UBC ACCOUNTING 101 - finance.ubc.ca · UBC ACCOUNTING 101 – Revised ... UBC uses up to 8 ......

UBC ACCOUNTING 101

Revised December 22, 2016

of 20 UBC ACCOUNTING 101 – Revised September 30, 2015

UBC ACCOUNTING 101

Contents

INTRODUCTION ......................................................................................................................................................... 3

INTRODUCTION TO BASIC ACCOUNTING RULES ....................................................................................................... 4

INTRODUCTION TO ACCOUNTING PRINCIPLES ......................................................................................................... 5

INTRODUCTION TO FINANCIAL MANAGEMENT SYSTEM (FMS) ................................................................................ 6

INTRODUCTION TO UBC ACCOUNTING STRUCTURE ................................................................................................. 7

1. Business Unit ................................................................................................................................................. 9

2. Account .......................................................................................................................................................... 9

3. Fund ............................................................................................................................................................. 11

4. Department ID (or DeptID) .......................................................................................................................... 11

5. Project/Grant (P/G) ..................................................................................................................................... 13

6. Program ....................................................................................................................................................... 15

7. Budget/Fiscal Year ....................................................................................................................................... 16

8. Accounting Period ....................................................................................................................................... 16

INTRODUCTION TO FUND ACCOUNTING ................................................................................................................ 17

General Purpose Operating Fund (G0000) .......................................................................................................... 17

Awards Fund (W0000 – W1000) ......................................................................................................................... 17

Endowment Fund (EXXXX) ................................................................................................................................... 18

Capital Fund (PXXXX) ........................................................................................................................................... 18

Sponsored Research Fund (RXXXX) ..................................................................................................................... 18

Specific Purpose Fund (S0000) ............................................................................................................................ 19

Agency or Conference Fund (Z0000) ................................................................................................................... 19

Fee for Service Fund (G0002) – fund codes F0000 and F1000 no longer in use as of April 1, 2013 ................... 19

Continuing Studies Fund (G0001) – fund codes CXXXX no longer in use as of April 1, 2013 .............................. 19

Ancillary Enterprises Fund (G0200 – G1600 for UBC Vancouver, G3100 – G3500 for UBC Okanagan) – fund

codes AXXX no longer in use as of April 1, 2013 ................................................................................................. 20

PUTTING IT ALL TOGETHER ..................................................................................................................................... 20


INTRODUCTION

This course provides you with an introduction to the accounting practices and accounting structure at the University of British Columbia (UBC) and is aimed at UBC employees who process financial transactions or review financial information at the University.

The following topics will be covered:

Introduction to Basic Accounting Rules

Introduction to Accounting Principles

Introduction to Financial Management System (FMS)

Introduction to UBC Accounting Structure

Introduction to Fund Accounting

While this course is mostly focused on accounting as it relates to UBC, there will also be a discussion of basic

accounting principles, terminologies and concepts.

Contacts

In the course of your career at UBC, you may need to contact Central Finance for specific inquiries. Please visit:

www.finance.ubc.ca – to find contacts on the Vancouver campus

www.finance.ok.ubc.ca – to find contacts on the Okanagan campus

Both websites also contain many helpful resources.


INTRODUCTIONTOBASICACCOUNTINGRULES

Debits = Credits

The universal terminology of the accounting industry can be described as debits and credits. Even in this age of

information technology, this principle still holds. Although keying the data electronically, at times, only shows

one side of the entry, the allocation to complete the balanced entry is performed through back‐end

programming. For instance, keying in a purchase requisition eventually results in a cheque being issued and the

corresponding accounting transactions recorded. Similarly, recording receipt of funding from a granting agency

automatically posts the receipt of funds to the bank balance.

A document that shows both the debit and credit side of the transaction is called a journal voucher.

Debits (+) – Charging an expense to a project grant. When we say we are going to debit a grant, this means

we are going to charge an expense to a grant. For example, when we pay for a laptop, we would debit the

grant from which the money will be spent to pay for the laptop.

