Accounting Procedures

July 2018

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Before We Begin…

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Your Hosts for this Session

Ernie DiSandroInterim University Controller

University Controller’s Office

Sue Heleno

Manager, and Chart of Accounts Lead

University Controller’s Office

Ed Scheer

Director of Budget, Policy & Analysis

University Budget Office

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Your Hosts for this Session

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Erin CuomoSenior Director, Budget and Finance

Institutional Planning and Operations

Theresa FronckowiakSenior Director

RU–Camden

Vincent NaccoExecutive Director of Finance, Dentistry

Rutgers Biomedical and Health Sciences

• Accounting Procedures Overview

• Funding Transfers

• Expense Recovery

• Faculty Funds

Agenda

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After working in COA for more than a year, and hearing about difficulties staff,

faculty and central administration are experiencing with its use, we are

developing ways to better serve the University through chart of accounts

changes, improved controls and education, guidance, support and policies to

ensure the best use of the COA.

GOAL

Improve how we support our operations by making the chart of

accounts simpler to use, ensuring the data are accurate and easily

reportable across the University, and making certain that the project

ledger interacts seamlessly with the general ledger.

Chart of Accounts (COA): Goal

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Procedures and Guidance

An internal controls framework under which all

staff can work is critical to ensure we are all

protecting and managing the university’s

assets.

The following three topics we are discussing

today represent the first group of procedures

that will be implemented in fiscal year (FY19).

– Funding Transfers

– Expense Recoveries

– Faculty Funds

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Funding transfers are used to move resources from one chart string to

another to provide support for a specific purpose. Amounts that are transferred

from one fund to another must use specific accounts in order to be tracked

separately to be in compliance with accounting standards.

Expense recoveries are used to record the purchase of goods and services

between Rutgers units. Expense recoveries should be used when an actual

exchange of goods or services takes place internally and never when either

party is external to Rutgers. Expense recoveries are primarily used when the

goods or services being provided are reflective of the provider unit’s official

purpose or mission.

During today’s presentation we will explain when a funding transfer should be

used vs when an expense recovery should be used vs when neither should be

used, such as when recording external revenue, when correcting a transaction

or when distributing expenses or revenues.

Funding Transfers v. Expense Recoveries

Funding Transfers

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• Definition

• Purpose of Accounting Procedure

• Recording

• Examples

• Reporting

Funding Transfers

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Funding Transfers: Definition

Funding transfers (exclusively for internal use) are the flow of funds from

one chart string (general ledger or projects) to another. Funding transfers

have a similar impact as revenues (transfers in) and expenses (transfers

out) but from an institutional perspective, transfers do not represent “real”

revenues or expenses and must net to zero at the University level.

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Funding Transfers: Purpose of the Procedure

• Ensure adherence to Generally Accepted Accounting Principles (GAAP).

• Standardize and promote the consistent accounting treatment for funding

transfers across the University.

• Ensure that internal transfers of funds do not increase the total University

revenues or expenses, or misstate the operating results of any University

unit.

• Properly allocate resources across different chart segment values – such as

Unit-Division-Organization, Location, Fund Type or Business Line.

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Funding Transfers: Examples

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When to use a transfer

Providing funds to an academic unit to

cover the expenses of a special event.

Moving current year funds for current

repair and replacement needs into

plant funds.

Transferring funds to close a deficit in

GL or Non-sponsored Projects.

Moving funds to a designated fund

type such as faculty start-up funds.

When NOT to use a transfer

Transfers are NOT intended to re-

class revenues or costs from one

general ledger string to another.

Transfers are NOT permitted on

sponsored projects.

Funding from donors (i.e., restricted gifts) cannot be commingled with

other unrestricted funds. If a gift is in deficit, it is required that expenses

are moved out. Do not transfer funding in.

Funding Transfers: Recording

Funding transfers between projects, between projects and general ledger

and general ledger to general ledger must be recorded using a general

ledger journal or project cost journal. When recording a funding transfer

between or within fund types, find the correct account value by using the

Transfer Account Matrix found in the appendix and on the Controller’s

website. These values are not valid in PeopleSoft and RU Marketplace.

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Funding Transfers: Recording

• The same funding transfer account must be used on all lines of the journal

entry to ensure the transaction will net to zero by account.

