Printed on: 03/25/2019. Please go to http://policy.umn.edu for the most current version of the Policy or related document.
ADMINISTRATIVE POLICY

General Accounting

Responsible University Officer(s):

  • Controller

Policy Owner(s):

  • Director of Accounting Services
  • Terri Hall

Date Revised:

Jan 10, 2019

Effective Date:

Jan 10, 2019

POLICY STATEMENT

This policy governs the accounting and financial reporting of the University of Minnesota. 

The financial statements of the University of Minnesota are prepared on an accrual basis in accordance with generally accepted accounting principles (GAAP) outlined by the Governmental Accounting Standards Board (GASB).

Community members must be committed to the highest ethical standards of conduct and integrity.  University policy and procedures provide guidance for making decisions and memorialize the institution’s commitment to responsible behavior.

Departments must ensure that accounting transactions are entered accurately and timely in the Enterprise Financial System (EFS) by employees who have satisfied the University's prescribed training and assessment requirements and have access to initiate and/or approve transactions in EFS.

Departments must ensure transactions:

  • follow the principles of Fund Accounting;
  • align revenues and expenses with the appropriate activity;
  • are in compliance with University policies;
  • ensure donor restrictions and/or regulations are followed;
  • are recorded correctly in EFS based on the type of transaction;
  • are recorded to the correct chartstring;
  • are completed based on established deadlines; and
  • include required documentation for the transaction type

REASON FOR POLICY

To fairly present the University’s financial position and results of its financial operations at the fund level in conformity with GAAP, as well as determine and demonstrate compliance with finance-related legal and contractual provisions. 

PROCEDURES

FORMS/INSTRUCTIONS

APPENDICES

FREQUENTLY ASKED QUESTIONS

CONTACTS

SubjectContactPhoneEmail
Primary Contact(s) Terri Hall 612-626-1235 carl0769@umn.edu
Overall Policy / Process University Financial Helpline 612-624-1617 Finsys.umn.edu
Sponsored Transactions University Financial Helpline 612-624-1617 Finsys.umn.edu

DEFINITIONS

Account
ChartField value that classifies which asset, liability, net position (fund balance), revenue, expense or statistical value will be affected. This chartfield value classifies the nature of the transaction and is required on all transactions.
Accounting
The systematic recording, reporting, and analysis of financial transactions to assist management in making financial decisions
Accrual Basis
Accrual accounting relates to the timing of recording transactions. Revenues are recorded when earned, expenses are recorded when incurred. Under the accrual basis of accounting, expenses are matched with the related revenues and/or reported when the expense occurs, not when the cash is disbursed. 
Amortization Expense
Periodic allocation of a specific type of a capital asset’s (intangible asset) cost over its useful life.
Assets
Assets are items that provide future economic benefits and are owned by the University as a result of a past transaction. Assets include items such as buildings, vehicles, receivables owed by customers, cash on hand, investments, etc. 
Bartering
Exchange a good or service for another good or service without using cash. 
Capital Assets
Capital Assets are items that meet certain criteria and are recorded as assets and depreciated over their useful life. Examples of a capital asset are:
  • Equipment items costing $5,000 or more and have a useful life greater than one year
  • Building, infrastructure, and leasehold improvements costing $50,000 or more
  • Software costing $500,000 or more
Capitalization
Capitalization is the recording of a capital asset and then depreciating or amortizing the asset over its useful life.
Chart of Accounts (COA)
A financial organizational tool that provides a series of systematically classified financial values (ChartFields) that are used and compatible with the University’s financial system (EFS). The values support central and distributed financial reporting. The COA contains classifications or groupings, descriptions, and definitions as it relates to individual ChartField values. 
ChartField String
A combination of ChartFields, usually including at a minimum Fund, DeptID, Account, and Program or Project values
Credits
Credits are used in accounting to track transactions in and out of accounts. A credit will be entered into the financial system as a negative number. A credit will decrease an asset or an expense account and increase a liability or revenue account.
Debits
Debits are used in accounting to track transactions in and out of accounts. A debit will be entered into the financial system as a positive number. A debit will increase an asset or an expense account and decrease a liability or revenue account.
Depreciation Expense
Periodic allocation of a capital asset’s cost over its useful life.
DeptID
ChartField value that identifies the departmental level of responsibility at which to isolate a group of financial resources, employees, or academic programs to support effective management of financial, human, and academic resources. 
Donated Capital Assets
Donated capital assets occur when an individual or organization gives the University an asset. Both the revenue and asset must be recorded in EFS.
Encumbrance
Represents outstanding purchase orders and other commitments for materials or services not yet received. 
Escheatment
The process of turning over unclaimed or abandoned property to a state authority. Escheatment laws require uncashed or returned check dollars to be turned over to the state if the owner cannot be located within a length of time determined by each state.
Expenses
Expenses are actual or expected costs that have resulted or will result from the University’s ongoing operations. Expenses include items such as salaries, fringe benefits, lab supplies, repairs, maintenance, etc.
Function
ChartField value that answers the question, “How does this transaction accomplish the mission of the University?” Function codes are required as attributes to all program and project values.
Fund
ChartField value that is an accounting entity with a self-balancing sets of accounts that record cash and other financial resources (assets), together with all related liabilities and balances. 
Fund Accounting
Fund Accounting classifies financial resources for accounting and reporting purposes into funds according to the regulations, restrictions, or limitations placed on their use by the donors, parties outside the University, or the Board of Regents.
Fund Transfers
The process of moving revenues and expenses between funds in EFS.
GAAP
General Accepted Accounting Principles is a collection of commonly followed accounting rules and standards for financial reporting. 
GASB
The Governmental Accounting Standards Board (GASB) is a nongovernmental entity that is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments.
Liabilities
Liabilities are obligations or debts that the University owes to outside parties. Liabilities include items such as accounts payable owed to vendors, faculty and staff salaries, sales tax received on sales but not yet paid to the state, etc.
Non-Monetary Financial Transactions
A financial transaction without the transfer of money between parties. One party gives a good or service in exchange for receiving a good or service. 
Program or Project
ChartField Value that describes the kind of activity being recorded
Revenue
Revenue is actual or expected cash received by the University as the result of its operations. Revenue includes items such as general state funding, tuition and fees, grants, contracts, gifts, etc.
Resource Responsibility Centers (RRC)
An organizational unit at the University accountable to central administration for the financial activities of units and organizations reporting to the RRC. Generally each campus, Twin-Cities college, and major support unit is considered an RRC.