Credits (‐) – Reimbursing a project grant. When we say we are going to credit a grant, this means we are

going to reimburse a grant. For example, when we are putting money into a grant, we would credit that

account.

Normal Balance

Normal balance – Every type of account has a normal balance. A normal balance is the debit or credit side

on which an account increases, meaning the type of balance expected of a particular account based on its

balance sheet classification.

Ideally we would like to see the “normal balance” for each category on the ledger as follows:

ACCOUNT TYPE NORMAL BALANCE

Fund Equity Credit (‐)

Revenue Credit (‐)

Budget Debit (+)

Expense Debit (+)

Transfer in Credit (‐)

Transfer out Debit (+)


INTRODUCTIONTOACCOUNTINGPRINCIPLES

Reliable & Verifiable ‐ Information is accurate, true and fair. The basic transaction integrity is the

representation of the recording to its source document. The accuracy and correctness of the keying, posting,

or recording in the database must be verifiable by an independent third party. All transactions need

appropriate supporting backup documents that need to be retained for seven (7) years. Transactions should

be categorized into appropriate transaction groups based on the supporting documents.

Relevant ‐ Information that is needed to affect decision making. All transactions need to have detailed

descriptions regarding the nature of the transaction.

Representational Faithfulness ‐ Transactions and events are accounted for and presented in a manner that

conveys their substance rather than necessarily their (legal or other) form.

Consistent & Comparable ‐ Accounting procedures and practices should be the same across all departments

within UBC. For our database to be comparable from one period to the next, the process of categorizing

transactions and the treatment of these transactions require consistency. This will ensure that funding from

a granting agency can be compared from one year to the next, and that the University’s stewardship ability

can be assessed from one period to the next.

These are the accounting principles that help us report the correct figures on the statements we produce. But

the correct information flows up from those who are inputting the data through to those who analyze the data

and produce statements. If everyone abides by these rules, then the statements will be as accurate as possible.


INTRODUCTIONTOFINANCIALMANAGEMENTSYSTEM(FMS)

PeopleSoft Financial Management System (FMS) is the Enterprise Resource Planning (ERP) software used by UBC

to track its financial transactions. It is utilized by employees with financial responsibilities. Financial data is

recorded into FMS Live by various Central Finance units and FMS certified departments and faculties, and can be

accessed and viewed in FMS nQuery, which is a read‐only database developed by UBC.

Below is a screen shot of the Management Systems Portal reporting screen where users can obtain access to

many financial applications including FMS nQuery.


INTRODUCTIONTOUBCACCOUNTINGSTRUCTURE

FMS helps the University keep track of funding and expenditures. It generates reports based on the information

organized in a structure known as the Chartfields. The Chartfield structure is the key to identifying information

in FMS.

UBC uses up to 8 Chartfield elements to categorize transactions.

1. Business Unit

2. Account

3. Fund

4. Department ID (Dept ID)

5. Project/Grant (P/G)

6. Program

7. Budget/Fiscal Year

8. Accounting Period

Different Chartfield combinations are used to enter and retrieve information in FMS. A combination of fields

with each field denoting a unique meaning leads to a unique pocket of money within UBC. Because Chartfields

are the basic building structures for all FMS reports, the proper use of Chartfields is crucial to allow users the full

range of sophisticated reporting options in FMS. Below is a sample of a Chartfield combination:

SpeedCharts are four character codes that represent a unique Chartfield combination made up of a fund code,

department ID and project grant. SpeedCharts are used to speed up data entry. They are generated by Central

Finance when a project grant is initially created.

Below are screen shots of the FMS nQuery Menu and link to Chartfields in FMS nQuery:


1. BusinessUnit

The “Business Unit” Chartfield identifies separate legal entities or areas of UBC. It has between three to five

alphabetic characters.

