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THE GENERAL LEDGER

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  1. 2002/2003 THE GENERAL LEDGER SACSIFIED Sub-Fundingand the SAN BERNARDINO COUNTY SCHOOLS Financial System District Financial Services

  2. General Ledger Contents Pages 2 – 40 PowerPoint Presentation slides Exhibit A General Ledger Accounts Listing Exhibit B Control Accounts Exhibit C Establishing the Estimated Beginning Balance Exhibit D Revising the Budget Exhibit E Journal Entries Exhibit F Accrual Set-Up Exhibit G Closing the General Ledger Exhibit H Automated Asset and Liability Account Roll Exhibit I Corrective Action Example Exhibit J Account Review Checklist

  3. What is the General Ledger? The General Ledger contains all of the balance sheet accounts of an accounting system. The balance sheet accounts are the assets, liabilities, and fund balance accounts of the school district. Values in General Ledger are expressed as debits or credits.

  4. Asset Accounts • Object Codes 9100 - 9499 • Cash • Investments • Accounts Receivables • Due from Other Funds • Fixed Assets

  5. Liabilities • Object Codes 9500 - 9699 • Current Liabilities • Due to Other Funds • Due to Other Agencies/Government • Temporary Loans • Deferred Revenue • Long Term Liabilities

  6. Fund Balance • Reserve Accounts Objects 9700 - 9749 • Revolving Cash, Stores, and Prepaid Assets • Legally Restricted • General Reserve 9600 • Designated Accounts 9770 -9789 • Economic Uncertainty • Locally Designated • Unappropriated Objected 9790

  7. Normal Values • Assets are Debits • Liabilities are Credits • Fund Balance represents the difference between Assets and Liabilities • Credit if positive • Debit if negative Exhibit A List

  8. Project vs. Sub-fund • Projects / cash and expenditure activity is not audited. • Projects may have negative balances and/or a negative cash position but contributions must be posted before year end to bring account to zero. • Sub-Fund / cash transactions are audited Each resource is treated as a separate fund. • Sub-funds must maintain a positive fund balance and a positive cash position at all times.

  9. Asset 3 Mil Formula Assets less Liabilities equal Fund Balance • Assets 3,000 • Liabilities 1,000 • Fund Bal. 2,000

  10. Control Accounts • Daily transactions are booked through the subsidiary ledgers (revenue and expense) leaving a trail of debits and credits in the General Ledger. • Revenues are posted to Object 9840 • Expenditures are posted to Object 9850

  11. Control Accounts • Budget Appropriations are made in the subsidiary ledgers (revenue and expense). • Revenues are posted to Object 9810 • Expenditures are posted to Object 9820 • The difference is posted to Object 9799and to the fund balance objects accounts 9790 ad 9798 Exhibit B

  12. Beginning Balance Accounts • Reflect values of assets and liabilities with which the district starts the year. • The estimated values from the adopted budget are summarized in Object 9791 (Beginning Balance Entry) • The adjustments for the actual values which are reported on the districts unaudited actuals are summarized in Object 9792 (Asset/Liability Automated Roll) • Any Adjustments made by the Auditors are posted to Object 9793 (Budget Transfer Update) • Restatements made by the District are posted to Object 9795 (Budget Transfer Update) AND…

  13. Beginning Ending Balances • Reflect values of Fund Balance and Reserves with which the district starts the year (Beginning plus Revenue Less Expense equal Ending). • Total fund balance from the adopted budget is summarized in Object 9798 (Control Account = F2 Fund Form) • Components of the Ending Fund Balances are detailed and provide the break out for the SACS Fund Form Detail (must sum to Control Object 9798) • Reserve Accounts 9700-9749 • Designated Accounts 9770- 9789 • Unapporpriated Balance 9790

  14. Beginning Balance Accounts continued • The estimated Beginning Fund Balance values are manually entered through the ACCLI Beginning Balance Link menu and reflected on report FCR 125 along with the estimated budget year ending fund balances. These values and input screens are locked upon submission of the budget and roll of the tentative budget to the Adopted Status. These values must be in balance for all resources detailed.

