THE GENERAL LEDGER

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THE GENERAL LEDGER
2002/2003
SACSIFIED Sub-Fundingand the SAN BERNARDINO
COUNTY SCHOOLS Financial System
District Financial Services
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General Ledger Contents

• Pages 2 40 PowerPoint Presentation slides
• Exhibit A General Ledger Accounts Listing
• Exhibit B Control Accounts
• Exhibit C Establishing the Estimated
  Beginning Balance
• Exhibit D Revising the Budget
• Exhibit E Journal Entries
• Exhibit F Accrual Set-Up
• Exhibit G Closing the General Ledger
• Exhibit H Automated Asset and Liability
  Account Roll
• Exhibit I Corrective Action Example
• Exhibit J Account Review Checklist

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What is the General Ledger?

• The General Ledger contains all of the balance
  sheet accounts of an accounting system. The
  balance sheet accounts are the assets,
  liabilities, and fund balance accounts of the
  school district. Values in General Ledger are
  expressed as debits or credits.

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Asset Accounts

• Object Codes 9100 - 9499
• Cash
• Investments
• Accounts Receivables
• Due from Other Funds
• Fixed Assets

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Liabilities

• Object Codes 9500 - 9699
• Current Liabilities
• Due to Other Funds
• Due to Other Agencies/Government
• Temporary Loans
• Deferred Revenue
• Long Term Liabilities

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Fund Balance

• Reserve Accounts Objects 9700 - 9749
• Revolving Cash, Stores, and Prepaid Assets
• Legally Restricted
• General Reserve 9600
• Designated Accounts 9770 -9789
• Economic Uncertainty
• Locally Designated
• Unappropriated Objected 9790

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Normal Values

• Assets are Debits
• Liabilities are Credits
• Fund Balance represents the difference between
  Assets and Liabilities
• Credit if positive
• Debit if negative

Exhibit A List
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Project vs. Sub-fund

• Projects / cash and expenditure activity is not
  audited.
• Projects may have negative balances and/or a
  negative cash position but contributions must be
  posted before year end to bring account to zero.
  
• Sub-Fund / cash transactions are audited Each
  resource is treated as a separate fund.
• Sub-funds must maintain a positive fund balance
  and a positive cash position at all times.

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• Asset 3 Mil

Formula Assets less Liabilities equal Fund
Balance

• Assets 3,000
• Liabilities 1,000
• Fund Bal. 2,000

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Control Accounts

• Daily transactions are booked through the
  subsidiary ledgers (revenue and expense) leaving
  a trail of debits and credits in the General
  Ledger.
• Revenues are posted to Object 9840
• Expenditures are posted to Object 9850

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Control Accounts

• Budget Appropriations are made in the subsidiary
  ledgers (revenue and expense).
• Revenues are posted to Object 9810
• Expenditures are posted to Object 9820
• The difference is posted to Object 9799 and to
  the fund balance objects accounts 9790 ad 9798

Exhibit B
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Beginning Balance Accounts

• Reflect values of assets and liabilities with
  which the district starts the year.
• The estimated values from the adopted budget are
  summarized in Object 9791 (Beginning Balance
  Entry)
• The adjustments for the actual values which are
  reported on the districts unaudited actuals are
  summarized in Object 9792 (Asset/Liability
  Automated Roll)
• Any Adjustments made by the Auditors are posted
  to Object 9793 (Budget Transfer Update)
• Restatements made by the District are posted to
  Object 9795 (Budget Transfer Update)
  AND

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Beginning Ending Balances

• Reflect values of Fund Balance and Reserves with
  which the district starts the year (Beginning
  plus Revenue Less Expense equal Ending).
• Total fund balance from the adopted budget is
  summarized in Object 9798 (Control Account F2
  Fund Form)
• Components of the Ending Fund Balances are
  detailed and provide the break out for the SACS
  Fund Form Detail (must sum to Control Object
  9798)
• Reserve Accounts 9700-9749
• Designated Accounts 9770- 9789
• Unapporpriated Balance 9790
  

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Beginning Balance Accounts continued

• The estimated Beginning Fund Balance values are
  manually entered through the ACCLI Beginning
  Balance Link menu and reflected on report FCR 125
  along with the estimated budget year ending fund
  balances. These values and input screens are
  locked upon submission of the budget and roll of
  the tentative budget to the Adopted Status.
  These values must be in balance for all resources
  detailed.

