1. Fiscal Year 2017 Accrual Process Webinar 1:30pm to 2:15 pm: Thursday, June 8, 2017
Presented by
Karen Morimoto, Director of General Accounting and Loan Collection
Welcome to the FY 2017 Accrual Process Webinar.

2. Agenda FY2017 Year End Close Key Milestones
Types of Accounting Accruals/Adjustments
Fiscal Administrator Initiated Adjustments
Central Offices Initiated Adjustments
Submission of JV Worksheets
In this presentation, I will cover the following items:
FY 2017 year end close key milestones
Types of accounting accruals and adjustments that include:
Fiscal Administrator initiated adjustments, and
Central Office initiated adjustments
I will also review the process for submitting accrual and adjustment year end JV worksheets.

3. FY2017 Year End Close Key Milestones
Changes from Prior year and key items
KFS will be disabled on 7/1 at 7pm
6/23/2017 – Last day for FA to approve salary transfer (ST) eDocs, including clean up of “clearing” (continuation) accounts
PCDOs with create dates through 6/14/2017 will be system approved at 8pm on 6/20/2017
Accounts Payable accrual will be based on vendor and sub-recipient invoices paid through 8/4 with service dates on or prior to 6/30/2017 in the UH KFS AP system (special handling for Bookstore MIT and construction invoices)
Record A/P over $100,000 not paid by 8/4/2017 via L-11 JV Worksheet
There will be no De Minimis for recording construction invoices
Please note the following changes and key reminders:
KFS will be disabled on 7/1 at 7pm.
6/23/2017 will be the last day for FA to approve salary transfer eDocs, including clean up of “clearing” continuation accounts.
PCDOs with create dates through 6/14/2017 will be system approved at 8pm on 6/20/2017
The accounts payable accrual will be based on vendor and sub-recipient invoices paid between 7/1 and 8/4 with service dates on or prior to 6/30/2017 in the KFS AP system.
There will be special handling (manual accruals) for Bookstore MIT and construction invoices.
Record A/P invoices over $100,000 not paid by 8/4/2017 via an L-11 JV worksheet.
There will be no de minimis for recording construction related invoices.

4. KFS Service Date Requirement
What
Provide accurate service date information regardless of when a bill is being paid
If you have questions on the appropriate service date to use, please your question to hawaii.edu
Why
Improve AP information in KFS
Throughout the closing process, analytics are performed on payment data
Incorrect service date information impacts the effectiveness of the analysis
Enhance completeness and timeliness of AP accruals
Please be sure to always provide accurate service date information on DVs and PREQs. Throughout the closing process, analytics are performed on payment data so that unrecorded liabilities can be identified. Incorrect service date information can lead to audit comments for unrecorded liabilities.

5. Service Dates SERVICE DATE SCENARIO OTHER ACTIONS
Date to enter in “Goods/Services Rec’d” date field
OTHER ACTIONS 1
Service period entirely within FY 2017
Last day of service 2
Majority of service in FY 2017
06/30/2017 3
Majority of service in FY 2018 4
Goods received
Actual date received 5
Payment for future services 6
Utility bills paid using DV when service period includes FY 2017 and FY 2018
06/30/2017 and last day of service
Pro-rate amounts on separate accounting lines. Attach pro-ration worksheet to DV 7
Utility bills paid using PREQ when service period includes FY 2017 and FY 2018
Attach pro-ration worksheet to PREQ
This matrix provides guidance on the appropriate service date to use on your DV or PREQ.

6. FY2017 Year End Close Key Milestones
Reminders
Funds for fiscal year 2018 must not be encumbered or expended prior to 7/1/2017
No General fund or Payroll encumbrances
Ask vendors and sub-recipients to submit outstanding invoices as soon as possible
New fiscal year will open in KFS on July 7, 2017
KFS will not be available from 7/2 through 7/6 during the balance roll forward process
Please remember:
Funds for FY 2018 must not be encumbered or expended prior to 7/1/2017.
General Fund and Payroll encumbrances are not allowed.
To improve our accounts payable information, ask vendors and sub-recipients to submit outstanding invoices for FY 2017 services as soon as possible so that they can be paid by 8/4.
The new fiscal year is expected to open in KFS on July 7, KFS will not be available from 7/2 through 7/6 during the balance roll forward process.

