Accounting and Financial Management Governance – Revenue

PURPOSE

• To record revenue received in Agriculture from billing Indiana counties for Extension Educators salaries and to pay out salary savings to Indiana counties.
• This funding is regulated by state code at the county level and is billed based on the # of educators each county has. Also used to track income received in the College of Nursing at the Northwest campus for Innkeepers Tax Distributions from the Lake County Convention & Visitors Bureau. 

GENERAL LEDGER/COMMITMENT ITEM

REFERENCE MATERIAL

IC 21-46-5-1 Cooperative extension service; county office; appropriations by county for staff and office expenses

 Sec. 1.:

(a) The office of the cooperative extension service is established in each county.

(b) Each county council shall annually appropriate the amount of money that the county council considers necessary to pay secretarial and clerical employees, travel expenses of the county cooperative extension service educators, rent, office supplies, equipment, and incidental expenses. Each county council may appropriate additional money for the salaries and other personnel costs of the county cooperative extension service educators.

[Pre-2007 Higher Education Reconciliation Citation: 20-12-42.1-1.] As added by P.L.2-2007, SEC.287.

Reference website: http://iga.in.gov/legislative/laws/2017/ic/titles/021#21-46-5

TRANSACTION DETAIL

PURPOSE

• Used for deposits of Federal Fund draws from the USDA ASAP system. 
• These draws reimburse the College of Agriculture for annual revenue allocation that is distributed each FY to the COA departments, Vet, and HHS.  

GENERAL LEDGER/COMMITMENT ITEM

REFERENCE MATERIAL

The following link is for the Policy guide maintained by OGFM for the NIFA federal assistance funding. 
http://nifa.usda.gov/sites/default/files/resource/NIFA_policy_gde_Oct_2014.pdf.
It is not specific to revenue nor the Formula funds however, the information is useful.

TRANSACTION DETAIL

Example:  SoFA/Income Statement 

PURPOSE

• To record the receipt of State Appropriations 

GENERAL LEDGER/COMMITMENT ITEM

REFERENCE MATERIAL

Financial Planning and Analysis (FP&A) provides the accounts and amounts for recording State Appropriations to Accounting Services.

• The accounts and amounts are based on the State Budget Bill. 
• Accounting tracks claims monthly against these amounts for Operating and Line Items and adjusts the June amount accordingly for any rounding that has taken place during the year.
• For Operating and Debt, FP&A track claims to budget on the 12-month income file. They are specifically checking for items such as rounding throughout the year and then work with Accounting Services to make adjustments as needed.

TRANSACTION DETAIL: RECEIVE STATE APPROPRIATION REVENUE THAT IS NOT BASED ON REIMBURSEMENT OF EXPENSE

TRANSACTION DETAIL: RECORDING THE REVENUE FROM THE STATE AFTER CLAIM HAS BEEN SUBMITTED AND WIRE HAS BEEN SENT, WHEN THE WIRE IS TO REIMBURSE EXPENSE ALREADY INCURRED BY THE UNIVERSITY.

PURPOSE

• Capital gifts are gifts restricted by donor to be used for Capital Construction Projects.  Departments should not deposit. 
• ALL gifts are administrated through UDO – Gift Fund Accounting / DAUCH.
  •  Gift information is documented on appropriate forms (Form 44 or Form 41B – Gift In Kind).
• Capital Gifts will be recorded with the appropriate IO to derive the BA receiving the gift.  This will be a non-operating IO and will not show on the Department Trend Report.  Funding will be swept to Capital Project via automated transfer in EAM process.

GENERAL LEDGER/COMMITMENT ITEM

OUTSTANDING ITEMS/QUESTIONS (JUNE 2018)

• Capital gifts will be recorded either in Unit or in Plant fund if there is a current project. Discussion is still being held on whether all capital gifts should go through the Unit or if some related to current ongoing projects should go directly to Plant.
• Other capital gifts that ordinarily will flow through the Unit will be:
  • recorded in the Gift Fund with a DAC assignment of capital
  • will be reported as non-operating.
  • will report the gifts as capital gifts via the GL account.

