OASIS IssuesOASIS Issues

Updates: BPI Reports and Query Group

Why, When, and How to Delete Queries

Bob Barton, MBA

Purchasing DepartmentPurchasing Department Issues Issues

Where Did All My PO’s Go?

Blanket Orders & Contracts…What Now?

Mark Seiler, CPM

Dirk Buesing, Buyer II

General Accounting DivisionGeneral Accounting Division(ACO)(ACO)

Long Term Debt and

Capital Lease Obligations

James D. MooreSenior Accountant

Presented by Frank Leonard February 22, 2005

Deferred Revenue Deferred Revenue Account AnalysisAccount Analysis

Schedule S-9Schedule S-9

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ObjectivesObjectives To provide departments the opportunity to

validate the data in deferred revenue accounts prior to external auditor’s review

To avoid unnecessary audit findings

To ensure proper representation of financial data

Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

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Deferred RevenueDeferred Revenue

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Deferred revenue arises when a potential revenue transaction does not meet both the “measurable” and “available” criteria for recognition in the current period.

Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Criteria for Revenue RecognitionCriteria for Revenue Recognition

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Under Accrual Basis of AccountingUnder Accrual Basis of Accounting (For Proprietary Funds only - Internal Service Funds, Enterprise Funds) :

Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Revenue must be earned (measurable) before it can be recognized. However, cash does not have to be received (available) before revenue is recognized.

Revenue must be earned (measurable) and available. This means it must be earned and cash must be received within 12 months. The revenue must also be eligible to recognize revenue.

Under Modified Accrual Basis of AccountingUnder Modified Accrual Basis of Accounting (For Governmental Funds only - General Fund, Special Revenue Funds, Capital Project Funds, and Debt Service Funds) :

Criteria for Revenue RecognitionCriteria for Revenue Recognition

Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

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Eligibility requirements: Allowable cost restrictions (Expenditure-driven /

Reimbursements) Time restrictions Contingencies Required characteristics of recipient

Criteria for Revenue RecognitionCriteria for Revenue Recognition

Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Eligible or EligibilityEligible or EligibilityThe characteristic that must exist for a given entity to be considered qualified or allowed to take legal ownership of the money received for a particular program.

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NOTE: Purpose restrictions cannot be used to establish NOTE: Purpose restrictions cannot be used to establish eligibility.eligibility.

A. Proceeds Received in Advance of Revenue A. Proceeds Received in Advance of Revenue Entitlement (Unearned)Entitlement (Unearned)

1. To receive cash in advance of revenue recognition:

Account Debit Credit

Cash (101100) $100Deferred Revenue (230XXX) $100

2. To recognize revenue once the criteria has been met:

Account Debit CreditDeferred Revenue (230XXX) $100Revenue (7XXXXX) $100

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Accounting TreatmentAccounting Treatment

B. Proceeds Received Subsequent to Revenue B. Proceeds Received Subsequent to Revenue Entitlement (Unavailable)Entitlement (Unavailable)

1. Once revenue has been earned by a governmental fund, a receivable and offsetting deferred revenue should be entered. If these amounts remain at year-end, it is considered “Unavailable.” These amounts should be identified using Schedule S-9.

Account Debit Credit

Receivable (11XXXX) $100

Deferred Revenue(230XXX) $100

(continued)…

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Accounting TreatmentAccounting Treatment

2. Once proceeds are received, (available), the entry should be reversed and the revenue should be recognized. Delaying the recognition of revenue until cash is received is a modified accrual concept for use with governmental funds only.Account Debit CreditReceivable (11XXXX) $100Deferred Revenue(230XXX) $100

To reverse initial entryCash (101100) $100Revenue(7XXXXX) $100

To recognize revenue

B. Proceeds Received Subsequent to Revenue B. Proceeds Received Subsequent to Revenue Entitlement (Unavailable)Entitlement (Unavailable)

Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Accounting TreatmentAccounting Treatment

Start Your Queries!