  15. Adopted Budget Roll • The Tentative Roll from Budget Development to the General Ledger sets up all the accounts. The roll will not proceed if the account does not pass the account edits of state and county approved field values and combinations. • The Adopted Roll is initiated by DAS once the hard copy of the Districts Certified Adopted budget is validated and is checked to agree with the values in the General Ledger. • Information Systems launches the job that takes the budget values to the Adopted Status

  16. Adopted Budget Posting • The launched job proceeds to roll each account and dollar value to adopted . • Entries are made to the control accounts for total revenue (9810 - debit) and total expense (9820-credit), resource by resource. • Since the GLD is a balanced set of records values are also posted in a control account 9799 for each resource. This entry to posted as activity as of the date the job is launched. Revenue (9810) less Expense (9820) Equal Net Change (9799)

  17. Adopted Budget Posting • The job also takes this calculated Net Change Amount and adds it to the unappropriated fund balance account 9790 and to the fund balance control account 9798, resource by resource. • These accounts are updated in the ACCLI Beginning Balance Program which are then reflected on the GLD report as the beginning value for this account, resource by resource. Beginning Balance (9791) Plus Net Change (9799) Equals Ending Fund Balance (9798) Exhibit C

  18. Revising the Adopted Budget • After the adopted budget roll the district may process budget revisions changing revenue, expense or fund balance values. • Intra-district * within expense objects or within revenue objects • Audit Batches * affects both revenue and expense or fund balance. • Changes that affect the unappropriated fund balance account 9790 automatically post to the fund balance control account 9798, resource by resource. Revenue Control (9810) Expenditure Control (9820) Change (9799) Equals Ending Fund Balance (9798) Exhibit D

  19. Beginning Balance Accounts continued • Each update/revision of the Beginning Fund Balance Accounts (9791, 9792, 9793, or 9795) also update the ending fund balance accounts - 9790 and 9798 (Budget Transfer Automatic Update) • Budget Transfer Edits check formula Assets Less Liabilities equal Control Account • Decrease to Asset must Decrease Control Account • Decrease to Liability must Increase Control Account • Increase to Asset must Increase Control Account • Increase to Liability must Decrease Control Account

  20. Daily Transactions • Payroll , Accounts Payable, Cash Receipts, and Cash Transfers are programs that create transactions that reflect activity (use) of District assets. • Payroll Wage Payments - Gross Expenditures Fringe Benefit – Payroll Mapping • Accounts Payable Vendor Payments Employee reimbursements Sales Tax Liabilities Capital Outlay • Cash Receipts and Transfers Revenue Receipts Interfund transfers Control Accounts • Encumbrance (9830) Pending (9835) Revenue(9840) • Expenditure (9850) Exhibit E

  21. Payroll Benefit Mapping • Most Districts use the payroll benefit mapping program to charge employer costs to the individual 26-digit program account code where the employee was paid. • Unemployment Insurance (U/I) Debit Subsidiary Ledger (3501) Credit Suspense Account (9565) Debit Expenditure Control (9850) • Workers Compensation (WC) Debit Subsidiary Ledger (3601) Credit Suspense Account (9566) Debit Expenditure Control (9850)

  22. Payroll Benefit Mapping –Cont. • Some Fixed Charges are posted right to cash and given to the Reporting Entity (Retirement and School Claims). • Retirement (STRS/PERS) Debit Subsidiary Ledger (3101/3202) Credit CASH Account (9110) Debit Expenditure Control (9850) • Medicare (MC) Debit Subsidiary Ledger (3341) Credit Suspense Account (9110) Debit Expenditure Control (9850)

  23. Payroll Benefit Mapping –Cont. • Some Fixed Charges are posted to one of the District Other Funds waiting for an interfund to reimburse the General Fund where most payments to vendors or Risk Management are charged in the Suspense Account). • Health and Welfare (H&W) Debit Subsidiary Ledger (3411/3412) Credit CASH Account (9564) Debit Expenditure Control (9850) • Interfund Charge/Reimbursement Debit Subsidiary Ledger (N/A already charged by map) Credit Cash Account (9110) Debit Suspense Account (9564) Debit Cash General Fund (9110) Credit Suspense General Fund (9564)

  24. PERS Reduction Mapping • The difference between actual employer PERS charges and the base rate of 13.020% is charged to the PERS Reduction Accounts for all resources except federal which are excluded. The type of account (R or Blank) restricted/nonrestricted and if to charge PERS Reduction or not is identified in the Field Definition (P or Blank). • PERS Reduction Debit Subsidiary Ledger Expense (3801/3202) Credit Subsidiary Ledger Revenue (8092) Credit Revenue Control (9840) Debit Expenditure Control (9850) • Other Funds Debit Subsidiary Ledger (3801/3802) Credit Suspense Account (9572) Debit Expenditure Control (9850)

  25. Stores • Some Districts have warehousing facilities in which they purchase goods and hold them in an asset inventory until issued out to a school or program. • Purchase Debit Stores Account (9320) Credit Cash (9110) • Stock Issue Debit Subsidiary Ledger Credit Stores Account (9320) Debit Expenditure Control (9850) • Inventory Requisition Evaluation (LIFO) Adjs (9329) • Physical Inventory Adjustment (lower value) Debit Subsidiary Ledger Credit Stores Account (9320) Debit Expenditure Control (9850)

