Handbook
For Medical School Accountants
Treatment of A/R on Reports
Last DateReviewed: 10/28/2016
Prior to the University installing EFS, departments had limited access to Accounts Receivable information.Revenue was not recognized until checks were deposited into accounts and departments had to keep shadow systems to track receivables.With EFS, departments no longer need to keep shadow systems to track receivables and revenue is recognized immediately.However, the revenue does not affect the cash balance until it is received.
Understanding the treatment of Accounts Receivable in reports can be very confusing.Central reports, including UM reports, use a cash balance for their reports. The signs (positive/negative) referred to in the following paragraphs reflect how UM Reports displays the transactions.When an invoice is billed in EFS, it generates a positive amount to revenue and a negativeamount to accounts receivable.The net of those two items is zero.When the bill is paid, it generates a positive amount to accounts receivable and a negative amount to a Central cash account.Accounts Receivable is now zero and both revenue and the cash balance are positive in UM Reports (Example A).This is true except when billing the University of Minnesota Foundation.The revenue is recognized immediately and is not deducted from the cash balance if the invoice is outstanding (Example B).
Example A:
Example B:
If a bill is not paid in the same year it is billed, it can be even more confusing.If you have billed an invoice in a prior year, it generated a positive amount in revenue and a negative amount for accounts receivable.The net effect is zero and the invoice did not influence your bottom line.Assuming you had no expenses, the balance on that chart string(in UM reports) would be zero at year end.The next fiscal year, the beginning balance would also be zero.The payment is made, generating a positive amount in Accounts Receivable and a negative amount to a Central cash account.Now, your balance is positive in UM Reports (Example C).
Example C:
Although it may not look right to have a positive balance in your A/R in the current year, it is correct.The payment cannot be reflected in revenue as then it would be double counted. It would be revenue in both the prior year and the current year.You may think that the A/R should start out in the current year as a negative amount instead of zero.That would not be right either as then your beginning balance would be negative instead of zero.See the SOP supplemental document called A-R Reporting Example for an example of the above.
Currently, the Dean’s Office likes to look at departmental reports that include accounts receivable.As a result, several AHC reports ( were developed that include accounts receivables in their balances.These reports have an (A/R) after their title.In these reports, balances include all revenue (including outstanding A/R).Prior year accounts receivables are included in the report as a separate column to reflect the correct beginning balance otherwise the report would have a cash balance carry forward.
Definitions on AHC Reports:
“Prior Years A/R (2009+): The Cumulative A/R balance up to the Prior Fiscal Year (for example in FY16, the Prior Year’s A/R is cumulative balance from FY 2009 to FY2015. This figure is used to adjust the Prior Year Carryforward Figure. As noted above, the Central Prior Year Carryforward Figure is reduced by outstanding A/R; therefore it needs to be added back in.
[JMB1]Link outdated. Any idea what this refers to?