In my blog posting last month, one of the audit sections pertained to Pre-Paid Items. So, what is that? On the balance sheet, pre-paid expense is an asset (I know; sounds strange). Governments operate on an accrual-based rather than cash-based accounting system. Think of it as the opposite of an accrual where you’re recognizing the expense in one fiscal year but the actual payment (affect cash) is in the next fiscal year. With pre-paid expense, cash is affected in the current fiscal year but the expense is recorded for the subsequent fiscal year. Common examples of pre-paid item or expense are insurance and maintenance contracts where the payment for some or all of the goods/services is due before the contract/service period. Such contracts may need to be expensed to the current fiscal year as well as the subsequent fiscal year depending on the contract period (which means that the invoice would be split and entered for two different fiscal years).
How OpenRDA Handles Pre-Paid Items
How do you accomplish this in the OpenRDA software? First, you must have a standard balance sheet code for Pre-Paid Items (if you follow the 3-digit RDA standards, this would be 181 with a reference type of PRE-PAID ITEMS) and a balance sheet account master for this in each fund. Second, the fiscal year for the pre-paid expense must be opened in Financial Management so that account masters exist for the fiscal year. Third, when these type of invoices are received, vouchers are created using the applicable fiscal year with the fiscal month of Pre-Year. You’ll see when you override the fiscal month to Pre-Year that the Pre-Paid Expense automatically flags. Once you enter the desired account code, the Payable Code will automatically change to the standard balance sheet code for pre-paid items/expense. If the invoice is for the current fiscal year as well as the subsequent fiscal year, you would enter the portion for the current fiscal year as you normally do.
And, that’s it in a nutshell! And, accomplished without any journal entries. How easy is that?
Are you ready for your auditoscopy? Okay, that is a new word that I coined. If you prepare for your annual audit all year long, it won’t be so scary. Below, I’ve listed some of the more common schedules and items auditors request that you make available. In an upcoming white paper, you’ll find tips and suggestions on how to produce many of these items from the OpenRDA software. In the meantime, get organized and start saving supporting documentation for those items that require it.
- A detail listing of accounts receivable as of the last day of the fiscal year reconciled to the general ledger; supporting documents should be provided for items that are $10,000 or more.
- A schedule of receipts for the first two months of the fiscal year as well as supporting documents for amounts $10,000 or more.
- If your organization has utilities (such as water/sewer or garbage collection/solid waste), provide an A/R Aging Summary Report as of the last day of the fiscal year.
- A recap of all Due from Other Funds accounts.
- Copy of all federal and state grant agreements including reimbursement requests for which expenditures were made during the fiscal year.
- For each receipt transaction $10,000 or more, provide supporting documentation when not evident from the account description (for example, a revenue account for miscellaneous items).
- If your organization has an emergency 911 fund, provide a schedule of cash receipts from vendors for E911 fees.
- Revenue Summary Report with Amendments for the fiscal year (post year fiscal month so that accruals are indicated and totaled).
- A schedule of prepaid invoices with support documentation. Amounts should agree with general ledger account for pre-paid items.
- If the premium for workers’ compensation coverage crossed fiscal years, a copy of the statement and a schedule of the cost allocation should be provided.
- If the premium for other insurance coverage crossed fiscal years, a copy of the coverage page(s) should be provided.
- A schedule (detail listing) of accounts payable by vendor name and amount as of the last day of the fiscal year, sorted and totaled by account code.
- A copy of the check/EFT registers for the first 2 months of the new fiscal year. Provide invoices and copies of check/EFT for all checks/EFTs that are $10,000 or more.
- A schedule of accrued liability for any leave that is accrued in accordance with the governing authority’s leave policies. If you cannot produce a liability report from the OpenRDA software, you should provide a report of leave balances by employee along with the employee’s rate of pay as of the last day of the fiscal year.
- A schedule listing vacation or sick leave amounts paid to an employee upon his/her termination of employment.
