FIS BULLETIN Number 8

Announcements | Calendar | Status | T&A-Q&A | Training | Inside Peek | Odds &Ends

May 2, 1997

IMPORTANT ANNOUNCEMENTS

GENERAL: None

ACQUISITIONS: None

BANNER REPORTS:

STATUS OF NEW REPORT: FZRINOF - ORGANIZATION/FUND EXPENDITURES WITH NO BUDGET": We hope to run the FZRINOF report with the usual April 30 "Big 5" reports.

OTHER FIS / BANNER ITEMS:

CHANGE PLANNED IN THE SIGNING CONVENTION USED FOR TRANSFER OF FUNDS PROCESSING ON THE FZAJVCD FORM: We received numerous requests from Service Centers and from the Planning and Budget Office to consider changing the signing convention used on the FIS-Banner Distributed TOE/TOF form (FZAJVCD) for TOF’s from D/C to +/-. In doing this, it will eliminate inconsistencies in the way data is input in FZAJVCD and the BSL, or permanent budget, system. Simply put, for distributed TOF transactions involving budgetary ledger expenditure FOAPALs, a "+" would represent what is now a "D" (debit) and a "-" would represent what is now a "C" (credit). A "+" represents an increase in the amount available to spend in a budgetary ledger expenditure FOAPAL. A "-" represents a reduction. PLEASE CONTINUE TO USE THE CURRENT "D/C" SIGNING CONVENTION FOR TOF ENTRIES UNTIL THE "SWITCHOVER" OCCURS.

A survey of Service Center managers unanimously confirmed the need to make the change. As a result we are planning to change the signing convention during the latter portion of May. Notification of the specific date of the "switchover," along with other pertinent information, will be provided to you next week. Documentation is currently being updated to reflect the anticipated change.

Please be aware that all TOF-related documents in process will need to be completed and approved prior to the switchover date. Because incomplete and/or unapproved TOFs entered prior to the switchover date will post incorrectly after the switchover, they will be disapproved and deleted at the time of the switchover.

CALENDAR OF FIS / BANNER EVENTS

Please note that period close-related dates are estimated.

PROJECT STATUS

FISCAL CLOSING PROCESS TESTING: Work on this top priority project has begun with testing of acquisitions/AP-related fiscal closing processes. In addition, dozens of paper and electronic reports for both the campus and Office of the President are being reviewed. This is necessary because of the upgrade made to the Banner system a few months ago and also to make improvements to some of the reports based on the lessons learned from the last fiscal closing. In addition, there is some leftover "cleanup" work that was deferred until this year’s closing.

REPORT PRODUCTION COORDINATION: "Nuts and bolts" work on report production coordination continues.

DISTRIBUTED TRANSFER OF EXPENDITURES/TRANSFER OF FUNDS: 23 of 36 Service Centers are currently participating in the distributed TOE/TOF process. We hope to allow inter-Service Center TOE/TOF transactions among participating Service Centers to be processed beginning on June 1, 1997, at which time we hope participation will approach 100%. With this notification will come a listing of participating Service Centers.

INVENTORIAL EQUIPMENT DATA CONVERSION: Work continues, on schedule, on this project.

THE "STEALTH" AVAILABLE BALANCE QUERY FORM PROJECT: Testing of the query form and test data by a group of volunteer Service Center testers will take place later this month. If it proves successful, installation of the data compilation process and query form in the production environment may take place in early June, with full access being made available in mid- to late-June. Please be aware that this project remains on an "as time allows" basis and is subject to delay. We expect that users having access to FGIBDST - Organization Budget Status form will also be able to access this new form.

TIPS & TRICKS / QUESTIONS & ANSWERS

TIPS AND TRICKS: None submitted over the past month

QUESTIONS & ANSWERS: None submitted over the past month

________________________
Questions or problems regarding the Banner system can be directed to:
Acquisitions, Accounts Payable - Karsen Jones kjones@cats
Ledger Reports, Fiscal closing - Vicki Gutzwiller vickig@cats
Banner Security, Access - Monique Leduc mleduc@cats
Other questions - Kirk Lew kllew@cats

INSIDER’S PEEK AT FIS

Editor’s Note: Due to our desire to provide further background about the signing convention "switchover," the planned article "Fred & Ginger, Ozzie & Harriet, Abbott & Costello, User Analyst & Programmer Analyst: Teaming up to find and fix Banner Bugs" will be presented in a future edition.

