introduction system information system name system name formation – city/county/dg formation –...
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System InformationSystem Information
System NameSystem Name Formation – City/County/DGFormation – City/County/DG # of Employees # of Employees
– Drivers & Admin. FT/PTDrivers & Admin. FT/PT 2008 Total Budget2008 Total Budget Total Revenues – Indicate Major SourcesTotal Revenues – Indicate Major Sources
– Contracts & Local Contracts & Local Indicate Who Pays The Bills? City County Indicate Who Pays The Bills? City County
or other? or other?
Workshop ObjectiveWorkshop Objective
Objective: to understand which Objective: to understand which expense and revenues to accrue in expense and revenues to accrue in order to properly report on the ODOT order to properly report on the ODOT invoiceinvoice
Workshop ExpectationsWorkshop Expectations
Your Participation is ExpectedYour Participation is Expected Flip Chart for QuestionsFlip Chart for Questions No Question is StupidNo Question is Stupid
Workshop OutlineWorkshop Outline
11stst half of workshop instructional half of workshop instructional ODOT rules of ODOT rules of
accounting/terminologyaccounting/terminology Accruing revenues & expenses Accruing revenues & expenses A look at Quick BooksA look at Quick Books LunchLunch Budget to Budget VarianceBudget to Budget Variance General ledger exerciseGeneral ledger exercise QuestionsQuestions
USOAUSOAUniform System of AccountsUniform System of Accounts
Required book of reference used for Required book of reference used for all accounting definitionsall accounting definitions
Final Rule – published 1/15/1993Final Rule – published 1/15/1993 Requires FTA grantees to use Accrual Requires FTA grantees to use Accrual
Basis of AccountingBasis of Accounting Allows conversion of Cash to Accrual Allows conversion of Cash to Accrual
– only as described in USOA– only as described in USOA
Accrual AccountingAccrual AccountingRemember this????Remember this????
What Is It?What Is It? Definition: Definition: Accounting method that Accounting method that
records revenues and expenses records revenues and expenses when they are incurred, regardless when they are incurred, regardless of when cash is exchanged. The term of when cash is exchanged. The term "accrual" refers to any individual "accrual" refers to any individual entry recording revenue or expense entry recording revenue or expense in the absence of a cash transaction.in the absence of a cash transaction.
Accrual AccountingAccrual Accounting
Remember this:Remember this:
Record Expenses when Record Expenses when incurred;incurred;
Revenues when earnedRevenues when earned
AssetAsset
An economic resource that is expected to An economic resource that is expected to be of benefit in the future. Probable future be of benefit in the future. Probable future economic benefits obtained as a result of economic benefits obtained as a result of past transactions or events. Anything of past transactions or events. Anything of value to which the entity has a legal claim. value to which the entity has a legal claim. Any owned tangible or intangible object Any owned tangible or intangible object having economic value useful to the having economic value useful to the owner.owner.
Debit AccountDebit Account
LiabilityLiability
DEBTS or obligations owed by one DEBTS or obligations owed by one entity (DEBTOR) to another entity entity (DEBTOR) to another entity (CREDITOR) payable in money, (CREDITOR) payable in money, goods, or services. goods, or services.
Credit AccountCredit Account
RevenueRevenue
the total amount of money received the total amount of money received by the entity for goods sold or by the entity for goods sold or services provided during a certain services provided during a certain time period time period
Credit AccountCredit Account
ExpensesExpenses
Payment, either in cash, by assuming Payment, either in cash, by assuming a LIABILITY, or by surrendering a LIABILITY, or by surrendering ASSET ASSET
Debit AccountDebit Account
Why Accrual???Why Accrual???
Smooth out Timing Differences Smooth out Timing Differences
For recording of Grant Revenues, For recording of Grant Revenues, Revenue and Expenses reported to Revenue and Expenses reported to
ODOTODOT
Reduce over/under paymentsReduce over/under payments
Rules of ThumbRules of Thumbto Accruingto Accruing
#1 Over $12,000 per year#1 Over $12,000 per year #2 Under $12,000 per year may #2 Under $12,000 per year may
accrue if necessary to maintain proper accrue if necessary to maintain proper accounting, adjusting entries must be accounting, adjusting entries must be made annually. made annually.
#3 Do not accrue consistent, fixed #3 Do not accrue consistent, fixed type of revenue or expense. type of revenue or expense. Examples: rent or utilities that are Examples: rent or utilities that are fixed amounts; fuel is consistent plus fixed amounts; fuel is consistent plus who knows what fuel is going to cost in who knows what fuel is going to cost in future.future.
Expenses to accrue or not?Expenses to accrue or not?
