Rutgers UniversityFuture state monthly close calendar

May 11, 2015

Agenda

• Rutgers University Finance close objectives

• Key improvement themes identified during the assessment

• Proposed monthly close process

– Governance framework

– High level close cycle

– Stakeholder’s roles and responsibilities

– Materiality thresholds framework

• Next steps

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Rutgers University Finance close objectives

Business Objectives

Develop a standard monthly close process across Rutgers enabling:

• Consistency in processes and quality of business results

• Ability to leverage technology to improve automation

• Timeliness of month-end close and reporting

• Agility with on-going finance improvement efforts (e.g. HFM, RCM, future ERP rollout)

• Organization structure with right skills and capabilities to support finance and accounting requirements

Key Levers for Improvement

1. Standardize and formalize accounting processes for better integration of Legacy Rutgers and RBHS

2. Define overall governance model to ensure quality and accuracy of financial data

3. Leverage current technology to increase efficiency and data accuracy

4. Establish Finance organization and process model to align with future state reporting structure

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Rutgers University Financial Statement Close ProcessKey improvement themes identified during the assessment

Standardize and formalize accounting processes for better integration of Legacy Rutgers and RBHS

• Establish process governance & monitoring

• Reinforce control procedure leveraging technology enablers

• Ensure appropriate financial statement quality review

• Set up adjustment reporting materiality threshold and responsibility Financial

Statement Close Process

• Standardize transactional processes across Rutgers organization (accounts payable, payroll, T&E, fixed assets)

• Define a common monthly close calendar with clear cut-off dates

• Standardize month end close activity• Standardize and automate JE’s

• Standardize operating model between both structures to support transactional processes

• Define roles and responsibilities across shared services, Central Accounting and school finance teams

Establish Finance organization and process model to align with future state reporting structure

• Maximize use of current technology capabilities (e.g., close management, account reconciliation, fixed assets modules etc.)

• Automate GL feeding• Automate revenue & cost allocation

model based on RCM defined

Leverage current technology to increase efficiency and data accuracy

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Proposed monthly close processGovernance framework

CONTROLLER’S OFFICE

CENTRAL ACCOUNTING

Decision & Policy

► Establishes and monitors accounting policies and procedures► Review accruals journal entries and compliance with policy ► Consolidates business results and prepare internal and external

reports► Conducts final financial report reviews and variance analysis for

Final RU reports► TBD - Accrual booking process and roles definition in progress

CAMPUSVice Chancellor’s

office, Central and School units

Interpretation & analysis

► Determine and provide accrual information for JE posting► Signs off school level financial results according to policy and

procedures► Perform financial reporting analysis at campus level (variance

Actual vs Budget) ; Monthly budget will be developed across the University

CENTRALIZED DELIVERY

Transaction processing

► Records all transactional entries (Accounts Payable, T&E, Fixed Assets, Accounts Receivable and collection, bank reconciliation, etc.)

► Send query on outstanding items to the business for further investigation and resolution

► Prepare units specific journal entries (e.g. accruals)

Governance model► Define clear common accounting policies across Rutgers

schools/central units (e.g., cut-off procedures, revenue recognition, AP and Payroll accrual calculation, cut-off procedures, escalation path)

► Centralize transactional accounting activities

► Define performance measurement framework

► Embed Central Accounting oversight on close cycle by implementing controls and monitoring process (e.g., Pre-close meetings with accounting team) and centralizing close activities

► Reinforce control and accountability at unit and campus levels regarding monthly financial reports (e.g., Campus Pre-close meetings coordinated by Vice Chancellor’s office, report analysis, sign off)

