Accounting I: Introduction to University Accounting Accounting I: Introduction to University...
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Transcript of Accounting I: Introduction to University Accounting Accounting I: Introduction to University...
Welcome!
Accounting I: Introduction to University Accounting
Susan Moore
Accounting & Financial Services
General Accounting
General Accounting Division, Accounting & Financial Services 2
Agenda
Introductions
Course objectives
TopicsAccounting ConceptsFund Accounting OverviewThe Chart of AccountsFinancial ReportingQuestions and Answers
General Accounting Division, Accounting & Financial Services 3
Introductions
General Accounting Division, Accounting & Financial Services 4
By the end of class, you will be able to…
Talk like an accountant Identify and classify university revenuesIdentify and classify university expensesSet up an account in DaFIS and find it in the Annual Schedules
Course Objectives
General Accounting Division, Accounting & Financial Services 5
Accounting Concepts
Accounting Standards
Balance Sheet: Statement of Net Assets
Income Statement: Statement of Revenues, Expenses and Changes in Net Assets
Double Entry Accounting System
Restricted vs. Unrestricted Funds
General Accounting Division, Accounting & Financial Services 6
Accounting Standards
Why have them?ReliabilityComparability
What are they?GAAP – generally accepted accounting principalsGASB – Governmental Accounting Standards BoardFASB – Financial Accounting Standards BoardNACUBO – National Association of Colleges & University Business Officers
General Accounting Division, Accounting & Financial Services 7
Balance Sheet
Statement of Net AssetsAssetsLiabilitiesFund Balance
Permanent Accounts
General Accounting Division, Accounting & Financial Services 8
Assets
Probable future economic benefit
What you own
Normal balance = debit
General Accounting Division, Accounting & Financial Services 9
Assets
Examples:CashBuildings & Capital EquipmentPrepaid Expense/Deferred ExpenseInventoryAccounts Receivable
General Accounting Division, Accounting & Financial Services 10
Liabilities
Probable future sacrifices of economic benefit arising from present obligations
What you owe
Normal balance = credit
General Accounting Division, Accounting & Financial Services 11
Liabilities
Examples:Accounts PayableSalariesDeferred IncomeDebt
General Accounting Division, Accounting & Financial Services 12
Exercise: Asset or Liability?
Bill for cellular phone service
Network server from Sun
Petty cash fund
Invoice to University of Nebraska for poultry diagnostic services
Purchase of textbooks for resale
Purchase of a copier on a lease-purchase agreement
General Accounting Division, Accounting & Financial Services 13
Fund Balance
Net Assets
Beginning Balance + Income - Expense = Ending Balance
What you are worth
In private = retained earnings
General Accounting Division, Accounting & Financial Services 14
Income Statement
Statement of Revenues, Expenses and Changes in Net Assets
Statement of how you did each yearIncome and expenses for the yearClosed at year end
Temporary Accounts
General Accounting Division, Accounting & Financial Services 15
Income Statement
Revenues – Expenses = Net Income
Net Income +/- Other Fund Balance Changes
=Total Change in Net Assets
General Accounting Division, Accounting & Financial Services 16
Revenues
External income to the university
Examples:State appropriationsStudent feesContracts and grantsPatient feesSales and services to outside entities
General Accounting Division, Accounting & Financial Services 17
Expenses/Expenditures
Goods and services purchased to meet the mission of the university
Salaries and wagesBenefitsGoods and materialsServices
General Accounting Division, Accounting & Financial Services 18
Recharges
Charge to departments for goods and services provided internally
Like income to department providing the good/serviceInternal rates = Recovery of costs incurred to provide goods/service (no profit)When recharge and expense totaled across UC, net effect is original cost
General Accounting Division, Accounting & Financial Services 19
Expense Reimbursement
External payment for specific cost incurred by the university
Examples:Reimbursement by employees for personal telephone calls
Not a revenue but a reduction of expense
General Accounting Division, Accounting & Financial Services 20
Liens and Encumbrances
Firm commitment or obligation placed against funds for goods or services not yet received
Reduces the balance in the fund
NOT in the Financial Statements
General Accounting Division, Accounting & Financial Services 21
Double Entry Accounting
Debits always equal credits
Every transaction has 2 entries:Debit (+)Credit (-)
General Accounting Division, Accounting & Financial Services 22
Debits
Generally shown as a positive (+) numberAssetsExpensesExamples:
CashEquipmentRoadsBuildingsBooks
General Accounting Division, Accounting & Financial Services 23
Credits
Generally shown as a negative (-) number
Liabilities
Revenues
Examples:Student feesSale of genetically enhanced miceVacation time earned but not takenCash received before June 30th for July conference
General Accounting Division, Accounting & Financial Services 24
Exercise:
DOUBLE ENTRY ACCOUNTING -
Putting it all together
General Accounting Division, Accounting & Financial Services 25
For Profit vs. Not For Profit
Attribute For-Profit Business Public University
Purpose Profit for owners/shareholdersService to beneficiaries at cost, below cost or at no cost.
