1. 1 The University of Texas at San Antonio Presented by Accounting Services Training Class - Understanding the Statement of Account and Reconciliation (AM506)

2. 2 The University of Texas operates on a 12 month fiscal year which runs from September 1 to August 31. Budgets, appointments and external reporting are all done for this 12 month period. A lot of accounting activity takes place as the old fiscal year ends and the new fiscal year begins. Understanding the Statement of Account and Reconciliation Business Affairs – Your Partner for Successful Solutions June 2012

3. 3 Account Structure Account number –The account number is a 10-digit number used for recording accounting transactions. The account number is broken down into three parts, fund group, budget group and budget category. UTSA Account Structure Budget GroupBudget Category (Sub-Account) Fund Group Budget Group 14 02330050 Business Affairs – Your Partner for Successful Solutions June 2012

4. 4 Account Structure Fund Group – The first two digits of the account number specifies the source of funds. Below is a list of fund groups: –12 / 14 – Educational & General (E & G Funds) –18 – Service Centers –19 – Designated Funds –26 – Grants & Contracts –29 – Auxiliary Enterprise Funds –30 – Gift Funds –32 – Loan Funds –36 – Plant Funds –41 – Agency Accounts Budget Group – The first 8 digits of an account number represent a Budget Group. Each department or academic entity may have several budget groups. Budget Category – The last two digits of the account number specifies the purpose of funds. A Budget Group could have multiple categories. Unit Code – The unit code determines the department, division or college an account belongs to. Typically the unit code is the same across fund groups. The unit code was once embedded in the 10-digit account number. This does not apply to the following fund groups, 26, 32, 36 and 41. Business Affairs – Your Partner for Successful Solutions June 2012

5. Account Structure For additional information on the Chart of Accounts, refer to Operational Guidelines: Chart of Accounts at: http://www.utsa.edu/financialaffairs/opguidelines/0114.html 5 June 2012

6. Electronic Statement of Account The Statement of Account is disbursed electronically for each unit code. Consists of five reports: –Transactional Detail Report –Balances by Budget Group and Subaccount –Balances by Budget Group –Monthly Income and Expenses Workbook –Reconciliation Workbook The reports can be accessed as a PDF or excel file 6 June 2012

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16. 16 Encumbrance Example A.A department with a $7,000 budget B.Orders a $1,500 computer and that amount is encumbered on a Purchase Order (PBO document). The ‘free balance’ (DEFINE terminology = budget balance available) is reduced by $1,500, to a new total of $5,500. C.The computer is received and a payment voucher (VP1 document) is prepared. A disencumbrance entry is created after the payment voucher is created. $1,500 is disencumbered and increases the ‘free balance’ by $1,500. The free balance is now $7,000. D.Although not encumbered on the PO, the vendor has invoiced for $100 in freight charges that are owed. A check is therefore issued to the vendor in the amount of $1,600. The ‘free balance’ now shows as $5,400. June 2012 Business Affairs – Your Partner for Successful Solutions

17. 17 Encumbrance Example DESCRIPTIONEXP/INCENC/INVFREE BALANCE a) Budget balance before Purchase Order 7,000.00 b) Encumbrance created by Purchase Order 1,500.00-5,500.00 c) Disencumbrance after the Payment Voucher 1,500.007,000.00 d) Approved Payment Voucher creates an expenditure 1,600.00-5,400.00 June 2012 Business Affairs – Your Partner for Successful Solutions

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21. 21 Balance Available 1.Each budget category in a budget group is assigned to a budget pool. 2.Budget categories within a budget group may be assigned to the same budget pool. In these instances the system combines (pools) the balance available of the different budget categories into one balance (pool balance). 3.When the system audits an account for funds it reads the pool balance, not the balance available. 4.Pooling accounts can reduce the number of routine budget transfers that might normally be required. Business Affairs – Your Partner for Successful Solutions June 2012

22. 22 Balance Available In the example below, although the balance available in budget category is negative, the pool balance is positive and a transaction for $5,000 or less will process. Budget Budget Budget Free Pool GroupCategory PoolBalanceBalance 19-XXXX-XX 50 01 -5,000 5,000 19-XXXX-XX 95 01 10,000 5,000 Business Affairs – Your Partner for Successful Solutions June 2012

23. 23 Sub-Certification Process and Account Reconciliation Business Affairs – Your Partner for Successful Solutions

