The Financial Procedures Manual - Finance Division

[Pages:579]Finance Division

The Financial Procedures Manual Chapter 10

Month?End Guidance

Also available on-line at:

Issued: May 2006 Revised July 2010

Contents

1. Purpose of Month-End Procedures

2. How to use this Guidance

3. Month-End Timetable

3.1 Overview of Processes

4. Detailed Month-End Guidance

4.1 Purchasing 4.2 Accounts Payable 4.3 Accounts Receivable (including Internal Trading

& Banking) 4.4 Inventory 4.5 Fixed Assets 4.6 Grants 4.7 General Ledger

5. Glossary of Terms

Month-End Guidance

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1. Purpose of Month-End Procedures

Month-End Guidance

Month-end procedures are tasks performed every month (or period) prior to and following the closedown of the relevant CUFS modules (e.g. the General Ledger).

CUFS modules are `closed down' for each period as this provides a clear "cut-off" point to review (or to report on) the financial position of the department/University.

It is good practice to closedown financial systems for each period to allow the institution to compile its management accounts (e.g. showing the actual expenditure v. budget) to assess its financial position. Therefore, month-end procedures will involve running reports to check transactions and balances, as well as preparing management accounts to assess the financial position of the Department.

Departments should ensure that a member of staff is responsible for ensuring monthend procedures are completed ? typically the Departmental Administrator.

The benefits to Departments of month-end procedures include:

? Providing a cut-off point on which to report on the financial position of the department. This is essential for accurate management reporting.

? Helps to ensure transactions/invoices are processed in the correct GL period.

? Prevents backposting of transactions by closing off earlier periods so previously reported financial information is not affected.

? Improving your efficiency by routinely completing pre-planned procedures to a set timetable.

? Helps with the preparation of your department's year-end accounts.

? Helps to improve the University's financial position by: ~ allowing good quality management information to be produced for better decision-making; ~ for collecting debts from our customers more quickly; and ~banking receipts more promptly

This document provides a summary of the general departmental month-end procedures. It is intended for the guidance to be flexible and departments may wish to amend and add to these procedures based upon their own organisational requirements. As such this document only provides a guide of minimum best practices for departments and does not represent a definitive list of month-end procedures.

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2. How to use this Guidance

Month-End Guidance

This guidance sets out the key procedures that departments should be undertaking each month, analysed within each CUFS module. It has been prepared in the context of the University's overall month-end timetable.

The guidance can be adapted by departments to meet their own requirements. This guidance should be used together with the Finance Training Manual - `How to Run Month-End', which expands upon these instructions to include the relevant CUFS reports.

How to Run Month-End Manual available at:

3. Month-end Timetable

The closing dates for each ledger are as follows:

Module Accounts Receivable Accounts Payable Grants Inventory Purchasing Last day for Deposit Movements General Ledger Fixed Assets September Month End October Month End November Month End December Month End January Month End February Month End March Month End April Month End May Month End June Month End

Working Day 3 Working Day 4

5 October 2010 3 November 2010 3 December 2010 5 January 2011 9 February 2011 3 March 2011 5 April 2011 4 May 2011 3 June 2011 5 July 2011

6 October 2010 4 November 2010 6 December 2010 6 January 2011 10 February 2011 4 March 2011 6 April 2011 5 May 2011 6 June 2011 6 July 2011

Working Day 5

7 October 2010 5 November 2010 7 December 2010 7 January 2011 11 February 2011 7 March 2011 7 April 2011 6 May 2011 7 June 2011 7 July 2011

All modules will close at 5pm on the stated days.

Working days for each month except January which is extended by 4 working days.

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3.1 Overview of Processes

Module

Last working day of calendar month

Purchasing Run and Action Open PO (UFS) Report

Accounts Payable

Run Invoice Register Report Run Invoice on Hold Report

Accounts receivable (inc. Cash and Banking and Internal Trading )

Run `Incomplete (AR) Invoices Report' Run `Unapplied Receipts Register' Run `Receipt Register Report' and complete receipt batches Arrange for banking of monies Claim BACS receipts from weekly F.D. spreadsheet Internal Trading: raise any AR invoices/process any AP invoices

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PO Module Closed

AP Module Closed

AR Module Closed

Grants

Inventory Fixed Assets General Ledger

Expenditure posted to dummy suspense Grants should be corrected

Funds check failures should be reviewed and cleared

Review status of all grants on a cyclical basis

Stocktake or cycle count

Run `Material Distribution' report

AP Invoice (tick `Track as Asset' box)

Inform Finance Division of fixed asset disposals

Review and process journals for deposit account movements

Review and clear departmental suspense accounts/review GL accounts for miscodings and correct as necessary

Journal expenditure to match correct income (source of funds)

Grant Module Closed

Inventory Module Closed

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Run `Ageing 7 Buckets by Account' report

