9/12/2017.

9/12/2017

Fund Accounting Sherrie Kutzler

What is Fund Accounting?
Fund Accounting, used by non-profit and governmental organizations, is a method of segregating resources and expenditures into categories (e.g., Funds) according to the funding sources and any restrictions placed on their use by external agencies or donors. Financial resources and expenses are recorded in different fund types. Each fund type has a different purpose and requirements.

Why Use Funds? Universities have unique requirements for accounting and financial reporting based on the source of funds received and their use. Universities vs. Corporations – why the difference? Corporations are responsible to investors to return a profit. Universities are required to report financial activity based on donor, State or other governing board restrictions. Fund Accounting provides the method for Universities to report based on the various requirements.

Where Does the Money Come From?
Tuition & Fees State & Federal Appropriations Grants & Contracts Investment Income Gifts Auxiliary & Educational Activities

Fund Definition: A Fund is a self-balancing, separate entity that consists of assets, liabilities, and a fund balance. Separate accounts are maintained in each fund to ensure that the limitations and restrictions placed on the use of specific resources are observed.

What are the Fund Groups?
A Fund Group is a grouping of funds. The Fund Groups used by the University are: Current Funds Loan Funds Endowment & Investment Funds Plant Funds Agency Funds Put number series

Fund Group Definitions
Current Funds: Include resources that are expendable for the primary and supporting missions of the University. The resources are intended for general operating purposes. Sub-categories of current funds are: Unrestricted: resources that have no stipulations made by the donor or other external agency related to the purpose of the funds to be expended. Restricted: used for operations but limited by the donors or external agency to specific uses.

Loan Funds: Account for resources available for loans to students. Typically operate on a revolving basis – principal and interest paid by one borrower may be lent to others.

Endowment & Investment Funds: Endowment and investment funds are invested for the purpose of producing revenue and generally have restrictions related to principal or use. Categories of endowment and similar funds: True Endowment – donor has specified that the principal cannot be spent. Quasi Endowment: Both the principal and income may be used by the department or Board of Regents. Donor restrictions are followed.

Plant Funds: Plant funds are generally used for one of four purposes: Acquisition of long-lived assets for institutional purposes. Renewal and replacement of institutional properties. Debt-service charges and retirement of indebtedness. The cost of long-lived assets. Agency Funds: Agency funds are used to record funds held by the University for outside groups who have a close relationship with the University. Only the assets and liabilities are included in the financial statements of the University.

What do we do with this information?
Segregating these resources into separate fund groups allows the University to compile accurate financial statements which illustrate how the University meets its mission of Instruction, Research and Public Service. Monitor resources and expenditures to ensure compliance with donor or external agency restrictions. Provides management with data to evaluate organizational performance.

Who uses the data? Parents & Students Accrediting Agencies Donors
Rating Agencies State of MN Investors

Fund Transfers Fund transfers are resource or cost transfers between or amongst funds. Transfers may occur between funds or within a fund. Transfers must adhere to: University policy Donor restrictions Department or College requirements

Why does it matter? Donor restrictions must always be followed.
Fund transfers crossing between restricted and unrestricted should be avoided, if possible. Fund transfers that occur can “get lost” in the new fund when mingled with existing funds making reporting on accountability difficult or impossible. Donor gives money for basketballs

General Accounting Information
Fiscal year Reporting time-frames for organizations are either calendar year (Dec 31) or fiscal year. A fiscal year can be any period during the year. The University’s fiscal year is July 1 - June 30. The University’s financial statements are prepared as of June 30.

Accounting Periods Accounting period refers to a month within the fiscal year. The University uses the following accounting periods: Period 0 is used for beginning balances for assets, liabilities and net position. Periods 1-12 represent months July - June. Used by academic and central departments to record financial transactions. Adjusting Periods: 913 is used by academic and central departments during the year-end process to make adjustments after Period 12 has closed. 914, 915, 921, 922, 923 are used by Accounting Services to make financial statement adjustments at the University level by campus.

University Financial Statements
The University’s Annual Report is prepared annually and includes financial statements, notes, and a summary of significant accounting policies for the University. There are three primary financial statements in the annual report: The Statement of Revenues, Expenses & Changes in Net Position (Income Statement) The Statement of Net Position (Balance Sheet) The Statement of Cash Flows

The Statement of Net Position (Balance Sheet)
Reports the University’s assets, liabilities & net position. Assets: something the University owns that is expected to provide a benefit in the future. Cash Capital Assets

The Statement of Net Position (Balance Sheet)
Liabilities: are claims on the University’s resources. Accounts Payable Long-term Debt

Net Position Unrestricted Restricted Expendable
Restricted nonexpendable Invested in Capital Assets

