Policy Title General Ledger and Chart of Accounts Policy Number



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Policy Title

General Ledger and Chart of Accounts

Policy Number

301

Version

DRAFT 0

Contact

Candy Shin, Chief Financial Officer

Effective Date




Approved By




General Ledger and Chart of Accounts
Policy

IRIS Financial Services is responsible for maintaining a complete general ledger and supporting financial records for all IRIS funds and accounts. All financial transactions should be posted in accordance with IRIS accounting policies and procedures.


Purpose

The purpose of this policy is to ensure the accuracy of the financial and accounting records of IRIS through the use of proper expenditure codes and account numbers.


Scope

It is the function of the general ledger accounting system to accumulate, on a timely and accurate basis, all financial transactions of an entity. The framework for the general ledger system is the chart of accounts, a listing of all account titles and the account numbers or codes assigned to them.


The chart of accounts (with any related definitions) is the main reference tool for all personnel who are required to assign account numbers or expenditure codes to various accounting transaction documentation, e.g., purchase requisitions, check requests, etc.
Responsibilities

All personnel who are required to assign account numbers or expenditure codes for any purpose should verify all account numbers and coding information (including funding source and program codes, and expense categories and subcategories) through reference to a current chart of accounts, or by direct communication with Financial Services. Failure to verify account information can lead to inaccuracies in financial information and delays in processing transactions.




  1. Chart of Accounts


Organization

IRIS’s Chart of Accounts is organized as follows: each account has an assigned 11-digit numeric string divided into 4 unique segments in a 4 - 3 - 2 - 2 pattern.



XXXXXXX XXXX


XXXX

Represents the funding source or contract or, if beginning with a zero, represents a non-contract asset, liability, revenue or expense account.

XXX

Represents a particular IRIS program or activity or a further division for non-contract accounts.

XX

Represents an expense code category for contract accounts only.

XX

Represents a particular type of expense for contract accounts only.

For example, an invoice coded to account code 2005-300-44-15 represents an expense under the USArray Cooperative Agreement (2005), under the Flexible Array program (300), for equipment (44), specifically, sensors (15).


Maintenance

The chart of accounts is perpetual. The Director of Finance & Administration, or her designee, is responsible for adding accounts and making necessary changes to the chart of accounts, as well as deleting unused, unneeded accounts. Accounts may only be deleted when the general ledger account does not report any budget amounts, transactions or commitments in the current year.


B. Classification Of Net Assets
For financial statement purposes, IRIS follows the recommendations of the Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. Under SFAS No. 117, IRIS reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.
Permanently restricted net assets are those net assets that result from contributions and other inflows of assets whose use by the IRIS is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of IRIS.
Temporarily restricted net assets are those net assets that result from contributions and other inflows of assets whose use by IRIS is limited by donor-imposed stipulations that either expire by the passage of time or can be fulfilled and removed by actions of IRIS pursuant to those stipulations.
Unrestricted net assets are those net assets that are neither permanently restricted nor temporarily restricted by donor-imposed stipulations. 

C. Fiscal Year
IRIS’s fiscal year for accounting purposes begins on July 1st of the year and ends on June 30th of the following year.


D. General Ledger Closing
1. Monthly: Generally, Financial Services closes the books by the 20th of the following month. The closing process includes review of the trial balance, entry and review of adjusting journal entries, computation and allocation of indirect cost pools, computation of revenue, and production of closing worksheets. Once the tasks are all completed, reports are printed and reviewed.
2. Annual: Financial Services usually closes the books for the fiscal year at the end of July, to allow transactions pertaining to the fiscal year to be identified and posted to the accounting system, to enable GAAP-based financial reporting.
At the end of July, a preliminary audit directory is created, and the audit directory remains open until all accruals are identified and final reconciliations are completed. Once the audit is finished, usually in October, any audit adjustments made to the audit directory are recorded in the beginning balances in the accounting system.
3. Other: Certain types of transactions are accumulated and tracked on a different fiscal basis, in addition to the accounting system, to facilitate certain types of required reporting. For example, while expenses are charged to the appropriate general ledger accounts on a fiscal year basis, vendor payments are tracked on a calendar-year basis so that accurate 1099 forms cans be completed on a timely basis, and then closed out. Payroll transactions are also tracked on a calendar year basis to facilitate accurate W-2 reporting to employees, and other governmental authorities.
E. Journal Entries
All manual journal entries to the IRIS’s general ledger must be properly prepared, supported by adequate documentation, reviewed, approved, and recorded. Journal entry records and support are maintained in accordance with audit requirements.
All manual (non-system generated) journal entries must be properly prepared, reviewed, authorized, and posted.


  • All journal entries are required to be signed by the preparer and a reviewer prior to posting.

  • A person preparing a journal entry cannot authorize the same journal entry.

  • All journal entries must have supporting documentation that fully explains the nature and amounts being recorded, as well as the reason for the journal entry.

  • Procedures are in place to ensure that all journal entries have been properly processed prior to closing the accounting period – Financial Services management uses a checklist to execute the closing process.

  • All posted journal entries and related documentation are maintained in a readily accessible file for review by senior management and internal and external auditors.

Approved journal entries are recorded each month, prior to month-end close. The Accounting Manager keys each journal entry into the accounting system. After entry, the staff person prints a Voucher Edit Report from the accounting system and verifies that the entry was correctly recorded. The journal entry documentation and the Voucher Edit Report are then forwarded to the Director of Finance & Administration, who reviews the report and the supporting documentation. Once the Director of Finance & Administration is satisfied, the entries are posted to the accounting system.


At the end of each month, all activity for each project, including journal entries, is downloaded into an Excel spreadsheet (Program Managers General Ledger Detail download) and distributed to the management staff for review. Managers review the activity posted to their projects and forward comments or required changes to Financial Services.


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