University of Delaware
The University Accounting System and the monthly statements produced from that system are designed to assist departmental administrators to better manage the financial resources available to them. During the General Accounting workshop, our discussions will focus on both the format of these statements and the elements that are a key to reading the statements.
I. Purpose of the Accounting System
The Accounting System at the University of Delaware is designed to accumulate and report financial data. It also assists departmental administrators in the management and control of University resources. These functions necessitate the data being stored and reported in a variety of formats-leading to a multiple-digit account code. The University has over 10,000 active account codes which are used to capture approximately 1,100,000 accounting entries each year. The Accounting System records these transactions and reports them in the form of meaningful, accumulated activity. In a sense, the Accounting System is a compromise of the needs of the various units.
The need for reports ranges from the monthly statement of activity to annual reports of overall University operations, including reports needed to meet Federal and State requirements. The principles which govern the University Accounting System are dictated by the American Institute of Certified Public Accountants to insure some uniformity between universities. The University publishes an annual financial report which is reviewed by a public accounting firm. It files two annual tax returns, one for informational purposes only due to the University's tax exempt status and a second return for Unrelated Business Income (UBIT).
At the departmental level, the Accounting System functions much like your bank does with your checking account. Transactions initiated by the department are recorded as they "clear" the central system, just as your checks "clear" the bank. A reconciliation of the account statement is necessary-just as you reconcile your monthly checking account-to determine what entries are still outstanding, what "service charges" or direct charges have been made to the account, and to insure the bank did not make an error in your account.
It is important to note that the Monthly Account Statements will not relate the exact status of an account, but rather confirms the status as of a certain date. The plans and records of the department and/or unit administrator should be more indicative of account status than the monthly statement, since more information is available to the department.
Fiscal control is a responsibility of the department as well as of the Treasurer's staff. The Treasurer's staff is concerned with controls for the University-at-large, and looks at individual accounts on a periodic basis. However, day-to-day control of the several accounts that make up a department's resources rests with the staff of that department.
II. Accounting Subsystems
The Accounting System is a recording and reporting system. The transactions are actually generated in a group of subsystems which feed the transactions to the Accounting System. Payroll, Central Stores, and Work Orders are examples of these subsystems. When questions arise or errors occur, they usually occur at the subsystem level.
Transaction codes on the account statement are the key to which subsystem fed an entry to the Accounting system, and therefore usually indicate where to begin to resolve the question.
III. Account Codes
The University account code is a base code of ten digits with a three-digit object code added to each transaction. Understanding the nature of an account is a key element to reading the account statements because there are three commonly used statement formats.
There are five types of accounts used in the University system. These are: assets, liabilities, revenues, expenditures, and fund (cash) balances. Departments most commonly use only the expenditure and fund balance type accounts. For statement purposes, fund balance accounts are further broken down as fiscal year accounts and project accounts. Accounts can be classified as to the type of statement produced by the first two digits of the account code. The balance of the ten digits provide function, departmental, and project information. Account Code Description identifies the type of accounts and gives the complete breakdown by the first two digits.
The three-digit object code is added to the basic account code each time a transaction is initiated by the department. Please see the object codes list. Their use will also be further explained while reviewing the account statements.
IV. Account Statements
A separate statement is issued monthly for each ten-digit account code only if there was activity (transactions) during the month for that account. Statements are not printed for accounts with no activity. However, once a year, statements will be printed for all accounts, activity or not, as a reminder that you may be responsible for an active account which has little or no activity.
The summary page should be used to check the account status in total, after verifying the accuracy of the transactions for the month. Budget, accounting, encumbrance, and reference data are presented on the statements. Again, it must be stressed that the monthly statements are similar to bank statements. That is, they confirm activity and present information about charges to an account.
There may be a lag in the information presented on the statement due to paperwork in process, just as some checks have not "cleared" the bank at statement time. Some relatively simple record keeping is necessary in the department to remember additional commitments against accounts.
The monthly account statement is the building block for a series of reports that ultimately become the University's overall financial statements. Each department receives summary (Management Information System - MINS) reports in the same format as the account statement summary page. These accumulate the data from multiple accounts, and can be used to assist the administrator in controlling programs within the department. They are also known as Upper Level Management (UPS) reports.
V. Summary
The monthly account statements are an aid to managing the department. Properly used, they provide a resource tool for management. We look forward to helping you make the statements work for your department.
Please direct questions to : General Accounting
URL of this document :http://www.udel.edu/genacct/
Last updated August 4, 1999
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University of Delaware