Systemwide accounting YEAR-END LEGAL TRAINING APRIL 2017 Systemwide accounting Lisa Kasten, General Accounting Manager, Chancellor’s Office Kelly Cox, Associate Director, Chancellor’s Office Nancy Freelander-Paice, Director Capital Programs, CO

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2016 Agenda Cash Posting Order Process Interagency Accruals Year End Rollforward Tree Reserves Chapter 15 Update

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING CPO Basics What is a CPO? Why Do We Issue CPOs? Where to Find The CPO Request Page? Who Should Request a CPO? How Do You Complete a CPO? When to Request a CPO?

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 What is a Cash Posting Order? Mechanism to move SWIFT dollars to settle inter-campus transactions

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Why Do We Issue CPOs? Checks: Slow Timing delays Inconsistent Accounting Costly CPO: Consistent Accounting Systemwide elimination

Where To Find The CPO Request Page? YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Where To Find The CPO Request Page? https://CSYou.calstate.edu CSYou  Tools & Services  Financial Tools  CPO Request

Who Should Request CPOs? YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Who Should Request CPOs? Exceptions: Remitting to multiple campuses General Rule: Receiving Campus

How Do You Complete A CPO Request? YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 How Do You Complete A CPO Request? Review CPO User Guide Include payment approval from remitting campus (e.g., MOU, emails, or contracts) Verify total dollar amount ties Verify funds transferred to/from correct campuses Recommend accounting entries (to be verified by CO)

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 When To Request CPOs? In the same accounting period After obtaining payment approval After obtaining supporting documents After ensuring all campus participants are included on a single CPO request Year-End Deadline June 15 is the last day to submit a CPO request for guaranteed processing

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Helpful Tips Copying & Pasting? Break down the amounts Want us to know Something?

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END GAAP TRAINING APRIL 2017 What’s NEW? Effective this fiscal year (July 1, 2016) new SWAT object codes have been created: 506100 572000 Transfers in – RMP SWAT 680100 672000 Transfers out – RMP SWAT (CO Use Only) 571485 572485 Transfers in – RMP SWAT 571487 572487 Transfers in – RMP SWAT Returns

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Important Dates Last day to submit 2016-17 CPO request: June 15, 2017 Last day to get DOA approval: June 23, 2017 Last day a 2016-17 CPO will be distributed: July 5, 2017 Bank of CSU Statements issued: July 6, 2017 FIRST day to submit 2017-18 CPO request: July 10, 2017

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 QUESTIONS?

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency accruals Source of AR and AP Balances: Legal balance derived from Due to/from accounts Interagency Transaction Table (ITT) Report Legal balance derived from AR Operating and AP Other Prior Year Expenditure CPOs Report GAAP adjustments Transactions in CSU Fund 230 (claims outstanding) Other (if any)

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals Reminder: CPO Deadline June 15th Interagency Transactions are due by end of business day on Monday, July 3rd Included in the FIRMS edit in the appropriate due to/from object codes and CSU Funds. Utilize the new Interagency campus contact list to ensure each side of the entry is completed timely. https://csyou.calstate.edu/groups/StateReporting/Interagency%20ARAP/

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals 2. Transactions received between July 5th until Legal submission are to be recorded as follows: The campus issuing the AR is to record 103004: AR-Operating Revenue and the remitting campus is to record 201001: AP Issuing campus MUST email the related campus Utilize the new Campus Contact list. IMPORTANT! MUST Request CPO for payment processing by July 31st

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals 3a - Prior Year Expenditure CPOs Report 2016-17 CPOs issued in 2017-18 Every attempt will be made NOT to issue CPOs as GAAP adjustments. Only record CPOs at the direction of SFSR.

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals 3b - Transactions in CSU Fund 230 The activity in CSU Fund 230 is not passed down to the campuses in GAAP. Therefore, the outstanding AP need to be offset from the campuses records. To facilitate this, we have developed a new matrix to confirm the campus’ balance.

