February 16,
2011
Prepared by Tamaka Butler, Associate Controller

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 Wayne State University’s financial statements are prepared in accordance with Governmental Accounting Standards Board
(GASB) principles.
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The day-to-day accounting is prepared using fund accounting.
Fund accounting is an accounting and reporting system commonly used by public colleges and universities to keep track of resources whose use is limited by donors, granting agencies, law, other outside individuals or entities, or by governing boards.
A fund is maintained for each specific purpose.
A fund is a self-balancing “entity” with its own set of accounts, consisting of assets, liabilities and fund balance (equity).
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 WSU, like many public institutions, use the encumbrance system to help control expenditures as it relates to budgets. Under this system, the amount of the available balance for a given department is reduced when purchase orders or other commitments are established (i.e. POs. IRBs, Travel, etc.).
Encumbrances are not included with expenses in externally issued financial reports or reported as liabilities because the amounts are not yet owed under the accrual basis.
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 Banner is the integrated database system used at WSU which includes the following components: Finance, Human Resources, Student,
Financial Aid, and Alumni/Development, General.
Banner Finance houses the accounting ledgers, procurement, accounts payable, accounts receivable, endowment, fixed assets, and research accounting.
The core of Banner Finance consists of:
 General Ledger which is equivalent to the Balance Sheet
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Operating Ledger which is equivalent to the Income Statement
Encumbrance Ledger which is used to reserve against available balances for anticipated expenditures and/or outstanding commitments (purchase orders, Internal Requisition Billings, etc.)
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WSU’s Chart of Account Structure consists of six elements ( FOAPAL ):
F und - Identifies source of funds and represents a self – balancing set of accounts within the general ledger
O rganization - Identifies cost centers of the University such as School, College, Division or
Department (Examples: Dean of Libraries, School of Medicine, Fiscal
Operations)
A ccount - Identifies the type of financial activity (i.e. asset/liability, expense/revenue, transfer, fund balance)
P rogram - Identifies the purpose of the transaction (Examples: Instruction, Research)
A ctivity -
L ocation -
Can be used to define separate or unique activities to help refine reporting
(limited use currently)
Identifies physical location (used in the Plant Fund only)
The Index is a six character code that serves as a shortcut to a FOAPAL string combination.
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F
F
WSU has the following fund groups:
Current Fund Groupings (consists of funds expendable for operating purposes):
General Fund - used to account for general operating activities related to academic and instructional programs and their administration. Principal revenue sources are state appropriations, tuition and indirect cost.
Designated Fund - used to account for funds for specific departments which are not restricted by donors or supporting agencies. Includes organized departmental activities associated with academic programs, salary reimbursements and gifts (not restricted to a specific purpose by donor).
Auxiliary Activities Fund - used to account for revenues and expenses of revenue-producing, substantially self-supporting activities that perform a service for, but are not themselves, educational or general activities.
Independent Operations Fund - used to account for revenues and expenses of separately organized operations that are owned or controlled by the University but are unrelated to, or independent of, the institution’s mission.
Expendable Restricted Fund - is used to account for funds restricted for specific purposes by external parties, contracts, or legislation.
Noncurrent Fund Groupings:
Student Loan Fund - is used to account for transactions related to university and federal student loans (excludes activity from the Direct Loan Program)
Plant Fund - used to account for transactions relating to investments in physical properties, indebtedness incurred in the financing there of and reserves for maintenance, replacement, and unexpended plant fund.
Endowment and Related Funds – are used to account for money and investments received where the donor has indicated the principal be held in perpetuity or the Board of Governors has elected to treat such gifts as endowments, with only the income being expended.
Agency Fund - is used to account for amounts withheld from payroll and amounts held in custody for students, Universityrelated organizations and others.
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F
F
FUND ST RUCT URE
Fund
General
Designated
Expendable Restricted
Federal
State
Other Governmental
Private Grants & Contracts
Salary Reimbursement
Donations
Endowment Beneficiaries
Central Accounting Funds
Auxiliary Activities
Independent Operations (WDET )
Student Loan Funds
University Loans
Federal Loans
Endowments
True
Term
Funds Functioning As Endowment
Annuity & Life Income
Plant
Unexpended Plant
Repair & Replacement Reserve
Debt Service
Investment in Physical Plant
Agency
Fund
Type
Le ve l 2
11
12
21
23
24
25
27
28
29
2A
37
39
51
59
60
63
66
69
70
73
75
77
90
Fund No.
