What accounting do I need to know as a School Nutrition
Supervisor?
Slide 2
Restrooms: There are restrooms in the front of the building as
well as down the side hallway. Please put all cell phones on
silent. Due to the metal building, cell phone reception can be very
poor. Feel free to take calls just outside the conference room
under the cover. Attendance: How many non-School Nutrition
attendees? Finance or other? How many School Nutrition Supervisors?
Less than 3 years? The LG work environment is a very quiet work
environment due to the needs of our programmers. Please be
respectful of that.
Slide 3
Slide 4
Todays Objective: Be able to recognize and correct problems
based on the information in your Financial Statements.
Slide 5
Slide 6
143-73100-429-ELEM-ABC TN State COA follows this format:
Function Function 5 digit Fund Fund - 3 digit Object Object Code 3
digit Object Codes are only used on Expenditures Cost CenterSub
Object Cost Center 5 digit Sub Object 3 digit Cost Centers and Sub
Objects are: Optional Completely user defined
Slide 7
Double entry accounting is a standard accounting method that
requires each transaction to be recorded in at least two accounts.
Every debit balance must have an equal and off-setting credit
balance for each transaction. WHY DOES THAT MATTER ? ? ? It
provides for quick accuracy. Every transaction must balance.
Slide 8
What is the difference between a Calendar year and a Fiscal
Year? The Calendar year is January 1 through December 31. The
Fiscal year is a period used for calculating annual (yearly)
financial statements for businesses and other organizations. For
Tennessee school systems, the Fiscal year is July 1 through June
30.
Slide 9
ASSETS Bank Accounts Investment Accounts Receivables
Inventory/Supplies Due From Other Funds Prepaid Expenses ASSET
ACCOUNTS Normally carry a positive (debit) balance Debits increase
the ending balance Credits decrease the ending balance All Asset
Function Numbers begin with 1 (one)
Slide 10
What is an Accounts Receivable? Accounts Receivable is revenue
that has been earned for goods or services that you have provided
for which you have not received payment. Accounts Receivable is an
Asset on your Balance Sheet or Trial Balance. Example: USDA
reimbursement requested for meals that have been provided but for
which you have not received payment. Generally, receivables are set
up at the end of the year (June 30) in order to record revenues in
the correct fiscal year. When should I record an Accounts
Receivable?
Slide 11
LIABILITIES Payables Due To Other Funds Payroll deductions
Short Term Debt LIABILITY ACCOUNTS Normally carry a negative
(credit) balance Credits increase the ending balance Debits
decrease the ending balance All Liability Function Numbers begin
with 2 (two)
Slide 12
What is an Accounts Payable? Accounts Payable is an expense
that has been incurred for which payment has not been made.
Accounts Payable is a Liability on your Balance Sheet or Trial
Balance. Example: Supplies ordered and received in June that have
not been paid for by June 30. Generally, payables are set up at the
end of the year (June 30) in order to record expenditures in the
correct fiscal year. When should I record Accounts Payable?
Slide 13
EQUITIES Inventory Long-Term Notes Receivable Prepaid Items
Restricted, Committed, Assigned, and Unassigned Equity EQUITY
ACCOUNTS Normally carry a negative (credit) balance Credits
increase the ending balance Debits decrease the ending balance All
Equity Function Numbers begin with 3 (three)
Slide 14
= Assets Liabilities + Equities/Fund Balance
Slide 15
= Assets + Deferred Outflows Liabilities + Deferred Inflows +
Equities/Fund Balance (Not included in the discussion today)
Slide 16
vs Balance Sheet Trial Balance
Slide 17
The Balance Sheet displays ending balances only
Slide 18
The Trial Balance shows Balance Sheet accounts with their
beginning balances and activity.
Slide 19
Seeing the beginning balance is often helpful. In this
particular case, it tells us that the Due from Other Governments
(receivable) has not been collected when the amount was received,
it was recorded incorrectly.
Slide 20
The Trial Balance also shows accounts with a zero balance.
Slide 21
Cumulative Budget entries for Revenue Controlling account for
Outstanding Current Year POs Cumulative YTD Expenditures Cumulative
Liquidated Prior Year POs
Slide 22
Cumulative budget entries (BG) made to expenditure accounts
Cumulative YTD revenues
Slide 23
Prior Year Encumbrances (if any) Current Year Encumbrances
Cumulative Budget entries (BG) made to Restricted for Operation of
Non-Instructional Services
Slide 24
HOW DOES CLOSING THE YEAR END AFFECT THE EQUITY? Total Revenues
are reversed through Restricted for Operation of Non- Instructional
Services which increases Equity Total Expenditures are reversed
through Restricted for Operation of Non- Instructional Services
which decreases Equity The difference (net gain or net loss)
remains in Restricted for Operation of Non- Instructional
Services
Slide 25
EXAMPLE: Prior Years Balance Sheet (572,239.49) Revenues
521,128.81 Expenses $(125,515,12) After YE Closing (see previous
slide) $(74,404.44) Restricted
Slide 26
Purchases ( Food, Supplies, Contracted Services ) Salaries and
Wages Payroll Taxes ( Employers portion of Social Security and
Medicare ) Insurance ( Employers portion of health and dental )
Normally carry a positive (debit) balance Equipment Therefore, a
debit will increase expenses and a credit will decrease
expenses.
