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Chapter 7 Financial Transactions and General Ledger Processes

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Chapter 7 Financial Transactions and General Ledger Processes

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

    TABLE OF CONTENTS - CHAPTER 7

I. CHAPTER 7 FINANCIAL TRANSACTIONS & GENERAL LEDGER

    PROCESSES .................................................................................................. 1 II. TYPES OF FINANCIAL TRANSACTIONS................................................ 1 A. Cash Receipts ........................................................................................ 1 B. Cash Disbursements ............................................................................... 1 C. Actual Journal Entries ............................................................................. 1 D. Budget Transactions ............................................................................... 1 III. GENERAL LEDGER PROCESSES ............................................................... 2 A. ChartField Request ................................................................................. 2 B. Journal Source Request ........................................................................... 3 C. Journal Entry Actual ............................................................................. 3

    1. Journal .......................................................................................................... 4

    2. Standard Journal Entry .................................................................................... 4

    3. Transfers ....................................................................................................... 5 D. Payroll Expense Transfer ......................................................................... 8 E. Journal Entry Budget ........................................................................... 8

    1. Budget Ledger................................................................................................ 9

    2. Additional Budget Information .......................................................................... 9

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    CHAPTER 7: FINANCIAL TRANSACTIONS AND GL PROCESSES 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

    I. CHAPTER 7 FINANCIAL TRANSACTIONS & GENERAL LEDGER PROCESSES

    The purpose of this chapter of The Guide is to provide information about financial

    transactions and about the general ledger processes associated with the Finance

    System at CU-Boulder.

    II. TYPES OF FINANCIAL TRANSACTIONS

    A transaction is the basic unit of input to the Finance System. A transaction

    consists of

    ? The receipt or disbursement of cash or

    ? Any other financial activity within the university.

The list below describes the major categories into which university transactions

    are grouped.

A. Cash Receipts

    Cash is received and recorded by campus departments and deposited with the

    CU-Boulder Office of Cash Management in Regent Hall. The Cashier, in turn,

    deposits the cash to the university’s bank accounts.

B. Cash Disbursements

    Cash is paid out for payroll, purchases of supplies and services, financial aid,

    and other items as a means of achieving the goals of the university.

C. Actual Journal Entries

    All transactions are fed as journals to the Actuals Ledger within the Finance

    System. Online journals are used to do the following. This list is not all-

    inclusive:

    ? Make corrections to previously-recorded transactions

    ? Record cash transfers

    ? Enter accruals such as accounts receivable and revenue

    ? Record allowance for bad debt and bad debt expense

    ? Expense inventory to cost of goods sold.

D. Budget Transactions

    Budget transactions increase or decrease the budget within a FOPPS to reflect

    a change in appropriation, an adjustment in revenue or expense projections, or

    the creation of a new program or project.

     1 FINANCIAL TRANSACTIONS AND GL PROCESSES: CHAPTER 7 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

     Every transaction has an impact on the monthly financial statements. These statements must be reviewed and reconciled regularly to verify that ? transaction amounts are recorded accurately and

    ? transactions are recorded in the correct FOPPS-Account combination. III. GENERAL LEDGER PROCESSES

    Many administrative processes are associated with the Finance System. Some of

    these processes are offline, while others involve online data entry.

    A. ChartField Request

    Requesting a ChartField involves both offline and online processes. To

    receive a new ChartField, or to request additions or changes to an existing

    ChartField, use the Chart of Accounts Request Workbook. This is an Excel spreadsheet that contains multiple pages. The workbook should be used to request additions or changes to Account, Org, Program, SubClass, or

    Project/Grant ChartFields. The workbook also includes worksheets for

    requesting SpeedTypes and Statistic Codes. In addition, forms for modifying

    or adding a Tree structure can be found in the workbook. The Chart of Accounts Request Workbook is located on the University of Colorado System

    Forms website at http://www.cu.edu/forms/index.html and also on the ABS

    website at http://abs.colorado.edu/ABS_WEB/WEB_2003/ABS_Forms.htm.

    Navigation to the Chart of Accounts Request Workbook This workbook can be accessed from the ABS website Forms page: http://abs.colorado.edu/ABS_WEB/WEB_2003/ABS_Forms.htm. From here ? Select COA on the left side of the page, or scroll down to Chart of Accounts (COA) Forms ? Select Original Chart of Accouts Form Print out the pertinent worksheet(s) Fill in the required information. Send the completed forms to ABS COA Request at 579 UCB.

Note: You can also fill out the worksheets electronically and email them to

    ABS: Accounting@colorado.edu. This is the preferred method.

Alternate Form: The Boulder campus developed a simplified Chart of

    Accounts form called COA-Lite. You can use this for most of the common

    COA requests. It is available via the same navigation above except select

    COA-Lite: http://abs.colorado.edu/ABS_WEB/Forms/COA_Lite.xls. Note that the submission of a form from the Chart of Accounts Request

    Workbook is a request. Do Not Use the new ChartField until you receive an

    email notification from ABS that the ChartField has been created or changed.

