Future state monthly close calendar Socialization session June 18 th, 2015

2 Rutgers University Finance close objectives Proposed High Level Monthly Close Process Revenue and Expenses Recognition Policy Materiality Thresholds for adjustment JE’s Next steps

Business Objectives Develop a standard monthly close process across Rutgers enabling: Consistency in processes and quality of business results Ability to leverage technology to improve automation Timeliness of month-end close and reporting Agility with on-going finance improvement efforts (e.g. HFM, RCM, future ERP rollout) Organization structure with right skills and capabilities to support finance and accounting requirements Key Levers for Improvement 1.Standardize and formalize accounting processes for better integration of Legacy Rutgers and RBHS 2.Define overall governance model to ensure quality and accuracy of financial data 3.Leverage current technology to increase efficiency and data accuracy 4.Establish Finance organization and process model to align with future state reporting structure Rutgers University Finance close objectives

4 General accountin g Revenue Cost D-0 & priorD+1 D+2 D+3 D+4 D+5 D+6 D+7 D+8 D+9 D+10D+11 Unit GL close activities Consolidation, Units review & Sign off Reporting AP cut-off FA capitalization and depreciation cut-off Payroll & Fringe accrual Grants and contracts revenue Cut-off and accrual process Grants and contracts revenue Cut-off and accrual process Student tuition revenue cut-off and accrual process Financial aid cut-off and accrual process Financial aid cut-off and accrual process Loan information Cut-off Loan information Cut-off Patient services revenue cut-off and accrual process Auxiliary revenue cut-off and accrual process All other revenue cut-off and accrual process Target Fed. & State Student Aid program cut-off and accrual process Fed. & State Student Aid program cut-off and accrual process Bank transfer/investment posting Bank reconciliations Cost pooling Campuses and Central Units consolidated data review Units reporting final review, variance analysis at Campus level (Actual vs Budget) & sign- off Final Rutgers report consolidated data review Final material adjustment postings in HFM Report publishe d on RU Board website RU report variance analysis (Actual vs Budget, Act. M vs Act. M-1) RU report variance analysis (Actual vs Budget, Act. M vs Act. M-1) Pub. 1 AP accruals Oracle and Banner data uploaded into HFM on daily basis (To Be Confirmed) (1) RU report will be published a week before Finance Board meeting Accrual and provision JE posted into Oracle / Banner GL at Unit level Legend: Proposed High Level Monthly Close Process School and Central Units inputs in the process

Overall principle: Accrual Accounting: The basis of accounting that records revenues when earned and expenses when the goods are received or services performed, even though the receipt of the revenue or the payment of the expense may take place, in whole or part, in another accounting period. Revenue Recognition Principles: The recognition of revenue during a period involves consideration of one of two factors (specified below as a reference). Before revenue can be accrued, it must be deemed as “earned” or “Realized or realizable” Deferred Revenue: Deferred revenue results when cash is received in advance of revenue being earned. Deferred revenue is a liability until it is earned. Once earned, the liability is reduced and revenue is recorded. When recording cash receipts, it is important to determine whether the cash represents payments for recognized revenue or for deferred revenue. Expense recognition Principles: If goods are received or the services are provided are not paid in the same period (e.g., month), then the University needs to record an entry on its balance sheet. The type of balance sheet entry depends on when the University receives the goods/services relative to when the University pays for them. Prepaid Expenses: When the University pays a vendor in advance and won’t receive the goods or services until a subsequent period (e.g., month), the University records a prepaid expense until it actually receives the goods or services 5 Revenue and expenses recognition policy

6 Materiality Thresholds for adjustment JE’s DRAFT – For discussion purpose only ► The materiality threshold matrix below defines processes in scope, adjustment JE ownership and $ amount thresholds by campus to use along the monthly close cycle D+1D+2D+3D+4D+5D+6D+7D+8D+9D+10 Unit Close Activities Consolidation, Units Review & Sign Off Reporting Ownership / Key processes / milestones Sub-ledger cut-off and Revenue & Expense accrual postings by Units and Central Accounting (General Accounting group) into GL system Adjustment escalated to Central Accounting (Consolidation & Reporting groups) for JE posting into Hyperion Financial Management (HFM) Central Accounting Revenue JE’s -Tuition and Student fee -Financial Aid -Loan Adjustment JE posting if Materiality > $50K 1 or $100K 2 JEs into Oracle/Banner systems (GL) Adjustment JE posting if Materiality > $500K 1 or $1M 2 JEs in HFM Adjustment JE posting if Materiality > $1M 1 or $2M 2 JEs in HFM Central Accounting revenue JE’s -Grants accounting Materiality > $50K 1 or $100K 2 JEs into Oracle/ Banner systems (GL) Adjustment JE posting if Materiality > $500K 1 or $1M 2 JEs in HFM Adjustment JE posting if Materiality > $1M 1 or $2M 2 JEs in HFM Central Accounting Expense JE’s -Accounts Payable -Payroll and Fringes Adjustment JE posting if Materiality > $50K 1 or $100K 2 JEs into Oracle/Banner systems (GL) Materiality > $500K 1 or $1M 2 JEs in Oracle/Banner systems (GL) Adjustment JE posting if Materiality > $500K 1 or $1M 2 JEs in HFM Adjustment JE posting if Materiality > $1M 1 or $2M 2 JEs in HFM Units/Department Revenue JE’s -Patient services -Auxiliary revenues -All other revenues Adjustment JE posting if Materiality > $50K 1 or $100K 2 JEs into Oracle/Banner systems (GL) Adjustment JE posting if Materiality > $500K 1 or $1M 2 JEs in HFM Adjustment JE posting if Materiality > $1M 1 or $2M 2 JEs in HFM (1) Newark and Camden units will apply a materiality threshold of $50k - $500K and $1 million during the close cycle (2) Materiality threshold of $100k will apply to the two major campuses, New Brunswick and RBHS units, and the 5 Central units. Unit close activities Consolidation, Units review & Sign off Reporting

Go Live scheduled for September FY16 close Continue to have open communication with Vice Chancellors and School units on project progress and outputs 7 Next Steps