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Office of the Comptroller

[ Accounting ]

Capital Project Accounting Procedures

In April 1998 all University administrators received a new Capital Accounting/Budgeting Procedures document. This document formally spelled out, for the first time, the procedures to be used in the financial management of capital projects under the new BEN Financials Chart of Accounts inaugurated in July 1996, and the "Revised RCM Model" for University financial administration adopted in December 1997. These Procedures were revised in June, 1999.

The following revised Capital Accounting/Budgeting Procedures were developed following extensive discussions with School/Center senior business administrators and two briefing sessions for senior business administrators conducted in April 1999 by the Division of Finance, the Division of Facilities Services, and the University Budget Office.

The primary reasons for the revision are as follows:

  1. Need to Integrate with the University's Revised Capital Planning Procedures: When the April 1998 Capital Accounting/Budgeting Procedures document was issued, work was just beginning on a revised version of the University's Capital Planning Process. Since then, following extensive consultation with the Deans, the Academic Planning and Budget Committee, the Executive Vice President, the Provost and the President, the new Capital Planning Process has been finalized and is being implemented. The Capital Accounting/Budgeting Procedures have therefore been revised to make them fully compatible with the new Capital Planning Process.

  2. Subsequent Decisions to Revise Capital Project Policies: Based on the actual experience of the Schools and Centers in implementing the April 1998 Capital Accounting/Budgeting Procedures, the Provost and the Executive Vice President have come to the conclusion that some of the procedures that were announced in April 1998 needed to be modified. The most notable of these changes are revisions to the interest rates to be charged on Interim Construction Period Financing and on Internal Capital Project Loans. In both cases, multiple interest rate alternatives have been replaced with lower unified rates.

  3. Need to Spell Out Accounting Entries in Greater Detail: In a number of cases, the April 1998 Capital Accounting/Budgeting Procedures did not spell out precisely how some of the accounting was going to be carried out in order to implement the new procedures. Since we are now much clearer as to how certain journals need to be done, and what the resulting transactions are supposed to look like some of the "holes" that existed in the April 1998 document have been filled in.

Among the highlights of these changes embodied in the new document are the following:

  • The new draft is consistent with the University's new Capital Planning Process.

  • The new documents establish fixed interest rates for all Interim Construction Period Financing (at the TIF rate) and for all Internal Capital Project Loans (at the 30 Year Treasury Bond rate).

  • The new draft spells out in greater detail the various policies, procedures and journal entries related to the internal financing of School/Center capital projects.

  • The new draft is much more specific as regards the treatment of Capital Gift Funds.

  • The new draft is much more specific regarding project closeout steps and the additional journals needed to implement closeout.

The revised procedures will be very helpful to those staff members who have direct responsibility for the various aspects of capital project implementation within each School and Center. We encourage you to duplicate and distribute these materials to all those involved in the capital projects process in your School or Center.

Questions regarding the revised procedures should be forwarded to Fran Seidita in the Budget Office (215.898.1929) or to Sudha Vettath in the Comptroller's Office (215.573.2245).

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