[ Accounting ]
Journal Through Certification (a to d)
Capital Project Accounting Procedures
REVISED as of June 7,
1999
In this hypothetical example, an anonymous School (School
03)
is erecting a new building, to be named later. The building
is
categorized as "general use" and will include
classrooms,
computer laboratories, seminar rooms, and faculty and
administrative
offices.
The School Surrogate organization,
0300, is used for
most of the entries, although other organizations
in the School,
and in other Schools and Centers, are sometimes used as
funding
sources. Organization 0320 and its associated Research
Institute
0325, among others, will occupy the building. Organization
0345
is the clinical practice of the department.
A variety of
funds, both real and imaginary, are used.
The school's default
program value for its regular activities
is 4567. The program value
assigned to the project is 8123. The
program value assigned to the
building is 9876.
The center reference values are always all zeros
in the transactions
in the Capital Construction Fund (Fund 000010). The
school has
defined a center reference value of 1234 to be used to flag
other
transactions associated with this project. Another center
reference,
5678, is used for transactions associated with Professor
Star,
who leads the Research Institute.
Sample Journal Entries Through
Certification
| Project
Step |
Journal#/
Type
|
Created
By |
Purpose |
Entry |
Amount
in
Example |
Notes |
;
|
| A.
Initiation of New Capital Project |
None
required. |
|
|
|
|
|
|
| B.
Determine Project Details |
B1
Budget Journals
|
Various |
To budget
and certify the feasibility
study. |
Dr. 030-0300-1-000000-4821-8123-0000
Cr. 030-0300-1-000010-4821-8123-0000
Cr. 030-0300-1-000010-CPTA-8123-0000
Dr. 030-0300-1-000010-1917-8123-0000
Dr. 030-0300-1-000010-1941-8123-0000
|
25,000
25,000
25,000
24,375
625
|
The
Feasibility Study follows the same procedures as the main certification.
See Section D. |
|
| |
B2
Manual Journals
|
Various |
To fund
and
record expenditures for the feasibility study. |
Dr.
030-0300-1-000000-4821-8123-0000
Cr.
030-0300-1-000010-4821-8123-0000
Dr.
030-0300-1-000010-1917-8123-0000
Dr.
030-0300-1-000010-1941-8123-0000
|
25,000
25,000
24,375
625
|
The
Feasibility Study follows the same procedures as the main certification.
See Section E. |
|
| C.
Approval of New Capital Project |
None
required. |
|
|
|
|
|
|
| D.
Establishment of Project Budget
& Certification of Funding
Sources |
D1
Budget Journal
|
School/Center |
To budget
the use of a General Operating
Fund as a funding source, where
a capital funding transfer was
previously planned. |
Dr.
030-0300-1-000000-4821-8123-0000
Cr.
030-0300-1-000000-4821-8999-0000
|
75,000
75,000
|
Object
4821 is the Capital Funding Transfer. Typically, funds would
have
been identified for a capital funding transfer as part of
the School
or Center's original budget for the fiscal year. If
the program value
for this project was already known at that
time, then no other entry
may be needed now. However, if the
original budget used a generic
Program value , like 8999, then
this reallocation is necessary to
move the budget to the correct
Program value. |
|
| |
D2
Budget Journal
|
School/Center |
To budget
the
use of a General Operating Fund as a funding source, where
there was
no previous capital commitment in the operating budget. |
Dr. 030-0345-2-010302-4821-8123-0000
Cr. 030-0345-2-010302-4300-4567-0000
|
200,000
200,000
|
In this example, the Capital Funding Transfer
was not
previously planned, and previously unbudgeted revenue
will provide
resources for this project. In other situations,
previously budgeted
expenditures might have been reduced.
Note that any appropriate organization in
any appropriate
school or center may agree to fund the project.
In this case,
Organization 0345 is one of the school's clinical
practices.
|
|
| |
D3
Budget Journal
|
School/Center |
To budget
the
use of a Capital Gift Fund as a funding source. |
Dr.
031-0300-0-651234-4812-8123-0000
Cr.
031-0300-0-651234-4400-8123-0000
|
3,000,000
3,000,000
|
Object 4812 is the Capital Restriction Reclassification.
For capital gifts restricted by the donor for a specific project,
funds will be reclassified as the project proceeds and the donor's
restriction is met.
Budgeting the gift
income is only appropriate
in the year in which you expect it. If you
already received it
in a previous year, or expect to receive it in a
future year,
then this can be a one-sided entry.
Notice that this is the only budget entry
which is
made to Net Asset Class 1, which is Temporarily Restricted.
|
|
|
D4
Manual Journal
|
Treasurer's
Office |
To liquidate
the investment in a quasi-endowment fund to be used as a funding
source. |
Dr. 000-0001-0-020000-1710-0000-0000
Cr. 030-0320-1-461234-1710-4567-0000
|
4,000,000
4,000,000
|
Upon
request, the Treasurer will arrange to liquidate an investment
so the
proceeds can be used to fund a capital project. This entry
removes
the investment in AIF and replaces it with cash. |
|
| |
D5
Budget Journal
|
School/Center |
To budget
the use of the cash
proceeds from the liquidation for a capital
funding
transfer. |
Dr.
