MISCELLANEOUS ACCOUNTING

CHAPTER29

MISCELLANEOUS ACCOUNTING

300.2

1.0OVERVIEW AND DEFINITIONS:

This chapter contains accounting guidance for several different topics that do not readily fit into the other chapters of the Legal Manual. Here is a list of the topics.

  1. Information and Technology Program Codes
  2. Accounting Treatment for Event Registration Fees
  3. Trust Fund Cash Deficit – Loans
  4. Department of General Services (DGS) Prepayments
  5. Health and Augmented Health Services Fees
  6. Processing Journals with FTE
  7. Sabbatical Leave Forfeitures
  8. FIRMS Edit for Fund Balance Clearing
  9. Interagency Transactions
  10. Interagency Transaction Table (ITT)FIRMS Edit
  11. Accounting Treatment for Rebates
  12. Unrelated Business Income Tax (UBIT) Fund Accounting
  13. Plan of Financial Adjustment (PFA) Processing

Still haven’t found what you are looking for?

If the reader has searched the entire Legal Manual, including this chapter, and has not found whateverguidanceis being sought, the reader is urged to search the CSU website. A CFS 9.2 – CFS Modulesor anICSUAMguideline may contain relevant instructional material that can meet the need while this manual continues to evolve. If you are still unable to locate information regarding your topic, please consider submitting your issue through the feedback button located at the top right of the Legal Manual webpage. Further information regarding feedback for the Legal Manual can be found in Chapter 1, General Information.

2.0FUND SPECIFICS:

Not applicable.

3.0FUND MANAGEMENT AND ACCOUNTING PRACTICES:

3.1Information and Technology Program Codes

Chapter 1,General Information,discusses how the higher education industry has standardized the external reporting of operating expenses using NACUBO program codes and how the CSU derives those codes when processing financial data. Please review Chapter1 in conjunction with this section,which discusses proper reporting of IT (information and technology) expenses.

Effective July 1, 2004, NACUBO adopted new programcodes to be used for information and technology expenses within each program code group.For example, NACUBO program code 0106,Instructional Information Technology, was identified for instructional information technology expenses. These subcategories should be used for formally organized and/or separately budgeted information technology expenses. If a campus does not separately budget and expense information technology resources, the costs will be reported in other NACUBO program codes.

If a campus must report in the information and technology program codes, some expenses will be easily identifiable and may be derived directly to the appropriate value using a program code override or a department derivation Rule 4 set-up. However, some expenses incurred by campus departments that should be reported in these program codes will derive elsewhere, like the established department derivation Rule 4. The campus can establish an allocation to automate the reclassification of the expenses from the department derivation to the information and technology program codes. This type of reclassification uses a specific set of accounts, typically those associated with FIRMS object codes 616001, I/T Communications, 616002, I/T Hardware,616003,I/T Software, 616004, I/T Infrastructure, and 616005,Miscellaneous Information Technology Costs, to identify the expenses to be reclassified.

Note that this reclassification must be made in the “xxCSU" business unit so the expenses will report properly in FIRMS. To comply with the reporting requirement, the expenses that did not derive to the information and technology program codes in each program group would be reclassified in the Actuals, Budgets and Encumbrance ledgers.

For further information regarding the Information and Technology Program Codes for FIRMS, please see FIRMS Overview PowerPoint presentation. Thescreen prints below illustrate how to generate an allocation journal entry that will reclassify all 616XXX expenses associated with program codes 0101 through 0105 to program code 0106.

There is no GAAP impact.

3.2Accounting Treatment for Event Registration Fees

This section provides coding instructions for a very specific type of expense: event registration fees. This expense occurs with high frequency within CSU, although not with high dollars.

Registration fees paid for staff training, workshops, conferences, and similar events should be recorded in FIRMS object code 660009,Professional Development. CSU’s former practice of recording certain registration fees in FIRMS object code 660090,Expenses-Otherwas discontinued in October 2014.

There is no GAAP impact.

3.3Trust Fund Cash Deficit – Loans

CSU has the legal authority to lend the money of onefundto another fund under certain circumstances. This authority is granted in Education Code Section 89760, excerpted below.

“(a) The trustees may transfer money from one special fund to another special fund or to the general fund in order to meet the commitments of the California State University if the transferred moneys are returned to the special fund of origin in time to fulfill the purposes of the special fund. Interest shall be paid….”

In any given year, a program’s expenditures may exceed revenues. This would typically occur when carryforward balances (reserves) are intentionally expended in a subsequent year based on the business plan for the activity, i.e. a planned spend-down of reserves. As such, the deficit spending would not be a cause for concern. However, in a year where a fund has insufficient beginning reserve balances and expenditures exceed revenues, the result can be negative cash, negative ending fund balance or both. Action is needed to resolve the deficit(s).

In the event that a fund or program has a credit balance in cash/investments, a loan should be obtained to rectify the cash deficit. Should the fund or program have a deficit (a debit) in its fund balance, the cure will require either a transfer in of resources, reduction of spending, increase in revenues or a combination thereof. This section discusses a hypothetical cash deficit in a self-support program and its resolution.

