Business Procedures Manual

Essential business procedural components for University System of Georgia institutions.

1.7 Accounting Periods

(Last Modified on February 25, 2016)

The University System of Georgia (USG) is an organizational unit of the State of Georgia, under the governance of the Board of Regents, engaged in business activities. The USG’s accounting policies conform with accounting principles generally accepted in the United States of America (GAAP) applicable to public colleges and universities engaged in business-type activities as prescribed by the Governmental Accounting Standards Board (GASB) and the State of Georgia’s statutory basis of accounting (Budget Funds) reported in the State of Georgia Budgetary Compliance Report (BCR).

(Last Modified on February 25, 2016)

The USG adheres to the GASB GAAP hierarchy as defined in GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, which sets forth what constitutes GAAP for all state and local governmental entities. It establishes the order of priority of pronouncements and other sources of accounting and financial reporting guidance that a governmental entity should apply. The sources of authoritative GAAP are categorized in descending order of authority as follows:

  • Officially established accounting principles - Governmental Accounting Standards Board (GASB) Statements (Category A)
  • GASB Technical Bulletins; GASB Implementation Guides; and literature of the AICPA cleared by the GASB (Category B).

Authoritative GAAP is incorporated periodically into the Codification of Governmental Accounting and Financial Reporting Standards (Codification), and when presented in the Codification, it retains its authoritative status.

If the accounting treatment for a transaction or other event is not specified by a pronouncement in Category A, the USG considers whether the accounting treatment is specified by a source in Category B.

If the accounting treatment for a transaction or other event is not specified within Category A or B authoritative GAAP, the USG considers accounting principles for similar transactions or other events within Category A or B authoritative GAAP. In addition, the USG may also consider nonauthoritative accounting literature from other sources that does not conflict with or contradict authoritative GAAP.

Sources of non-authoritative accounting literature may include GASB Concepts Statements; pronouncements and other literature of the Financial Accounting Standards Board, Federal Accounting Standards Advisory Board, International Public Sector Accounting Standards Board, and International Accounting Standards Board, and AICPA literature not cleared by the GASB; practices that are widely recognized and prevalent in state and local government; literature of other professional associations or regulatory agencies; and accounting text- books, handbooks, and articles.

In evaluating the appropriateness of non-authoritative accounting literature, the USG considers the consistency of the literature with the GASB Concepts Statements, the relevance of the literature to particular circumstances, the specificity of the literature, and the general recognition of the issuer or author as an authority.

Summaries of GASB Statements, Concepts Statements and Interpretations, including instructions for obtaining the full text, can be found on the GASB website: http://www.gasb.org/st/index.html. Additional non-authoritative accounting literature utilized by the USG includes the following:

  • The National Association of College and University Business Officers (NACUBO), Financial Accounting and Reporting Manual for Higher Education Released (FARM) manual; and
  • The Statewide Accounting Policy & Procedure manual issued by the State Accounting Office.

(Last Modified on February 25, 2016)

Basis of accounting refers to when revenues, expenses, and related assets, deferred outflows of resources, liabilities, and deferred inflows of resources are recognized in the accounts and reported in the financial statements. Specifically, it relates to the timing of the measurements made, regardless of the measurement focus applied.

1.2.1 GAAP Reporting

(Last Modified on February 25, 2016)

Business-Type Activities:

GASB Statement No. 34, Basic Financial Statements-and Management’s Discussion and Analysis-for State and Local Governments, and 35, Basic Financial Statements-and Management’s Discussion and Analysis-for Public Colleges and Universities, requires that colleges and universities that report as Business Type Activities (BTAs) present financial statements using the economic resources measurement focus and the accrual basis of accounting.

Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from non-exchange activities are generally recognized when all applicable eligibility requirements, including time requirements, are met.

Fiduciary Fund Types:

Pension and Other Employee Benefit Trust Funds – These funds account for the Board of Regents Retiree Health Benefit Fund and the Georgia Regent’s Early Retirement Plan. These funds use the economic resources measurement focus and the accrual basis of accounting.

Elements of Financial Statements:

The GASB has identified and defined seven elements as the fundamental components of financial statements of state and local governments. Refer to the Statewide Accounting Policy & Procedure Manual for a more detailed discussion of these elements and the related concepts.


1.2.2 Budgetary Reporting

(Last Modified on February 25, 2016)

The State of Georgia’s statutory basis of accounting/Budgetary Compliance Reporting (BCR) is a comprehensive basis of accounting other than GAAP.