• All general ledger journals should have attachments with supporting

documentation when applicable. As a reminder, there is no functionality to

add an attachment on project cost journals so supporting documentation

should be retained by the department.

• All general ledger journal transfers require a second approval by the

University Controller’s Office within 24 hours of the departmental

approval.

• Journal entries that do not balance, or that do not have the same single

funding transfer account on all lines of the journal entry, will be rejected.

• There should be only one purpose per funding transfer journal with a

detailed description at the journal entry and the journal line level.

• Refer to the appendix for the complete transfer matrix.

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Funding Transfers: Recording

The funding transfer account values in the table below have been created

to facilitate the funding transfer journals.

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Funding Transfer

Account Transfer Account Description

90190 Transfers Within Unrestricted Operating

90200 Transfers Between Operating and internally Designated Funds

90202 Transfers Within Internally Designated Funds

90400 Transfers Between Plant and Operating Funds

90401 Transfers Between Plant and Internally Designated Funds

90402 Transfers Within Plant/Capital Funds

90500 Transfers Between Unrestricted Endowment and Operating Funds

90501 Transfers Between Unrestricted Endowment and Internally Designated

90502 Transfers Within Unrestricted Endowment Funds

90503 Transfers Between Unrestricted Endowment and Plant Funds

90506 Transfers Between Unrestricted Endowment and Contributions

90508 Transfers Within Endowment Principal and Operating Funds

90602 Transfers Within Contributions

90603 Transfers Within Contributions and Plant/Capital Funds

90020 Transfers Mandatory Transfers Debt Service

90030 Transfers Mandatory Transfers Deferred Maintenance Costs

90199 Transfers Year End Balances

Funding Transfers: Example – GL-to-Project

Department ABC needs to fund its capital project. Department ABC transfers

funds from Fund Type 100 (Unrestricted Operating General) to Fund Type 180

(Unrestricted Capital Projects), using funding transfer Account value 90400

(Transfer between Operating Funds and Plant). * For project transfers refer to

the Projects Cost Adjustments Job Aids found on the Controller’s website.

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Funding Transfers: Example – GL-to-Project

Funding Transfers: Example GL-to-GL

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The Dean is funding the English department conferences by transferring funds from his GL

under FT 100 to the English department’s GL under FT 100 using account value 90190.

Funding Transfers: Examples When Not to Use

Transfer accounts are intended to move funding, not to move expenses or

revenues. DO NOT USE FUNDING TRANSFERS for the following types of

transactions.

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Corrections

Example

Department ABC purchased a printer under $5K, the

expense was booked mistakenly to office supplies computer

(Account value 52930)

ExplanationThis is a reclassification of an expense. It’s not related to

funding transfers.

Solution

Reclassify the expense transaction by crediting (-) (Account

value 52930) the wrong chart string, then debiting (+) the

correct chart string (Account value 58010) for computer

equipment.

Funding Transfers: Examples When Not to Use

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Distributions

Example

School XYZ shares a copy machine with School ABC.

School XYZ pays the invoices directly to the copy machine

company and then spreads a portion of the cost to School

ABC based on School ABC’s use of the machine.

ExplanationThis is a an expense distribution transaction. It’s not related

to Funding Transfers or Expense Recovery.

Solution

Adjust the expense transaction by debiting (+) school ABC’s

expense account, then crediting (-) school XYZ’s expense

account.

Transfer accounts are intended to move funding, not to move expenses or

revenues. DO NOT USE FUNDING TRANSFERS for the following types of

transactions.

Funding Transfers: Examples When Not to Use

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Restricted Funds in Deficit

ExampleA gift fund established to purchase textbooks for needy

students is over expended and is in deficit.

ExplanationThis is a reclassification of an expenses, not a transfer of

funding.

Solution

Since funding from donors/sponsors cannot be comingled

with unrestricted funds, it is required that expenses be moved

out using the expense account value. Funds may not be

transferred in. The account segment value used to

purchase books in the gift fund should be credited and

another string such as the dean’s operating account should

be debited.

Transfer accounts are intended to move funding, not to move expenses or

revenues. DO NOT USE FUNDING TRANSFERS for the following types of

transactions.

