March 9, 2005

1. March 9, 2005 Year End Closing Procedures Presented by: Rachel Raynoha, Financial Systems Manager SDSU Research Foundation Wednesday, 12:00 PM – 1:30 PM Evaluation Code 178

2. Session Rules of Etiquette • Please turn off your cell phone/pager • If you must leave the session early, please do so as discreetly as possible • Please avoid side conversation during the session Thank you for your cooperation!

3. Introduction • This session will present SDSU Research Foundation’s Year-End Processing procedures, including Banner system parameter set-up, annual test plan, departmental year-end processing guidelines, pre-roll audits and clean-up procedures and roll balancing procedures. • This session will help Banner users prepare for and execute year-end processes in a methodical and timely manner.

4. SDSU Research Foundation Overview • Converted to Banner Finance in July 1999 • Currently operating on Banner 6 • Administer over $190 million in annual revenues • Administer over 2,700 accounts on behalf of SDSU faculty research, training, service and self-support projects, involving partners and activities (in over 70 countries) worldwide • Employee over 5,800 people annually • Own and manage more than 754,000 square feet of property

5. Topics of Discussion • Overview • Banner Year End Processes • System Parameters and Set-Up • Year End Audits and Pre-Roll Checklists • June 30 Reports and Procedures • Fixed Assets – Annual Depreciation • July 10 Payroll Processing and HR Position Roll • Roll Processing and Balancing • Post-Roll Activities • Summary

6. Overview • Concurrent Year Processing • Banner maintains both prior and current fiscal years, allowing concurrent year processing while the prior fiscal year is being closed out. This helps minimize the amount of system down time required while the previous fiscal year is being finalized. • Departments are able to begin entering next year activity (requisitions, purchase orders, journal vouchers, budgets, cash receipts, etc.) as they are received instead of after the old year is closed and the new year is opened. • There are a series of Banner processes that facilitate concurrent year processing; FGRGLRL, FGRENRL, FGRBDRL, FGRCLOP • Banner allows institution’s to maintain processing parameters to meet their operating requirements.

7. Overview • Terminology • Fiscal Year • Each institution maintains it’s books based on a fiscal year. Fiscal years can be based on a calendar year or an academic year. The fiscal year is defined by the institution. Some fiscal years start on January 1, some start on July 1, or other dates based on the institution’s needs. The general ledger (FGBGENL) and the operating ledger (FGBOPAL) are populated on a fiscal year basis. • Project to Date • Some projects are managed on a project, or inception to date basis. Banner tracks these funds in the grant ledger (FRRGRNL). Note: The Year End Roll Process also keep the fiscal query screens (FGIBDST, FGITBAL, etc.) in sync with the grant ledger query screens (FRIGITD, etc.) for funds that are tied to the grant ledger for project to date reporting.

8. Overview • Fiscal Periods (00-14) • Period 00 is reserved for year end roll transactions, beginning balances. • Periods 01-12 represent months of fiscal period. EX: 01- July, 02-Aug • Period 13 not used by SDSURF. Used by institutions working on an academic year basis instead of a calendar year basis. • Period 14 is the accrual period, a bucket that allows and accounts for backdating of accrual and adjustment transactions effective in the prior year. This period is populated by backdated transactions that occur after period 12 of the old year is closed and period 01 of the new year is opened.

9. Fiscal Year End Processes – FGRGLRL • Balance Forward Process/GL Roll – FGRGLRL • Rolls the General Ledger balances (FGBGENL) into the new fiscal year. Entries are posted into period 00. • Opens the accrual period (period 14) in the prior fiscal year. Can be verified on the Fiscal Year End Maintenance Form – FTMFSYR. Accrual Period is reset to OPENED. Can remain open as long as necessary. Only users that have been granted Accrual Period posting privileges on FOMPROF can post accrual transactions. • Completed for all fund types. • Permits concurrent year processing. • Updates the Date Performed and Ending Doc Number fields on Year-End Maintenance Table (FGBYRLM) and Year-End Ledger Maintenance Form (FGAYRLM). • The GL roll process can be completed any time after June 30.