USG presents its BCR statements using the statutory basis of accounting that is substantially the same as the accrual basis of accounting, with the following major exceptions:

  • Receivables and revenues of State appropriations are recorded when appropriations are allotted to the budget units by the Office of the State Treasurer.
  • For expenditure-driven funding arrangements (grants, sales and services), receivables and revenues are recorded when qualifying statutory-basis expenditures are recorded or when services have been provided.*
  • All other revenues may be recorded when received in cash in accordance with SAO policy or accrued if intended to cover current operating costs.
  • Liabilities and expenditures are recorded when purchase orders or other contractual obligations to procure goods or services have been executed.*
  • Expenditures for items not requiring purchase orders are recorded when the goods or services are received. However, institutions may record these expenditures when presented for payment as long as the application of this method is applied consistently and the appropriate number of occurrences is reflected each year. For example, an institution may record utility invoices one month in arrears, provided that 12 (and only 12) monthly utility invoices are recorded per fiscal year.
  • Prior period adjustments and certain other items are reported as additions to and deductions from beginning fund balances.

* -Restricted Funds do not report encumbrances as expenditures.

The laws of the State of Georgia require that certain funds appropriated for a specific fiscal year must be “expended or obligated” in that fiscal year, or “lapse” and be returned to the state treasury to be available for future appropriations.

“Obligated” funds are commonly referred to as encumbrances – meaning the institution has issued a purchase order for goods and services or has signed a contract. Although encumbrances are not expenses for GAAP purposes, they represent an expense of the institution for that particular budget year, and therefore represent an expense for the State of Georgia’s statutory basis of accounting/ Budgetary Compliance Reporting (BCR).

Surplus (Lapse) – Unless eligible to be kept as reserves, current funds that are not contractually obligated (not encumbered) and prior year funds that are unencumbered lapse and must be returned to the Office of the State Treasury as a portion of surplus. Each institution returns its surplus funds to the University System Office (USO) and the USO returns these funds to the Office of the State Treasury.

The fund groups that are included in accordance with the State of Georgia statutory basis of accounting/Budgetary Compliance Reporting (BCR) and having funds subject to lapsing are:

  • 10xxx Educational and General
  • 11xxx Other Organized Activities
  • 50000 Unexpended Plant

Encumbrances for Statutory Basis of Accounting/Budgetary Compliance Reporting

Required Information for Valid Encumbrance (Obligation)

A valid encumbrance should be supported by the following information:

  • Confirmed Vendor
  • Specific Project/Services/Goods
  • Specific Price for Project/Services/Goods
  • State Time or Range of Time for Delivery/Completion

Documentation of this type should be available from appropriately executed purchase orders, contracts, etc. The presence of these conditions correspond to the elements of an enforceable contract in that they support the concept of mutual assent, this is, the parties have agreed on the specific product or service at the given price and time.

The rules for managing prior year purchase orders issued from Funds 10xxx, Funds 11xxx, and Fund 50000: (for managing surplus).

  • Purchase orders issued and encumbered in a previous fiscal year that are paid in the following fiscal year for exactly the encumbered amount have no effect on “surplus”.
  • Purchase orders issued and encumbered in a previous fiscal year that are paid (as final payment with PO closed) for an amount less than the encumbered amount will contribute the difference between original encumbrance amount and payment amount to “surplus”. No journal entry or other action is required, since the “surplus” amount to be returned to the state treasury is already in the appropriate net asset account due to the previous fiscal year being closed using GAAP/GASB closing rules. GAAP/GASB closing rules do not expense encumbrances.
  • Purchase orders issued and encumbered in a previous fiscal year that need to be paid for an amount greater than the encumbered amount should have the excess amount charged to the current budget period. The original encumbered amount may be paid against the original budget period. The excess amount should be paid against the current budget period
  • If a vendor cannot supply the item(s) ordered:
    • An institution that does not desire to reissue the purchase order to a new vendor can simply cancel the purchase order. The entire purchase order amount will become surplus.
    • Purchase orders issued and encumbered in a previous fiscal year that are cancelled in a subsequent fiscal year may be reissued to a different vendor for similar goods and services (like and kind) in an amount not to exceed the original purchase order amount. The reissued purchase order must reflect the budget period of the original purchase order. If the reissued purchase order is less than the original purchase order amount, the difference will increase “surplus”.