No Profit!
OperationsProduction and sale of products and/or services at a price to exceed cost to make and sell
•Providing services•Fund raising
Measures of successAmount of profit, return on investment, financial condition
Percent of receipts expended for stated purpose. Amount of funds obtained.
Interest and relationshipsCustomer satisfaction is essential; management subject to investor control
Contributors/tax-payers are essential; management subject to political control
Accounting standardsFinancial Accounting Standards Board (FASB)
Governmental Accounting Standards Board (GASB) and Financial Accounting Standards Board (FASB)
General Accounting Division, Accounting & Financial Services 26
Restricted Resources
Generally unique to non-profit/public
Limitations on useExternal conditionsCannot restrict internally
Examples:DonorsContractsFederal or other governmental entities
General Accounting Division, Accounting & Financial Services 27
Unrestricted Resources
No external conditions
Examples:State AppropriationsGifts without conditions
General Accounting Division, Accounting & Financial Services 28
Designated Resources
Not RestrictedConditions placed by the University of California Regents, Office of the President or ChancellorExamples:
Faculty Research GrantsOpportunity Funds
General Accounting Division, Accounting & Financial Services 29
Fund Accounting Overview
Tracks the receipt and use of resources by the source of the funds
Defines the “color” of the money
Used by all Higher Education institutions
General Accounting Division, Accounting & Financial Services 30
Fund Groups Summary
Current
Loan
Endowment
Annuity and Life Income
Plant
Agency
General Accounting Division, Accounting & Financial Services 31
Current Funds
Educational and general
Auxiliary enterprises
Hospital
Affiliated organizations
General Accounting Division, Accounting & Financial Services 32
Sources of Current Funds
State appropriations
Tuition and fees
Grants and contracts
Gifts
Endowment income
Overhead recovery funds
Sales and services
General Accounting Division, Accounting & Financial Services 33
State Appropriations
General Funds (19000-19XXX)Appropriations from State General Fund as part of annual State budget processUC General Funds
General Accounting Division, Accounting & Financial Services 34
Student Fees
Registration Fee (20000)
University Extension
Continuing Education
General Accounting Division, Accounting & Financial Services 35
Other Fees
Professional Degree Fees
Student Approved Mandatory Fees
Course Material Fees
General Accounting Division, Accounting & Financial Services 36
Extramural Funds
Contracts and Grants
Gifts
Endowment Income
Managed by Extramural
General Accounting Division, Accounting & Financial Services 37
Indirect Cost Recovery Funds
Educational Fund (05397)Garamendi Funds – for research facilitiesOff-the-Top Funds (69750)Opportunity Funds (07427)
General Accounting Division, Accounting & Financial Services 38
Sales & Service: Educational Activities
Definition: Revenue related only incidentally to the conduct of teaching, research and service
Funds (income) supports the activities
General Accounting Division, Accounting & Financial Services 39
Sales & Services: Auxiliary Enterprises
Residence halls
Student union
Parking and transportation
Bookstore
Athletics
Revenues Must Cover Expenses
General Accounting Division, Accounting & Financial Services 40
Match Revenue to the Source
1. Sale of genetically enhanced mouse
2. “Autopsies of the Rich and Famous” continuing medical education
3. Faculty research grant
4. Sale of parking decal
5. Grant from National Science Foundation
A. Auxiliary
B. General Funds
C. Sales and Services- Educational Activites
D. Contracts and Grants
E. Student Fees
Answers: 1-C, 2-E, 3-B, 4-A, 5-D
General Accounting Division, Accounting & Financial Services 41
Other Fund Groups
Loan
Endowment
Plant
Agency
General Accounting Division, Accounting & Financial Services 42
Loan Funds
Resources loaned to students, faculty or staff
Interest usually charged
Principal must be repaid
General Accounting Division, Accounting & Financial Services 43
Endowment and Similar Funds
Endowment funds
Term endowment funds
Quasi-endowment
Earnings (interest) moved to current funds to spend
General Accounting Division, Accounting & Financial Services 44
Plant Funds Subgroups
Unexpended
Renewals and replacements
Retirement of indebtedness
Investment in plant
General Accounting Division, Accounting & Financial Services 45
Agency Funds
Funds held for othersStudent organizations Other third-party
At year-endIncome less expenses = Cash (Asset)Cash held for others = Liability
The money does not belong to UC
General Accounting Division, Accounting & Financial Services 46
Identify the fund source …
…by the OP Fund Number!