Color of Money Net position represents the wealth of the University, however not all money is unrestricted and can be spent as the University wants. Another way to look at the various funds is a concept called the “Color of Money” where the colors are represented as Green, Yellow and Red, where Green has the least external constraints and Red has the most. Current funds would be represented as follows: Green: Unrestricted funds Yellow: Restricted expendable funds Red: Restricted nonexpendable funds

Chartfield Values Fund – as discussed above
DeptID – identifies the unit responsible for financial activity Program: alpha/numeric characters that describe the nature of the activity (research, instruction). Project – identifies sponsored projects and select non-sponsored transactions Chartfield 1, Chartfield 2, FinEmplID – Optional values

Chartfield Values Account – 6 digit number that identifies the nature of the transaction (asset, revenue, etc.) Smart-coding where the first digit identifies the category of the account: 1 = Assets 2 = Liabilities 3 = Net Position 4 & 5 = Revenues 6 = Transfers 7 & 8 = Expenses 9 = Statistical accounts

Why does it matter which value is used?
the account determines which category the transaction is reported in the University’s financial statements (assets, revenues, etc.) within each category, the account determines the type of activity Example: Expenses: salaries, depreciation, supplies

Encumbrances Used to reflect future commitments in the accounting system in order to prevent overspending. Example: A purchase order is issued for supplies. An encumbrance is created to show future spending. Managers can review reports to see expenses that have been incurred OR committed. When the University is invoiced for the supplies, the invoice is vouchered in PeopleSoft. This voucher records the liability (Accounts Payable) of the University and the encumbrance is reversed.

FUNCTION, why is it so important?
Terri Hall Sherrie Kutzler

What exactly is function?

Multiple Choice... A) Method of grouping expenses according to their purpose, which indicates the “why” rather than “what” was purchased.

B) Attribute attached to a program or project code value.

C) Another way of illustrating how you feel when you are “function”ing well...

D) Some of the above.

The Answer Is... D) Some of the above.
A) Method of grouping expenses according to their purpose, which indicates the “why” rather than “what” was purchased. B) Attribute attached to a program or project code value.

Where did this whole concept and model originate?

What are the actual functions?

Instruction

Research

Public Service

Academic Support

Student Services

Institutional Support

Auxiliary Enterprises

Operation & Maintenance of Plant

Scholarships & Fellowships

Where do I find function?

Why should you care about function so much?

Multiple Choice... A) I do care by ensuring that my transactions always get recorded the same way over and over again.

B) Accounting Services has no sense of humor.

C) It helps tell the University’s story as to how expenses are reported within the University’s financial statements and facilitates other financial related reporting within the University.

The Answer Is... C) It helps tell the University’s story as to how expenses are reported with the University’s financial statements and facilitates other financial related reporting within the University.

Other Reporting & Consumers of this Information
Reporting to External Entities Internal Reporting Constituents

How does it relate to this woman?

#UMNProud

BREAK! Please be back and ready to go by 10:15

Reconciling Sherrie Kutzler

What is Reconciling Reconciliation, verification and substantiation are essential for an effective internal control environment to ensure that: the information transmitted to, contained in, and reported from the University’s financial systems is accurate, complete and recorded in a timely manner the information can be relied upon for making financial and administrative decisions; and departments can identify and quickly report fraud, theft, compliance violations, and other irregularities to the appropriate authorities.

Why do we reconcile accounts?
Reconciliations can be used to answer flux/variance questions during the financial reporting process and throughout the year Reconciliations can be used to monitor spending Reconciliations must be completed timely – monthly is recommended

Reconciliation Terms There are several terms related to reconciling an account: Reconciliation – the process of comparing information in two or more systems, analyzing differences & making corrections Review & Verification – the process of examining financial information at a high level for accuracy & reasonableness. Further analysis may be required Analysis – the process of evaluating & interpreting financial information by breaking the whole into parts Substantiation – The process of corroborating or confirming financial information

Examples Reconciliation: Review: Analysis: Verification:
Reconciling your checkbook to your bank statement Review: Review paycheck to ensure net amount is correct Analysis: Your pay statement is different than you expected Verification: You worked 8 hours of overtime in the last payperiod Substantiation: You have received a 3% annual increase

The Reconciliation is complete !

AR/Billing Q&A David Laden And a panel of AR/Billing experts

Payroll Accounting Guess who…Sherrie Kutzler!