10. Fiscal Year End Processes - FGRENRL • Roll Open Encumbrances Process – FGRENRL • Rolls the specified open encumbrances forward into the current fiscal year. • Rolled encumbrances can be liquidated in either fiscal year. • Rolls completed and posted PO’s. These are open, but PO not yet completed. Carries forward any OPEN encumbrance with balance. • Completed for all fund types. For SDSURF, special action is required to reverse budget roll transaction on ‘FISCAL’ funds that are set up in fund types that have system parameters to roll as if they were project to date. (At the time we developed our chart of accounts, we didn’t know what we didn’t know.) • The encumbrance and budget rolls must be completed in order, the same night, and should be completed after most prior year activity has been completed. For SDSURF, this date is based on A/P & Purchasing deadlines and processing of our final July 10 payroll.

11. Fiscal Year End Processes - FGRBDRL • Roll Remaining Budget Balance Process - FGRBDRL • Rolls the specified remaining budget into the current fiscal year • Completed for fund types that are accounted for on a project-to-date vs. fiscal year basis. • For SDSURF, special action is required to reverse budget roll transaction on ‘FISCAL’ funds that are set up in fund types that have system parameters to roll as if they were project to date

12. Fiscal Year End Processes – FGRCLOP • Close General Ledger Process – FGRCLOP • Closes all the operating control accounts in the GL in the prior fiscal year. SDSURF does not perform this step so the GL balances are not closed and rolled into fund balance, and can be queried by fiscal year.

13. Concurrent Year Processing – GL • Banner maintains both prior and current fiscal years, allowing concurrent year processing while the prior fiscal period is being closed out. This helps minimize the amount of system down time required while the previous fiscal year is being finalized. Departments are able to begin entering next year activity, (REQ’s, PO’s, JV’s, budgets, cash receipts, etc.) as they are received instead of after the old year is closed and the new year is opened. • SDSURF opens period 01 (July) of the new fiscal year in May. Users can then begin posting new year transactions by posting them with a July transaction date. • Between July 1 and completion of the roll processes, users may enter transactions in either the previous fiscal year or the new fiscal year. Transactions with a June 30 date will post to period 12 of the old year, and transactions with a July date will post to period 01 of the new fiscal year.

14. System Parameters and Set-Up • Banner allows institution’s to define how each fund type should be processed between fiscal years. The following need to be maintained and reviewed annually. Verify that Multiple Fund Balance Ind is NOT checked. FOASYSC Ensure that Enc, Budget Carry Forward and Doc Roll Parameters are accurately defined. FTMCOAS Ensure valid fund account is defined. FTMCOAS Ensure Chart of Accounts effective date if in effect before the year-end jobs are FTMCOAS scheduled on the Year End Ledger Maint Form - FGAYRLM Set Enc, Budget Carry Forward and Doc Roll Parameter overrides for project funds, 2, 5 FTMFTYP and 9 ledgers. Verify that valid system id's are established for ENCROLL, BDGTFRWD, and GLCLOSE FTMSDAT processes. Also need attribute specifying E090 as the FGBTRNI_RUCL_CODE for FGBTRNI. Make sure new fiscal year is defined and period 01 is open. Verify that accrual period is FTMFSYR NOT open in prior or new fiscal year. Verify that new year is defined in HR system. PTRCALN Verify that payroll processing dates are defined for the new year. NBAFISC Schedule the year end jobs according to the Foundation timeline. Set dates as July 12, FGAYRLM 2000.

