General Ledger

3.4.1 Account Reconciliations

3.4.1.1 Overall Procedures

1. The Manager, General Accounting reconciles all asset and liability accounts, except Student Receivables.
   
   
2. Other Departments, such as Finance, Payable, Receivables, etc., may provide to the Manager, General Accounting, detail reconciliations in the form of worksheets that tie to Balance Sheet amounts. The Manager, General Accounting will review these worksheets for reasonableness.
   
   
3. The income and expense accounts will be reviewed before the close of each month for propriety. Comparisons will be made to prior year and budget income and expense amounts, with large differences investigated and explained. See Monthly Closing Procedures, below.
   
   
4. The Due To (Due From) accounts must be in balance before the month can close. See Monthly Closing Procedures, below.
   
   
5. Budget amounts will be reviewed to be sure they are in balance with what has been approved. See Monthly Closing Procedures, below.

3.4.1.2 Fund Bank Accounts

All Bank Reconciliations are performed by the Manager, General Accounting. The bank statements are sent directly to the Manager, General Accounting, who in turn, collects data from other departments in order to reconcile the bank accounts. These are done before the end of the month following the month being reconciled. Reconciliations of the bank accounts where large numbers of checks are written, such as payables and payroll, will use data provided by the bank instead of individual check copies.

3.4.1.3 Other Cash

There are petty cash funds, registration drawer funds, food service cash funds and other cash funds maintained by each location.

Petty Cash - Limited to expenses (excluding memberships) up to $75. Reimbursed as needed through the voucher system and reconciled with each reimbursement.

Registration Drawer Funds - Balance on hand in cash drawers necessary to give change to registering students. Cash collected is deposited each day along with other tuitions and fees and entered into the system at the College level. A copy of this tuition register is sent to the Manager, General Accounting.

Food Service Cash Funds - Balance on hand in cash necessary to give change to students. Cash is deposited each day in a separate bag and an analysis is attached to account for the deposit and the cash funds. This is entered by the College and sent to the Manager, General Accounting.

Other Cash Funds - There may be other petty cash funds needed in certain circumstances. For instance, the pay for use machines, such as copier machines, will have a change balance and will be collected on a regular basis by the Learning Resource Center. These funds along with book fines, etc. will be turned over to the College Business Office for deposit.

These locations will provide the Manager, General Accounting with a reconciliation of all of the funds annually.

3.4.1.4 Accounts Receivable

Receivables are recorded for Continuing Education and Workforce Development, Federal Funds and Student Receivables. Please refer to the section in this manual titled "Student Financial Records" for more detailed procedures for this type of account.

3.4.1.5 Taxes Receivable

As a general rule, Tax Revenues are recorded only upon receipt.

Because it is impossible to accurately predict when the taxes will be paid or the amount to be paid, no accrual is made to record expected or anticipated tax revenues, except at fiscal year end.

At August 31, the Finance and Treasury Department will endeavor to get a confirmation of unremitted taxes owing and will record a receivable for that portion. This receivable is only adjusted annually for differences.

Allowances for Uncollectible Taxes are based upon historical experience in collecting property taxes.

A more in-depth discussion of Tax Revenues can be found below under Revenue Recognition.

3.4.1.6 Investments

Investments are directed by the ExecutiveDirector of Finance and Treasury. All entries to record investment activities are prepared by the Finance Department on an Investment Journal Entry form and approved by the Chief Financial Officer. An Investment Report is prepared monthly by the Finance and Treasury Department as an addendum to the monthly financial statements and must agree in total to the Balance Sheet.

3.4.1.7 Inventories

The only inventories accounted for on the General Ledger are the (1) Print Shop Supplies (i.e. paper, etc.) and (2) Food Service. Office Supplies and Physical Plant Supplies are considered consumable as purchased and are not inventoried. The Book Store is contracted to an independent operator. Therefore, no inventory is carried. All inventories are valued at the lower of cost, under the "first-in, first-out" method, or market.

Print Shop - Supplies purchased go into the inventory account and are relieved through usage reports. Usage by department is maintained by the print shop and is forwarded, via journal entry, on a monthly basis to the Manager, General Accounting to charge each department, as appropriate. A physical inventory is taken once a year, at the end of the year, and any adjustment is corrected at that time.

Food Service - As above, supplies purchased go into the inventory account and are relieved through usage reports. However, a physical inventory is taken monthly and the resulting usage is forwarded on a monthly basis to the Manager, General Accounting.

3.4.1.8 Fixed Assets

Refer to the Fixed Assets section in this manual for more complete procedures.Only assets that are $1000 or more in unit value are set up as capital items.