Funding Transfers: Reporting

• Two separate reports are available to review and reconcile transfers.

One report for GL to GL transfers only and one for the projects transfers.

• The reports can be accessed via the Oracle financial management

system by following the paths listed below, under the “Tools” tile.

– Tools/Reports and Analytics /Shared Folders/Custom/RU

Custom/Reports/ATC Reports/RU GL 085

– Tools/Reports and Analytics /Shared Folders/Custom/RU

Custom/Reports/PGM Reports/RU PJ 084

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Q A&QUESTIONS & ANSWERS

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Expense Recovery

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• Definition

• Purpose of Accounting Procedure

• Requirements

• Recording

• Example

Expense Recovery

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Expense Recovery: Definition

• An expense recovery is a transaction that is used when one University

unit bills another University unit for goods and/or services provided. The

service provider unit incurs all of the direct expenses and, subsequently,

allocates an amount to the consumer unit(s) in accordance with an

agreement.

• Expense recoveries must only be used for internal transactions and

either facilitated by an IPO (Internal Purchase Order) in RU Marketplace

or a general ledger journal entry or project cost journal.

• Expense recoveries must net to zero.

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Expense Recovery: Purpose of the Procedure

• Ensure adherence to Generally Accepted Accounting Principles (GAAP).

• Standardize and promote the consistent accounting treatment for recording

expense recoveries across the University, whereby expenses are recorded

accurately to ensure that financial statements are precise, and do not

double-count expenditures.

• Ensure that expense recoveries do not increase the total University income

or expenses, or misstate the operating results of any University unit.

• Allow service provider units to charge consumer units for goods and/or

services.

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Expense Recovery: Requirements

• Both the service provider and consumer units must be Rutgers entities. If the

consumer unit is a non Rutgers entity, revenue must be recorded.

• All service provider and consumer units will use the account values on both

the debit and credit side of the transactions to record expense recoveries.

The Internal Purchase Order (IPO) Account Mapping file posted on the

Controller’s Office website.

• Expense recoveries cannot be used to transfer funds or allocate resources.

• Expense recovery account values are for internal use only.

– Expense recovery account values cannot be used to record external revenues.

– Expense recovery account values cannot be used to pay external vendors.

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Expense Recovery: Recording

• The units that provide the goods and/or services will designate the correct

account values to use for recording an expense recovery.

• The units that consume the goods and/or services must use the specific

account values designated by the service provider unit when purchasing

goods and/or services.

• Service providers are expected to include the designated account value

required for purchasing goods and/or services on quotes, invoices and/or

any form of communication sent to internal customers who will order

through an IPO in RU Marketplace.

• The same expense recovery account values must be used for the debit

and credit sides of the transactions to ensure that the accounts will net to

zero for accurate financial reporting.

• The Controller’s Office will be updating the account values on all IPO

purchase orders that have balances as of 06/30/2018 to match the

account value of the IPO supplier.

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Expense Recovery: Recording

• For Service Provider Units: Expense recovery credits that need to be

applied to a project must be recorded via a general ledger-to-project

transaction to move the expense recovery to a project. Please refer to the

Projects Cost Adjustments Job Aids on the Controller’s website for

specific instructions.

• The RU Marketplace approver is responsible for ensuring that the

appropriate expense recovery account value is being used when placing

the order (creating the requisition in RU Marketplace); not the receiving

department.

• The Finance approver for journal entries and/or project adjustments is

responsible for ensuring that the appropriate matching expense recovery

account value is being used.

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Expense Recovery: Example

Rutgers Dining Services incurred expenses (food items) to accommodate a lunch

meeting held by Unit (ABC).

• Dining Services incurred expenses which is debited to their expense string (1).

• Unit (ABC) should initiate an IPO requisition in RU Marketplace using the

“expense recovery account” designated by Dining Services to record the expense

on their books (Debit) (2).

• Dining Services will receive an expense credit using the same “expense recovery

account” once the IPO process is complete (2).

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Expense Recovery: Direct Journal Entry Process

• In the event that the IPO process cannot be used, a general ledger journal entry

may be done for expense recovery transactions.

• The entry follows the same accounting steps outlined above whereas, same

expense recovery account value(s) must be used for the debit and credit

transactions to ensure that the accounts will net to zero for accurate financial

reporting.

