1. OASIS Issues Updates: BPI Reports and Query Group Why, When, and How to Delete Queries Bob Barton, MBA

2. Purchasing Department Issues Where Did All My PO’s Go? Blanket Orders & Contracts…What Now? Mark Seiler, CPM Dirk Buesing, Buyer II

3. General Accounting Division (ACO) Long Term Debt and Capital Lease Obligations James D. Moore Senior Accountant

4. Presented by Frank Leonard February 22, 2005 Deferred Revenue Account Analysis Schedule S-9 4

5. Objectives  To provide departments the opportunity to validate the data in deferred revenue accounts prior to external auditor’s review  To avoid unnecessary audit findings  To ensure proper representation of financial data Deferred Revenue Account Analysis Schedule S-9 5

6. Deferred Revenue 6 Deferred revenue arises when a potential revenue transaction does not meet both the “measurable” and “available” criteria for recognition in the current period. Deferred Revenue Account Analysis Schedule S-9

7. Criteria for Revenue Recognition 7 Under Accrual Basis of Accounting Under Accrual Basis of Accounting (For Proprietary Funds only - Internal Service Funds, Enterprise Funds) : Deferred Revenue Account Analysis Schedule S-9  Revenue must be earned (measurable) before it can be recognized. However, cash does not have to be received (available) before revenue is recognized.

8.  Revenue must be earned (measurable) and available. This means it must be earned and cash must be received within 12 months. The revenue must also be eligible to recognize revenue. Under Modified Accrual Basis of Accounting Under Modified Accrual Basis of Accounting (For Governmental Funds only - General Fund, Special Revenue Funds, Capital Project Funds, and Debt Service Funds) : Criteria for Revenue Recognition Deferred Revenue Account Analysis Schedule S-9 8

9. Eligibility requirements:  Allowable cost restrictions (Expenditure-driven / Reimbursements)  Time restrictions  Contingencies  Required characteristics of recipient Criteria for Revenue Recognition Deferred Revenue Account Analysis Schedule S-9 Eligible or Eligibility The characteristic that must exist for a given entity to be considered qualified or allowed to take legal ownership of the money received for a particular program. 9  NOTE: Purpose restrictions cannot be used to establish eligibility.

10. A. Proceeds Received in Advance of Revenue Entitlement (Unearned) 1. To receive cash in advance of revenue recognition: AccountDebitCredit Cash (101100)$100 Deferred Revenue(230XXX) $100 2. To recognize revenue once the criteria has been met: AccountDebitCredit Deferred Revenue(230XXX)$100 Revenue (7XXXXX) $100 10 Deferred Revenue Account Analysis Schedule S-9 Accounting Treatment

11. B. Proceeds Received Subsequent to Revenue Entitlement (Unavailable) 1. Once revenue has been earned by a governmental fund, a receivable and offsetting deferred revenue should be entered. If these amounts remain at year-end, it is considered “Unavailable.” These amounts should be identified using Schedule S-9. AccountDebitCredit Receivable (11XXXX)$100 Deferred Revenue(230XXX) $100 (continued)… 11 Deferred Revenue Account Analysis Schedule S-9 Accounting Treatment

12. 2. Once proceeds are received, (available), the entry should be reversed and the revenue should be recognized. Delaying the recognition of revenue until cash is received is a modified accrual concept for use with governmental funds only. AccountDebitCredit Receivable (11XXXX) $100 Deferred Revenue(230XXX)$100 To reverse initial entry Cash (101100) $100 Revenue(7XXXXX) $100 To recognize revenue B. Proceeds Received Subsequent to Revenue Entitlement (Unavailable) Deferred Revenue Account Analysis Schedule S-9 Accounting Treatment

13. Start Your Queries! 13

14. 1.Run a Summary Trial Balance of Current Year Period 0 only. See Query 1 2.Run a Summary Trial Balance of Prior Year (periods 0- 998). This will give you the opportunity to see any adjustments made by ACO in period 998 of the prior year. 3. Reconcile period “0” of FY05 to the ending balance of FY04 and resolve any discrepancies. Preparing Account Analysis Schedule S-9 14 Deferred Revenue Account Analysis Schedule S-9 A. To reconcile period “0”

15. Query 1 (Summary) Query 1 (Summary) Sample Fund – All Deferred Revenue Fields Criteria 15 Deferred Revenue Account Analysis Schedule S-9

16. First - Run to Excel Highlight all data and sort the data by Account. Query 1 Query 1 Sample Fund – All Deferred Revenue 16 Deferred Revenue Account Analysis Schedule S-9

17. Use Query 1 information to fill in the Schedule S-9 columns (b) through (e) Now is when you should validate the balances in period 0. Feel free to insert rows to identify balances that will not be recognized within the next 12 months. 17 Deferred Revenue Account Analysis Schedule S-9 Is it deferred revenue?? Ask yourself…

18. Preparing Account Analysis Schedule S-9 18 Deferred Revenue Account Analysis Schedule S-9 A. To reconcile period “0” 2.Run a Summary Trial Balance of Prior Year (periods 0- 998). This will give you the opportunity to see any adjustments made by ACO in period 998 of the prior year.

19. Query 1 (Summary) Query 1 (Summary) Sample Fund – All Deferred Revenue Fields Criteria 19 Deferred Revenue Account Analysis Schedule S-9 Change Fiscal Year to “2004” Change Accounting Period to “between 0-998”

20. 3. Reconcile period “0” of FY05 to the ending balance of FY04 and resolve any discrepancies. Preparing Account Analysis Schedule S-9 20 Deferred Revenue Account Analysis Schedule S-9 A. To reconcile period “0”

21. 1.If no change to beginning balance, then verify to see why it has not been recognized as revenue. 2.If the ending balance in the deferred revenue is positive, then this is a sign of over-reclassification. (Hint: Liability accounts have natural credit balances). 3.Be sure to research and adjust the balance prior to submitting it to the ACO. 4.Identify when revenue recognition is expected to take place in order to enter the amounts accurately in columns (k) & (l) of the schedule. Preparing Account Analysis Schedule S-9 Deferred Revenue Account Analysis Schedule S-9 B. Validate Current Year Deferred Revenue Transactions 21

22. Query 2 (Detail) Query 2 (Detail) Sample Fund – All Deferred Revenue Fields Criteria 22 Deferred Revenue Account Analysis Schedule S-9

23. Query 2 (Detail) Query 2 (Detail) Sample Fund – All Deferred Revenue First - Run to Excel Highlight all data and sort the data by Account, then by date, then by Journal ID. 23 Deferred Revenue Account Analysis Schedule S-9

24. Query 2 (Detail) continued Query 2 (Detail) continued Sample Fund – All Deferred Revenue This information can then be included into schedule S-9 columns (f) through (l) With the data still highlighted run a subtotal by Account. 24 Deferred Revenue Account Analysis Schedule S-9

25. Use Query 2 information to fill in the Schedule S-9 columns (f) through (l) Now is when you should validate current year deferred revenue transactions through period 9. If balances require reclassification, doing it now allows the department to avoid unnecessary auditor review, eliminate findings and better ensure that financial data is represented accurately. 25 Deferred Revenue Account Analysis Schedule S-9 Is it deferred revenue?? Ask yourself…

26. Questions?? Deferred Revenue Account Analysis Schedule S-9

27. ACO Contacts For questions regarding deferred revenue, please contact: Frankie Ezzat at micro 5-3851 or Frank Leonard at micro 5-3877 27 Deferred Revenue Account Analysis Schedule S-9

28. General Accounting Division (ACO) Year-End Reminders Review ACO Calendar Dates Vi Jackson Principal Accountant