TRANSACTION DETAIL: RECEIVE REVENUE

PURPOSE

To distribute monthly endowment activity to each campus endowment fund.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL: RECEIVE REVENUE

True/Term Endowment Donor Gifts:

PURPOSE

To record receipt of gift revenue not identified as Capital or Endowment.

Restricted

Revenue that is received by the University with limitations on where (by what dept.) and/or how (for what expenses) the funds can be used

• Fund: Gifts – 53010000
• Funded Program Type: Restricted Gifts
  • Restricted gifts identifies gift accounts which have restrictions from the donor on the use of the funds (except to specify what unit is to receive the gift).  The restriction type is determined by the Purpose Code that is assigned to each gift by UDO:
    • Professorships
    • Other Faculty Support
    • Facilities
    • Programs
    • Funded Program Type: Unrestricted to Department Gifts
      • Unrestricted identifies gift accounts that have no restrictions on their use, beyond specification of which department is to receive the funds.

Unrestricted

Unrestricted revenue is revenue received by the University without limitations on where (by what department) and/or how (for what expenses) the funds can be used. Certain types of activities that can be supported by unrestricted funds are institutionally significant and need to be categorized and identified for reporting and management.

• Fund: Gifts – 53010000
• Funded Program Type: Unrestricted to Department Gifts
  • Unrestricted to Department identifies gift accounts that have no restrictions on their use, beyond specification of which department is to receive the funds.

GENERAL LEDGER/COMMITMENT ITEM

REFERENCE MATERIAL

University Gift Policy: http://www.purdue.edu/policies/business-finance/iib2.html

Important Note:  UDO must receive a completed Form 44 from a business office in order to properly record the gift in the Advance gift system.   The Form 44 must be signed by either a PI, Department Head, and/or school level signature, as required by each organizational unit.  Obtaining only a Director of Development signature is not sufficient.

Link to current Pending and Clearing Process

OUTSTANDING ITEMS/QUESTIONS

School Discretionary and Institutional Program (SDIP) Procedures effective July 1, 2018.

TRANSACTION DETAIL: RECEIVE REVENUE

PURPOSE

Purdue Research Foundation (PRF) serves as Purdue’s agent with respect to the receipt, processing, management and reporting of private Gifts made for the benefit of Purdue. PRF Gifts are for those gifts made to PRF for the benefit of Purdue and are not recorded in the University gift system.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL: RECEIVE REVENUE

PURPOSE

Sponsored projects are established when funds are awarded to the University by external sources in support of research, instruction, training, service, or other scholarly activities under an agreement where one of the following conditions applies:

• The award instrument requires endorsement (i.e., a formal signature or other method of acceptance), and binds the University to a set of terms and conditions.
• The agreement obligates the PI to a line of scholarly or scientific inquiry that typically follows a plan, provides for orderly testing or evaluation, or seeks to meet stated performance goals.
• The agreement establishes an understanding of how funds will be used or includes a line item budget that identifies expenses by activity, function, or project period.
• The agreement requires fiscal accountability as evidenced by the submission of financial reports to the sponsor, an audit provision, or the return of unexpended funds at the conclusion of the project.
• The agreement obligates the PI to report project results or convey rights to tangible or intangible properties resulting from the project. Examples of tangible properties include equipment, records, technical reports, theses, or dissertations. Intangible properties include rights in data, copyrights or inventions.
• The agreement requires considerations such as indemnification or imposes other terms of legal accountability.
• The agreement prohibits or inhibits the University or the PI from carrying out any activities normal to an academic setting.

GENERAL LEDGER/COMMITMENT ITEM

REFERENCE MATERIAL

SPS Handbook: https://www.purdue.edu/business/sps/pdf/Purdue_SPS_Handbook.pdf

TRANSACTION DETAIL: RECEIVE REVENUE

PURPOSE

Journal Voucher’s (JVs) are processed to charge tuition and fees up to the university allowance given by that sponsor for the fellowship program being funded.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL: RECEIVE REVENUE

PURPOSE

• To record revenue earned on Purdue University Endowment funds and to record the allocation of the earnings to departments (Debit side of the Endowment Income Distribution entry 12.0.) 

