscal year in which an invoice is recorded, regardless of the year the purchase order is created. The invoice date is the date presented on the first page of an invoice that has been assigned by the vendor. Since the university's first closing generally occurs in the first week of July, all invoices received by the Accounts Payable Department up to and including the last day of first closing with an invoice date of June 30th or before will be processed in the prior fiscal year. Invoices dated July 1st or later will be processed in the following fiscal year. Invoices that should be entered by year end but do not meet the deadline must be accrued.
Disbursement Vouchers: All disbursement vouchers with a payment method of "check" must be fully approved two days prior to June 30th to be posted in the current fiscal year. The DV charge is posted to the general ledger when the check is written. The check is written within two days of being approved. DV's that have a payment method of wire transfer, ACH, or foreign draft create pending ledger entries upon approval of the document. These documents need to be approved by June 30th to be posted in the current fiscal year.
Capital Asset Management (CAMS):
Capital Asset Documents: Auxiliary and Service Center accounts must approve their financial documents that impact capital asset object codes on or before June 30th.
Asset Inventory: In accordance with the federal government's OMB Circular A-21 all organizations that purchase or maintain capital equipment are required to complete a physical inventory of those assets every other fiscal year. To complete a physical inventory, all Asset Retirement, Asset Transfer and Equipment Loan/Return Documents must be approved on or before June 30th. All Asset Transfer and Retirement documents processed after June 30th are held for final approval until after Final Closing.
Depreciation: June depreciation will run prior to Second Closing. July depreciation is delayed until after Final Closing. For further information contact your campus capital asset manager. Also see CAMS Standard Operating Procedures.
Contracts & Grants
Contract and Grant accounts will be closed at First Closing (first week of July).
No transactions will be processed against these accounts after First Closing for the ending fiscal year. All transactions after that date will be booked into the following fiscal year unless there is explicit approval from Contract and Grant Administration.
All cost transfers for the ending fiscal year involving grant accounts should be completed before the First Closing.
Cash
Negative cash balances for all accounts are required to be covered prior to June 30th. This includes accounts that will be transferring Foundation funds to cover deficits.
Clearing Accounts:
Central or campus administration will close out the clearing account income and expense balances to general fund accounts for all campuses at year end.
Clearing accounts (68 accounts) are designed to be a holding area for funds when it is unclear which operating account is appropriate to use for a given transaction. It is appropriate for an item to remain in a clearing account for a period up to 30 days. This should provide sufficient time for each clearing account manager to identify the appropriate operating account for a transaction, and transfer the funds to that operating account.
The material nature of the activity in the 68 accounts over the past several years has forced balances in clearing accounts to be moved to operating accounts at year end by Financial Reporting. |
