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FY03 ACCRUAL PROCESS

FY03 ACCRUAL PROCESS. 4/25/02. ACCRUALS. Definition: Expense Accrual: A month-end journal entry (either system generated or manual) that accounts for goods or services that were received in a given month but the invoice was not posted by month end

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FY03 ACCRUAL PROCESS

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  1. FY03 ACCRUAL PROCESS 4/25/02

  2. ACCRUALS • Definition: • Expense Accrual: • A month-end journal entry (either system generated or manual) that accounts for goods or services that were received in a given month but the invoice was not posted by month end • Purpose: To allow monthly expense reports to accurately report actual medical center expenses in the event there are invoicing inconsistencies or delays. • Revenue Accrual • Establishment of a collectible receivable • A month end manual journal entry to report revenue that was generated in a given month when the corresponding cash payment was not received by month end. • Purpose: To allow monthly revenue reports to accurately report actual medical center revenue in the event there are delays in receipt or posting of cash.

  3. What Causes an Expense Accrual? • Three triggers for expense accruals: • A good or service is purchased and received, but invoice has not been processed/matched to purchase order in the system by month end • A good or service is invoiced infrequently or inconsistently, and needs to be expensed over multiple periods of a fiscal year • A significant invoice was expected and was not received as of month close

  4. Expense Accruals

  5. Expense Accruals

  6. Expense Accruals

  7. Assumptions • New Check Request Policy will increase use of purchase orders. Purchasing Operations and Systems will work with users to mandate maximum and effective use of electronic receiving. The ESI Task Force will monitor the use of purchase orders to ensure compliance with appropriate policies. It is their expectation that the increased use of purchase orders and current purchasing policies will greatly reduce the number of manual accruals needed. • Accounting will continue to review automatic ESI accruals to implement e-entry accruals and reversals. • FY02 e-entry accruals will be reconfirmed by Accounting staff prior to FY03 to determine if they are still required. • Accrual policies and definitions will be distributed and reviewed during budget process. • NO ACCRUALS WILL BE DONE WITHOUT APPROVAL BY DEPARTMENT MANAGER

  8. What Causes a Revenue Accrual? • Revenue Accruals are rare and only done when confirmed revenue could not be posted to the general ledger at month close. • Triggers: • No Accruals done for patient revenue • Other operating revenue that is confirmed could not be posted to the general ledger (I.e. HMFP monthly parking payment not received prior to month close); typically entered at departmental request • Standard revenue accruals for long-term revenue sources (I.e. Rental Income, Resident income, other affiliation agreements) • Accounting may contact department to determine if other operating revenue accrual required if significant variance observed, but revenue will NEVER be accrued without department manager approval and proof that revenue is confirmed.

  9. For further information or questions, please contact: Diana Tuttle Director, Support Services 7-2388 Or Stephen Deveau Director, Fiscal Services 7-0003

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