• 501/502 Labor & Fringes – Yes501/502 Labor & Fringes – Yes
• 503 Services – Rules #1,2,3503 Services – Rules #1,2,3
• 504.01 Fuel – Not required 504.01 Fuel – Not required
• 506 Insurance – Yes (prepaid)506 Insurance – Yes (prepaid)
• 507 Taxes - No507 Taxes - No
WagesWages
CashCash4-1-08 Operators Expense - 501.01 $5,0004-1-08 Operators Expense - 501.01 $5,000
Cash - 101.01 $5,000Cash - 101.01 $5,000
AccrualAccrual3-28-08 Operators Expense - 501.01 $5,0003-28-08 Operators Expense - 501.01 $5,000
Wages Payable - 201.01 $5,000Wages Payable - 201.01 $5,000
4-1-08 Wages Payable - 201.01 $5,0004-1-08 Wages Payable - 201.01 $5,000
Cash - 101.01 $5,000Cash - 101.01 $5,000
Employees are paid on the Friday following the end of week 2 pay period. For the pay period ending 3/28/08, total Operators Salary $5,000. Pay checks are issued on 4-1-08.
Cash Posting to LedgersCash Posting to Ledgers
On 4-1-08 post $5,000 to:On 4-1-08 post $5,000 to:
- 501.01 (DB) Oper. Expense to 010 Operations - 501.01 (DB) Oper. Expense to 010 Operations
- 101.01 (CR) Cash to Asset- 101.01 (CR) Cash to Asset
Accrual Posting to LedgersAccrual Posting to Ledgers
On 3-28-08 post $5,000 to:On 3-28-08 post $5,000 to:
- 501.01 (DB) Oper. Expense to 010 Operations- 501.01 (DB) Oper. Expense to 010 Operations- 201.01 (CR) Wages Payable to Liability - 201.01 (CR) Wages Payable to Liability
On 4-1-08 post $5,000 to:On 4-1-08 post $5,000 to:
- 201.01 (DB) Wages Payable to Liability- 201.01 (DB) Wages Payable to Liability- 101.01 (CR) Cash to Asset- 101.01 (CR) Cash to Asset
Effect of Cash VS AccrualEffect of Cash VS Accrual
• Under Cash transaction recording only Under Cash transaction recording only when payroll paid.when payroll paid.
• Under Accrual transaction recording Under Accrual transaction recording payroll when incurred.payroll when incurred.
• Notice timing difference: 4-01 vs 3-28 Notice timing difference: 4-01 vs 3-28
• Salary expense is recorded in 1Salary expense is recorded in 1stst Quarter Quarter under Accrual & 2under Accrual & 2ndnd Quarter under Cash Quarter under Cash
FringesFringes
CashCash4-01-08 Operator’s Fringes - 502.15 $1,2504-01-08 Operator’s Fringes - 502.15 $1,250
Cash - 101.01 $1,250Cash - 101.01 $1,250
AccrualAccrual 3-28-08 Operator’s Fringes - 502.15 $1,2503-28-08 Operator’s Fringes - 502.15 $1,250 Accrued Payroll Liabilities - 202.02 $1,250Accrued Payroll Liabilities - 202.02 $1,250 4-01-08 Accrued Payroll Liabilities - 202.02 $1,2504-01-08 Accrued Payroll Liabilities - 202.02 $1,250 Cash - 101.01 $1,250Cash - 101.01 $1,250
The fringe rate for the system is 25% of Operator’s Salary. Paid fringes at time of payroll.
Vehicle InsuranceVehicle Insurance
Transit system is billed $12,000 once a year for Transit system is billed $12,000 once a year for vehicle insurance on 6/30 annually. Record monthly vehicle insurance on 6/30 annually. Record monthly vehicle insurance expense 3-18-08vehicle insurance expense 3-18-08..
AccrualAccrual3-18-08 Premiums for PD Insurance - 506.01 $1,0003-18-08 Premiums for PD Insurance - 506.01 $1,000
Prepaid Insurance - 151.01 $1,000 Prepaid Insurance - 151.01 $1,000
Entry when paid on 6/30/08Entry when paid on 6/30/08::
6-30-08 Prepaid Insurance - 151.01 $12,000 6-30-08 Prepaid Insurance - 151.01 $12,000
Cash - 101.01 $12,000 Cash - 101.01 $12,000
Expenses to accrue or not?Expenses to accrue or not?
• 508.01 Purchased Transportation – 508.01 Purchased Transportation – Based on Contract – NoBased on Contract – No
• 509 Misc. Expenses – Rule #1 509 Misc. Expenses – Rule #1
• 512.12 Rent – Typically fixed amount512.12 Rent – Typically fixed amount
• 600 Other Costs – Rule #1 & 2600 Other Costs – Rule #1 & 2
Revenues to accrue or not??Revenues to accrue or not??