Interagency Accruals - Reconciliation YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals - Reconciliation New input matrix for campus interagency reconciliation Legal 103004 201001 GAAP All Accounts AR From Down Across

Interagency Accruals - Reconciliation YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals - Reconciliation Accounts payable To Across Down

Interagency Accruals - Reconciliation YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals - Reconciliation Reconciliation Confirm no variance Contact campus to resolve

Interagency Accruals - Reconciliation YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals - Reconciliation Reconciliation will assist with the Footnote 4.1 & 17

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals How to Edit the file Use Internet Explorer Click the down arrow Select ‘Edit in Browser’ Make your edits Close page by clicking ‘Interagency AR/AP’

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Interagency Accruals Legal Transactions received between July 5th and July 10th are to be reconciled in the new Legal Interagency matrix. Deadline is July 10th GAAP transactions received between Legal close and August 18th are to be reconciled in the new GAAP interagency matrix. Deadline is August 18th https://csyou.calstate.edu/groups/StateReporting/Interagency%20ARAP

Knowledge Check Question YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Knowledge Check Question Question: what new tool will you use to help you record interagency transactions? A – ITT Report B – Interagency Campus Contact list C – Kelly’s email address

Knowledge Check Question APRIL 2017 YEAR-END LEGAL TRAINING Knowledge Check Question Question: When is the last day to submit all Legal interagency Due to/Due from transactions for the year? A – 6/15/2017 B – 7/3/2017 C – 7/5/2017

Year End Rollforward Tree YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Year End Rollforward Tree Rollforward funds should be limited to: Capital Improvement (CIMP) Funds Until the project is completed Non-Recurring Maintenance and Repair Projects (NRMR) Grants and contract Until the grant or contract is completed Appropriated funds until the ‘Reversion date’. Currently at 2014 General Fund

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Rollforward Tree Limited 0948 funds should rollforward: CIMP suite of CSU Funds NRMR suite of CSU Funds CSU Fund 465 – Grants and Contracts CSU Fund 491 – Special Projects– FNAT 127973 for capital only CSU Fund 550–Restricted Expendable–Capital Projects

Non-Rollforward Funds YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Non-Rollforward Funds 0948 funds that should NOT Rollforward: CSU fund 403 – Perkins Loans CSU fund 407 –Nursing Student Loans- Undergraduate CSU fund 436- Agency Funds CSU fund 485- CSU Operating Fund CSU fund 496- Misc Trust Operating CSU Funds (Parking, Housing, Student Union, etc.) CSU fund 542- Capital project Management Fee CSU fund 543- Internal Cost Recovery CSU fund 544- External Cost Recovery

Knowledge Check Question YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2016 Knowledge Check Question Question: What is a type of fund that should rollforward? 1 – Financial Aid 2 – Grants and Contracts 3 – Cost Recovery

Reserves for Economic Uncertainty YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Reserves for Economic Uncertainty Reserve for Economic Uncertainty is limited to 50% of annual operating budget. Pay attention to the amounts you are including in this account. Don’t dump all your reserves in “Reserve for Economic Uncertainty”.  Do spread your reserves out according to your plan. Plan ahead.

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Capital Authority Increase in Funding Authority Education Code Sections 89770-89774 CSU may finance capital using operating funds and fund on a pay as you go basis. Limits CSU capital expenditures to 12% of the budget State moved Budget and Debt payment to CSU GO Bonds and Public Works Board (PWB) Bonds PWB debt restructured Use reduced payment to issue more debt Board of Trustees Approve Multi-Year Financing Plan

Project Tracking and Reporting APRIL 2017 YEAR-END LEGAL TRAINING Project Tracking and Reporting Why is it important? How do we use the information? Does it work? 33

Project Tracking and Reporting APRIL 2017 YEAR-END LEGAL TRAINING Project Tracking and Reporting Board of Trustees Facilities Renewal and Capital Improvement Plan (Book) Active Project Report Department of Finance Quarterly Reports Deferred Maintenance State Legislature Capital Outlay Program Request per EC Section 67501 Support Expenditures for Capital Outlay Projects per EC Section 89722 Legislative Analyst’s Office IRS and Bondholders Private Activity Project expenditures against spend down targets

Projects Subject to Reporting APRIL 2017 YEAR-END LEGAL TRAINING Projects Subject to Reporting Board Approved Delegated Approved (Assistant Vice Chancellor) State Funded Systemwide Revenue Bond Financing CSU Funding [PAYGO] Designated Campus Reserves Major Repairs and Renovations (CSU fund 486) Minor Capital Projects (CSU funds 486 and 487)

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING Reporting Tools Systemwide Data Warehouse – Campus Financials All Projects Activity Expenditures Encumbrances Non-Recurring Maintenance and Repair Capital Improvement Powerful Search and Reporting Capabilities

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING Reporting Tools State Controller’s Office (PIMMs Terminal Fi$Cal) Verify Project Funding CSU Systemwide Revenue Bonds State Appropriated General Fund General Obligation and Public Works Board Bonds Spending Authority Limits Expenditures Cash Balance Monitor Tax-Exempt Bond Expenditures

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YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Chapter 15 Update Updated Definitions: Recurring maintenance/repair: Activities, typically in cycles less than one year, required for ongoing, routine operations and maintenance of buildings and equipment. Work necessary to keep facilities, buildings, equipment, roads, sidewalks, sewer and water systems, utility infrastructure, and grounds in good repair, appearance and operating condition.