7. Reminder
Fiscal Year 2017 Year End Closing Schedule has been posted on the FMO website for your reference:
The 2017 Fiscal year end closing schedule can be found on the FMO website with the following link.

8. Why We Have to Record Accounting Accruals
The accounting matching principle and concept is the primary driver for the recording of accounting accruals and adjustments for our fiscal year end financial statements.

9. Matching Principle
Requires an entity to match revenues with related expenses so profitability during a specified time interval is accurately stated
Revenues are recognized when earned
Expenses are recognized when incurred
Examples
#1 - Fall 2018 tuition and fee revenue should match the salary and other related expenses incurred to support Fall 2018 semester. Therefore, we re-allocate
the fall revenue to fiscal year 2018 because the semester has not started
the accounts receivable to fiscal year 2018 because the amount is not yet due from students
#2 – Goods or services have been received but have not been paid for by the end of the fiscal year
#3 – Inventories (e.g. supplies) have been paid for but have not been consumed
The principle requires the reporting entity (UH) to match revenues with related expenses so that profitability during the fiscal year is accurately stated. As such:
Revenues are recognized when earned and
Expenses are recognized when incurred.
For example:
Although students may register and pay for fall classes before our fiscal year end, the revenue can only be recognized in the next fiscal year. Therefore, accrual adjustments are recorded to properly state tuition and fee revenue as well as accounts receivable from students.
If goods or services have been received but not paid for as of fiscal year end, we record accounts payable liabilities.
For supplies inventories purchased but not used or sold by June 30, 2017, we record inventory assets.

10. Types of Accounting Accruals/Adjustments
Receivables
Payables
Unearned revenue
Prepaid expenses
Inventories
Eliminations
These are the major types of accounting accruals and adjustments that need to be recorded for fiscal year end.
We record or adjust receivable balances for revenues earned but not yet collected.
We record payables for goods or services received but not yet paid for.
We record unearned revenue for payments received for services not yet provided.
We record prepaid expenses for future services paid for.
We record inventories for items that will be consumed or sold in the future.
We record elimination entries for goods and services provided between university departments.

11. Fiscal Administrator Initiated Adjustments
Accounts Receivable (non-KFS A/R)
Allowance for Doubtful Accounts (non-KFS A/R)
Inventory
Prepaid Expenses
Accrued Payroll
Unearned Revenue
Certain Accounts Payable
Tuition and Housing waivers
RCUH G,R,S Account Adjustments
The following are fiscal administrator initiated adjustments. I will cover them individually by type of JV worksheet that the adjustment will need to be recorded on. JV worksheets are available on the FMO website. Please be sure to access the current worksheet. Do not use worksheets saved from prior years.

12. Accounting entries are provided in the GALC template
Fiscal Administrator Initiated Adjustments Accounts Receivable (non-Banner, non-KFS A/R)
A-01 A/R-Revenue
Revenue earned on or prior to June 30, 2017
De Minimis: Recording of amounts >$2,500
A-02 A/R-G Fund Expense Reimbursement
Reimbursement of General Fund expenditures on or prior to June 30, 2017
A-03 A/R-Reimbursement of Expenses (REX)
Services provided on or prior to June 30, 2017
Do not include inter-departmental allocations or G fund accounts
A-04 Allowance for Doubtful Accounts
All A/R balances aged over 180 days
A-10 ST Loan Receivable Allowance
All L/R balances aged over 180 days
This group of Accounts Receivable accruals is for non-Banner and non-KFS A/R.
A-01 A/R Revenue is used to record revenue earned on or prior to June 30, Amounts less than $2,500 do not need to be recorded.
A-02 is used to record reimbursements of General Fund Expenditures paid on or prior to June 30, 2017.
A-03 is used to record Reimbursement of Expenses for services provided on or prior to June 30, Do not record inter-departmental allocations or G fund accounts. Amounts less that $2,500 do not need to be recorded.
A-04 is used to record an Allowance for Doubtful Accounts for all A/R balances that are aged over 180 days.
A-10 is used to record an Allowance for Doubtful Accounts on short term loan receivable balances aged over 180 days.
Accounting entries are provided in the GALC template