15. Department Guidelines for Concurrent Year Processing • Each department establishes processing guidelines that apply during the time period when we are concurrently entering data in two fiscal years. • Finance & Accounting (Ledgers, Journal Vouchers) • Accounts Payable (Invoice and Check Processing) • Purchasing (Requisitions, Purchase Orders, Change Orders) • SR Administration (Grants & Contracts Indirect Cost Processing)

16. Concurrent Year Processing - GL • GL Transactions in the Prior Year • If period 12 of the previous year is open, backdated transactions will post to period 12. • After period 12 has been closed, backdated transactions will post to the accrual period, period 14. • Once the general ledger balances have been rolled (FGRGLRL), the posting process (FGRACTG) automatically updates GL balances in both fiscal years. • Any adjustments to prior year general ledger balances will automatically update the same accounts in the current year opening balance. • NOTE: To avoid detailed transaction updates of the general ledger balance roll, defer executing the GL Roll process until most period 12 activity has posted.

17. Concurrent Year Processing - OL • Operating Ledger (OPAL) Transactions in Prior Year • Any transactions against operating ledger accounts in the prior fiscal year will update the Control Accounts in the prior fiscal year and Fund Balance in the current fiscal year. For example, a prior year invoice will update Expenditure Control and Accounts Payable in the prior year. In addition, it will update Fund Balance and Accounts Payable in the current year. Remember, since the General Ledger balances are not going to roll again, the system must simultaneously update Accounts Payable in both fiscal years.

18. Concurrent Year Processing – Finance & Accounting • During concurrent year processing, journal vouchers may be posted to either the old fiscal year or the new fiscal year, depending on the transaction date entered in Banner. • During the period of July 1 through execution of the roll processes, limit posting authority to authorized individuals who have been trained and are responsible for carefully reviewing documents and posting accurately so that transactions are posted to the correct fiscal year.

19. Concurrent Year Processing – Finance & Accounting • Implement custom versions of journal voucher forms: • FGAJVCD – Journal Voucher Entry Form • FGAJVCQ – Journal Voucher Quick Form • Implemented between June 30 and roll date • Modified to default in June 30 transaction date vs. baseline sysdate

20. Concurrent Year Processing – A/P • Accounts Payable • SDSURF has established guidelines that apply to processing A/P documents during the time period when we are concurrently entering data in two fiscal years. In some cases, the system will prevent you from completing a document when the fiscal year information is not in sync. In other cases, the system may allow you to perform the function but it will result in an out-of-balance situation in the general ledger. This is definitely something we try to avoid! The Banner transaction date is the key to data entry of documents into the correct fiscal year.

21. Concurrent Year Processing – A/P • Create a Banner Invoice with No Purchase Order (Direct Pay) • Review the vendor invoice, reimbursement receipts, service dates for independent contractors, etc. • If the goods were purchased and received and/or the services provided in the old fiscal year (prior to June 30), use a transaction date of June 30 when creating the Banner invoice. • If the purchased goods were received and/or the services provided in the new fiscal year (July 1 or later), use a transaction date in July when creating the Banner invoice.

22. Concurrent Year Processing – A/P • Cancel a Banner Invoice • During the period when both old and new fiscal years are open, it is extremely important to pay attention to the transaction date of a Banner invoice before you cancel it. If the invoice has a transaction date in the old fiscal year (prior to June 30), make sure you enter a cancel date of no later than June 30 on FAAINVD. If the invoice has a transaction date in the new fiscal year (July 1 or later), make sure you enter a cancel date of July 1 or later on FAAINVD. • Processing transactions in the incorrect fiscal year will cause the ledgers to go out of balance, and differences will be reported on the institution’s Control Report – FGRCTRL.

