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Accounting I: Introduction to University Accounting . Susan Moore Accounting & Financial Services General Accounting. A genda. Introductions Course objectives Topics Accounting Concepts Fund Accounting Overview The Chart of Accounts Financial Reporting Questions and Answers.

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accounting i introduction to university accounting

Accounting I: Introduction to University Accounting

Susan Moore

Accounting & Financial Services

General Accounting

a genda
Agenda
  • Introductions
  • Course objectives
  • Topics
    • Accounting Concepts
    • Fund Accounting Overview
    • The Chart of Accounts
    • Financial Reporting
    • Questions and Answers

General Accounting Division, Accounting & Financial Services

i ntroductions
Introductions

General Accounting Division, Accounting & Financial Services

c ourse objectives
CourseObjectives
  • By the end of class, you will be able to…
    • Talk like an accountant
    • Identify and classify university revenues
    • Identify and classify university expenses
    • Set up an account in DaFIS and find it in the Annual Schedules

General Accounting Division, Accounting & Financial Services

a ccounting concepts
Accounting Concepts
  • Accounting Standards
  • Balance Sheet: Statement of Net Assets
  • Income Statement: Statement of Revenues, Expenses and Changes in Net Assets
  • Double Entry Accounting System
  • Restricted vs. Unrestricted Funds

General Accounting Division, Accounting & Financial Services

a ccounting standards
Accounting Standards
  • Why have them?
    • Reliability
    • Comparability
  • What are they?
    • GAAP – generally accepted accounting principals
    • GASB – Governmental Accounting Standards Board
    • FASB – Financial Accounting Standards Board
    • NACUBO – National Association of Colleges & University Business Officers

General Accounting Division, Accounting & Financial Services

b alance sheet
Balance Sheet
  • Statement of Net Assets
    • Assets
    • Liabilities
    • Fund Balance
  • Permanent Accounts

General Accounting Division, Accounting & Financial Services

a ssets
Assets
  • Probable future economic benefit
  • What you own
  • Normal balance = debit

General Accounting Division, Accounting & Financial Services

a ssets9
Assets
  • Examples:
    • Cash
    • Buildings & Capital Equipment
    • Prepaid Expense/Deferred Expense
    • Inventory
    • Accounts Receivable

General Accounting Division, Accounting & Financial Services

l iabilities
Liabilities
  • Probable future sacrifices of economic benefit arising from present obligations
  • What you owe
  • Normal balance = credit

General Accounting Division, Accounting & Financial Services

l iabilities11
Liabilities
  • Examples:
    • Accounts Payable
    • Salaries
    • Deferred Income
    • Debt

General Accounting Division, Accounting & Financial Services

e xercise asset or liability
Exercise: Asset or Liability?
  • Bill for cellular phone service
  • Network server from Sun
  • Petty cash fund
  • Invoice to University of Nebraska for poultry diagnostic services
  • Purchase of textbooks for resale
  • Purchase of a copier on a lease-purchase agreement

General Accounting Division, Accounting & Financial Services

f und b alance
Fund Balance
  • Net Assets

Beginning Balance + Income - Expense = Ending Balance

  • What you are worth
  • In private = retained earnings

General Accounting Division, Accounting & Financial Services

i ncome statement
Income Statement
  • Statement of Revenues, Expenses and Changes in Net Assets
    • Statement of how you did each year
    • Income and expenses for the year
    • Closed at year end
  • Temporary Accounts

General Accounting Division, Accounting & Financial Services

i ncome statement15
Income Statement

Revenues – Expenses = Net Income

Net Income +/- Other Fund Balance Changes

=Total Change in Net Assets

General Accounting Division, Accounting & Financial Services

r evenues
Revenues
  • External income to the university
  • Examples:
    • State appropriations
    • Student fees
    • Contracts and grants
    • Patient fees
    • Sales and services to outside entities

General Accounting Division, Accounting & Financial Services

e xpenses expenditures
Expenses/Expenditures
  • Goods and services purchased to meet the mission of the university
    • Salaries and wages
    • Benefits
    • Goods and materials
    • Services

