1. SECTION 12 – YEAR END ACCRUALS
  2. Overview
  3. Accounts Payable Expenditure Accruals
  4. Payroll Accrual
  5. Inventory Accrual
  6. Prepaid Items
  7. THIS YEAR PO – Current
  8. Fiscal Year
  9. NEXT YEAR PO – Next
  10. Fiscal Year
  11. Which Year PO Date Goods
  12. Received
  13. How or Where Charged

ADDED 11/07
ASB Manual Section 12
Page 1 of 3
SECTION 12 – YEAR END ACCRUALS

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Overview
The District’s fiscal year ends on August 31st. For a period of time in September, both
the old fiscal year and the new fiscal year are considered “open” and transactions (both
revenues and expenditures) are recognized or charged to either the old year or the new
year depending on certain criteria. The criteria guiding which year an expenditure is
charged to is governed by Generally Accepted Accounting Principals (GAAP) and
affects the Financial Statement’s presentation. GAAP requires that the District record
its expenditures on an accrual basis. This means expenditures should be recognized in
the period in which the benefit is received, regardless of when payment is made.

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Accounts Payable Expenditure Accruals
The Accounting Office processes special accrual runs for invoices covering goods
received and services rendered by 8/31/200X. Special criteria apply to school orders to
govern the year in which an expenditure transaction is charged. Invoices must be
received by a September deadline within the open period in the Accounting Office (said
deadline is announced each year by Accounting).

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Payroll Accrual
The Payroll Office processes a special payroll run of timesheets for work performed
before 8/31 so that the expenditures from those timesheets can be accrued to the
proper year. Timesheets must be received by a September deadline in order to be
processed in the special payroll accrual run (said deadline is announced each year by
the Payroll Office).
Receipt and Revenue Accruals
Receipts and revenues processed during the months of August and September are
either accrued as revenue or deferred as next year’s revenue. For example, most
receipts collected by schools during the registration period in August are considered
next year’s revenue. It is important that sites submit their Point of Sale Receipting
System End-of-Period (EOP) reports timely for year end.

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Inventory Accrual
Goods ordered on a Next Year’s PO, where the goods are received by or before August
31, are accrued/included as part of the asset inventory balance in the financial
statements. Dates entered in IFAS’s on-line receiving module should be the actual
date the goods were physically delivered to the site.

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Prepaid Items
Services for next year that are paid for with this year’s funds are accrued as a prepaid
item in the financial statements, while the actual expense is charged to the next year.
There are limited examples where this is appropriate, such as payments made in June
for subscriptions and registrations for next year.

ADDED 11/07
ASB Manual Section 12
Page 2 of 3
This Year vs. Next Year PO – Impacts on Financial Statements
The fiscal year ends on August 31st. The Accounting Office is able to differentiate and
charge expenditures to the new year or accrue the expenditure to the old year during a
short open period in September. Accounting largely relies on the year the PO is
encumbered (this year vs. next year) to drive how the expenditure is charged based on
the following set of assumptions:

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THIS YEAR PO – Current

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Fiscal Year

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NEXT YEAR PO – Next

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Fiscal Year
Services completed
before
9/1.
Services to be completed on or
after
9/1.
Registration for training, conferences,
or workshops held
before
9/1.
Registration for training, conferences
or workshops held on or
after
9/1.
Materials/Supplies for immediate use
in your school.
Materials/Supplies to be used in the
next school year.
Annual Memberships/Dues paid no
later than May 31
st
.
Annual Memberships/Dues paid after
May 31
st
.
Computers/Equipment for immediate
use, or for use in summer school.
Computers/Equipment to be used
starting in September.
Schools
: When talking about supplies, “immediate use” means the supplies purchased
will be put into use immediately and the bulk of them will be consumed before the start
of the new school year. If you are a school site purchasing supplies/goods in June,
unless it is for an activity that will transpire over the summer, the likelihood is that those
goods are to benefit the coming school year period (not the school year period that is
coming to a close). Therefore, the PO should be for next year.
The date sites are allowed to begin encumbering next year POs is limited by the
Finance Department to a date near the end of the school year.
Closing Out and Cleaning Up Outstanding Encumbrances
It is especially important near year end for sites to track their budgets, review
transaction recap activity, and follow-up on their budget’s outstanding open Purchase
Orders. Accounting is also doing their part to assist by reviewing open PO status
reports and contacting sites to resolve old outstanding open POs.

ADDED 11/07
ASB Manual Section 12
Page 3 of 3
Date Received – Impact on Budget and Financial Statements
At the fiscal year end it is important to “on-line receive” your goods as soon as they are
delivered and checked in
. The date you enter goods/services as “received” via the
on-line receiving system is also a crucial factor reviewed by Accounting in
determining the correct budget year to charge the expenditure or when to include
it in the balance reported as inventory in the financial statements. See table
illustration below:

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Which Year PO
Date Goods

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Received

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How or Where Charged
Goods on a “next year”
PO
Goods physically
received by 8/31
Expenditure should be
charged to the new budget
year
May also be recognized
as an inventory asset of
the current year’s financial
statements.
Goods on a “this year”
current year PO
Goods physically
received after
8/31
Expenditure will be charged
to the new budget year.
Goods on a “this year”
current year PO
Goods physically
received by 8/31
Expenditure may be charged
to the current budget year.
Note: In all cases, the date entered in IFAS’s on-line receiving module should be
the actual date the goods were physically delivered to the site.
The table above
illustrates the assumptions used by accounting to determine proper treatment of each
payables transaction at year end. The year in which the expense will be charged is not
the only consideration. Whether it qualifies as inventory on hand at the time the books
are being closed is important. If the goods qualify as inventory, it doesn’t impact a site’s
expenditure budget, but, it is crucial to capture the value as an asset and an overall
district liability on our financial statements. Meanwhile, payment will be made in the
next fiscal year.
Journal Entries, Account Code Changes, Inter-Fund Billings
Schools are responsible for tracking and staying closely tuned to their budgets. Once
the open period for the fiscal year has passed, journal entries, account code changes,
and interfund billings can no longer be processed or posted to the old year. All
transactions against the old year must be received in the Accounting Office by a
September deadline (announced each year by the Accounting Office). It is important
that schools timely submit correcting paperwork (Journal Entries, Account Code
Changes) so that everything is in order by the time the year is officially closed.

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