24. 24 UT System Administration Policy – UTS 142.1 3.2 Certifications by Account Owners (Sub- Certifications). Each Account Owner should provide a sub-certification annually to the Financial Reporting Officer-the Associate Vice President for Financial Affairs. Each institution’s Financial Reporting Officer should decide at what level the sub-certification is required (e.g. Dean, department head, etc.). The minimum requirements of the sub-certification letter are included in Appendix 2. http://www.utsystem.edu/policy/policies/uts142_1.pdf June 2012 Business Affairs – Your Partner for Successful Solutions

25. 25 Sub-Certification Process Electronic sub-certification conducted through the Office of Institutional Compliance & Risk Services at the beginning of each fiscal year. June 2012

26. 26 Sub-Certification Process The sub-certification certifies that, among other items, their accounts are being reconciled timely, duties are properly segregated and no material weakness exists relative to their internal control. June 2012 Business Affairs – Your Partner for Successful Solutions

27. 27 Highlights of Sub-Certification required by UT System Acknowledgement of responsibility Sub-Certification of reconciliation and that all transactions were appropriate Sub-Certification that errors were adjusted Sub-Certification that transactions were reviewed and approved. Sub-Certification of segregation of duties –Enter & Approve transactions; Receive cash & reconcile June 2012 Business Affairs – Your Partner for Successful Solutions

28. 28 Highlights of Sub-Certification required by UT System (cont) Sub-Certification of sound internal controls Sub-Certification that no misstatements or omissions are evident on your SOA Fraud Sub-Certification Sub-Certification of compliance with Code of Ethics related to award of contracts June 2012 Business Affairs – Your Partner for Successful Solutions

29. 29 Need for reconciliations and segregation of duties? Funds availability Exposes lack of internal controls Risk management June 2012 Business Affairs – Your Partner for Successful Solutions

30. 30 Office of Institutional Compliance & Risk Services Quality Assurance Review (QAR) Reports of Account administrators failing to complete the sub-certification are reported to their respective Vice President, Auditing & Consulting Services, & Asst. VP/Controller. Compliance utilizes administrator responses (or lack thereof) when performing the annual risk assessment to determine account administrators selected for QAR June 2012 Business Affairs – Your Partner for Successful Solutions

31. Reconciliation Workbook The Reconciliation Workbook includes the Certification Worksheet and Supplemental Information Report. Certification Worksheet: Provides year-to-date balances of all active budget groups within a unit. It also includes the official certification statement to be signed by the Account Administrator and Reconciler. NOTE: This worksheet is provided as an optional tool that the Reconciler can use to show total reconciling items and compute the balance available per department. Departments may use other tools (such as Quicken®) for this purpose, but they must have a formal reconciliation process in place. 31 June 2012

32. Reconciliation Workbook 32 IMPORTANT: The certification statement and Account Administrator and Reconciler signatures are required even if there are no reconciling items or the department uses another reconciliation method. If the Certification Worksheet is not used, the certification statement must be copied verbatim from the Certification Worksheet onto the last page of the departmental reconciliation document and signed by the Account Administrator and Reconciler. Retain reconciliation for FE+3 June 2012

33. Who Do You Call ??? Contact Management Reporting and Administrative Systems MRAS@utsa.edu for assistance with: MRAS@utsa.edu –Appropriate personnel are not receiving the SOA reports –Accessing the SOA reports –Other technical issues Contact Accounting Services at accounting.ofc@utsa.edu for assistance with:accounting.ofc@utsa.edu –Accounting corrections –Recording reconciling items –Accounting terms and definitions –Other matters related to financial information 33

34. 34 NACUBO Program Codes Definition – Functional classification of expenses Classification is assigned to a budget group or individual sub-account Accounts should be reviewed for appropriate NACUBO program codes Purpose of a new account is important for determining appropriate code Business Affairs – Your Partner for Successful Solutions June 2012

35. 35 NACUBO Program Codes Functional Classification List Expense categories adopted by Higher Ed for grouping budget & expenditures 02 – Instruction 06 – Research 12 – Public Service 14 – Academic Support 16 – Student Services 20 – Institutional Support 22 – Operational & Maintenance of Plant 48 – Scholarships & Fellowships 70 – Auxiliary Enterprises Business Affairs – Your Partner for Successful Solutions June 2012