Finance Fundamentals IV: Monitoring Funds: Budgets, Reports, and Journals

1. Finance Fundamentals IV: Monitoring Funds: Budgets, Reports, and Journals

2. Housekeeping • Subject Matter Experts • Sign-in sheet • Timing • Slides & Materials • Parking Lot • Feedback • Facilities • And…

3. An oh so gentle reminder…

4. Baseline Quiz

5. Question 1 The Economics Department is conducting a workshop next semester. Psychology has agreed to provide $2,500 of funding from its unrestricted fund and would like to transfer the funding to Economics as soon as possible in advance of the workshop. • Is this an income or expense transfer? • Can Psychology complete this transfer without FAS Finance assistance?

6. Question 1a • Is this an income transfer? • Is this an expense transfer?

7. Question 1b • Psychology is authorized to make this journal voucher transfer themselves • Psychology will need assistance from FAS Finance

8. Question 2 • Once a year • Twice a year • Once every two years FAS departments have the opportunity to enter or update their budgets:

9. Question 3 • Gift only • Endowment only • Gift and endowment Are FAS departments required to budget AEA for their gift and endowment funds?

10. Question 4 • FGUUBR • Detail Listing/ Detail Listing Lite • Summaries Actual and Budget Which CREW report is compatible with all fund types?

11. Understanding Budgets Section 1: Annual Budget Process

12. Oracle-based budgeting application known as HUBS – Harvard University Budgeting System The system is made up of the following three applications: PLNG0025 – Tub 370 PLNG0026 – Tubs 310, 385, 400 and 420 PLNG0027 – Tubs 110, 340, 355, 415 Each application consists of an employee cube and a separate CINA cube for all non-personnel budgeting. HUBS

13. Operating Budget – Reviewed and approved budget of record Forecast – Updated in the fall by departments to reflect additional anticipated savings or approved variances. Plan/Working – Working copy of current budget or forecast in HUBS. Useful Budget terms

14. Annual Budget Process • The FAS issues budget guidance in December • Departments begin working on their budgets outside of HUBS in Excel workbooks provided by FAS Office of Finance. • Workbooks are submitted in early January, followed by a budget meeting with the divisional office. • Workbooks are loaded to HUBS after receiving preliminary approval. Depts review all budget data in HUBS. • The final FAS budget is submitted and receives Corporation approval in late May/early June • Final budget approvals are communicated at the beginning of the fiscal year.

15. Provided in annual Budget Guidance by the FAS Office of Finance: Salary increase for exempt and non-exempt staff Fringe benefit rates Change in endowment distribution Interest on surplus/deficit balance of gift and endowment funds Assessment on gift & endowment funds Essential Tools for Budgeting:

16. Questions to consider: In the next fiscal year, will you have any… • Staff changes? • Equipment purchases? • Building repairs or renovations? • Office moves? • New workshops/conferences planned?

17. Which funds require a budget? • Departmental Unrestricted Fund 000001 • Unrestricted Designated Funds • Gifts • Endowments • Sponsored Funds – Personnel only* (*Since most grants do not follow the same fiscal year, budgets are entered throughout the year; separate from the annual budgeting process.)

18. New to budgeting? • A few suggestions on where to start… • Review budgets and actuals from previous years to find trends in spending • Use previous fiscal year as baseline • Confirm changes to programs/initiatives with Chair or Director to allocate sufficient funding

19. Budget Consideration: Object Code • What object code to use - detailed or high-level? • Ex: Travel-related expenses to be budgeted for FY15: $5,000

20. Budget Consideration: Object Code • There is no policy that advises departments on whether to use General or detailed object codes. • Departments must consider: • University policies • Tub-level requirements • Funding agency requirements for sponsored research transactions • Departmental / local unit reporting requirements

21. Budget Consideration: Income Transfers Departments should communicate with each other whenever they are budgeting transfers to make sure both sides are represented correctly: Dept. A is will be transferring $5,000 of fund 567891 to Dept. B to support a conference. 1. Dept. A requests cross validation of fund 567891 with Dept. B by contacting Application Security – appsec@fas.harvard.edu and Linda Kuros. 2. Dept. A will budget a 5910 transfer out (Debit) of $5,000 3. Dept. B will budget a 5910 transfer in (Credit) of $5,000 and also include an appropriate expense budget of $5,000.

