accounts payables accruals - scoe · accounts payables accruals fy16 page 7 o create a journal...

Accounts Payables Accruals FY16 Page 5

Accounts

Payables

Accruals

For FY16

June 16, 2016

Information Technology


Understanding the AP Process

The goal of year-end accrual process is to recognize revenues and expenses in the period in which it was incurred, regardless of when payment is received or paid, to ensure accurate presentation of revenues and expenses. Accrual basis accounting records revenues at the time when services or sales are made rather than when cash is actually paid or received.

As we get closer to the end of the fiscal year, districts should be reviewing requisitions that do not have a status of Complete, Cancelled or Denied. It is extremely important that you do so before the books are closed, since all requisitions must be either carried forward or closed.

Escape

You cannot accrue or carryover requisitions in the Open status. o Review the requisition and determine is they need to be submitted or

cancelled o Use the quick link on the processing screen to go directly to the requisition

activity

Documents with errors will not post o Documents with errors must be resolved o Use the quick link on the processing screen to go directly to the requisition

activity

Requisitions cannot be processed with negative outstanding accrual or carryover amounts

o These requisitions must be resolved in the Finance-Requisition activity o Use the quick link on the processing screen to go directly to the requisition

activity

The accrual and carryover columns on the list are editable, but may not be set to a negative value

If all fields are $0 the requisition will roll to the next fiscal year with a zero dollar amount

o This would not be something you would generally want to do o You must manually complete the requisition o Use the quick link on the processing screen to go directly to the requisition

activity

Posting an Accrual amount in Escape will:


o Create a journal entry in the closing fiscal year to set up the liability o Add liability accounts in next year o Write history record detailing what was done to the requisition/PO during the

year end process

When the Payables (PCL) year-end closing list is created, Escape makes the assumption that all requisitions are to be carried over into the next year

o This is not the case in our county o Construction projects are an example of a kind of requisition that may need

to be carried over rather than released and reissued

o The Carryover process allows the req or PO number to remain the same between years

Posting a Carryover amount Escape will internally o Change the fiscal year of the requisition o Add accounts for next year o Reverse outstanding encumbrances in the closing year o Encumber amounts in the new fiscal year o Write the appropriate history record as to what happened to the

requisition/PO during the year end process

Posting a Release amount on the requisition (both the accrual and carryover amounts are zero), Escape will

o Change the requisition status to completed o Reverse outstanding encumbrances o Write a history record for what was done to the requisition during the year

end process

The Release column is calculated by subtracting the accrual and carryover amounts from the outstanding amount

o A red amount will be shown, if the result is negative o No requisitions items with red amounts can be processed

The Accrual process results in FY16 journal entries to establish AP’s (credits object 9529) and record expenses (debits objects 1xxx through 6xxx) in 2015-16

Stores Requisitions do go through the year end process

o Must be addressed in the Finance–Stores activity o Stores requisitions default to release


o Backorders are cancelled automatically

Work Orders do not go through the year end process

o Must be addressed in the Finance-Work Orders activity o Must be manually closed or cancelled or complete

If the work order status is Open or Submitted you must cancel If the work order status is Approved, Assigned or Ready to Expense

you have a choice to cancel or complete

Reminder:

o The Asset/Liability roll, which takes place after 2015-16 is closed, will

move the General Ledger amounts from object 9529 in FY16 to General

Ledger object 9510 in FY17

The Asset/Liability roll does not roll the specific AP’s to the next

fiscal year

o Until the Asset/Liability roll is performed, there will be no balance in

the FY17 general ledger object 9510 to offset the payments being made

to the FY16 (accrued) payables

1. To Review Potential PCL’s Go to Finance – Reports – Fiscal - Fiscal15

Run the Fiscal Year End Checklist (Fiscal 15) report (provides a list of all items needing to be addressed prior to close) Section 2 – User Options

Fiscal Year = 2016 (System will default to 2017 after July 1)

****Manual Accruals of Due to/from Government Entities****

Must use 9290/9590 objects for any accruals associated with state or federal programs (example: cafeteria)

Manual Journal Entries will need to be done as the Year End Processing activity does not allow the use of objects other than 9210/9510

Amounts from manually created Journal Entries to 9290/9590 will move to 9290/9590 during the Asset/Liability roll and will need to be reversed in the new fiscal year (can copy the journal entry and move to the appropriate expense/revenue account).