“UBC” is the main business unit and it is the only business unit used for general ledger and reporting purposes.

Each entity within UBC may or may not have its own business unit assigned for accounts payable transactions.

This depends on whether the particular entity/department is an FMS certified department or not (i.e. the

department in question is allowed to enter financial data directly into FMS vs. the department’s financial data is

entered into FMS by qualified staff in Central Finance).

For example the UBC Bookstore is a FMS certified department and its business unit is “BKSTR”. The accounts

payable entries of departments that are not certified default to the business unit “UBC”.

The business unit is required for all transactions and defaults to “UBC”.

2. Account

The “Account” Chartfield defines the type of transaction. It is generally referred to as the account code. It is

made up of six numeric characters. There are six account code types:

Assets (1XXXXX)

Liabilities (2XXXXX)

Fund Equity (3XXXXX)

Revenues (4XXXXX)

Expenses (5XXXXX, 6XXXXX, 7XXXXX and 8XXXXX)

Interfund Transfers (9XXXXX)

Examples of transactions include expenses such as postage or office supplies, and revenues, such as food sales.

Account codes are required for all FMS transactions.

A complete list of account codes is available in the FMS nQuery Menu.


3. Fund

The “Fund” Chartfield classifies assets, liabilities, revenue and related expenses according to the purpose as

listed below:

General Purpose Operating Fund (G0000)

Awards Fund (W0000 – W1000)

Endowment Fund (EXXXX)

Capital Fund (PXXXX)

Research Fund (RXXXX)

Specific Purpose Fund (S0000)

Agency or Conference Fund (Z0000)

Fee for Services (G0002) – fund codes F0000 – F1000 no longer in use as of April 1, 2013, but included

here for historical purposes

Continuing Studies Fund (G0001) – fund codes CXXXX no longer in use as of April 1, 2013, but included

here for historical purposes

Ancillary Fund (G0200 – G1600 for UBC Vancouver, G3100 – G3500 for UBC Okanagan) – fund codes

AXXXX no longer in use as of April 1, 2013, but included here for historical purposes

The “Fund” Chartfield is required for all FMS transactions and is made up of five alphanumeric characters.

4. DepartmentID(orDeptID)

A department is any academic or other organizational unit that has defined fiscal, administrative and budgetary

responsibility. Some examples include Botany, Mechanical Engineering, Surgery, etc.

Each department is assigned a Department ID that has six numeric characters. For example, the Department ID

for Botany is “220200”.

The Department ID is required for all transactions.

In the FMS nQuery Menu you can view a full list of departments (Dept IDs) by clicking on “Chartfields”, then

“Department” and then “FMS Department Structure”. You can also see the name of a specific department ID, its

location and its specific signing authorities by entering a specific Department ID into the “DeptID” field.


5. Project/Grant(P/G)

The Project/Grant (P/G) Chartfield is used to track assets, liabilities, revenues and expenses to a specific

activity/grant/contract, for both actual and budget transactions. It is made up of eight alphanumeric characters.

For example: 32G10010

The letter/character refers to the type of fund. In this case ‐ G ‐ is a general purpose operating fund.

The last five numbers after the character are automatically generated by the system and are a unique identifier

for a project.

When a Department ID and/or Fund is linked to a specific Project/Grant, that Department ID and/or Fund must

be used whenever the specific Project/Grant is used.

Although the PG is not required in all cases, its use is strongly encouraged.

You can look up the details of a specific Project/Grant in the FMS nQuery Menu by entering the PG number into

the “P/G Number” field under Chartfields Project/Grant. The details are information such as the effective

date and end date of the PG, its description, fund, DeptID, program, location code, manager of PG, source of

funding, signing authorities for the PG, etc.


6. Program

The “Program” Chartfield groups related activities and transactions that are directed towards accomplishing a

set of objectives. It is made up of up to five alphabetic (e.g. ADMIN) or alphanumeric characters.