General Accounting Division, Accounting & Financial Services

r echarges
Recharges
  • Charge to departments for goods and services provided internally
    • Like income to department providing the good/service
    • Internal rates = Recovery of costs incurred to provide goods/service (no profit)
    • When recharge and expense totaled across UC, net effect is original cost

General Accounting Division, Accounting & Financial Services

e xpense reimbursement
Expense Reimbursement
  • External payment for specific cost incurred by the university
    • Examples:
      • Reimbursement by employees for personal telephone calls
    • Not a revenue but a reduction of expense

General Accounting Division, Accounting & Financial Services

l iens and encumbrances
Liens and Encumbrances
  • Firm commitment or obligation placed against funds for goods or services not yet received
  • Reduces the balance in the fund
  • NOT in the Financial Statements

General Accounting Division, Accounting & Financial Services

d ouble entry accounting
Double Entry Accounting
  • Debits always equal credits
  • Every transaction has 2 entries:
    • Debit (+)
    • Credit (-)

General Accounting Division, Accounting & Financial Services

d ebits
Debits
  • Generally shown as a positive (+) number
  • Assets
  • Expenses
  • Examples:
    • Cash
    • Equipment
    • Roads
    • Buildings
    • Books

General Accounting Division, Accounting & Financial Services

c redits
Credits
  • Generally shown as a negative (-) number
  • Liabilities
  • Revenues
  • Examples:
    • Student fees
    • Sale of genetically enhanced mice
    • Vacation time earned but not taken
    • Cash received before June 30th for July conference

General Accounting Division, Accounting & Financial Services

e xercise
Exercise:

DOUBLE ENTRY ACCOUNTING -

Putting it all together

General Accounting Division, Accounting & Financial Services

f or profit vs not for profit
For Profit vs. Not For Profit

General Accounting Division, Accounting & Financial Services

r estricted resources
Restricted Resources
  • Generally unique to non-profit/public
  • Limitations on use
    • External conditions
    • Cannot restrict internally
  • Examples:
    • Donors
    • Contracts
    • Federal or other governmental entities

General Accounting Division, Accounting & Financial Services

u nrestricted resources
Unrestricted Resources
  • No external conditions
  • Examples:
    • State Appropriations
    • Gifts without conditions

General Accounting Division, Accounting & Financial Services

d esignated resources
Designated Resources
  • Not Restricted
    • Conditions placed by the University of California Regents, Office of the President or Chancellor
    • Examples:
      • Faculty Research Grants
      • Opportunity Funds

General Accounting Division, Accounting & Financial Services

f und accounting overview
Fund Accounting Overview
  • Tracks the receipt and use of resources by the source of the funds
  • Defines the “color” of the money
  • Used by all Higher Education institutions

General Accounting Division, Accounting & Financial Services

f und groups summary
Fund Groups Summary
  • Current
  • Loan
  • Endowment
  • Annuity and Life Income
  • Plant
  • Agency

General Accounting Division, Accounting & Financial Services

c urrent funds
Current Funds
  • Educational and general
  • Auxiliary enterprises
  • Hospital
  • Affiliated organizations

General Accounting Division, Accounting & Financial Services

s ources of current funds
Sources of Current Funds
  • State appropriations
  • Tuition and fees
  • Grants and contracts
  • Gifts
  • Endowment income
  • Overhead recovery funds
  • Sales and services

General Accounting Division, Accounting & Financial Services

s tate appropriations
State Appropriations
  • General Funds (19000-19XXX)
    • Appropriations from State General Fund as part of annual State budget process
    • UC General Funds

General Accounting Division, Accounting & Financial Services

s tudent fees
Student Fees
  • Registration Fee (20000)
  • University Extension
  • Continuing Education

General Accounting Division, Accounting & Financial Services

o ther fees
Other Fees
  • Professional Degree Fees
  • Student Approved Mandatory Fees
  • Course Material Fees

General Accounting Division, Accounting & Financial Services

e xtramural funds
Extramural Funds
  • Contracts and Grants
  • Gifts
  • Endowment Income
  • Managed by Extramural

