Business Process Accounting for University Revenue Bonds
DRAFT
May 18, 2005
Accounting for University Revenue Bonds – draft
05/18/05
TABLE OF CONTENTS
Business Process Description ........................................................................................... 3
Key Assumptions ............................................................................................................................. 3
Conversion............................................................................................................................................... 3
Revenue Bond Proceeds in PeopleSoft General Ledger ....................... 4
General Procedures ................................................................................................................ 5
Record the Bond Issuance ................................................................................................ 7
Fund and Manage the Projects ....................................................................................... 8
Bond Issuance Costs ........................................................................................................... 12
Debt Service ................................................................................................................................ 16
Capitalized Interest ................................................................................................................ 20
Reconciliation Tips ....................................................................................................................... 23
Construction Projects ......................................................................................................... 23
Control Projects ....................................................................................................................... 24
Program Codes ......................................................................................................................... 25
Bond Payable ............................................................................................................................. 25
Bond Issuance Costs ........................................................................................................... 25
Other Bond Issuance Scenarios ..................................................................................... 26
Page 2 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Business Process Description
Frequently the University of Maine System issues Revenue Bonds to fund capital projects. The receipt and
spending of these bond proceeds must be specifically identified in our accounting system both for financial
reporting and federal regulation purposes. Properly accounting for the proceeds is a shared responsibility of
the System Office and the Campuses. The purpose of this document is to:
1.
2.
3.
4.
Identify responsibilities belonging to the campuses.
Identify responsibilities belonging to the System Office.
Describe the numerous procedures required to properly account for the Revenue Bonds.
Provide reconciliation tips to ensure that the Revenue bond proceeds are properly recorded in the
accounting system
The System primarily issues Revenue Bonds to fund construction projects; however, some or all of an
issuance may be used to retire previously issued bonds. This document focuses on bonds issued to fund
construction projects.
Key Assumptions
The reader is familiar with PeopleSoft GL Chartfields and their use.
The reader is familiar with the following Business Process Documents:




“Journal Entry (Online) – Enter” and/or “Journal Entry (Excel) – Enter/Copy”
“Requesting a Project – Completing the Project Create Form”
“Accounting for Capital and Maintenance Projects”
“Budget Adjustments & Transfers.”
Conversion
This document is designed to describe how new University Revenue Bond issuances should be accounted for
once PeopleSoft General Ledger is implemented. The process described in this document differs somewhat
from what was used with the old FAST system due to limitations of that system. Consequently, just after
conversion, chartfield combinations used for existing University Revenue Bonds may not look exactly as
illustrated in this document. After conversion the SAD, working with campus personnel, will make needed
adjustments to account for the existing bond proceeds in accordance with this document.
Page 3 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Revenue Bond Proceeds in PeopleSoft General Ledger
Introduction
Prior to issuing Revenue Bonds, System management, working with Campus management, identifies what
projects are to be funded with the new Revenue Bond proceeds. Once the System issues the bonds,
numerous procedures must occur to properly account for the Revenue Bonds. These procedures are
grouped below in like areas and are discussed in this document by area. The sequence column indicates the
order that these procedures would occur. The procedures with a sequence indicator of ‘6+’ do not follow a
set order in relation to one another.
Procedures
General
» Request creation of program code(s) for the bond issuance.
» Request creation of control project(s).
» Request creation of project code for bond issuance costs.
» Request creation of program code(s) for debt service reserves.
Record the Bond Issuance
Fund and Manage the Projects
» Identify existing projects or request creation of new projects.
» Post balanced budgets for each identified project.
» Move bond proceeds to the individual project(s).
» Spend the bond monies on qualified expenses.
» Monitor spending and draw money from the investment account.
» Move current budget to other projects as applicable.
» Move bond proceeds to other projects based on budget change.
» Close the project(s).
Bond Issuance Costs
» Record balanced budget.
» Move bond proceeds to the bond issuance costs project.
» Pay bills for bond issuance costs.
» Monitor spending and draw money from the investment account.
» Capitalize bond issuance costs.
» Record amortization of bond issuance costs.
Debt Service
» Charge the campuses for debt service.
» Record payments to the bondholders.
» Record accrued interest.
» Transfer bonds from unexpended plant to plant fund invested.
» Amortize bond discounts and premiums
» Record current portion of bonds and bond discounts/premiums.
Capitalized Interest
Sequence
Timing
1
1
1
1
2
At issuance
At issuance
At issuance
At issuance
At issuance
3
4
5
6+
6+
6+
6+
6+
At issuance
At issuance
At issuance
Daily
Twice/month
As needed
As needed
Once
4
5
6+
6+
6+
6+
At issuance
At issuance
Monthly
Twice/month
Year-end
Year-end
6+
6+
6+
6+
6+
6+
July
Sept & March
Year-end
Year-end
Year-end
Year-end
Year-end
6+
Responsible Party:
SAD
Campus
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
As shown in the remainder of this document, the above procedures affect numerous funds in the PeopleSoft
General Ledger. A brief summary of the funds involved is provided below:
Fund
19-Designated Debt Service
Items Recorded in the Fund
►
►
►
Reserves holding the Campuses’ payments until payment is due to the
bondholders
Expense for interest paid to the bond holders
Liability for accrued interest
Page 4 of 26
Accounting for University Revenue Bonds – draft
Fund
05/18/05
Items Recorded in the Fund
28-Restricted Plant
►
►
Investment of unspent bond proceeds and the related bonds payable
and premium/discount
Construction project costs until they are capitalized
28-Restricted Plant
►
Bond issuance costs until they are capitalized
48-Plant Fund – Net
Investment
►
Capitalized construction project costs and related bonds payable and
premium/discount
Capitalized bond costs
►
Several other funds may be involved as well, depending on what chartfield combinations the Campuses
choose to charge for their debt service payments.
To aid in the discussion of each procedure, illustrations have been provided of what would have been done to
record UMF’s share of the 2004 Revenue Bonds for new capital projects. Information related to the spending
of these proceeds is fabricated for illustration purposes.
General Procedures
>> Request Creation of Program Code(s) for the Bond Issuance
University revenue bond proceeds are identified in PeopleSoft General Ledger through the use of a
specific program code for each bond issuance. The SAD is responsible for requesting and creating these
program codes. The first digit of the program code indicates the applicable business unit and the
remaining four digits are the same for all business units. At the time this document was created, the
following program codes (the ‘C’ indicates the business unit number) existed in PeopleSoft General
Ledger for revenue bonds:
Program Number
C9200
C9202
C9203
C9204
C9205
Program Description
1998 University Bonds
2000 University Bonds
2002 University Bonds
2003 University Bonds
2004 University Bonds
These program codes are used in combination with several other chartfields to identify different aspects of
the bond issuance: project expenditures, liability, investments, bond costs, etc.
Illustration: UMF is to receive a portion of the 2004 University Revenue Bonds to build a new residence hall.
The SAD creates program code 29205 to track the 2004 University Revenue Bonds at UMF.
>> Request Creation of Control Project(s)
The SAD must also establish a control project at each campus to record the initial receipt of the bond
proceeds. Refer to business process document, “Requesting a Project – Completing the Project Request
Form’ for guidance on creating the control projects. Separate control project numbers are used for each
bond issuance.
Please note that a budget is not to be established for the control project. Please also note that the control
project should only be used in combination with department ‘C000005-Restricted Plant’, fund ‘28Restricted Plant’, and the bond issue program code.
Page 5 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Illustration: The SAD creates project code 2200009 as the control project for UMF’s share of the 2004
University Revenue Bond proceeds. Transactions related to the control project will be posted to
chartfield strings that include the following:
BU
UMS02
DEPT
2000005
FUND
28
PROGRAM
29205
PROJECT
2000009
>> Request Creation of Project Code for Bond Issuance Costs
When the System issues bonds it incurs various costs that must be tracked and eventually capitalized. To
track these costs the SAD should request the creation of a new project code for the System Office. This
project code must be used in combination with fund ‘28-Restricted Plant’, department ‘8000005-Plant
Fund’, and SWS’ program code for the new bond issuance.
Illustration: The SAD creates project code 8200036 to track bond issuance costs for the 2004 University
Revenue Bonds. Transactions related to the bond issuance costs project will be posted to
chartfield strings that include the following:
BU
UMS08
DEPT
8000005
FUND
28
PROGRAM
89205
PROJECT
8200036
>> Request Creation of Program Code for Debt Service Reserves
Each campus receiving revenue bond proceeds is responsible for paying the debt service on those bonds.
At the beginning of each fiscal year, the SAD charges the campuses for their share of the debt service
and places the money in a campus reserve until the bond payments are actually due to the bondholders.
To track the reserve associated with each bond issuance, a separate program code is used for each one.
Each time the System issues new revenue bonds, the SAD must request the creation of new reserve
program codes for the issuance. Once again, the first digit of the program code indicates the applicable
business unit and the remaining four digits are the same for all business units. At the time this document
was created, the following program codes (the ‘C’ indicates the business unit number) existed in
PeopleSoft General Ledger for the debt service reserves for revenue bonds:
Program Number
C8900
C8902
C8903
C8904
C8905
Program Description
Reserve – 1998 Rev Bonds
Reserve – 2000 Rev Bonds
Reserve – 2002 Rev Bonds
Reserve – 2003 Rev Bonds
Reserve – 2004 Rev Bonds
Please note that the program code for the debt service reserve should only be used in combination with
fund ‘19-Designated Debt Service’ and department ‘C000005-Plant Administration.’
Illustration: The SAD creates program 28905 for UMF’s debt service reserve for the 2004 University Revenue
Bonds.
Page 6 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Record the Bond Issuance
The SAD will submit the entry to record the bond issuance for all campuses that receive a portion of the
proceeds. A revenue bond issuance typically includes some combination of the following items: proceeds
designated for projects, proceeds designated for bond issuance costs, proceeds designated for capitalized
interest, proceeds designated for miscellaneous other purposes, bond issuance costs incurred at closing,
bond discounts or premiums, and liability for the bonds. The breakdown of these items by campus is
provided by the System’s financial advisor for the bond issuance.
Please note the following when recording the issuance of new bonds:



