2. Introduction

3. System Information System Name System Name Formation – City/County/DG Formation – City/County/DG # of Employees # of Employees –Drivers & Admin. FT/PT 2008 Total Budget 2008 Total Budget Total Revenues – Indicate Major Sources Total Revenues – Indicate Major Sources –Contracts & Local Indicate Who Pays The Bills? City County or other? Indicate Who Pays The Bills? City County or other?

4. Workshop Objective Objective: to understand which expense and revenues to accrue in order to properly report on the ODOT invoice Objective: to understand which expense and revenues to accrue in order to properly report on the ODOT invoice

5. Workshop Expectations Your Participation is Expected Your Participation is Expected Flip Chart for Questions Flip Chart for Questions No Question is Stupid No Question is Stupid

6. Workshop Outline 1 st half of workshop instructional 1 st half of workshop instructional ODOT rules of accounting/terminology ODOT rules of accounting/terminology Accruing revenues & expenses Accruing revenues & expenses A look at Quick Books A look at Quick Books Lunch Lunch Budget to Budget Variance Budget to Budget Variance General ledger exercise General ledger exercise Questions Questions

7. USOA Uniform System of Accounts Required book of reference used for all accounting definitions Required book of reference used for all accounting definitions Final Rule – published 1/15/1993 Final Rule – published 1/15/1993 Requires FTA grantees to use Accrual Basis of Accounting Requires FTA grantees to use Accrual Basis of Accounting Allows conversion of Cash to Accrual – only as described in USOA Allows conversion of Cash to Accrual – only as described in USOA

8. Accrual Accounting Remember this???? What Is It? What Is It? Definition: Accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged. The term "accrual" refers to any individual entry recording revenue or expense in the absence of a cash transaction. Definition: Accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged. The term "accrual" refers to any individual entry recording revenue or expense in the absence of a cash transaction.

9. Accrual Accounting Remember this: Record Expenses when incurred; Revenues when earned

10. Asset An economic resource that is expected to be of benefit in the future. Probable future economic benefits obtained as a result of past transactions or events. Anything of value to which the entity has a legal claim. Any owned tangible or intangible object having economic value useful to the owner. An economic resource that is expected to be of benefit in the future. Probable future economic benefits obtained as a result of past transactions or events. Anything of value to which the entity has a legal claim. Any owned tangible or intangible object having economic value useful to the owner. Debit Account Debit Account

11. Liability DEBTS or obligations owed by one entity (DEBTOR) to another entity (CREDITOR) payable in money, goods, or services. DEBTS or obligations owed by one entity (DEBTOR) to another entity (CREDITOR) payable in money, goods, or services. Credit Account

12. Revenue the total amount of money received by the entity for goods sold or services provided during a certain time period the total amount of money received by the entity for goods sold or services provided during a certain time period Credit Account

13. Expenses Payment, either in cash, by assuming a LIABILITY, or by surrendering ASSET Payment, either in cash, by assuming a LIABILITY, or by surrendering ASSET Debit Account

14. Why Accrual??? Smooth out Timing Differences For recording of Grant Revenues, Revenue and Expenses reported to ODOT Reduce over/under payments

15. Rules of Thumb to Accruing #1 Over $12,000 per year #1 Over $12,000 per year #2 Under $12,000 per year may accrue if necessary to maintain proper accounting, adjusting entries must be made annually. #2 Under $12,000 per year may accrue if necessary to maintain proper accounting, adjusting entries must be made annually. #3 Do not accrue consistent, fixed type of revenue or expense. Examples: rent or utilities that are fixed amounts; fuel is consistent plus who knows what fuel is going to cost in future. #3 Do not accrue consistent, fixed type of revenue or expense. Examples: rent or utilities that are fixed amounts; fuel is consistent plus who knows what fuel is going to cost in future.

16. Expenses to accrue or not? 501/502 Labor & Fringes – Yes 501/502 Labor & Fringes – Yes 503 Services – Rules #1,2,3 503 Services – Rules #1,2,3 504.01 Fuel – Not required 504.01 Fuel – Not required 506 Insurance – Yes (prepaid) 506 Insurance – Yes (prepaid) 507 Taxes - No 507 Taxes - No

17. Wages Cash Cash 4-1-08 Operators Expense - 501.01 $5,000 Cash - 101.01 $5,000 Cash - 101.01 $5,000 Accrual Accrual 3-28-08 Operators Expense - 501.01 $5,000 Wages Payable - 201.01 $5,000 4-1-08 Wages Payable - 201.01 $5,000 Cash - 101.01 $5,000 Employees are paid on the Friday following the end of week 2 pay period. For the pay period ending 3/28/08, total Operators Salary $5,000. Pay checks are issued on 4-1-08.