11xxxx
12xx or 13xx
21xx, 22x, 2Mx
23xxx
24xxx
25xxx
27xxx
28xxx
29xxx
2Axx
37x
39x
51xx or 55xx
59x
60xxx
63xx
66xxxx
69xx
70xxx
73xx
75xx
77xx
9xxx
Indexes
1XXXXX
22XXXX
3XXXXX
3XXXXX
3XXXXX
4XXXXX
4XXXXX
4XXXXX
4XXXXX
4XXXXX
227,228XXX
2278XX
05XXXX
059XXX
060,061XXX
063XXX
066,067XXX
069XXX
Curr/NonCurr
Current
Current
Current
Current
Current
Current
Current
Current
Current
Current
Current
Current
Non-current
Non-current
Non-current
Non-current
Non-current
Non-current
770,771,772XXX
773XXX
Non-current
Non-current
075XXX Non-current
077, 078, 079XXX Non-current
99XXXX Non-current
BK BKxx Bank Funds
Funds are sequentially numbered within each fund type.
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F
F
Sub-funds roll up to the fund types and are sequentially numbered as follows:
Auxiliary Activities
Housing
Housing Admin
Housing Apts
Sherbrooke
DeRoy
Housing Residence Halls
Ghafari (North) Hall
South Hall
Student Center
South End
Press
37 (fund type)
372
373
374
375 ro ll-up fund fo r all H o using funds
3721
3722 ro ll-up fund fo r A pts
37221
37222
3723 ro ll-up fund fo r D o rms
37231
37232
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O
O
• Organization codes identify the cost center of the School, College, Division or Department
• Rollup organization codes are used to summarize data by reporting unit.
Hierarchy
University
Executive Level
SCD Rollup
SCD Sub-Rollup
Department Rollup
Individual Department Rollup
Subunit Rollup
Individual Subunit
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O
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The first two digits of an organization code (SCD Sub Rollup level 4 - Individual Sub unit level 8 of the hierarchy ) represents the School/College/Division (S/C/D).
S/C/D List
01 – UNIVERSITY LIBRARIES
02 – EDUCATION
03/12 – LIBERAL ARTS & SCIENCES
07 – LAW
14 – HONORS
15 – NURSING
09 – VICE PRESIDENT FOR RESEARCH
10 – HEALTH & PHYSICAL EDUCATION
13 – SOCIAL WORK
16 – BUSINESS ADMINISTRATION
20 – EDUCATIONAL OUTREACH
04 – FINE, PERFORMING & COMMUNICATION ARTS
05 – ENGINEERING
06 – MEDICINE
08/18/19 – PHARMACY & HEALTH SCIENCES
25 – COMPUTING & INFORMATION TECHNOLOGY
30 – SECRETARY OF THE UNIVERSITY
31 – PRESIDENT
32 – VICE PRESIDENT FOR ACADEMIC AFFAIRS
33 – VICE PRESIDENT FINANCE & BUSINESS ADMINISTRATION
37 – GOVERNMENT AFFAIRS
42 – FACILITIES PLANNING & MANAGEMENT
43 - BUSINESS OPERATIONS
73 – EXECUTIVE VICE PRESIDENT AND CHIEF OF STAFF
75 - OFFICE OF BUDGET, PLANNING & ANALYSIS
78 - WOMEN'S COMMISSION
82 - FISCAL OPERATIONS/INVESTMENT, DEBT & RISK MANAGEMENT
86 - DEVELOPMENT & ALUMNI AFFAIRS
87 - MARKETING & COMMUNICATION
88 - GENERAL COUNSEL
92 - STUDENT SERVICES & UNDERGRATUATE AFFAIRS
98 - CENTRAL ACCOUNTS
46 - PUBLIC SAFETY
47 - INTERNAL AUDIT
48 - LABOR RELATIONS
49 - HUMAN RESOURCES
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O
O
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A
A
Account T ypes
The account types represent the high level financial statement classifications and are used to group like types of account codes.
Assets
Liabilities
Control Accounts
Fund Balance
Federal Loan Funds Cumulative Total
Revenues
Labor/ Fringe Benefits
Direct Expenditures
Transfers
Fund Additions
Fund Deductions
Account Type
Level 1
10
20
30
40
42
50
60
70
81
90
95
Each account code is classified by its corresponding account type .
Example:
Direct Expenditures 70 (account type level 1)
72 General Expenditures
Supplies
Office Supplies
Research & Lab Supplies
Computer Software
(account type level 2)
7216
72161
72162
72163
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P
P
Program Codes
Program codes are used for financial reporting purposes to classify expenditures by functional purpose.
Description
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and Maintenance of Plant
Scholarship and Fellowships
Auxiliary Enterprises
Program Code
1X
2X
3X
4X
5X
6X
7X
8X
9X
All expenditure transactions in the current funds must have one of the above program codes to allow for proper classification in the University's financial statements
A detailed definition of the functional expense categories is included on the following slide.
