ACCRUAL PROCESS
Updated 9/13/2010
ACCRUALS

Definition:

Expense Accrual:
–
–

A month-end journal entry (either system generated or manual) that accounts for goods
or services that were received in a given month but the invoice was not posted by
month end
Purpose: To allow monthly expense reports to accurately report actual medical center
expenses in the event there are invoicing inconsistencies or delays.
Revenue Accrual:
–
–
–
Establishment of a collectible receivable
A month end manual journal entry to report revenue that was generated in a given
month when the corresponding cash payment was not received by month end.
Purpose: To allow monthly revenue reports to accurately report actual medical center
revenue in the event there are delays in receipt or posting of cash.
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What Causes an Expense Accrual?

Two triggers for expense accruals:

A good or service is purchased and received, but invoice has not been
processed/matched to purchase order in the system by month end

A good or service is invoiced infrequently or inconsistently, and needs to be
expensed over multiple periods of a fiscal year
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Expense Accruals
Accrual Type
Entered in Dept GL
Reversed from Dept GL
Peoplesoft
(Purchasing)
Generated
Automatically
Reversed
generated when
goods/services that were ordered
via a purchase order are received
in Peoplesoft
For items covered in “E-entry”,
manual intervention by
accounting may be necessary to
override automatic accrual
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in subsequent month
Expense Accruals
Accrual Type
Entered in Dept GL
Reversed from Dept GL
E-Entry
(Pre-set monthly
accruals done in
Accounting)
Designed
Accounting
for consistent or predictable
goods/services that will be paid infrequently or
invoiced inconsistently (I.e. annual service
agreement) and needs to be expensed across
multiple periods
New e-entry items to be created at manager
request (either during budget process or ad
hoc)
Accounting may help managers identify
appropriate e-entry items, but will only create
with manager approval
Communications and set-up of E-entry will
occur prior to start of the upcoming fiscal year
E-entry items to continue regardless of dollar
amount if department manager approves
E-entries will automatically occur during the
fiscal year without additional approval required
unless Accounting notified of an operational
change.
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will manually
accrue and/or reverse
accruals each month based
upon criteria agreed upon
with manager.
Expense Accruals
Accrual Type
Entered in Dept GL
Reversed from Dept
GL
Journal Entry
(Ad hoc accruals
done manually in
accounting)
Manually generated in Accounting in
response to:
Departmental Manager request
Journal entries automatically
reverses the following month
unless department manager
requests otherwise.
Accounting
may contact department
manager to determine if ad hoc accrual
necessary in any month when monthly and
YTD variance is significant.
All
outstanding expenses greater than
$1,000 will be accrued to allow allocation to
correct fiscal period.
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Assumptions

Accounting will continue to review automatic Peoplesoft accruals to
implement E-entry accruals and reversals.

Current year E-entry accruals are reconfirmed by Accounting staff
prior to the new fiscal year to determine if any adjustments need to
be made.

Accrual policies and definitions will be distributed and reviewed
during budget process.
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What Causes a Revenue Accrual?

Revenue Accruals are rare and only done when confirmed revenue could
not be posted to the general ledger at month close.

Triggers:

Other operating revenue that is confirmed could not be posted to the general
ledger (I.e. HMFP monthly parking payment not received prior to month close);
typically entered at departmental request

Standard revenue accruals for long-term revenue sources (I.e. Rental Income,
Resident income, other affiliation agreements)

Accounting may contact department to determine if other operating revenue
accrual required if significant variance observed.
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Contact

For further information or questions, please contact:

Sue Gammons
Accounting Manager

Or

Eileen Simons
Assistant Controller, Fiscal Services 7-0364


7-5408
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