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Expense Recovery: Example

Public Safety provides fixed post security services to the Camden Law School.

Public Safety incurs the expenses (Salaries & Fringe) for the services provided on their

general ledger.

The Camden Law School pays for the services provided using a general ledger journal

entry. The journal entry should use the expense recovery account values as specified by

Public Safety on both sides of the entry.

Ex: Debit Account value 74106 “Public Safety Services” and Credit Account value 74106

“Public Safety Services”.

The department providing the services maintains the expenses on their general ledger in

Salary and Fringe account values but “recovers” its costs in the expense recovery

account value. The department consuming the service has an expense on the expense

recovery line. The matching account value debit and credit nets to zero for accurate

financial reporting on a university wide basis.

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Account Goods and Services Category

74100 Construction & Renovation Services

74101 Copy, Mail, and Print Services

74102 Facilities and Maintenance Services

74103 Information Technology and Media Services

74104 Lab/Equipment/Core Use

74105 Parking Services

74106 Public Safety Services

74107 Records Management Services

74108 Recovery Materials, Supplies, COGS

74110 Recovery Professional Services

74111 Registration, Rental, and Conference and Event Services

74112 Student Services

74113 Surplus and Moving Services

74114 Training Services

74115 Transportation Services

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Expense Recovery: New Account Values as of July 1

The current expense recovery account values will be deactivated on July 1, 2018

Q A&QUESTIONS & ANSWERS

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Faculty Funds

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• Definition

• Purpose of Accounting Procedure

• General Guidelines

• How to Request a Faculty Funds Project

• Examples

Faculty Funds

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Faculty Funds: Definition

Faculty funds are resources that are allocated to an individual faculty member, or an

academic department, to support research and other academic activities of the faculty.

The faculty funds resources are allocated by University leadership, such as:

– The President

– Board of Governors

– Board of Trustees

– Vice President or Chancellor

– Dean or Director

Some examples of faculty funds are:

– Start-up funds

– A return on revenue generated by a faculty member such as Facilities &

Administration (F&A)

– Incentive funding

– Internal research awards

– Discretionary funding available to a faculty member

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Faculty Funds: Purpose of the Procedure

• Ensure adherence to Generally Accepted Accounting Principles (GAAP).

• Standardize and promote the consistent accounting treatment for

recording faculty funds across the University.

• Track expenses and balances by faculty member or academic

department.

• Track funds by funding source and/or purpose (start-up, incentive, or

internal research award), as needed.

• Make faculty funds easily identifiable.

• Allow fund balances to carry forward over multiple fiscal years. Carry

forward rules will be determined by the funding source.

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Faculty Funds: General Guidelines

• Faculty funds are managed and tracked using the projects sub-ledger and must

be recorded using the new Fund Type 160 – Internally Designated Faculty.

• All faculty funds projects will be in the 3XXXXX series.

• A faculty fund is for an individual faculty member or an academic department.

• No minimum dollar threshold will be imposed on faculty funds projects.

• Faculty funds projects will use the following naming convention:

– Unit and faculty member’s name when the funding is specific to a single faculty member

(i.e. SAS John P. Smith )

– Unit and academic department when the funding is allocated to a department, rather than

an individual faculty member (i.e. SAS Biology Department)

• An individual faculty member or academic department should use one project,

and distinguish various funding sources or uses identified by tasks.

• Faculty projects are funded via transfers. Faculty funds projects do not receive

revenue directly.

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Faculty Funds: How to Request a Project

• Download the Faculty Funds Project Request form from the University

Controller’s Office Forms Repository.

• Forward the completed, and approved form to the Chart of Accounts team

at coa@finance.rutgers.edu.

• Requests for changes to an existing faculty fund project set up should

also use the project request form and sent to the Chart of Accounts team

at coa@finance.rutgers.edu.

• Current non-sponsored designated projects, 2XXXXX series, that are

Faculty Funds have the following options:

– Setup a new project under 3XXXXX series. Departments would transfer balances to the

new 3XXXXX series project.

– Departments can keep their current 2XXXXX series projects and spend down the funds

by end of the 2019 fiscal year 06/30/2019. It is preferred to change the Fund Type to 160

by completing the Project Request form. See Forms Repository.