Reqs = No - Do NOT include Requisitions having zero encumbrance balance

Payments = Yes (Will include pending AP payments that are not associated with a requisition)

Click Go

Review the report for any outstanding items that should not be accrued or carry forward

o Verify all balances and pending payments o Remember to also check encumbrance amounts

The Fiscal 15 report MUST be completely clear (no entries present) before you are ready to close the fiscal year


2. Process Year End Closing for Payables

Go to Finance – Processes – Year End Closing Provides a list specific to AP’s via the selection criteria

1. Enter search criteria: a. Fiscal Year (2016)- System will default to 2017 after July 1 b. Document Type

Select Vendor Req to start for a smaller list to work from

If using smaller lists be sure to run a listing for each type to verify that you have addressed all entries

c. Account Code may be another limiting selection to start your review d. Process Default should say No

The No selection will allow you to determine if you want to process a few items or all items

2. Select Go

3. Report options from the resulting report listing:

a. From Task select Year End Processing Report Reports all detail for remaining items of each requisition

b. From the tool bar select the “Magnifying Glass” icon Snapshot with Payments for the requisition highlighted on your list

4. Review checklist and take appropriate action as defined in the process outlined below

5. There can be no remaining entries on the processing screen prior to your close


3. The Setup of Payables

Go to Finance – Processes – Year End Closing 1. Document Type = Vendor Reqs

2. Click Go (Ctrl g)

From the resulting list: 3. Determine for each line item whether to accrue, carry over or close out the amounts

*****Always use the Enter Key – Not the Tab Key***** 4. Post the entry or entries from the Task menu

You can post as many times as you want

You will need to run a new search before each processing session Accrual - This is used when you have received the goods or services before July 1st (in FY16) and will pay for them next year (FY17) o The payable amount is expensed to the current year account and next year’s

liability account is brought into the requisition for payment next year

Enter the amount of the requisition (or a partial amount) in the Accrual field

I used $100.00 in the example above o Escape automatically moves the dollars to the Carryover field

You must then zero out the carryover field o Once the Carryover field has been set to zero the system will automatically

calculate the release amount and enter it in the Release column for you o When you post an accrual amount Escape will

Create a journal entry in the closing fiscal year (FY16) to set up liability

Reverse the encumbrance (FY16)

Add liability accounts in next year (FY17)

Write history record defining what happened to the requisition during year

end processing

***Once posted the requisition has “crossed the line” into FY17 and can only be altered from the FY17 fiscal year***


Carryover - You can carry forward a requisition from the current year to next fiscal year without setting up a liability

o This will cause the requisition to be paid from next year’s appropriation with the same req or PO number as the current year (R16 or PO15)

o Verify the amount of the requisition (or a partial amount) in the Carryover field

Escape automatically placed the remaining dollar amount from the requisition in the Carryover field.

If you do not change the carry over amount you will need to make sure that you Change the Process Field from No to Yes

Escape will not automatically change it for you if no entry is made

If you want to carry over an amount different from the Escape entry you will need to change the carry over amount

Escape will automatically do the release math Escape will automatically change the process field to yes

o When you post a carryover amount, Escape will

Create a journal entry in the closing fiscal year (FY16) to reverse the encumbrance (FY16)

Add expense accounts in next year (FY17)

Encumber the amount (FY17)

Write history record for year-end processing results

***Once posted the requisition has “crossed the line” into FY17 and can only be altered from the 2017 fiscal year


Release - Sometimes it is just better to close out the requisition

o Enter zero in the Carryover field

Escape will automatically calculate the Release amount

Escape will automatically set the process flag to Yes

Escape will automatically release the funds upon posting

o When you release a requisition amount Escape will

Create a journal entry in the closing fiscal year (FY16)

Release the funds (FY16)

Set the requisition to complete (FY16)

Create a journal to reverse the encumbrance(FY16)

Write history record to document what happen to the requisition during the year end process


Post all items to be processed from the Task menu flagged as Yes

There were no changes to R16-00226

o To post carryover for this requisition this requires a manual change by updating the process flag to “Yes”

Always verify that the documents to be processed match with your count

Always verify that all your entries processed

If there were errors the posting for items with errors would have failed


Payable Issues for Thought

Expired accounts

Requisitions can be accrued and carried over even if the accounts do not exist or are expired in the new year (FY17) If a component of an account string does not exist you will need to establish the component or fix the requisition before the year end process is attempted If possible, the accounts should be corrected prior to the payable being either accrued or carried over

If an AP Document on the year end list does not have accounts for the new year, remember to create or unexpired the accounts in the new year before processing. If the AP Document has already been carried over to the new fiscal year it is our recommendation to open the requisition, go to tasks and use the Rollback Year End Processing task. Or go to the requisition and enter in the correct expense account in the requisition and delete the error account.