Slide 27
Why are Expenditures the only account type that uses object
codes? For example, 143-73100-499 Expenditures are the only account
type segregated by department The Function defines the department
The Object Code defines the type of expenditure within the
department
Slide 28
The Original Budget shows on the top line of the first column
Budget Amendments show on the bottom line of that column The Total
Budget (Original +/- Amendments) is in the next column Budget
Amounts
Slide 29
YTD Expenditures are on the top of each expenditure line YTD
Encumbrances (POs) are below the expenditure The available amount
(total budget less YTD expenses and POs) is listed as the
Unencumbered Balance The Percent Used is listed below: Total
expended (including POs) divided by the total budgeted The final
column show the current months actual expenses and POs Actual
Amounts
Slide 30
Lunch, Breakfast, Ala Carte Normally carry a negative (credit)
balance Interest income Grants Transfers in from other funds USDA
Payments Therefore, a debit will decrease a revenue but a credit
will increase a revenue.
Slide 31
Similar to the Statement of Expenditures, the first columns are
the budgeted amounts for Revenues The next columns are the actual
revenues received and the percentage that represents of the total
budgeted The Unrealized column is revenue budgeted but not
collected The last column is the Current months revenue
Slide 32
Bank Accounts Investment Accounts Receivables
Inventory/Supplies Due From Other Funds Prepaid Expenses Normally
carry a positive (debit) balance ASSETS Debit Credit
Slide 33
Payables Due To Other Funds Payroll deductions Short Term Debt
Normally carry a negative (credit) balance LIABILITIES Debit
Credit
Normally carry a negative (credit) balance Lunch, Breakfast,
Ala Carte Interest income Grants Transfers in from other funds USDA
Payments A debit will decrease a revenue but a credit will increase
a revenue. REVENUES
Slide 36
Normally carry a positive (debit) balance Purchases ( Food,
Supplies, Contracted Services ) Salaries and Wages Payroll Taxes (
Employers portion of Social Security and Medicare ) Insurance (
Employers portion of health and dental ) Equipment A debit will
increase expenses and a credit will decrease expenses.
EXPENDITURES
Slide 37
Slide 38
Setting up Accounts Receivable DR Due from Other Governments CR
Revenue (This also increases your Revenues)
Slide 39
Receipting of Revenue Sources DR Cash on Hand CR Lunch Revenue
Record Bank Deposit DR Cash in Bank CR Cash on Hand (This also
increases your Revenues)
Slide 40
Payroll DR Gross salary expense CR Payroll Liabilities CR Cash
in Bank Writing Checks DR Expenditure or Liability Accounts CR Cash
in Bank (These transactions also increase your Expenditures)
Slide 41
Payroll DR Gross salary expense CR Payroll Liabilities CR Cash
Setting Up EOY Payables DR Expenditure Accounts CR Accounts Payable
(These transactions also increase your Expenditures)
Slide 42
Paying Vendors for Vol. Ded. withheld & other Payables DR
Employee Deduction or Payable Accounts CR Cash in Bank (This also
decreases your Assets.)
Slide 43
Slide 44
Asset accounts with negative balances warrant investigation Our
software indicates a debit balance as a positive number Assets
normally have a debit balance
Slide 45
Liabilities normally have a credit balance Our software
indicates a credit balance as a negative number Liability accounts
with positive balances warrant investigation
Slide 46
Expenditures on lines where there is no Budget need
reclassification or a Budget Amendment
Slide 47
Expenditures on lines where the Unencumbered Balance is
positive (the Percent Used is >100%) may require
reclassification or a Budget Amendment.
Slide 48
When the Unencumbered Balance is negative, there are still
funds available (Percent Used < 100%) When the Unencumbered
Balance is positive, more has been spent than was budgeted (Percent
Used > 100%)
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How do I reconcile my payroll deductions?
Slide 54
TOTALS ON THIS REPORT SHOULD MATCH AMOUNT BILLED BY INSURANCE
COMPANY
Slide 55
What are Cost Centers? Cost Centers are User-defined codes in
the Chart of Accounts Why do I need to use Cost Centers? Cost
centers allow you to track Revenues and Expenditures by school For
example: 143-73100-422-ELEM
Slide 56
Cost Centers allow you to track revenues and expenses by school
NOTE: If a summary line has actual expenditures or revenues
recorded, the Cost Center has not been properly keyed.