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL: ENDOWMENT DISTRIBUTIONS

PURPOSE

• Semi-annual endowment distributions made to Purdue support accounts. Distributions are based on the Spending Policy approved by the Endowment Investment Committee consistent with donor restrictions (distributed or reinvesting).
  • Distributions may be made to Agency (limited), Operating, Non Federal Sponsored Research (Fellowships) and the Cash Investment Pool (funding source for the semiannual PIPC Income distribution) Trend report fund groups.
• Semiannual endowment distributions are calculated by PRF Office of Investments.
  • Funds are wired to the University and distributed to Purdue support accounts based on the donor’s restrictions.
  • Effective May 2015, endowment distributions post to SAP in May and November of each year.
• Additional balance sheet SAP entries are created, as needed.  For example, increase in book value based on endowment distributions reinvested.
• Endowment gifts are not considered operating and therefore not budgeted.  Gifts increase the historical book value and are factored into future endowment distribution growth.
  • PRF endowment distribution posts directly to Purdue major units.
  • FY 17 Endowment Gifts = $28M.
• PRF endowment investment earnings and operating expenses post on PRF operating books and the PRF endowment distribution is received as a wire transfer in for posting to major areas.
• The budgeted amount on 469015 Endowment Distributed debit and 469010 Endowment Income Distribution credit should net to $0.

GENERAL LEDGER/COMMITMENT ITEM

REFERENCE MATERIAL

Cognos Standard Reports:

• Endowment Distribution by Owner 
• Endowment Distribution with FI Balance
• Endowment Summary by Owner – Endowment 
• Endowment Summary by Owner 

OUTSTANDING ITEMS/QUESTIONS

Endowment Distributions Not Distributed (new process):

• Note: GL 469015 was used (instead of GL 469010) because this amount was not included in total amount of distribution. Total of GL 469010 ties to amount reported as distributed. Materials will be updated if a new general ledger account is needed.
• Note: An increase to Fort Wayne Funds Held in Trust endowments which should show as an increase to a liability instead of income is currently not viewable. Options to record will be reviewed.

Transaction Detail: Endowment Distributions

Transaction Detail: Endowment Distributions reinvested

PURPOSE

To record earnings on the University Cash Pool and to expense investment related custodial/manager fees.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL:

PURPOSE

To record the debit (expense) entry to distribute net earnings on the University Cash Pool to the central general funds for each campus or to specific funds that are required to earn interest i.e. grants, loan funds, etc.

General Ledger/Commitment Item

TRANSACTION DETAIL:

PURPOSE

To record the credit (revenue) entry to collect net earnings on the University Cash Pool. 

General Ledger/Commitment Item

TRANSACTION DETAIL:

PURPOSE

• Facilities and Administrative (F&A) Costs are charged to all federal and non-federal sponsored programs based on Purdue University’s current rate agreement approved by the Department of Health and Human Services (DHHS).
• These rates are charged on a modified total direct cost (MTDC) basis to all sponsors based on the activity type (research, instruction and other sponsored programs) and the location (on or off campus).
• Any variance to charging the negotiated F&A rate must be approved by the Senior Director of Sponsored Program Services.

GENERAL LEDGER/COMMITMENT ITEM

REFERENCE MATERIAL

https://www.purdue.edu/business/sps/pdf/FA_costs_policy_definition_use_ratedetermination.pdf

Facilities and Administrative Costs (F&A) are those costs also referred to as indirect costs or overhead. They are actual costs incurred to conduct the normal business activities of an institution and are not readily identified with or able to be directly charged to a specific sponsored research project. Activities that are typically Facilities or Administrative Costs include:

• “Facilities” – defined as depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, operation and maintenance expenses, and library expenses.
• “Administrative” – defined as general administrative costs and expenses, departmental administrative costs, sponsored projects administrative costs, student administration and services, and all other types of administrative expenditures.

