ACCOUNTING

Policy
Sample
Instructions

Chart of Accounts
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Monthly Close
Year-End Close
Capital Assets
Authorized Signature

2007-2008
2006-2007
2005-2006
Earlier Years

Fiscal Year-End Closing

Fiscal Year End Adjustments

Accrued and Prepaid Expense Adjustments:

Overview:

1. Departments are encouraged to review invoices and purchases greater than $1,000 that are received between June 1st and the final closing date for inclusion in the proper fiscal period. If an adjustment is warranted, the Controller’s Office will post an adjusting journal entry.
2. For accrued expenses adjustments, the entry will increase current year expenses and decrease subsequent year expenses simultaneously for the transaction.
3. For prepaid expense adjustments, departmental expenses for the current year will be decreased and increased in the new fiscal year for the amount of the transaction.
4. For larger items it may be necessary to provide the Controller’s Office with evidence of when the goods or services were received.

Accrued Expense:

1. A cost greater than $1,000.00 that is incurred, but no invoice has been received prior to the accounts payable closing date. Since the good or service was received in the current fiscal year, an expense should be established on the departmental budget in the current fiscal year.
   
2. Examples of Accrued Expenses:
   • Typical accrued expenses are month statements, such as telephone, utilities and credit card bills. The reporting of these expenses by the vendor is often delayed and the invoice may not be received until after the accounts payable deadline.
   • Receipts for travel advances have not yet been received.
   • Equipment/item has been received as of June 30, however, no invoice has been sent from the vendor.
   • Contractor has not yet invoiced for work performed in June.

Prepaid Expense:

1. Items over $1000.00 and are paid during the current fiscal year, but the expenses are associated with the new fiscal year. In these cases, it is appropriate to record a prepaid expense.
2. Such amounts are not reflected in the department's expenses for the current year but are reported as assets in the College's financial statements.
3. In the new fiscal year, these amounts are charged to the department's budget.
4. Examples of Prepaid Expenses:
   • Advance travel payments for trips to be taken after July 1.
   • Subscriptions or membership fees that begin in the next fiscal year.
   • Maintenance fees or contracts and software licenses with term date beginning after July 1.
   • Expense transactions, that are associated with unearned revenue (i.e., summer session).

Period Adjustment Procedure:

1. To request a period adjustment as described above, a completed Accrual/Prepaid Expense Request Form is required along with a copy of the purchase order, check request, if applicable.
   
   
2. Forward to Jim Sullivan in the Controller’s office. Note: Please do not send Originals. The Original Invoice must still be sent to Accounts Payable for processing.
   
   
3. To process this request the following information is required.
   • Description of transaction
   • An estimate of the amount of the expense, including the basis of the estimate.
   • The full FOAPAL to be charged
   • Departments may be required to provide documents supporting of date of receipt.
   • Adjustment threshold – $1,000.00
   • Accrued and Prepaid adjustments are intended to ensure that the College's annual financial statements present fairly, in all material respects, the financial results for the year. These adjustments are not intended to achieve precise accuracy or to align with budget; therefore, they are limited to significant items where the presence or absence of an amount would distort the financial picture for the College as a whole.

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