General Accounting Division, Accounting & Financial Services

i ndirect cost recovery funds
Indirect Cost Recovery Funds
  • Educational Fund (05397)
  • Garamendi Funds – for research facilities
  • Off-the-Top Funds (69750)
  • Opportunity Funds (07427)

General Accounting Division, Accounting & Financial Services

s ales service educational activities
Sales & Service: Educational Activities
  • Definition:
    • Revenue related only incidentally to the conduct of teaching, research and service
  • Funds (income) supports the activities

General Accounting Division, Accounting & Financial Services

s ales services auxiliary enterprises
Sales & Services: Auxiliary Enterprises
  • Residence halls
  • Student union
  • Parking and transportation
  • Bookstore
  • Athletics

Revenues Must Cover Expenses

General Accounting Division, Accounting & Financial Services

m atch revenue to the source
Sale of genetically enhanced mouse

“Autopsies of the Rich and Famous” continuing medical education

Faculty research grant

Sale of parking decal

Grant from National Science Foundation

Auxiliary

General Funds

Sales and Services- Educational Activites

Contracts and Grants

Student Fees

Match Revenue to the Source

Answers: 1-C, 2-E, 3-B, 4-A, 5-D

General Accounting Division, Accounting & Financial Services

o ther fund groups
Other Fund Groups
  • Loan
  • Endowment
  • Plant
  • Agency

General Accounting Division, Accounting & Financial Services

l oan funds
Loan Funds
  • Resources loaned to students, faculty or staff
  • Interest usually charged
  • Principal must be repaid

General Accounting Division, Accounting & Financial Services

e ndowment and similar funds
Endowment and Similar Funds
  • Endowment funds
  • Term endowment funds
  • Quasi-endowment
  • Earnings (interest) moved to current funds to spend

General Accounting Division, Accounting & Financial Services

p lant funds subgroups
Plant Funds Subgroups
  • Unexpended
  • Renewals and replacements
  • Retirement of indebtedness
  • Investment in plant

General Accounting Division, Accounting & Financial Services

a gency funds
Agency Funds
  • Funds held for others
    • Student organizations
    • Other third-party
  • At year-end
    • Income less expenses = Cash (Asset)
    • Cash held for others = Liability

The money does not belong to UC

General Accounting Division, Accounting & Financial Services

i dentify the fund source
Identify the fund source …

…by the OP Fund Number!

General Accounting Division, Accounting & Financial Services

op fund numbers
OP Fund Numbers
  • 5 digits
  • Identifies the source of the revenue
  • Restricted vs. non restricted

General Accounting Division, Accounting & Financial Services

u se of funds
Use of Funds
  • Instruction
  • Research
  • Community Service

General Accounting Division, Accounting & Financial Services

c urrent funds expenditures
Current Funds Expenditures
  • Expenditures defined by:
    • Higher Education Function Code (HEFC) and
    • Uniform Accounting Structure (UAS)
  • Applied to all Higher Education institutions

General Accounting Division, Accounting & Financial Services

c urrent funds expenditures50
Current Funds Expenditures
  • Expenditure Categories
    • Education and General
    • Auxiliary (Self Supporting)
    • Hospital

General Accounting Division, Accounting & Financial Services

e ducation and general
Education and General
  • Instruction
    • General Academic
    • Departmental Research
    • Continuing Education
    • University Extension

General Accounting Division, Accounting & Financial Services

e ducation and general52
Education and General
  • Research – Sponsored Projects
    • Principal Investigator
    • Period of performance
    • Set scope of work
    • Reporting requirements

General Accounting Division, Accounting & Financial Services

e ducation and general53
Education and General
  • Public Service
    • Community service
    • Cooperative extension services
    • Outreach

General Accounting Division, Accounting & Financial Services

e ducation and general54
Education and General
  • Academic Support
    • Academic administration
    • Course and curriculum development
    • Libraries

General Accounting Division, Accounting & Financial Services

e ducation and general55
Education and General
  • Student Services
    • Admissions
    • Student records
    • Student health services

General Accounting Division, Accounting & Financial Services

e ducation and general56
Education and General
  • Institutional Support
    • Executive management
    • Fiscal and business operations
    • General administrative and logistical services