RESPONSIBILITIES

Accounting Services
  • Responsible for the accurate accounting and reporting of transactions in the University’s financial statements. 
  • Review and assist units regarding general accounting transactions.
  • Ensure compliance with the requirements of GASB, GAAP, regulatory agencies and University policies.
  • Maintain supporting documentation for financial statements.
  • Monitor the financial accounting and reporting system requirements.
  • Recommend new or modified processes and procedures when necessary.
  • Maintain, review, approve, and/or deny requests for additions or changes to the Chart of Accounts.
  • Responsible for the accurate accounting and reporting of the University’s capital assets including the physical inventory and tagging of capital equipment.
Controller’s Office
  • Communicate the calendar deadlines to all department employees
  • Provide assistance and guidance with any close related questions or issues.
Dean, Department Head, or Administrative Officer
  • Approve the recording of transactions into EFS to ensure compliance with University policies and sponsor or donor requirements.
Sponsored Financial Reporting
  • Responsible for the accurate accounting and reporting of sponsored financial transactions.
  • Review and prepare sponsor reports to ensure compliance with external grantor agencies.
RRC
  • Responsible for ensuring unit financial transactions (including non-monetary) are recorded correctly and timely. Routine journal entry transactions are recorded in Periods 1 thru 12. Necessary adjustments are recorded in Period 913.
  • Track the sale and redemption of gift card sales, record revenue as appropriate, and develop methodology for calculating breakage.
  • Ensure department and college requirements for earlier submission of year-end processes are in compliance with the year-end calendar.
  • Ensure all fiscal year documents and transactions are submitted to meet closing deadlines.
  • Analyze requests from Accounting Services on changes in revenues, expenses, and/or asset and liability balances and provide explanations.
  • Approve department additions and changes to the Chart of Accounts.
University Departments
  • Accurately record transactions to the correct account classifications (assets, liabilities, revenues and/or expenses) per University policy.
  • Accurately record transactions to the correct fund and function per the University’s COA.
  • Ensure documentation is retained according to the applicable University policy to support transactions entered into the University’s financial system (EFS).
  • Communicate appropriate Chartfield string(s) to other department(s) when transactions are recorded on their behalf.
  • Work with dean, department head, or administrative officer to ensure compliance with University policies and sponsor or donor requirements.
  • Work with Accounting Services to determine correct recording of transactions.
  • Request additions/changes to the Chart of Accounts.
  • Accurately record non-monetary financial transactions

RELATED INFORMATION

Board of Regents Policies

Administrative Policies

Accounting Resources

  • Chart of Accounts

HISTORY

Effective:
January 2019 - Comprehensive Review. Adds sections from Board of Regents Policy: Code of Conduct; includes a new procedure address non-monetary transactions, and updates the language to match the current version of the enterprise financial system.
Supercedes:
General Accounting Policy, Revised 2005
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