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    CHAPTER 7: FINANCIAL TRANSACTIONS AND GL PROCESSES 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

    B. Journal Source Request

    A three-character field, called a journal source, identifies all journal entries

    posted to the Finance System. Requests to add or modify existing journal

    sources involve both offline and online processes. Proposals to add a new

    journal source or to modify an existing journal source involve completing a

    Journal Source form, securing approval for the change from the Boulder

    Campus Controller’s Office, and submitting the request to the Office of University Controller.

    Navigation to the Journal Source Request Form The journal source request process begins at the University of Colorado

    System Forms website, http://www.cu.edu/forms/index.html. Follow the

    navigation below to access the Journal Source form.

    Select Finance & Procurement. This takes you to the Finance & Procurement Forms page.

    ?

    Select Finance Forms. This takes you to a table that lists the financial forms

    associated with the Finance System.

    ?

    Select Journal Source. This takes you to the Journal Source form.

    ?

    Print out the form.

    ?

    Fill in the required information.

    ?

    Send the completed form to ABS, at 579 UCB. The Campus Controller’s

    Office will review the request and, when approved, will route the signed

    Journal Source request form to the Office of University Controller.

Note: You can also fill out the worksheets electronically and email them to

    ABS: Accounting@colorado.edu.

    C. Journal Entry Actual

    A Journal Entry (JE) is an accounting term that denotes an intra-university

    transaction. JEs are done online in the Actuals ledger of the Finance System.

    The online pages for doing JEs are accessed through the Finance Production

    database. In addition to online JEs, all campus subsystems, such as the

    Facilities Management Work Order System or the Mailing Services subsystem,

    feed transactions to the Finance System as journals. There are three types of

    accounting (Actual) journal entries within the Finance System: Journal Entry,

    Standard Journal Entry, and Cash Transfer Journal Entry.

     3 FINANCIAL TRANSACTIONS AND GL PROCESSES: CHAPTER 7 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

    1. Journal

    This type of journal entry is used for one of two purposes:

    a) To correct an error that occurred in recording an original

    journal entry to revenue, expense, cash transfer, asset or liability.

    This type of journal entry is commonly referred to as a correcting

    JE.

    b) To adjust a Finance System balance for purposes other than to

    correct errors. Examples include:

    ? Accrue accounts receivable and revenue

    ? Record allowance for bad debts and related bad debt expense

    ? Expense inventory to cost of goods sold

    ? Expense prepaid or deferred expenses.

    Navigation to the Journal Entry Pages

    From the Finance System Production homepage, select General

    LedgerJournalsProcess JournalsJournal Entries.

    2. Standard Journal Entry

    A Standard Journal Entry allows the user to perform certain routine

    monthly financial transactions. A standard journal entry may involve either

    fixed or prorated amounts. An example of a fixed amount standard journal

    entry would be when one campus program provides a set amount of

    financial support, e.g., $100.00 per month, to another campus program. A

    prorated standard journal entry is referred to as an allocation. An example

    would be the monthly allocation of funds from a central administration

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    CHAPTER 7: FINANCIAL TRANSACTIONS AND GL PROCESSES 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

    FOPPS to a number of direct operating FOPPS on a percentage basis.

    Instructions on how to create a standard journal are available online:

    http://abs.colorado.edu/ABS_WEB/nonhtm/other/SJE.pdf

    Navigation to the Standard Journal Entry Pages

    From the Finance System Production homepage, select General

    LedgerJournalsStandard JournalsDefine Standard

    Journal Entry.

    3. Transfers

    A Cash Transfer Journal Entry denotes an accounting term that is used to

    describe a movement of cash from one FOPPS to another FOPPS when no

    goods and/or services are provided in exchange for the cash. A cash

    transfer journal entry is typically used to provide financial support for an

    activity, fund an over-expenditure, or reserve funds for future use. A cash

    transfer journal entry should not be used to move revenue or expense from

    one FOPPS to a different FOPPS. Journal Entries involving cash transfers

    will always use an account within the range 990000-999999.

    Navigation to the Cash Transfer Journal Entry Pages

    From the Finance System Production homepage, select General

    LedgerJournalsProcess JournalsCash Transfer Journal

    Entries.

     5 FINANCIAL TRANSACTIONS AND GL PROCESSES: CHAPTER 7 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

    An actual journal entry should not be used for the following activities:

    1. To record the sale of goods or services between departments. An

    Interdepartmental Order and Invoice (IN) or procurement card should

    be used for this type of activity.

    2. By departmental personnel to make direct entries to cash accounts

    (000100-004999) or fund balance accounts (199900-199999). This

    type of transaction is restricted to the System level of the university. 3. To affect the budget in general budget accounts. A budget journal entry

    should be used for this type of transaction.