This Chartfield is user‐defined to enhance reporting flexibility, and may be used in combination with any other

FMS Chartfield.

The “Program” Chartfield is optional.

You can look up an existing program in the FMS nQuery Menu by clicking on “Chartfields”, then “Program” and

then entering the program code into the “Program” search box.


7. Budget/FiscalYear

The accounting/fiscal year is the 12 month period for which a business or organization uses its funds and records

its annual financial information. It is also referred to as budget year.

UBC’s accounting/fiscal year starts April 1st and ends March 31st of the next year. The calendar year in which the

final fiscal period ends, names the fiscal year. For example, the accounting/fiscal year 2011 means the year

started April 1, 2010 and ended March 31, 2011.

8. AccountingPeriod

Accounting periods range from 1 to 12 and represent the specific month within a particular fiscal year. The first

accounting period ‐ period 1 ‐ of the UBC accounting/fiscal year is April; the last accounting period ‐ period 12 ‐

of the UBC accounting/fiscal year is March.

Any given date within a specific fiscal year can be referred to as a budget/accounting date. Each financial

transaction requires a budget date which will be based on the date the transaction was recorded.

The financial information is reported monthly, quarterly and annually during any given accounting/fiscal year.

Below is a sample showing a typical general ledger summary.


INTRODUCTIONTOFUNDACCOUNTING

The University keeps track of money using various “funds”. Funds can be externally restricted, internally

restricted or unrestricted. In Fund Accounting all revenues received must be classified and deposited to the

appropriate fund. The different funds can be described as the buckets where funding is allocated in accordance

with the wishes of the granting agency. Each fund covers all the transaction types (i.e. assets, liabilities,

revenues and expenses) and is reported on its results of operations and its financial position.

The type of accounting used in the public sector is predominantly Fund Accounting. All accounting is processed

by the designated funds. The financial information collected from all these funds are then amalgamated and

consolidated into financial statements for reporting purposes.

The different types of funds at UBC are:

GeneralPurposeOperatingFund(G0000)

The General Purpose Operating Fund is also referred to as GPO. Its sources of revenue are operating grants

provided by the Province of British Columbia and tuition fees (“central revenues”), as well as revenues

generated directly by units. Transactions that are applicable to revenues received or earned for general use in

the University’s operations, are recorded into this fund type.

Central revenues are made available to University faculties, departments and other units through the GPO

budget process which is managed by the Budget Office (Management Reporting and Budgeting).

It is a budget based fund, which means that the amount available for spending compares actual expenditures

(excluding interfund transfers) to the budget amount (not actual revenue received).

Fund code G0000 is used for all activity in this fund.

AwardsFund(W0000–W1000)

Transactions that are applicable to grants received for student awards are recorded into this fund type. The use

of these funds is restricted by the donor or granting agency.

Fund codes W0000 – W1000 are used for all Award Fund activity.


EndowmentFund(EXXXX)

Endowment Funds are budget based funds. The principal and related investment income that has been

endowed is recorded into this fund type. The principal may not be spent. The use of investment income derived

from the principal is restricted by the terms of “deeds” that are established for each fund. These principal funds

may be established by directions from the donor or by decisions of the University.

The fund code EXXXX is used for all Endowment Fund activity.

Examples: Killam General, Killam Salary, and Killam Advanced Studies.

CapitalFund(PXXXX)

Transactions that are applicable to donations and grants received for construction, minor capital, or equipment

(other than research) are recorded into this fund type. The use of these monies is usually restricted by the

donor or granting agency.

A separate fund code (PXXXX) is used for each capital project.

Examples: Province of British Columbia Equipment Grant (P0013) and UBCO Arts and Sciences Building

Construction Project (P3022).

SponsoredResearchFund(RXXXX)

Transactions applicable to donations, grants and contract monies that are received for research are recorded

into this fund type.

The sponsored research fund is a budget based fund and is administered by Research and Trust Accounting

(RTA).

The use of these funds is usually restricted by the donor or granting agency.