Decisions & Policy

Interpretation & Analysis

Accounting transactional activities

DRAFT – For discussion purpose only

Work in progress

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Page 6

Gen

era

l accou

nti

ng

Reven

ue

Cost

D-0 & prior D+1 D+2 D+3 D+4 D+5 D+6 D+7 D+8 D+9 D+10 D+11

Unit close activitiesConsolidation,

Units review & Sign off

Reporting

Proposed monthly close process (Cont’d)High level close cycle

AP cut-off

FA capitalization and depreciation

cut-off

Payroll & Fringe accrual

Grants and contracts revenue

Cut-off and accrual process

Student tuition revenue cut-off and accrual process

Financial aid cut-off and accrual process

Loan information

Cut-off

Patient services revenue cut-off and accrual process

Auxiliary revenue cut-off and accrual process

All other revenue cut-off and accrual process

Payroll 1 reallocati

on

Targ

et

Fed. & State Student Aid program

cut-off and accrual process

Bank transfer/investment posting Bank reconciliations

Due to/from accounts reconciliationsIndirect cost

allocation

RBHS consolidated data review

Units reporting final review, variance analysis

at Campus level (Actual vs Budget) & sign-off

Legacy Rutgers consolidated data review

Final Rutgers report

consolidated data review

Final material adjustment postings in HFM

Report published on

RU website

RU report variance analysis

(Actual vs Budget, Act. M vs Act. M-1)

Pub.2

AP accrual

s

Oracle and Banner data uploaded into HFM on daily basis (To Be Confirmed)

(1) Banner Payroll reallocation

(2) RU report will be published a week before Finance Board meeting Timing of activity to be confirmed with Central Accounting

Accrual and provision JE posted into Oracle / Banner GL at Unit levelLegend:

DRAFT – For discussion purpose only

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Close date1

Current State Controller’s Office Campuses

Key activities Central accounting Central and School units

D-0 to

D+5

Determine and provide accrual information (Accrual posting roles between Central Accounting and Units are To Be Determined)

D+6

to

D+8

Review final unit financial report and certification sheet for sign-off, determine necessary top side adjustments (based on materiality thresholds matrix - see page 8),

Review top side adjustments, approve and post top side entries

Review and submit final Campus/Central unit financial statement, variance analysis at campus/central unit level, and Units certification sheet signed off

Validate Campus/Central unit level financial statements

D+9

to

D+11

Review Legacy and RBHS consolidated financial statements

Determine Rutgers consolidated final top side adjustments, approve and post top side entries

Validate and publish Rutgers consolidated financial data

Proposed monthly close process (Cont’d) Stakeholder’s roles and responsibilities

Consolidation & Reporting

Consolidation & Reporting

Consolidation & Reporting

Consolidation & Reporting

Unit Business offices

Consolidation & Reporting

4 Vice Chancellors& 5 Central Units

Reps.

(1) Close dates are Business days; “D-0” corresponds to the last business day of the closed period

Unit Business officesGeneral Accounting

Work in progress

DRAFT – For discussion purpose only

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Proposed monthly close process (Cont’d)Materiality threshold framework

D+1 D+2 D+3 D+4 D+5 D+6 D+7 D+8 D+9 D+10

Unit Close ActivitiesConsolidation, Units Review &

Sign OffReporting

Key processes / milestones

Units and Central Accounting (General Accounting group)**

Central Accounting (General accounting, Consolidation & Reporting

groups)

Due to/From account No transactions < $5K*JEs into Oracle/Banner systems (GL)

Units/Department revenues No materiality limitsJEs into Oracle/Banner systems (GL)

Materiality > $50K*JEs in HFM

Units/Department costs No materiality limitsJEs into Oracle/Banner syst. (GL)

Materiality > $50K*JEs in HFM

Materiality > $50K*

Consolidated Profit & Loss Requirements To Be Determined Materiality > $50K*JEs in HFM

Materiality > $250K*JEs in HFM

Materiality > $500K*JEs in HFM

Consolidated Balance Sheet

Requirements To Be Determined Materiality > $50K*JEs in HFM

Materiality > $250K*JEs in HFM

Materiality > $500K*JEs in HFM

Work in progress

Note:

(*) $ amount thresholds to be determined

(**) Roles and responsibilities of manual accrual/provision Journal Entries (JE) posting between Central Accounting and Units To Be Determined

Month-end close materiality threshold matrix

DRAFT – For discussion purpose only

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Next Steps

• Include your feedback to inform a finalized design and

determine change requirements

• Continue to socialize the Future state monthly close process

with other Campus Business Offices to get further inputs in

the design

• Continue to have open communication with Vice Chancellors

and Business offices on project progress and outputs

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