Retros Salary adjustments entered into HRMS to move salary expenses
Why can’t a journal entry be done instead of a Retro? Financial chartstring data in HRMS will be different than G/L Reports that are generated from HRMS will not match G/L reports Analysis and reconciliation would be difficult due to systems with different information

Default Program Values
23000 – Departmental Default Maintained by the departments Used in Departmental funding chartstring Used when no funding has been established for a position pool, position or appointment Used by departments to identify errors 21853 – Central Default Maintained by Central System generated transactions PS inherits Fund, DeptID and Account

Moving Expenses in the Default Values
Program and have the Institutional Support function Need to be recorded to the correct function Retros are processed by Departments to move the expense to the correct chartstring

LUNCH! Take your ticket to the lunch area, exchange it for a box lunch + beverage, and be back here by 11:45 for The Color of Money, presented by Mike Volna

Colors of Money Long-term Financial Sustainability of the University of Minnesota FSUN General Membership Meeting September 12, 2017

Context of Public Higher Education Funding National – Regional

72 Source: State Higher Education Finance (SHEF) FY15; SHEEO

Midwest states’ spending per capita on higher education: 1961-2017
73 Source: Grapevine Compilation of State Fiscal Support for Higher Education,

State support for higher education per $1,000 of personal income
The Changing Landscape State support for higher education per $1,000 of personal income $10.09 $5.79 $5.41 $5.87 $4.10 $6.13 $5.43 $4.28 $4.44 $2.11 Over $10.00 $5.00 to $10.00 $0.00 to $5.00 US average excluding Illinois: $5.40 Notes: Illinois figure reflects FY17 appropriations as of December, 2016 Source: Grapevine 74 Royall & Company Slide V-3 Higher Education’s Landscape 74

Minnesota’s Funding of Public Higher Education

State of Minnesota Spending on Higher Education Per Capita: Rank among all US states
From the mid-1970s through 2003, Minnesota was consistently in the top 10 states for spending per capita on higher education. Since 2003, Minnesota has remained in the top half of states for spending per capita, but has fallen as low as 25th before rebounding in the biennium. 76 Source: Grapevine Compilation of State Fiscal Support for Higher Education,

State of Minnesota Spending on Higher Education 1961-2017
Constant 2017 Dollars (CPI adjusted) 17% decrease in real dollars from 2002 high point $1,858 M $1,543 M 77 Source: Grapevine Compilation of State Fiscal Support for Higher Education,

(unadjusted for inflation)
University of Minnesota and MN State FY2001 – FY2017 General Fund Appropriations and Transfers* (unadjusted for inflation) *Excludes Cigarette Tax and MnCare for U of MN – includes nonrecurring project appropriations Source – Minnesota Management and Budget 78

University of Minnesota and MN State FY1990 – FY2017 Trends in State Funding - % of State General Fund Over Time UofMN=6.82% MNST=3.19% MNST=6.56% Higher Education Total* = 14.54% UofMN=2.97% This is not adjusted for inflation. In nominal $ Appropriations MNState = $421,200 $673,516 Uof MN = $437,712 $629,049 (w/transfer from DEED) MMB includes “transfer” in their numbers, which we do not – they are rare, but in 2017 a one-time $2.6m appropriation was made to the Dept. of Employment & Econ Dev for “transfer” to the University – for a MnDRIVE related project at UMD. That is included in MMB’s number. It doesn’t change the %s in the chart. Higher Education Total* = 7.35% *Higher Education Total includes the two systems plus the Mayo Medical School (.01% of GF in 2017) and the Office of Higher Education with the state grant program (1.2% of GF in 2017). 79 Source: Minnesota Management and Budget

Types of Revenue in Public Higher Education

Current Funds – “Not All Money is Green”
Fees, ICR, Sales & Services, Clinical Income, Central Reserves, Unrestricted Gifts State Specials, Federal Appropriations, Restricted Gifts & Endowment Income Generates ICR Availability Varies by Unit Charges to “the public” for services Sponsored Awards State O&M Appropriation and Tuition Contributes to Support Operations Auxiliary Self Supporting Directed to Specific Areas or Programs Research & Public Service Grants Instruction Research Public Service Housing Food Service Parking Books Athletics Donor or Gov’t Directed Purposes Direct Costs Only – Budgets Approved by Sponsors Support Student Services, Facilities, Libraries, Research Infrastructure, Leadership, Finance, HR, Public Safety, Compliance, etc. Least Externally Constrained Most Externally Constrained 81

University of Minnesota Revenue Sources By Fund Category-FY17: $3
University of Minnesota Revenue Sources By Fund Category-FY17: $3.5 Billion (excludes internal sales) Sponsored Restricted to Purpose or Units (Gifts, Endowment Earnings, State Special and Federal Appropriations, Non-Sponsored Grants & Contracts) O&M Appropriation and Tuition Auxiliaries Misc. Unrestricted – Differentially Available to Units Based on Ability to Generate (ICR, Fees, Sales, Clinical Income, etc.) 82