General Accounting Division, Accounting & Financial Services

e ducation and general57
Education and General
  • Operation and Maintenance of Plant
    • Building maintenance and custodial services
    • Landscape and grounds maintenance
    • Major repairs and renovations

General Accounting Division, Accounting & Financial Services

e ducation and general58
Education and General
  • Scholarships and Fellowships
    • Student grants
    • Trainee stipends
    • Tuition and fee waivers

General Accounting Division, Accounting & Financial Services

a uxiliary enterprises
Auxiliary Enterprises
  • Provide goods and services to students, faculty and staff
  • Charge a fee directly related to costs
  • Managed as a self supporting activity

General Accounting Division, Accounting & Financial Services

h ospital
Hospital
  • Direct patient care
  • Health care supportive services
  • Hospital administration
  • Hospital physical plant operation

General Accounting Division, Accounting & Financial Services

r eserves
Reserves
  • Used to accumulate funds from the net revenue of self supporting activities for the purchase of new equipment, buildings and other capital projects

General Accounting Division, Accounting & Financial Services

e xpenditure classification
Expenditure Classification

MULTIPLE CHOICE QUESTIONS

  • Breast Cancer Research Program Award "Regulations of Estrogen Response by Corepressors"
    • Organized Research
    • Instruction
    • Academic Support

General Accounting Division, Accounting & Financial Services

e xpenditure classification63
Expenditure Classification
  • Utilities purchased by facilities for recharge to campus units.
    • Academic Support
    • Student Services
    • Operation and Maintenance of Plant

General Accounting Division, Accounting & Financial Services

e xpenditure classification64
Expenditure Classification
  • Approved research project budget that includes graduate student stipend.
    • Organized Research
    • Scholarships and Fellowships
    • Academic Support

General Accounting Division, Accounting & Financial Services

e xpenditure classification65
Expenditure Classification
  • New faculty start up costs including research equipment and furniture.
    • Organized Research
    • Academic Support
    • Instruction

General Accounting Division, Accounting & Financial Services

e xpenditure classification66
Expenditure Classification
  • Seminar on Pests and Pest Management given by the Cooperative Extension Master Gardeners.
    • Organized Research
    • Public Service
    • Instruction

General Accounting Division, Accounting & Financial Services

c hart of accounts
Chart of Accounts
  • A systematic measurement of the source and use of funds.

General Accounting Division, Accounting & Financial Services

w hat is the chart of accounts
What is the Chart of Accounts?
  • Blueprint for the accounting system
  • Sorts and classifies transactions
  • Allows for identification of:
    • Restricted vs. Unrestricted
    • Purpose or use of funds
    • Ownership vs. Agency

“The keys to the kingdom”

General Accounting Division, Accounting & Financial Services

c hart of accounts69
Chart of Accounts
  • Full Accounting Unit (FAU)
    • Chart
    • Account
    • Object
    • Optional fields (in DaFIS)
      • Sub account
      • Sub object
      • Project

General Accounting Division, Accounting & Financial Services

f ull accounting unit chart
Full Accounting Unit - Chart
  • 2 Locations
    • UCD Campus
    • Systemwide
  • UCD Campus Charts
    • 3 - Campus
    • S - School of Medicine
    • H - Teaching hospital (UCDMC)
  • Systemwide
    • L - Agricultural & Natural Resources (ANR) and Multiple Research Units (MRU)

General Accounting Division, Accounting & Financial Services

f ull accounting unit account
Full Accounting Unit - Account
  • DaFIS Account
    • 7 character alphanumeric
  • Tied to:
    • OP Fund Number (fund source)
    • OP Account Number (account purpose)
  • Account attributes
    • Describes the purpose & the owner of the account
    • Contains the financial attributes to properly record and report transactions

General Accounting Division, Accounting & Financial Services

d afis account attributes
DaFIS Account Attributes
  • Organization
    • 4 character alphanumeric
    • Every DaFIS account is tied to an organization
    • Normally the unit incurring the transactions in the account