Assume the Extended Education(EE) program has an unplanned cash shortfall of $100,000. Further assume that the Parking program determines that it can extenda loan to Extended Education without impairing its (Parking’s) operations.

A loan document should be created to specify the terms of the loan. Include the interest rate to be charged, the payback period, and, if a multi-year agreement, a schedule outlining the principal and/or interest that will be paid each year. Full principal repayments at the end of a multi-year loan, sometimes referred to as balloon payments, should only be offered after careful scrutiny and analysis by the lending fund.

The following journal entries are suggested. Using this accounting will ensure elimination of this intercompany activity, which will be necessary for GAAP and State reporting.Journal descriptions that include “loan” can ensure that the nature of the transaction is not lost.

FUND / ACCOUNT / ACCOUNT DESCRIPTION / DEBIT / CREDIT / DESCRIPTION OF ENTRY
Entry to record loan at June 30:
EE / 101100 / Cash/Short-term Investments (SWIFT) / 100,000 / Loan from Parking Fund to cover EE’sdeficit for FY13-14.
EE / 230472 / Due to CSU 472 -TF Parking Revenue Fund-Parking Fees / 100,000 / Loan from Parking Fund to cover EE’sdeficit for FY13-14.
PARKING / 130441 / Due from CSU 441 -TF - EE / 100,000 / Loan to EEFund to cover EE’s deficit for FY13-14.
PARKING / 101100 / Cash/Short-term Investments (SWIFT) / 100,000 / Loan to EE Fund to cover EE’s deficit for FY13-14.
Entry to record payback of loan in the next fiscal year:
FUND / ACCOUNT / ACCOUNT DESCRIPTION / DEBIT / CREDIT / DESCRIPTION OF ENTRY
EE / 230472 / Due to CSU 472 -TF Parking Revenue Fund-Parking Fees / 100,000 / Payback of loan from Parking Fund to cover EE’s deficit for FY13-14.
EE / 660004 / Interfund Interest Expense / 500 / Interest expenserelated to loan from Parking Fund to cover EE’s deficit for FY13-14.
EE / 101100 / Cash/Short-term Investments (SWIFT) / 100,500 / Payback of loan from ParkingFund to cover EE’s deficit for FY13-14.
PARKING / 101100 / Cash/Short-term Investments (SWIFT) / 100,500 / Collection on loan to EE to cover EE’s deficit for FY13-14.
PARKING / 130441 / Due from CSU 441 –TF - EE / 100,000 / Collection of loan CE/EE Fund to cover EE’sdeficit for FY13-14.
PARKING / 580012 / Interfund Interest Revenue / 500 / Interest revenuerelated to loan to EE Fund to cover EE’s deficit for FY13-14.

EE course fees should be evaluated on an on-going basis to assure revenues cover all costs, both direct and indirect. In the year(s) subsequent to the cash deficit in the EE program, the course fees should also include sufficient revenue to cover the repayment of theloan (both the principal and interest).

GAAP Impact: As noted above, interfund loans need to be eliminated for GAAP reporting purposes. Using the due to/due from object codes specified above, will facilitate the elimination. Therefore, no further entries by the campus are required.

Effective FY12/13, campuseswill no longer need to record a GAAP entry to eliminate interfund interest revenue (recorded in object code 580012) and expense (recorded in object code 660004) if the interfund interest is between two different funds within a campus (intra-agency).Both interfund interest revenue and expense transactions now map to 723005 and program code 14 and the activities will be self-eliminating in consolidation.

However, if other object codes are used, such as Loan Receivable/Interest Income/Loan Payable/Interest Expense, a manual elimination entryshould be created.

3.4Department of General Services (DGS) Prepayments

Similar to how CSU promotes the use of Cash Posting Orders within its SWIFT investment pool to efficiently settle transactions between campuses, the State of California promotes the use of direct charges within its treasury system to efficiently settle transactions between state agencies. This section discusses how a specific agency, the DGS, collects advances from CSU campuses for services to be rendered.

The state books an entry on the campus’s Agency Reconciliation Report (Tab Run) the description of which is “DGS SRF Prepayment” (Department of General Services Service Revolving Fund Prepayment). The entry reduces the campus’s balance in its statefund 0948 account. The charge represents an advance for services to be provided in the upcoming year and provides working capital to the service revolving fund. Campuses may also see a second entry on their tab run, similarly described as “DGS SRF Return”. This second entry increases the campus’ state fund 0948 balance and represents the return of the prior year’s advance. Annually, DGS determines the amount of prepayment required, returns the prior period’s advance if applicable and simultaneously charges a new amount for the current period. The amount charged by DGS varies each year as the average purchases of the campus fluctuate.

The process used by DGS to determine if a prepayment should be collected from a state agency is as follows: every year,at the end of April, DGS calculates the prepayment by gathering all of the prior year’s DGS expenditure activity for each agency, then taking one third as the projected prepayment amount. If the projected amount is under $10,000, a prepayment is not assessed.

Campuses should record the advance as follows:

DR - 107005 Prepay Service Revolving Fund-Services

CR - 305022 Fund Balance Clearing

The opposite entry would be used to record the return of a prior year’s advance.

