Financial Services Manual (FIN)

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Effective: 3/18/1985

Revised: 11/1/2013

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FIN 105: Fiscal Year-End Closing

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Contents

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Purpose

Source

Introduction

Overview of Encumbrance and Expenditure Cutoff

Deadlines

Payables and Reimbursements

Travel

Petty Cash

Accounts Receivable Billing Documents

Capital Purchases near Fiscal Year-End

Payroll Expense Redistributions

Payroll Position and Job Data Changes

Payment of Annual Services

Prior Year Commitments

Approving and Processing Current Fiscal Year Purchase Requests/Interdepartmental Purchase Orders

Payment Vouchers

Other User Documents

Reopening of Purchase Orders

Processing of Old Year Interdepartmental Billings against Interdepartmental PO Documents

Final Payables and Reimbursements Processing

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Purpose

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To close out year-end financial transactions

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Source

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University policy

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Introduction

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The following information outlines fiscal year-end close-out procedures for the ASU accounting system.

It is important to understand these planned procedures so that budget availability can be closely monitored and year-end deadlines are met.

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Overview of Encumbrance and Expenditure Cutoff

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The general rule for year-end closing is that a use of funds occurs only when a payment is generated to pay an external vendor or an interdepartmental billing is processed within the accounting system. State accounts are exceptions to this general rule whereby certain purchase orders and certain interdepartmental purchase orders remaining open at June 30 are known as “prior year commitments.”

Prior year commitments remain encumbered on state agency/orgs as of year-end, even though the actual expenditure does not occur until the following fiscal year. Specific items classified as prior year commitments and their budget treatment are discussed in detail below.

On state agency/orgs, outstanding orders that are not included as prior year commitments will not remain encumbered at year-end on the 12th month reports. The ensuing fiscal year’s budget will be used for these items.

In general, purchase orders to external vendors and most interdepartmental purchase orders, including prior year commitments, are automatically rolled over in the following fiscal year.

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Deadlines

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Deadline dates for processing current fiscal year documents are typically published by Financial Services by April 30 of each year. Publication of these dates is announced in the Important News section of the Financial Services Web site.


Payables and Reimbursements

Goods and services received in June are recorded as current fiscal year expenditures; goods and services received in July are recorded as ensuing fiscal year expenditures.

It is important that departments correctly input receiver documents into the financial accounting system as soon as possible after full or partial receipt of items ordered. If the items are received in June, a June date is to be used even if the receiver is being input in July; conversely, if the items are received in July, a July date is to be used when the receiver is entered into the financial accounting system.

Both receiving reports and vendor invoices for the current fiscal year expenditures must be entered into the financial system by the published deadline date. Financial Services can ensure that June items are recorded as current fiscal year expenditures only if the published deadline date is met. Otherwise, it is likely that noncapital items will be processed against the ensuing fiscal year budget.


Travel

Travel authorizations and claims for current fiscal year travel must be received by Travel Reimbursements no later than the published deadline date. Travel claims for current fiscal year expenses submitted after the year-end deadline date will be processed against ensuing fiscal year budgets.


Petty Cash

Original receipts are required. Itemized receipts are preferred and may be required in certain circumstances before reimbursement is made. Disbursements made from petty cash funds are to be turned in no later than the published deadline date for all disbursements made through June 30. Receipts for July purchases should not be included with those of June or earlier.


Accounts Receivable Billing Documents

Final processing for accounts receivable billing documents will be the published deadline date, although documents should be delivered at the earliest time possible. If documents delivered by this deadline are rejected from the system due to errors, they will be re-entered into the system in the next fiscal year.


Capital Purchases near Fiscal Year-End

Off-Campus Purchase Requests for capital purchases from the current fiscal year State General Operating Fund budget should be made by the published deadline date. Refer to FIN 405–02, “Capital Purchases Near Fiscal Year-End,” for additional information.


Payroll Expense Redistributions

A payroll redistribution is used to move payroll expense to a different account number, position number, or pay period end date. The deadline for processing payroll expense redistributions in current fiscal year is set by Financial Services. Payroll expense redistributions processed after the deadline will be recorded against the subsequent fiscal year’s budget.


Payroll Position and Job Data Changes

The deadline for position and job data reclassification, adjustments, or corrections that are not payroll expense redistributions is set by Payroll Services. Payroll calendars and year-end information relating to payroll can be found at the Payroll Services Web site.


