Advantage 3 Accounting Basics

1. Advantage 3 Accounting Basics Information Technology Services http://www.nau.edu/its

2. Advantage 3 Accounting Basics This course is designed to give the Advantage user a basic understanding of the accounting and budget structure within the Advantage 3 Financial System. For those that are interested in additional information on fund accounting or the budget process, please contact the Comptroller’s or Budget Office.

3. Lesson objectives By completing this lesson, you will gain a basic understanding of: • The Concept of Fund Accounting • Organizational and Grant Chart of Account (COA) Elements (page codes in parentheses). • Advantage 3 Budget Models • Advantage 3 Documents and Accounting Elements

4. Fund Accounting Concepts NAU has an important responsibility to taxpayers and others to safeguard the assets entrusted to us, and to report annually on the sources and uses of the funds that we receive. To help accomplish these goals we use Fund Accounting at NAU. • Accounting for resources and activity within a self-balancing set of accounts • Funds are separately maintained to reflect differences in funding sources (resources) and spending restrictions (activity) • Funds can be thought of as separate “buckets” which are never mixed with other buckets

5. Fund COA Elements The Fund Code is the primary Fund level COA element within Advantage. Fund Rollups are used for reporting purposes. Fund Category (FCAT) Fund Class (FCLS)Fund Group (FGRP)Fund Type (FTYP) FUNDRollups Fund Codes by Major Fund Category (FCAT)1xxx = State and General Operating (state appropriations)2xxx = Designated / Local (designated for specific purposes)3xxx = Restricted (grant accounts)4xxx = Auxiliary (substantially self-supporting activities)7xxx = Agency (custodian funds for outside agencies) FUNDCode

6. Fund Balance Fund balance is made up of self-balancing COA elements Revenue Source Code (RSRC), Object Code (OBJ) and Balance Sheet Code (BSA). REVENUE SOURCE(Revenue) OBJECT(Expense) BALANCE SHEET + = = FUND BALANCE $100 CLASS FEE + <$40> CLASS SUPPLIES = $60 FUND BALANCE = $60 BSA

7. Organizational COA Within each Fund, spending units are defined at the Unit level (Org in Adv2), the primary organizational COA element at which budgets are established. New rollups in Adv3 include Cabinet and Branch. 100 President 200 Provost 300 Administration & Finance 400 Enrollment Management.... CABINET200 210 College of Arts & Letters 220 College of Business Administration 230 College of Education...... BRANCH 210 ADS School Of Art & Design ARD Ardrey Auditorium ARG Art Gallery ARL College of Arts and Letters DEPTADS UNIT1113 1113 Schl of Art & Design 2501 Schl Of Art & Design-SS 2508 Bronze Fund

8. Grant COA Elements In Advantage 3, Program COA elements are added for Grant accounts. The primary elements are Major Program and Program, which relate to Department and Unit respectively. The new elements are used to help track reimbursable direct and indirect costs. Organizational COA Program COA DEPT(BIO) MAJOR PROGRAM(BIO) PROGRAM(321X) UNIT(321X)

9. Budget Models University Budgets are established using three Advantage budget models: • Expense Budget (model 80) – expense budgets are established for all spending units regardless of fund. • Revenue Budget (model 34) – revenue budgets are established primarily for units within designated, auxiliary and restricted funds. • Grant Budget (model 37) – grant budgets are established for spending units within the restricted fund.

10. Budget Controls The following budget constraints are used to control spending: • Presence Control – Budget lines must exist at the lowest budget level for documents to process successfully. An “budget line does not exist” error will be generated if a document is processed against a budget line that does not exist. • Grant Spending Controls – The grant budgets are setup to prevent spending beyond budgeted direct and indirect charges.

11. Expense Budget (model 80) Expense budgets are based on a combination of Fund and Organizational COA elements which roll up at two primary reporting levels: • Department Unit Level (BQ80LV1)Fund – Dept – Unit (Appropriation Unit) • Object Level (BQ80LV2)Fund – Dept – Unit - Object

12. Revenue Budget (model 34) Revenue budgets are based on a combination of Fund and Organizational COA elements which roll up at two basic levels: • Unit Level (BQ34LV1)Fund – Dept – Unit (Appropriation Unit) • Revenue Source Level (BQ34LV2)Fund – Dept – Unit – Revenue Source

13. Grant Budget (model 37) Grant budgets use Program COA elements to track direct and indirect charges associated with the grant. Budgeted direct charges will represent the total of a Grant’s expense budget lines, and budgeted indirect charges will represent the estimated indirect cost recovery associated with the grant. • Major Program (BQ37LV1)Dept – Major Program • Program (BQ37LV2)Dept – Major Program - Program

14. Budget Level COA Summary Expense and Revenue Budgets (Models 80 and 34) FUND(XXXX) Restricted (Grant Accounts) State, Local & Auxiliary Grant Budget (Model 37) DEPT(XXX) MAJOR PROGRAM(XXX) DEPT(XXX) PROGRAM(XXXX) UNIT(XXXX) UNIT(XXXX) Grant Direct and Indirect Budget Lines Revenue & ExpenseBudget Lines Revenue & ExpenseBudget Lines

15. Advantage Documents A document is a single unit of work containing a hierarchy of related data objects that are processed and accepted together.  For example the Purchase Order (PO) document consists of a Header, Vendor Lines, Commodity Lines, and Accounting Lines. The Accounting Line object or “page” is where COA and posting information is entered. New features in Advantage 3: • COA elements are inferred from the “Accounting Template”. • Posting information is controlled through “Event Types”.

16. Accounting Templates • The Accounting Template is a field on the Accounting page. The field’s value is used to infer the following COA elements on Advantage Documents: • Fund (FUND) • Department (DEPT) • Unit (UNIT) • Appropriation Unit (APPR) • Activity (ACTV) • Program (PROG) • In most cases, the Accounting Template (ACTPL) is a 6 character value consisting of the Dept code and last 3 characters of the Unit code.

17. Accounting Template (cont.) • The Accounting Template must be used on all documents. This feature provides a convenient shortcut that eliminates having to type in FUND,DEPT, UNIT, ACTIVITY on documents. • To complete each accounting line, enter your Accounting Template information and any COA elements not inferred (e.g., Revenue/Object code, Sub Revenue/Obj).

18. Event Types • Event Types are codes which signify what posting codes (debits & credits) will be used while also bringing in specific rules for data entry concerning referenced transactions, customer codes, vendor codes, and all defined chart of account elements in the system. • These codes allow you to record different types of transactions on a single document. For example, instead of having two separate documents for expense to expense (IX) and revenue to expense (II) transactions in Advantage 2, we will have a single transfer document (IET). • For most documents, Event Types will default to a pre-defined value when the document is validated.

19. Course summary Concepts of Fund Accounting Organizational and Grant Chart of Account (COA) Elements Advantage Documents and Accounting Elements Budget Models

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