Accounting Basics for FIS Users

1. Accounting Basics for FIS Users

2. Accounting Basics for FIS users Overview • Types of Accounts • Basic Account Structure • Budget Transfers • Journal Entries • Inter-fund Transfers • Miscellaneous

3. Accounting Basics for FIS users Section 1 – Types of Accounts • Operating Accounts (Departmental) • Trust Accounts • Grant Accounts There are 3 main types of accounts

4. Accounting Basics for FIS users Operating Accounts • These are your Business Unit accounts • They are 5 digits long and start with either a “1” or a “2” eg. Dept A - 19250 • They are funded through the University’s central operating budget, administered by the Budget Process and the Budget Committee, and approved by the Board of Governors. • The Budget is allocated to various object accounts such as general office supplies, travel, equipment, and repairs

5. Accounting Basics for FIS users Trust Accounts • These accounts are set up for specific purposes or functions such as Scholarships or conferences • They are 5 digits long and start with either a “6” or a “7” • They are funded through various outside sources ie private donations, government grants, or registration fees (conferences) • There are 2 main types of Trust accounts: Endowment Accounts (Interest Earning) Expendable Accounts (No Interest earned)

6. Accounting Basics for FIS users Trust Accounts-Endowment • Typically funded by an individual or group of individuals for a very specific purpose ie. Scholarship • These accounts begin with a “6” • The initial investment is deposited and remains unspent unless the Endowment is to be closed out. These accounts have specific terms of reference that must be followed and expenses are not allowed to be posted to them. • Interest earned is calculated at year-end with a maximum of 6% transferred to an Expendable trust. This account will start with a “7” and has the same last four digits as the Endowment. Interest earned over 6% is returned to the Endowment.

7. Accounting Basics for FIS users Trust Accounts-Expendable • Funded by the interest from their respective Endowment Accounts, Government funding, or from private donations that have not been earmarked as an Endowment. • These accounts begin with a “7” • Payments for scholarships, supplies, salaries etc can be made from these accounts • These accounts do not have budgets. Expenses are limited to funds available.

8. Accounting Basics for FIS users Grant Accounts • Grant accounts are 5 or 6 digits long and start with an “8” • They are funded from external granting agencies such as NSERC or SSHRC, or internally funded (start up grants) • Grantee is responsible to ensure that expenditures meet the funding agency’s guidelines. Any non-compliance with these guidelines may result in loss of future funding to the grantee and the University as a whole. • Any over-expenditure of the grant is the sole responsibility of the grantee • Any grant account may be audited by the funding source at any time • Additional financial assistance may be available from the Research Grants Department of Finance

9. Accounting Basics for FIS users Section 2 - Basic Account Structure • Made up of the following components – Business Unit 19250 Dept A Object Account 8560 Special Projects When entering data in the System, you must always have a Business Unit and an Object Account as well as a “.” separating the two. Please see the attached “FIS QUICK FACTS” Sheet for easy reference 19250.8560

10. Accounting Basics for FIS users Basic Account Structure • A Sub-object is another level of detail that is sometimes added to a particular Object. In the above example, the Business Unit is Dept A. The Object account is Special Projects and the Sub-Object could be for “System Upgrade”. • The use of the Sub-Object further clarifies what the object is being used for and makes tracking of these expenses easy to identify. 19250.8560.1

11. Accounting Basics for FIS users Understanding the Budget Comparison • At the top of the Budget Comparison Screen, you will see a field called Account – this is where you type in your Business Unit eg. 19999 • Next you will see a field called “Ledger Type 1” – this is defaulted to read “BA”. This means Budget Ledger • The field under this is “Ledger Type 2” – this is defaulted to read “AA”. This means Actual Ledger • The LT1 Thru date and LT2 Thru date refer to the point in time that information is being pulled from the system. These dates must be the same • The level of detail “9” refers to the amount of information that is provided in this view. It can be changed to provide a lower level of detail (more condensed information)

12. The Ledger Type 1 (BA) Budget ledger is as of the LT1 Thru Date of 2009/07/31 The Ledger Type 2 (AA) Actual ledger is as fo the LT2 Thru Date of 2009/07/31 If these dates were not the same, you would be comparing the Budget as of July 31, 2009 with Actuals from some other time period and the information would be meaningless

13. Accounting Basics for FIS users Budget Transfers • Budget transfers are used to move budget monies from one account to another in order to facilitate spending • Budget amounts can be “Base” meaning that these amounts are given to your Business Units on an annual basis or “One Time” which means the funds are only given once and for a specific purpose identified in the budget process. When do I do a budget transfer?

