Printed on: 11/30/2023. Please go to policy.umn.edu for the most current version of the document.
University of Minnesota  Administrative Policy

General Accounting

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Policy Statement

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

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

University community members must be committed to the highest ethical standards of conduct and integrity. The standards of conduct supported through University policy, procedures, and workplace rules, provide guidance for making decisions and memorialize the institution’s commitment to responsible behavior.

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

Units must ensure financial transactions:

  • follow the principles of fund accounting;
  • align revenues and expenses with the appropriate activity;
  • are in compliance with University policies;
  • ensure external restrictions and regulatory requirements are met;
  • are recorded correctly in EFS based on the type of transaction;
  • are recorded to the correct chartfield string;
  • are completed based on established deadlines; and
  • include required documentation for the transaction type.

Reason for Policy

Activities at the University have financial reporting implications. This policy supports the fair and accurate presentation of the University’s financial position and results of its financial operations at the fund level in conformity with GAAP, demonstrates compliance with finance-related requirements that may have legal, contractual, or accreditation provisions, and supports transparent financial reporting as a public institution.

Contacts

Subject Contact Phone Email
Primary Contact(s) Terri Hall 612-626-1235 [email protected]
Overall Policy / Process Financial Helpline 612-624-1617 [email protected]
Responsible Individuals
Responsible Officer Policy Owner Primary Contact
  • Controller
  • Controller
  • Terri Hall
    Financial Analyst

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 and expenses are recorded when incurred, not when the cash is received or disbursed.
Amortization Expense
Periodic allocation of a specific type of asset’s (intangible asset or underlying right to use asset in a leasing arrangement) cost over its useful life.
Assets
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 or other monetary assets.
Capital Assets
Items that meet certain criteria and are recorded as assets and depreciated or amortized over their useful life.
  • Capitalization criteria are
    • Equipment items costing $5,000 or greater
    • Building, infrastructure, and leasehold improvements costing $50,000 or greater
    • Software and other intangible assets costing $500,000 or greater
  • The University must have title or ownership rights.
  • The useful life must be one year or greater.
Capitalization
The recording of a capital asset and then depreciating or amortizing expense over the useful life of the asset.
Chart of Accounts (COA)
A financial organizational tool that provides a series of systematically classified financial values (chartfields) that are used and compatible with 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, which includes the required Fund, DeptID, Account, and Program or Project values. Additional optional ChartField values, such as ChartFields 1 and 2, FinEmplID may be used.
Credits
Credits are used in accounting to track transactions in and out of accounts. A credit will be entered into EFS 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 EFS as a positive number. A debit will increase an asset or an expense account and decrease a liability or revenue account.
Deferred Inflows and Outflows
The acquisition or consumption of net assets applicable to a future reporting period.
Depreciation Expense
Periodic allocation of a tangible 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, salaries and fringe, and other commitments for materials or services not yet received.
Expenses
Actual costs that have resulted from the University’s ongoing operations. Expenses include items such as salaries, fringe benefits, lab supplies, repairs, maintenance, depreciation/amortization, etc.
Function
A required attribute associated with all program and project chartfield values that indicates the purpose of the expense in alignment with the University mission or supporting activities.
Fund
Chartfield value with a self-balancing set of accounts that record the balances of cash and other financial resources (assets), together with all related liabilities.
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 or Cost Transfers
The process of moving financial resources revenues and expenses between funds in EFS.
Generally Accepted Accounting Principles (GAAP)
A collection of commonly followed accounting rules and standards for financial reporting.
Governmental Accounting Standards Board (GASB)
A nongovernmental entity that is recognized by governments, the accounting industry, and the capital markets as the official source of GAAP for state and local governments, and is applicable to the University.
Liabilities
Obligations or debts that the University owes to outside parties. Liabilities include items such as accounts payable owed to suppliers, 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, which is in exchange for receiving a good or service.
Program or Project
ChartField Value that describes the kind of activity being recorded, which aligns with an assigned function (for example: instruction, research, public service, institutional support, academic support, operations and maintenance of plant, student services, auxiliary enterprises, scholarship and fellowship, or agency).
Revenue
Actual or expected inflow of resources 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, and approve 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 accounting and financial reporting calendar deadlines to unit employees
  • Provide assistance and guidance with any close related question or issue.
Dean, Department Head, or Administrative Officer
  • Approve the recording of transactions in EFS to ensure compliance with University policies and sponsor or donor requirements.
Sponsored Financial Reporting (SFR)
  • Responsible for the accurate invoicing and reporting of sponsored financial transactions to sponsors.
RRC Manager
  • Responsible for ensuring unit financial transactions (including non-monetary) are recorded correctly and timely. Routine journal entry transactions are recorded in Periods 1 through 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 and provide explanations to Accounting Services on changes in revenues, expenses, and/or asset and liability balances.
  • Approve departmental requests for additions and changes to the Chart of Accounts.
Units
  • 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 EFS.
  • Communicate to other department(s) when transactions are recorded on their behalf or to a corresponding impacted chartfield string.
  • 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 or changes to the Chart of Accounts.
  • Accurately and timely, in accordance with University deadlines, record non-monetary financial transactions.

Related Information

Board of Regents Policies

Administrative Policies

Accounting Resources

History

Amended:
May 2023 - Comprehensive review included clarifying edits to policy, definitions and responsibilities language for consistency within policy and with related policies.
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