• 401 Passenger Fares – No, unless seasonal401 Passenger Fares – No, unless seasonal
• 402 Contracts – Rule#1 & #2402 Contracts – Rule#1 & #2
• 406 Advertising – Rule #1 & #2406 Advertising – Rule #1 & #2
• 407.01 Sale of Maint. – Rule 1,2,3407.01 Sale of Maint. – Rule 1,2,3
• 412.02 E&D – Rule #1 & #2412.02 E&D – Rule #1 & #2
• 413 Other Federal – Rule #1 & #2413 Other Federal – Rule #1 & #2
• 430 Contributed Services – No – Fixed430 Contributed Services – No – Fixed
• 499 Other Revenue – Rule #1 & #2499 Other Revenue – Rule #1 & #2
Contract RevenueContract Revenue
Record monthly contract revenue for the $120,000 Record monthly contract revenue for the $120,000 per year JFS contract. Record contract revenue per year JFS contract. Record contract revenue of $9,500received on 3-28-08.of $9,500received on 3-28-08.
3/28/08 Contracts Receivable 102.01 $10,0003/28/08 Contracts Receivable 102.01 $10,000
Contract Revenue 402.01 Contract Revenue 402.01 $10,000$10,000
3/28/08 Cash – JFS Payment 101.01 $9,5003/28/08 Cash – JFS Payment 101.01 $9,500
Contracts Receivable 102.01 Contracts Receivable 102.01 $9,500$9,500
Elderly & Disabled ProgramElderly & Disabled Program
Annual E&D grant is for $15,000 received approximately Annual E&D grant is for $15,000 received approximately 9/30 annually. Record monthly E&D accrual on 3-28-9/30 annually. Record monthly E&D accrual on 3-28-08.08.
3-28-08 E&D Receivable - 102.07 $1,2503-28-08 E&D Receivable - 102.07 $1,250
State E&D Fare Assistance - 412.02 $1,250State E&D Fare Assistance - 412.02 $1,250
Entry when received on 9/30/08Entry when received on 9/30/08:: : :9-30-08 Cash - 101.01 $15,0009-30-08 Cash - 101.01 $15,000
E&D Receivable - 102.07 $15,000 E&D Receivable - 102.07 $15,000
Budget/PlanningBudget/Planning
• Review Budget SampleReview Budget Sample
• Review Budget Variance SampleReview Budget Variance Sample
Bookkeeping SystemBookkeeping SystemReviewReview
• General LedgerGeneral Ledger• Asset LedgerAsset Ledger• Liability LedgerLiability Ledger• Revenue LedgerRevenue Ledger• Expense LedgerExpense Ledger
– 010 Operations010 Operations– 041 Vehicle Maintenance041 Vehicle Maintenance– 042 Non-Vehicle Maintenance042 Non-Vehicle Maintenance– 160 General Administration 160 General Administration
Quick Books OverviewQuick Books Overview
• User FriendlyUser Friendly
• $80 per hour for Training$80 per hour for Training
•http://quickbooks.intuit.com
• Provides Reports & Other FeaturesProvides Reports & Other Features
Work SessionWork Session
• Prepare Budget Variance Prepare Budget Variance
• Use Your Own DataUse Your Own Data
ODOT Invoice ReviewODOT Invoice Review
• Review Sample ODOT InvoiceReview Sample ODOT Invoice
• How the ODOT Invoice Works How the ODOT Invoice Works (handout)(handout)
• Review Posting to InvoiceReview Posting to Invoice
Why Do We Care?Why Do We Care?
CIRCULAR
FTA C 9040.1F U.S. Department of Transportation Federal Transit Administration April 1, 2007
Subject: NONURBANIZED AREA FORMULA PROGRAM GUIDANCE AND GRANT APPLICATION INSTRUCTIONS
1. PURPOSE. This circular is a re-issuance of guidance on the administration of the transit assistance program for nonurbanized areas under 49 U.S.C. 5311, and guidance for the preparation of grant applications. This revision incorporates provisions of the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA–LU), and includes the most up-to-date available guidance for the program.
2. CANCELLATION. This circular cancels Federal Transit Administration (FTA) Circular 9040.1E, “Nonurbanized Area Formula Program Guidance and Grant Application Instructions,” dated October 1, 1998.
Chapter VI, Financial Management 6.b (2) on page VI-7
“Costs incurred and available balances are reported annually on an accrual basis, on the Financial Status Report in FTA’s Transportation Electronic Award Management (TEAM) System.”