14. Accounting Basics for FIS users Budget Transfer –General Rules • The most important thing to remember is to put the expense where it belongs. Finance relies on historical information to help us make decisions regarding Budget Submission approvals and to forecast future costs to the University. This adds to the integrity of the data. • Our auditors use this information as well, to determine what areas need further focus at year- end

15. Accounting Basics for FIS users Section 3: Budget Transfers • Budget transfers are done via a number of document types. Each of the codes are designed to allow the user to easily identify what kind of budget transfer users are looking at. • The most common are as follows: • BO – a basic budget transfer used for one time transfers between accounts – you will use this 99% of the time • BB – a Base Budget transfer used to transfer base budget funds on a permanent basis. Make sure that when you use this, you want a PERMANENT change.

16. Accounting Basics for FIS users Budget Transfers – General Rules • You give the money “to” the account that needs it to cover the spending and take away money “from” the account you have the funds in. • You want to move money from Miscellaneous to the Equipment budget you would: DEBIT (to) 11130.8860 CREDIT (from) 11130.8550

17. Accounting Basics for FIS users Budget transfers explained • Think of the FIS ledgers as your checking account. Every time you spend money, by writing a cheque or swiping your debit card, these are your actual expenses. In the FIS, this is your AA ledger. • If your checking account doesn’t have enough money in it, you do a transfer from your savings account. In the FIS, Budget transfers do the same thing. If you want to spend money in an account that doesn’t have any Budget, you take it from an account that does have money in it through the budget Transfer process.

18. Accounting Basics for FIS users Budget Transfer –Example 1 • The actual cost of the Furniture needs to be charged to the account that best reflects the nature of the purchase. • As you have funds in Misc and have no budget in Furniture, does not mean that this is where you should charge the purchase order. • The budget transfer will be as follows: You are finally getting that new desk and chair you have always wanted! You don’t have any money in your Furniture account, but you have lots in the Misc account.

19. Accounting Basics for FIS users Budget transfer –Example 1

20. Accounting Basics for FIS users Budget Transfers-Example 2 • The spending must occur in the Service contracts object line so you will have to transfer funds fromanother object account tothe service contract account. • The budget transfer will look like this: Your newly installed computer program has an annual maintenance fee with it and you have no funds in your 8625 object account (Service Contracts)

21. Accounting Basics for FIS users Budget Transfers-Example 2 The positive number is where the budget is being transferred “TO” and the negative is where the budget is being transferred from. In this case you took the budget FROM your Miscellaneous account (-) and transferred it TO the Service Contract line (+)

22. Accounting Basics for FIS users Budget Transfer –Example 3 • The actual cost of the Machine needs to be charged to the Business unit that has the ultimate control over the asset. • The purchase order will be made out to the other Business Unit ONLY. Your accounts will not be charged for part of the purchase. • The budget transfer will be as follows: As your department has plans to use another dept’s new machine, you have decided to give them some money to help pay for it.

23. Accounting Basics for FIS users Budget Transfer –Example 3

24. Accounting Basics for FIS users Section 4 - Journal Entries You will make a journal ONLY in the following circumstances. • When a charge has been incurred and it is not in the correct account. ie. You see that a charge has been made to 8550 Miscellaneous and it should have been charged to object account 8850 Furniture • You need to transfer funds to a trust account or grant account. (Interfund transfers) When do I do a Journal Entry?

25. Accounting Basics for FIS users Journal Entries–Example 1 • The actual cost of the Furniture needs to be charged to the account that best reflects the nature of the purchase. • A journal entry needs to be made that will move the expense from your Miscellaneous account (credit) to your Furniture account (debit). • The journal entry will be as follows: Your new desk and chair have come in and at month-end you look at the Furniture account for the charges. You discover they were charged to Miscellaneous in error.

26. Accounting Basics for FIS users Journal Entry –Example 1

27. Accounting Basics for FIS users Journal Entries–Example 2 • The actual cost of the Office supplies needs to be charged to the account that best reflects the nature of the purchase. • A journal entry needs to be made that will move the expense from your Miscellaneous account (credit) to your Office Supplies account (debit). • The journal entry will be as follows: An order for office supplies has come in and you assign object account 8550 to the invoice.

28. Accounting Basics for FIS users Journal Entry –Example 2

29. Accounting Basics for FIS users Section 5 - Interfund Transfers • Accounting needs to properly report all dollars moved from one type of fund to another These are transfers that occur between Operating, Trust, and Grant accounts.