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P
P
Financial Statement Functional Expense Categories
Instruction - Includes expenditures for all activities that are part of the institution’s instruction program. Expenditures for both credit and noncredit activities are reported in this functional category. This function excludes expenditures for academic administration where the primary assignment is administration (i.e., academic deans). However, expenditures for departmental chair, since instruction is still an important role of the administrator, should be included in this category.
Research - Includes all funds expended for activities specifically organized to produce research outcomes and commissioned by an agency either external to the institution or separately budgeted by an organizational unit within the institution. This function does not contain all sponsored programs (such as training grants), nor does it contain sponsored research only, since internally supported research programs should be included in this function. It includes only expenditures for specifically budgeted departmental research.
Public Service - Includes funds budgeted specifically for public service and expended for activities established primarily to provide noninstructional services beneficial to groups external to the institution. Such activities include seminars, projects and various organizational entities established to provide services to particular sections of the community.
Academic Support - Includes expenditures for activities carried out primarily to provide support services that are an integral part of the operations of one of the institution’s three primary programs: instruction, research and public service. It includes the retention, preservation, and display of materials and the provision of services that directly assist the academic functions of the institution. This function includes the media and technology (i.e., computing support) employed by the three primary programs as well as the administrative support operations that function within the various academic units (which includes the development of future instructional activities).
Student Services - Includes all funds expended for admissions, registrar activities, and activities whose primary purpose is to contribute to students’ emotional and physical well-being and to their intellectual, cultural, and social development outside the context of the formal instruction program.
Institutional Support - Includes all funds expended for activities whose primary purpose is to provide operational support for the day-to-day functioning of the institution, excluding expenditures for physical plant operations.
Operation and Maintenance of Plant - Includes all expenditures of current funds for the operation and maintenance of the physical plant, net of amounts charged to auxiliary enterprises. It does not include expenditures made from the Plant Fund. It includes all expenditures for operations established to provide services and maintenance related to campus grounds and facilities including utilities, property insurance, fire protection and similar items.
Scholarships and Fellowships - Includes monies given in the form of outright grants and trainee stipends to individuals enrolled in formal coursework, either for credit or non-credit.
Auxiliary Activities – Includes expenditures relating to the operation of auxiliary enterprises, whether charged directly as expenditures or allocated as a proportionate share of costs of other departments or units.
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 Scenario 1 – Accounting for a Purchase Order from requisition to vendor payment
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Scenario 2 – Accounting for certain Endowment Fund transactions
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A new gift
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Quarterly distributions
Scenario 3 – Accounting for certain Plant Fund transactions
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Transfer of funding for a new account
Construction in Progress (CIP)
Scenario 4 – Accounting for medicare payments between WSU, State of
Michigan, DMC and UPG
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1. Create a Requisition (Req# R01077002) for annual Hardware Maintenance in the amount of $1,483.83.
2. Establish Purchase Order (PO# P0501596) for Requisition R01077002 and liquidate the
requisition.
3. Invoice (Inv# I0628629) received for the annual maintenance related to Purchase Order
P0501596. a) Liquidate encumbrance b) Record expense and accounts payable liability
4. Invoice I0628629 approved for payment and a check is generated. a) Reduce claim on cash (cash balance) and accounts payable liability in related
fund. b) Record impact to bank fund.
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SCENARIO 1 – Accounting for a Purchase Order:
From Requisition to Vendor Payment
FUND: 113100 FUND: BK53
1.
2.
3a.
Encumbrance Ledger
Establish Req
Establish PO
Increase
Commitment
(reserve available balance)
+
1,483.83
1,483.83
Decrease
Commitment
(release reserve on available balance)
-
(1,483.83) Liquidate Req
(1,483.83) Liquidate PO
3b.
4a.
4b.
dr
Claim on Cash cr
1,483.83
General Ledger
Accounts Payable dr cr
1,483.83
1,483.83
(Component of Fund Balance)
Expense Control dr
1,483.83
cr
Claim on Cash dr
1,483.83
cr
General Ledger
General Disbursements
Fifth Third Bank Account dr cr
1,483.83
Operating Ledger
3b.
Expense dr
1,483.83
cr
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SCENARIO 2 – Accounting For Certain Endowment Fund Transactions
1.
Check received for the Drs. White Endowed Scholarship Fund (Endowment
Index/Designation 060382, Fund 60163M) a) Record deposit to the Bank b) Record Gift in Development (transaction feeds from Banner Development to
Banner Finance).
2. Record quarterly endowment income distribution from the Common Trust Fund (Fund
699) to the Drs. White Endowed Scholarship Fund Index 477133 ($1,000 used for example).