Escape will use the following logic:

Accrued:

The liability account assigned uses the same fund-project year resource of the base year account

If the resource is changed for the new fiscal year, Escape uses the new value to assign the liability account

If the new year liability account does not exist, Escape will create it based on the error account and the fund-project year-resource of the base fiscal year

Carried over:

If the expense account is expired prior at the start of the new year or doesn’t exist in the new year, Escape will use the Finance Error Acct defined on the Ledger tab of the Organization record

If the error account is valid, Escape Online processes the requisition and gives the user the following error message: Processed - One or more accounts are missing in new fiscal year

If the error account is expired or does not exist in the new year, Escape generates an error and stops the processing of the requisition for year end

In either case a history record is written to the requisition listing the expense accounts that could not be used in the new fiscal year


Account Distribution Tied to Line Items

To appropriately distribute the accrued/carryover amounts to the liability Accounts, Escape changes the account distribution option of the req to manual

Escape Online adds the liability accounts to the requisition and distributes the amounts

Escape writes a history record detailing the amount accrued/carried over and documenting that the account distribution method was changed to manual

If there is a time when you need to roll back the year end processing, Escape will rollback the year end processing as usual, but leave the account distribution option set to manual

o It would be up to you to change the account distribution option and re-evaluate the accounts

Multiple Users

Sometimes there are two people working the year end list and they both try to post a requisition at the same time or the same requisition at different times

If you receive the error: “Cannot process requisition, it is already in fiscal year xxxx,”

o This means that the document has already been carried forward to the new fiscal year

o The requisition has “crossed the line” into FY17 and can only be altered from that fiscal year

Items Process Too Soon – Pre Close

There will be times when you have accrued something and did not mean to. Basically, you have three options:

Cancel the requisition, copy it and make the payment on the new req

Make a direct payment to the vendor in the current fiscal year and manually complete the new fiscal year requisition

Return to the Vendor Requisition screen and select Roll Back Year End Processing

o The Roll Back Year End requires the activity permission


Fixing Vendor Requisition Errors (Pre-Close)

Rollback Procedure

This feature is extremely handy if you need to alter account codes for a requisition that has already been accrued (crossed the line into FY17)

o You can rollback year end processing for a single requisition ONLY if:

The requisition has not been cancelled or completed There have been no payment on the accrued requisition The previous fiscal year is still open When you need to alter last year’s accounts You are a fiscal user or have the Rollback activity The Rollback Year End Processing activity will create a history

record:

Data Entry Correction

If you have NOT closed the books for the year and discover a data entry mistake in a year-end liability that was set up follow the procedure below:

Go to Finance – Requisitions – Vendor Requisitions 1. Open the requisition that needs to be changed 2. From the task bar select the Rollback Year End Processing task.

3. Go to the Accounts tab 4. If the req amount is changing

a. Change the items as necessary **OR**

b. Add an adjustment amount to get the requisition total to change

If red X in Acct Undistributed Amount, need to distribute in Accounts Tab

5. Or change the Manual Account Distribution Option


6. Go to the Accounts tab

a. Verify distribution of new cost of the req or if multiple accounts distribute new cost of the req

**OR**

b. Add account codes if necessary

7. Save and close the requisition\

Reprocess the requisition on the year End Closing list

This reverses the liability and encumbrance journal entries and changes the fiscal year of the requisition back to the previous year

Incorrect setup of Payables will affect both fiscal years

FY16 will be overstated if the Payable is set up over the actual amount owed.

FY17 will be understated as you manually complete or pay short the accrued requisition.