1. It is the District procedure that no depreciation is to be recorded for these items.
   
   
2. Fixed Assets costing less than $1000 are expensed to each department upon purchase. This includes assets that may be purchased in a large amount but when set up on the asset ledger would amount to under $1000 each.
   
   
3. Bar Code strips are provided by the Manager, General Accounting to each location to be affixed to each asset. This number should be communicated to the Manager, General Accounting as soon as the asset is put into service. However, a reconciliation is performed on a monthly basis by the Manager, General Accounting and any missing information, at this time, is requested to be provided by the location.
   
   
4. Annually, a physical inventory is taken by each location. This is done in cooperation with the Vice President for Administrative Services and the Physical Plant Manager for each location. All differences are investigated and adjustments are made at this time.
   
   
5. At the end of the fiscal year, an addition based on a percentage of the Fixed Assets on the books is accumulated in a reserve for Renewals and Replacements in the Current Unrestricted Fund.

3.4.1.9 Overdrafts

The District utilizes Control Disbursement Accounts whereby checks are written on accounts that carry a zero balance. At the end of each day, checks that have cleared the bank will be completely 'swept' against depository accounts which have balances. This allows for the maximum interest accrual owing to available funds and protects against an overdraft position.

3.4.1.10 Accounts Payable

This area interfaces with the General Ledger. During account reconcilation, the Accounting Department verifies all outstanding checks in the bank account to ensure that vendors are in timely receipt of payment. Procedures for this area are more completely addressed in the Accounts Payable section in this manual.

3.4.1.11 Other Current Payables

Other current payables includes clearing accounts for benefits and other payroll related items.

3.4.1.12 Accrued Liabilities

The accrued liability account is for items such as unpaid annual leave, received merchandise, accrued interest and deferred fees in the Unrestricted Current Fund and Auxiliary Funds, as applicable.

3.4.1.13 Deferred Revenues

1. Amounts for Gifts, Contracts and Grant Awards received in excess of expenditures are reported as deferred revenues.
   
   
2. Tuition and fees received in the months prior to September 1 but belonging to the fall semester are recorded as deferred revenues. On September 1, a journal entry is made to reclassify these revenues to current.

3.4.1.14 Bonds Payable

Bonds payable by the District consist of general obligation bonds payable, combined fee revenue bonds and contractual obligations payable. The Finance and Treasury Department maintains the records and makes the necessary journal entries to record the liability and redemption for all bonds payable.

3.4.1.15 Other Payables

Lease Purchase Agreements
Lease purchase agreements are made as an alternative financing of capital purchases, but must follow the same considerations as followed when purchasing any item of a capital nature. The equipment is capitalized at the present value of future minimum lease payments. The Vice President for Administrative Services for each College or the appropriate Department Head (i.e. Director of Information Technology) for the District Office will initiate the journal entry to record a lease purchase agreement.

3.4.2 Monthly Closing Procedure

3.4.2.1 Revenue Recognition

Revenues for the District originate from six primary sources, as discussed below:

3.4.2.1.1 Ad Valorem Taxes

1. The District has entered into agreements with the county tax assessors to bill and collect the District's property taxes, based upon all real and business personal property located in the District, net of a collection fee.
   
   
2. As a general rule, Tax Revenues are recorded only upon receipt. The Finance and Treasury Department will allocate the revenue based upon debt service requirements.
   
   
3. The months of December, January and February are when the majority of the tax revenues are paid to the District. Taxes are collected throughout the year and may be received at any time. Delinquent taxes are prorated between operations and debt service based upon rates adopted for the current fiscal year.
   
   
4. No accrual is made to record expected or anticipated tax revenues, except at fiscal year end.
   
   
5. The Finance and Treasury Department will compare the actual receipts of taxes to budgeted tax revenues based upon estimations of assessed valued and approved tax rates, with differences reported to the Chief Financial Officer monthly.

3.4.2.1.2 Gifts, Contracts and Grant Awards

1. Gifts, Contracts and Grant Awards may come from Federal, State, Local or Private sources and may be of a restricted or unrestricted nature.
   
   
2. The funds, when received but not expended during the reporting period, are shown as additions to fund balances. Revenues are not recognized until they are actually expended.
   
   
3. The Grants Accountant allocates all revenues and expenditures to insure proper fund allocations. (Refer to the Grants section in this manual for more detail procedures.)

3.4.2.1.3 Tuition

1. Tuition and fees originate from two main sources: (1) regular academic and vocational/technical courses and (2) community education and workforce development classes. These are both made up of (1) Tuition, (2) Registration Fees for credit classes, (3) Lab Fees and are offset by (4) Remissions and exemptions.
   