General Accounting Division, Accounting & Financial Services 47
OP Fund Numbers
5 digits
Identifies the source of the revenue
Restricted vs. non restricted
General Accounting Division, Accounting & Financial Services 48
Use of Funds
Instruction
Research
Community Service
General Accounting Division, Accounting & Financial Services 49
Current Funds Expenditures
Expenditures defined by:Higher Education Function Code (HEFC) and
Uniform Accounting Structure (UAS)
Applied to all Higher Education institutions
General Accounting Division, Accounting & Financial Services 50
Current Funds Expenditures
Expenditure CategoriesEducation and GeneralAuxiliary (Self Supporting)Hospital
General Accounting Division, Accounting & Financial Services 51
Education and General
InstructionGeneral AcademicDepartmental ResearchContinuing EducationUniversity Extension
General Accounting Division, Accounting & Financial Services 52
Education and General
Research – Sponsored ProjectsPrincipal InvestigatorPeriod of performanceSet scope of workReporting requirements
General Accounting Division, Accounting & Financial Services 53
Education and General
Public ServiceCommunity serviceCooperative extension servicesOutreach
General Accounting Division, Accounting & Financial Services 54
Education and General
Academic SupportAcademic administration Course and curriculum developmentLibraries
General Accounting Division, Accounting & Financial Services 55
Education and General
Student ServicesAdmissionsStudent recordsStudent health services
General Accounting Division, Accounting & Financial Services 56
Education and General
Institutional SupportExecutive managementFiscal and business operationsGeneral administrative and logistical services
General Accounting Division, Accounting & Financial Services 57
Education and General
Operation and Maintenance of PlantBuilding maintenance and custodial servicesLandscape and grounds maintenanceMajor repairs and renovations
General Accounting Division, Accounting & Financial Services 58
Education and General
Scholarships and FellowshipsStudent grantsTrainee stipendsTuition and fee waivers
General Accounting Division, Accounting & Financial Services 59
Auxiliary Enterprises
Provide goods and services to students, faculty and staff
Charge a fee directly related to costs
Managed as a self supporting activity
General Accounting Division, Accounting & Financial Services 60
Hospital
Direct patient care
Health care supportive services
Hospital administration
Hospital physical plant operation
General Accounting Division, Accounting & Financial Services 61
Reserves
Used to accumulate funds from the net revenue of self supporting activities for the purchase of new equipment, buildings and other capital projects
General Accounting Division, Accounting & Financial Services 62
Expenditure Classification
1. Breast Cancer Research Program Award "Regulations of Estrogen Response by Corepressors"
A. Organized ResearchB. InstructionC. Academic Support
MULTIPLE CHOICE QUESTIONS
General Accounting Division, Accounting & Financial Services 63
Expenditure Classification
2. Utilities purchased by facilities for recharge to campus units.
A. Academic SupportB. Student ServicesC. Operation and Maintenance of Plant
General Accounting Division, Accounting & Financial Services 64
Expenditure Classification
3. Approved research project budget that includes graduate student stipend.
A. Organized ResearchB. Scholarships and FellowshipsC. Academic Support
General Accounting Division, Accounting & Financial Services 65
Expenditure Classification
4. New faculty start up costs including research equipment and furniture.
A. Organized ResearchB. Academic SupportC. Instruction
General Accounting Division, Accounting & Financial Services 66
Expenditure Classification
5. Seminar on Pests and Pest Management given by the Cooperative Extension Master Gardeners.
A. Organized ResearchB. Public ServiceC. Instruction
General Accounting Division, Accounting & Financial Services 67
Chart of Accounts
A systematic measurement of the source and use of funds.