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Adopted Budget Roll

• The Tentative Roll from Budget Development to the
  General Ledger sets up all the accounts. The
  roll will not proceed if the account does not
  pass the account edits of state and county
  approved field values and combinations.
• The Adopted Roll is initiated by DAS once the
  hard copy of the Districts Certified Adopted
  budget is validated and is checked to agree with
  the values in the General Ledger.
• Information Systems launches the job that takes
  the budget values to the Adopted Status
  

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Adopted Budget Posting

• The launched job proceeds to roll each account
  and dollar value to adopted .
• Entries are made to the control accounts for
  total revenue (9810 - debit) and total expense
  (9820-credit), resource by resource.
• Since the GLD is a balanced set of records values
  are also posted in a control account 9799 for
  each resource. This entry to posted as activity
  as of the date the job is launched.
  Revenue (9810) less Expense (9820)
  Equal Net Change (9799)

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Adopted Budget Posting

• The job also takes this calculated Net Change
  Amount and adds it to the unappropriated fund
  balance account 9790 and to the fund balance
  control account 9798, resource by resource.
• These accounts are updated in the ACCLI
  Beginning Balance Program which are then
  reflected on the GLD report as the beginning
  value for this account, resource by
  resource. Beginning Balance (9791)
  Plus Net Change (9799) Equals Ending
  Fund Balance (9798)

Exhibit C
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Revising the Adopted Budget

• After the adopted budget roll the district may
  process budget revisions changing revenue,
  expense or fund balance values.
• Intra-district within expense objects or
  within revenue objects
• Audit Batches affects both revenue and expense
  or fund balance.
• Changes that affect the unappropriated fund
  balance account 9790 automatically post to the
  fund balance control account 9798, resource by
  resource. Revenue Control
  (9810) Expenditure Control (9820) Change
  (9799) Equals Ending Fund Balance
  (9798)

Exhibit D
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Beginning Balance Accounts continued

• Each update/revision of the Beginning Fund
  Balance Accounts (9791, 9792, 9793, or 9795) also
  update the ending fund balance accounts - 9790
  and 9798 (Budget Transfer Automatic Update)
• Budget Transfer Edits check formula
• Assets Less Liabilities equal Control
  Account
• Decrease to Asset must Decrease Control Account
• Decrease to Liability must Increase Control
  Account
• Increase to Asset must Increase Control Account
• Increase to Liability must Decrease Control
  Account

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Daily Transactions

• Payroll , Accounts Payable, Cash Receipts, and
  Cash Transfers are programs that create
  transactions that reflect activity (use) of
  District assets.
• Payroll Wage Payments - Gross
  Expenditures Fringe Benefit Payroll Mapping
• Accounts Payable Vendor Payments
  Employee reimbursements Sales Tax
  Liabilities Capital Outlay
• Cash Receipts and Transfers Revenue
  Receipts Interfund transfers
  Control Accounts
• Encumbrance (9830) Pending (9835)
  Revenue(9840)
• Expenditure (9850)

Exhibit E
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Payroll Benefit Mapping

• Most Districts use the payroll benefit mapping
  program to charge employer costs to the
  individual 26-digit program account code where
  the employee was paid.
• Unemployment Insurance (U/I)
• Debit Subsidiary Ledger (3501)
• Credit Suspense Account (9565)
  
• Debit Expenditure Control (9850)
• Workers Compensation (WC) Debit
  Subsidiary Ledger (3601)
• Credit Suspense Account (9566)
• Debit Expenditure Control (9850)

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Payroll Benefit Mapping Cont.

• Some Fixed Charges are posted right to cash and
  given to the Reporting Entity (Retirement and
  School Claims).
• Retirement (STRS/PERS)
• Debit Subsidiary Ledger (3101/3202)
• Credit CASH Account (9110)
• Debit Expenditure Control (9850)
• Medicare (MC) Debit Subsidiary
  Ledger (3341)
• Credit Suspense Account (9110)
• Debit Expenditure Control (9850)

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Payroll Benefit Mapping Cont.

• Some Fixed Charges are posted to one of the
  District Other Funds waiting for an interfund to
  reimburse the General Fund where most payments to
  vendors or Risk Management are charged in the
  Suspense Account).
• Health and Welfare (HW)
• Debit Subsidiary Ledger (3411/3412)
• Credit CASH Account (9564)
• Debit Expenditure Control (9850)
• Interfund Charge/Reimbursement Debit
  Subsidiary Ledger (N/A already charged by map)
• Credit Cash Account (9110)
• Debit Suspense Account (9564)
• Debit Cash General Fund (9110)
• Credit Suspense General Fund (9564)

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PERS Reduction Mapping

• The difference between actual employer PERS
  charges and the base rate of 13.020 is charged
  to the PERS Reduction Accounts for all resources
  except federal which are excluded. The type of
  account (R or Blank) restricted/nonrestricted and
  if to charge PERS Reduction or not is identified
  in the Field Definition (P or Blank).
• PERS Reduction
• Debit Subsidiary Ledger Expense (3801/3202)
• Credit Subsidiary Ledger Revenue (8092)
• Credit Revenue Control (9840)
• Debit Expenditure Control (9850)
• Other Funds Debit Subsidiary
  Ledger (3801/3802)
• Credit Suspense Account (9572)
• Debit Expenditure Control (9850)

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Stores

• Some Districts have warehousing facilities in
  which they purchase goods and hold them in an
  asset inventory until issued out to a school or
  program.
• Purchase Debit Stores Account (9320)
  Credit Cash (9110)
• Stock Issue Debit Subsidiary Ledger
  Credit Stores Account (9320) Debit
  Expenditure Control (9850)
• Inventory Requisition Evaluation (LIFO) Adjs
  (9329)
• Physical Inventory Adjustment (lower value)
  Debit Subsidiary Ledger Credit
  Stores Account (9320) Debit
  Expenditure Control (9850)

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Capital Outlay

• Upon purchasing an item of capital outlay
  (determined by the Districts threshold value)
  the funds are charged for the cash value paid and
  the fixed asset programs are updated.
• Purchase Debit Subsidiary Ledger (6410)
  Credit Cash (9110)_ Debit
  Expenditure Control (9850)
• Fixed Asset Debit Fixed Asset Account
  (9440) Credit Investment (9990)
• AS items are used (depreciated) the Fixed Asset
  Program records and accumulates the depreciation.
  