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Chapter 15 Update Updated Definitions: Non-recurring maintenance/repair (NRMR) – deferred maintenance: Work required to restore facilities, buildings, equipment, roads, sidewalks, sewer and water systems, utility infrastructure, and grounds to their original condition or to such condition that they can be effectively used for their intended purpose, ensuring ongoing operation of the campus. Typically, this work occurs on cycles greater than one year (and is not funded as part of the new space budget allocation). Some campuses budget non-recurring maintenance separately and, for example, may establish (1) use of one-time funds for such expenditures, or (2) set aside permanent base funds to address non-recurring maintenance and deferred maintenance. Restore does not change anything – it simply replaces what is no longer there or something that is no longer working.

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Chapter 15 Update Updated Definitions: Capital Improvement Project (CIMP): An activity which improves or alters an existing space or creates new space. New construction of facilities, buildings, equipment, roads, sidewalks, sewer and water systems, utility infrastructure, and grounds are all capital expenditures, as distinguished from Maintenance/repair. Improve or alter ‘changes’ from what was previously in place. Changing the use of space by altering walls, doors, type of flooring etc. to support a different use.

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2017 Chapter 15 Update Repairs & Maintenance for contractual services arrangements, campuses will select from the below: 660061- Building Maintenance (0702) 660062- Custodial Services (0703) 660063-Utilities (0704) CO-GENERATION PLANTS ONLY 660064-Landscape and Grounds Maintenance (0705) Discontinue use: 660065-Major Repairs & Renovations (0706) For Health, Parking, Housing, Auxiliary Enterprise programs the program code will default to 2001, via Rule 3. Discontinued Use of 660021-Facilities Repairs and Maintenance effective 7/1/2017 or earlier.

FIRMS Capital Object Codes April 2017 YEAR-END LEGAL TRAINING FIRMS Capital Object Codes FIRMS Object Code Object Name Description 607002 Acquisition For costs incurred to acquire real estate; includes due diligence studies. 607008 Service Districts Assessments For one-time assessments on construction imposed by municipal taxing authorities. 607009 Capital Equipment For the cost of fixtures, furniture and moveable equipment purchased with funds budgeted as part of the original project cost.  Includes installation costs. 607010 Lease Purchase For payments made on a lease that in substance is a financing arrangement for acquisition of a building.  Allowable in construction improvement funds only. 607011 Minor Capital Outlay Used for projects that correct deficiencies, provide new or improved facilities, or provide equipment which is part of a new or improved facility (e.g. HVAC) and which are estimated to cost no more than the threshold set biennially (January of even years) by the Director of the Department of Finance, as set forth in Section 10108 of the Public Contract Code.  Contracts for minor capital outlay projects are exempt from Chancellor's Office review and approval per Executive Order 1057.  (Ref. State University Administrative Manual, Section XII, Construction Management, Part 9701.01, Minor Capital Outlay Projects) At the option of the campus, the more detailed capital outlay expenditure object codes (in the 607XXX series) can be used for projects meeting the definition of "minor capital outlay" project in place of this object code. 607022 Capital-Design Fees (pre-construction phase) Used for all project design costs incurred prior to beginning of construction, including architectural fees, feasibility studies, plan checks, peer and constructability reviews, CEQA, soils investigations and surveys (including those related to hazardous materials).  If applicable, include costs charged by general contractor for working with design team during design phase (referred to as "construction management pre-construction services").  Also include contractually identified reimbursable expenses such as advertising, printing and reproduction, and travel costs. Use object code 607034, Capital - Design Fees (construction phase), for architectural costs, including reimbursables, incurred during construction. 607031 Capital-Construction Contract For the general construction contract and all associated change orders, only.  Do not include any additional contracts that are not with the main contractor (these should be recorded in object code 607033, Capital - Construction Other).

