Rutgers University
Future state monthly close calendar
May 11, 2015
Agenda
•
Rutgers University Finance close objectives
•
Key improvement themes identified during the assessment
•
Proposed monthly close process
– Governance framework
– High level close cycle
– Stakeholder’s roles and responsibilities
– Materiality thresholds framework
•
Next steps
2
Rutgers University Finance close objectives
Business Objectives
Develop a standard monthly close process
across Rutgers enabling:
•
Consistency in processes and quality of
business results
•
Ability to leverage technology to
improve automation
•
Timeliness of month-end close and
reporting
•
Agility with on-going finance
improvement efforts (e.g. HFM, RCM,
future ERP rollout)
•
Organization structure with right skills
and capabilities to support finance and
accounting requirements
Key Levers for Improvement
1.
Standardize and formalize accounting
processes for better integration of
Legacy Rutgers and RBHS
2.
Define overall governance model to
ensure quality and accuracy of financial
data
3.
Leverage current technology to increase
efficiency and data accuracy
4.
Establish Finance organization and
process model to align with future state
reporting structure
3
Rutgers University Financial Statement Close Process
Key improvement themes identified during the assessment
Standardize and formalize accounting processes for better
integration of Legacy Rutgers and RBHS
• Standardize transactional processes across Rutgers
• Establish process governance &
organization (accounts payable, payroll, T&E, fixed
assets)
• Define a common monthly close calendar with clear
cut-off dates
• Standardize month end close activity
• Standardize and automate JE’s
monitoring
• Reinforce control procedure leveraging
technology enablers
• Ensure appropriate financial statement
quality review
• Set up adjustment reporting materiality
threshold and responsibility
• Maximize use of current technology
capabilities (e.g., close management,
account reconciliation, fixed assets
modules etc.)
• Automate GL feeding
• Automate revenue & cost allocation
model based on RCM defined
Leverage current technology to increase efficiency and data
accuracy
Financial
Statement
Close Process
• Standardize operating model between
both structures to support transactional
processes
• Define roles and responsibilities across
shared services, Central Accounting and
school finance teams
Establish Finance organization and process model to align with
future state reporting structure
4
DRAFT – For discussion purpose only
Proposed monthly close process
Governance framework
Governance model
►
Define clear common accounting policies across Rutgers
schools/central units (e.g., cut-off procedures, revenue recognition,
AP and Payroll accrual calculation, cut-off procedures, escalation
path)
►
Centralize transactional accounting activities
►
Define performance measurement framework
►
Embed Central Accounting oversight on close cycle by implementing
controls and monitoring process (e.g., Pre-close meetings with
accounting team) and centralizing close activities
►
Reinforce control and accountability at unit and campus levels
regarding monthly financial reports (e.g., Campus Pre-close
meetings coordinated by Vice Chancellor’s office, report analysis,
sign off)
Work in progress
Decisions
& Policy
Interpretation
& Analysis
CONTROLLER’S
OFFICE
CENTRAL
ACCOUNTING
Decision & Policy
CAMPUS
Vice Chancellor’s
office, Central
and School units
►
Establishes and monitors accounting policies and procedures
►
Review accruals journal entries and compliance with policy
►
Consolidates business results and prepare internal and external
reports
►
Conducts final financial report reviews and variance analysis for
Final RU reports
►
TBD - Accrual booking process and roles definition in progress
►
Determine and provide accrual information for JE posting
►
Signs off school level financial results according to policy and
procedures
►
Perform financial reporting analysis at campus level (variance
Actual vs Budget) ; Monthly budget will be developed across
the University
►
Records all transactional entries (Accounts Payable, T&E,
Fixed Assets, Accounts Receivable and collection, bank
reconciliation, etc.)