BANNERSLUG’S GUIDE TO MISUNDERSTANDING THE CAMPUS LEDGERS
(OR IF YOU SURVIVE READING THIS, YOU CAN CONQUER BANNERLAND)

MISUNDERSTANDING #1: The campus ledger consists of budget accounts, expense accounts and encumbrance accounts.
[Editor’s Note: Things may be more understandable if you think of campus "ledger" as containing four separate ledgers - one ledger that contains only budgetary activity, or appropriations (which includes what many consider to be "budgetary accounts,"); another ledger that contains only financial activity, or real revenues and expenditures ("expense accounts"); another ledger containing only encumbrance activity, or legal commitments to spend ("encumbrance accounts); and a last ledger that contains budget reservations, or unofficial commitments to spend such as requisitions.

All four ledgers use exactly the same FOAPAL's (which some think of as "accounts"). Double-entry accounting is used in each ledger, although you may not see both sides of some entries, such as those involving purchase orders (They are there, buried in various hideous FOAPALs). All sides (debits and credits) of an entry must post to the same ledger, in other words, TOF-related transactions post only to the budgetary ledger, TOE-related transactions post only to the financial ledger, etc. Calculated ending balances (i.e. amounts left to spend or overdrafts) are the result of relating the data from the four ledgers by FOAPAL. TOFs are the mechanism by which adjustments are made to the budgetary ledger. TOE's are the mechanism by which adjustments are made to the financial ledger. Change orders are the mechanism by which adjustments are made to encumbrance and budget reservation ledgers.

To better understand how debits and credits (or pluses and minuses) effect different types of FOAPALs in the different ledgers, it’s best to think of FOAPALs from the following perspective: there are budgetary expense FOAPALs, financial expense FOAPALs, encumbrance expenditure FOAPALs, and budget reservation expander FOAPALs as well as budgetary revenue FOAPALs and financial revenue FOAPALs. A budgetary expense and a financial expense (and an encumbrance and/or budget reservation) expense can, and often do, share the same FOAPAL.

MISUNDERSTANDING #2: Budgetary- and encumbrance-related transactions must be processed according to the same standards used for financial transactions.
[Editor’s Note: Generally accepted accounting rules (or the rules established by the accounting "gods" that must be used by all organizations, profit and non-profit, in order to be official) apply only to the campus financial ledger, which contains actual revenue and expenditure activity, as well as cash balances, accounts payable, etc. The rules decree that debits increase amounts in expenditure FOAPALs (like 19900-660204-002580) and reduce amounts in revenue FOAPALs (like 19900-660204-R23400). The data in the financial ledger is audited to ensure that we have followed the accounting rules in how we process and compile data. The data is used for all official campus and University-wide financial reporting to the regents, state, federal government, etc. These rules do not apply to how the campus ledgers handles transactions in the budgetary, encumbrance and budget reservation ledgers because...]

MISUNDERSTANDING #3: Budgetary-, encumbrance-, and budget reservation-related transactions in the ledger appear on the audited campus and University financial statements.
[Editor’s Note: Budgetary-, encumbrance-, and budget reservation-related transactions do not appear on any audited campus financial statements. These kinds of statements present only actual campus financial activity as recorded in the financial ledger. Certain University, campus, service center, and unit reports may use budgetary, encumbrance, and budget reservation data for internal financial reporting purposes.

MISUNDERSTANDING #4: Because of misunderstandings #2 and #3, the campus has no control over how these transactions can be input and processed. In other words, things like signing conventions used for inputting data into the financial ledger must also be used for the other ledgers.
[Editor’s Note: In reality, how things are done in budgetary, encumbrance, and budgetary reservation ledgers are not governed by the same accounting rules used in processing data in the financial ledger. In fact most private, for-profit companies do not use these non-financial ledgers. Because non-profit organizations, like us, are typically budget-driven organizations that must closely control expenditures, budgetary and encumbrance ledgers are used to help provide these controls. Since official accounting rules don't necessarily apply to these three ledgers, how debits and credits affect the two ledgers can be determined by the organization, which in our case is the University and to some limited extent, the campus. By choice, the University records transactions to the budgetary, encumbrance, and budget reservation ledger in a manner similar to that used for recording transactions in the financial ledger.