General Accounting Division, Accounting & Financial Services 68
What is the Chart of Accounts?
Blueprint for the accounting system
Sorts and classifies transactions
Allows for identification of: Restricted vs. UnrestrictedPurpose or use of fundsOwnership vs. Agency
“The keys to the kingdom”
General Accounting Division, Accounting & Financial Services 69
Chart of Accounts
Full Accounting Unit (FAU)ChartAccountObject Optional fields (in DaFIS)
Sub accountSub objectProject
General Accounting Division, Accounting & Financial Services 70
Full Accounting Unit - Chart
2 LocationsUCD Campus Systemwide
UCD Campus Charts3 - CampusS - School of MedicineH - Teaching hospital (UCDMC)
SystemwideL - Agricultural & Natural Resources (ANR) and Multiple Research Units (MRU)
General Accounting Division, Accounting & Financial Services 71
Full Accounting Unit - Account
DaFIS Account7 character alphanumeric
Tied to:OP Fund Number (fund source)OP Account Number (account purpose)
Account attributesDescribes the purpose & the owner of the account Contains the financial attributes to properly record and report transactions
General Accounting Division, Accounting & Financial Services 72
DaFIS Account Attributes
Organization4 character alphanumericEvery DaFIS account is tied to an organizationNormally the unit incurring the transactions in the account
General Accounting Division, Accounting & Financial Services 73
DaFIS Account Attributes
OP FUND5 digits that identifies the fund source of the DaFIS account.Assigned by Award document, OP, Extramural or General AccountingOP funds grouped into sub funds – a general classification of the fund source
General Accounting Division, Accounting & Financial Services 74
DaFIS Account Attributes
OP Account6 digits that identify the transaction classification
Balance sheet = 1XXXXXRevenue accounts = 2XXXXXExpense accounts = 4XXXXX to 79XXXXAgency accounts = 8XXXXX
General Accounting Division, Accounting & Financial Services 75
Building an OP Account
General Accounting Division, Accounting & Financial Services 76
OP Accounts
First 2 digits = Higher Education Function Code
Second 2 digits are the School/College
Last 2 digits are the Department
General Accounting Division, Accounting & Financial Services 77
OP Accounts
OP Account also hasAccount Group Code (Account Group)Uniform Accounting Structure Code (UAS)Academic Discipline (Acad Disc)National Science Foundation Code (NSF POS)Annual Report Code (Report Code)Organization Code (ORGN)
General Accounting Division, Accounting & Financial Services 78
OP Accounts
Why?REPORTING
Financial statementsSurveysManagement DecisionsState government budget decisionsFunding agencies
General Accounting Division, Accounting & Financial Services 79
OP Accounts – UAS Code
UAS Code is similar to the HEFC. Provides a uniform presentation of expenses across all university campuses
See Annual Schedule B
General Accounting Division, Accounting & Financial Services 80
OP Accounts – Annual Report Code
Annual Report Code – used to describe major programs in Schedule C and Schedule C – Overhead
The same Annual Report Code can be used for more than one OP account
General Accounting Division, Accounting & Financial Services 81
OP Accounts - Organization
Each OP Account is “owned” by an organization
Expenditures associated with an OP account reported under the school or college of the OP account
General Accounting Division, Accounting & Financial Services 82
OP Accounts - Organization
Check your OP Account organizations to make sure they are reporting to your school/college
Resources:DS226 Annual Report Codes by OrganizationTP – Reference Tables – Account
Click on OP Account and any attribute
General Accounting Division, Accounting & Financial Services 83
DaFIS Account - Recap
Identifies:Source of Funds – OP FundUse of Funds – OP Account
Higher Education FunctionSchool/College Major programs
Account owner
General Accounting Division, Accounting & Financial Services 84
Full Accounting Unit - Object
4-character alphanumeric
Every transaction must have an object code
AttributesDescribes the activity and type of the financial transaction
Summarized and reported on the Financial Report
General Accounting Division, Accounting & Financial Services 85
DaFIS Object Attributes
Object Consolidations4-character alphanumericSummary object code used for budget documents
Examples:BLSH (Balance Sheet)INCO (Income)SUBG (General Assistance)SUB3 (Supplies & Expense)
