Brown University's Year End Process Presented by: Controller’s Office, Purchasing & Cashiers’ Office

1. Brown University's Year End ProcessPresented by: Controller’s Office, Purchasing & Cashiers’ Office Kathleen A. Morrissey, Assistant Controller Mary Willis, Purchasing Agent John Haden, Accounts Payable Manager Jason A. Masi, Financial Operations Accountant Tracie A. Mederos, Cashiers’ Office Manager Christine G. Wood, Payroll Manager

2. Topics of Discussion • Year end process and your role in the close • Key dates for submitting items to our office related to: • Purchase requisitions & blanket orders • Accounts Payable and Travel Payments • Interdepartmental Invoices (IIs) • Salary reallocations • Payroll • Deposits • When you can expect ledgers and reports • Changes and key policies • Audience questions

3. What is going on: Nonpublic entities are increasingly being held to standards of public companies Focus on internal controls in place that reduce the risk of misstatement of financial results Lowering of bar of what is reported to Audit Committee What you can do: Be aware of accounting policies and procedures Fill in all information on forms submitted to administrative offices Attend trainings offered Establish adequate controls in your department Refer to Internal Audit website for more information Accounting Standards

4. Brown’s Fiscal Year - Timing and Deadlines • Brown’s fiscal year runs from July 1 to June 30 • Year End Close Memo - Can be found on the Controller’s Office Home Page http://www.brown.edu/Administration/Controllers_Office/accounting/fiscal/ • Specific year end deadlines are set in order to close the books and prepare the financial statements

5. Closing Timeframes Closings: • June 1st list (July 8th)– normal monthly close • June 2nd list (July 24th)– for corrections and last minute entries. • June 3rd list – to record reserve transfers and various closing entries initiated by Controller’s Office

6. Purchasing – Requisitions • Goods and/or Services – Friday, May 15, 2009 • All Goods & Services must be completed and received by June 30, 2009. No check with orders to bypass this rule will be processed. • Completed Date - June 30, 2009 Determines fiscal year • Allow Delivery Time!! Furniture, Vehicles and/or Equipment may take weeks for delivery and installation.

7. Purchasing – Requisitions (continued) • Allow process time for purchase orders • Contact person's) Name & Phone # • Documentation Requirements $10,000.00 and over Sole Source Memo

8. Blanket Orders • Reason for request • Note “vendor does not accept credit cards” • Required for line item • Brief description of products • Pricing discounts and/or agreement • Terms of Agreements • 07/01/09 – 06/30/10 or within fiscal year

9. Blanket Orders(continued) • Web requisitions • copy requisitions to resubmit • Dollar value • Based on last year’s spending • State vendor relationship • Preferred Vendor or Contract Vendor

10. Helpful Hints • Purchasing Card • Please use for Typewriter and Fax machines’ maintenance. • Purchasing Card – do not use for: • Gift Cards • Conference Fees • Avoid Processing Requisitions less than $3,000.00 if it’s allowable on the Purchasing Card

11. Purchasing Training • Web requisitions • Blanket orders • copy requisitions to resubmit • Purchasing@Brown.edu

12. Questions

13. Accounts Payable - Prepaids • Expenses ($1,000 or greater) for the coming fiscal year that require payment prior to July 1st can be submitted to Accounts Payable clearly marked FY 09/10 • Examples: Subscriptions and membership renewals, insurance, etc. • A prepaid account is used when payment is made. An entry is made in July to charge your department account.

14. Accounts Payable- Key Dates • All Request for Check and Professional Services Agreements for fiscal year 2009 • Due by June 30th at 12:00 • Receiving Reports due to AP by June 30th at noon for inclusion in the 1st list closing for June

15. Removing PO Encumbrances • Encumbrances remaining on Purchase Orders (POs) as of June 30, 2009 are carried forward to FY 2010 • The Controller’s Office will take care of removing FY 2009 blanket order encumbrances – usually done around September • If the departments would like encumbrances on regular purchase orders removed before they are carried forward into the new year, please submit the request to Accounts Payable by June 30th

16. Vendor Cut-Offs • If you want Office Max, VWR, Fisher or P-card purchases to hit FY 2009, we suggest that all purchases be made as soon as possible (no later than June 23rd). • Purchases between June 23rd and 30thmay hit for fiscal year 2010.

