1. Journal Entries Auditing Thursday, June 20 th, 2013 1

2. Content What is Journal Entry For? Important Aspects of Journal Entry. When is Journal Entry Not Appropriate? How Long Should You Keep Info. on File. “Get to Know Journal Entry”. Questions & Answers. 2

3. What is Journal Entry for? Definition: Journal Entries are used to make adjusting entries/corrections/cost transfers to existing transactions. Some examples are as follows:  An incorrect account code was used.  To move an expense charged on a previous journal entry to another department.  To Record Quasi revenue. 3

4. Important Aspects of Journal Entry… 1. Preparation 2. Description/ Header 4. Supporting/ Documentation 5. Responsibilities of Approvers 3. Actual Journal Entry Lines 4

5. 1. Preparing for Journal Entry - what is the expense total? 5

6. 1. Preparing for Journal Entry Is the expense accurate? 6

7. 2. Journal Entry Description/ Header The “long description’’ or “Business Purpose” of the Journal Entry Should Include:  What the JE is meant to do.  Why the entry is being made (the “because” rationale)  Details of original expense being moved (JE no & Line, AP no./Voucher no. Vendor, date of posting)  If JE is a Cost Transfer or Correcting Entry o Cause of the error. o How/why is the expense necessary to complete the scope of work of the project charged.  Direct relationship to scope of work/speed type is key. 7 “Expenditure Review Can Prevent Large Journal Entries”

8. Example 1 Insufficient Description Identified by Internal Audit: “To transfer income/expenses from Speed Type XXXXX” Suggested Description: “To transfer supply expenses from Speed Type XXXXX that is over budget due to supply costs being greater than planned. Expenses transferred to an allowable unrestricted departmental funding source (Speed Type XXXXX), Approved by Director/Chair/P.I. Name or Approved Cost Transfer form on file”. 8

9. Example 2 Insufficient Description Identified by Internal Audit: “To move lab supplies from one speed type to the new lab speed type where they should’ve been reported” Suggested Description: “To transfer lab supplies from speed type XXXXX to speed type XXXXX. Lab supplies were required as part of instructional lab course XXXXX. Expenses were originally purchased via p-card and not transferred in WORKS due to a miscommunication in lab order request”. (Can be edited to fit) 9

10. 3. Actual Journal Entry Lines 10

11. 3. Actual Journal Entry Lines 11 Examples of Revenue Deposited to incorrect Account Codes

12. 4. Supporting Documentation a. Journal Print with Signatures (Initiator/Approvers) b. Original Transaction Back-Up from PantherMart or p-card charge. c. Report from Spectrum/Lines Highlighted. d. Cost Transfer Form. 12

13. 5. Responsibilities of Approvers i. Is the Expense Transfer Appropriate? ii. Is the Expense Allowable on the Account/Speed Type? iii. Do you Agree with the Reasoning of the Journal? iv. Request additional Information if Not Satisfied. v. Sign and Approve in Spectrum Plus. 13

14. When is Journal Entry Not Appropriate? 1. For Payroll Entries (Except Joint Staffing) 2. To Transfer Funds from one department to another. 3. For Open Purchase Orders. 14

15. Open Purchase Order & What to DO? Submit an email to Michael Davidson in Purchasing or complete a change order in PantherMart: Example of Email Communication: Please can you change the chart field lines on the below PM00125359: ◦Reduce (-) LINE 4 by $71,250 to a new total of $40,000 and change the speed type, to project, SP00010859 ◦ADD (+) a LINE 5 adding $71,250 to speed type, ENRMR, chart field, 10000-110020000-12200-11000-2013. The equipment has not been installed yet. Therefore, no invoices have been paid on this PM yet. If you need to run this through workflow again. The workflow to use would be PRJ, 1108000000. 15

16. Chart field Before Spectrum Updated 16

17. Chart field After Spectrum Updated 17 This Updated in PantherMart & on The Budget Overview Inquiry in Spectrum in minutes….

18. How Long Should You Keep Information on File? University System of Georgia (USG) Retention record requirements: Although not explicitly named, any materials (e- mails, memoranda, worksheets, etc.) that would support the creation of Journal Entries would fall into “related documentation”. The full USG record retention requirements are available at : http://www.usg.edu/usgweb/busserv/series/search.phtmlhttp://www.usg.edu/usgweb/busserv/series/search.phtml 18

19. (73) General Ledger Statements Explanation: This series provides a complete monthly record of the final posting of all university financial transactions, listed by account number. It is used to prepare periodic financial statements. Records contain: the program name; account number; posting date; debit and credit amounts; new balance; and related information. Record Copy: Business Affairs Retention: 7 years 19 USG - Citation or Reference: O.C.G.A. 9-3-24

20. (74) Miscellaneous Accounting Reports Explanation: This series documents the production of various accounting reports made by individual offices or departments on a monthly, quarterly, or annual basis. These reports provide summary information relating to the department and its programs, and may be used for planning or review. Reports include operating statements, year-end projections, reconciliation's, expenditures by facilities, accumulated hours and dollars by employee, summaries of assets and liabilities, sales, cost accounting, and income. Records may include but are not limited to: working papers; drafts; final reports; and related documentation and correspondence. Record Copy: Creating units Retention: 5 years for annual reports; 1 year for monthly and quarterly reports and working papers 20USG: No Citation or Reference

21. (96) Cooperative Federal Program Budget Preparation, Projection and Allocation Records Explanation: This series is used to develop, estimate, propose, and plan preliminary budget requests for cooperative federal/state programs and reflects the process by which the annual budget allotment is to be distributed to the department and its programs. This series may include but is not limited to: budget expenditure statements; general ledger statements of accounts; salary work sheets; budget exhibits; project detail sheets; budget requests; budget change sheets; federal agency annual reports; federal agency status of fund reports; journal vouchers; reports to monitor FTE budgets; spread sheets; expenditure projection work papers; preliminary section budget proposals; budget development schedules; allotment reports; decision packages; spending plans; compensation plan proposals; contingency/deviation plans; various federal publications; reports; forms; and related documentation and correspondence. Record Copy: Administering Units Retention: 10 years 21USG: No Citation or Reference

22. “Get to Know Journal Entry” 22

23. 23

24. 24

25. Contacts 25 - Agency Accounts - Continuing Education - Dept. Sales & Services - Quasi Revenue - Study Abroad Accounts Contact: Mr. Sheadrick Stevenson Suite 620, Langdale Hall (GCB) Phone: 404-413-5028 sstevenson@gsu.edu - State Appropriations - Indirect Cost Contact: Ms. Yvonne Mangiaracina Suite 805, Langdale Hall (GCB) Phone: 404-413-5024 yvonnem@gsu.edu - For Fund Code 20XXX Sponsored Projects Your designated college representative.

26. 26