Slide 57
Reports can be run with Summarized information
Slide 58
Reports can be run with Cost Center detail
Slide 59
And reports can be run by individual Cost Centers
Slide 60
When the Total Ending Balance is a negative, the Equity and
Revenues exceed the Expenditures. Negative is Good
Slide 61
Things I need to know about Budgets
Slide 62
Budgets are entered in reverse from a regular transaction o
Budgeted Revenues are entered as aDebit o Budgeted Expenditures are
entered as aCredit Budgeted expenditure is negative -- a Credit
Actual expenditure is positive -- a Debit
Slide 63
Things I need to know about Budgets Budgets are entered by
summarized Revenue or Expenditure line item rather than by Cost
Center Budgeted amount Actual amount
Slide 64
Things I need to know about Budgets When do I need to do a
Budget Amendment for Revenues? Review your Summarized statements
Generally, Revenues are only amended if they exceed the anticipated
amount AND additional revenues are necessary to cover an increase
in Expenditures. Revenues may also require an amendment if
anticipated amounts are significantly lower due to decreased meal
counts.
Slide 65
Things I need to know about Budgets When do I need to do a
Budget Amendment for Expenditures? Local policy dictates when
amendments are required Generally, actual expenditures should not
exceed the budget in any Function (e.g., 73100) or any Fund
(143).
Slide 66
Things I need to know about Budgets When do I need to do a
Budget Amendment for Expenditures? Line item expenditures generally
require amendment based on amount or percentage of overagerefer to
local policy. Line item not amended. Amount of overage is <
$500. Line item amended to prevent overage > 5% and $500.
Slide 67
OTHER USEFUL TOOLS AND REPORTS Vendor payment verification The
SEARCH function The Account Analysis report
Slide 68
Where can I look if a Vendor says he/she has not been
paid?
Slide 69
You can also look at your Reconciled/Unreconciled checks in
your Bank Reconciliation
Slide 70
What is wrong with this expenditure? Note that the account in
question is 143-73100-422- -ELEM
Slide 71
To see detail entries posted to an account, you can run an
Account Analysis For the account in question, there has been a
refund issued which explains the credit to an expense account.
Slide 72
An Account Analysis report can be run for a month, quarter or
year. While it may be a lengthy report, it can be a valuable tool
for reviewing all transactions made to Fund 143.
Slide 73
How can I find a transaction if I know the amount? To search
for other transactions in the same amount, hit F3
Slide 74
Finding the right numbers What is the purpose of the Annual
Financial Report? Determination of Excess Balance
Slide 75
Finding the right numbers The Ending Balance from the prior
year automatically rolls forward into the current year report as
the Starting Balance.
Slide 76
Finding the right numbers The Starting Balance is automatically
rolled forward from the prior year report. Any difference in
Starting Balance will have to be run through Current Year income or
expenses. In this case, Expenses will be increased by $307.67
Slide 77
Finding the right numbers What would cause my starting balance
to be different? Audit adjustments made after the books were
closed. Voided check that was outstanding from the prior year.
Prior year purchase orders (entered in the system) voided or closed
out for amounts different than original amount.
Slide 78
Finding the right numbers Total Income is your total current
year revenues.
Slide 79
Finding the right numbers Trial Balance
Slide 80
Finding the right numbers Statement of Revenues
Slide 81
Finding the right numbers Total Expenses is your total current
year expenditures.
Slide 82
Finding the right numbers Trial Balance Remember, expenditures
were increased by $307.67 on the annual report because of the
Starting Balance difference.
Slide 83
Finding the right numbers Statement of Expenditures
$307.67
Slide 84
Finding the right numbers The Ending Balance should equal the
Fund Balance amount after closing the books for year end.
Slide 85
Asset Accounts - Debit balance - Debits to increase - Credits
to decrease Liability Accounts - Credit balance - Credits to
increase - Debits to decrease Equity Accounts - Credit balance -
Credits to increase - Debits to decrease Monthly Tasks (at minimum)
- Reconcile Bank Accounts - Reconcile Liability Accounts - Review
Trial Balance, Statement of Expenditures and Encumbrances, and
Statement of Revenues Annual Financial Report - Check the Starting
Balance and make necessary adjustments - Verify the Ending
Balance
Slide 86
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Slide 88
Why do those balances roll over when Revenue and Expenditures
dont? Where does Fund Balance come from? Why do YTD Debits and
Credits only increase, never decrease? What are payables and do I
have to journalize them if I do POs? Would Full Accrual accounting
benefit me? What are Control Accounts and where did they come from?
Why do some accounts show up on a Trial Balance but not on the
Balance Sheet?
Slide 89
What is each column in the expenditure report telling me? Why
is there activity in an account but no amount budgeted? Do I care
if one account is over budget but the total by CC is not? Why are
there two budget amounts showing up instead of one? Why are numbers
stacked on top of each other? How do I know if I am over budget? Is
there a more concise or one line report showing budget information?
My Revenue/Expense Statement shows a negative ending balance. Is
that good or bad?
Slide 90
How do most LEAs track school revenues and expenditures? How do
I set up Cost Centers? How do I reconcile my payroll liability
accounts? Are there payroll reports that show people paid out of
the wrong program?