22. Monitoring Budgets & Actuals Section II. Reporting

23. Which CREW reports are budget friendly? • Budget Variance Report • Side by side comparison of Prior Fiscal Year and Current Fiscal Year Operating Budgets with Actual expenses • Includes percent spent for Current Fiscal Year

24. Which CREW reports are budget friendly? • Summaries Actual and Budget Report • Compares Budget to Actual, includes dollar variance and percent spent • Concise format for viewing all spending activity within a fund • Ability to display as many chart segments as necessary

25. Helpful HUBS Reports FRBC030 Budget Fund Balance Summary FRBC133 Budget Analysis by Object and Fund FRBC027 Budget Analysis – different versions available for different levels of detail FRBC039 Budget Variance Summary

26. New to Monitoring Funds? • The FAS Office of Finance recommends the following CREW reports to be run monthly: • Detail Listing or Detail Listing Lite • Budget Variance or • Summaries Actual and Budget • Funds, Gifts, Unexpended Unrestricted Balances Report (FGUUBR) • Period Expense Report (PER)

27. Detail Listing – Individual transactions to assist in determining if all charges are accurate and appropriate Budget Variance – Comparison of prior fiscal year budget and actuals with current fiscal year budget and actuals Summaries Actual and Budget – Summary level budget and actuals for any Chart combination along with the dollar differences and percent variances FGUUBR – Beginning balance, total income, total expense, total non-operating activity, and ending balance for each fund PER – Budget, actuals, and available balance per object code and subactivity within a fund What will the reports show?

28. Surplus Fund Balances • Balances are treated differently, depending upon the fund type: • Unrestricted Undesignated: Any remaining balance at year end is automatically returned to FAS • Unrestricted Designated, Gift, Endowment funds: If the fund balance designation is at the org level, surpluses in these fund types will carry forward into the next fiscal year in your department. If the fund balance designation is at the tub level, any surplus will be automatically returned to the FAS.

29. Deficit Fund Balances • Unrestricted Undesignated: Discuss all deficits at this fund level with your analysts. Any overages that have not already been approved should be moved to another available funding source. • Unrestricted Designated, Gift, Endowment funds: Deficits that remain in these funds at year end will be charged interest at the beginning of the next fiscal year. Deficit balances should be moved to another available funding source.

30. How to eliminate a deficit? • To clear a fund’s deficit balance and avoid a deficit charge, you must transfer the associated expenses to another fund in accordance with the University Transfer Policy • Income or expenses are moved with a Journal Voucher • Journals can be: • Departmental - income or expenses are moved within an Org or Mega org • Inter-departmental – income or expenses are moved between departments or Tubs

31. Monitoring Funds Section III. Journal Voucher Transfers

32. To change coding in the General Ledger due to incorrect coding, more accurate information obtained after the charge posted, cost sharing agreements, new coding segment added etc. Capital Assets (object codes 6800-6816) need to be corrected using the AP Adjustment Form, instead of a Journal Voucher. Exceptions: If the original transaction was posted as an Internal Billing or PCard charge. The AP adjustment form is either created by the FAS Office of Finance or the Science departments. Why process a Journal Voucher?

33. Types of Journal Vouchers • To process a change in coding within your departmental security responsibility, there are two ways to process a journal: • Complete and upload the ADI journal template. • Complete General Ledger Journal by entering the change in coding directly in the system by logging into Oracle. • To process a change in codingoutside your department security responsibility, complete and submit completed ADI journal template to finjrnl@fas.harvard.edu • Remember to include approval from the tub/org being charged (debited) within the email along with the journal.

34. CoA Flashback – FAS tubs The following tubs are considered INTRA-tub for FAS: • 110 – DOAK^Dumbarton Oaks • 310 – FCOL^ FAS College Life & Student Services • 325 – SEAS^School of Eng & Appl Science • 340 – FATH^FAS Athletics • 355 – FDCE^FAS Continuing Education • 370 – FCOR^FAS Core • 385 – FMUS^ FAS Museums • 400 – FGS^ Grad School of Arts & Sciences • 415 – FHCL^ Harvard College Library 420 – FIFI^FAS Interfaculty Initiatives. This tub falls under the FAS for financial reporting oversight, but it is not a FAS tub. It is considered INTER-tub when choosing internal billing or internal transfer object codes.

