University of Hawai’i

1. University of Hawai’i YEAR-END AND OTHER ISSUES Presented by Financial Management Office May 17, 2006

2. Order of Presentations • David McClain – President • Howard Todo – Vice President for Budget and Finance/CFO • General Accounting • Disbursing and Payroll • Property and Fund Management • Procurement • Treasury • ORS

3. GENERAL ACCOUNTING

4. FY2005 Audit Findings: • Finding No. 05-03: Improper Categorization of Expenditures • Two expenditures coded as 3020, Operating Supplies, Educational but should have been recorded as 5600, Rent-Equipment, Other and 7100, Services Non-State Employees • Improper expenditure recording could result in inaccurate amounts reflected in the grant’s modified total direct cost (“MTDC”) base.

5. FY2005 Audit Findings: • Audit Finding: Improve Year End Accounts Payable Recording • Annual recurring finding

6. Audit Finding: Improve Year End Accounts Payable Recording • Per 2005 audit report, “We noted a deterioration in the year end accounts payable recording process, particularly related to extramurally funded awards.” • $1 mil, $945,000, $838,000, $535,000 attributable to four departments

7. Audit Finding: Improve Year End Accounts Payable Recording • Per 2004 audit report, “While the University significantly improved its year-end accounts payable recording”, there were net unrecorded liabilities of $342,000 attributable to one department noted. • $2.8 million in unrecorded accounts payable at June 30, 2003. • $4 million in unrecorded accounts payable at June 30, 2002.

8. Audit Finding: Improve Year End Accounts Payable Recording • Accounts payable definition (A8.866): A liability or amount owed by the University to outside vendors and individuals or University employees for goods and services received or performed but not paid for by the end of the fiscal year.

9. Audit Finding: Improve Year End Accounts Payable Recording • Please review APM A8.866-Accounts Payable Listing • Unrecorded liabilities impair the presentation of complete financial information at the fiscal year end.

10. FY2006 Year-End Calendar • Please visit FMIS website: http://www.fmo.hawaii.edu/FMIS/ for various central office year-end deadlines. (No exceptions to deadlines will be granted) • FMIS on-line input extended to 6:30pm from May 15th to June 30, 2006 (EXCEPT for deadlines indicated on year-end calendar and per Henry Ito’s email dated May 9, 2006)

11. FMIS Website

12. FY06 Year-End Accounting Data Required • To present the University’s financial statements on the full accrual basis in accordance with Governmental Accounting and Financial Reporting Standards. • Accrual basis: revenues are recorded when earned and expenditures are recorded when incurred-when goods and services are received but not necessarily paid.

13. FY05 Year-End Accounting Data Required • Please review APM A8.671: Year-End Accounting Data

14. FY05 Year-End Accounting Data Required • Recording Year-End Accounting Data Memorandum due July 3, 2006. • Memorandum and sample journal vouchers will be sent via email in June 2006. • Journal vouchers to record Year-End Accounting data required by GALC due by 11:00am, July 14, 2006.

15. Recording Year-End Accounting Data Memorandum

16. RCUH Reclassification JV-Reminders • RCUH expense to proper object code JVs should be done during the regular year instead of during the year-end accrual period. • Especially for “Project” accounts (year-end process=P) and Fixed asset subcode reclassifications

17. RCUH Reclassification JV-Reminders • If RCUH expense reclassifications are recorded during the accrual period (13th month) for SLs with year-end process=P, two additional JVs should be prepared: • JV to record expense reclassification in the new fiscal year • JV to reverse expense reclassification during the accrual period of the new fiscal year

18. RCUH Reclassification JV-Reminders • Please input RCUH 6-digit project number in Ref. No. 1 of journal vouchers for: • RCUH expense to proper object code (for expended funds) • RCUH expense to Due from RCUH (for unexpended funds)

19. RCUH Expense Reclassification Subcodes • Use subcode 2087**-RCUH Wages to record salaries/wages paid by RCUH • Use subcode 2097**-RCUH Fringe Benefits to record fringe benefits paid by RCUH • **New subcodes2987, RCUH Wages (7232) and 2997, RCUH Fringe Benefits (7232) available to accommodate budget restrictions for subcode 7232 reclass only