Credit control procedures ? send `Dunning Letters'

Process petty cash journal

Run `Value of Inventory' report

Fixed Assets Module Closed

Run `Fixed Asset Additions' report

GL Module Closed

Run `Budget v. Actual `Report (UFS)'

Review the `Departmental Summary Report' distributed by Finance Division

Month End Guidance

4. Detailed Month-End Guidance

4.1 Purchasing

An overview of the purchasing cycle is given as follows:

Requisition

Raising an internal purchase requisition

Supplier Selection

Quotations Contracts Pre-Suppliers

Purchase Order

Raise Purchase Order

Receipt Goods/Services

Receive Goods and Services

Payment to Supplier

Purchase Invoice Payment

Although raising a purchase order creates a commitment on CUFS, once goods/services have been received then this becomes a legal obligation to pay the supplier. Prior to the month-end we should establish that any incomplete purchase orders are actioned and closed.

Quarter-End Guidance - Purchasing

? Each quarter-end run Open Purchase Orders Report (UFS) to identify incomplete purchase orders

? Close purchase orders by receiving the goods, matching against the invoice, /cancelling the order or manually closing the order.

4.2 Accounts Payable

Accounts Payable (AP) describes the procedure for processing supplier invoices and employee expense claims, and other disbursements processed via the AP module. A summary of the AP cycle is given as:

Invoice Entry

Enter Invoice Using the Batching System

Coded to an Account

Matching Invoices to Purchase Orders (where raised) ~coded directly to relevant account/project

Approval

Primary and Secondary Approval of Purchase Invoices

Payment

Payment of Supplier/ Employee by Cheque: Finance Division

Month-End Guidance

Month-End Guidance ? Accounts Payable

? Approve all AP invoices for the month (this is ongoing). ? Review supplier statements and check all invoices are secondary

approved/or current (i.e. not due for payment). ? Review employee expense claims/advances to ensure they are up-to-date

and processed ? Review credit card statements to supporting receipts/vouchers and journal

expenditure from the department suspense account to relevant cost centre. ? Run Invoice Register (CAPSA) report to identify invoices not primary

approved. ? Run Invoices on Hold (CAPSA) Report to list invoices placed on hold and

then action all holds, as necessary. ? Review and approve any invoices that are coded to a project and are now

"unapproved" as a result of the AP Tie Back process.

4.3 Accounts Receivable (Including Internal Trading &

Banking)

Accounts Receivable concerns income generated from sales for services rendered

with the following steps being involved.

Send to

Debt

Invoice

Customer

Receipts

Management

Raise Sales Invoice

Invoice Sent to Customer

Income Collected and Receipted

Credit Control Statements/ Dunning Letters

It will be necessary to raise sales invoices promptly to ensure income is collected quickly.

4.3.1 Internal Trading Internal Trading refers to inter-department (internal to the University) purchases and sales ? when one department trades (sells goods or services) to another department.

Dept A Sales Invoice

Raise Internal AR Invoice

Dept B Action Invoice

Finance Division Reviews

Locate Internal AP Invoice on CUFS, code to appropriate Dept account & approve.

Finance Division Reviews Matching of AP and AR Invoices

Disputes

When invoices are disputed, queries should be resolved by referring to Head of Department in the first instance. Final Arbitration is with the Finance Division

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Month-End Guidance

4.3.2 Banking It is important to ensure that all monies (cash and cheques) received during the month are banked and receipted promptly and at least weekly. It will also be necessary to balance your petty cash float each week.

Month-End Guidance

Accounts Receivable (AR)

? Complete AR invoices, credit notes and batch receipts for the month (this is ongoing).

? Print and send AR invoices and customer statements. ? Print and send Dunning letters as part of credit control. ? Run Incomplete Invoices report to identify any incomplete sales

transactions and complete/cancel transactions as necessary. ? Run Unapplied Receipts Register to identify any receipts unapplied to

specific invoices and match these receipts to the invoices report. ? Run Ageing 7 Buckets by Accounts report to show invoices with no

remittance, and review ? use for credit control. ? Review and write-off bad debts (with the Head of Department approval).

A. Internal Trading

? Raise Internal Trading AR invoices promptly to departments in accordance with agreed terms.

? Process Internal Trading AP invoices promptly (within the same month if possible)

? Review and agree Internal Trading invoices in dispute and refer to arbitration as necessary.

B. Banking

? Complete all receipt batches for cash and cheques received on or before the last day of the month.

? Run the Receipt Register report for cash receipt batches. ? Arrange for banking of all monies received up to the last day of the month

(including vending machines, photocopier sales, pay phones, key deposits). ? Claim BACS receipts/bank transfers from the weekly Finance Division

spreadsheet. ? Process monthly petty cash journal for balancing your petty cash float.

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