030-0320-1-461234-4821-8123-0000 |
4,000,000
4,000,000
|
We don't normally budget liquidations. If
we did, the
credit would be:
Cr.
030-0320-1-461234-1710-4567-0000
|
|
| |
D6
Manual
Journal
|
School/Center |
To withdraw
balances from the bank and put
them in the General Unrestricted
Fund. |
Dr.
030-0300-2-000013-4839-4567-1234
Cr.
030-0300-1-000000-4839-4567-1234
|
500,000
500,000
|
The
Capital Program, 8123, cannot be used on the withdrawal entry
because
it is not the capital funding entry. In this case, the
school
established the Center Reference to document the relationship
with
the project and has been using it as it banked funds in
anticipation
of this project. |
|
| |
D7
Budget
Journal
|
School/Center |
To budget
the use of the bank proceeds for
a capital funding transfer. |
Dr.
030-0300-1-000000-4821-8123-1234
Cr.
030-0300-1-000000-4839-4567-1234
|
500,000
500,000
|
Notice
that the 000000 fund is the official funding source, not the
bank.
The school is using the Center Reference to document the
relationship
with the project, and to distinguish these funds
from the ones it
budgeted in entry D1. |
|
| |
D8
Budget
Journal
|
School/Center |
To budget
the use of a grant or contract
for a capital funding transfer |
Dr.
030-0320-4-512345-4821-8123-5678
Cr.
030-0320-4-512345-4600-4567-5678
|
6,000,000
6,000,000
|
If the
grant's revenue and expense had previously been budgeted, then
this
would be a reallocation. |
|
| |
D9
Manual
Journal
|
Provost's
Office |
To make
the RFDF
award. |
Dr. 000-0003-2-000003-4825-4567-0000
Cr. 030-0320-2-000003-4820-4567-5678
|
70,000
70,000
|
A
similar
process is used for University Research Foundation (URF) and
any other awards from the Other Unrestricted Funds fund group. |
|
| |
D10
Budget Journal
|
School/Center |
To budget
the use
of the RFDF Award for a capital funding transfer. |
Dr.
030-0320-2-000003-4821-8123-5678
Cr.
030-0320-2-000003-4820-4567-5678
|
70,000
70,000
|
If the
award was made in a previous fiscal year, this could be a one-sided
budget journal. |
|
| |
D11
Budget
Journal
|
School/Center |
To budget
the use of the school's own
Renewal and Replacement reserves
for a capital funding
transfer. |
Dr.
030-0300-2-000005-4821-8123-1234
|
80,000 |
No
credit is shown since we're assuming
the reserves were moved
here in a prior year, and the transfer wasn't
previously budgeted. |
|
| |
D12
Budget
Journal
|
Facilities
Services |
To budget
the award of
resources from the University's Facilities Renewal
Program for a
capital funding transfer. |
Dr.
960-9600-2-000005-4821-8123-0003
Cr.
960-9600-2-000005-4821-8999-0003
|
90,000
90,000
|
This
credit is shown since we're assuming the planned level of awards
was
budgeted in the original budget, but to a generic program. |
|
| |
D13
Budget Journal
|
School/Center |
To budget
the use
of insurance proceeds as a capital funding transfer. |
Dr.
030-0300-2-000009-4821-8123-1234
Cr.
030-0300-2-000009-4820-8999-1234
|
100,000
100,000
|
This
may happen before the proceeds are actually received only with
the
written authorization of the Risk Management office. |
|
| |
D14
Budget Journal
|
Treasurer's
Office |
To certify
the
amount the Capital Project is authorized to spend. |
Dr.
030-0300-0-000010-CPTA-8123-0000 |
15,225,000 |
CPTA
stands for Capital Project
Treasurer's Authorization. This is
posted in a separate budget called
the "Special Budget",
and not in the Original or Operating
Budgets. |
|
| |
D15
Budget Journal
|
Treasurer's
Office |
To budget
the project's
receipt of currently available funding sources. |
Cr.
030-0300-0-000010-4821-8123-0000
Cr.
030-0300-0-000010-4812-8123-0000
|
11,115,000
3,000,000
|
Each
of these lines is for the total amount of all the funding sources
that use the particular object code. |
|
| |
D16
Budget
Journal
|
Treasurer's
Office |
To budget
the project's
maximum level of internal financing expected. |
Dr.
000-0001-1-000000-2780-8123-0000
Cr.
030-0300-0-000010-2780-8123-0000
|
1,110,000 |
As the interim internal financing is
used
during the life of the project, the actual amounts used can be
compared to the budget to see if financing was within planned
limits.
Note that the CPTA amount is
not necessarily
equal to the sum of the budgeted 4821, 4812, and 2780
amounts.
The 2780 amount is the maximum anticipated internal
financing,
but the plan may call for it to be replaced by other
sources
(like donor payments on capital gift funds) during the life
of
the project.
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