Other laws of the State of Georgia allow year-end fund balances for certain funds to be exempt from state law concerning lapsable funds. The fund groups that are audited in accordance with State of Georgia statutory basis of accounting/Budgetary Compliance Reporting (BCR) but are exempt from lapsing due to state law are:

  • 14000 Departmental Sales and Services Revenues and Expenditures
  • 15000 Indirect Cost Recovery and Administrative Cost Allowance Revenues and Expenditures
  • 16000 Technology Fee Revenues and Expenditures

Other laws of the State of Georgia allow year-end fund balance in fund 10500 Tuition to be exempt from the state law concerning lapsable funds up to a threshold of 3% of current year tuition revenues.

In addition to the fund groups indicated above, another set of restricted funds are audited within the context of BCR to report expenditures in relation to approved budget values. However, these fund groups are not subject to having funds lapse. These restricted fund groups are:

  • 20000 Restricted Educational and General
  • 21xxx Restricted Other Organized Activities

(Last Modified on February 25, 2016)

Revenues are reported in the Statement of Revenues, Expenses, and Changes in Net Assets and are classified as either operating or non-operating.

Operating revenues are those derived from exchange transactions and include:

  • Tuition and Fees (Net of Sponsored and Unsponsored Scholarships)
  • Federal Appropriations, Grants and Contracts
  • Gifts
  • Sales and Services of Educational Activities
  • Sales and Services of Auxiliary Enterprises
  • Sales and Services of Hospitals
  • Other Operating Sources

Non-operating revenues are those derived from non-exchange transactions, or those that are not reported as operating activities in the Statement of Cash Flows. Non-operating revenues include:

  • State Appropriations
  • Grants and Contracts (including Pell)
  • Gifts
  • Investment Income
  • Other Non-Operating Revenues

(Last Modified on February 25, 2016)

1.6.1 General

(Last Modified on February 25, 2016)

The USG has elected to utilize full accrual basis accounting and to comply with generally accepted accounting principles.

This election means that:

  • Encumbrances on the books as of June 30 that have not had receipt of goods and/or services will not be converted into expenditures.
  • For GAAP/GASB reporting, these encumbrances simply continue into the next fiscal year. The expense occurs during the fiscal year where the underlying obligation for the goods and/or services occurs.
  • For the BCR, encumbrances outstanding on June 30 will be reported like expenditures for the purpose of comparing expenditures to budget and for determining “surplus.”
  • Normal accounting processes will be based upon GAAP/GASB standards, with reports developed to accomplish required reporting for the BCR. It should be noted that for fund groups subject to lapsing, the normal day-to-day business process is based on the State of Georgia statutory basis of accounting, but the accounting processes are recording transactions on the GAAP/GASB basis. For the BCR, transactions are matched to budget periods rather than fiscal years. For GAAP/GASB reporting, transactions are reported by fiscal year without regard to budget period.

1.6.2 Encumbrance Policies

(Last Modified on February 25, 2016)

For all funds except restricted funds, the USG requires that all known obligations for the current fiscal year be encumbered unless the amount is considered immaterial.

Personal Services Encumbrances

By the end of September, each filled position must be properly encumbered in the financial records to reflect the remaining salary and benefit expense amounts for the fiscal year. An accurate method of delivering encumbrance liquidation data into the financial records must be utilized after each payroll, so that only remaining salary and benefit amounts remain encumbered.

Note: Benefit amounts should be encumbered as accurately as possible/practical. Extra pay and/or overtime pay that was not previously encumbered should not provide an encumbrance liquidation transaction. If the extra pay/overtime pay was not encumbered, the payroll posting process should increase the appropriate expense without liquidating the encumbrance amount.

Travel Encumbrances

When travel to be taken in a future fiscal year has been formally authorized and the amount is material (greater than $500 per trip), the travel funds may be encumbered or paid and expensed in the current fiscal year for budgetary purposes. These expenses would normally be for travel and/or seminars planned in the first quarter of the subsequent fiscal year.

Note: For travel funds to be encumbered, the travel must be formally authorized. This would include submission of the usual out-of-state travel approval form, or written approval for in-state travel, stating the nature and purpose of the travel, date of travel, and amount.

When the travel or seminar cost to be incurred in the subsequent fiscal year is actually paid in the current fiscal year, a list of these transactions should be maintained and a year-end journal entry should be posted in the GAAP Ledger to move the amount from expense to prepaid expense for financial reporting purposes. This journal entry should be reversed in the subsequent year.