Under the old UCSC accounting system, in the budgetary ledger, credits increase amounts (available to spend) in expenditure acct-fund-sub-objects (FOAPALs). FIS-Banner chooses to have credits decrease the amounts (available to spend) in expenditure FOAPALs in the budgetary ledger. Banner's thinking (which might actually make more sense than UC’s in this case) is that, in the financial ledger, credits decrease amounts in expenditure FOAPAL's so, to be consistent with this notion, credits, in the budgetary ledger, should decrease the amount available to spend.

MISUNDERSTANDING #5: There is some other-worldly reason why debits are debits and credits are credits.
[Editor’s Note: The Italian monk who started the double-entry accounting craze centuries ago (and is used to this day by monk-accountants and Bannerlanders alike) probably devised the system for very practical reasons. No doubt his autocratic, pointy-headed monk boss wanted a better way to keep track of how much money the monastery had at all times. At the same time, he probably also wanted to know what the money was being spent for and in what ways the money was being earned.

Working away in his monastic cubicle, our ingenious monk-hero concluded that, as money is earned or spent, the amount of money on hand increases or decreases. A candle lit up over his head - every time an entry is made to record a particular expenditure or receipt, another entry in the same amount can be made to cash on hand. So he divided up the transactions into different categories. Outgoing money he considered to be expenditures. Incoming money were revenues. Cash on hand were assets. (So maybe he didn’t really call them revenues, expenditures, and assets - I’m trying to make an important point). When money goes out, he would record a positive (or debit) amount for that expenditure. At the same time he would record a negative (or credit) amount under cash . When money came in he would record a positive (or debit) amount under cash and negative (or credit) amount under revenue. By assuming that a positive cash balance is represented by a debit, adding debit amounts increases the cash balance.

As you can see, this ingenious monk had figured out a way to keep track of the money on hand AND also keep track of the total amounts going out and coming in at the same time. This, no doubt, made for easy financial reporting to his boss. Our ingenious monk-hero had created double-entry accounting. Increases in expenditures are represented by debits (to us, financial ledger expenditure FOAPALs containing acct codes 000010 - 009600, Pxxxxx, Cgxxxx, Uxxxxx), increases in revenues are represented by credits (to us, financial ledger revenue FOAPALs containing acct codes Rxxxxx), and cash is increased with a debit amount and reduced by a credit amount.

MISUNDERSTANDING #6: In Bannerland, there is no particular reason why pluses and minuses are used for recording transactions in the budgetary ledger.
[Editor’s Note: According to Einstein (Clyde Einstein, the accountant), everything is relative. Banner employs what is known as "normalized" accounting (as opposed to the historically accurate "debit/credit" accounting developed by our monk-hero/accountant). Normalized accounting means that positive amounts always reflect what is the normal balance for any account code, expenditure or revenue. In other words, under traditional debit/credit accounting, a $1000 credit balance in a revenue account is reflected as -1000. Under normalized accounting the same balance in the same revenue account is reflected as 1000. Normalized accounting assumes that a "+" (not to be confused with a debit) amount increases the amount in a budget ledger expenditure or a revenue FOAPAL.

If you can remember the following, you’ve got it made from the standpoint of understanding the budget ledger:
In the budget ledger, a "+" used to record a transaction to an expenditure FOAPAL is the same as a debit
In the budget ledger, a "+" used to record a transaction to a revenue FOAPAL is the same as a credit.
In the budget ledger, a "-" used to record a transaction to an expenditure FOAPAL is the same as a credit.
In the budget ledger, a "-" used to record a transaction to a revenue FOAPAL is the same as a debit.

Confused? Blame it all on the pointy-headed boss monk.]

In the next issue:
News Flash: Bannerslug Announces Management Shakeup in Bannerland

ODDS & ENDS

FIS / BANNER: None

REQUEST FOR FEEDBACK ISSUES:

Vicki Gutzwiller will be distributing a survey to Service Center Managers requesting feedback on changing the options allowed in the way that budget deficits and surpluses are carried forward into the new fiscal year. Based on preliminary, informal feedback, we are considering REPLACING the full FOAPAL carryforward option with a carryforward based on pool account code - activity code. Responses from Service Center Managers on behalf of their Service Centers to Vicki would be much appreciated.

Contributors: Kirk Lew
Your comments and suggestions are always welcome. Please direct them to the editor, Kirk Lew kllew@cats

Financial Affairs | Accounting Offices | Campus Controller | FIS

Comments to: controller@ucsc.edu - Maintained by FIS, Updated