23. Concurrent Year Processing

24. Concurrent Year Processing – A/P • Cancel A Check • During the period when both old and new fiscal years are open, it is important to pay attention to the check issue date before you cancel the associated check. • If the check issue date is in the old year (June 30 or prior), enter a cancel date in the old year of no later than June 30 on FAACHKS. • If the check issue date is in the new fiscal year (July 1 or later), enter a cancel date in the new fiscal year of July 1 or later on FAACHKS. • It is extremely important to apply the correct cancel dates as failure to do so may cause an out-of-balance situation in the ledgers and will appear on the institution’s Control Report – FGRCTRL

25. Concurrent Year Processing - Purchasing • The following guidelines apply to processing purchase requisitions and purchase orders during the time period when we are concurrently entering data in two fiscal years. • Create a Purchase Order or Change Order • The Banner transaction date is the key to data entry of documents into the correct fiscal year. If you want the purchase order in the old fiscal year, the Banner transaction date must be no later than June 30. If you want the purchase requisition/purchase order in the new fiscal year, the transaction date must be July 1 or later. The purchase requisition must be created with the correct transaction date in order to encumber the funds in the appropriate fiscal year.

26. Concurrent Year Processing - Purchasing • Cancel a Purchase Purchase Order/Change Order • During the period when both old and new fiscal years are open, it is extremely important to pay attention to the Banner transaction date of a purchase order before you cancel it. If the purchase order has a transaction date in the old year, make sure you enter a cancel date in the old fiscal year of no later than June 30 on FPAPDEL/FPACDEL. If the purchase order has a transaction date in the new year, make sure you enter a cancel date in the new year of July 1 or later on FPAPDEL/FPACDEL.

27. Concurrent Year Processing - Purchasing • After period 12 is closed and the roll processes have been executed, you will not need to worry about the transactions dates, other than the fact that they must be in an open accounting period. • CAUTION: When the old fiscal year is closed, there is an accrual period that remains open for several months. This accrual period allows the Finance & Accounting staff to make adjusting entries prior to the actual close of the books. For the most part, this accrual period is invisible to most staff. Unfortunately, Banner form FPAEOCD will allow those with access, to make adjustments to prior year purchase orders and line items during the time that the accrual period is open. This is to be avoided as it causes an out-of-balance situation in the ledgers. (Watch for these entries on the Control Report – FGRCTRL.)

28. Concurrent Year Processing - Purchasing • SDSURF has designed and implemented a Banner modification to add an warning message to FPAEOCD during the period the accrual period is open in order to remind users to take extra caution to review the fiscal year status of the PO or line item so that they are not making and adjustment to a document that was not rolled into the current fiscal year.

29. Concurrent Year Processing – Indirect Processing • Indirect Cost Processing also requires special handling. • SDSURF modifies it’s nightly processes so that between June 30 and the execution of the roll processes, the Deferred Grant Process (FRRGRNT) runs nightly through June 30, with a transaction date of June 30. • This insures indirect costs associated with prior year transactions are posted in the prior year. • After the roll processes have been executed, FRRGRNT is run to calculate and post indirect in the new year for new year transactions.

30. Year End Data Integrity • SDSU Research Foundation has developed several reports and sql scripts to review data, identify potential problems, and ‘scrub’ known issues prior to executing the year end roll processes. • It’s all about the data. Clean Data = Year End Success • Vigilance. Know your data. • DO NOT WAIT until year end to clean up a year’s worth of issues. • Execute scripts on a routine basis. • It is not just the errors on the control report (FGRCTRL). • Methodically look at your data for any inconsistencies that would cause problems during the year end roll. • Execute the TEST run of processes. This will identify the less obvious or new issues.

31. Year End Data Integrity - Scripts • Close all requisitions and encumbrances that are zero. (Appendix 1) • Close all requisitions and encumbrances < $1.00 using rule code E032. You can manufacture the transactions. (Appendix 2) • Clean up requisitions and PO’s associated with terminated FOAPAL’s.

32. Year End Data Integrity – Ongoing Clean-Up • Year end data clean-up processes should be executed monthly. • Types of data scripts that need to be run every month: • Mismatched data headers and detail records. • Fiscal year problems. • Posting problems. Suspended records and zeroed records that are not closed. • Terminated FOAPAL elements • PO’s with GL codes • “Orphaned” records. PO or invoice number with no associated header record.