FIRMS Capital Object Codes April 2017 YEAR-END LEGAL TRAINING FIRMS Capital Object Codes FIRMS Object Code Object Name Description 607032 Capital-Construction Management For Project management direct costs (including salaries and benefits of project management personnel and supplies directly associated with the management of a particular project), internal or external inspection fees (e.g. county building inspector, but not inspection fees imposed by a state agency; charge inspection fees charged by a state agency to object code 607038), campus-based and CPDC/CO Accounting administrative fees (imposed for the recovery of administrative overhead costs), and project management costs charged by an external vendor.  Do not include pollution remediation or hazardous material inspection fees; charge these costs to 607043, Capital - Pollution Remediation Costs, if part of a capital project. 607033 Capital-Construction Other Used for agreements written during the construction phase which are not part of the general contract (the general construction contract and all associated change orders are charged to object code 607031, Capital - Construction Contract) or which are not properly charged to another 607XXX object code (such as inspection fees - 607032; design fees - 607022; management fees - 607032).  Should include fees for testing required to be in compliance with building code and other state regulations, soils testing, legal fees, utility transfers/hookups and miscellaneous construction contracts. 607034 Capital-Design Fees (construction phase) Architect fees during the construction phase, including reimbursables. Architectural fees incurred during the design phase are to be charged to object code 607022, Capital - Design Fees (pre-construction phase) 607037 Capital-Insurance Premiums Used to record all insurance costs associated with capital projects, including BRIP (Builders Risk Insurance Program), OCIP (Owner Controlled Insurance Program) and seismic self-insurance. 607038 Capital-State Agency Costs Used to record all state agency costs associated with construction projects (e.g. fees imposed by State Fire Marshal, Division of State Architect, Department of Industrial Relations). 607041 Capital-Contingency Unencumbered funds available for project expenditure (balance available). 607042 Capital-Construction Reserve Unallocated funds, bid savings, and project savings not available for expenditure. 607043 Capital-Pollution Remediation Costs Pollution remediation costs, including related inspection fees, that are part of capital projects.  Costs that are not part of such projects should be recorded in object code 660027.

FIRMS Capital Object Codes April 2017 YEAR-END LEGAL TRAINING FIRMS Capital Object Codes FIRMS Object Code Object Name 607021 Capital-Design Other TO BE DEACTIVATED - DO NOT USE FOR PROJECTS WITH INCEPTION DATE OF APRIL 1, 2017 OR LATER 607023 Capital-Design Arch Extra Services 607024 Capital-Design Arch Extra Services Contractual 607025 Capital-Design Reimbursables 607035 Capital-Const-Arch Extra Services 607036 Capital-Const-Arch Reimbursables

YEAR-END LEGAL TRAINING April 2017 YEAR-END LEGAL TRAINING Statement of Finance What Management tool during project Why Communication between project management and accounting

Campus Funded Major Improvements Projects April 2017 YEAR-END LEGAL TRAINING Coding Implementation CO Funded Projects Campus Funded Major Improvements Projects CO creates and sets up project attributes 51% rule – Project CPDC Form 2-7 Amend – CPDC to campus correspondence Funding – AO attachment Academic – CPDC Self-support – F&T Campus tags attributes to PS Project Chartfield

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YEAR-END LEGAL TRAINING April 2017 YEAR-END LEGAL TRAINING Coding Implementation 2015 CP 2015A TE SRB 2017A TE SRB Reserves & ELF Spending Implications

YEAR-END LEGAL TRAINING April 2017 YEAR-END LEGAL TRAINING Coding Implementation 2015 DM 2015A TE SRB 2015 CP 2017A TE SRB 2016 2017A TE SRB 2015 Bridge Loan – Early campus spend Spending Implications

Campus Funded Projects April 2017 YEAR-END LEGAL TRAINING Campus Funded Projects Campus Designated Reserves Minor capital improvements Minor or major repair and maintenance CSU Fund Selection 486 Non-Recurring Maintenance and Repair 487 Capital Improvement Enterprise programs select corresponding CSU funds Implementing coding Campus facilities identify project type Campus records activity in appropriate CSU fund 51% rule

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING Deferred Maintenance General Fund State Appropriation 2015-2016 2016-2017 Total Appropriation $25 million $35 million Allocation Order AO 15-031 AO 16-006 AO Issue Date to Campuses Dec 4, 2015 Sept 16, 2016 Encumbrance Date June 30, 2017 June 30, 2018 Reversion Date June 30, 2019 June 30, 2020 Claimed at SCO as of 2/28 30.0% 1.7% *Actuals as of 3/21 34.0% 2.0% *Encumbrances as of 3/21 20.0% 8.0% *Source: Systemwide Data Warehouse

YEAR-END LEGAL TRAINING APRIL 2017 YEAR-END LEGAL TRAINING APRIL 2016 Questions and Answers