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SCENARIO 2 – Accounting For Certain Endowment Fund Transactions
Drs. White Endowed Scholarship Fund (60163M) Common Trust Fund (699) Comerica Bank Fund (BK10)
Claim on Cash dr cr
1a.
1b. 25,000.00
2.
General Ledger
(Component of Fund Balance)
Revenue Control dr cr
25,000.00
Claim of Cash dr cr
Operating Ledger
Undistributed Income
(account 153031) dr cr
General Ledger
Claim on Cash dr cr
25,000.00
Gift Bank Account dr cr
25,000.00
1,000.00
1,000.00
Drs. White Endowed Scholarship Index 477133 (Fund 290ZR)
Operating Ledger
1b.
2.
dr
Revenue cr
25,000.00
Claim on Cash dr cr
General Ledger
(Component of Fund Balance)
Revenue Control dr cr
1,000.00
1,000.00
Operating Ledger dr
Revenue cr
1,000.00
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1.
Receive request to establish new Unexpended Plant Fund account for Parking Structure 1-Major Repair
(Index 771486, fund 70GLA) with funding from the following: a) $100,000 - Auxiliary index 227601, fund 3781
(Note: T-accounts not shown for Auxiliary Fund activity) b) $5,675,000 - Plant Fund Reserve index 773033, fund 730C
2. At year-end, record CIP for capitalizable expenditures for the fiscal year for the Parking
Structure 1 Major Repair in the corresponding "Investment" in Plant fund Parking Structure 1 index (078320, fund 777V).
( Note: As part of this process, Accounting staff will analyze the unexpended account to identify non capitalizable costs included in expense (internal transfers from other Plant Fund accounts) to determine the appropriate amount of CIP.)
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SCENARIO 3 – ESTABLISH NEW PLANT FUND ACCOUNT & RECORD
CONSTRUCTION IN PROGRESS (CIP)
Parking Structure I Major Rep FY10 Index (771486) - Unexpended Plant Fund (70GLA)
Operating Ledger dr
Claim on Cash cr
1a.
100,000.00
1b.
5,675,000.00
General Ledger
(Component of Fund Balance)
Expense Control dr cr
5,675,000.00
i nterfund tra ns fer from 773033
Pl a nt Res erve
(Component of Fund Balance)
Transfer Control dr cr
100,000.00
from Auxi l i a ry dr
Transfers cr
100,000.00
tra ns fer from a uxi l i a ry
(a ccount 8514) dr
Expense cr
5,675,000.00
i nterna l tra ns fer from Res erve
(a ccount 785)
1b.
dr
Claim on Cash cr
5,675,000.00
Parking Improvement Reserve Index (773033) - Repair and Maintenance Reserve Fund (730C)
General Ledger Operating Ledger
Expense Control dr cr
5,675,000.00
Expense dr
5,675,000.00
(account 785) cr dr
2.
5,093,651.00
CIP cr
Parking Structure 1966 Index (078320) - Investment in Plant Fund (777V)
General Ledger
Capital Expenditure * dr cr
5,093,651.00
* For Financial Statement purposes the credit to capital expenditures (in Investment in Plant Fund) is offset by the capitalizable expenditures which are
incurred and recorded in the Unexpended Plant Fund (not shown in this example).
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–
1.
WSU receives payment from DMC (usually via wire) for their portion of the Medicare payment
2.
a) Record impact to the bank fund b) Reduce unbilled receivable in index 224650, fund 130M31
WSU submits payment to the State of Michigan based on amount requested from UPG (includes DMC &
UPG portion) via wire a) Record increase to unbilled receivable in index 224650, fund 130M31 b) Record impact to bank fund
3.
UPG reimburses WSU for their portion of the payment via wire a) Record impact to bank fund b) Reduce unbilled receivable in index 224650, fund 130M31
Note: Wayne State treats this transaction as pass through activity. Therefore, there is no income statement impact.
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SCENARIO – 4 State of Michigan/DMC/UPG- Medicare Payments
Med AEF - Master Index (224650) - State of Michigan DSH Activity Fund (130M31)
General Ledger
FUND: BK10
General Ledger
Claim on Cash dr
2a.
2b.
1a.
1b.
200,000.00
3a.
3b.
2,709,159.38
cr
2,909,159.38
Unbilled Accounts Receivable dr cr
2,909,159.38
200,000.00
2,709,159.38
dr
Claim on Cash cr
200,000.00
Comerica EFT Concentration dr
200,000.00
cr
2,909,159.38
2,709,159.38
2,709,159.38
2,909,159.38
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February 16,
2011