Operating Expenses and Equipment Purchases

Purchase orders issued for goods and services should be encumbered. When underlying obligations occur for goods or services, the encumbrance should be liquidated along with accruing the expense, with a resulting credit to accounts payable.

Note: Purchases by procurement card or petty cash do not need to be encumbered, as these are generally small value and they are promptly expensed into the institution’s records.


(Last Modified on February 25, 2016)

The accounting periods will consist of twelve (12) monthly periods that coincide with calendar months, with twelve (12) monthly periods constituting the accounting year. Depending upon the accounting system software utilized, other specialized periods may exist due to software concerns.*

* Note: Institutions using the PeopleSoft Financials software also will have period 0 that contains beginning balances. Other periods may be available as approved by the USO.

1.7.1 Accounting Year

(Last Modified on February 25, 2016)

A reconciliation should be done between the various balances maintained in the Human Resources/Payroll System and the cumulative balances maintained in the financial records. This should include all salaries and payroll deductions. The reconciliation should be done at least quarterly. Documentation confirming these reconciliations should be maintained in the institution’s files for at least three (3) years.

Care should be exercised to insure that balances in payroll deduction agency accounts in financials do not become debit balances by disbursing more than is delivered from the deductions transmitted from the payroll system. Prior to fiscal year end, analysis with appropriate action must be accomplished to prevent debit balances from occurring in agency accounts on the Annual Financial Reports.


1.7.2 Monthly Closing of Accounting Record

(Last Modified on April 19, 2016)

Accounting records shall be closed at the end of every calendar month, no later than ten (10) business days after the end of the month. After all required adjusting journal entries have been made, all allocations processed, all interfaces from other software systems posted, and required reports processed, the accounting records for that month should be closed.*

* Note: Institutions using the GeorgiaFIRST model of the PeopleSoft Financials software should follow the instructions provided for closing the prior accounting period.


1.7.3 Year End Closing of Accounting Records

(Last Modified on February 25, 2016)

The closing of the accounting year shall be accomplished by the date established by the Office of Fiscal Affairs – Accounting and Reporting each year. This shall include all required adjusting journal entries entered, all allocations processed, all interfaces from other software systems posted, and all required reports processed to prepare the system-generated annual financial reports. Requests for extensions should be made to the Office of Fiscal Affairs – Accounting and Reporting.


(Last Modified on February 25, 2016)

USG presents the Statement of Net Position in a classified format to distinguish between current and noncurrent assets and liabilities in accordance with GASB Statement No. 34.

Assets

The term current assets is used to designate cash and other assets or resources commonly identified as those that are reasonably expected to be realized in cash or sold or consumed within a year. Therefore, current assets generally include such resources as (a) cash available for current operations and items that are the equivalent of cash; (b) inventories of merchandise and operating supplies; (c) trade accounts, notes, and acceptances receivable; (d) receivables from other governments, vendors, customers, beneficiaries, and employees, if collectible within a year; (e) installment or accounts and notes receivable if they conform generally to normal trade practices and terms within the business-type activity; (f) marketable securities representing the investment of cash available for current operations; and (g) prepayments such as insurance, interest, rents, unused royalties, current paid advertising service not yet received, and operating supplies. Prepayments are not current assets in the sense that they will be converted into cash but in the sense that, if not paid in advance, they would require the use of current assets within a year.

Noncurrent asset classification includes resources such as (a) cash and claims to cash that are restricted as to withdrawal or use for other than current operations, that are designated for disbursement in the acquisition or construction of noncurrent assets, or that are segregated for the liquidation of long-term debts; (b) receivables arising from unusual transactions (such as the sale of capital assets) that are not expected to be collected within 12 months; (c) cash surrender value of life insurance policies; (d) land and other natural resources; and (e) depreciable assets.

Unearned discounts (other than cash or quantity discounts), finance charges, and interest included in the face amount of receivables are shown as a deduction from the related receivables.

Asset valuation allowances, such as uncollectible receivables, are deducted from the assets or groups of assets to which the allowances relate, with appropriate disclosure.