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Projects 2XXXXX series & 3XXXXX series will be linked together to assist in tracking the transaction

history. The 2XXXXX series project number will be populated in the 3XXXXX series “related project”

field and vice versa for the 3XXXXX series projects.

Department XYZ have a faculty fund project for Dr. Manish Smith. The project is series

2XXXXX and the FT is 150. The department’s business manager projected that the funds

remaining in Dr. Smith’s project will not be spent by end of FY19. The department

requested a new project number 3XXXXX series and received project number 300000

under new Fund Type 160. The department now should initiate a transfer of the funds

remaining in the 2XXXXX series project, FT 150 to the new 300000 project, FT 160 using

account value 90200.

1- To determine the funding transfer account value the department searched the transfer

account value matrix on the Controller’s website.

2- For project transfers refer to the Projects Cost Adjustments Job Aids found on the

Controller’s website.

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Faculty Funds: Example

Q A&QUESTIONS & ANSWERS

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Please send inquiries or questions regarding the new processes to the

Financial Management Help Desk

Phone: (848) 445-2100

Email: finance_helpcenter@finance.rutgers.edu

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Accounting Procedures: Who to Contact for Support

You can access updates and resources on the University

Controller’s Office website at

https://uco.rutgers.edu/accounting-procedures

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Accounting Procedures: Conclusion

• Accounting Procedures Overview

• Funding Transfers

• Expense Recovery

• Faculty Funds

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Appendix: Funding Transfers Account Matrix

Transfer Matrix for All Fund Types

100 110 145 150 190 160 & 165 120 & 130 210 & 220 230 & 240 700 & 710 180 & 610 620 900 650

Unrestricted

Operating

General

Unrestricted

Operating

Auxiliary

Unrestricted

Medical

Contracts

State of New

Jersey

Future Use to

be Cleaned

up in FY19

Unrestricted

Cost Share

Internally

Designated Faculty

and Internally

Designated General

Unrestricted

Endowment

Principal Quasi Type

3B and Unrestricted

Endowment

Operating Quasi

Type 3B

Term

Endowment

Principal &

True

Endowment

Principal

LTIP Endowments &

Separately Invested

Endowments

Restricted

Endowment

Operating Term &

True & Quasi Type

3A and Restricted

Endowment Principal

Quasi Type 3A

Unrestricted

Capital

Projects and

Restricted

Capital

Projects

Restricted

Debt

Service

Net Investment

in Capital

Assets

Contributions

Gifts

100Unrestricted Operating

General

90190 90200 90500 NOT AVAILABLE FOR TRANSFERS 90400

NOT AVAILABLE FOR TRANSFERS

110Unrestricted Operating

Auxiliary

145

Unrestricted Medical

Contracts State of New

Jersey

150Future Use to be Cleaned up

in FY19

190 Unrestricted Cost Share

160 & 165

Internally Designated Faculty

and Internally Designated

General

90200 90202 90501 NOT AVAILABLE FOR TRANSFERS 90401NOT AVAILABLE FOR TRANSFERS

120 & 130

Unrestricted Endowment

Principal Quasi Type 3B and

Unrestricted Operating Quasi

Type B

90500 90501 90502 NOT AVAILABLE FOR TRANSFERS 90503 90506

210 & 220Term Endowment Principal &

True Endowment Principal

NOT AVAILABLE FOR TRANSFERSNOT AVAILABLE FOR

TRANSFERSNOT AVAILABLE FOR

TRANSFERS90508 NOT AVAILABLE FOR TRANSFERS

NOT AVAILABLE FOR TRANSFERS

230 & 240

LTIP Endowments &

Separately Invested

Endowments

700 & 710

Restricted Endowment

Operating Term & True &

Quasi Type 3A and

Restricted Endowment

Principal Quasi Type 3A

180 & 610

Unrestricted Capital Projects

and Restricted Capital

Projects

90400 90401 90503 NOT AVAILABLE FOR TRANSFERS 90402 90603620 Restricted Debt Service

900Net Investment in Capital

Assets

650 Contributions Gifts NOT AVAILABLE FOR TRANSFERSNOT AVAILABLE FOR

TRANSFERS90506 NOT AVAILABLE FOR TRANSFERS 90603 90602