30. Interfund Transfers Operating Trust Acct Grant Acct Each of these Areas is like their own separate bank account We need to make sure that when we transfer money between these accounts, they balance.

31. Accounting Basics for FIS users Interfund Transfers • To ensure proper accounting and reporting of these transfers, a series of objects have been setup to transfer funds. • These objects are found in your accounts: • 8975.1 Transfer to Operating • 8975.6 Transfer to Trust Fund • 8975.8 Transfer to Research Grants

33. Accounting Basics for FIS users Interfund Transfers • There are offsetting revenue objects to accurately track these transfers. • 5901 Rev-Internal from Trans-Operating • 5902 Rev-Internal from Trans-Grants • 5903 Rev-Internal from Trans-Trust Acct

35. Accounting Basics for FIS users Interfund Transfers –Operating to Trust • Interfund transfers are handled in two steps • A budget transfer to move funds TO the 8975.6 (transfer to trust account object). The FROM will be any object in your account that has money available to transfer –ie. Misc • A journal entry is done to facilitate the movement of these funds to the trust account – remember that trust accounts don’t have Budgets so you cannot do a budget transfer to a trust. The journal entry will be a (+) amount to your 8975.6 object to show the expense in your account, and a (-) amount to the trust account’s 5901 object account.

36. Accounting Basics for FIS users Interfund Transfers –Operating to Trust • This transfer will be from your operating account to a trust account. • You have funds available in your miscellaneous account to pay for this. • Our first step is a Budget Transfer as follows: HRG has a trust account XXXXX setup for a special Speaker series and you have promised them $500 to help pay for this.

37. Accounting Basics for FIS users Interfund Transfers –Operating to Trust

38. Accounting Basics for FIS users Interfund Transfers –Operating to Trust • We have now moved the budget funds from our Miscellaneous account to the Transfer to Trust account. • The “Transfer to” accounts must always balance • Now that we have done our Budget transfer, we need to complete step 2 – The journal entry.

39. Accounting Basics for FIS users Internal Transfers –Operating to Trust

40. Accounting Basics for FIS users Internal Transfers –Operating to Trust • Our journal entry shows the (+) to our 8975.6 account. When you look at your expenses for the year, you will clearly be able to identify this transfer as a cost to your department in the year. • The (-) amount in the trust shows up in their revenue account. Revenues always appear as negatives. When the recipient of the funds sees a negative in their object account, they know someone has given them some money.

41. Accounting Basics for FIS users Internal Transfers-Operating to Grant • The transfer will be from your operating account to the grant account. • You have funds available in your miscellaneous budget to pay for this. • Step 1 is the budget transfer - Prof Doe has a grant account that he is using to help fund a research project. Your department has decided to pay for some equipment he will need to purchase.

42. Accounting Basics for FIS users Internal Transfers-Operating to Grant

43. Accounting Basics for FIS users Interfund Transfers –Operating to Grant • We have now moved the budget funds from our Miscellaneous account to the Transfer to Grant account. • The “Transfer to” accounts must always balance • Now that we have done our Budget transfer, we have to have a balancing Journal entry to physically move the funds from our Operating to the Grant account. The grant account records this as revenue, and the operating account records this as an expense. • Step 2 is the journal entry as follows:

44. Accounting Basics for FIS users Internal Transfers-Operating to Grant

45. Accounting Basics for FIS users Section 6 -Miscellaneous • The Budget Department is staffed as follows: • David Butcher – Manager, Budgets x2130 • Bonnie Bashura – Budget Secretary x2130 • David Smith – Budget Analyst x2082 • Sue Holiga – Budget Analyst x2022 • Shelley Daigneault – Budget Analyst x2021 For further information, please visit our Budget website at : www.uwindsor.ca/budgets

46. Accounting Basics for FIS users Miscellaneous – Other Financial Issues If you have questions relating to FIS such as getting Security on accounts or training for staff members, please contact : • Sandy Mehenka, Systems x2143

47. Accounting Basics for FIS users Miscellaneous – Other Financial Issues Any Grant related questions should be forwarded to : -Heather Pratt-Supervisor, Grant Accounting X2127 -Donna Bergamin-Grant Accountant X2132 (CFI,OIT,Sharc-Net,HRDC) -Kathy McGorman-Grant Accountant X2129 (SSHRC/NSERC/CIHR Grants, Start up Grants) Visit the Grants website at: ‘www.uwindsor.ca/finance” and then click on the Research Grants “flyout” on the left.

48. Accounting Basics for FIS users Other Questions?