University of Minnesota Endowment
University of MN Endowment Totals by Fiscal Year A B C Consolidated Total Endowment Fund (CEF) UMF/MMF Endowments Pool Totals by FY (A + B) FY07 1,169,388 1,580,360 2,749,748 FY08 1,128,309 1,475,576 2,603,885 FY09 814,865 1,256,067 2,070,932 FY10 838,964 1,376,952 2,215,916 FY11 968,300 1,606,821 2,575,121 FY12 970,593 1,586,054 2,556,647 FY13 1,075,466 1,782,071 2,857,537 FY14 1,276,888 2,017,184 3,294,072 FY15 1,293,232 2,077,855 3,371,087 FY16 1,308,310 2,087,582 3,395,892 Source: University of MN Audited Financial Statements 83

Revenue Shift in Operations & Maintenance (O&M)
Historic Change

Trends in Tuition & State Funds
Trends in Tuition & State Funds* to 2017 Growth Constrained in Last Decade Since FY08 – average annual growth in these two sources combined = 1.8% *Includes Cigarette Tax and MnCare – excludes nonrecurring project appropriations 85

Declining State Investment Drives Tuition Increases
State of Minnesota investment & University of Minnesota tuition revenue per degree seeking student (constant 1997 dollars) 30% 58% 70% This one in in 1997 dollars, using HEPI as the inflator. Other choices are 2013 dollars, and using CPI. They all tell basically the same story. We went from 70% state/30% tuition, to 40% state/60% tuition on a real dollar basis. 1997 = $15,394 total - $10,844 (70%) from the state; $4,550 (30%) from tuition 2013 = $13,556 total - $5,505 (41%) from the state; $8,051 (59%) from tuition 42% Inflation index: Higher Education Price Index Source: Commonfund, 86

How We Spend Our Unrestricted Funds (O&M)
By Major Mission

Use of O&M for Mission The results of the last Cost of Mission analysis completed by the Office of Budget and Finance for FY14 showed the following distribution to Mission Activities: Appropriation Tuition 12% to Student Aid 7% to Student Aid 1% to Public Serv. 24% to Direct and Overhead Costs of Instruction 2% to Direct and Overhead Costs of Research 4% to Overhead Costs Of Auxiliaries 14% to Direct and Overhead Costs of Public Service 90% to Direct and Overhead Costs of Instruction 47% to Direct and Overhead Costs of Research 88

Distribution of O&M Appropriation to Mission FY14 – Unit Level Examples
Veterinary Medicine TC-Liberal Arts UMD 12% 35% 33% 37% 38% 43% 51% 7% 2% 4% 17% 21% Instruction Research Public Service Auxiliary Support Student Aid 89

Declining State Investment Drives Tuition Increases
State of Minnesota investment & University of Minnesota tuition revenue per degree seeking student (constant 1997 dollars) 30% 58% 70% This one in in 1997 dollars, using HEPI as the inflator. Other choices are 2013 dollars, and using CPI. They all tell basically the same story. We went from 70% state/30% tuition, to 40% state/60% tuition on a real dollar basis. 1997 = $15,394 total - $10,844 (70%) from the state; $4,550 (30%) from tuition 2013 = $13,556 total - $5,505 (41%) from the state; $8,051 (59%) from tuition 42% Inflation index: Higher Education Price Index Source: Commonfund, 90

Student movement among reciprocity state / Fall 2014
91

Implications and Opportunities

Implications of a More “Tuition Dependent” U
Recurring enrollment contingency funds/hedges Focus on enrollment System campuses Programs with flat or declining demand curves 93

Opportunities Targeted revenue growth potential in NRNR, tuition differentials Brand and reputation to pursue new degree offerings in professional masters and other demand areas Location ideal for expanded corporate relationships in TC, Duluth, and Rochester Increase system campus/TC partnerships to serve the state’s needs 94

Lunch Clean-Up! Please be back by 12:30 for the next presentation

Purchasing, Suppliers, & Requisition Basics
Not Sherrie Kutzler! Kristen Berning

We’ll Cover These Basics
When can you purchase? Who can you purchase from? How do I create a requisition/PO?

Purchasing Fundamentals
Purchasing is intentional and planned Employees must be good fiscal stewards Know how to buy and what the rules are If you don’t know, ask for help

“Our purchasing policies end up being a lot of bull
“Our purchasing policies end up being a lot of bull.” - comment from helpline caller

Allowable Allocable Available Reasonable

Allowable Can you buy it according to: Resources:
U of MN policy and procedure State and federal laws Sponsored guidelines Resources: Policy Library: policy.umn.edu The sponsor’s guidelines

Allocable Can anyone make a direct connection that this purchase supports and advances our mission? Would the public perceive this as someone personally benefiting from it? Justification and documentation are key because allowable purchases are not always allocable.