- Quarterly payroll tax reports for the fiscal year that reflect the date deposits were made.
- Copies of 941 reports reconciled to payroll tax records.
- Verification that the beginning fund balance agrees to the ending fund balance per the prior year audit.
- A schedule of fund balances that the governing authority has designated for a specific purpose in conformance with GASB 54.
- Supporting documentation for expenditures greater than or equal to $10,000 and an explanation of the transaction if not evident from the account description (for example, a miscellaneous items account).
- Expenditure Summary Report with Amendments for the fiscal year (post year fiscal month so that accruals are indicated and totaled).
- A listing of all bank accounts that were opened or closed during the fiscal year.
- Copies of bank statements and bank reconciliations along with the reconciliation to the general ledger.
- A listing of all checks outstanding as of the last day of the fiscal year.
- A listing of any deposits in transit as of the last day of the fiscal year.
- Copies of bank statements for the 1st month of the new fiscal year.
- A listing of the capital outlay accounts along with invoices for items $10,000 or more.
- Reconciliation of the capital outlay account expenditures for the fiscal year along with the capital asset additions.
- Asset depreciation reports; one sorted by the asset number as well as one sorted by the function/department.
- A schedule of capital assets that were sold or otherwise disposed of during the fiscal year. For sold assets, include a copy of the check received for payment.
- A schedule of construction in progress including the amount authorized as well as the amount paid as of the last day of the fiscal year.
- County and city governments should provide a list/schedule of new roads accepted into the system during the fiscal year as well as a schedule of any repaved roads.
- Copies of all new loan agreements and capital lease agreements entered into during the fiscal year and a schedule of capital lease assets reflecting purchase date and amount.
- Supporting information for all payments made for principal and interest on debt as well as any amortization schedules.
- Inventory reports, if any, as of the last day of your fiscal year. For example, your organization may purchase gasoline in bulk. If so, provide the report from that system along with a copy of the last invoice from the fiscal year for the purchase.
- Schedule of journal entries for the fiscal year with supporting documentation.
- Trial Balance reports for all funds (pdf version and csv file).
Upcoming blog postings will cover how to use the OpenRDA features for entry of revenue accruals, prepaid items, and accounts payable/payroll accruals.
We all recognize the fact that we are completely dependent on technology functioning properly in order to do our jobs. And we all know that there is a chance that technical equipment can fail, many times without warning. Its easy to think “it won’t happen to me”. But the reality is it might. And sometimes hearing a real life story keeps us motivated to have a backup plan…and even a backup for our backup!
A Customer’s Story
A RDA customer recently had an in-house server that suffered an unexpected catastrophic failure. Their data could not be recovered from that server. Fortunately the RDA user backed up her live OpenRDA data directory nightly on a CD. But she also had an MBGUI directory containing data from 2004 – 2008 on that server that she still needed to occasionally access. This was not a part of her normal backup routine. Luckily she had a CD from 2010 that contained the 2004-2008 data she needed. This story ended well but unfortunately it does not always happen that way. The good news is that losing data is the result of improper planning and it can be prevented.
So, in hopes of preventing future issues we will ask you…do you backup your historical directories at least once a year? Do you backup your live data directory daily?
While backing up your live OpenRDA data on a daily basis is a must, we are all guilty of getting in a hurry and forgetting things. And many of us may completely forget about other important yet less used data that is stored on a server, such as historical information. While you don’t need to back up static data that does not change on a daily basis, it would be a good habit to make it part of your annual “data housekeeping” process.
So thanks to our customer mentioned above, here is your friendly reminder: Make sure you have a backup plan in place to:
- Backup your live data directory daily
- Backup any other data on your server on a regularly scheduled basis
Our Customer Care Group Can Help
Need help? RDA has options to make backing up your data easier for you. Part of hosting your data in the cloud is that your data is automatically backed up nightly. This backup service is included in your annual cloud cost and does not require any time commitment on your end.
