1. Understanding the Financial Statements
BA3
Understanding the Financial Statements

2. There are four areas to the financial statement
The Title Area
The Fund Summary Area
The Open Encumbrances Summary Area
There are four areas to the financial statement:
The title area
The fund summary area
The open encumbrances summary area
The current expenditures detail area
We will break each area down and fully explain the contents.
The Current Expenditures Detail Area

3. Area 1 is the title area
Let’s start with the title area.

4. This is the heading area of the financial statement.
This area describes the speedtype by providing pertinent information such as:
Organizational Unit (department) this speedtype belongs to,
Investigator responsible for the speedtype
Current Budget Period of the speedtype
Grant information (e.g., sponsor’s grant number and title of the grant)
Notes includes any stipulations or reminders for this particular speedtype

5. Next we will discuss the Fund Summary area.

6. Budget – Lists the total of the budget for this speedtype
Budget – Lists the total of the budget for this speedtype. All expenses are rolled up to the expense pools. For example: all salary account codes will roll up to the expense pool.
Expenditure Current – Lists expense roll-up totals. Detailed expenditures will be discussed in area 4.
Expenditures YTD - All expenses charged to this speedtype. For program speedtypes, this will be UofL’s fiscal year (July1 to June 30); grant speedtypes will be the accumulated total for all budget periods of this grant award.
Encumbrances Remaining – Roll-up of the encumbered expenses expected to be charged to this speedtype. Encumbrances will be discussed in further detail in area 3.
Uncommitted Balance - Amount available to spend that is not encumbered. If the speedtype is line item budgeted, the uncommitted balance is reflected on a per line basis and summed in the uncommitted balance total. If the speedtype is expense pool budgeted, the entire budgeted balance will remain on the operating expense line which will result in negative numbers in this column, however, the summed total is still the amount remaining open to spend.

7. Next we will discuss the Open Encumbrances Summary area.

8. For example:
Tracey Jones’ salary (account code ) is paid at a pay rate of $1, from to , which is a period of 12 months. 12 months multiplied by $1,290.95=$15,491.40
One month has been paid so the remaining encumbrance should be the pay rate multiplied by the 11 remaining months. 11 multiplied by $1, = $14,200.45
Payroll is always encumbered for the entire budget period.
Pay rate is the gross salary (total pay before taxes and fringe benefits) per pay period.
Original encumbrance is pay rate multiplied by number of pays to be charged to this speedtype.
Expenditures is total payroll expense to date in this budget period.
Encumbrance remaining is the original encumbrance minus expenditures.
To ensure the remaining encumbrance is correct, the pay rate multiplied by the amount of pays remaining in this budget period should equal the encumbrance remaining.

9. For example:
This PI has animal charges in the amount of $3, per month. We would encumber the amount of his IACUC protocol to be paid on this speedtype by entering an encumbrance of $3, multiplied by 12 months.
Each time the Research Resource Center bills this protocol on this speedtype, the amount will be deducted from the encumbrance until the budget period ends or the amount encumbered has been exhausted.
Anything can be encumbered for any amount of time.

10. “Auto-Encumbering” Codes
Examples of
“Auto-Encumbering” Codes

12. This slide shows the difference in what the PI would see if they look at University Reports verses looking at the Financial statement reflecting the encumbered amounts. In this example University Reports shows an uncommitted balance of $325,730.03, while the true balance of $62, is reflected in BA3.