20. RCUH Expense Reclassification Subcodes • Refer to the handout for other expense reclassification subcodes

21. Handout on Transactions with RCUH • Types of payments to RCUH • RCUH Budget Categories to UH Subcode crosswalk • Table of Account code ranges requiring 3 JVs if expenses are reclassified during the accrual period (13th month)

22. Year-End Accounting Data to be recorded by fiscal officers: • Unrecorded accounts receivable: Amount due to the University from the sale of goods or services, credit memos from vendors, and reimbursements of expenditure transactions that is not recorded as an accounts receivable in FMIS (Accounts Receivable System “ARS” and non ARS)

23. Year-End Accounting Data to be recorded by fiscal officers: • Allowance for uncollectible accounts: The portion of accounts receivable (including Banner student receivables) that is not on the University’s ARS which is estimated to be uncollectible.

24. Year-End Accounting Data to be recorded by fiscal officers: • BANNER Accounts Receivable balance reversal: • Revenue and related Banner accounts receivable for classes, housing, etc. beginning after June 30, nnnn must be reversed. • Revenue fully attributable to next fiscal year is not considered earned as of June 30th. (Reclass cash payments received to deferred revenue)

25. Year-End Accounting Data to be recorded by fiscal officers: • Due from RCUH: Unexpended RCUH G,S,R,B service ordered funds (object code 7232) should be reclassified to Due from RCUH (account control 1560) • Audit Finding No. 02-13: Transactions with Research Corporation of the University of Hawaii • $9 million (approx.) [advance] prematurely recorded as expenditures

26. Year-End Accounting Data to be recorded by fiscal officers: • Inventory of supplies: Cost value of un-issued inventorial supplies which are charged to other departments, external agencies or customers as part of departmental operations. • See APM A8.636-Supply Inventory

27. Year-End Accounting Data to be recorded by fiscal officers: • Deferred revenues: Revenue collections made in the current fiscal year for services to be rendered entirely in the subsequent fiscal year, e.g. Fall tuition collected in June should be deferred. Revenue recorded for sessions that cross fiscal years, should be prorated between the two (2) fiscal years.

28. Year-End Accounting Data to be recorded by fiscal officers: • Deferred charges/prepaid expenses: Amounts paid as of June 30th for goods and services to be consumed or expended in the subsequent fiscal year, e.g. summer session expenses paid in June should be prorated between the two (2) fiscal years or subscription paid in June for publications of the ensuing year, etc.

29. Year-End Accounting Data to be recorded by fiscal officers: • Tuition and Housing Discounts and Allowances (Waivers): Student tuition and housing waivers must be recorded as revenues and contra-revenues. Employee tuition and housing waivers must be recorded as revenues and expenditures.

30. GASB Attribute Reminders • Please do not use the “ZZ” Exchange/Nonexchange GASB attribute for any Fund Group 11 or Fund Group 12 accounts. • Fund Group 11 or Fund Group 12 accounts should be either EX (Exchange), MN (Mandatory Nonexchange), or VN (Voluntary Nonexchange).

31. FINANCIAL REPORTS WEBSITE • Please visit the Vice President for Budget & Finance/CFO’s website: http://www.fmo.hawaii.edu/cfo/ for the FY2002, FY2003, FY2004 and FY2005 audited financial statements

32. FINANCIAL REPORTS WEBSITE

33. OTHER ANNOUNCEMENTS • A year-end FMIS On-Line journal voucher system is currently being developed to replace the manual accrual journal voucher process. • If completed by June 2006, system will be available for FY2006 accrual journal vouchers/entries and instructions will be distributed.

34. Questions/Discussion? • Please contact the General Accounting & Loan Collection Office at 956-8278 if you have any questions or need assistance.