Illustration:
Issuance of the bonds should be recorded in the control project(s) established specifically for the
bond issuance in question – see earlier discussion of control projects on page 5.
Proceeds received by the campuses for bond issuance costs should be transferred to the System’s
bond issuance costs project. The System manages and pays the bills for all bond issuance costs.
Bond costs incurred at closing by the campus should be transferred to the System’s bond issuance
costs project. As the bond costs for the issuance as a whole are incurred and capitalized, they will
be transferred back to the campuses for inclusion on their statements of net assets. This process
is discussed later in this document under ‘Bond Issuance Costs’.
The System issues new revenue bonds in March 2004. UMF’s share of the total bond issuance
includes the following:
Par value of bonds issued
Bond premium
Gross proceeds
Less bond costs incurred at closing
Net Proceeds Received
$5,910,000.00
55,482.90
5,965,482.90
(81,203.40)
$5,884,279.50
Project proceeds invested
Capitalized interest invested
Issuance cost proceeds invested
Total Distribution of Net Proceeds
$5,632,560.56
216,279.51
35,439.43
$5,884,279.50
The SAD submits the following entry to the ACTUALS ledger to record issuance of UMF’s share of
the bonds:
LEDGER
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
BU
DEPT
FUND
PROGRAM
UMS02
UMS02
UMS02
UMS02
UMS02
UMS02
UMS08
UMS08
UMS08
UMS08
2000005
2000005
2000005
2000005
2000005
2000005
8000005
8000005
8000005
800005
28
28
28
28
28
28
28
28
28
28
29205
29205
29205
29205
29205
29205
29205
29205
29205
29205
PROJECT ACCOUNT CLASS
2200009
2200009
2200009
2200009
2200009
2200009
8200036
8200036
8200036
8200036
12700
12700
72800
27000
27010
72800
12700
82800
60000
82800
Page 7 of 26
01
02
03
AMOUNT
5,632,560.56
216,279.51
35,439.43
(5,910,000.00)
(55,482.90)
81,203.40
35,439.43
(35,439.43)
81,203.40
(81,203.40)
Jln Line Description
Project proceeds
Cap interest proceeds
Xfer invest to UMS08
Bonds payable
Premium
Xfer costs to UMS08
Xfer invest from UMS02
Xfer invest from UMS02
Xfer costs from UMS02
Xfer costs from UMS02
Accounting for University Revenue Bonds – draft
05/18/05
Below is a representation of the GL Inquiry display you would see for UMF’s control project just
after issuance of the 2004 Revenue Bonds is recorded:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS02
2000005
28
29205
2200009
Accounting Period:
University of Maine at Farmington
Plant Fund Administration
Restricted Plant
2004 University Rev Bonds
2004 University Rev Bonds
Account
Description
12700 Deposits with Bond Trustees
12700 Deposits with Bond Trustees
27000 Bonds payable
27010 Bonds payable - premium
Revenues/Expenses
72800 Transfers to Restr Plant
Net
Class
01
02
9-March
Beginning of Beginning
Year-to-Date
Current
Year
of Month Current Month
Activity
Balance
0.00
0.00 5,632,560.56 5,632,560.56 5,632,560.56
0.00
0.00
216,279.51
216,279.51
216,279.51
0.00
0.00 -5,910,000.00 -5,910,000.00 -5,910,000.00
0.00
0.00
-55,482.90
-55,482.90
-55,482.90
Class Base Budget
0.00
0.00
Current
Budget Current Month Year-to-Date
0.00
116,642.83
116,642.83
0.00
116,642.83
116,642.83
Project-toBalance
date
Encumb
Available
116,642.83
-116,642.83
116,642.83
0.00 -116,642.83
Fund and Manage the Projects
>> Identify/Create Project Codes and Record Balanced Budgets
The Campus must identify existing projects that are to be funded with the revenue bond proceeds or
request the creation of new project codes. The SAD will record the balanced budget for the identified
project(s); however, any subsequent budget changes are the responsibility of the Campus. Both
parties should follow the guidance in business process documents “Requesting a Project – Completing
the Project Request Form “ and “Accounting for Capital and Maintenance Projects.”
In recording the budget for the indicated projects please note that the total amount approved to be spent
on the project(s) from the revenue bonds may be more than the actual net proceeds received by the
campus. This is because the System sometimes borrows less than what is needed, anticipating that the
invested bond proceeds will earn enough interest to fund the difference. In this situation the budgeted
revenues for the project(s) would include a transfer from the control project and interest income.
Illustration: UMF’s share of the bond proceeds will be used for a new residence hall. A project code does not
already exist for this project so UMF requests that project code 2100008 be created.
The approved budget totals $5.7 million; however, UMF only received $5,632,560.56 in project
proceeds. The remaining $67,439.44 will be funded from interest earnings on the invested bond
proceeds. The SAD submits the following entry to record a balanced budget for the combination
of project 2100008 and program 29205 to the ‘BUDGET’ ledger:
LEDGER
BU
DEPT
BUDGET UMS02 2721700
BUDGET UMS02 2721700
BUDGET UMS02 2721700
FUND
PROGRAM
PROJECT
ACCOUNT
28
28
28
29205
29205
29205
2100008
2100008
2100008
67100
82800
44100
Page 8 of 26
CLASS
AMOUNT
Jln Line Description
5,700,000.00 Budgeted expenses
(5,632,560.56) Net proceeds
(67,439.44) Anticipated interest
Accounting for University Revenue Bonds – draft
05/18/05
Below is a representation of the GL Inquiry display you would see for the residence hall project
just after this entry is made:
Fiscal Year: 2004
Business Unit: UMS02
Department: 2721700
Fund Code: 28
Program: 29205
Project: ;2100008
Operating Unit:
Assets/Liabilities
Accounting Period:
University of Maine at Farmington
Facilities Capital Projects
Restricted Plant
2004 University Rev Bonds
New Residence Hall
Account
Description
12700 Deposits with Bond Trustees
01
Beginning
of Year
0.00
Class
Base
Budget
9-March
Beginning of
Month
0.00
Current Month
0.00
Year-to-Date
Activity
0.00
Current Month
Year-to-Date
Current
Balance
0.00
Revenues/Expenses
Account
Description
Current Budget
Project-toDate
Encumb
Balance Available
44100 Interest income
82800 Transfers from Restr Plant
0.00
-67,439.44
0.00
0.00
0.00
0.00
-67,439.44
0.00
-5,632,560.56
0.00
0.00
0.00
0.00
-5,632,560.56
Total Revenues
0.00
-5,700,000.00
0.00
0.00
0.00
0.00
-5,700,000.00
67100 Main construction contract
0.00
5,700,000.00
0.00
0.00
0.00
0.00
5,700,000.00
0.00
0.00
5,700,000.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
5,700,000.00
0.00
Total Expenses & Transfers
Net
>> Move Bond Proceeds to Individual Project(s)
Once the budget has been recorded, the SAD moves the bond proceeds from the control project to the
individual project(s) being funded by the bonds and posts a transfer between the projects.
Illustration: The SAD submits the following entry to move $5,632,560.56 of investment from control project
2200009 to project 2100008 and to record a transfer for the same amount in the ‘ACTUALS’
ledger.
LEDGER
BU
DEPT
ACTUALS
ACTUALS
ACTUALS
ACTUALS
UMS02
UMS02
UMS02
UMS02
2721700
2000005
2000005
2721700
FUND PROGRAM PROJECT ACCOUNT CLASS
28
28
28
28
29205
29205
29205
29205
2100008
2200009
2200009
2100008
Page 9 of 26
12700
12700
72800
82800
01
01
AMOUNT
5,632,560.56
(5,632,560.56)
5,632,560.56
(5,632,560.56)
Jln Line Description
Bond proceeds
Bond proceeds
Bond proceeds
Bond proceeds
Accounting for University Revenue Bonds – draft
05/18/05
Below is a representation of the GL Inquiry displays you would see for the chartfield combinations
for the control project and the residence hall project just after this entry is made:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS02
2000005
28
29205
2200009
Account
Description
12700 Deposits with Bond Trustees
12700 Deposits with Bond Trustees
27000 Bonds payable
27010 Bonds payable - premium
Revenues/Expenses
72800 Transfers to Restr Plant
Net
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS02
2721700
28
29205
2100008
Account
Description
12700 Deposits with Bond Trustees
Accounting Period:
9-March
University of Maine at Farmington
