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Finance Division
The Financial Procedures Manual
Chapter 10
Month–End Guidance
Also available on-line at: Issued: May 2006 http://www.admin.cam.ac.uk/offices/finance/procedures Revised July 2010
Month-End Guidance
Finance Division
Contents
1. Purpose of Month-End Procedures 2 2. How to use this Guidance 3 3. Month-End Timetable 3.1 Overview of Processes 4 4. Detailed Month-End Guidance 4.1 Purchasing 5 4.2 Accounts Payable 5 4.3 Accounts Receivable (including Internal Trading 6
& Banking) 4.4 Inventory 8 4.5 Fixed Assets 8 4.6 Grants 9 4.7 General Ledger 9
5. Glossary of Terms 10
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Month-End Guidance
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1. Purpose of Month-End Procedures 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 month-end 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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Month-End Guidance
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2. How to use this 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.
3. Month-end Timetable The closing dates for each ledger are as follows: Module Working Day 3 Working Day 4 Working Day 5 Accounts Receivable Accounts Payable Grants Inventory Purchasing Last day for Deposit Movements General Ledger Fixed Assets September Month End 5 October 2010 6 October 2010 7 October 2010 October Month End 3 November 2010 4 November 2010 5 November 2010 November Month End 3 December 2010 6 December 2010 7 December 2010 December Month End 5 January 2011 6 January 2011 7 January 2011 January Month End 9 February 2011 10 February 2011 11 February 2011 February Month End 3 March 2011 4 March 2011 7 March 2011 March Month End 5 April 2011 6 April 2011 7 April 2011 April Month End 4 May 2011 5 May 2011 6 May 2011 May Month End 3 June 2011 6 June 2011 7 June 2011 June Month End 5 July 2011 6 July 2011 7 July 2011
Working days for each month except January which is extended by 4 working days.
All modules will close at 5pm on the stated days.
How to Run Month-End Manual available at: http://www.admin.cam.ac.uk/offices/finance/training/manuals
Month End Guidance Module
Last working day of calendar month 3 4 5 6 7
Purchasing
Accounts Payable
Accounts receivable (inc. Cash and Banking and Internal Trading )
Grants
Inventory
Fixed Assets
General Ledger
GL Module Closed
Run and Action Open PO (UFS) Report
Run Invoice Register Report
Run Invoice on Hold Report
Run ‘Incomplete (AR) Invoices Report’ AR Module
Closed
Claim BACS receipts from weekly F.D. spreadsheet
Expenditure posted to dummy suspense Grants should be corrected Grant
Module Closed
Journal expenditure to match correct income (source of funds)
Review and clear departmental suspense accounts/review GL accounts for miscodings and correct as necessary
Review and process journals for deposit account movements
Inform Finance Division of fixed asset disposals
AP Invoice (tick ‘Track as Asset’ box)
Run ‘Material Distribution’ report
Stocktake or cycle count
Inventory Module Closed
Review status of all grants on a cyclical basis
Funds check failures should be reviewed and cleared
Internal Trading: raise any AR invoices/process any AP invoices
Arrange for banking of monies
Run ‘Receipt Register Report’ and complete receipt batches
Run ‘Unapplied Receipts Register’
AP Module
Closed
PO Module Closed
Run ‘Budget v. Actual ‘Report (UFS)’
Fixed Assets Module Closed
Run ‘Value of Inventory’ report
Run ‘Fixed Asset Additions’ report
Review the ‘Departmental Summary Report’ distributed by Finance Division
Process petty cash journal
Credit control procedures – send ‘Dunning Letters’
Run ‘Ageing 7 Buckets by Account’ report
3.1 Overview of Processes
4. Detailed Month-End Guidance 4.1 Purchasing An overview of the purchasing cycle is given as follows:
Supplier Receipt Payment to Requisition Selection Purchase Order Goods/Services Supplier
Purchase Invoice Payment
Receive Goods and Services
Raise Purchase Order
Quotations Contracts Pre-Suppliers
Raising an internal purchase requisition
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 Coded to an Account Approval Payment
Payment of Supplier/ Employee by Cheque: Finance Division
Primary and Secondary Approval of Purchase Invoices
Matching Invoices to Purchase Orders (where raised) ~coded directly to relevant account/project
Enter Invoice Using the Batching System
Month-End Guidance
Finance Division
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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 Credit Control
Statements/ Dunning Letters
Income Collected and Receipted
Invoice Sent to Customer
Raise Sales Invoice
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 Dept B Finance Division Sales Invoice Action Invoice Reviews
Disputes
Raise Internal AR Invoice
Locate Internal AP Invoice on CUFS, code to appropriate Dept account & approve.