General Accounting Division, Accounting & Financial Services

d afis account attributes73
DaFIS Account Attributes
  • OP FUND
    • 5 digits that identifies the fund source of the DaFIS account.
    • Assigned by Award document, OP, Extramural or General Accounting
    • OP funds grouped into sub funds – a general classification of the fund source

General Accounting Division, Accounting & Financial Services

d afis account attributes74
DaFIS Account Attributes
  • OP Account
    • 6 digits that identify the transaction classification
      • Balance sheet = 1XXXXX
      • Revenue accounts = 2XXXXX
      • Expense accounts = 4XXXXX to 79XXXX
      • Agency accounts = 8XXXXX

General Accounting Division, Accounting & Financial Services

b uilding an op account
Building an OP Account

General Accounting Division, Accounting & Financial Services

op accounts
OPAccounts
  • First 2 digits = Higher Education Function Code
  • Second 2 digits are the School/College
  • Last 2 digits are the Department

General Accounting Division, Accounting & Financial Services

op accounts77
OPAccounts
  • OP Account also has
    • Account Group Code (Account Group)
    • Uniform Accounting Structure Code (UAS)
    • Academic Discipline (Acad Disc)
    • National Science Foundation Code (NSF POS)
    • Annual Report Code (Report Code)
    • Organization Code (ORGN)

General Accounting Division, Accounting & Financial Services

op accounts78
OPAccounts
  • Why?
    • REPORTING
      • Financial statements
      • Surveys
      • Management Decisions
      • State government budget decisions
      • Funding agencies

General Accounting Division, Accounting & Financial Services

op accounts uas code
OPAccounts – UAS Code
  • UAS Code is similar to the HEFC.
  • Provides a uniform presentation of expenses across all university campuses
  • See Annual Schedule B

General Accounting Division, Accounting & Financial Services

op accounts annual report code
OPAccounts – Annual Report Code
  • Annual Report Code – used to describe major programs in Schedule C and Schedule C – Overhead
  • The same Annual Report Code can be used for more than one OP account

General Accounting Division, Accounting & Financial Services

op accounts organization
OPAccounts - Organization
  • Each OP Account is “owned” by an organization
  • Expenditures associated with an OP account reported under the school or college of the OP account

General Accounting Division, Accounting & Financial Services

op accounts organization82
OPAccounts - Organization
  • Check your OP Account organizations to make sure they are reporting to your school/college
  • Resources:
    • DS226 Annual Report Codes by Organization
    • TP – Reference Tables – Account
      • Click on OP Account and any attribute

General Accounting Division, Accounting & Financial Services

d afis account recap
DaFIS Account - Recap
  • Identifies:
    • Source of Funds – OP Fund
    • Use of Funds – OP Account
      • Higher Education Function
      • School/College
      • Major programs
    • Account owner

General Accounting Division, Accounting & Financial Services

f ull accounting unit object
Full Accounting Unit - Object
  • 4-character alphanumeric
  • Every transaction must have an object code
  • Attributes
    • Describes the activity and type of the financial transaction
  • Summarized and reported on the Financial Report

General Accounting Division, Accounting & Financial Services

d afis object attributes
DaFIS Object Attributes
  • Object Consolidations
    • 4-character alphanumeric
    • Summary object code used for budget documents
    • Examples:
      • BLSH (Balance Sheet)
      • INCO (Income)
      • SUBG (General Assistance)
      • SUB3 (Supplies & Expense)

General Accounting Division, Accounting & Financial Services

d afis object attributes86
DaFIS Object Attributes
  • Object Type
    • Categorizes each transaction for financial statement presentation.
    • Examples:
      • AS (Assets)
      • LI (Liability)
      • FB (Unexpended balance)
      • IN (Income)
      • EX (Expense)

General Accounting Division, Accounting & Financial Services

d afis object attributes87
DaFIS Object Attributes
  • Other Object Code Attributes
    • Object Level
    • Object Sub Type
  • Used mostly for ad hoc reporting

General Accounting Division, Accounting & Financial Services

b alance sheet object codes
Balance Sheet Object Codes
  • Always used in balance sheet accounts
    • Inventories (0470)
    • Unexpended balance (0000)
  • Sometimes used in expense accounts
    • At year-end, moved to balance sheet accounts, then reversed in new year
      • Account Receivable (0299)