Liabilities

The term current liabilities is used principally to designate obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities. As a category in the Statement of Net Position, the classification is intended to include obligations for items that have entered into the operating cycle, such as payables incurred in the acquisition of materials and supplies to be used in providing services; collections received in advance of the performance of services; and debts that arise from operations directly related to the operating cycle, such as accruals for wages, salaries, commissions, rentals, and royalties. Other liabilities whose regular and ordinary liquidation is expected to occur within one year also are intended for inclusion, such as short-term debts arising from the acquisition of capital assets, serial maturities of long-term obligations, amounts required to be expended within one year under sinking fund provisions, and certain agency obligations arising from the collection or acceptance of cash or other assets for the account of third parties. The current liability classification also is intended to include obligations that, by their terms, are due on demand or will be due on demand within one year from the date of the financial statements, even though liquidation may not be expected within that period.

Noncurrent liabilities include debts to be liquidated by resources that have been accumulated in accounts of a type not properly classified as current assets, or long-term obligations incurred to provide increased amounts of working capital for long periods.

(Last Modified on February 25, 2016)

GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions, 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, and 65, Items Previously Reported as Assets and Liabilities, establishes accounting and reporting standards for non-exchange transactions. These statements divide non-exchange transactions into four classes:

  1. Derived tax revenues
  2. Imposed non-exchange transactions
  3. Government-mandated non-exchange transactions
  4. Voluntary non-exchange transactions

The class most frequently found in the USG is voluntary non-exchange transactions. GASB Statement No. 33 defines a non-exchange transaction as one where “a government (including the federal government, as provider) either gives value (benefit) to another party without directly receiving value in exchange or receives value (benefit) from another party [including individuals and other private sector entities] without directly giving value in exchange.”

GASB Statement No. 33 establishes time requirements and purpose restrictions for non-exchange transactions. Time requirements affect the timing of recognition of non-exchange transactions. Recipients of resources with purpose restrictions should report the assets as restricted until the resources are used for the specified purpose.

The following table provides additional guidance on non-exchange transactions.

Class Recognition

Government-mandated nonexchange transactions

Examples: federal government mandates on state and local governments

Voluntary nonexchange transactions

Examples: certain grants and entitlements, most donations

Recipients:

Assets
Period when all eligibility requirements have been met.

Liabilities
Receipt of resources before elgibility requirements are met, excluding time requirements.

Deferred inflows of resources
Receipt of resources before time requirements are met, but after all other eligibility requirements have been met. When modified accrual accounting is used for revenue recognition, resources that are not “available”.

Revenues
Period when all eligibility requirements have been met. However, when a provider precludes the sale, disbursement, or consumption of resources for a specified number of years, until a specified event has occurred, or permanently (for example, permanent and term endowments), report revenues when the resources are received and report resulting net position or fund balance as restricted. When modified accrual accounting is used for revenue recognition, resources also should be “available.”

Providers:

Assets
Payment of resources before eligibility requirements are met, excluding time requirements.

Liabilities
Period when all eligibility requirements have been met.

Deferred inflows of resources
Payment of resources before time requirements are met, but after all other eligibility requirements have been met.

Expenses or expenditures
Period when all eligibility requirements have been met. However when a provider precludes the sale, disbursement, or consumption of resources for a specified number of years, until a specified event has occurred, or permanently (for example, permanent and term endowments), report expenses or expenditures when the resources are paid.

(Last Modified on February 25, 2016)

Due to the conflicting requirements imposed on the USG in conforming to GAAP/GASB principles while maintaining the ability to provide reporting as mandated by the laws of the State of Georgia (BCR) , several different ledgers should be maintained. These ledgers must be able to distinguish between fiscal year and budget period to facilitate correct reporting in the various reporting modes, as discussed in the following sections.

1.8.1 Actuals Ledger

(Last Modified on February 25, 2016)

The actuals ledger reports all “day to day” financial transactions in the general ledger based on the fiscal year and accounting period. Activity for assets, liabilities, net position, revenue and expenditures are included.

Note: The State of Georgia statutory basis of accounting/ BCR activity will be a combination of the Actuals, Detail_En and BCRADJ ledgers for institutions using the GeorgiaFIRST model of the PeopleSoft Financials software. The following types of transactions are not allowable for BCR reporting:

  • Depreciation expenses of assets
  • Recording compensated absences
  • Eliminations of intra-campus sales
  • Recording scholarship allowances

1.8.2 Capital Assets with Depreciation

(Last Modified on February 25, 2016)

For GAAP/GASB reporting, a ledger for capital assets with resulting depreciation values must be maintained. This ledger should be updated from a software module containing detailed information about each capital asset and its associated depreciation entries. *

* Note: The ledger for Capital Assets will be the Capital Ledger for institutions using the GeorgiaFIRST model of the PeopleSoft Financials software. The Asset Management module will populate this ledger.