The SAM99 report(Reconciliation of State Controller’s Accounts with Agency Accounts)is programmed so that FIRMS object code 107005 and all other object codes mapping to state general ledger account 1730,Prepayments to Other Funds or Appropriations, are ignored or not picked up on line 3,Reverse Agency Original Prior Year Accruals. This allows the campus to adjust the advance and fund balance clearing amounts directly to match the transaction(s) initiated by DGS without creating an error or adjusting revenue/expense accounts.

To segregate data that isn’t otherwise broken out using state sub-funds, the SCO uses an attribute called a category code. The Services Revolving Fund or DGS Prepay Advance is booked to category code 98 by the SCO. The SAM99 report is coded to only pick up entries to state general ledger 1730 in funds marked with category codes 98 or 99 to assist campuses in aligning their data with the state records.

The addition of the category code on this transaction means that a unique FNAT key must be created to match the state attributes. Since this transaction is only booked once a year, to recognize the change in the advance booked by the SCO, the campus may choose from either of the following options when selecting the PeopleSoft fund in which to record the entry.

•Add a fund mapped to category 98. [Recommended]

Or

•Record the advance in a fund not mapped to category 98.

Note that if this transaction is recorded in a fund not mapped to category 98, the SAM99 report will be persistently out of balance by the advance amount. Nevertheless, the campus may choose this option since data for statefund 0948 is not submitted to the state via the SAM99 process (see Chapter 4, Year End); the out of balance error for this item can be ignored.

There is no GAAP impact.

3.5Health and Augmented Health Services Fees

Health and augmented health services fees are briefly mentioned in Chapter 14,CSUOperating Fund. This section contains an expanded discussion, which differentiates the two fees, plus provides details on how to properly capture the activity within the CFS.

Campuses are required to collect mandatory health services fees charged to all students. The health services fee is intended to provide funding for basic health services to students. Augmented health services fees are those services offered by the Student Health Center that are elective or specialized in nature and not included in the basic health services provided by a campus. A fee may be charged for the augmented health services, but there are no circumstances when the fee charged may exceed the actual cost of providing the services and/or materials.

Augmented health services fees are student user fees governed by Executive Order 1000 and must be recorded in CSU fund 485. In order to comply with additional requirements found in Executive Order 943, a methodology should be established to enable separate reporting of augmented health services revenue and related expenditures should it be required or requested.

To comply with both executive orders, a campus must minimally:

  1. Account for and track augmented health services revenue/expense within CSU fund 485.
  2. Ensure augmented health services fees are mapped to object code 501112, Category IV fees.

It is the responsibility of campus financial officers to ensure all augmented health services fees and related expenditures are recorded in the appropriate PeopleSoft fund within CSU fund 485. Augmented health services fees and related expenses must be recorded in such a way as to readily show that amounts charged to students do not exceed the actual cost of materials or of providing the services. These fees/expenses must not be commingled with the mandatory health services fees charged to all students as part of their registration fees. Additionally, augmented health services fees must follow CSU fund 485 rules without exception.

Campus funds related to health services operations and augmented health services activity should be mapped to FNAT 127340. As mentioned previously, by policy health services fees and augmented health services fees must be deposited in the CSU Operating Fund 485. Furthermore, the health activity must be associatedwith a unique FIRMS project code that distinguishes these trial balances from other operating fund activity on some reports, like the SAM06. FNAT 127340 contains project code HSFEE which fulfills that requirement. Note that FNAT 127340 also has a program attribute key of 0507 which ensures that the health services expenses will be assigned the proper NACUBO program code of 0507 through the derivation process.

There is no GAAP impact.

3.6Processing Journals with FTE

Within the Common Financial System (CFS), there is a statistical field which CSU utilizes to capture “FTE” (full time equivalent). In this context, FTE does not refer to students, but instead to employees. This is a workforce measurement value, or workforce metric, that assists CSU in managing its large workforce and measuring its institutional efficiency and effectiveness. This section discusses how to populate the FTE field when preparing payroll-related journal entries.It also discusses how to calculate FTE, if the statistical amount is not known.

Salary object codes, except for 601301, Overtime, and 601102, Summer Fellowship Stipend, are required to be reported with the statistic FTE. Payroll transactions fed from the Human Resources module are posted in the Finance module with FTE. The payroll expenses for one employee are posted with an FTE of one month. Occasionally,adjustments must be booked in the general ledger. An example would be when faculty from one campus assists a second campus and a Cash Posting Order for faculty release time is issued. The receiving campus will need to record a manual journal entry to credit their original payroll expenditure accounts; the remitting campus will need a manual journal entry to debit their appropriate payroll accounts.

How to Populate the FTE Field

The fields displayed in the journal entry lines grid are controlled initially for all users by the journal entry template. A standard or default template is maintained centrally in the CFS; however, multiple journal entry templates may exist within PeopleSoft. The fields selected on the standard template or an alternate template may be viewed by clicking on the Template List link from the Journal Lines tab.

Select a template that shows that the fields Stat Code and Stat Amt on the Amount tab are available for entry.