2.01 Structure of the Accounting System
last updated: 10/01/2011
Policy Owner:
Financial Management
NOTE: The Structure of the Accounting System has been updated to reflect changes resulting from the implementation of UAccess Financials. This section is currently in review and additional revision may be necessary
- UAccess Financials is
the official accounting system used at the University of Arizona. The
accounting system is a tool for accumulating the financial activity at
the University. The primary responsibility for the information
maintained in the system resides with the
Financial
Services Office.
- The University
receives funding from various sources,
most of which is specified for certain types of expenditures. To enable
the administrators of these funds to monitor and report on the activity
of the funds, the accounting system must maintain separate records of
each source of funds, and the expenditures from each source. This is
accomplished by establishing separate accounts in the system, much as a
bank establishes separate accounts for each depositor. An account is
defined as a functional unit established for a specific purpose, with
one individual having primary responsibility for its activity.
-
The Financial Services Office
is responsible for
establishing
accounts. This responsibility may be delegated. The accounts in UAccess Financials are
7-digit numbers that are approved by the Financial Services Office. Similar
types of accounts will all be in the same range of numbers. For example,
state subsidiary ledger accounts are in the range 1-000000 through 1-499990.
- Seven-digit accounts are combined with four-digit object codes when dollar information is recorded in the system.
- As each account is established, a series of attributes for
the account is recorded. Attributes are non dollar, descriptive data about the
account. They include a short account name and a long
description; the name of the person responsible for the
account; the organization to which the
account belongs; the persons that may be authorized to approve
certain source documents for the account; and several other pieces of
information. These attributes are used to identify account information for
reporting purposes.
- To maintain detailed records of the dollar activity within
an account, a series of object codes are used. Object codes are four-digit numbers
that represent detail activity within an account. Detailed listings and definitions
of these object codes are provided in
Section
3, Balance Sheet Codes;
Section 4,
Revenue Object Codes; and
Section 5,
Expenditure Object Codes.
- Once an account has been established in the system,
transactions originated on various source
documents may be posted to the account. The doc type identifies the type of transaction and
tells the computer system how to process that transaction.
- In addition to the doc type, the originator of a
transaction must also provide the date of the transaction and the account
number and the detail object code to which the transaction is to be posted. Reference fields are available for use to
identify source documents that may have initiated the transaction.
- Transactions may be posted directly into the system
through E-Docs or may be posted to a subsystem and subsequently fed to the
mainframe in a "batch" feed. The system may only be updated by
authorized data entry units.
- UAccess Financials is a double-entry accounting system. This type of
accounting requires that every entry is entered as a debit to one 11-digit
account (7-digit account plus 4-digit object code) and a credit to another
11-digit account, so that the total of the debits and credits is always
equal. Each type of object code has a "normal" balance of either debit
or credit.
- Much of the transaction posting in UAccess Financials is processed
automatically, based on the doc type. For example, when a cash
receipt is posted as a revenue, double entry bookkeeping requires that the
account/revenue object code be credited and the related
cash object code be debited. However, the operator only
enters the credit side of the transaction. The system determines the cash
balance to be debited and updates it automatically.
- The transactions posted to an account are accumulated in the
system. At the end of each month, the series of transactions posted to the
account are created on a monthly report.
A summary statement is provided for each account. Several other standard
and specially designed reports
are available as appropriate. The standard reports are listed in the UAccess Financials / Analytics Crosswalk
- The responsible person
for the account is required to reconcile each account each month.
Account reconciliation is the
process of comparing the transactions initiated for the account to the
transactions that actually printed on the report. This process verifies the
balance of the account and identifies errors that must be resolved.
- To comply with accounting and reporting requirements,
accounts are classified into funds. These funds are described in the
following paragraphs.
- Current
Operating Funds:
Current operating funds are resources
currently expendable by the University in direct support of its primary
objectives. The current operating funds may be either unrestricted or
restricted. Resources available for all purposes of the University, at the
discretion of the Board of Regents, are classified as unrestricted current
operating funds. This group is further classified as state, designated and
auxiliary funds.
Resources that are restricted for a specific
purpose by persons or organizations outside the University are classified as
restricted current operating funds. This group is further classified as
sponsored project grants and contracts and other restricted funds.
- State
Funds: Unrestricted current operating funds not classified as
designated or auxiliary funds. These funds primarily
consist of tuition and fee revenue and State appropriations for main campus, College of Medicine,
agricultural, and UA South operations. State funds are used to support the academic
programs and the general operating expenses of the University.
A State appropriation may specify the general purpose or purposes for
which the appropriation may be used, and, if the Board of Regents
can effect a change in the intended use of the funds, without having to go
through a legislative process, then the funds are general operating funds.
The Board of Regents may delegate authority to make changes in the intended
use of these funds to administrative units within the University.
- Designated
Funds: Current operating funds that have been limited for a specific
purpose by specific action of the Board of Regents or by an administrative
unit of the University authorized by the Board to designate funds.