    General Budget Accounts

     Revenue

    200000 Revenue General Budget

    200100 Appropriations and Refunds

    205000 Student Tuition and Refunds

    220000 Student Fees and Refunds

    230000 Investment Revenue and Refunds

    235000 Grants and Contracts and Refunds

    240000 Private Gifts, Grants and Contracts and Refunds

    250000 Sales/Services of Educational Activities & Refunds

    280000 Auxiliary Enterprise Revenue and Refunds

    310000 Health Services Revenue and Refunds

    315000 F&A Reimbursement and Refunds

    320000 Rental Income and Refunds

    325000 Miscellaneous Income and Refunds

    355000 Other Fund Additions and Refunds

    380000 Service Center IN Revenue and Refunds

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    CHAPTER 7: FINANCIAL TRANSACTIONS AND GL PROCESSES 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

     Expenditures

    400000 Faculty Salaries

    402500 Officer/Exempt Professional Staff Salaries 405000 Classified Staff Salaries

    407500 Hourly Wages

    418400 Faculty Benefits

    422500 Officer/Exempt Professional Benefits 425000 Classified Staff Benefits

    427500 Hourly Staff Benefits

    460000 Operating Expense

    450100 Cost of Goods Sold

    480000 Office Administration

    482500 Telecommunications

    485000 Postal Costs

    487500 Printing, Publication and Duplication 490000 Microform, Photography, Graphics 492500 Subcontracts

    495000 Honoraria

    497500 Motor Vehicle Maintenance and Supply 500000 Information Technology

    502500 Rentals - Buildings, Land, Space 507500 Advertising and Publicity

    510000 Dues and Memberships

    512500 Subscriptions, Books, Periodicals, and Scores

    515000 Physical Plant Maintenance and Repair 517500 Custodian and Laundry

    520000 Hospitalization Costs

    522500 Food Supplies and Services

    527500 Instructional Supplies and Services 530000 Laboratory and Technical Shop 532500 Field Research Expense

    535000 Medical Supplies and Services 537500 Equipment - Non Capital

    540000 Freight, Moving and Storage 542500 Interest, Royalties and Patents 545000 Insurance

    547500 Donations and Community Services 550000 Official Functions

    552500 Other Operating Expenses

    700000 Travel

    750000 Utilities

    770000 Student Aid

    790000 Books, Periodicals (Library)

     7 FINANCIAL TRANSACTIONS AND GL PROCESSES: CHAPTER 7 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

    810000 Fixed Asset Costs

    950000 Facilities and Administrative Costs

    960000 General Recharges

    970000 Other Deductions

     Transfers

     990000 Mandatory Transfers In

     992000 Mandatory Transfers Out

     995000 Voluntary Transfers In

     997000 Voluntary Transfers Out

    Go to http://www.cu.edu/System_Controller/fin-system-info.html for the

    most current account tree and select Chart of Accounts (Full Version

    formatted for MS Excel)

    JOURNAL ENTRIES INVOLVING ANOTHER DEPARTMENT’S FOPPS

    When creating a JE that impacts another department’s FOPPS, it is important to communicate with the respective department about the transaction before doing the online approval and posting of the JE. The department initiating the JE should: 1. Contact the Program Manager or Fiscal Staff contact person for the offset

    FOPPS before the JE is prepared and explain the reason for doing the JE. 2. Once the JE has been approved and posted, notify the Program Manager or

    Fiscal Staff for the offset FOPPS of the JE Date and Journal ID #.

Failure to follow the steps outlined above may result in confusion on the part of the

    department with the offset FOPPS. It may also result in a duplicate entry in the event

    the department with the offset FOPPS also prepares a JE to adjust the same

    transaction.

D. Payroll Expense Transfer

    A Payroll Expense Transfer, (PET), is a dedicated, online journal process

    used to correct a payroll error. The PET process automatically moves the

    benefits associated with the salary that is being corrected. Most PETs are

    done in the HR Production system.

E. Journal Entry Budget

    A Budget Journal Entry (BJE) is used to submit transactions for entering

    original budgets or doing subsequent budget adjustments in the Finance

    System. BJEs are done online, and the budget pages are accessed through the

    Finance Production database.

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    CHAPTER 7: FINANCIAL TRANSACTIONS AND GL PROCESSES 11/09

    UNIVERSITY OF COLORADO AT BOULDER

    DEPARTMENTAL FINANCIAL MANAGEMENT GUIDE

     FINANCIAL TRANSACTIONS AND GENERAL LEDGER PROCESSES

    1. Budget Ledger

    The budget ledger is divided into four additional ledgers:

    ? B_INI_CONT

    ? B_INI_TEMP

    ? B_CUR_CONT

    ? B_CUR_TEMP

Use of the INITIAL budget ledgers, B_INI_CONT and B_INI_TEMP, is

    restricted to authorized staff from Accounting and Business Support (ABS)

    and Planning, Budget and Analysis (PBA). At the beginning of each fiscal

    year, PBA records the initial budget for FOPPS within the General,

    Auxiliary, and Renewal/Replacement Funds using the appropriate

    INITIAL ledger.

The CURRENT budget ledgers are available to Finance System users

    having the proper security authorization. The CURRENT ledgers are used

    throughout the fiscal year for making budget adjustments.

    2. Additional Budget Information More information on Budget Theory and Practice at the University of

    Colorado at Boulder can be found in Chapter 8 of The Guide.

Navigation to the Budget Journal Entry Pages

    From the Finance System Production Homepage, Select General

    LedgerJournalsBudget Journal Entries.

     9 FINANCIAL TRANSACTIONS AND GL PROCESSES: CHAPTER 7 11/09

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