17. Account Payable - Accruals • What is an accrual? • If goods have been received or services performed prior to June 30th, the related expense must be recognized in the current fiscal year regardless of whether the goods/services have been paid for • Related Entries: • Accruals will appear on your June ledger • The accrual will be reversed on your July ledger • The actual invoice payment will hit your ledger in the month paid in the new year. This charge and the accrual reversal in July should net to $0 in the new year.

18. Accruals (continued) There are two types of accruals that will appear on your ledgers: • System accruals – will appear on June 1st list ledgers. Purchase Orders $300 and over are automatically charged if the receiving report is in AP by noon on June 30th. • Manual accruals – will appear on June 2nd list ledgers. Invoices for POs or Check Requests $1,000 and over are reviewed and accrued if goods are received or services performed by June 30th.

19. Example – System Accrual • Submit a PO for a computer equipment costing $3,000 in May • The computer is received in June and the receiving report is forwarded to Accounts Payable by the June 30th deadline • The invoice is received and paid in July (in new fiscal year) • Because the computer was received before year end, it represents an expense to fiscal year 2009

20. (SYSTEM ACCRUAL) What are these transactions on my ledgers?

21. Entry to accrue charge Description denotes that transaction is a system accrual Purchase order number Offset account used by AP for year end accruals Batch ref indicating entry is an AP system accrual Entry to reverse accrual in new year Description used in #2 – system accrual Batch reference indicating entry is reversing an AP system accrual Entry to record the charge when the invoice is paid. Entries 6 and 9 net to a $0 impact on the new ledgers. Please note that the invoice may be paid in a later month and will not appear in the same month as the reversing entry. Description used when paying vendor (vendor name will generally appear here) Offset account used by AP to record payable items Batch reference assigned by system when invoice is processed. Ledger Items

22. Example – Manual Accrual • Submit a PO for a computer costing $3,200 in May • The computer is received in June • The invoice is received and processed in July (in new fiscal year) • Because the computer was received before year end, it represents an expense to fiscal year 2009

23. (MANUAL ACCRUAL) What are these transactions on my ledgers?

24. Entry to accrue charge Description – usually vendor name Voucher number or other identifying number Referenced used by AP to indicate item is a manual accrual Offset account used by AP for year end accruals Batch ref indicating it is a year end journal entry to be reversed in the following fiscal year Entry to reverse accrual in new year Reference used to cross reference original batch that this entry is reversing Batch reference indicating journal entry # of reversing entry. Entry to record the charge when invoice is paid. Entries 7 and 10 net to a $0 impact on the new year ledgers. Please note that the invoice may be paid in a later month and will not appear in the same month as the reversing entry. Offset account used by AP to record payable items Batch reference assigned by system when invoice is processed. Ledger Items

25. Petty Cash • Replenish petty cash by processing all receipts before year-end • Count the funds & outstanding vouchers and reconcile the result to the G/L balance   • If the balance is short, figure out why and make the account whole again. • If balance is over, deposit excess amounts into the misc. revenue account for the University (#1-08060-0100). 

26. Travel • Business Expense Policy Highlights http://www.brown.edu/Administration/Controllers_Office/documents/BusinessExpensePolicyHighlights.doc • All travel completed as of 6/30 should be recorded as an expense of FY 2009 • All travel reports processed by 6/30 will be charged to FY 2009 • All travel reports submitted after 6/30 through 7/15 will be accrued if the total is $1,000 or greater and the travel was completed by 6/30

27. Questions If you have additional travel related questions, please contact Raquel Almeida at ext 3-9442 or Dorothy Vetere at ext 3-1777.