The designated funds account for the activities
of indirect cost and administrative service charge recoveries; conferences;
certain instructional activities, such as the summer session, continuing
education, international, and extension programs
which have been designated for a specific purpose. Also included are funds
received from the sale of products or services that are not more
appropriately classified as auxiliary enterprises according to the definition
below. For example, sales of by-products of instructional, research, or public
service activities, such as the sale of produce by the College of
Agriculture, or the sale of hearing aids by the Speech and Hearing Science
Department, are accounted for as designated funds.
- Auxiliary
Enterprise Funds: Auxiliary enterprise funds are those current
operating funds, which generate revenue from an established auxiliary
enterprise. An auxiliary enterprise is a separately organized University unit
or activity established to sell products or services on a continuing basis and
is managed essentially as a self-supporting business. The
auxiliary enterprises generally support the instructional, research, or public
service activities of the University. An auxiliary enterprise charges fees
directly related to, although not necessarily equal to, the cost of the
products or services. Sales of by-products of instructional, research, or
public service activities are not classified as auxiliary enterprises. See
definition of designated funds. Examples of auxiliary enterprises include
Residence Life, Intercollegiate Athletics, and Stores.
- Sponsored
Project Grant and Contract Funds: Funds received from Federal,
State or other governmental agencies or private organizations that are
provided on a contractual or grant basis with the restriction that the funds
be used for a specific purpose. These funds may only be used for the intended
purpose and must be spent in accordance with terms specified in an agreement
established between the sponsor and the University. If not, the funds may
revert to the sponsor.
- Other
Restricted Funds: Current operating funds received from outside
sources with specific restrictions on how the monies are to be spent that are
not more appropriately classified as sponsored projects. Included are
restricted gifts, governmental grants for student aid, and private grants and
scholarships.
- Non-operating
Funds: Non-operating funds are classified as loan, endowment, plant
and agency funds.
- Loan
Funds:Resources available to the University for loans to
students in the financing of their education and the balance of existing loans
outstanding. Loan funds may originate from restricted sources, such as gifts,
endowment income restricted to loans, and refundable grants matched with
institutional funds. The Board of Regents or authorized University
administrators may designate or transfer unrestricted funds to loan funds.
Funds for loans may be specified for use in the National Direct Student
Loan/Perkins program, temporary and long-term loan programs, or the
health-related professions loan programs.
- Endowment
Funds: Simply stated, an endowment is a special fund whereby the
principal is held for investment and the interest earned on the principal is
spent as directed by the donor. For more detail on endowments, see
Section 8.13,
Endowment and Investment Policies.
- Plant
Funds: The unexpended plant funds, renewal and replacement
funds, debt service funds, and the investment in plant funds together
are called Plant Funds.
- Unexpended Plant Funds: Unexpended plant
funds are resources and any associated indebtedness to be used for the
acquisition of physical properties for institutional purposes, which have not
yet been expended. Indebtedness incurred to finance plant acquisition,
construction, and the like, are included as a liability of the unexpended
plant funds, until the proceeds of the indebtedness are expended. Examples of
restricted unexpended plant funds include proceeds from the issuance of
long-term debt and gifts. Unrestricted unexpended plant funds include
State capital or building renewal appropriations, as well as, funds set aside by
the University from unrestricted fund balances.
- Renewal and Replacement Funds: Resources
accumulated for renewal and replacement of the capital facilities of the
University.
- Debt Service Funds: Accumulates resources for the
payment of debt service charges and the retirement of long-term indebtedness.
Examples of debt service funds include those for bonded indebtedness,
Certificates of Participation, lease purchase agreements, and other forms of
long-term indebtedness.
- Investment in Plant Funds: Records the net
capital acquisitions of the University. Capital assets are classified as
land, buildings and improvements, infrastructure, equipment, library acquisitions, and
construction in progress. The principal balance of liabilities incurred to
acquire capital assets is recorded in this fund.
-
Agency
Funds: Agency funds are resources held by the University in a
fiduciary capacity for organizations or entities not directly affiliated with
the University, such as University Physicians, Inc.
- The structure of the
accounts is illustrated below:
| |
| |
Assignment
|
Object Code
|
| |
Revenues
|
0010 - 0999 |
| |
Personal Svcs
|
1000 - 1999
|
| |
Employee Rel Exp
|
2000 - 2999
|
| |
Operations
|
3000 - 5999
|
| |
Travel
|
6000 - 6399
|
| |
Student Support |
6800 - 6891 |
| |
Capital |
7000 - 7999 |
|
|
Indirect Costs
|
7950
|
|
|
Admin Svc Charges
|
7955 |
|
|
Gift Admin Charge |
7960 |
| |
Intradept Costs |
7970 |
| |
Assets |
8000 - 8999 |
| |
Liabilities |
9000 - 9899 |
|
|
Fund Balance |
9900 |
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