However, the fund R2222 is unrestricted and it is used to support the principal investigator’s (PI) research

activities in his/her area of expertise. All funding allocated from internal sources for startup and residual

balance from expired research project grants that meet the internal reserves criteria is recorded into this fund.

Examples: Natural Sciences and Engineering Research Council – NSERC ‐ (R8000) and Canadian Institutes of

Health Research – CIHR ‐ (R9000).


SpecificPurposeFund(S0000)

Transactions applicable to donations, grants and contract revenues received for specific purposes other than

student awards, research or capital are recorded into this fund type. The use of these funds is restricted by the

donor or granting agency.

Fund code S0000 is used for all Specific Purpose Fund activity.

AgencyorConferenceFund(Z0000)

Transactions applicable to non‐University activity that are managed by University members at UBC are recorded

into this fund type. This primarily includes conferences held at UBC on behalf of external associations.

Fund code Z0000 is used for all activity in this fund.

FeeforServiceFund(G0002)–fundcodesF0000andF1000nolongerinuseasofApril1,2013

Transactions that are applicable to revenues generated by the University faculties, departments and other units

that are generated on a fee‐for‐service basis, are recorded into this fund type. This fund is a revenue based fund

and supports or supplements the General Operating Fund allocations of the departments that generate revenue

on a fee for service basis. The Fee for Service Fund is managed by the responsible department and has no

external restrictions on its use.

As of April 1, 2013, these transactions are recorded into GPO funds (G0002) as part of the ongoing work to

simplify the budgeting process and change the way this fund is treated.

Fund codes F0000 and F1000 were historically used for all activity in this fund.

Examples: UBC Dental Clinic and Psychology Clinic.

ContinuingStudiesFund(G0001)–fundcodesCXXXXnolongerinuseasofApril1,2013

Transactions that are applicable to student fees and other revenues received to deliver non‐credit, distance and

extra‐sessional programs are recorded into this fund type. It is a revenue based fund, which means the balance

available for spending compares actual expenditures and interfund transfers against actual revenue received

(not a budgeted amount).


As of April 1, 2013, these transactions are recorded into GPO funds (G0001) as part of the ongoing work to

simplify the budgeting process and change the way this fund is treated.

A separate fund code (CXXXX) was historically used for each continuing studies operation.

Examples: Commerce Professional Programs and Forestry Continuing Studies Network.

AncillaryEnterprisesFund(G0200–G1600forUBCVancouver,G3100–G3500forUBCOkanagan)–fundcodesAXXXnolongerinuseasofApril1,2013

Transactions that are applicable to income generated by UBC’s ancillary operations are recorded into this fund

type. Ancillary operations are fully self‐sufficient. They receive no direct or indirect subsidy from the University

and are revenue based funds.

Ancillary operations are defined by the Board of Governors.

As of April 1, 2013, these transactions are recorded into GPO funds (G0200 – G1600 for UBC Vancouver, G3100 –

G3500 for UBC Okanagan) as part of the ongoing work to simplify the budgeting process and change the way

this fund is treated.

A separate fund code (AXXXX) was historically used for each ancillary operation.

Examples: Bookstore and Athletics & Recreation.

PUTTINGITALLTOGETHER

While FMS is an excellent system, the element that holds the data true, that maintains the database integrity,

and that humanizes the information technology is the people who input financial information into the system.

They are the ones that ensure the data entered reflects the source documents. And they make FMS work.

If you are interested in learning more, we have a variety of training sessions that you may find helpful. We offer

training sessions for FMS Certified departments as well as Finance training for other departments.

To learn more about Finance training and learning please visit:

http://finance.ubc.ca/training ‐ Vancouver campus

http://finance.ok.ubc.ca/training.html ‐ Okanagan campus

UBC ACCOUNTING 101 - finance.ubc.ca · UBC ACCOUNTING 101 – Revised ... UBC uses up to 8 ......

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