When Purdue provides services we look to recover both direct costs and indirect (F&A) costs. F&A is charged as a percentage of direct costs except where it is prohibited or otherwise excluded. If it is not charged, units may be asked to subsidize it. Negotiated F&A rates are to be used for all sponsored program awards from federal and non-federal sponsors.

https://www.purdue.edu/business/sps/pdf/inst1-62703.pdf

PURPOSE

Medical Plans

Medical Plans are Self Insured -Self Supporting except for FEHB plans – premiums paid to Government.  

Goal: 70% of medical costs paid by Purdue and 30% paid by employees. 

In order to create a steady state medical budget, integrated into payroll is an Employee cost and an Employer cost.

• The employee cost is deducted from payroll in either 26 pays for FY biweekly, 18 pays for AY 10 month biweekly, 10 pays for AY monthly and 12 pays for FY monthly.
• The Employee revenue to the University is credited using a 4 GL by medical plan/EE Cost and deposited to a fund specific for each medical plan. 
• The Employer cost is charged to the Employee’s cost center identified in the appropriate cost distribution record (IT27) using a 5 GL expense.
• The offsetting entry for the Employer cost is a revenue credit using a 4 GL by medical plan/ER Cost specific to each medical plan.
• Claims are then charged to the specific medical plan funds.
• Each medical plan was set up with its own EE revenue GL, ER revenue GL and its own fund.  All for reporting purposes to help determine the cost to the University of each Plan. 
• FEHB plans – Government sets rates – Purdue pays employee and employer premiums to Government

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL

Owner: Business Office – Director of Business Managers

Medical: Example Purdue Health Plan Option

GRAD INSURANCE-VOLUNTARY: EXAMPLE

LIFE INSURANCE: EXAMPLE BASIC EE LIFE

PURPOSE

“Common Good Services” refers to that set of basic, non-specialized computing resources that is beneficial for nearly all members of the Purdue community. Common Good Services are those basic information technology services that most community members would agree are critical to conducting business (academic, business, student, and research) at a modern research university. These services include:

• Networking capability (wired and wireless data capabilities and associated infrastructure)
• Voice services (phone, voicemail, associated infrastructure)
• Data storage and back up services

Information technology Common Good Services are those services that all community members reasonably expect and that are “always on.” The services are not, and do not need to be, specialized for a particular department. They are most efficiently provided by a single provider.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL

PURPOSE

Overhead is an unavoidable cost in production and service-oriented businesses. Unlike direct costs such as production employee wages and materials that can be applied directly to production or service delivery, however, overhead includes only indirect expenses

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL

PURPOSE

Student Aid – 13XXXX Agency funds.  

• Agency fund award/scholarship recipients are chosen by an external entity (what distinguishes from PU Operating). 
• Outside aid disbursement runs through the Agency fund (in theory PU agency funds are just a pass through) to help insure that we over package/over award to the student.
• In general, the actual “expenditures” for 13XXXXXX Outside Student Aid will post on the appropriate Agency funds and balance sheet GL’s. 
• For state programs, individual funds have been used to track and manage aid by academic year (last 4 digits).
  • Prior to FY 18 one fund was used for the academic year, shared by all three campuses. One fund: many campuses. 
  • For FY 18, the single fund was subdivided into individual agency funds with Fund Master Cost Centers for each campus, in order to isolate each campus’s activity.    

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL

PURPOSE

• Rates for goods and services must be computed at the break-even level by estimating the full direct costs of the activity for the upcoming period (usually one year) less any accumulated surplus or any accumulated deficit from prior years operations (the fund balance of the recharge center account).
• The full direct cost of the recharge center activity should be incurred in the recharge center account and subsequently included in charge rates.
  • The costs incurred to provide a good or service may include salaries and wages, fringe benefits, graduate fee remissions, miscellaneous supplies, maintenance contracts, etc.
  •  Departments may choose to charge internal users at less than the breakeven rate by agreeing to subsidize the recharge center account.
• Rates must be established in a manner that does not discriminate between federal and Non-federal activities.
  • In practice, this means that federal projects may not be charged at a rate that exceeds the break-even rate.
  • The break-even rate is calculated by distributing the total costs of the activity to all users of the activity, including those users the department may wish to subsidize. Under no circumstance may the cost attributable to subsidized users, be recovered by increasing the charge rates to other users.