Available Was the purchase intentionally budgeted for?
Help your team understand that just because there’s money doesn’t mean that we can spend it however we want. Resources: UM Reporting Center Approved sponsored project’s budget

Reasonable Does it pass the public “sniff” test?
Given the circumstances, was it within the fair market value price range? Don’t purchase it if a stakeholder with modest means would view it as: Elaborate or over-priced Wasteful or unnecessary

What Does Reasonable Price Really Mean?

Real Costs of Every Purchase
Think beyond the sticker price. Discounts Freight Sustainability Shopping Data Entry Approvals Warranty Trust Service

Supplier Selection Basics

Supplier Selection 101 Use U Market first
If it is unavailable at U Market: Visit uwidecontracts.umn.edu Look internally within the University Visit the Targeted Business Directory at: Use a PO with a trusted supplier

Helpful Job Aid Making the Most Common Purchases”

Why Look at U Market First?
Pricing Benefits: Discounts on commonly bought supplies Free shipping on most items Alleviates Risks: Guaranteed prices from trusted suppliers After approvals, creates an EFS PO Saves Time

U Market By the Numbers Administrative time saved by:
One-stop shopping Data entry: no EFS receiving or vouchering FY17: 140,000 U Market POs created Last year, we saved $3.7 million Since it began, $12.2 million in savings

U Market’s Value on Campus

Supplier Selection Importance
As a public institution, it is expected that we give all suppliers a fair chance Auditors check for policy compliance When audited, the three key things auditors will look for are: How did you choose the supplier? Why did you choose the supplier? Did you document price reasonableness?

Purchasing Thresholds
Standard Services & Goods: $10,000-$49,999: UM 1819 Form $50,000+: Bid/RFP process facilitated by Purchasing Services Professional Services: U-Wides: Up to $250K without a bid/RFP

Requisition Basics: Are You Beginning With the End in Mind?

Preparers Have 3 Audiences
External System Internal Focus on the three key audiences: External (supplier needs to see it on PO) Internal (approver/auditors need to see it) System (req won’t save or errors occur)

POs are Legal Contracts
You want to get what you want to get Sets clear expectations Protects the University

Don’t Just Sign It or Attach It
Thoroughly review supplier quotes to ensure they do not have their own terms If a supplier requires a contract with their terms, then OGC approval is required Complete the OGC contract worksheet Once OGC review is complete, only the delegated signature authority may sign

Where the PO is going Your name is on the order Where the supplier sends the invoices (Cluster) Where the order is delivered U of MN’s standard terms Purchasing’s contact info

Will Suppliers Understand?

Faster, Better Requisitions

Requisition Settings

Settings Apply to All Lines

This is What it Does

Req Settings: Plain & Simple
Pluses Perfect if everything on your order has the same ChartFields, ship to, and category Minuses Can’t use split ChartFields Changes to default ship to do not work

Mass Change Feature recently added in EFS

Mass Change (Continued)

Mass Change: Plain & Simple
Similar features as requisition settings. Allows you to enter multiple ChartField distributions. Req settings does not. Use this for picking and choosing certain lines that you want the same ChartField strings. Req settings will only apply things to the entire requisition.

Supplier Search: Dispatch

Suppliers See Your Work
Specify what is being ordered. Don’t use internal terms like FY18. Don’t list supplier name as the Description. Boxed fields print on the PO. “Send to Supplier” checked = prints on the PO.

Location Codes Enter P, then the DeptID, then search.

Seeing a Location’s Address
Click <One Time Address>

Location Code Facts Don’t use multiple ship tos on the same order. Suppliers will send to line #1. Don’t manually change an address. It usually does not work, and delays order. Complete and send Location Code request form to

3 Things You Can Do to Help

75% of CPS Reqs are Entered Wrong
One comment box per attachment. SOW must have Send to Supplier checked twice. Internal forms must NOT have Send to Supplier checked. Do NOT combine all attachments in 1 file. See handout for instructions.

No Comment + Attachment = Buffer Error
If an attachment exists without an associated comment box, a “no matching buffer error” commonly occurs if a change order is created for that PO. These errors prevent approvers from seeing the PO. Purchasing and Module Support have to fix them.

Don’t Enter $0 Lines $0 lines cause encumbrance errors
$0 lines cause match exceptions $0 lines cause permanent budget errors Purchasing has to manually force close all $0 lines because EFS will not $0 lines cause a PO to not roll The eProcurement/Purchasing modules do not understand a $0. POs with $0 lines will be force closed at fiscal year end because they will not roll. The $0 line can also cause errors or encumbrance issues when a change order is made to the PO.

