FY 2018 Accrual and Deferral Process
Accrual and Deferral Process and Timeline
The handling of pre-paid expense deferrals and expense accruals will be consistent with the last two fiscal years. General Accounting processes all prepaid expense deferrals and accruals for all of Drexel University and its subsidiaries, except for Drexel University Online (DUO). Accruals and deferrals for DUO will be handled by DUO Finance.
Drexel University accrues prepaid expenses based on a minimum invoice threshold of $25,000. The Academy of Natural Sciences and DUO utilize a minimum invoice threshold of $5,000 for deferring prepaid expenses. To be considered for a prepaid deferral entry, the expense must exceed the appropriate threshold and the period in which the expense benefits must cross over a fiscal year. The amount of the prepaid expense deferral will be equal to the portion that benefits the future fiscal year. The prepaid amount will be credited to your current expenses, then charged to the subsequent fiscal year in July or August of that year. If an expenditure falls below the thresholds for the respective entities, it will be fully expensed when paid.
The current practice defers the portion of the expense that relates to the future fiscal year in the month the invoice is paid and then reverses the prepaid expense in its entirety in Period 1 of the new fiscal year.
Prepaid expense deferrals can happen at any time of the year. Typically, the Accounts Payable team enters a comment in Smart Source to alert General Accounting of a prepaid deferral situation. These items are deferred at that time, but depending upon the time of the year, the new fiscal year may not be open in Banner to process the reversal in the new year. In those cases, the deferred amount related to FY 2019 will be fully recognized on or before Period 03 of the new fiscal year.
For prepaids that overlap multiple periods, General Accounting keeps a schedule of these items and will recognize the appropriate amount related to FY 2019 by the end of Period 03 of FY 2019.
Example: Department A at Drexel University has a journal subscription for $30,000 that starts on January 1, 2018, and expires on December 31, 2018. In this scenario, Accounts Payable will pay the invoice when received and charge the entire amount to the FOAPAL/fund identified on the purchase order or check request. They will inform General Accounting that the invoice is over $25,000 and crosses fiscal years via a Smart Source comment. General Accounting will then create a journal entry in FY 2018 to defer as a prepaid expense the $15,000 relating to the July 1 - December 31, 2018, period. This will result in the FOAPAL/fund initially charged for the subscription having a net expense of $15,000 in FY 2018. Prior to Period 03 of FY 2019, General Accounting will reverse the full amount of the deferred expense. This will charge/debit your FY 2019 expenses for the subscription expense of $15,000 relating to that period. General Accounting will notify the department who requisitioned the item in Smart Source of the amount being deferred using a comment in that system.
Drexel University, the Academy of Natural Sciences, and DUO must accrue all expenses for goods and services that were received on or before June 30 of each fiscal year. For the fiscal year 2018 close, we will follow the schedule listed below for all expenses. Consistent with the fiscal year 2017 close, when the entry for the accrual is processed by General Accounting, the reversal for the accrued amount will be automatically reversed in the current period of the new fiscal year.
After the year-end roll of encumbrances and balances on Friday, July 13, 2018, Accounts Payable will begin the accrual process for invoices relating to FY 2018. All invoices will be entered in the new fiscal year in the current period, with an invoice date of June 30 or prior. A query of these transactions will be provided to General Accounting no less than twice per week until Period 12 is closed. Departments should not submit accruals for transactions that have corresponding invoices being processed by Accounts Payable during the period of July 14 through August 17, 2018. If a department does not see an accrual for an item that they know they have received in FY 2018 on their FOAPAL/fund, please contact firstname.lastname@example.org and ask to have a member of the General Accounting staff review the transactions. Please allow 3 business days for an accrual to be processed after it hits your account in the new fiscal year.
Department administrators must send to General Accounting any expense accruals for good received or services provided during FY 2018 that they know will not be invoiced prior to August 24, 2018. The posting of accruals by General Accounting for goods and services without invoices will be subject to the dollar thresholds outlined below. A journal entry should be submitted via Journal Entry Workflow for the FY 2018 accrual using a June 30, 2018 date. A corresponding reversing entry should also be submitted using the current date and referencing the original journal workflow entry in the document reference field. Submitting separate entries for the accrual and its corresponding reversal will ensure that your accrual is properly reversed.
Salary transactions for FY 2018 need to be processed by the deadlines in the FY 2018 Year-End Closing Schedule. Payroll transactions for wages earned during FY 2018 will be accrued by General Accounting based on information from the Payroll department on a bi-weekly basis through August 24, 2018.
During the dates below, any non-salary expenses related to FY 2018 will be accrued per the thresholds specified below:
July 2-13, 2018
Accrue all FY 2018 expenses. Accounts Payable will enter invoices, travel and business reimbursements into FY 2018 with a June 30, 2018, invoice and processing date.
July 16-August 3, 2018
Accounts Payable will enter invoices and travel and business expense reimbursements in current period of new fiscal year with an invoice date of June 30, 2018, or prior. General Accounting will accrue all invoices, travel and business reimbursements related to FY 2018 for Drexel and the Academy of Natural Sciences. DUO Finance will accrue all invoices, travel and business reimbursements related to FY 2018.
August 6-10, 2018
Accounts Payable will enter invoices and travel and business expense reimbursements in current period of new fiscal year with an invoice date of June 30, 2018, or prior. General Accounting will only accrue invoices, travel and business reimbursements transactions related to FY 2018 more than $25,000 for Drexel and more than $5,000 for the Academy of Natural Sciences. DUO Finance will accrue invoices, travel and business reimbursements more than $5,000 related to FY 2018.
August 13-17, 2018
Accounts Payable will enter invoices and travel and business expense reimbursements in current period of new fiscal year with an invoice date of June 30, 2018, or prior. General Accounting will only accrue invoices and travel and business expense reimbursement-related transactions related to FY 2018 more than $50,000 for Drexel and more than $25,000 for the Academy of Natural Sciences. DUO Finance will accrue invoices, travel and business reimbursements more than $25,000 related to FY 2018.
August 20-September 21, 2018
Accounts Payable will enter invoices and travel and business expense reimbursements in current period of new fiscal year with an invoice date of June 30, 2018, or prior. General Accounting will accrue only FY 2018 expenses more than $100,000 for Drexel and more than $50,000 for the Academy of Natural Sciences with approval of the Associate Vice President and Comptroller. DUO Finance will accrue all invoices, travel and business reimbursements more than $50,000 related to FY 2018.
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