Plant Fund Administration
Restricted Plant
2004 University Rev Bonds
2004 University Rev Bonds
Class
01
02
Beginning of Beginning
Current
Year-to-Date
Current
Year
of Month
Month
Activity
Balance
0.00
0.00
0.00
0.00
0.00
0.00
0.00
216,279.51
216,279.51
216,279.51
0.00
0.00 -5,910,000.00 -5,910,000.00 -5,910,000.00
0.00
0.00
-55,482.90
-55,482.90
-55,482.90
Class Base Budget
0.00
0.00
Current
Budget
0.00
0.00
Accounting Period:
University of Maine at Farmington
Facilities Capital Projects
Restricted Plant
2004 University Rev Bonds
New Residence Hall
01
Beginning
of Year
0.00
Class
Base
Budget
Current
Month
Year-to-Date
5,749,203.39 5,749,203.39
5,749,203.39 5,749,203.39
Project-todate
Encumb
5,749,203.39
5,749,203.39
0.00
Balance
Available
-5,749,203.39
-5,749,203.39
9-March
Beginning of
Month
Current Month
0.00
5,632,560.56
Year-to-Date
Activity
5,632,560.56
Current
Balance
5,632,560.56
Year-to-Date
Project-toDate
Revenues/Expenses
Account
Description
Current Budget
Current Month
Encumb
Balance
Available
44100
Interest income
0.00
-67,439.44
0.00
0.00
0.00
0.00
82800
Transfers from Restr Plant
0.00
-5,632,560.56
-5,632,560.56
-5,632,560.56
-5,632,560.56
0.00
0.00
Total Revenues
0.00
-5,700,000.00
-5,632,560.56
-5,632,560.56
-5,632,560.56
0.00
-67,439.44
Main construction contract
0.00
5,700,000.00
0.00
0.00
0.00
0.00
5,700,000.00
Total Expenses & Transfers
0.00
0.00
5,700,000.00
0.00
0.00
-5,632,560.56
0.00
-5,632,560.56
0.00
-5,632,560.56
0.00
0.00
5,700,000.00
5,632,560.56
67100
Net
-67,439.44
>> Spend the Bond Monies on Qualified Expenses and Draw Money from the Investment
Account
The Campuses must spend the revenue bond proceeds on qualified expenses in accordance with
University of Maine System policies. As discussed in the business process document, “Accounting for
Capital and Maintenance Projects,” a single project number may be used in combination with several
program codes. As project costs are incurred the Campus must select the program to be charged. It is
imperative that the Campus charge the appropriate program code when the costs are first recorded. The
SAD routinely withdraws money from the revenue bond investment accounts to reimburse the expenses
charged to the revenue bond program codes. If the Campus later reclassifies one of these expenses to a
different program code, the System is left in a situation of having overdrawn money from the investment
accounts. As an issuer of tax-exempt bonds, the System is subject to federal regulations requiring them
to only withdraw money from the investment accounts after qualified expenses have been incurred.
Page 10 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Illustration: During April 2004, UMF spends $500,000 from the combination of program 29205 and project
2100008. In early May 2004, the SAD draws this amount from the investment account.
Below is a representation of the GL Inquiry display you would see in May for this chartfield
combination just after the reimbursement is received:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS02
2721700
28
29205
2100008
Accounting Period:
University of Maine at Farmington
Facilities Capital Projects
Restricted Plant
2004 University Rev Bonds
New Residence Hall
Account
Description
12700 Deposits with Bond Trustees
01
Beginning
of Year
0.00
Class
Base
Budget
11-May
Beginning of
Month
Current Month
5,632,560.56
-500,000.00
Year-to-Date
Activity
Current Balance
5,132,560.56
5,132,560.56
Revenues/Expenses
Account
Description
Current Budget
Current Month
Year-to-Date
Project-to-Date
Encumb
Balance
Available
44100
Interest income
-67,439.44
0.00
0.00
0.00
0.00
82800
Transfers from Restr Plant
0.00
-5,632,560.56
0.00
-5,632,560.56
-5,632,560.56
0.00
0.00
Total Revenues and Transfers
0.00
-5,700,000.00
0.00
-5,632,560.56
-5,632,560.56
0.00
-67,439.44
Main construction contract
0.00
5,700,000.00
0.00
500,000.00
500,000.00
0.00
5,200,000.00
Total Expenses & Transfers
0.00
0.00
5,700,000.00
0.00
0.00
0.00
500,000.00
-5,132,560.56
500,000.00
-5,132,560.56
0.00
0.00
5,200,000.00
5,132,560.56
67100
Net
-67,439.44
>> Move Budget and Bond Proceeds to Other Projects
In the event that the originally recorded revenue bond budget is not needed for a project, budget may
need to be moved to another qualified project. In this situation, the Campus should submit a journal entry
to move current budget. See Business Process Document “Accounting for Capital and Maintenance
Projects” for more information regarding budget adjustments. Pursuant to the Campus’ budget entry, the
SAD will move the appropriate amount of bond proceeds from the original project to the new project.
Illustration: In late June 2004, UMF realizes that $250,000 of the original budget will not be needed for the
residence hall project; therefore they process the following journal entry to move $250,000 of the
budget to another qualified project (project 2100029). This entry is made to the ‘BUDGET’ ledger:
LEDGER
BUDGET
BUDGET
BUDGET
BUDGET
BU
DEPT
UMS02
UMS02
UMS02
UMS02
2721700
2721700
2721700
2721700
FUND PROGRAM PROJECT ACCOUNT CLASS
28
28
28
28
29205
29205
29205
29205
2100008
2100029
2100029
2100008
82800
82800
67100
67100
AMOUNT
Jln Line Description
250,000.00
(250,000.00)
250,000.00
(250,000.00)
Move rev budget
Move rev budget
Move exp budget
Move exp budget
Pursuant to UMF’s journal entry, the SAD submits the following journal entry to move an equal
amount of the bond proceeds to the new project. This entry is made to the ‘ACTUALS’ ledger:
LEDGER
BU
DEPT
ACTUALS
ACTUALS
ACTUALS
ACTUALS
UMS02
UMS02
UMS02
UMS02
2721700
2721700
2721700
2721700
FUND PROGRAM PROJECT ACCOUNT CLASS
28
28
28
28
29205
29205
29205
29205
2100029
2100008
2100008
2100029
Page 11 of 26
12700
12700
82800
82800
01
01
AMOUNT
250,000.00
(250,000.00)
250,000.00
(250,000.00)
Jln Line Description
Move investment
Move investment
Move funding
Move funding
Accounting for University Revenue Bonds – draft
05/18/05
Below is a representation of the GL Inquiry display you would see for the residence hall project
just after these entries are posted:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS02
2721700
28
29205
2100008
Accounting Period:
University of Maine at Farmington
Facilities Capital Projects
Restricted Plant
2004 University Rev Bonds
New Residence Hall
01
Beginning
of Year
0.00
Class
Base
Budget
Account
Description
12700 Deposits with Bond Trustees
12-June
Beginning of
Month
Current Month
5,132,560.56
-250,000.00
Year-to-Date
Activity
4,882,560.56
Current
Balance
4,882,560.56
Year-to-Date
Project-toDate
Revenues/Expenses
Account
Description
Current Budget Current Month
Encumb
Balance
Available
44100
Interest income
-67,439.44
0.00
0.00
0.00
0.00
82800
Transfers from Restr Plant
0.00
-5,382,560.56
250,000.00
-5,382,560.56
-5,382,560.56
0.00
0.00
Total Revenues and Transfers
0.00
-5,450,000.00
250,000.00
-5,382,560.56
-5,382,560.56
0.00
-67,439.44
Main construction contract
0.00
5,450,000.00
0.00
500,000.00
500,000.00
0.00
4,950,000.00
Total Expenses & Transfers
0.00
0.00
5,450,000.00
0.00
0.00
250,000.00
500,000.00
-4,882,560.56
500,000.00
-4,882,560.56
0.00
0.00
4,950,000.00
4,882,560.56
67100
Net
-67,439.44
>> Close the Projects
When a construction project is complete, the Campus should close the project following the guidelines in
the process document, “Accounting for Capital and Maintenance Projects.” Please note, however, that all
of the proceeds from a revenue bond issuance must be spent on qualified capital projects. None of the
proceeds may be transferred to a reserve or used for general operations.
Bond Issuance Costs
As previously mentioned in this document under ‘General Procedures’, the SAD must create a System project
to track the costs associated with issuing the revenue bonds. These costs will ultimately be capitalized and
amortized over the life of the bond issuance. The bond issuance costs project should be handled in a similar
manner to the construction projects:



Record balanced budget
Spend the money on qualified expenses
Draw money from the bond proceeds investment account.
>> Record Balanced Budget
The SAD must record a balanced budget for the bond issuance costs project. The dollar amount of the
budget can be found in the bond paperwork from the System’s financial advisor. Only one project is used
to record the bond issuance costs even though the financial advisor may have allocated the costs to each
campus receiving bond proceeds. The recorded budget for the project should be the total for the entire
bond issue.
Page 12 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Illustration: According to the paperwork for the 2004 Revenue Bond issuance, $594,529.80 was incurred for
bond costs at closing in March. In addition, $146,677.56 of the bond proceeds have been
allocated to paying additional bond issuance costs. In the paperwork, the financial advisor
allocated the total of these two amounts to the campuses as follows:
UMF
UMFK
UMM
UM
USM
UMPI
SWS
$128,776.34
146,513.09
932.12
298,340.88
122,390.21
39,939.42
4,315.30
$741,207.36
The SAD will record a total budget of $741,207.36 in project 8200036 as follows:
LEDGER
BUDGET
BUDGET
BU
DEPT
UMS08 8000005
UMS08 8000005
FUND PROGRAM PROJECT ACCOUNT CLASS
28
28
29205
29205
8200036
8200036
AMOUNT
82800
60100
Jnl Line Description
(741,207.36) From controls projects
741,207.36 Bond costs
>> Move Bond Proceeds to the Bond Issuance Costs Project
This step actually occurs as part of the entry to record the bond issuance for each campus (see ‘Record
the Bond Issuance). As mentioned in that section, any project costs the campuses incur at closing and
any bond proceeds they receive for additional bond costs are to be transferred to the System’s bond
issuance costs project.
Illustration: The SAD records the bond issuance for all campuses. As part of the issuance entries,
transfers from the Campuses’ control projects to the System’s bond issuance costs project
are recorded. Below is a representation of the GL Inquiry display you would see for the bond
issuance costs project just after the bond issuance is recorded:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS08
8000005
28
29205
8200036
Account
Description
12700 Deposits with Bond Trustees
Accounting Period:
Univ of Maine System Office
Plant Fund
Restricted Plant
2004 University Rev Bonds
2004 Bond Issuance Costs
03
9-March
Beginning Beginning of
of Year
Month
Current Month
0.00
0.00
146,677.56
Year-to-Date
Activity
146,677.56
Current
Balance
146,677.56
Revenues/Expenses
Account
82800
60100
Description
Class
Base
Budget
Current Budget Current Month
Year-to-Date
Project-toDate
Encumb
Balance
Available
Transfers from Restr Plant
0.00
-741,207.36
-741,207.36
-741,207.36
-741,207.36
0.00
Total Revenues and Transfers
0.00
-741,207.36
-741,207.36
-741,207.36
-741,207.36
0.00
0.00
0.00
Professional Services
0.00
741,207.36
594,529.80
594,529.80
594,529.80
0.00
146,677.56
Total Expenses & Transfers
Net
0.00
0.00
741,207.36
0.00
594,529.80
-146,677.56
594,529.80
-146,677.56
594,529.80
-146,677.56
0.00
0.00
146,677.56
146,677.56
>> Pay Bills for Bond Issuance Costs and Draw Money from the Investment Account
It is the System’s responsibility to spend the revenue bond proceeds on qualified bond issuance expenses
in accordance with University of Maine System policies. Twice a month, the SAD withdraws money from
the revenue bond investment accounts to reimburse the expenses charged to the bond issuance costs
project. The entry for these reimbursements is similar to that used to record reimbursement of the
construction projects.
Page 13 of 26
Accounting for University Revenue Bonds – draft
05/18/05
>> Capitalize Bond Issuance Costs
At the end of each fiscal year the SAD must capitalize the year-to-date costs in the bond issuance costs
project and record them in fund ‘48-Plant Fund – Net Investment’. The costs in the project are not actually
reduced, but are instead reclassified to account code ‘74800-Transfer To Plant Net Investment.’ Please
note that account code ‘67699-Capitalized Costs’ should be credited instead of account code 60100. This
enables the SAD to continue monitoring project-to-date issuance costs incurred.
Except in rare circumstances, the capitalized bond issuance costs will be allocated to each campus that
received bond proceeds. The capitalized costs are to be posted to the following chartfield combination:
BU
UMS0C
DEPT
C000005
FUND
48
PROGRAM
C9XXX
PROJECT
ACCOUNT
15200
CLASS
Please note that the program code in the above combination identifies the bond issuance to which the
costs are related.
Illustration: As of June 30, 2004 the System has spent and been reimbursed for $729,122.47 of bond
issuance costs. The SAD determines how much is allocable to each campus and posts the
following entry to the ‘ACTUALS’ ledger:
UMF
UMFK
UMM
UM
USM
UMPI
SWS
LEDGER
BU
DEPT
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
UMS08
UMS08
UMS02
UMS02
UMS08
UMS08
UMS03
UMS03
UMS08
UMS08
UMS05
UMS05
UMS08
UMS08
UMS06
UMS06
UMS08
UMS08
UMS07
UMS07
UMS08
UMS08
UMS08
UMS08
8000005
8000005
2000005
2000005
8000005
8000005
3000005
3000005
8000005
8000005
5000005
5000005
8000005
8000005
6000005
6000005
8000005
8000005
7000005
7000005
8000005
8000005
8000005
8000005
$123,951.00
145,824.00
0.00
291,649.00
123,951.00
36,456.00
7,291.47
$729,122.47
FUND PROGRAM PROJECT ACCOUNT CLASS
28
28
48
48
28
28
48
48
28
28
48
48
28
28
48
48
28
28
48
48
28
28
48
48
89205
89205
29205
29205
89205
89205
39205
39205
89205
89205
59205
59205
89205
89205
69205
69205
89205
89205
79205
79205
89205
89205
89205
89205
8200036
8200036
8200036
8200036
8200036
8200036
8200036
8200036
8200036
8200036
8200036
8200036
Page 14 of 26
74800
67699
15200
82800
74800
67699
15200
82800
74800
67699
15200
82800
74800
67699
15200
82800
74800
67699
15200
82800
74800
67699
15200
82800
AMOUNT
Jnl Line Description
123,951.00
(123,951.00)
123,951.00
(123,951.00)
145,824.00
(145,824.00)
145,824.00
(145,824.00)
291,649.00
(291,649.00)
145,824.00
(145,824.00)
123,951.00
(123,951.00)
123,951.00
(123,951.00)
36,456.00
(36,456.00)
36,456.00
(36,456.00)
7,291.47
(7,291.47)
7,291.47
(7,291.47)
UMF share
UMF share
Bond costs
Bond costs
UMFK share
UMFK share
Bond costs
Bond costs
UM share
UM share
Bond costs
Bond costs
USM share
USM share
Bond costs
Bond costs
UMPI share
UMPI share
Bond costs
Bond costs
SWS share
SWS share
Bond costs
Bond costs
Accounting for University Revenue Bonds – draft
05/18/05
Below is a representation of the GL Inquiry display you would see for the bond issuance costs
project just after this entry is recorded:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
UMS08
8000005
28
89205
8200036
Univ of Maine System Office
Plant Fund
Restricted Plant
2004 University Rev Bonds
2004 Bond Issuance Costs
Account
Description
12700 Deposits with Bond Trustees
Account
82800
03
Class
Description
Beginning Beginning of
Year-to-Date
of Year
Month
Current Month
Activity
0.00
12,084.89
0.00
12,084.89
Base
Budget
Current
Budget
Current Month Year-to-Date
Current
Balance
12,084.89
Project-toDate
Encumb
Balance
Available
Transfers from Restr Plant
0.00
-741,207.36
0.00
-741,207.36
-741,207.36
0.00
Total Revenues and Transfers
0.00
-741,207.36
0.00
-741,207.36
-741,207.36
0.00
0.00
60100
Professional Services
0.00
741,207.36
0.00
729,122.47
729,122.47
0.00
12,084.89
67699
Capitalized Costs
0.00
0.00
-729,122.47
-729,122.47
-729,122.47
0.00
729,122.47
Transfer to Plant - Net Investment
0.00
0.00
729,122.47
729,122.47
729,122.47
0.00
-729,122.47
Total Expenses & Transfers
0.00
0.00
741,207.36
0.00
0.00
0.00
729,122.47
-12,084.89
729,122.47
-12,084.89
0.00
0.00
12,084.89
12,084.89
74800
Net
0.00
>> Record Amortization of Bond Issuance Costs
At the end of each fiscal year the SAD must record amortization of each Campus’ capitalized bond costs.
The entry to record amortization only impacts fund ‘48-Plant Fund – Net Investment’. The calculation of
amortization should be done in accordance with generally accepted accounting principles.
Illustration: The SAD determines that UMF’s FY2004 amortization for its 2004 bond costs is $1,033 and
submits the following entry to record the amortization:
LEDGER
BU
DEPT
ACTUALS UMS02 2000005
ACTUALS UMS02 2000005
FUND PROGRAM PROJECT ACCOUNT CLASS
48
48
29205
29205
Page 15 of 26
65901
15200
AMOUNT
Jln Line Description
1,033.00 FY04 amort
(1,033.00) FY04 amort
Accounting for University Revenue Bonds – draft
05/18/05
Debt Service
>> Charge the Campuses for Debt Service
As previously mentioned, each campus receiving revenue bond proceeds is responsible for paying the
debt service on those bonds. At the beginning of each fiscal year the SAD submits an entry to charge the
Campuses for their share of the debt service on the various revenue bonds. The charge is to be posted to
the following account codes in the chartfield combination provided by the Campuses:


71921 - External Debt Service Principal
71922 - External Debt Service Interest
The offset to the above charge is a credit to one of the following account codes used in combination with
fund ‘19-Designated Debt Service’ and the program code for each revenue bond debt service reserve
(see earlier discussion under ‘General Procedures):





80000 – Transfers from E&G
80300 – Transfers from Auxiliary
81000 – Transfers from Designated
82000 – Transfers from Restricted
82800 – Transfers from Restricted Plant
Please note that the second and third digits of the above account codes represent the fund from which the
debt service payment is being transferred.
Illustration: UMF’s first payment on the FY2004 Revenue Bonds related to the new residence hall is not due
until July 2005. At that time the SAD makes the following entry to charge UMF for its debt service
payment:
LEDGER
ACTUALS
ACTUALS
ACTUALS
BU
DEPT
UMS02 2720303
UMS02 2720303
UMS02 2000005
FUND PROGRAM PROJECT ACCOUNT CLASS
03
03
19
71021
71022
80300
28905
AMOUNT
Jln Line Description
115,000.00 Principal payment
263,285.07 Interest payment
(378,285.07) Debt Service
>> Record Payments to the Bondholders
Payments to the bond holders are due each September 1 and March 1. The System makes the payments
via wire transfers; thus, the payments get recorded in PeopleSoft General Ledger as part of the daily
banking entry submitted by Funds Management.
At the time the SAD submits the wire requests they must tell Funds Management what chartfield
combinations should be used to record the payments. The payments are to be posted to the debt service
reserves to which the campus payments were credited. The interest portion is charged to account code
‘66001-Interest Debt (Acct use only)’ and the principal portion is charged to account ‘74800-Trfr To Plant
Net Investmnt’. The remainder of the chartfield string should be as follows:
BU
UMS0C
DEPT
C000005
FUND PROGRAM
19
C8xxx (debt service reserve)
The SAD must submit a reciprocal entry to balance the transfer in the above entry and to reduce the
liability for bonds payable at each campus. Account codes ‘27000-Bonds Payable’ and ‘81002-Transfers
From Designated External Debt’ should be used in combination with the following chartfield string:
BU
UMS0C
DEPT
C000005
FUND PROGRAM
19
C9xxx (bond issuance)
Page 16 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Illustration: On March 1, 2005 the System sends separate wires to pay the interest and the principal on the
2004 Revenue Bonds. Based on information given to them with the wire request form, Funds
Management posts the following entry to the ‘ACTUALS’ ledger to record the wire:
LEDGER
BU
DEPT
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
UMS02
UMS03
UMS04
UMS05
UMS06
UMS07
UMS08
UMS08
UMS02
UMS03
UMS05
UMS06
UMS08
2000005
3000005
4000005
5000005
6000005
7000005
8000005
8000000
2000005
3000005
5000005
6000005
8000000
FUND PROGRAM PROJECT ACCOUNT CLASS
19
19
19
19
19
19
19
00
19
19
19
19
00
28905
38905
48905
58905
68905
78905
88905
66001
66001
66001
66001
66001
66001
66001
11001
74800
74800
74800
74800
11001
28905
38905
58905
68905
AMOUNT
Jln Line Description
139,911.34 Interest payment
147,524.34 Interest payment
1,598.40 Interest payment
427,748.95 Interest payment
183,876.49 Interest payment
41,343.75 Interest payment
7,399.86 Interest payment
(949,403.13) Interest payment
3,000.00 Princ payment
130,000.00 Princ payment
180,800.00 Princ payment
21,200.00 Princ payment
(335,000.00) Princ payment
On March 1, 2005, the SAD posts the following entry to the ‘ACTUALS’ ledger to balance
the transfer in the above entry and to reduce bonds payable:
LEDGER
BU
DEPT
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
UMS02
UMS02
UMS03
UMS03
UMS05
UMS05
UMS06
UMS06
2000005
2000005
3000005
3000005
5000005
5000005
6000005
6000005
FUND PROGRAM PROJECT ACCOUNT CLASS
48
48
48
48
48
48
48
48
29205
29205
39205
39205
59205
59205
69205
69205
27000
81002
27000
81002
27000
81002
27000
81002
AMOUNT
Jln Line Description
3,000.00 Reduce bonds
(3,000.00) Reduce bonds
130,000.00 Reduce bonds
(130,000.00) Reduce bonds
180,800.00 Reduce bonds
(180,800.00) Reduce bonds
21,200.00 Reduce bonds
(21,200.00) Reduce bonds
>> Record Accrued Interest
At the fiscal year-end the SAD must record accrued interest on each Campus’ share of all revenue bonds.
The accrual is to be posted to the following chartfield combination in which program represents the
Campuses’ revenue bond debt service reserves:
BU
UMS0C
DEPT
C000005
FUND
19
PROGRAM
C8xxx
Interest expense is to be posted to account code ‘66001-Interest Debt (Acct use only)’ and the liability is
to be posted to account code ‘20158-Accrued Interest – Bonds.’
Page 17 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Illustration: On June 30, 2004 the SAD posts the following entry to the ‘ACTUALS’ ledger to record
accrued interest on the 2004 Revenue Bonds:
LEDGER
BU
DEPT
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
UMS02
UMS02
UMS03
UMS03
UMS04
UMS04
UMS05
UMS05
UMS06
UMS06
UMS07
UMS07
UMS08
UMS08
2000005
2000005
3000005
3000005
4000005
4000005
5000005
5000005
6000005
6000005
7000005
7000005
8000005
8000005
FUND PROGRAM PROJECT ACCOUNT CLASS
19
19
19
19
19
19
19
19
19
19
19
19
19
19
28905
28905
38905
38905
48905
48905
58905
58905
68905
68905
78905
78905
88905
88905
66001
20158
66001
20158
66001
20158
66001
20158
66001
20158
66001
20158
66001
20158
AMOUNT
Jln Line Description
70,422.00 Accr interest
(70,422.00) Accr interest
74,253.00 Accr interest
(74,253.00) Accr interest
805.00 Accr interest
(805.00) Accr interest
215,299.00 Accr interest
(215,299.00) Accr interest
92,552.00 Accr interest
(92,552.00) Accr interest
20,810.00 Accr interest
(20,810.00) Accr interest
3,725.00 Accr interest
(3,725.00) Accr interest
>> Transfer Bonds from Restricted Plant to Plant Fund Invested
Generally accepted accounting principles require that the liability for bonds payable be recorded in the
same fund as the related asset. Until the bond proceeds are spent the related asset is an investment
account recorded in fund ‘28-Restricted Plant’. However, as project costs are capitalized (see the process
document ‘Accounting for Capital and Maintenance Projects’ for more information on this process – it is
similar to the process for capitalizing bond costs described in this document) the asset related to the
bonds payable shifts from the investment account to a capital asset account such as construction in
progress, land, buildings, etc. These capital assets are recorded in fund ‘48 – Plant Fund-Net
Investment’; therefore, the portion of bonds payable related to them also needs to be recorded in fund 48.
At the fiscal year-end the SAD must analyze all projects funded with bond proceeds to determine how
much of the year-to-date expenses in the projects will be capitalized as bond costs, construction in
progress, land, buildings, etc. This represents the total of bonds payable and premiums/discounts that
must be moved from fund 28 to fund 48.
Illustration:
An analysis of UMF’s projects in fund 28 that are used with program 29205 reveals the following
as of June 30, 2004:
Program
29205
29205
Total
Project
2100008
2100029
Fund
28
28
Budget
In 82800
$5,382,560.56
250,000.00
$5,632,560.56
PTD
Expenses
$500,000.00
00.00
$500,000.00
Bond
Balance
$4,882,560.56
250,000.00
$5,132,560.56
An analysis of SWS’ project 8200036 for the bond issuance costs reveals that $729,112.47 of
bond costs have been incurred and it is determined that $123,951.00 is allocable to UMF.
The amount of bonds payable and bond premiums that the SAD needs to transfer from fund 28 to
48 for UMF is therefore $623,951 ($500,000 + $123,951). The allocation of bonds payable and
premiums for the bond issuance was 99/1; therefore the amount of bonds to be transferred is
$617,711 and the amount of bond premium is $6,240.
Page 18 of 26
Accounting for University Revenue Bonds – draft
05/18/05
The SAD posts the following entry to the ‘ACTUALS’ ledger to move the bonds payable and bond
premiums:
BU
DEPT
UMS02
UMS02
UMS02
UMS02
UMS02
UMS02
2000005
2000005
2000005
2000005
2000005
2000005
FUND PROGRAM PROJECT ACCOUNT CLASS
28
28
28
48
48
48
29205
29205
29205
29205
29205
29205
2200009
2200009
2200009
27000
27010
84800
27000
27010
72800
AMOUNT
Jln Line Description
617,711.00 Bonds
6,240.00 Premiums
(623,951.00) Bonds/prem
(617,711.00) Bonds
(6,240.00) Premiums
623,951.00 Bonds/prem
Below is a representation of the GL Inquiry display you would see for UMF’s control project just
after the above entry is recorded:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
Account
2004
UMS02
2000005
28
29205
2200009
Description
Accounting Period:
12-June
University of Maine at Farmington
Plant Fund Administration
Restricted Plant
2004 University Rev Bonds
2004 University Rev Bonds
Class
Beginning of Beginning of
Year
Month
Current
Month
Year-to-Date
Activity
Current
Balance
12700 Deposits with Bond Trustees
12700 Deposits with Bond Trustees
01
0.00
0.00
0.00
0.00
0.00
02
0.00
216,279.51
0.00
216,279.51
216,279.51
12700 Deposits with Bond Trustees
27000 Bonds payable
27010 Bonds payable - premium
03
0.00
35,439.43
0.00
35,439.43
35,439.43
0.00
0.00
-5,910,000.00
-55,482.90
617,711.00
6,240.00
5,292,289.00
-49,242.90
-5,292,289.00
-49,242.90
Class Base Budget
0.00
Current
Budget
0.00