For those of you that currently have an in-house server and/or plan to continue to host your data on an in-house server, we offer our Internet Backup Service (IBS). We keep at least 5 days worth of data available at all times. We also store your last 12 monthly backups. This process takes place after business hours and will not interrupt your day.
And if you need to backup your historical directory but are not sure how, send in a cyber support ticket under utilities and we’ll be glad to show you.
If you have any questions about backing up your data or how RDA can assist you with this process, contact Mimi English for more information. Things happen, be prepared!
We have had many requests for a way to track and report “Who Did What and When”. This question comes up often in the form of “Who changed what in our payroll files since the last check run?”
OpenRDA Tracks That Information
We have always tracked this information in the Transaction Processing tool. Transaction Processing tracks when something was changed even if it has been changed three times. A record is created and stored of every change. The record of every change includes the process, the date/time and who made the change along with the initial and resulting values.
Many of you have experienced the benefits of this tool with its undo/redo features. One scenario where Transaction Processings has helped many is when a system experiences an ungraceful shutdown due to a power outage in the middle of process like distribution, posting, computing, etc.. The Transaction Processing tool helped get the data back to a known and stable state.
OpenRDA 4.0 Will Make It More Useful
However, in its present format, the data is not easily shared or analyzed. That is about to change in OpenRDA 4.0. In addition to its trusted logging and undo/redo capabilities, Transaction Processing will easily query the activity logs for your organization or department showing Who did What and When. You will be able to get a list of all the data changes in a module, like Payroll or Vendor Payments, over a specific time frame. You will be able to quickly see who made what changes to your payroll records over a specific time period i.e., since the last check run. And, transaction Processing still has the undo/redo capabilities.
Transaction Processing can also be used with new hires and other employees to monitor their progress as they take on new and additional responsibilities. By looking at what they are doing and when, you can pinpoint areas where they are doing well or where they could use a little help.
Share Your Ideas
We can think of a number of other ways this tool can make a difference and we would like to hear what you think. Leave a comment about a time when this information would have come in handy to solve a problem or run down the information you needed.
As you are no doubt aware, the Payroll department is a target for data theft from both internal and external sources. We would like to share some best practices that Payroll personnel can take when protecting data to minimize the likelihood of secure information being intentionally or unintentionally released:
- Secure all documentation that contains employee information, including employee files, system reports, and negotiable paychecks
- Only collect items from employees that you actually need
- Implement a strong document destruction policy
- Secure servers and backup tapes
- Encrypt data as much as possible
- Update computer systems, as necessary, to those that are more secure
- Work with the IT department to manage the disposal of computer, copier and printer hard drives
- Change passwords frequently, keep passwords secure, and log out of all systems when away from your desk
- Restrict users’ access to what they need to know to perform their job duties
- Create policies that govern the use of company property that employees can carry with them (for example, laptops, flash drives, paper files)
- State in contracts with third parties that your organization owns the employee data
- Agree with vendors on their data protection practices and data retention time frames
- Set standards for how vendors can choose other third parties
- Monitor for vendor merger and acquisition activity, and revisit privacy and protection issues before an agreement is made
We hope that this list gives you ideas of how your organization, and your department specifically, can be more secure. If you have any other good practices to share with the RDA community, please comment below.
My October 4, 2013 blog posting talked about purchase cards (P-cards). Hard to believe that was four months ago. Anyway, in my (very humble) opinion, OpenRDA’s ESS Requisitions module is the absolute best solution for managing these type of purchases–for efficiency, transparency and accountability. I’m not sure about your area of the country, but it seems that every day I’m reading in the newspaper about someone in an organization who has been caught using his/her issued P-card (or company credit card) for personal purchases. And, I always wonder why it took so long for it to be detected.
But, if you’re not quite ready to deploy ESS Requisitions, you may want to try direct, credit card-type purchase orders or recurring vouchers.
If you would like more information on ESS Requisitions, please let us know.