35. Journal Resources • “FAS Guide to Creating ADI & Manual Journals” – includes specific instructions for completing journals, contacts for questions, best practices & tips. • “ADI Journal Tips” - highlights key points to keep in mind when preparing a journal. Includes guidance on how to avoid common mistakes that prevent a journal voucher from uploading. • “Journal Voucher Template” is used to create a new ADI journal. Please use a fresh template for each journal voucher. The most current version of the template is dated June 13, 2013.

36. Journal Resources • General information regarding Journal Vouchers: http://finance.fas.harvard.edu/training-support/oracle-gl • Information regarding the AP Adjustment Form: http://finance.fas.harvard.edu/reference-guides-if-applicable/ap • The FY2015 month end closing schedule: http://finance.fas.harvard.edu/files/fas_finance/files/fy15_closing_schedule_fas.pdf

37. The Internal Billing Policy and the Internal Transfer Policy provide additional information when processing journals. Internal billing - when one Harvard unit bills another Harvard unit for goods or services, including academic service centers. Internal transfers - when one Harvard tub transfer income or expenseto another Harvard tub (object codes 5910, 5921, 8921) University Financial Policy Office http://policies.fad.harvard.edu/pages/internal-transfers “FAS Guide to Transfer Object Codes” http://hwpi.harvard.edu/files/fas_finance/files/fas_guide_to_transfer_object_codes.pdf University Policies

38. All units involved must agree on the nature of the transfer and how the entry should be processed Transfers between tubs must either: Debit and credit an income object code Debit and credit an expense object code Debit and credit a non-operating object code Transfers must not: increase total University income and expenses distort the operating results of any unit within the University University Transfer Policy

39. The FAS provides funding to the Department of Athletics each year to help support their operations. Should we account for FAS’ support of Athletics as an income or expense transfer? Which type of transfer do I choose?

40. Expense Transfer Athletics Revenue Gift & Inv Income $10,000 Other Income 2,500 Income Transfers 0 Total Revenue $12,500 Expenses Salaries & Benefits $10,000 Other Expenses 7,500 Expense Transfers (10,000) Total Expenses $7,500 Change in Net Assets $5,000 Impact of Transfer Type on CINA Income Transfer Athletics Revenue Gift & Inv Income $10,000 Other Income 2,500 Income Transfers 10,000 Total Revenue $22,500 Expenses Salaries & Benefits $10,000 Other Expenses 7,500 Expense Transfers 0 Total Expenses $17,500 Change in Net Assets $5,000

41. Organismic & Evolutionary Biology provides ongoing administrative support to the Museum of Comparative Zoology. To date, OEB has incurred $2500 in administrative costs for MCZ. Should we account for OEB’s support of MCZ as an income or expense transfer? Which type of transfer do I choose?

42. Expense Transfer OEB Revenue Gift & Inv. Income $10,000 Other Income 2,500 Income Transfers 0 Total Revenue $12,500 Expenses Salaries & Benefits $6,000 Other Expenses 1,500 Expense Transfers (2,500) Total Expenses $5,000 Change in Net Assets $7,500 Impact of Transfers on CINA Income Transfer OEB Revenue Gift & Inv. Income $10,000 Other Income 2,500 Income Transfers 2,500 Total Revenue $15,000 Expenses Salaries & Benefits $6,000 Other Expenses 1,500 Expense Transfers 0 Total Expenses $7,500 Change in Net Assets $7,500

43. Got questions? Section IV. Resources

44. Heather McCormick, Manager of Budget Operations – Affiliated Tubs hvmccorm@fas.harvard.edu, x5-0970 Tracey-Ann Herbert – Social Science Division therbert@fas.harvard.edu, x6-4218 Julie Knippa Colby – Science Division jknippa@fas.harvard.edu, x5-4047 Kathleen Daly – Arts & Humanities, Administrative Divisions kdaly@fas.harvard.edu x6-9023 Resources – Budgeting

45. Jennifer Edmonds, Manager of Accounting Operations jenniferedmonds@fas.harvard.edu, x5-0690 Gina Armstrong, Financial Administrator armstr3@fas.harvard.edu, x5-9107 Training: ASAP (Administrative Systems Assistance Program) fasasap@fas.harvard.edu, x6-7136 Resources – Accounting & Training