18. Cash Posting to Ledgers On 4-1-08 post $5,000 to: - 501.01 (DB) Oper. Expense to 010 Operations - 101.01 (CR) Cash to Asset

19. Accrual Posting to Ledgers On 3-28-08 post $5,000 to: - 501.01 (DB) Oper. Expense to 010 Operations - 201.01 (CR) Wages Payable to Liability On 4-1-08 post $5,000 to: - 201.01 (DB) Wages Payable to Liability - 101.01 (CR) Cash to Asset

20. Effect of Cash VS Accrual Under Cash transaction recording only when payroll paid. Under Cash transaction recording only when payroll paid. Under Accrual transaction recording payroll when incurred. Under Accrual transaction recording payroll when incurred. Notice timing difference: 4-01 vs 3-28 Notice timing difference: 4-01 vs 3-28 Salary expense is recorded in 1 st Quarter under Accrual & 2 nd Quarter under Cash Salary expense is recorded in 1 st Quarter under Accrual & 2 nd Quarter under Cash

21. Fringes Cash Cash 4-01-08 Operator’s Fringes - 502.15 $1,250 Cash - 101.01 $1,250 Cash - 101.01 $1,250 Accrual Accrual 3-28-08 Operator’s Fringes - 502.15 $1,250 3-28-08 Operator’s Fringes - 502.15 $1,250 Accrued Payroll Liabilities - 202.02 $1,250 4-01-08 Accrued Payroll Liabilities - 202.02 $1,250 Cash - 101.01 $1,250 The fringe rate for the system is 25% of Operator’s Salary. Paid fringes at time of payroll.

22. Vehicle Insurance Transit system is billed $12,000 once a year for vehicle insurance on 6/30 annually. Record monthly vehicle insurance expense 3-18-08. Accrual 3-18-08 Premiums for PD Insurance - 506.01 $1,000 Prepaid Insurance - 151.01 $1,000 Prepaid Insurance - 151.01 $1,000 Entry when paid on 6/30/08: 6-30-08 Prepaid Insurance - 151.01 $12,000 Cash - 101.01 $12,000 Cash - 101.01 $12,000

23. Expenses to accrue or not? 508.01 Purchased Transportation – Based on Contract – No 508.01 Purchased Transportation – Based on Contract – No 509 Misc. Expenses – Rule #1 509 Misc. Expenses – Rule #1 512.12 Rent – Typically fixed amount 512.12 Rent – Typically fixed amount 600 Other Costs – Rule #1 & 2 600 Other Costs – Rule #1 & 2

24. Revenues to accrue or not?? 401 Passenger Fares – No, unless seasonal 401 Passenger Fares – No, unless seasonal 402 Contracts – Rule#1 & #2 402 Contracts – Rule#1 & #2 406 Advertising – Rule #1 & #2 406 Advertising – Rule #1 & #2 407.01 Sale of Maint. – Rule 1,2,3 407.01 Sale of Maint. – Rule 1,2,3 412.02 E&D – Rule #1 & #2 412.02 E&D – Rule #1 & #2 413 Other Federal – Rule #1 & #2 413 Other Federal – Rule #1 & #2 430 Contributed Services – No – Fixed 430 Contributed Services – No – Fixed 499 Other Revenue – Rule #1 & #2 499 Other Revenue – Rule #1 & #2

25. Contract Revenue Record monthly contract revenue for the $120,000 per year JFS contract. Record contract revenue of $9,500received on 3-28-08. 3/28/08 Contracts Receivable 102.01 $10,000 Contract Revenue 402.01 $10,000 Contract Revenue 402.01 $10,000 3/28/08 Cash – JFS Payment 101.01 $9,500 Contracts Receivable 102.01 $9,500 Contracts Receivable 102.01 $9,500

26. Elderly & Disabled Program Annual E&D grant is for $15,000 received approximately 9/30 annually. Record monthly E&D accrual on 3-28-08. 3-28-08 E&D Receivable - 102.07 $1,250 State E&D Fare Assistance - 412.02 $1,250 State E&D Fare Assistance - 412.02 $1,250 Entry when received on 9/30/08: : 9-30-08 Cash - 101.01 $15,000 E&D Receivable - 102.07 $15,000 E&D Receivable - 102.07 $15,000

27. Budget/Planning Review Budget Sample Review Budget Sample Review Budget Variance Sample Review Budget Variance Sample

28. Bookkeeping System Review General Ledger General Ledger Asset Ledger Asset Ledger Liability Ledger Liability Ledger Revenue Ledger Revenue Ledger Expense Ledger Expense Ledger –010 Operations –041 Vehicle Maintenance –042 Non-Vehicle Maintenance –160 General Administration

29. Quick Books Overview User Friendly User Friendly $80 per hour for Training $80 per hour for Training http://quickbooks.intuit.com http://quickbooks.intuit.com http://quickbooks.intuit.com Provides Reports & Other Features Provides Reports & Other Features

30. Work Session Prepare Budget Variance Prepare Budget Variance Use Your Own Data Use Your Own Data

31. ODOT Invoice Review Review Sample ODOT Invoice Review Sample ODOT Invoice How the ODOT Invoice Works (handout) How the ODOT Invoice Works (handout) Review Posting to Invoice Review Posting to Invoice

32. Why Do We Care? 1. PURPOSE. This circular is a re-issuance of guidance on the administration of the transit assistance program for nonurbanized areas under 49 U.S.C. 5311, and guidance for the preparation of grant applications. This revision incorporates provisions of the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA–LU), and includes the most up-to-date available guidance for the program. 2. CANCELLATION. This circular cancels Federal Transit Administration (FTA) Circular 9040.1E, “Nonurbanized Area Formula Program Guidance and Grant Application Instructions,” dated October 1, 1998. Chapter VI, Financial Management 6.b (2) on page VI-7 “Costs incurred and available balances are reported annually on an accrual basis, on the Financial Status Report in FTA’s Transportation Electronic Award Management (TEAM) System.”

33. Wrap-up / Questions