4. Review of Additional Payables (PCL) Information Three methods to review Payables (PCL) setup, activity and journal information: 1. Finance – Fiscal – Journal Entry

Enter the R16-xxxxxx that you are interested in

Zero out the Fiscal Year field so you will get a list of all journals to the PCL

Select Go All journals associated with that Payables (PCL) will be listed in order of entry type Open and review the adjustment entry

2. Finance – Requisitions – Vendor Requisitions

Leave the fiscal Year Blank

Enter and open the R16-XXXXXX you are interested in

Select the History Tab

All activity will display in order of entry o History will always tell you if you have moved the requisition through

the accrual process

Remember that until the Asset/Liability Roll is done for your district later in August, you will be viewing the general ledger object 9529 in FY16 and the general ledger object 9510 in FY17 for all Payables (PCL’s) if you are verifying using the G/L


Go to Finance – Reports – Ledger

Ledger 02a- Receivables/Liabilities Activity

Closing year - Enter the fiscal year for which the payables were setup (will default to FY17 after July 1)

A/R or A/P - Use the lookup to limit the report to Payables (For the final report to your accountants this should reference all)

Requisition number – Specify Invoice # to see only transactions for that invoice

Cleared items - Change Cleared items to No to limit the report to only items that have not been cleared (For the final report to your accountants this field should be Y)

Unposted JE – Change to Yes to include journals that are not posted on the report.


This report shows journal entry activity by: o requisition number o account receivable invoice number o journal entry number as it relates to account receivable and/or liability

setup and clearing o Page breaks on account type o If account selection is specified

Only those accrual journal entries that have expense/revenue detail matching the selection criteria will be included in the report

o The offset objects the report uses are defined in the Ledger tab of the Organization record

The current year is 9529 and the prior year is 9510 o Journal entries

That do not reference a requisition or invoice and only have an offset account and a cash account will be excluded from the report

o The description comes from the AR Invoice/Vendor Req comment If the comment is blank, the report will use the comment from

the latest JE that is found for this reference number o Journal accrual journals to 9290/9590 will not show on this report o If the offset account is expired, an asterisk will show next to the

amount


Payables (PCL) Cheat Sheet A. To SET UP an AP in 2016-17 from EXISTING requisitions/purchase orders created

during FY16

1. Go to Finance – Processes –Year End Closing Source criteria-

o Select Department from the drop down menu o Select Document Type from the drop down menu and choose Vendor Req o Select Go

From the list alter the Accrual, Carryover and/or Release column amounts o The Escape system assumes that since you have created a

requisition/purchase order that the items are still needed so the natural default is the Carryover column

o This is Not the normal assumption for our county

Make sure that the Process column shows Yes 2. Select Task from the menu bar at the top of the screen 3. Select Post from the drop down menu

The screen should give a count of the ones ready for processing

Select Yes if you agree with the count to continue the post

If any of the postings fail you will see a message bar and it will indicate why the post failed when you hover over the message with your mouse

If you receive an error message on an item follow through on the error message and then redo the process above after the error has been corrected

B. To SET UP an AP in 2016-17 WITHOUT A PRIOR requisition/purchase order having been created in FY16

1. Go to Finance – AP - Vendor Requisition

2. Select New

Select 2015/16 from the drop down

Fill in all the criteria required for the Invoice, Items and Accounts tab

On the Requisition tab select or change the default Order Type to Direct Payment ***Since this type of payment would be for something already received it should not be necessary to have a full purchase order to send to a vendor.

3. Select submit

If you do not want the requisition to go through any approvals, use the Approval Override selection

4. You do not need to print the requisition to continue the year end process 5. Now return to the steps under A. To set up an AP in 2016-17 from existing

requisitions/purchase orders 6. You must take the newly created requisition through the Year end Processing in order to

accrue the amounts


C. To SET UP an A/P in 2016-17 and simultaneously make a 2017 cash payment in

one step (payment type is called a “Direct” payment)

In Escape you are able to process a FY16 payment without setting up a structured payable. This requires diligence in making sure you are selecting the proper year, FY16, as you begin the direct payment process. The system knows that you are processing payables to FY16 and will:

In 15-16, credit object 9529 and debit expense objects 1xxx to 6xxx.