0.00
0.00
0.00
0.00
Revenues/Expenses
84800 Trfr from Plant Net Investmnt
74800 Trfr To Plant Net Investmnt
Net
Current
Month
Year-to-Date
-623,951.00
-623,951.00
Project-todate
Encumb
-623,951.00
0.00
0.00
-623,951.00
5,713,763.96
5,089,812.96
5,713,763.96
5,089,812.96
0.00
0.00
Balance
Available
623,951.00
-5,713,763.96
-5,089,812.96
>> Amortize Bond Discounts and Premiums
At the end of each fiscal year the SAD must record amortization of each Campus’ bond premiums and
discounts. The entry to record amortization impacts one or both of the following chartfield combinations:
BU
UMS0C
UMS0C
DEPT
C000005
C000005
FUND PROGRAM
28
C9xxx
48
C9xxx
PROJECT
Control
Illustration: The SAD determines that UMF’s FY2004 amortization for its 2004 bond premium is $158.00. This
amount must be allocated between the premium recorded in fund 28 and that recorded in fund 48.
The SAD posts the following entry to the ‘ACTUALS’ ledger to record the amortization:
LEDGER
BU
DEPT
ACTUALS
ACTUALS
ACTUALS
ACTUALS
UMS02
UMS02
UMS02
UMS02
2000005
2000005
2000005
2000005
FUND PROGRAM PROJECT ACCOUNT CLASS
28
28
48
48
29205
29205
29205
29205
2000009
2000009
Page 19 of 26
27010
66001
27010
66001
AMOUNT
Jnl Line Description
141.00 Amort premium
(141.00) Amort premium
17.00 Amort premium
(17.00) Amort premium
Accounting for University Revenue Bonds – draft
05/18/05
>> Record Current Portion of Bonds Payable and Bond Discounts/Premiums
At the end of each fiscal year the SAD must submit an entry to break out the current portion of bonds
payable and their related discounts or premiums. The entry is contained within one fund. The entry is
typically posted in fund ‘48-Plant Fund-Net Investment’. If, however, the bonds payable balances in fund
48 are not larger than the current portion, the entry should be posted to fund ‘28-Restricted Plant.’ The
account codes used for the current portions are as follows:
Account
Description
20700
20710
Bonds payable – current
Bonds payable premium current
Capitalized Interest
Generally accepted accounting principles require that interest costs incurred during the construction period of
a project be capitalized as part of the cost of the project. The standards also require that investment earnings
on the unspent bond proceeds offset the amount of interest expense to be capitalized. These requirements
only apply to projects funded with University Revenue Bonds.
Although the annual adjustment for capitalized interest is included in our audited financial statements,
historically it has not been recorded in our accounting system. Please note, however, that this annual
adjustment will be posted to the PeopleSoft GL.
At the end of each fiscal year the SAD will calculate the capitalized interest in conformity with the existing
accounting standards. The SAD will then make an entry to each applicable project to charge the capitalized
interest for the current fiscal year and to fund the cost of the interest. Please note that the department code
to be used in this journal entry is ‘C000005-Plant Fund Admin.’ This department code is used to
minimize the impact on the project manager’s view of the project. If the manager runs a query based on his
department + project he will not see the impact of the SAD’s capitalized interest entry.
>> Illustration
At the end of fiscal year 2005 the SAD determines the following related to UMF’s share of the 2004
University Revenue Bonds. These amounts are related to the new residence hall project 2721700.
Gross interest to be capitalized
Investment earnings to be capitalized
$250,000
$ 80,000
Based on the above information, the SAD posts the following entry to capitalize the net interest expense
of $170,000 (gross interest expense of $250,000 less investment earnings of $80,000):
LEDGER
BU
DEPT
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
ACTUALS
UMS02
UMS02
UMS02
UMS02
UMS02
UMS08
UMS08
2000005
2000005
2000005
2000005
2000005
8000005
8000005
FUND PROGRAM PROJECT ACCOUNT CLASS
28
28
28
19
19
28
28
29205
29205
29205
28905
28905
89205
89205
2721700
2721700
2721700
8000009
8000009
67698
72800
81900
72800
66001
44100
82800
AMOUNT
170,000.00
80,000.00
(250,000.00)
250,000.00
(250,000.00)
80,000.00
(80,000.00)
Jln Line Description
Charge capital int.
Fund project
Fund project
Reclass int expense
Reclass int expense
Reclass invest inc
Reclass invest inc
Note that the project is funded with a transfer from fund 19 where the interest costs were initially
expensed as interest and fund 28 where the investment earnings were originally recorded.
Page 20 of 26
Accounting for University Revenue Bonds – draft
05/18/05
The GL Inquiry display for department 2721700 (project manager’s department) after the above entry is
the same as it was before the entry was made:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS02
2721700
28
29205
2100008
Account
Description
12700 Deposits with Bond Trustees
Accounting Period:
12-June
University of Maine at Farmington
Facilities Capital Projects
Restricted Plant
2004 University Rev Bonds
New Residence Hall
01
Beginning
of Year
0.00
Class
Base
Budget
Beginning of
Month
Current Month
5,132,560.56
0.00
Year-to-Date
Activity
Current Balance
5,132,560.56
4,882,560.56
Revenues/Expenses
Account
Description
44100 Interest income
82800 Transfers from Restr Plant
Total Revenues and Transfers
67100 Main construction contract
Total Expenses & Transfers
Net
Current Budget Current Month
Year-to-Date
Project-to-Date Encumb
Balance
Available
-67,439.44
0.00
0.00
0.00
0.00
0.00
-5,632,560.56
0.00
-5,632,560.56
-5,632,560.56
0.00
-67,439.44
0.00
0.00
-5,700,000.00
0.00
-5,632,560.56
-5,632,560.56
0.00
-67,439.44
0.00
5,700,000.00
0.00
500,000.00
500,000.00
0.00
5,200,000.00
0.00
0.00
5,700,000.00
0.00
0.00
0.00
500,000.00
-5,132,560.56
500,000.00
-5,132,560.56
0.00
0.00
5,200,000.00
5,132,560.56
GL Inquiry display would look similar to the following for department 2000005 used by the SAD:
Fiscal Year: 2004
Business Unit: UMS02
Department: 2000005
Fund Code: 28
Program: 29205
Project: 2100008
Operating Unit:
Assets/Liabilities
Account
Description
12700 Deposits with Bond Trustees
Accounting Period:
University of Maine at Farmington
Plant Fund Admin.
Restricted Plant
2004 University Rev Bonds
New Residence Hall
01
Beginning of
Year
0.00
12-June
Beginning of
Month
Current Month
0.00
0.00
Year-to-Date
Activity
Current Balance
0.00
0.00
Revenues/Expenses
Account
Description
Class Base Budget Current Budget Current Month
Year-to-Date
Project-to-Date Encumb
Balance
Available
44100 Interest income
81900 Transfers Fr Debt Svc Unrestr
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-250,000.00
-250,000.00
-250,000.00
0.00
250,000.00
Total Revenues and Transfers
67100 Main construction contract
67698 Capitalized interest
0.00
0.00
-250,000.00
-250,000.00
-250,000.00
0.00
250,000.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
170,000.00
170,000.00
170,000.00
0.00
-170,000.00
72800 Transfers To Restr Plant
0.00
0.00
80,000.00
80,000.00
80,000.00
0.00
-80,000.00
0.00
0.00
0.00
0.00
250,000.00
0.00
250,000.00
0.00
250,000.00
0.00
0.00
0.00
-250,000.00
0.00
Total Expenses & Transfers
Net
Page 21 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Now assume that the project manager opens the GL Inquiry tool and puts in the following criteria for his
query:
Project
Program
Department
2100008 New Residence Hall
29205 2004 University Rev Bonds
ALLDEPTS
Based on the above criteria the GL Inquiry display would look as follow. As you can see the balance
available for the revenue bond portion of the project is still $5,132,560.56.
Business Unit: UMS02
Department: ALLDEPTS
Fund Code: 28
Program: 29205
Project: 2100008
Operating Unit:
Assets/Liabilities
Account
Description
12700 Deposits with Bond Trustees
University of Maine at Farmington
All Departments
Restricted Plant
2004 University Rev Bonds
New Residence Hall
01
Beginning
of Year
0.00
Class
Base
Budget
Beginning of
Current Month
Month
0.00
5,132,560.56
Year-to-Date
Current Balance
Activity
4,882,560.56
5,132,560.56
Revenues/Expenses
Account
Description
Current Budget Current Month
Year-to-Date
Project-to-Date Encumb
Balance
Available
44100 Interest income
81900 Transfers Fr Debt Svc Unrestr
0.00
-67,439.44
0.00
0.00
0.00
0.00
-67,439.44
0.00
0.00
-250,000.00
-250,000.00
-250,000.00
0.00
250,000.00
82800 Transfers from Restr Plant
0.00
-5,632,560.56
0.00
-5,632,560.56
-5,632,560.56
0.00
0.00
0.00
-5,700,000.00
-250,000.00
-5,882,560.56
-5,882,560.56
0.00
182,560.56
67100 Main construction contract
67698 Capitalized Interest
0.00
5,700,000.00
0.00
500,000.00
500,000.00
0.00
5,200,000.00
0.00
0.00
170,000.00
170,000.00
170,000.00
72800 Transfers to Restr Plant
0.00
0.00
80,000.00
80,000.00
80,000.00
0.00
-80,000.00
0.00
0.00
5,700,000.00
0.00
250,000.00
0.00
750,000.00
-5,132,560.56
750,000.00
-5,132,560.56
0.00
0.00
4,950,000.00
5,132,560.56
Total Revenues and Transfers
Total Expenses & Transfers
Net
Page 22 of 26
-170,000.00
Accounting for University Revenue Bonds – draft
05/18/05
Reconciliation Tips
The following reconciliation tips by area are provided to help ensure that the revenue bonds are properly
recorded in PeopleSoft General Ledger.
Construction Projects
At any given time, the following should be true for each combination of program and project for revenue bond
funded projects:

Fund code 28-Restricted Plant should be used in combination with the program and project codes.

Assets + liabilities + ptd revenue + ptd expenses = zero. Any result other than zero should only
be attributable to expenses that have been incurred since the last reimbursement was made.
Scenario #1 - All expenditures have been reimbursed from the investment account:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS02
2721700
28
29205
2100008
Account
Description
12700 Deposits with Bond Trustees
Accounting Period:
11-May
University of Maine at Farmington
Facilities Capital Projects
Restricted Plant
2004 University Rev Bonds
New Residence Hall
01
Beginning
of Year
0.00
Class
Base
Budget
Beginning of
Month
Current Month
5,632,560.56
-500,000.00
Year-to-Date
Activity
Current Balance
5,132,560.56
5,132,560.56
Revenues/Expenses
Account
Description
44100 Interest income
82800 Transfers from Restr Plant
Total Revenues and Transfers
67100 Main construction contract
Total Expenses & Transfers
Net
Current Budget Current Month
Year-to-Date
Project-to-Date
Encumb
Balance
Available
-67,439.44
0.00
0.00
0.00
0.00
0.00
-5,632,560.56
0.00
-5,632,560.56
-5,632,560.56
0.00
0.00
0.00
-5,700,000.00
0.00
-5,632,560.56
-5,632,560.56
0.00
-67,439.44
0.00
5,700,000.00
0.00
500,000.00
500,000.00
0.00
5,200,000.00
0.00
0.00
5,700,000.00
0.00
0.00
0.00
500,000.00
-5,132,560.56
500,000.00
-5,132,560.56
0.00
0.00
5,200,000.00
5,132,560.56
Page 23 of 26
-67,439.44
Accounting for University Revenue Bonds – draft
05/18/05
Scenario #2 - $500,000 of expenditures have not been reimbursed from the investment account:
Fiscal Year:
Business Unit:
Department:
Fund Code:
Program:
Project:
Operating Unit:
Assets/Liabilities
2004
UMS02
2721700
28
29205
2100008
Account
Description
12700 Deposits with Bond Trustees
Accounting Period:
University of Maine at Farmington
Facilities Capital Projects
Restricted Plant
2004 University Rev Bonds
New Residence Hall
01
Beginning
of Year
0.00
Class
Base
Budget
11-May
Beginning of
Month
Current Month
5,632,560.56
0.00
Year-to-Date
Activity
Current Balance
5,632,560.56
5,632,560.56
Revenues/Expenses
Account
Description
Current Budget
Current Month
Year-to-Date
Project-to-Date
Encumb
Balance
Available
44100
Interest income
-67,439.44
0.00
0.00
0.00
0.00
82800
Transfers from Restr Plant
0.00
-5,632,560.56
0.00
-5,632,560.56
-5,632,560.56
0.00
0.00
Total Revenues and Transfers
0.00
-5,700,000.00
0.00
-5,632,560.56
-5,632,560.56
0.00
-67,439.44
Main construction contract
0.00
5,700,000.00
0.00
500,000.00
500,000.00
0.00
5,200,000.00
Total Expenses & Transfers
Net
0.00
0.00
5,700,000.00
0.00
0.00
0.00
500,000.00
-5,132,560.56
500,000.00
-5,132,560.56
0.00
0.00
5,200,000.00
5,132,560.56
67100
+ Assets
+ Liabilities
+ Net Assets
+ PTD revenues
+ PTD expenses
= Net
Scenario #1
$5,132,560.56
0.00
0.00
(5,632,560.56)
500,000.00
$
0.00
-67,439.44
Scenario #2
$5,632,560.56
0.00
0.00
(5,632,560.56)
500,000.00
$ 500,000.00 *
* = In this situation expenses incurred-to-date have not yet been reimbursed.

