Year-End Accrual Procedures

[Business Affairs Office News]

Good morning,

The Business Affairs Office Financial Services Department would like to remind University of Oregon personnel of important prepaid expense and accounts receivable processes that can begin now, in preparation for year-end closing. Although these processes should be performed on a routine basis, they are especially critical at year-end. Maintaining subsidiary lists of prepaid expenses or accounts receivable throughout the year aids in tracking and clearing these accounts at year end.
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Prepaid Expense

According to Generally Accepted Accounting Principles (GAAP), accrual accounting requires expenditures to be charged to the fiscal year and period in which goods are received or services are performed, regardless of when budget or cash is available.

Expenses for future fiscal years that are paid prior to June 30, 2014 should be coded to A5901 Prepaid Expense Year End Accrual. To remove the prepaid and recognize the expense, post a reversing journal voucher with a transaction date in the fiscal year and period that the goods or services are to be provided. This journal voucher may be processed ahead of time if the future period is open.

For amounts posted as expense in FY14 that should be prepaid expenses for future years:

Debit     Department Index             A5901 - Prepaid Expense
Credit    Department Index             Expense Account Code - ex. 39515 Out-St Empl Program Travel

To remove the prepaid and recognize the expense, use a transaction date in the proper future fiscal year and period:

Debit       Department Index             Expense Account Code - ex. 39515 Out-St Empl Program Travel
Credit      Department Index             A5901 - Prepaid Expense

We encourage entries be made before the close of period 12 on July 8th at 5:00 p.m.

*** It is important that prepaid amounts for FY14 are reversed prior to year-end. To review account A5901 or any other general ledger accounts, use FGITBAL/FGIGLAC. Some prepaid expenses, such as airfare for travel, may be initiated outside of your department.
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Accounts Receivable

Departments that sell products or provide services should post revenue on an accrual basis. According to GAAP, accrual accounting requires revenue be recognized when the product is delivered or the services are provided, not when the cash is received.  Departments should accrue amounts owed to them at year-end by customers external to UO.

To record revenue and receivable in FY14, with a transaction date of 30-JUN-2014 or earlier:

Debit       Department Index            A3103 - Misc A/R
Credit      Department Index            Revenue Account Code - ex. 06002 Sales or 06003 Services

To record the reversal in FY15, with a transaction date 01-JUL-2014 or later:

Debit       Department Index             Revenue Account Code - ex. 06002 Sales or 06003 Services
Credit      Department Index             A3103 - Misc A/R

We encourage entries be made before the close of period 12 on July 8th at 5:00 p.m.

*** It is important that receivable amounts for FY14 are reviewed for accuracy. To review account A3103 or any other general ledger accounts, use FGITBAL/FGIGLAC. Additional requirements at year-end include analysis of accounts for uncollectable amounts, and preparation of a detailed accounts receivable aging list reconciled to the general ledger.

Additional resources are available at http://ba.uoregon.edu/staff/accounts-receivable-non-student.
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If you have any questions, please contact us or visit our year-end instructions at http://ba.uoregon.edu/staff/year-end-close.


Thank you,

BAO Financial Services Department

Phil Davis, 6-3524, pdavis at uoregon.edu
Jill Ritz, 6-1256, jritz at uoregon.edu<mailto:jritz at uoregon.edu>
Robbin Howard, 6-1115, rchoward at uoregon.edu<mailto:rchoward at uoregon.edu>
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