1. Basics of Accounting and Financial Management
September 4, 2018
Lindsay Smith, Business Manager, Office of Legal Affairs

2. Plan for Today OneSource Accounting vs. Budgeting
Public vs. Private Distinction
Reporting Standards for Universities
Accounting Basics
Budgeting Basics
Best Practices

3. OneSource Project Includes:
UGA Budget Management System (Hyperion) – went live January 2018
Budget Development for FY20 will be done in Budget Management System.
Be aware that Quarterly Budget Reviews are required by Departments. notifications will be sent regarding upcoming review deadlines.
UGA Financial Management System (Peoplesoft) – went live July 2018
This includes all the day-to-day financial transactions – payments to vendors, reimbursements, etc.
OneUSG Connect– go –live December 16, 2018
HCM – Human Capitol Management System
Includes payroll, leave management, benefits, position management, faculty appointments, etc.
Be aware that until January, some legacy systems are still in use for particular transactions including personnels.
Also be aware of the upcoming blackout period for postings in UGAJobs.
November 14th – December 15th.

4. Accounting v. Budgeting Day-to-Day v. Long Term
Day-to-Day transactions
Monthly Reconciliations
Quarterly Budget Reviews
Budgeting
Long-Term Planning
Multi-Year Goals
Purchasing Planning
Hirings, Promotions, Retirements

5. Distinguishing the Public Interest
ACCOUNTABILITY
Being obliged to explain one’s actions, to justify what one does.
The requirement for government to answer to its citizenry.
GASB – The obligation to report whether the government operated within appropriate legal constraints and whether resources were used efficiently, economically, and effectively.
The Financial Accounting Standards Board (FASB) recognizes three distinguishing characteristics of governmental and not-for-profit organizations:
Receives significant amount of resources from providers that do not expect to receive repayment or economic benefits proportionate to the resources provided.
Operating purposes are other than to provide goods or services at a profit.
Absence of defined ownership interests that can be sold, transferred, or redeemed in the event of the liquidation of the organization.

6. Distinguishing the Public Interest
For-Profit Organizations
Efficiency and Measurement of Profits and Losses
Focus on Economic Flow of Resources
Accrual Basis of Accounting
Not-For-Profit and Governmental Organizations
Accountability to determine most Efficient, Effective, and Equitable use of public resources.
Governments report on both Economic Flow of Resources and Current Flow of Financial Resources
Both Accrual and Modified Accrual Basis of Accounting

7. Financial reporting standards
Standards Established by:
Financial Accounting Standards Board – FASB
Governmental Accounting Standards Board – GASB
Both are designated as authoritative bodies to establish Generally Accepted Accounting Principles – GAAP
Until 1999 GASB only required modified accrual accounting and fund reporting for Public Colleges and Universities.
No accounting for long-term liabilities or assets

8. Accounting for Public Colleges and Universities
Considered Special Purpose Governments
GASB allows Public Universities to use only the accrual basis for reporting.
Georgia law requires that all state agencies also report using the modified accrual basis.
UGA’s annual financial statements include both accrual (GAAP Basis) and modified accrual accounting (Non-GAAP Basis).

9. UGA’s Annual Financial report

10. Fundamental Accounting Equation
Assets = Liabilities + Equity
Assets = Resources Available
Cash, claims to cash (receivables), investments, land, equipment, buildings
Liabilities = Amounts Owed
Accounts payable, salaries payable, debt service, deferred revenue
Equity = Difference of assets and liabilities as they accumulate over time

11. Accrual Basis of Accounting
Assets = Liabilities + Net Assets
Net Assets = Revenues – Expenses
Revenues are recorded when earned and expenses are recorded when consumed.
Revenues = inflow of economic resources
Expenses = charges incurred for operation, maintenance, interest
Financial Statements include Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, and Statement of Cash Flows
These statements account for long-term liabilities and assets.

12. UGA’s Financial Statements

13. Modified Accrual Basis of Accounting
Assets = Liabilities + Fund Balance
Fund Balance = Revenues – Expenditures
Revenues are recorded when measurable and available.
Fund Balance = Difference between governmental fund assets and liabilities – the fund equity
Expenditures = recorded when liabilities are incurred pursuant to authority given in an appropriation
Financial Statements include the Balance Sheet and Statement of Revenues, Expenditures, and changes in Fund Balances
These statements show current payments to liabilities and acquired assets for the reporting period. They are a snapshot of a particular moment in time.

14. UGA’s Financial statements

15. Fund Accounting UGA Accounting is Fund Accounting
Fund = Accounting entity with a self-balancing set of accounts…segregated for the purpose of carrying on specific activities in accordance with special regulations, restrictions, or limitations.
In other words, where is the $ coming from?
State Appropriations
Tuition
Departmental Sales and Service
Grants
Endowments
Private Donors
Chart of Accounts Reference -

16. Expenditures How is $ spent at UGA?
Purchase Order
P-Card
Pre-approval required for purchases over $1k
For purchases under $1k it must meet one of the following conditions:
Un-Planned
Non-Routine
Urgent
Direct Charge
Purchase Request (Vendor Payments)– previously Check Request
Expense Request – Reimbursements to People
Foundation Reimbursements
Each method of purchasing has different rules of use.
Each method of purchasing may follow unique approval paths within a Department or Unit.
Purchases over $10k require multiple quotes.
Purchases over $25k require a competitive bidding process.

17. What is an Encumbrance?
Account used to record the estimated amount of purchase orders, contracts, or salary commitments chargeable to an appropriation.
Unique to modified accrual basis of accounting.
Basically, funds are set aside and deducted from your balance until they become an expenditure.
Encumbrances may be released when you know the expenditure will not be made.

18. So What?
Use these terms to inform how you analyze financial information.
Financial Statements
Quarterly and Monthly reports and reconciliations
ACCOUNTABILITY
Do you understand the information in your reports?
Your signature on monthly reconciliations, p-card reconciliations, etc. indicates your review and approval.
Where is the connection between your day-to-day business functions and your department/unit’s mission and purpose?
And the University’s mission and purpose?

19. UGA’s Budget Process University’s Fiscal year follows the State’s
July 1st – June 30th of each year
Budget Planning
Officially begins in January each year, but departments work on budgets year round.
Units are required to submit planning documents for the coming fiscal year.
Includes budgetary requests by units and planning for budget cuts, increases, and redirection of funds.
Fiscal Year end documents and reminders for year-end budget transactions are sent in February each year.

20. UGA’s Budget Process Budget Development
Typically takes place in April when UGA is made aware of state appropriations.
Quick turnaround time – be prepared!
Units allocate funds for the coming fiscal year, including any budget cuts, salary pool increases, etc.
Funds allocated during budget development reflect the starting budget for the coming fiscal year.

21. Budgeting as a Strategic Tool
Large vs. Small Budgets
Flexibility
Changes to sources of funding
Personnel Changes during the Year
Base Budget for next Fiscal Year will be based on current budget.
Current budget may not reflect personnel changes during the fiscal year.
Salary Savings
Consider potential promotions, reclassifications, retirements, temporary workers, and terminations.

22. A few Best Practices Be Proactive and Don’t Make Assumptions
Internal Audit is a Valuable Resource
Separation of Duties
Encourage Cross-Training
Signature Authority