GENERAL LEDGER/COMMITMENT ITEM

REFERENCE MATERIAL

• Managerial Accounting Policy
• Managerial Accounting Procedures

TRANSACTION DETAIL

PURPOSE

• The Recurring Adjusted Allocation represents recurring transfers between Units throughout the Fiscal Year. 
• Recurring Adjusted Allocations entered into the BPC Tool are projected amounts to help formulate a realistic budget.  Only if a recurring JV is processed during the Fiscal Year will these allocations affect the consumable budget and reflect as actual in the FM SAP Module.

GENERAL LEDGER/COMMITMENT ITEM

Transaction Detail

PURPOSE

The Recurring Original Allocation represents the consumable budget for Central Revenue Funds effective July 1 for an Area.  The Recurring Original Allocation (4950X1) amount is uploaded to the FM SAP Module by FP&A and will not change throughout the Fiscal Year. The Original Allocation is allocated via a Journal Voucher one time per year.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL

PURPOSE

Once the billing for Recreational and Sports income has occurred through the point of sale system, the amounts are recorded on daily CRVs to the appropriate revenue GL. Category examples include recording revenue from customers for locker fees, parking, golf equipment, or use of facilities.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL: RECEIVE REVENUE

PURPOSE

Room fees are assessed to undergrad students in July and November. After billing occurs, these total amounts end up as an unearned revenue (liability) for each hall in SAP on a BB document type.

There are also monthly billed students (currently Purdue Village and Hilltop undergrads). These are generally billed around the 20^th of the month for the following month (i.e. April 20 billed for May). After billing occurs, these amounts are posted directly as revenue for each hall in SAP. These initial entries post as document types BB since they come from Banner.

• Each month, an entry is made to back out the next month’s revenue (i.e. since May revenue posts in April, an entry is made to debit revenue in April and credit the liability). These entries are done as an SA document type.
• This entry is reversed in the current month (i.e. since May revenue posted in April, but we just debited April, we now need to put that revenue in the proper month (May)). These entries are done as an SA document type.

After billing for board income occurs, the total amounts end up as an unearned revenue (liability) for dining on a BB document type.

• Each month, a report is generated from Blackboard showing the number of meal swipes used at each dining court.
• An entry is made to move the monthly earned revenue from the liability to revenue for the particular dining court based on the number of meal swipes at each location. These entries are done on document type SA.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL: RECEIVE REVENUE

PURPOSE

There are five types of income producing operations, that each can make sales to EXTERNAL customers.