  26. Capital Outlay • Upon purchasing an item of capital outlay (determined by the District’s threshold value) the funds are charged for the cash value paid and the fixed asset programs are updated. • Purchase Debit Subsidiary Ledger (6410) Credit Cash (9110)_ Debit Expenditure Control (9850) • Fixed Asset Debit Fixed Asset Account (9440) Credit Investment (9990) AS items are used (depreciated) the Fixed Asset Program records and accumulates the depreciation. • Annual Depreciation Debit Depreciation (6900) Credit Accumulated Depreciation (9445) Note: GASB34 Conversion Entries to Government Funds

  27. Prepaid Expense • Some Districts enter into obligations that have an advance payment due before the use of the item. At fiscal year end goods or services paid but not used for the accounting period should be recognized as a prepaid asset. The asset should then be expensed when used. • Purchase Debit Prepaid Expense (9130) Credit Cash (9110) • Expensed upon use in next accounting period Debit Subsidiary Ledger Credit Prepaid Expense Account (9130) Debit Expenditure Control (9850) Note: Grants cannot have prepaids

  28. Annual Adjustments • California Schools System operate on a modified accrual basis. At year end Districts are required to “book” accrual entries for liabilities for goods and services received before June 30 but not paid. Also receivables must be recognized for funds due that will be received within 60-days of the fiscal year end or certified in the annual State apportionment • Receivables • SET-UP Credit to Subsidiary Ledger Debit to Receivable Asset Account • Receipt Credit to Receivable Asset Account Debit to Cash • Payables • SET-UP Debit to Subsidiary Ledger Credit to Liability Account • Receipt Debit to Liability Account Credit to Cash Exhibit F

  29. YEAR-END CLOSING • Budgetary and operating accounts are “closed” leaving only the asset, liability, and fund balance accounts open. Procedure 501 of the California School Accounting Manual identifies the general ledger operating accounts that need to be closed out. • Budgetary • Revenue (9810) • Expenditure (9820) • Operating Accounts • Revenue (9840) • Expenditure (9850) Exhibit G

  30. Establishing Accruals • Accruals are entered in using the receivables and current liability program. • Receivables • Revenues and Abatements (1000-8899) • Set-up Control 9229 (9229, 9299,9319) • Revenue/Expenditure Control (9840/9850) • Current Liabilities • Revenues Refunds and Expenditures (1000-8899) • Set-up Control 9529 (9529, 9599,9619, 9659) • Revenue/Expenditure Control (9840/9850)

  31. Establishing Accruals • Limitations currently exist to appropriately classify Accruals for the Annual Financial Balance Sheet and are adjusted using Journal entries. • Due From • Set-up Control 9229 Credit • Due From Account 9319 Debit • Due To • Set-up Control 9529 Debit • Due t To Account 9619 Credit

  32. ASSET & LIABILITY ROLL • Actual Asset and Liability values are posted to Next Fiscal Year Beginning Balance adjusting the estimated amounts. • ASSETS • LIABILITIES • FUND BALANCE ADJUSTMENTS Exhibit H

  33. OK So…...What is a Balance Sheet? • NET Worth … Bottom Line… Value… • Fund Balance How much is left? • Displays the value of the school district’s assets less liabilities for a given period.

  34. Correcting/Adjusting the GLD • Budget Transfer • Correct/Adjust Values • Journal Entries • Correct Activity within same resource • Cash Journal Entries • Correct Activity offsetting to Cash between one resource and another • NEVER NEVER NEVERUSE A JOURNALTO ADJUST A FUND BALANCE ACCOUNT – 97XX BUDGET TRANSFERS MAKE REVISIONS TO BEGINNING OR ENDING FUND BALANCES Exhibit I

  35. Check List • Review Batch List to see if activity has been posted or distributed. • Validate Working Budget represents current plan (Grants & Entitlements normally treated as 100% expended No Fund Balance) • Contributions, State Aid Transfers, Interprogram, and Interfund transfers are in balance. • Combo Maintenance Report reflects all accounts pass edit test. TIP GLD 115 GLD 410 FAR 311 Exhibit J

  36. GLD 410 Report Display from Activity Fund Balance When in Balance No error reported

  37. GLD 410 Report Calculated Fund Balance

  38. SACS Software Basic Tests • Beginning Balance plus Revenue less Expense equal Fund Balance • Assets less Liabilities equal Fund Balance • No Negative Fund Balance

  39. Test your knowledge Ledger

  40. Look At Your Ledgers Now!Develop a Plan • Do your Grants and Entitlements accounts agree with your award and carryovers? • What items will you allocate - PERS Reduction, Indirect Costs, Support Costs? • Check out those Suspense Accounts!