Correct Way to Enter “Free Stuff”
Pay $0.01 for it. Click <Send to Supplier> so it prints on the PO. Explain why it’s $0.01.

Don’t Enter Freight as a Line Item
Freight often is an estimate at the time the requisition is created EFS/U’s business process was designed to enter freight on the voucher Invoice amount is often different and a change order would need to be done Unnecessary administrative time spent

Correct Way to Enter Freight on Reqs
Enter the freight details in the requisition’s header-level comments on the Checkout – Review and Submit page. Type “Freight is estimated at $ and will be paid at the time of invoice.” If shipping internationally, type DB Schenker’s information. Click <Send to Supplier> so it prints on the PO. Explain why it’s $0.01.

Freight is Entered on the Voucher
The actual cost for freight will be listed on the invoice. The voucher specialist will enter the freight on the voucher. Do not create PO change orders for freight! Freight field on voucher

Receiving Still Kristen Berning

Quiz Approximately how many receipts were entered in Fiscal Year 2017?
69,500 80,800 90,000 111,500 D: 111,500

Why Do We Receive? Ensures internal controls: Data integrity
Risk Mitigation: Ensure suppliers are correctly paid Ensure suppliers are paid only for the goods/services the University actually received Separation of duties Note: we do NOT receive on U Market POs

Three-Way Matching Receipt Voucher PO

Rule #1: Receipt is Required
A receipt must be entered on a PO-related voucher or it will not pay. Assets must be received first, then vouchered. Receipts may be entered before the voucher or after the voucher is created. The best practice is to copy from a PO-related receipt.

Rule #2: Tolerance 10% or $100, whichever is greater.
Based on the PO’s header level (total) amount, not the difference between the receipt and the amount vouchered.

Rule #3: Unit of Measure A PO’s unit of measure controls its payment and receiving rules. Blanket orders and CPS POs using LOT default to dollar amount receiving. General POs default to quantity (not amount) type of receiving if using LOT.

What Matching Really Does
Step #1: Is there a receipt? It does NOT care how much the receipt is for. Step #2: Tolerance is verified. Step #3: Matching of all vouchers runs simultaneously—everything goes all at once.

The Silent Killer: Partial Receipts
We must strategically manage POs. Do not receive in full if it isn’t finished. Partial receipts happen when an imbalance exists between the amount received versus the amount vouchered. Every year, this causes around 1,000 POs to be closed at fiscal year-end. Even if it is off by a penny, it must close.

“What Happens Next?”

Once Receipt, Two Vouchers
Voucher specialist #1 enters a $500 voucher with invoice 451A Voucher specialist #2 enters a $500 voucher with invoice 451a Both vouchers were created on the same day and were NOT copied from a receipt One receipt is entered for $500

The Result Since they have unique invoice numbers and matching runs simultaneously, both vouchers would pay. This would cause a duplicate payment, meaning that the supplier is overpaid.

Two Receipts, Two Vouchers
Receipt A is entered for $800 Receipt B is entered for $850 Voucher A is entered for $800 Voucher B is entered for $850 Both vouchers were created on the same day and were NOT created by copying from a receipt

The Result Since matching happens simultaneously, both vouchers would match up to the first receipt. The second receipt would cause the PO to have a “partial receipt” and the PO will have a voucher to receipts imbalance making it ineligible to roll into the next fiscal year.

Miskeyed Voucher on $100K PO
Receipt Voucher Receipt is for $500. Voucher was entered for $5,000. Voucher was not created via the copy from receipt feature.

The Result The voucher would pay because:
There was a receipt. The payment was within the 10% tolerance. The tolerance is $10,000 so the difference from the receipt to voucher can be up to $10,000. The voucher would have stopped if it would have totaled $10,500. This results in an overpayment.

Different Amounts Receipt Voucher Receipt is for $4,012.23
Voucher is for $4, The voucher was not copied from a receipt.

The Result The voucher would pay because the discrepancy is well within tolerance and there is a receipt. An imbalance would exist between the vouchered amount and amount received. The nine cent imbalance would make the PO ineligible to roll into the next fiscal year.

Copy from PO Only Summary
Vouchers not copied from the PO’s receipts have much higher risks. Watch for multiple vouchers created for the same PO on the same day. Receipts should be associated. High dollar CPS and blankets need extra care. We suggest a special process to avoid them from closing at FYE.

Double-Checking Our Work
Receivers and voucher specialists need to function as a team. Their data should always mirror each other’s data. It is their responsibility to tell the other person to fix errors should they exist. Do not manipulate the receiving amount on the voucher entry page to bring it up or down. Instead, fix the receipt.

Two Receiving “What Ifs?”

What if it is Qty Vs. Amount?
If it’s wrong, the procurement specialist must change it on the PO before it is received/vouchered. Once a PO’s voucher is posted, the unit of measure can never be changed.