Due to the method for budgeting within the BCR for equipment (capital tems), the ledger for capital assets must provide some offsetting information. For example, purchase of capital equipment in the actuals ledger maintained for the BCR will charge an equipment purchase expense account to support the BCR expense reporting. For GAAP/GASB purposes, this is not an expense, but is the purchase of an asset. When this transaction populates the software module for tracking capital assets, it must generate an entry in the ledger for capital assets to debit the asset account for equipment, and to credit the equipment purchase expense account, which is the same account that was debited in the ledger for BCR transactions.

This means that the ledger for capital assets will not be able to support stand-alone financial reporting. It is only meaningful when combined with the Actuals Ledger.

The Actuals ledger will display the equipment expense as required for the BCR. Combining the Actuals Ledger and the Capitals Ledger will not show any equipment expense, but will properly report the asset “Equipment” as required for GAAP/GASB purposes.


1.8.3 GAAP Ledger for Adjusting Entries

(Last Modified on February 25, 2016)

In addition to the ledgers described above, a third ledger should be maintained for adjusting entries that must be recorded to provide for certain GAAP/GASB reports. The entries to this ledger are those that would interfere with normal business processes if the entries were made to the other two ledgers described above.*

* Note: The ledger for adjusting entries will be the GAAP Ledger for institutions using the GeorgiaFIRST model of the PeopleSoft Financials software.

Examples of entries made to the ledger for adjusting entries are:

  • Recording compensated absences
  • Eliminating intra campus sales
  • Recording scholarship allowances
  • Pension and OPEB liabilities

Generally, entries made into the ledger for adjusting entries will be reversed in the next accounting year.


1.8.4 Combinations of Ledgers versus Reporting Requirements

(Last Modified on February 25, 2016)

  1. For Budgetary Compliance Reporting (BCR), only the ledger(s) containing statutory basis of accounting transactions are used . * This reporting is based on budget period along with fiscal year.
    * Note: This will be the Actuals, Detail_EN and BCRADJ ledgers for institutions using the GeorgiaFIRST model of the PeopleSoft Financials software.

  2. For GAAP based reporting, the Actuals Ledger containing “day to day” financial transactions will be combined with the ledger containing capital assets. * This reporting is based upon fiscal year without regard to budget period.
    * Note: This will be a combination of the Actuals and Capital Ledgers for institutions using the GeorgiaFIRST model of the PeopleSoft Financials software.

  3. For GASB reporting (at the end of the fiscal year), the Actuals Ledger for “day to day” transactions , the ledger for capital assets, and the ledger for adjusting entries will be combined. * This reporting is based upon fiscal year without regard to budget period.
    * Note: This will be a combination of the Actuals, Capital, and GAAP Ledgers for institutions using the GeorgiaFIRST model of the PeopleSoft Financials software.


(Last Modified on February 25, 2016)

Data is generally provided to an institution’s financial records from multiple external sources, which may include Human Resources/Payroll, Student Information, and Cash Receipting (if not part of the financial application) systems. The USG requires periodic reconciliation of these external systems to the balances maintained in the financial records, as noted in the following sections.

1.9.1 Human Resources/Payroll Systems

(Last Modified on February 25, 2016)

A reconciliation should be performed between the various balances maintained in the Human Resources/Payroll System and the cumulative balances maintained in the financial records. This should include all salaries and payroll deductions. The reconciliation should be done at least quarterly. Documentation confirming these reconciliations should be maintained in the institution’s files for at least three (3) years and include all relevant supporting documentation, including prepared by, prepared date, reviewed by, and reviewed date.

Care should be exercised to insure that balances in payroll deduction agency accounts in financials do not become debit balances by disbursing more than is delivered from the deductions transmitted from the payroll system. Prior to fiscal year end, analysis with appropriate action must be accomplished to prevent debit balances from occurring in agency accounts on the Annual Financial Reports.


