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ACCRUAL PROCESS

ACCRUAL PROCESS. Updated 9/13/2010. ACCRUALS. Definition: Expense Accrual: A month-end journal entry (either system generated or manual) that accounts for goods or services that were received in a given month but the invoice was not posted by month end

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ACCRUAL PROCESS

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  1. ACCRUAL PROCESS Updated 9/13/2010

  2. ACCRUALS • Definition: • Expense Accrual: • A month-end journal entry (either system generated or manual) that accounts for goods or services that were received in a given month but the invoice was not posted by month end • Purpose: To allow monthly expense reports to accurately report actual medical center expenses in the event there are invoicing inconsistencies or delays. • Revenue Accrual: • Establishment of a collectible receivable • A month end manual journal entry to report revenue that was generated in a given month when the corresponding cash payment was not received by month end. • Purpose: To allow monthly revenue reports to accurately report actual medical center revenue in the event there are delays in receipt or posting of cash.

  3. What Causes an Expense Accrual? • Two triggers for expense accruals: • A good or service is purchased and received, but invoice has not been processed/matched to purchase order in the system by month end • A good or service is invoiced infrequently or inconsistently, and needs to be expensed over multiple periods of a fiscal year

  4. Expense Accruals

  5. Expense Accruals

  6. Expense Accruals

  7. Assumptions • Accounting will continue to review automatic Peoplesoft accruals to implement E-entry accruals and reversals. • Current year E-entry accruals are reconfirmed by Accounting staff prior to the new fiscal year to determine if any adjustments need to be made. • Accrual policies and definitions will be distributed and reviewed during budget process.

  8. What Causes a Revenue Accrual? • Revenue Accruals are rare and only done when confirmed revenue could not be posted to the general ledger at month close. • Triggers: • Other operating revenue that is confirmed could not be posted to the general ledger (I.e. HMFP monthly parking payment not received prior to month close); typically entered at departmental request • Standard revenue accruals for long-term revenue sources (I.e. Rental Income, Resident income, other affiliation agreements) • Accounting may contact department to determine if other operating revenue accrual required if significant variance observed.

  9. Contact • For further information or questions, please contact: • Sue Gammons • Accounting Manager 7-5408 • Or • Eileen Simons • Assistant Controller, Fiscal Services 7-0364

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