In 16-17, credit object 9110 (cash) and debit object 9510 (accounts payable). This process should only be used when:

You have received a billing for 2016-17 services/goods/reimbursements

No prior requisition or PO has been established

You are now paying the exact amount of the bill

1. Go to Finance – AP – Enter Direct Payments 2 . Change the fiscal year to FY17 (2016/2017) from the drop down menu

(IMPORTANT)

****Do not use this feature prior to the 6/23 APY run****

3. Enter C for the Bank Account and continue filling out all necessary information

Only enter FY16 invoices together

For any FY17 invoices o Start the direct payment process again without changing the fiscal year

The default is FY17 3. Select Go 4. When submitting the FY16 payments for approval be sure to batch them together by

selecting the Payment Type as Direct when building the list for submission 5. Follow the normal AP processing steps


D. To ALTER an already set up payable done through the Requisition Year End Closing process

1. Go to Finance –Requisitions – Vendor Requisitions

Source criteria- In the Reference Number field enter the Payable number you wish to alter (R16-xxxxx)

Note that the Payable number is the same as the original Req number Clear the Fiscal Year field with the space bar

2. Select Go 3. Open the requisition that needs to be changed 4. From the task bar select the Rollback Year End Processing task. 5. Go to the Accounts tab 6. If the req amount is changing

a. Change the items as necessary

**OR** b. Add an adjustment amount to get the req total to change

1. Go to the Accounts tab c. Distribute the full new cost of the req

**OR** d. Change the account codes if necessary

2. Save and close the requisition 3. Reprocess the requisition on the year End Closing list

****At this point a system created journal reverses the first accrual in both fiscal years****


***Pre-Close***

E. Payables (PCL) Scenario’s

1. When a Payable (PCL) was set up and should not have been

Finance – Requisitions – Vendor Requisitions a. Leave Fiscal Year field blank on search screen b. Enter and open the vendor requisition needing alteration (DO NOT REOPEN

the PCL from the Task menu) c. Go to the Task tab d. Select Rollback Year End Processing (see page 13 of this manual for

details) e. Change amounts accordingly (see pages 14-15 of this manual for details) f. A FY16 journal will be created that will alter the FY16 and bring the FY17

setup to zero g. You MUST Reprocess the requisition on the Year End Closing List

2. When a Payable (PCL) was set up for the incorrect amount

Finance – Requisitions – Vendor Requisitions a. Leave Fiscal Year field blank on search screen b. Enter and open the vendor requisition needing alteration (DO NOT REOPEN

the PCL from the Task menu) c. Go to the Task tab d. Select Rollback Year End Processing (see page 13 of this manual for

details) e. A FY16 journal will be created that will alter the FY16 and bring the FY17

setup to zero f. You MUST Reprocess the requisition on the Year End Closing List

3. When a Payable (PCL) was set up to the incorrect resource/account code

a. Leave Fiscal Year filed blank on search screen b. Enter and open the vendor requisition needing alteration (DO NOT REOPEN

the PCL from the Task menu) b. Go to the Task tab c. Select Rollback Year End Processing (see page 13 of this manual for

details) d. A FY16 journal will be created that will alter the FY16 and bring the FY17

setup to zero e. Cancel the requisition and copy it with the correct resource/account code f. You MUST Reprocess the requisition on the Year End Closing List


***Post Close***

1. When a Payable (PCL) was setup and not paid against (formally Z’ing out) Finance – Requisitions – Vendor Requisitions

a. Blank out the Fiscal Year field on search screen b. Enter and open the vendor requisition needing to be closed (DO NOT

REOPEN the PCL from the Task menu) c. Make NO alterations to the Accounts tab d. From the Task menu, select “Manually Complete” or “Cancel” if the

requisition has not been paid against e. This will force a journal in FY17 that will relieve the 9510 and credit the

expense side f. This will affect FY17 for the amount that was not paid

2. For a Payable (PCL) that was partially paid against but will not be totally

cleared Finance – Requisitions – Vendor Requisitions

a. Blank out the Fiscal Year on search screen b. Enter and open the vendor requisition needing to be closed (DO NOT

REOPEN the PCL from the Task menu) c. Make NO alterations to the Accounts tab d. From the Task menu, select “Manually Complete” or “Cancel” if the

requisition has not been paid against e. This will force a journal in FY17 that will relieve the remaining 9510 balance

and credit the expense side for the difference between what was set up and what was paid

f. This will affect FY17 for the amount that was not paid

Th