   
2. Tuition and fees received in the months prior to September 1 but belonging to the fall semester are recorded as deferred revenues. After the beginning of the fiscal year (September 1), a journal entry is made to reclassify these revenues to current revenues.
   
   
3. Other tuitions and fees (including those for the Spring and Summer semesters) are recorded upon receipt.
   
   
4. Registration is performed at campuses using a separate Registration software module, run and posted daily. The deposits are made daily and entered into the system at the Colleges.

3.4.2.1.4 State Appropriations

1. The District receives funds for support, maintenance, operations and improvements from biennial appropriations of the State Legislature. This appropriation is based partially upon certified official base period contact hours submitted by the District. Refer to Board Policy, Section CAA.
   
   
2. Basic unrestricted state appropriation aid originates from two main sources (1) academic credit instruction and (2) vocational and technical instruction.
   
   
3. Restricted aid comes from (1) Remedial Education, (2) State Group Insurance and (3) State retirement matching.
   
   
4. The Finance and Treasury Department makes a Journal Entry for the receipt and deposit of these funds.

3.4.2.1.5 Sales and Service of Educational Activities, Auxiliary Enterprises, and Other Miscellaneous Income

1. Other Revenues are recorded from food service, rental of building space, vending and other miscellaneous sources.
   
   
2. These procedures are dealt with in more detail in the Other Miscellaneous and Auxiliary Operations section of this manual.
   
   
3. The revenues from these sources are recorded through deposits and/or journal entries.

3.4.2.1.6 Interest Income

The Finance Department monitors all investments and records interest when received, by a monthly journal entry.

3.4.2.2 Expense Recognition

1. Payables interface automatically with the General Ledger system and are posted to the General Ledger on a daily basis.
   
   
2. Payroll interfaces with the General Ledger system after a payroll is closed and transferred.
   
   
3. All other sources of expenses must be entered into the General Ledger by means of Journal Entries. Refer to the Journal Entry Preparation procedure outlined below.

3.4.2.3 Journal Entry Preparation

1. In addition to Payable and Payroll, Receivables interface automatically with the General Ledger system.
   
   
2. All related departments have the ability to request a Journal Entry . This request can be made via e-mail or by completing a Journal Entry form and can be made at any time during the month.
   
   
3. This request is to be made to the Manager, General Accounting for approval and posting to the General Ledger.
   
   
4. The Colleges will make requests to the VP of Administrative Services, who will, after approval, forward the request or the Journal Entry to the Manager, General Accounting.
   
   
5. Since the General Ledger closes on the 3rd working day after the close of the fiscal month, all entries or requests for entries must be received by noon on the 3rd day.
   
   
6. The system automatically assigns the Journal Entry number upon entry.

3.4.2.4 Other Monthly Procedures

The Manager, General Accounting will review the General Ledger and make comparisons to budgeted amounts. Additionally, all Due To, Due From account transfers and funds must be in balance.

3.4.2.5 Financial Statement Preparation and Presentation

1. The Manager, General Accounting converts and customizes the information from the Colleague General Ledger system to month end financial reports on spreadsheets.
   
   
2. These reports, along with investment attachments from Finance, are given to Chief Financial Officer and the Executive Director of Finance and Treasury following the close of the month for review in time for production of the Board Agenda.
   
   
3. They are mailed with the Board Agenda, after approval.
   
   
4. The statements will be presented at the monthly Board Meeting held on the fourth Thursday of the month.
   
   
5. While the Foundation accounting is treated as a separate entity, the Student Financial Records Accountant will prepare and the Manager, General Accounting will review financial statements for the Foundation every month.

3.4.3 Year End Procedures

1. The external auditors will begin their interim work approximately 5 weeks before the fiscal year end with the assistance of the Manager, General Accounting.
   
   
2. The Manager, General Accounting is responsible for the District's interface with the external auditors and is the key contact person in this area.
   
   
3. The General Ledger will not close according to the normal montly cycle (on the 3rd working day following the end of the month), but may be held open through September, to allow for account analysis and the posting of year-end adjustments.
   
   
4. Normally, encumbrances must be relieved by the end of the year. If an encumbrance is carried over into the next fiscal year, budgets should be adjusted accordingly. Outstanding purchase orders are closed out and cancelled through Accounts Payable.
   
   
5. A preliminary year-end financial report will be available for the September and October Board meetings and no General Ledger financial reporting on the current year is available until the prior year is closed.
   
   
6. The external auditors will usually begin the audit in late September and must prepare their report by the date of the November Board meeting. A preliminary set of audited financial reports with findings will be presented to the Board in November after review by the Audit Committee.
   
   
7. A final published audit report must be completed and filed with the Coordinating Board on or before January 1 following the close of the fiscal year for which the audit was made.

3.5 Process Map

3.6 Forms