Payment of Annual Services

Payment for subscriptions, dues, maintenance agreements, and other services covering a period of time generally should be made in the fiscal year in which service begins. If the period of service begins in July, however, payment may be made in the prior fiscal year.


Prior Year Commitments

Prior year commitments apply only to state agency/orgs and are either capital purchases or special projects that remain encumbered at year end on the 12th month reports and for which appropriation (budget) increases are recorded in the ensuing fiscal year. Prior year commitments include:

  1. Capital purchase orders (PCs) coded to an object code beginning with the number “78.” If there are minor parts on the same purchase order coded to a noncapital code, the entire order will be treated as a prior year commitment if the remaining encumbered balance is at least $500.

  2. Interdepartmental purchase orders (POs) to the following vendors:
    • Department of Facilities Management (FACMAN, ASUWFACMAN, POLYFACMAN, DPCFACMAN)
    • Information Technology (IT)
    • ASU Purchasing (FURNITURE or CARPET)
    • Sun Card Services (SUNCARD)
    • West campus Information Technology Service (ASUWIT)
    • ASU Stores (ASUSTORES), FOLLETT, and Canon (CANON) for orders coded to capital only
    • Computing Services (COMPUTING) for orders coded to EDP Services (7310 31).
    • Interdepartmental POs must have a remaining encumbered balance of at least $500 to qualify as a prior year commitment.

  3. Special items for long-term projects that are manually encumbered by Financial Services using a journal voucher on sub-object code 7390 91, upon special written request to and approval by dean or director and appropriate vice president/vice provost/provost, the vice president for finance and deputy treasurer, and the associate vice president for budget and planning.

In addition to being reopened and re-encumbered in the following fiscal year, a corresponding appropriation increase is also made in the ensuing fiscal year for the amount of the prior-year commitments. The appropriation increase is processed after the new year original budgets have been loaded.


Approving and Processing Current Fiscal Year Purchase Requests/Interdepartmental Purchase Orders

The deadline for approving and processing online purchase requisitions and interdepartmental purchase orders with a June date is published each year. Due to time constraints at fiscal year-end, university users are encouraged to submit final fiscal year purchase requisitions and interdepartmental purchase orders well before the cutoff date. After the cutoff date, all online purchase requisitions and interdepartmental purchase orders not approved and processed will need to be redated with a July 1 date. Should an emergency situation arise in which goods or services must be obtained immediately from an off-campus vendor with a current fiscal year purchase order, contact the responsible buyer in the Purchasing and Business Services Department.


Payment Vouchers

The deadline for submitting Payment Vouchers and supporting documentation for expense reimbursements and other similar items to be reflected as current fiscal year expenditures is published each year. The forms and supporting documentation need to be sent to Payables and Reimbursements.


Other User Documents

The deadline for approving and processing other user documents such as Appropriation Transfers, Expense Transfer Vouchers, and Journal Vouchers to be reflected as a current fiscal year expenditure is published each year.


Reopening of Purchase Orders

As previously mentioned, the process of reopening orders in the next fiscal year occurs for all off-campus purchase orders and interdepartmental orders.


Processing of Old Year Interdepartmental Billings against Interdepartmental PO Documents

As previously mentioned, interdepartmental orders are automatically reopened and re-encumbered in the next fiscal year for all interdepartmental vendors. It is important not to confuse the reopening process with the appropriation increases discussed earlier. Appropriation increases on state accounts occur only for those items classified as prior year commitments.

Org Managers should review all outstanding interdepartmental purchase orders prior to the year-end deadline for interdepartmental purchase order modifications and close interdepartmental purchase orders that are no longer relevant.

Note: Before modifying a PO document to zero dollars, check with the service department to ensure that there are no charges pending against the PO document.

Final Payables and Reimbursements Processing

The reopening process for off-campus orders occurs after Payables and Reimbursements has processed old-year items during approximately the first week of the new fiscal year.

Final 12th Month Summary Financial Status and rollup reports reflect the following:D

Encumbrances in Agency/Orgs in Final Reports
Type of Agency/Org Comments
State Only prior year commitment items appear as encumbrances on 12th month reports
All other agency/orgs All remaining open encumbrances appear on 12th month reports
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