Period End Accruals ARC Service Conference June 1, 2009

What is an Expense Accrual? Merriam-Webster’s Dictionary defines accrual as:  the action or process of accruing (noun)  something that accrues or has accrued (noun)  relating to or being a method of accounting that recognizes income when earned and expenses when incurred regardless of when cash is received or disbursed (adjective)

In Layman’s terms an accrual can be explained as:  Amounts owed to a vendor for goods ordered and received, or for services rendered, that have not been billed. So, what exactly does that mean?

 Interim unaudited financial statements, without notes, are required on a quarterly basis.  OMB Bulletin lists major agency components that are required to prepare financial statements, and establishes minimum requirements for audits of Federal financial statements.  Audit firms have focused more on interim accruals for goods/services. Why are expense accruals important?

 Determine a threshold  Review open obligations report  Identify goods/services that have been received but not billed  Submit accrual information to ARC for processing  Once accruals have been posted, review your open obligations report and verify for accuracy What should the Agency do to facilitate the accrual process?