• Annual Depreciation Debit Depreciation
  (6900) Credit Accumulated Depreciation
  (9445)
• Note GASB34 Conversion Entries to Government
  Funds

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Prepaid Expense

• Some Districts enter into obligations that have
  an advance payment due before the use of the
  item. At fiscal year end goods or services paid
  but not used for the accounting period should be
  recognized as a prepaid asset. The asset should
  then be expensed when used.
• Purchase Debit Prepaid Expense (9130)
  Credit Cash (9110)
• Expensed upon use in next accounting period
  Debit Subsidiary Ledger Credit
  Prepaid Expense Account (9130) Debit
  Expenditure Control (9850) Note Grants
  cannot have prepaids

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Annual Adjustments

• California Schools System operate on a modified
  accrual basis. At year end Districts are
  required to book accrual entries for
  liabilities for goods and services received
  before June 30 but not paid. Also receivables
  must be recognized for funds due that will be
  received within 60-days of the fiscal year end or
  certified in the annual State apportionment
• Receivables
• SET-UP Credit to Subsidiary Ledger
  Debit to Receivable Asset Account
• Receipt Credit to Receivable Asset
  Account Debit to Cash
• Payables
• SET-UP Debit to Subsidiary Ledger
  Credit to Liability Account
• Receipt Debit to Liability Account
  Credit to Cash

Exhibit F
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YEAR-END CLOSING

• Budgetary and operating accounts are closed
  leaving only the asset, liability, and fund
  balance accounts open. Procedure 501 of the
  California School Accounting Manual identifies
  the general ledger operating accounts that need
  to be closed out.
• Budgetary
• Revenue (9810)
• Expenditure (9820)
  
• Operating Accounts
• Revenue (9840)
• Expenditure (9850)
  

Exhibit G
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Establishing Accruals

• Accruals are entered in using the receivables and
  current liability program.
• Receivables
• Revenues and Abatements (1000-8899)
• Set-up Control 9229 (9229, 9299,9319)
• Revenue/Expenditure Control (9840/9850)
  
• Current Liabilities
• Revenues Refunds and Expenditures (1000-8899)
  
• Set-up Control 9529 (9529, 9599,9619, 9659)
• Revenue/Expenditure Control (9840/9850)
  

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Establishing Accruals

• Limitations currently exist to appropriately
  classify Accruals for the Annual Financial
  Balance Sheet and are adjusted using Journal
  entries.
• Due From
• Set-up Control 9229 Credit
• Due From Account 9319 Debit
  
• Due To
• Set-up Control 9529 Debit
• Due t To Account 9619 Credit
  

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ASSET LIABILITY ROLL

• Actual Asset and Liability values are posted to
  Next Fiscal Year Beginning Balance adjusting the
  estimated amounts.
• ASSETS
• LIABILITIES
• FUND BALANCE ADJUSTMENTS
  

Exhibit H
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OK So...What is a Balance Sheet?

• NET Worth Bottom Line Value
• Fund Balance How much is left?
• Displays the value of the school districts
  assets less liabilities for a given period.

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Correcting/Adjusting the GLD

• Budget Transfer
• Correct/Adjust Values
• Journal Entries
• Correct Activity within same resource
• Cash Journal Entries
• Correct Activity offsetting to Cash between one
  resource and another
• NEVER NEVER NEVER USE A JOURNAL TO ADJUST A FUND
  BALANCE ACCOUNT 97XX BUDGET TRANSFERS MAKE
  REVISIONS TO BEGINNING OR ENDING
  FUND BALANCES

Exhibit I
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Check List

• Review Batch List to see if activity has been
  posted or distributed.
• Validate Working Budget represents current plan
  (Grants Entitlements normally treated as 100
  expended No Fund Balance)
• Contributions, State Aid Transfers,
  Interprogram, and Interfund transfers
  are in balance.
• Combo Maintenance Report reflects
  all accounts pass edit test.

TIP GLD 115 GLD 410 FAR 311
Exhibit J
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GLD 410 Report
Display from Activity Fund Balance When in
Balance No error reported
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GLD 410 Report
Calculated Fund Balance
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SACS Software Basic Tests

• Beginning Balance plus Revenue less Expense
  equal Fund Balance
• Assets less Liabilities equal
  Fund Balance
• No Negative Fund Balance

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Test your knowledge
Ledger
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Look At Your Ledgers Now!Develop a Plan

• Do your Grants and Entitlements accounts agree
  with your award and carryovers?
• What items will you allocate - PERS Reduction,
  Indirect Costs, Support Costs?
• Check out those Suspense Accounts!