28. General Accounting - Closing Timeframes Closings: • June 1st list (July 8th) – normal monthly close • Ledgers mailed July 9th • June 2nd list (July 24th) – for corrections and last minute entries. • Ledgers mailed July 25th • Last opportunity for departments to make adjustments to fiscal year 08-09 account balances. • June 3rd list – to record reserve transfers and various closing entries initiated by Controller’s Office.

29. General Accounting Deadlines • Interdepartmental Invoice, Prorates and Overhead deadlines • 1st list – June 30th by 4:00pm • 2nd list – July 20th by 10:00am • Activity for June 2nd and 3rd closing will appear separately from the 1st closing • Will appear in month 13/June-Final on FRS on-line and Web Ledgers

30. General Accounting - Entry Submission • Please carefully review all entries and ensure the minimum data requirements are met • Important – during the month of July we will be processing entries against 2 months (June/FY 2009 and July/FY 2010) • Please indicate on all items submitted to our office which month it should be processed against (June or July) and highlightit. • Entries not specified as such will be processed for July of the new year. • Electronic journal entry users – We will e-mail you a special Batch Fax Sheet that provides you with the option to select the fiscal month the entry relates to.

31. What Accounts “Roll Over”

32. Deficits/Over Expenditures • Units are responsible for monitoring balances in their accounts throughout the year. • A deficit is when the cash balance in general ledger is negative. • Deficits must be cleared in a timely manner, but no later than June 30th (fiscal year end)

33. Clearing Deficits • Need to submit an electronic journal entry or II • Try to transfer by sub-code out of the 4 or 6 ledger. • If too many sub-codes involved, you can use transfer sub-codes (as follows) • 9630 – use to reallocate between 2 accounts in the same ledger series • 9760 – use to reallocate between one type of ledger to another. Cannot use with 5-ledgers or 9-ledgers

34. Restricted Accounts Policies • Can be found on the Controller’s office webpage at http://www.brown.edu/Administration/Controllers_Office/policies/ • Apply to restricted accounts (6-ledgers) and endowment accounts (4-ledgers)

35. Questions?If you have additional questions on restricted accounts or deficit balances, please contact Pedro Lopez at ext. 3-1581Questions on the closing schedule or interdepartmental invoice submission can be directed to datacntl@brown.edu

36. Payroll • Weekly payroll for period through June 27th (paid on July 2nd) will be included in June expenses • Student payroll for period through 6/30 will appear in July expenses • Semi-monthly and monthly as of 6/30 will be included in June expenses • Compensable Absence worksheets due in HR: 6/12/09, Electronic submission

37. Questions? Please contact the Payroll Office at 3-2361 or Controller_Payroll@brown.edu

38. Cashiers’ Office • Do not hold checks. Please bring all checks sent directly to your department to the Cashiers’ window as they are received. • Cash Closing – done once on June 30th • Please submit all deposits and transmittals by 12PM on June 30th • June 30th deposits will be recorded to fiscal 2009 • If you deposit money after 6/30 that pertains to fiscal 2009, please inform the Cashiers’ Office so that the appropriate action can be taken • Checks related to payroll or benefit items should be brought to the Payroll Office (James Coccio) so the employee’s payroll record can be appropriately updated • Third party checks are not accepted (checks made payable to someone other then Brown University)

39. Cashiers’ Office(continued) • If an entry is posted to your account in July related to the prior year, you will see 3 entries on your ledgers: • June 2nd list ledger – credit entry with batch reference of R062XX • July – reversal of this credit entry with a batch reference of R07XXX • July – posting of the receipt on date of deposit • The last two entries will net to $0 on your July ledger and the credit will properly be reflected on your June ledger

40. Questions?Please contact the Cashiers’ Office at 3-1280 or cashier@brown.edu

41. Your Role in the Close • To review your ledgers and research any unusual or incorrect items (should be done throughout the year) • Use Web Ledgers!!! • To submit all necessary items to our office as soon as possible • Salary reallocations • Interdepartmental invoices • Receiving info. • Checks • Prorate and overhead info. • To be cognizant of the deadlines in the year end close memo