1.9.2 Student Information Systems

(Last Modified on February 25, 2016)

A reconciliation should be performed between the various balances maintained in the Student Information System (generally Banner) and the cumulative balances maintained in the financial records. This should include all accounts receivable balances, all scholarship disbursements, and all financial clearing accounts. Banner feeds should be reconciled daily, but are required no less than weekly. The TGRRECON report (Banner report) must be reconciled at least monthly, as it provides the detailed activity of accounts receivable supporting the general ledger. Documentation confirming these reconciliations should be maintained in the institution’s files for at least three (3) years and include all relevant supporting documentation, including prepared by, prepared date, reviewed by, and reviewed date.


1.9.3 Other Systems

(Last Modified on February 25, 2016)

A reconciliation should be performed between the various balances maintained in any other system and the cumulative balances maintained in the financial records. The reconciliation should be performed at least quarterly. Documentation confirming these reconciliations should be maintained in the institution’s files for at least three (3) years and include all relevant supporting documentation, including prepared by, prepared date, reviewed by, and reviewed date.


1.9.4 Bank Accounts

(Last Modified on February 25, 2016)

A monthly reconciliation must be accomplished between the institution’s financial records and all of the institution’s bank accounts. This reconciliation should be completed within thirty (30) days of receiving the bank statement(s). In all cases, the reconciliation must be completed before the closing of the next accounting month. Each reconciliation must include evidence of the preparer and date prepared. Reconciliation must also be accomplished prior to the final close of the fiscal year. Reconciliations must be reviewed, dated, and approved by a supervisor, and the approval documented on the reconciliation document. Supervisory approval is required within forty-five (45) days of performing the reconciliation.

A review of old outstanding checks must be accomplished during each reconciliation process. Checks that have not cleared within the time limit printed on the face of the check, normally ninety (90) days, should be considered potential “unclaimed property.” See Section 19.2, Unclaimed Property, for additional information and the required reporting of unclaimed property to the Commissioner of the Department of Revenue.

The payee of the outstanding check should be contacted in writing to facilitate delivery of the amount owed. To comply with state law, the write-off of old outstanding checks should not be made to a net asset account for “surplus” for return to the State Treasurer, but must be done via the Unclaimed Property Report so that the State of Georgia has a centralized pool of information about unclaimed property from all sources.


1.9.5 Accounts Payable

(Last Modified on February 25, 2016)

The Accounts Payable sub-ledger (detail) must be periodically reconciled to the corresponding balance(s) in the general ledger. A monthly reconciliation is suggested; a quarterly reconciliation is required. Documentation confirming these reconciliations should be maintained in the institution’s files for at least three (3) years and include all relevant supporting documentation, including prepared by, prepared date, reviewed by, and reviewed date.


1.9.6 Accounts Receivable

(Last Modified on February 25, 2016)

The Accounts Receivable sub-ledger (detail) must be periodically reconciled to the corresponding balance(s) in the General ledger. A monthly reconciliation is suggested; a quarterly reconciliation is required. Documentation confirming these reconciliations should be maintained in the institution’s files for at least three (3) years and include all relevant supporting documentation, including prepared by, prepared date, reviewed by, and reviewed date.


1.9.7 Capital Assets

(Last Modified on February 25, 2016)

The Capital Assets sub-ledger (detail) must be periodically reconciled to the corresponding balance(s) in the general ledger.* In addition, capital outlay expenses must be reconciled to additions to the Capital Asset sub-ledger. This should be done in conjunction with reviewing repairs and maintenance expense accounts for omissions to the Capital Asset sub-ledger.

A monthly reconciliation is suggested; a quarterly reconciliation is required.

Documentation confirming these reconciliations should be maintained in the institution’s files for at least three (3) years and include all relevant supporting documentation, including prepared by, prepared date, reviewed by, and reviewed date.

* Note: Institutions using the GeorgiaFIRST model of the PeopleSoft Financials software should reconcile both the Asset Management module to the Capital Ledger, as well as the Capital Ledger to the Actuals Ledger.


1.9.8 Other Balance Sheet Accounts

(Last Modified on February 25, 2016)

Institutions must periodically reconcile other general ledger balance sheet accounts not previously mentioned in the abovesections to detailed subsidiary listings. Detailed subsidiary listings should include relevant information about individual transactions, such as vendor/customer, transaction date, and amount, which would allow a user to trace the transaction to the underlying good/service provided.

The reconciliation should be done at least quarterly.

Documentation confirming these reconciliations should be maintained in the institution’s files for at least three (3) years and include all relevant supporting documentation, including prepared by, prepared date, reviewed by, and reviewed date.


↑ Top