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1. Run a Summary Trial Balance of Current Year Period 0 only. See Query 1

2. Run a Summary Trial Balance of Prior Year (periods 0-998). This will give you the opportunity to see any adjustments made by ACO in period 998 of the prior year.

3. Reconcile period “0” of FY05 to the ending balance of FY04 and resolve any discrepancies.

Preparing Account Analysis Schedule S-9Preparing Account Analysis Schedule S-9

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

A. To reconcile period “0”A. To reconcile period “0”

Query 1Query 1(Summary)(Summary)Sample Fund – All Deferred Revenue

Fields

Criteria

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

First - Run to Excel

Highlight all data and sort the data by Account.

Query 1Query 1Sample Fund – All Deferred Revenue

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Use Query 1 information to fill in the Schedule S-9 columns (b) through (e)

Now is when you should validate the balances in period 0. Feel free Now is when you should validate the balances in period 0. Feel free to insert rows to identify balances that will not be recognized within to insert rows to identify balances that will not be recognized within the next 12 months.the next 12 months.

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Is it deferred revenue??

Is it deferred revenue??

Ask yourself…

Preparing Account Analysis Schedule S-9Preparing Account Analysis Schedule S-9

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

A. To reconcile period “0”A. To reconcile period “0”2. Run a Summary Trial Balance of Prior Year (periods 0-

998). This will give you the opportunity to see any adjustments made by ACO in period 998 of the prior year.

Query 1Query 1(Summary)(Summary)Sample Fund – All Deferred Revenue

Fields

Criteria

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Change Fiscal Year to “2004”

Change Accounting Period to “between

0-998”

3. Reconcile period “0” of FY05 to the ending balance of FY04 and resolve any discrepancies.

Preparing Account Analysis Schedule S-9Preparing Account Analysis Schedule S-9

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

A. To reconcile period “0”A. To reconcile period “0”

1. If no change to beginning balance, then verify to see why it has not been recognized as revenue.

2. If the ending balance in the deferred revenue is positive, then this is a sign of over-reclassification. (Hint: Liability accounts have natural credit balances).

3. Be sure to research and adjust the balance prior to submitting it to the ACO.

4. Identify when revenue recognition is expected to take place in order to enter the amounts accurately in columns (k) & (l) of the schedule.

Preparing Account Analysis Schedule S-9Preparing Account Analysis Schedule S-9

Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

B. Validate Current Year Deferred Revenue B. Validate Current Year Deferred Revenue TransactionsTransactions

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Query 2 Query 2 (Detail)(Detail)Sample Fund – All Deferred Revenue

Fields

Criteria

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Query 2 Query 2 (Detail)(Detail)Sample Fund – All Deferred Revenue

First - Run to Excel

Highlight all data and sort the data by Account, then by date, then by Journal ID.

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Query 2 Query 2 (Detail) (Detail) continuedcontinued

Sample Fund – All Deferred Revenue

This information can then be included into schedule S-9 columns (f) through (l)

With the data still highlighted run a subtotal by Account.

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Use Query 2 information to fill in the Schedule S-9 columns (f) through (l)Use Query 2 information to fill in the Schedule S-9 columns (f) through (l)

Now is when you should validate current year deferred revenue transactions Now is when you should validate current year deferred revenue transactions through period 9. If balances require reclassification, doing it now allows the through period 9. If balances require reclassification, doing it now allows the department to avoid unnecessary auditor review, eliminate findings and department to avoid unnecessary auditor review, eliminate findings and better ensure that financial data is represented accurately.better ensure that financial data is represented accurately.

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

Is it deferred revenue??

Is it deferred revenue??

Ask yourself…

Questions??Questions??

Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

ACO ContactsACO Contacts

For questions regarding deferred revenue, please contact:

Frankie Ezzat at micro 5-3851 or

Frank Leonard at micro 5-3877

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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9

General Accounting DivisionGeneral Accounting Division(ACO)(ACO)

Year-End Reminders

Review ACO Calendar Dates

Vi JacksonPrincipal Accountant