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
Finance Division Reviews Matching of AP and AR Invoices
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Month-End Guidance
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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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Month-End Guidance
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4.4 Inventory These procedures only apply to departments using the CUFS Inventory module. It will be important for the departments with stores to ensure an accurate record of stock is maintained and that stock is allocated accurately within the department.
Month-End Guidance – Inventory
Ensure stock is physically secure (on-going) Complete all inventory issues and receipts (ongoing during the month). Undertake monthly stock take or cycle count, check against records and
investigate any differences Run Value of Inventory report to review stock items. Run Material Distribution Retail Report showing issues of stock items with
the department.
4.5 Fixed Assets Departments will wish to monitor their fixed assets using the Fixed Assets module from time to time. In order to maintain the university’s Fixed Asset Register, departments must ensure that when processing AP invoices for Fixed Asset purchases, they tick the “Track as Asset” box. Departments Finance Division Finance Division
Fixed Asset Fixed Asset Addition Capitalised
AP Invoice Addition Capitalised Fixed Asset is capitalised and journals created in General Ledger
Details listed in holding area of the Fixed Asset Module
AP Invoice Processed – Tick “Track as Asset” box
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Month-End Guidance – Fixed Assets
AP Invoices: tick “Track as Asset” box all fixed assets > £2,000 (on-going process).
Notify Finance Division (via Fixed Asset Helpdesk) of any fixed assets disposals during the month.
Review Departmental Fixed Asset Report for accuracy, sent out quarterly to departments by the Finance Division.
Run Asset Additions report to check new additions during the quarter (not monthly).
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Month-End Guidance
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4.6 Grants The Grants Module records expenditure and income for the University’s research grants and contracts. Research grants are governed primarily by the length of the grant rather than accounting periods (months), and therefore departments will need to be pragmatic when considering their month-end procedures.
Month-End Guidance – Grants
The following tasks should be undertaken monthly Review expenditure posted to your dummy suspense grants and re-post
expenditures to clear the dummy grant to zero. Review and clear funds check failures. Check for unposted pre-approved batches Correct VAT errors as advised by the Tax & Property Finance Section
The following task should be undertaken quarterly
Check the status of all grants and take action to correct erroneous items/resolve overspends and underspends
4.7 General Ledger (GL) The GL is at the heart of CUFS, collating information from the sub-ledgers of all of the University’s financial transactions. The GL is used for processing journals, account enquiries and running reports. Note on Accruals and Prepayments: When preparing your departmental accounts, accruals and prepayments can be used to:
more accurately reflect your financial position to monitored your final position
At present Departments are not expected to accrue their income/expenditure until the year-end, however if the amounts are material then they should be processed on a monthly basis. Advice is available from your Finance Adviser.
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Month-End Guidance
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5. Glossary
Accounts Payable Module
Module within CUFS specifically for processing payments of all suppliers, both internally and externally, as well as payments to staff for expenses.
Accounts Receivable Module
Module within CUFS specifically for the income collection process, including:
invoicing of customers (both internally and externally) receiving income managing overdue debts.
CUFS Cambridge University Financial System.
The accounting software package, Oracle Financial, used by the University to record its financial transactions.
Fixed Assets Assets are items that the University owns and uses. A fixed asset is an asset that we retain for more than one year (e.g. a vehicle).
Fixed Asset Module
Module within CUFS specifically for recording details of fixed assets.
General Ledger Module
Module within CUFS for processing journals and collating information from other modules about transactions and producing reports. The information is utilised for management and reporting purposes.
Grants Module Module within CUFS dealing with the detailed recording of income and expenditure for research grants and capital projects.
Inventory Module Module within CUFS specifically for recording stock/stores for a department, taking account of movements of the stock.
Month-End Guidance – General Ledger Pre-GL Close
Review any unposted GL journals. Take actions accordingly. Review and clear any departmental suspense accounts. Journal (or transfer) expenditure to match to correct source of funds. Review GL transactions for potential miscodings and correct as necessary. Review expenditure on Non-Recurrent grants to ensure not overspent. Review and monitor Trust Funds: Finance Division distribute Trust Funds
Statements monthly. Review and process journals for Deposit Account movements.
Post-GL Close
Run Budget comparing to Actual (CAPSA) report to review the department’s transactions and balances.
Review the Department’s Summary Report distributed by the Finance Division.
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Month-End Guidance
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Management Accounts
Financial Information, often showing income/expenditure for an entire institution and reported to senior management as a basis for decision making.
Month-End Procedures
Tasks and procedures repeated each month: to ensure financial transactions are processed so subsequently, financial information is analysed as part of the
preparation of Management Accounts.
Period An accounting period of time – ie. a month for breaking down the financial year (i.e. into 12 monthly periods).
Purchase Ordering Module
Module within CUFS specifically used to process purchase orders.
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