35. UP NEXT: • Disbursing and Payroll • Property and Fund Management • Office of Procurement and Real Property Management • Treasury • Office of Research Services

36. DISBURSING and PAYROLL

37. Disbursing and Payroll • Miscellaneous Encumbrances (Michael Wong) • Payments to New Employees (Michael Wong) • Accounts Payable (Alan Kimura)

38. Miscellaneous EncumbrancesNon-Payroll • Mileage Mnnnnnn • Relocation Nnnnnnn • Student Fellowship Fnnnnnn & Traineeship • Travel Reimbursements Tnnnnnn Not including Travel Advances • Library Purchases • Hamilton/Sinclair Libraries Lnnnnnn • All other Libraries Knnnnnn

39. Impact of ePurchasing • Issue Miscellaneous Encumbrance Ennnnnn for non participating UH provider • Issue eIDO to encumber XR2nnnn • INTER-DEPARTMENTAL CHARGES for participating UH providers • UTILITIES & OTHER AFPs Annnnnn • Issue eAFP to encumber (GL & Revenue Subcodes cannot encumber) • DEPARTMENTAL CHECKING SYSTEM • Issue ePO to encumber Pnnnnnn • Or issue eAFP to encumber Annnnnn

40. Payroll & Miscellaneous Encumbrances • Reference: “Fiscal Year-End Procedures for Payroll Encumbrances and Payments/Liquidation” May 12, 2006

41. Payroll & Miscellaneous Encumbrances

42. Payroll & Miscellaneous Encumbrances(cont’d) ORDER OF TRANSACTIONS • Record payroll expenses for 06/20/06 Pay Date • After the 06/20/06 payroll is recorded on 06/16/06, the other payroll transactions will be encumbered as follows:

43. Payroll & Miscellaneous Encumbrances(cont’d) • 07/05/06 After-the-Fact Payroll (Payroll # F55, F59, F69, F77, F78): only Object Codes 2001, 2011, 2017, 2018, 2019 and related employer fringe costs; encumber on June 19, 2006. • SCOPIS Payroll (F1, F2, F3, & F4) - Scan Sheets submitted for processing by 11:00 A.M. on 06/15/05; encumber on June 20, 2006. • Miscellaneous Encumbrances on form FMIS-35 for work performed up to 06/15/06. This includes (but is not limited to) overtime, night differential, split shift differential, and temporary assignment; encumber by June 22, 2006.

44. Payments to New Employees Departments must accrue (but not necessarily encumber) payroll for new hires if hired before July 1, 2006 and not paid by: • July 15, 2006 for new Faculty & Faculty Overload • July 20, 2006 for new After-the-Fact and Emergency Hires, and SCOPIS (student, casual, and other BOR overload)

45. What is an Accounts Payable? • An Accounts Payable (AP) is a liability or amount owed by the University to outside vendors and individuals or University employees for goods and services received or performed but not paid for by the end of the fiscal year June 30, 2006. (APM A8.866) • Applies to all University organizations and all sources of funds.

46. AP - What’s the Big Deal? • Past 5 years, cited by independent auditors. • Last year, UH did not improve its year end AP function. Significant increase in unrecorded liabilities (06/30/05) - Risk Mgt ($945,000) Fund Grp 11 - CRCH ($838,138) Fund Grp 12 - JABSOM ($1,017,153) Fund Grp 12 - Facilities ($573,188) Fund Grp 11 • Resulted in distorted financial information at the fiscal year end.

47. AP FY2006 • FMIS-11, Accounts Payable Listing Form • No diskettes - email FMIS-11 Accounts Payable data to Disbursing as attachment. • No signed FMIS-11 hard copies – email FO certification will be accepted. • June 30th FHMR009B Open Commitment Status by FO report available on-line in Page Center.

48. AP FY2006(cont’d) • P-Card Transactions • AP will be downloaded (includes P-Card transactions posted from June 15-30, 2006). • AP will not include P-Card transactions that are still in-transit and have not been posted on PVSNet as of June 30, 2006. • Fiscal Officers are then responsible to record these in-transit/not posted P-Card transactions.

49. Questions/Discussion? • Please contact Disbursing at 956-7126 or Payroll at 956-7444 if you have any questions or need assistance.

50. PROPERTY and FUNDMANAGEMENT