What if There is Freight?
Our business process is to enter the freight amount in the Freight field on the voucher. The freight amount will not impact the PO’s encumbrance. Charges will be prorated against all of the voucher’s ChartField strings.

What are Some Resources?

Magical PO Interface Page
EFS Navigation is: Accounts Payable>Review Accounts Payable Info>Interfaces>Purchase Order

Partial Receipts: Be Proactive
Run Query UM_DPO_YE_PARTIAL_RECEIPTS Locate and research items on list.

Resolving Receipt Issues
Receiver or procurement specialist can go to: Purchasing>Receipts>Add/Update Receipts page to correct the data entry error. Receipts can be edited as long as they do not: Fully tie to a posted voucher Go below what has been vouchered Pass the FYE cutoff

Questions & Thank You!

Paying Foreign Nationals
Amy Granlund And…Sherrie Kutzler!

IRS requirements When paying foreign nationals, proper documentation needs to be provided to determine if the University needs to withhold a portion of the payment.

What is proper documentation?
Supplier needs to provide a completed W-8 form so that supplier can be set up properly. If one time payment to supplier, need to understand what payment is for to determine if additional information is needed.

Goods or services? If goods or services are being provided by the supplier, need to know where these are being provided. US? Outside US?

Grossing up payments Payment cannot be grossed up.
The supplier can claim the withholding from the IRS after filing the proper documentation with them. The University is required to withhold unless the supplier can provide proper IRS documentation that clears them from withholding.

Payment options US Dollar check US Dollar wire
Foreign denominated wire Foreign denominated draft

Check payment This follows the normal check payment process and supplier maintenance steps for set-up. Payroll reviews vouchers being processed for foreign suppliers to determine if any withholding is necessary

Wire/Draft payment Supplier maintenance needs to set-up supplier
Wire/Draft form completed UM 1732 Foreign Payment Request Revised form as of August 2017

Revised Form UM 1732 Added questions related to whether goods or services were provided. These are critical for determining what the payment relates to and any potential tax implications.

Wire/Draft Process Submission/form received, printed and reviewed for proper approvals Form and supporting documentation provided to Payroll to determine any tax withholding Reviewed form returned and determination made of when payment should be made based on vendor terms

Wire/Draft Process, continued
Approved voucher(s) entered into PeopleSoft Wire/draft created in Wells Fargo platform Wire/draft approved in Wells Fargo Voucher marked as paid in PeopleSoft

Electronic Payment Formats
Amy Granlund

What are the electronic payment formats used by the University?

Three electronic payment formats
ACH (for domestic payment only) EFT (Virtual card payment) Wire (for foreign payment only)

ACH ACH stands for Automated Clearing House
An electronic network for financial transaction in the United States Vendors can request payment via ACH Terms are based on vendor set up The U does take discounts

EFT Credit card payment via virtual card
Supplier must be willing to pay merchant fee Supplier terms are set to Due Now Link provided to virtual card then supplier pulls payment

Wires These are utilized for foreign payments only when a supplier
will not accept a check or requires payment in a different currency than USD.

Factors to consider Will supplier pay merchant fee to get paid faster?
Is the request to set-up supplier on ACH valid? Where does the payment need to go to? US? Is the U missing out on potential discounts? What currency does the supplier require for payment?

BREAK! Please be back by 2:30

Hospitality & Special Expenses
Really, what’s hospitality/special expenses, and what’s just an excuse to try to get the U to pay for my lunch? Sue Paulson

Who pays the bill? Dinner and drinks

Let’s play Gail and Sue are recruiting Antonio
Gail, Sue and Antonio are work colleagues Antonio is collaborating with Gail and Sue on organizational effectiveness at Big 10 Universities

Who pays the bill? When is it okay? When is it not okay?
Donor relations activities Recruitment When is it not okay? Meeting with collaborators Each person pays for their own meal and may claim per diem if in travel status Multiple employees at same event who go out to eat together Business Meals Employees cannot be reimbursed for both a hospitality meal and pre diem for the same meal. Employees may not use this policy to circumvent travel per diem limits.

The real story NACUBO Conference in Minneapolis
Gail & Antonio from Wayne State and claimed per diem Sue was not in travel status

How much Not to exceed 20% (on total with tax)
Will be clarified in both the Hospitality and Special Expense and Travel policies The individual paying the bill has the discretion to tip up to 20% based on the experience.