• RECHARGE AND GENERAL SERVICE CENTERS use Internal Services Fund 22500000 and the Funded Program Type ‘Income Producing – Recharge.  Sales to external customers must be at least breakeven plus F&A; however, market rates can be charged to external customers.
  • Examples include transportation, risk management, benefits, animal care facilities and core research facilities (Brick, Prime Lab, Electron Microscopy, etc.)
  • Rates charged for sales to external customers must be reviewed for market competition, UBIT (Unrelated Business Income Tax) and sales tax issues
  • All associated revenues from sales to external customers and expenses for the operation must post to the IO. 
• ANCILLIARY ACTIVITIES use Internal Services Fund 22500000 and the Funded Program Type ‘Income Producing – Ancillary’.
  • Activities that charge fees; however, exist primarily to provide a practical learning experience for students in furtherance of core University missions of Learning, Research, and Engagement.
  • Examples include vet hospital, nursing clinics, pharmacy, Ismail Center, speech and language clinics.
• AUXILIARY ACTIVITIES use Auxiliary fund 24500000 and Funded Program type ‘Income Producing – Auxiliary’. They provide optional or convenience goods and services for which customers are primarily students and employees (or secondarily to the general public) rather than University departments.
  • Examples include Athletics, student housing and dining.
• OTHER Income Producing Activities use General Fund 21010000* and the Funded Program Type ‘Income Producing – Other’. (* Agriculture can also use funds 21030000 and 21020000)
  • Other operations primarily charge external customers and need reviewed periodically for UBIT (Unrelated Business Income Tax) or Sales Tax liability. 
  • Examples include Convocations, bands, PMO, rec & wellness.
• UNRESTRICTED Income Producing Activities use General Fund 21010000 and the Funded Program Type ‘Unrestricted to Department’.
  • Unrestricted Income producing activities that do not require distinct accounting and reporting due to Federal or State regulations including Uniform Guidance, tax laws or other regulations – use of the funds is unrestricted. 
  • Examples include conferences, digital education, copy charges, publications and misc. course fees.

GENERAL LEDGER/COMMITMENT ITEM

PURPOSE

There are five types of income producing operations, that each can make sales to INTERNAL customers. However, the ‘Other’ type of income producing activities makes sales primarily to external customers, and only incidentally to internal customers.

• RECHARGE AND GENERAL SERVICE CENTERS use Internal Services Fund 22500000 and the Funded Program Type ‘Income Producing – Recharge.
  • Internal rates for goods and services must be computed at the break-even by estimating the full direct cost of the activity for the upcoming period including any accumulated surplus or deficit from prior year operations.
    • Centers must not generate an operating surplus on internal charges (including grants); however, subsidization of rates may be appropriate in some cases.
    • Sales to external customers must be at least breakeven plus F&A; however, market rates can be charged to external customers
    • Rates must be reviewed for market competition, UBIT (Unrelated Business Income Tax) and sales tax issues. 
  • Sales to external customers must be at least breakeven plus F&A; however, market rates can be charged to external customers.
    • Examples include transportation, risk management, benefits, animal care facilities and core research facilities (Brick, Prime Lab, Electron Microscopy, etc.)
    • Rates charged for sales to external customers must be reviewed for market competition, UBIT (Unrelated Business Income Tax) and sales tax issues
    • The full direct cost of the recharge center activity should be incurred in the recharge center IO and subsequently included in the charge rates. 
• ANCILLIARY ACTIVITIES use Internal Services Fund 22500000 and the Funded Program Type ‘Income Producing – Ancillary’.
  • Activities that charge fees; however, exist primarily to provide a practical learning experience for students in furtherance of core University missions of Learning, Research, and Engagement.
  • Examples include vet hospital, nursing clinics, pharmacy, Ismail Center, speech and language clinics.
• AUXILIARY ACTIVITIES use Auxiliary fund 24500000 and Funded Program type ‘Income Producing – Auxiliary’. They provide optional or convenience goods and services for which customers are primarily students and employees (or secondarily to the general public) rather than University departments.
  • Examples include Athletics, student housing and dining
• OTHER Income Producing Activities use General Fund 21010000* and the Funded Program Type ‘Income Producing – Other’. (* Agriculture can also use funds 21030000 and 21020000)
  • Other operations primarily charge external customers and need reviewed periodically for UBIT (Unrelated Business Income Tax) or Sales Tax liability. 
  • Examples include Convocations, bands, PMO, rec & wellness.
• UNRESTRICTED Income Producing Activities use General Fund 21010000 and the Funded Program Type ‘Unrestricted to Department’.
  • Unrestricted Income producing activities that do not require distinct accounting and reporting due to Federal or State regulations including Uniform Guidance, tax laws or other regulations – use of the funds is unrestricted. 
  • Examples include conferences, digital education, copy charges, publications and misc. course fees.

GENERAL LEDGER/COMMITMENT ITEM

TRANSACTION DETAIL:

TRANSACTION DETAIL:

Income Producing Operations Definitions