Revenue sources should consist of transfers from restricted fund – account code 82800 and possibly
interest income – account code 44100.
Control Projects
The following should be true for each combination of revenue bond program and control project:

They should be used only in combination with fund code ‘28-Restricted Plant’.

Once the individual construction projects have been funded, there should be no assets in the control
project. The one exception is if bond proceeds designated for capitalized interest were received. In
that situation, an investment account will exist in the control project until all of these proceeds are
used to make debt service payments. Capitalized interest proceeds are typically spent within 2 years.

Once all of the bond proceeds have been spent, the balance in the control project should be zero
because the bonds and premiums/discounts would have been transferred to fund ‘48-Plant Fund –
Net Investment.’
Page 24 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Program Codes
At any given time, the following should be true for each program code for revenue bonds issuances (C9XXX):

Total project budgets (either revenue or expense) should equal the total project proceeds received
plus anticipated earnings to fund the projects.

The current balance for account code 12700-Deposit with Bond Trustees should agree with the
monthly statement of account from the investment company.

The current balance for account code 27000-Bonds Payable should agree with the outstanding bonds
payable per amortization schedules received from the System’s financial advisor.

The program codes should only be used in combination with fund 28-Restricted Plant or fund 48Plant Fund – Net Investment.
Bond Payable
At any given time, the following should be true for account code 27000-Bonds Payable:

It should only be used in combination with funds 28-Restricted Plant, 29-Restricted – Debt Service,
and 48-Plant Fund – Net Investment.

It should only be used in combination with the program codes for the various revenue bond issuances
(C9XXX).
Bond Issuance Costs
At any given time, the following should be true for account code 15200- Prepaid Bond Issuance Costs:

It should only be used in combination with fund 48-Plant Fund – Net Investment.

It should only be used in combination with the program codes for the various revenue bond issuances
(C9XXX).
Page 25 of 26
Accounting for University Revenue Bonds – draft
05/18/05
Other Bond Issuance Scenarios
As previously mentioned (see section titled ‘Business Process Description’), this process document focused
on revenue bonds issued to fund construction projects. The System typically does issue revenue bonds for
the purpose of funding projects; however, it has in the past added various other elements to a bond issuance
including the following:


All or part of the issuance is for refunding previously issued bonds.
The bond covenant requires that a portion of the proceeds be maintained in a debt service reserve to
secure the bonds.
If a bond issuance does involve elements other than project funds, the System’s financial advisor will break
the issuance down into its components so that the System may properly account for each. Please note that
no matter what elements are included, a program code for the bond issuance must be created as
discussed in the section of this document titled ‘General Procedures.’
For the following reasons we will discuss the above scenarios only briefly:
1. The reader should have a pretty good understanding of recording revenue bonds in PeopleSoft
General Ledger after having read this document.
2. The scenarios require an understanding of generally accepted accounting principles that this process
document is not intended to provide. The reader should instead consult accounting literature issued
by the Governmental Accounting Standards Board (GASB).
>> Issued to Refund Previously Issued Bonds
In this scenario, the bond issuance would be recorded in the fund(s) in which the refunded bonds are
recorded. The simplest example would be refunding bonds that are recorded entirely in fund 48-Plant
Fund – Net Investment because all of the proceeds have been spent. A more complicated example would
be refunding bonds that have been only partially spent. In that situation part of the new bond issuance
would need to be recorded in fund 28-Restricted Plant.
>> Required Debt Service Reserve
The only debt service reserves previously discussed in this document were the campus reserves in fund
19-Designated Debt Service. Such reserves are not required under the bond covenant and simply
represent a place to hold the Campuses’ money until the payments to the bondholders come due.
A debt service reserve required under the bond covenant is restricted and must therefore be recorded in
fund 29-Restricted Debt Service. As with the campus debt service reserves, a program code should be
created for the restricted reserve.
Page 26 of 26