Meetings with food Breakfast/Lunch/Refreshments

Let’s play Monthly department meeting, with a formal agenda and discussion topics Ad hoc committee working on a specific initiative meets every three weeks for nine month, with a formal agenda and discussion topics. Not allowed, the policy allows for occasional situations

Meetings Refreshments, accommodations and related incidental expenses must Have a business purpose Be occasional and modest in amount From the “Allowability Grid” Lunch Meetings/Refreshments To accompany business meetings and retreats, to conduct diversity business, staff and student development or recognition events, or community building

The real story Celebration to recognize the work of a committee that updated the Small and Targeted Fields in the CUFS VEND table in 2005!

Social Events

Let’s play David’s birthday Holiday party Jane’s retirement
Employee recognition event No Maybe Yes

Recognition/Reception Events
Significant events or achievements Employee recognition (service anniversaries, retirements) Official, ceremonial functions of the university (commencement, presidential inauguration) Student recognition Academic visitors Department social activities not allowed Holiday parties, birthdays, etc. From the “Allowability Grid” Recognition or Reception Events On University property, at staff residences, or at reasonably priced off-campus facilities For significant events or achievements

The real story Carnival Fundraiser to support the Ronald McDonald House Employee donations

Legal Definition of Gift
an intentional and gratuitous transfer of real or personal property by a donor with legal capacity who actually or constructively delivers the property to the donee with the intent of giving up dominion over the property and investing it in the donee who accepts it; broadly: a voluntary transfer of property without compensation

Employee Recognition Gifts
Employee – gift certificate Must not exceed $100 Must use allowable type of funds Employee – tangible personal property When intended for length of service, should be consistent with the University’s catalogue programs As recognition of performance Check the grid for what is taxable vs non-taxable!

Retirements Length of service with a minimum of 5 years
Tangible personal property Retirement award of personal property with cost not exceeding $400

Funding Source Budget Limitations
Most what we covered today related to hospitality is not allowed on sponsored projects Colleges/Department can limit Budget implications

Employee travel and expense reimbursements (including hospitality), and purchases of goods or services that could be perceived as personally benefitting an employee, must be approved by a person one level senior to the employee requesting reimbursement or initiating the purchase. One up approvals From the Administrative Policy: Financial Transaction Approvals and Routing on One-Up Approvals: Approval authority can be delegated by the original approver, however accountability cannot be delegated. Both the delegate and the original approver are accountable for any approvals completed.

Clarifications to the Hospitality & Special Expense Policy
Creation of a Business Expense Policy Comprehensive Review of Hospitality & Special Expense Policy

Resources Policies Traveling on University Business Hospitality & Other Special Expenses Hospitality Allowability Grid University Financial

UM Analytics Content Showcase
Sue Paulson Rob Howieson

UM Analytics Reports Converted and improved
Account Budget Status Transaction Detail Access via the Reporting Center Help documents What’s Next Chartfield String Budget Status Production rollout

Pre-Paid Debit Card Demo
Alicia Theisen

Objectives A reloadable prepaid debit card (PPDC) offers a faster and safer payment method. PPDC is a preferred alternative to AP checks, gift cards, petty cash and cash advance. Goals for solution Streamline Administration and Reduce Risk Ensure 1099 Compliance Reduce cost per payment

Greenphire - ClinCard Secure and safe payment method
In compliance with HIPAA & University policy Cards can be used in stores, online, or for cash withdrawal at a bank or ATM Cardholder fee if ATM is used, transactions in foreign currency or if the card has no activity for 3 (soon 6) months Currently No Fees to Departments

Gray branded custom card for U of M

Who Can use PPDC? Available to all departments and every campus
Examples? Study Participants, student recruitment, scenarios where you are buying a gift card or distributing cash

How do I request prepaid debit cards?
Departments will enter a Blanket Order Requisition into EFS (Supplier #: PPDC) No additional EFS access or training is required Req Preparer will attach a completed PPDC Study Form to the requisition – completed by a PI or study coordinator

Portal Appearance is based on the access granted
Study Coordinator: Register subjects, assign cards, and issue payments Approver: approves manual and travel payments Reporting: Run various reports on a per study basis

Business Process Enter and Approve Requisition Supplier #: PPDC
Department Enter and Approve Requisition Supplier #: PPDC Attach PPDC Study Form to Req Purchasing Set up in the Debit Card Portal Notifies Department Set up subjects and issue payments Enter Receipts and invoices Push invoice to cluster’s drawer in Perceptive Content Cluster / Voucher Specialist Complete a voucher by copying from receipt

To register a participant

Optional Appointment Reminder: Participant can opt in/out at any time for text and/or notifications

Requisition Tips Two potential line items Subject Stipends
Travel Reimbursements Total should equal the amount expected to pay out to all participants Description should be the study name or short summary of study

Prepaid.umn.edu Alicia Theisen Purchasing Services

FSUN@umn.edu z.umn.edu/fsun
Thank you! z.umn.edu/fsun

9/12/2017.

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