General Ledger and Journals

Financial Services - GL and Journals presentation What are journals? A journal [document] is used to record accounting transactions in the general ledger. Journal types:

Financial Services - GL and Journals presentation Journal Life Cycle School/College prepares Journal template Sender initiates the journal and sends template to their Manager for approval, the Receiver Receiver s the journal template to (cc: the Sender) Is the subject convention in the to ‘Journals’ correct? YES Financial Reporting team will process the journal within 24 hours of receipt NO The journal will be automatically declined and a reply issued requesting the journal be resent

Financial Services - GL and Journals presentation Journal Templates Journal templates are used to authorise and process journal entries that need to be posted into SAP. There are three types of journal templates: 1. General Journal (all postings within one RMIT entity) 2. General Journal – Intercompany 3. General Journal – Fixed Assets The templates can be found on the Financial Services website under: Staff > Service groups > Financial Services > Finance forms (under Quick Links)

Financial Services - GL and Journals presentation Example – General Journal template GJ Cover sheet 1. The first section of the form is to be completed by the person responsible for preparing the journal e.g. by the Finance Officer (the ‘Sender’). 2. Apart from the total debits and credits, all fields in Step 1 should be completed. The figures will be automatically updated when the posting details are completed.

Financial Services - GL and Journals presentation Example – General Journal template … Details of Posting sheet 3. Complete this sheet using the Posting fields information located from row 31 on the first sheet. 4.Once this sheet has been updated the total debit/credit amounts will automatically update on the GJ Cover sheet.

Financial Services - GL and Journals presentation Example – General Journal template … 5. Save the spreadsheet. the spreadsheet as an attachment to the person who is approving the journal (the ‘Receiver’) and complete the Receiver’s fields on the GJ Cover sheet. 6.Receiver: once they have authorised the journal they need to the spreadsheet to (cc: the Sender) with the following subject line depending on the type of FA> Asset postings AC> Month end accruals BK> Allocation of a bank posting PP> Prepayment journals RC> Recovery of monthly costs TR> Transfer journal e.g. AC> DSC expenses accrual (July 09)

Financial Services - GL and Journals presentation Other journal templates General Journal – Intercompany Used when the financial impact is across two different entities (e.g. RMIT recovering costs incurred on behalf of RMIT Union). Must specify the company code for each line item. Ensure correct internal orders are used for the company code you are posting to. When using this template, SAP is configured to post the balance sheet impact to the related party accounts. General Journal – Fixed Assets Posting keys are different – Debit asset = 70, Credit asset = 75. Transaction type is 100. For line item posting to an asset number, need to complete the Asset value date field (this is the date of the journal posting).

Financial Services - GL and Journals presentation Things to note / Common issues Supporting documents must be provided for audit purposes for all accruals/deferrals/prepayments at year end. For each month end it is expected that each School/College has supporting information for their journals. Per the policy memo issued in July 2008, accrual journals should only be processed for amounts greater than $5K or at least 20% of projected revenues/costs for a single project. Need to consider the University wide materiality of accruals. On average TR journals are processed each month. As such, where possible need to review the reason why the journal is required. e.g. if correcting allocations of IT, phone or property related costs then fix the problem at the source rather than completing a TR journal each month. When reviewing documents in SAP, the ‘Ref doc’ in the document header indicates who requested the journal.

Financial Services - GL and Journals presentation Things to note / Common issues … Issues with loading journals into SAP: - SAP only displays the first error in the journal (ie. errors are only identified and actioned one by one). As such, please review the information entered in the templates before submitting. - Cells formatted with formulae, $ signs, commas, more than two decimal places cannot be loaded by SAP. Do not unprotect the journal template. - For the majority of journals there are no GST consequences - use P9 or S9 tax codes and leave the Tax amount field blank. Refer to the following summary: - Note that the number of characters for Header text and Journal text description is limited to 50 characters (including spaces).

Financial Services - GL and Journals presentation Overview – SAP and Elements of Journals (1) Within SAP there are 2 modules for reporting: Financial Accounting (FI) and Controlling (CO). Information from the FI module is used for external reporting e.g. recording a supplier invoice and the CO module is used for internal / management accounting e.g. reporting a cost transfer between schools. Each entity which has a General Ledger (G/L) in SAP is assigned a unique company code:

Financial Services - GL and Journals presentation Overview – SAP and Elements of Journals (2) Cost elements: A cost element or G/L account has six numeric characters. SAP groups types of G/L accounts using the first digit of the account. Conventions are as follows: The Chart of Accounts can be used to display a list of all cost elements; their G/L account number, name and account description. Transaction code is F.10 or SAP menu path is Accounting > Financial Accounting > General Ledger > Information System > General Ledger Reports > Master Data > Chart of Accounts > S_ALR_

Financial Services - GL and Journals presentation Overview – SAP and Elements of Journals (3) Internal order: An internal order is used to collect revenues or expenses and capital expenditure by School/College/Portfolio/Project. Internal orders contain between four and six numeric characters depending on the type. Transaction code KO03 can be used to display information about an internal order or search for an order (e.g. name, order type and status). SAP menu path is Accounting > Controlling > Internal Orders > Master Data > Special Functions > Order > KO03 -Display. Posting keys: Within SAP posting keys determine if the transaction has a debit or credit impact on the G/L account. Note: posting keys only need to be entered into the fixed asset journal template.

Financial Services - GL and Journals presentation Overview – SAP and Elements of Journals (4) Tax codes: Tax codes determine the GST impact of transactions e.g. P1 and S1 are subject to GST. Tax codes for Purchases and Expenses begin with a P and Sales and Revenue begin with an S. Most commonly used tax codes are highlighted in bold.

Financial Services - GL and Journals presentation Overview – SAP and Elements of Journals (5) Note: Also can refer to the Simplified Tax Code (GST) decision maker (this will be explained at the GST session on 24/8/09).

Financial Services - GL and Journals presentation Thanks for your attention. Any questions?