33. Year End Data Integrity – Ongoing Clean-Up • Review your institution’s Control Report (FGRCTRL) daily. It is easier to identify and resolve issues as they occur instead of finding at year end. • Review your Incomplete Document Report (FGRIDOC) weekly. ALL items should be completed and posted prior to executing year end roll processes. • Create and run a Year End Invoice Audit Report. Review the report daily through the close process to ensure invoices have been keyed to the appropriate fiscal year. If corrections are required, delete the invoice and re-enter in the correct fiscal year.

34. Year End Data Integrity – Ongoing Clean-Up • Create and run a Year End Requisition Audit Report. Review open requisitions to make sure there is a legitimate reason for any open requisitions left on the system with transaction dates from the previous fiscal year that is about to close. Also review to make sure that there are no dangling line items left on a requisition after conversion to a purchase order. Make corrections as needed. • Create and run a Year End Invoices on Hold Report. Identify and remove all holds prior to year-end processing. Place holds back on invoices as soon as year-end roll processing is complete.

35. Year End Data Integrity – Ongoing Clean-Up

36. Year End Data Integrity – Sample Audit Checklist

37. June 30 Checklist • Make a checklist of action items that need to occur by or on the last business day of the fiscal year. • Assign an owner to each task.

38. June 30 Reports and Procedures

39. Fixed Assets: Annual Depreciation Processing • Overview • Pre-Depreciation Posting Audits • Annual Depreciation Test • After June 30 • Before execution of roll processes • Calculate and Post Annual Depreciation Expense

40. Final Payroll Processing for Previous Year • At SDSURF, payroll is processed and paid for the previous work period. Our final payroll for the fiscal year ending June 30 does not post until July 10. • Special Processing is required to post the July 10 payroll with an effective date in the previous fiscal year. • NTRFINI HR/Finance Set Up Rule Form • NBAFISC Fiscal Year End Form • PTRCALN Payroll Calendar Rule Form • HR Position Roll (custom script) • Zero out prior year payroll encumbrance BEFORE execution of roll processes.

41. Year End Processing Test • Each year, at least one test run will be performed of the year-end close procedures. One person will be assigned the responsibility of kicking off the year-end processing jobs, with technical support available. • Assemble year-end processing team. • Develop department test plans. • Develop task/timeline and assign responsibility as appropriate. • Complete the entire year-end job stream in a TEST instance. • Perform control checks at various points. • If significant modifications to procedures as a result of testing, execute another test.

42. Year End Processing Test • Document the amount of time and resources required to complete all processes. • Get a realistic estimate of the amount of system downtime required for PROD processing • Identify major system issues that can be resolved in TEST environment vs. PROD environment. EX: batch sizes, database table space, etc. • Review report output. • Balance each process and validate integrity of rolled data. • Generate control reports before and after executing each job, for both the prior and new fiscal year. • Back-up the database at critical points in the processes. • After each job is complete • Allows recovery back to previous process vs. beginning of processes in the event one job fails.

43. Pre-Roll Activities & Checklist

44. Pre-Roll Activities & Checklist

45. Roll Processing Checklist

46. Roll Processing Checklist

47. Roll Balancing – Generate Control Reports • Generate Banner reports before and after the roll for use in validation of roll processes.

48. Roll Balancing – Generate Control Reports

49. Roll Balancing – GL Roll • Before executing FGRGLRL: • Verify that Budget Control on your Trial Balance Report for the prior fiscal year period 12 nets to .00 before executing the GL roll. • Calculate the Fund Balance that should roll into the new fiscal year in the GL Roll Process. • Enter the Total Assets and Total Liabilities for both fiscal year and calculate the expected asset balances after the GL Roll is complete.

50. Roll Balancing – GL Roll • After executing FGRGLRL: • Verify that Assets and Liabilities match between the old year and the new year. User your Trial Balance Report for period 12 of the old year and period 01 of the new year. • Verify that the Fund Balance on your Trial Balance Report for the new fiscal year matches that calculated prior to executing the roll process.