►
Send query on outstanding items to the business for further
investigation and resolution
►
Prepare units specific journal entries (e.g. accruals)
Interpretation &
analysis
Accounting
transactional activities
CENTRALIZED
DELIVERY
Transaction
processing
5
Proposed monthly close process (Cont’d)
DRAFT – For discussion purpose only
Target
High level close cycle
D-0 & prior
D+1
D+2
D+3
D+4
D+5
D+6
D+7
D+8
Consolidation,
Units review & Sign off
Unit close activities
D+9
D+10
Reporting
D+11
Pub.2
Oracle and Banner data uploaded into HFM on daily basis (To Be Confirmed)
Cost
FA capitalization and
depreciation cut-off
AP cut-off
Payroll & Fringe
accrual
AP accruals
Payroll 1
reallocation
Revenue
Student tuition revenue cut-off and accrual process
Patient services revenue cut-off and accrual process
RBHS consolidated data review
Auxiliary revenue cut-off and accrual process
Legacy Rutgers consolidated data review
All other revenue cut-off and accrual process
Units reporting final review, variance analysis
at Campus level (Actual vs Budget) & sign-off
Financial aid
cut-off and accrual process
General
accounting
RU report variance analysis
(Actual vs Budget, Act. M vs Act.
M-1)
Report
published on
RU website
Final material adjustment postings in HFM
Fed. & State Student Aid program
cut-off and accrual process
Loan information
Cut-off
Final Rutgers report
consolidated data review
Grants and contracts revenue
Cut-off and accrual process
Bank transfer/investment posting Bank
reconciliations
Indirect cost allocation
Page 6
(1) Banner Payroll reallocation
(2) RU report will be published a week
before Finance Board meeting
Due to/from accounts reconciliations
Legend:
Accrual and provision JE posted into Oracle / Banner GL at Unit level
Timing of activity to be confirmed with Central Accounting
6
DRAFT – For discussion purpose only
Proposed monthly close process (Cont’d)
Stakeholder’s roles and responsibilities
Close
date1
D-0 to
D+5
Current State
Controller’s Office
Campuses
Key activities
Central accounting
Central and School units
Determine and provide accrual information (Accrual posting roles
between Central Accounting and Units are To Be Determined)
General Accounting
Unit Business offices
Review final unit financial report and certification sheet for signoff, determine necessary top side adjustments (based on
materiality thresholds matrix - see page 8),
D+6
Review top side adjustments, approve and post top side entries
Unit Business offices
Consolidation &
Reporting
to
D+8
Validate Campus/Central unit level financial statements
Consolidation &
Reporting
Review Legacy and RBHS consolidated financial statements
Consolidation &
Reporting
D+9
to
4 Vice Chancellors
& 5 Central Units
Reps.
Review and submit final Campus/Central unit financial statement,
variance analysis at campus/central unit level, and Units
certification sheet signed off
Determine Rutgers consolidated final top side adjustments,
approve and post top side entries
Consolidation &
Reporting
D+11
Validate and publish Rutgers consolidated financial data
Consolidation &
Reporting
7
(1) Close dates are Business days; “D-0” corresponds to the last business day of the closed period
DRAFT – For discussion purpose only
Proposed monthly close process (Cont’d)
Materiality threshold framework
Month-end close materiality threshold matrix
D+1
D+2
D+3
D+4
D+5
D+6
D+7
D+8
D+9
D+10
Work in progress
Unit Close Activities
Key processes /
milestones
Units and
Central Accounting (General Accounting group)**
Consolidation, Units Review &
Sign Off
Reporting
Central Accounting
(General accounting, Consolidation & Reporting
groups)
Due to/From account
No transactions < $5K*
JEs into Oracle/Banner systems (GL)
Units/Department revenues
No materiality limits
JEs into Oracle/Banner systems (GL)
Units/Department costs
No materiality limits
JEs into Oracle/Banner syst. (GL)
Materiality > $50K*
JEs in HFM
Materiality > $50K*
Consolidated Profit & Loss
Requirements To Be Determined
Materiality > $50K*
JEs in HFM
Materiality > $250K*
JEs in HFM
Materiality > $500K*
JEs in HFM
Consolidated Balance
Sheet
Requirements To Be Determined
Materiality > $50K*
JEs in HFM
Materiality > $250K*
JEs in HFM
Materiality > $500K*
JEs in HFM
Materiality > $50K*
JEs in HFM
Note:
(*) $ amount thresholds to be determined
(**) Roles and responsibilities of manual accrual/provision Journal Entries (JE)
posting between Central Accounting and Units To Be Determined
8
Next Steps
• Include your feedback to inform a finalized design and
determine change requirements
• Continue to socialize the Future state monthly close process
with other Campus Business Offices to get further inputs in
the design
• Continue to have open communication with Vice Chancellors
and Business offices on project progress and outputs
9