General Accounting Division, Accounting & Financial Services

r evenue object codes
Revenue Object Codes
  • Can be used in revenue accounts (IN) or expense accounts (EX)
  • Examples:
    • Income = 0060
    • Campus assessments/NUD = 0066, 0068, 0076
    • Over/short cash = 0056

No income in General Funds

General Accounting Division, Accounting & Financial Services

e xpense object codes
Expense Object Codes
  • More than 5,000 expense object codes
  • Hospital & School of Medicine have most specific object codes
  • Examples:
    • 7xxx Series – Services
    • 8xxx Series – Supplies
    • 9xxx Series – Equipment Expenses

General Accounting Division, Accounting & Financial Services

o ptional fau fields
Optional FAU Fields
  • Allow departments to meet internal reporting needs
    • Sub account
    • Sub object
    • Project
  • Not used in external reporting

General Accounting Division, Accounting & Financial Services

f inancial reporting
Financial Reporting
  • Who Cares?
    • Management
    • University of California Office of the President (UCOP)
    • Regents, State legislators
    • Other Stakeholders (Donors, Creditors)
    • External Users (Other universities, researchers, analysts)

General Accounting Division, Accounting & Financial Services

f inancial reporting93
Financial Reporting
  • Two Major Reports
    • Annual Report
    • Annual Financial Schedules

General Accounting Division, Accounting & Financial Services

a nnual report
Annual Report
  • Financial Condition of the university
  • Management discussion and analysis
  • Comparable to other public universities
  • Used to determine the value of a potential investment (donors and creditors)

General Accounting Division, Accounting & Financial Services

a nnual financial schedules
Annual Financial Schedules
  • Schedule A
    • Revenues by fund source
  • Schedule B
    • Expenses by Uniform Accounting Structure and Academic Discipline
  • Schedule C
    • Expenses by School/College, Higher Education Function and Annual Report Code
  • Schedule D
    • Expenses by fund source

General Accounting Division, Accounting & Financial Services

a nnual financial schedules96
Annual Financial Schedules
  • Uses:
    • Overhead distribution (Schedule C – Overhead)
    • Research expenditures
    • Comparability of revenues/expenses to other UC campuses and other universities

General Accounting Division, Accounting & Financial Services

t est your knowledge
Test your knowledge !!

General Accounting Division, Accounting & Financial Services

t o review
To review…
  • An asset is…
    • What you own
    • Cash
    • Accounts receivable
    • All of the above

General Accounting Division, Accounting & Financial Services

t o review99
To review…
  • A liability is…
    • Office supplies
    • Accounts payable
    • Prepaid expenses
    • None of the above

General Accounting Division, Accounting & Financial Services

t o review100
To review…
  • Fund balance is…
    • Same as unexpended balance
    • Accumulation of net revenues
    • Debt on new building
    • A & B above

General Accounting Division, Accounting & Financial Services

t o review101
To review…
  • University Fund Groups do not include…
    • Current
    • Agency
    • Putnam
    • Plant

General Accounting Division, Accounting & Financial Services

t o review102
To review…
  • Sources of current fund revenue include…
    • Retirement party donations
    • Revenue from sale of sweet potato crop
    • Nonresident undergraduate tuition
    • B & C above

General Accounting Division, Accounting & Financial Services

t o review103
To review…
  • True or False:

OP accounts classify expenses by Higher Education Function.

TRUE

General Accounting Division, Accounting & Financial Services

t o review104
To review…
  • What financial reports are used by external stakeholders…
    • Annual financial report
    • Annual financial schedules
    • Decision Support transaction report
    • A & B above

General Accounting Division, Accounting & Financial Services

n ow you can
Now you can…
  • Speak the language of accounting
  • Identify and classify university revenues
  • Identify and classify university expenses
  • Set up an account in DaFIS and find it in the Annual Schedules

General Accounting Division, Accounting & Financial Services

t ime for
Time for…

Questions ???

General Accounting Division, Accounting & Financial Services