Group Title: ERP position papers
Title: University accounting structure
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Permanent Link: http://ufdc.ufl.edu/UF00090031/00001
 Material Information
Title: University accounting structure ERP position paper 1
Series Title: ERP position papers
Physical Description: Serial
Language: English
Creator: Office of Inspector General, University of Florida
Publisher: Office of Inspector General, University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: December 20, 2002
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Bibliographic ID: UF00090031
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.

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University of Florida Office of Inspector General

ERP Position Paper #I Page I
Date: December 20, 2002
Topic: University Accounting Structure




With the implementation of GASB 34 and 35, migration to PeopleSoft's ERP system, and
a pending accreditation review, this is a good time to review the university's financial re-
porting structure.

Currently, when an organizational code is established in FLAIR, the expansion file infor-
mation is completed to identify the funding source, program activity, FID, and other char-
acteristics. However once established, there is no routine review to ensure the validity of
the data entered or to determine if there have been changes over time.

Over a period of time, we noted reporting inconsistencies of similar activities by university
units. Revenues and costs related to generating revenues sometimes have been accounted
for in multiple organizational codes and sometimes within support organizations such as
the University of Florida Foundation making it difficult to generate meaningful managerial
reports. Various examples of these types of inconsistencies include:

IFAS continuing education activities are accounted for in a direct support organiza-
tion while most other continuing education activities are accounted for in university
accounts.

Veterinary Teaching Hospital facility expenses are charged to the university ac-
counts whereas revenues and other expenses are attributed to the Practice Plan.

Most employees who are primarily responsible for the sales of goods and services
(an auxiliary activity for effort reporting) generally are paid through auxiliary funds
and effort reports for them accurately reflect their effort as auxiliary. Effort re-
porting procedures do not permit auxiliary efforts to be shown for E&G funds.
Therefore, effort reports for employees engaged in auxiliary activities paid through
E&G funds do not accurately reflect their effort. The effort for these employees is
manually adjusted for indirect cost calculations. CITS at the Brain Institute is an
example.

Revenues and expenses for "quasi-auxiliaries" such as the Center for Performing
Arts are only partially accounted for in the Auxiliary Fund. Some related revenues
and expenses are accounted for in other funds which makes it difficult to determine
the entire financial picture for these types of operations.









University of Florida Office of Inspector General

ERP Position Paper #I Page 2
Date: December 20, 2002
Topic: University Accounting Structure






Sales revenues from goods and services sold to the public and to the university
community are not accounted for as an auxiliary and sometimes revenues are re-
corded as expense refunds. IFAS maintains a catalog of publications and clothing
for sale. Certain IFAS accounts show a substantial number of expense refunds.

Numerous services to support research have been established within colleges.
When these services are made available university wide, the related revenues and
expenditures should be accounted for as auxiliaries to comply with NACUBO's
definition of an auxiliary. Several research services have been established and are
accounted for within the College of Engineering.

Varying models exist for accounting for sale of products/services incidental to re-
search. One department/college may use MG&G funds, others may direct the ac-
tivity to UFRF.

ICOFA's Financial Statements Policy Manual provides for reporting of Sales and
Services of Educational Departments to include:

(1) revenues that are incidental to the conduct of instruction, research, and public
service, and
(2) revenues of activities that exist to provide an institutional and laboratory ex-
perience for students and that incidentally create goods and services that may
be sold to students, staff and the general public.

Sales and Services of Auxiliary Enterprises are revenues generated by auxiliary
enterprises that exist:

to furnish goods or services to students, faculty, or staff and that charge a
fee directly related to, uhlh,1,i'g not necessarily equal to, the cost of the
goods and services. This category includes revenues (net of refunds) gen-
erated by operations.









University of Florida Office of Inspector General

ERP Position Paper #I Page 3
Date: December 20, 2002
Topic: University Accounting Structure




NACUBO's Advisory Report 99-2, defines auxiliaries with two subcategories, Auxil-
iary Enterprise-Other and Other Self-Supporting Enterprises. Under these definitions, an
auxiliary exists to furnish goods or services to students, faculty, staff, or incidentally to
the general public. It is managed as a self-supporting entity and fees are directly related
to but not necessarily equal to the cost of providing goods or services sold. Activities es-
tablished primarily to provide goods/services on a fee basis to internal units university-
wide are included as auxiliaries. Activities to furnish goods or services related to the
mission of the university primarily to customers other than students, faculty or staff
would also be included as auxiliaries. See the attachments for the complete definitions.

Conclusion

Current changes in governance, financial reporting, and transition to a new accounting
system provide unique opportunity to re-evaluate accounting for certain activities in a
way that will lead to a more complete and consistent reporting. It may be timely to estab-
lish a committee representing the University Controller, ERP, IFAS, the Health Science
Center, the University of Florida Research Foundation, Auxiliaries accounting, EIES, and
the Office of Inspector General to develop guidelines and procedures to address these is-
sues.




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