13. Accounting entries are provided in the GALC template
Fiscal Administrator Initiated Adjustments Inventory, Prepaid Expenses, Accrued Payroll
A-08 Inventory – Merchandise/Supplies
Items that will be charged to others as part of departmental operations
Attach a detail listing of inventory on hand at June 30, 2017
De Minimis: Recording of amounts >$2,500
A-09 Prepaid Expense
Goods and services that were paid for but will be used in a fiscal period after June 30, 2017
L-02 Accrued Payroll
Employee services rendered on or before June 30, 2017 but not paid on the July 5 or 20, 2017 payroll
De Minimis: Recording of payments to individuals >$2,500
A-08 is used to record merchandise or supplies inventories. This would be for items that will be charged to others as part of departmental operations vs items that will be consumed by the department. Be sure to attach a detail listing of the inventory on hand at June 30, Amounts less than $2,500 do not need to be recorded.
A-09 is used to record prepaid expenses. This would primarily be for services that were paid for but will be used in a fiscal period after June 30, Amounts less than $2,500 do not need to be recorded.
L-02 is used to record accrued payroll expenses for employee services rendered on or before June 30, 2017 and not paid on either the July 5 or July 20, 2017 payroll. Amounts less than $2,500 do not need to be recorded.
Accounting entries are provided in the GALC template

14. Fiscal Administrator Initiated Adjustments Unearned Revenue
L-03 Unearned Revenue (Non-Banner)
Payments received by June 30, 2017 for goods or services that will be rendered in a future fiscal period
If the revenue for services crosses fiscal years, the amount should be prorated and recorded in the appropriate fiscal year.
De Minimis: Recording of amounts >$2,500.
L-03 is used for recording non-Banner unearned revenue. This is for payments received by June 30, 2017 for good or services that will be rendered in a future fiscal period. If the service revenue crosses fiscal years, the amount should be prorated and recorded in the appropriate fiscal year. Amounts less than $2,500 do not need to be recorded.
Accounting entries are provided in the GALC template

15. Fiscal Administrator Initiated Adjustments Accounts Payable
L-11 Accounts Payable as of 6/30/2017 (Construction)
Amounts due to vendors for goods and services received through June 30, 2017
Include amounts owed on construction contracts, including retainage
Include projections if actual amounts are not available
L-11 Accounts Payable as of 6/30/2017 (Amounts >$100,000 paid after 8/4/2017)
De Minimis: Recording of amounts >$100,000
L-11 Accounts Payable (Construction) is used to record amounts due for construction goods or services received through June 30, Include amounts owed on construction contracts, including retainage. Please provide estimates if actual invoices are not available. Also, please note that construction includes contracts for:
Professional services for design, construction management, as well as repairs and maintenance such as painting and general repairs.
Please list retainage balances on separate lines and include retainage for contracts even if there was no activity during the fiscal year.
L-11 Accounts Payable for (single invoice) amounts greater than $100,000 paid after 8/4/ Include amounts due to vendors for goods and services received through June 30, 2017 but not paid for by 8/4. Please provide projections if actual invoices are not available. If you have questions regarding the threshold, please contact General Accounting.
Accounting entries are provided in the GALC template

16. Fiscal Administrator Initiated Adjustments Non-Banner Waivers
P-02 Non-Banner Student Tuition/Fee/Housing Discounts and Allowances (Waivers)
Attach detail list
De Minimis: Recording of amounts >$2,500
P-03 Non-Banner Employee Tuition/Fee/Housing Discounts and Allowances (Waivers)
P-05 Other Fee Waivers/Discounts
P-02 is for non-Banner student tuition, fees or housing discounts and allowances (waivers). Please attach a detail list and amounts less than $2,500 do not need to be recorded.
P-03 is for non-Banner employee tuition, fees or housing discounts and allowances (waivers). Attach a detail list and amounts less than $2,500 do not need to be recorded.
P-05 is for other fee waivers and discounts. Attach a detail list and amounts less than $2,500 do not need to be recorded.