General Accounting Division, Accounting & Financial Services 86
DaFIS Object Attributes
Object TypeCategorizes each transaction for financial statement presentation.Examples:
AS (Assets)LI (Liability)FB (Unexpended balance)IN (Income)EX (Expense)
General Accounting Division, Accounting & Financial Services 87
DaFIS Object Attributes
Other Object Code AttributesObject LevelObject Sub Type
Used mostly for ad hoc reporting
General Accounting Division, Accounting & Financial Services 88
Balance Sheet Object Codes
Always used in balance sheet accountsInventories (0470)Unexpended balance (0000)
Sometimes used in expense accounts At year-end, moved to balance sheet accounts, then reversed in new year
Account Receivable (0299)
General Accounting Division, Accounting & Financial Services 89
Revenue Object Codes
Can be used in revenue accounts (IN) or expense accounts (EX)
Examples:Income = 0060Campus assessments/NUD = 0066, 0068, 0076Over/short cash = 0056
No income in General Funds
General Accounting Division, Accounting & Financial Services 90
Expense Object Codes
More than 5,000 expense object codes
Hospital & School of Medicine have most specific object codes
Examples:7xxx Series – Services8xxx Series – Supplies9xxx Series – Equipment Expenses
General Accounting Division, Accounting & Financial Services 91
Optional FAU Fields
Allow departments to meet internal reporting needs
Sub accountSub objectProject
Not used in external reporting
General Accounting Division, Accounting & Financial Services 92
Financial Reporting
Who Cares?ManagementUniversity of California Office of the President (UCOP)Regents, State legislatorsOther Stakeholders (Donors, Creditors)External Users (Other universities, researchers, analysts)
General Accounting Division, Accounting & Financial Services 93
Financial Reporting
Two Major ReportsAnnual ReportAnnual Financial Schedules
General Accounting Division, Accounting & Financial Services 94
Annual Report
Financial Condition of the university
Management discussion and analysis
Comparable to other public universities
Used to determine the value of a potential investment (donors and creditors)
General Accounting Division, Accounting & Financial Services 95
Annual Financial Schedules
Schedule A Revenues by fund source
Schedule B Expenses by Uniform Accounting Structure and Academic Discipline
Schedule C Expenses by School/College, Higher Education Function and Annual Report Code
Schedule D Expenses by fund source
General Accounting Division, Accounting & Financial Services 96
Annual Financial Schedules
Uses:Overhead distribution (Schedule C – Overhead)Research expendituresComparability of revenues/expenses to other UC campuses and other universities
General Accounting Division, Accounting & Financial Services 97
Test your knowledge !!
General Accounting Division, Accounting & Financial Services 98
To review…
An asset is…A. What you ownB. CashC. Accounts receivableD. All of the above
General Accounting Division, Accounting & Financial Services 99
To review…
A liability is…A. Office suppliesB. Accounts payableC. Prepaid expensesD. None of the above
General Accounting Division, Accounting & Financial Services 100
To review…
Fund balance is…A. Same as unexpended balanceB. Accumulation of net revenuesC. Debt on new buildingD. A & B above
General Accounting Division, Accounting & Financial Services 101
To review…
University Fund Groups do not include…A. CurrentB. AgencyC. PutnamD. Plant
General Accounting Division, Accounting & Financial Services 102
To review…
Sources of current fund revenue include…A. Retirement party donationsB. Revenue from sale of sweet potato cropC. Nonresident undergraduate tuitionD. B & C above
General Accounting Division, Accounting & Financial Services 103
To review…
True or False:
OP accounts classify expenses by Higher Education Function.
TRUE
General Accounting Division, Accounting & Financial Services 104
To review…
What financial reports are used by external stakeholders…
A. Annual financial reportB. Annual financial schedulesC. Decision Support transaction reportD. A & B above
General Accounting Division, Accounting & Financial Services 105
Now you can…
Speak the language of accountingIdentify and classify university revenuesIdentify and classify university expensesSet up an account in DaFIS and find it in the Annual Schedules
General Accounting Division, Accounting & Financial Services 106
Time for…