17. Accounting entries are provided in the GALC template
Fiscal Administrator Initiated Adjustments RCUH G,R,S Account Adjustments
A-07 Due from RCUH
Unexpended balances of “7232” advances to RCUH as of June 30, 2017
Enter RCUH project number in Org Ref ID column
Attach detail list, support, RCUH BSR/BCR
L-07 Due to RCUH
Amounts due to RCUH for payments made by RCUH as of June 30, 2017
The final set of FA initiated adjustments are for RCUH G,R,S advance accounts.
A-07 is used to record unexpended balances of “7232” advances to RCUH as of June 30, Be sure to enter the RCUH project number in the Org Ref ID column and attach appropriate supporting documentation including detail lists, support and copies of the RCUH BSR/BCR.
L-07 is used to record amounts due to RCUH for payments made by RCUH as of June 30, Remember to enter the RCUH project number in the Org Ref ID column and attach appropriate supporting documentation.
Accounting entries are provided in the GALC template

18. Accounting entries are provided in the GALC template
Fiscal Administrator Initiated Adjustments RCUH G,R,S Account Adjustments Continued
P-01 RCUH Expense to Proper Object Code
Record expenditures made by RCUH prior to or on June 30, 2017 in the proper expense object code by reclassifying from object code 7232 RCUH EXPENSE/ADVANCE
Enter RCUH project number in Org Ref ID column
Attach detail list, support, RCUH BSR/BCR
For accounts that maintain inception to date balances, you will need to do a DI for the same reclassification in the new fiscal year (2018). Include the FY18 DI edoc number in the explanation field of the P-01 worksheet
P-01 is used to record expenditures made by RCUH prior to June 30, 2017 in the proper expense object code by reclassifying from object code “7232 RCUH EXPENSE/ADVANCE”
Enter the RCUH project number in the Org Ref ID column and attach supporting documentation such as detail list, support, copies of RCUH BSR/BCR.
For accounts that maintain inception to date balances, you will need to do a DI for the same reclassification in the new fiscal year (2018). Include the FY18 DI edoc number in the explanation field of the P-01 worksheet.
Accounting entries are provided in the GALC template

19. Central Offices Initiated Accruals/Adjustments
Accrued Payroll and Fringe Benefits
Accrued Vacation
KFS A/R Allowance for Doubtful Accounts
KFS FMIS A/R (8366) Allow for Doubtful Accts
Non Imposed Fringe Benefits
Internal Service Eliminations
Sponsored Projects Revenue Recognition
Banner Transaction Adjustments
The following are accruals and adjustments that are initiated by central offices.
We record accrued payroll and fringe benefits for amounts paid on the July 5 and July 20 payroll that are for service periods on or before June 30, 2017.
We record accrued vacation for balances earned on or before June 30, 2017.
We record KFS A/R and KFS FMIS A/R Allowance for Doubtful Accounts.
We record non-imposed fringe benefit expenses
We record internal service eliminations for goods and services provided between University departments.
Sponsored projects revenue recognition is recorded centrally,
As well as Banner future period transaction adjustments and allowance for doubtful accounts.

20. Submission of JV Worksheets
2017 Templates are posted to the FMO website
Sample tab provides requirements for completion of worksheet
Description: JV type code (i.e. A-01), FA code, JV description
Organization Document Number: JV type code (i.e. A-01)
Required fields and FA instructions noted in red type
Submit JV and supporting documentation to
Include JV type and FA # in the subject line (A-01 Revenue 036)
Note appropriate due dates
2017 templates are posted on the FMO website. Please be sure to use the current template and not one saved from prior years.

21. Sample tab provides requirements for completion of worksheet
Description: JV type code (i.e. A-01), FA code, JV description
Organization Document Number: JV type code (i.e. A-01)
Required fields and FA instructions noted in red type
Submit JV and supporting documentation to
Include JV type and FA # in the subject line (A-01 Revenue 036)
Note appropriate due dates on the 2017 year end closing schedule.

22. Capital Leases
Capital leases for equipment purchases require specific accounting for the equipment asset as well as the lease liability. Please review your lease agreements entered after June 30, If any one of the following conditions are met, please a copy of the lease agreement to
Ownership of the asset transfers to UH by the end of the lease term
The lease contains a bargain purchase option
The lease term is > 75% of the estimated economic life of the leased asset at the beginning of the lease term
The present value of the lease payments at the inception of the lease is > 90% of the fair value of the leased asset.

23. Thank You for attending this presentation