Download Payment Voucher Processing and Accounting in AFS: A Comprehensive Guide and more Schemes and Mind Maps Accounting in PDF only on Docsity!
TABLE OF CONTENTS
ISIS/AFS USER GUIDE, VOL. II (07/03) 2 - i
TABLE OF CONTENTS
TABLE OF CONTENTS
2 - iv ISIS/AFS USER GUIDE, VOL. II (07/03)
This page is intentionally left blank.
ISIS/AFS USER GUIDE, VOL. II (07/03) 2 - 1
Chapter 2 - Expenditure Accounting
This chapter describes the purchasing/disbursement cycle. It is organized as follows:
- Overview
- Key Concepts
- Requisition (Exclusively handled through AGPS)
- Purchase Order
- Payment Voucher
- Recurring Payment Voucher Facility
- Manual Warrant
- Automated Disbursements
- Check Voids
- Special Features -- Outstanding Check Reconciliation -- Lien and Levy Processing -- Backup Withholding -- Vendor 1099 Processing
Overview
The purposes of the expenditure module are:
- To provide a mechanism by which managers can procure goods and services required to carry out their functions; and
- To exercise control over spending and to account for the goods and services purchased for both financial and cost accounting purposes.
The four accounting events represented in the expenditure process are:
- Requisition (Pre-encumbrance). A request for procurement represents the intent to incur an obligation. Requests for procurement can be useful accounting information for internal management purposes. They are recorded in the accounting system as pre-encumbrances. They do not represent legal obligations of a government. Requisitions are exclusively processed in AGPS.
- Purchase Order (Encumbrance). A purchase order in AFS may represent a reservation of an agency's budget for a particular purpose: for example, utility payments. They are reductions in the amount available for spending when budgetary controls are being used.
- Receipt of Goods or Service (Expenditure). The acceptance of a delivery of goods or services by an authorized individual represents the initial point at which
ISIS/AFS USER GUIDE, VOL. II (07/03) 2 - 3
Figure 2- Alternative Processing CASH DISBURSEMENT Chains - Expenditure RECOGNITION OF RECOGNITION OF RECOGNITION OF AGAINST PREVIOUSLY Accounting PRE-ENCUMBRANCE ENCUMBRANCE EXPENDITURE RECOGNIZED EXPENDITURE
Requisition ────> Purchase Order ──> Payment Voucher ──> Manual Warrant, AGPS Automated Disbursement or EFT Purchase Order ──> Payment Voucher ──> Manual Warrant, AFS or Automated Disbursement AGPS or EFT Purchase Order ──────────────────────> Manual Warrant AFS only Payment Voucher ──> Manual Warrant, AFS or Automated Disbursement AGPS or EFT Manual Warrant AFS Only
Definition of Terms
The following terms are used throughout this chapter:
Closed Amount. The amount that has been closed to date against an open item (for example, the amount from a requisition that has been referenced on a purchase order). When the item is finally closed and no further activity is to occur against it, a closed date is assigned to the open item and the closed amount indicates that the total open item amount has been closed. Until the item has been closed, the expended amount will equal the closed amount.
Committed Amount. The sum total of pre-encumbrances, encumbrances, and expenditures.
Discount Type. A code used on payment voucher transactions to indicate that a discount may be taken against the line amount of the transaction if a corresponding cash disbursement is made within a specified number of days. Discount parameters, including number of days, are defined by discount type on Discount Type (DISC).
Electronic Funds Transfer (EFT). A transfer of funds electronically from buyer to seller through bank notification.
Encumbered Amount. The amount submitted on a purchase order document.
2 - 4 ISIS/AFS USER GUIDE, VOL. II (07/03)
Expended Amount. The amount submitted on a payment voucher, manual warrant, warrant voucher, or expenditure journal voucher transaction.
Expenditure. An AFS account type (23), used when items and services are purchased and used near enough in time to make it unnecessary to separate the two events.
Expense. An AFS account type (24), used when previously acquired goods or services are used, such as depreciation, receipt of pre-paid items, and depletion of inventories.
Internal References. Used on transactions when both the seller and the buyer are included, and both are within the government. On expenditure transactions, the references are the fund and agency of the seller.
Object of Expenditure. Any item or service on which funds are spent.
Obligations. The sum total of encumbrances and expenditures.
Outstanding Amount. For an open item, the difference between the line amount and the closed amount for that line.
Pre-encumbered Amount. The amount submitted on a requisition transaction.
Scheduled Payment Date. Every payment voucher is assigned a scheduled payment date -- the date on which payment is to be automatically triggered by the system. The scheduled payment date for a voucher will be: the date coded on the payment voucher, if any; or, if not coded, the scheduled payment will default to the system payment lag, as specified in System Control Options (SOPT). In Louisiana, the system payment lag is set to 30 days. Scheduled payment dates can always be overridden or changed by persons with appropriate security authority.
Tolerance Percent. The percentage used to calculate an upper limit to purchase order closing amounts. A system-wide tolerance is specified in System Control Options (SOPT). The system-wide tolerance may be overridden for a given fund by specifying a tolerance amount or percent for that fund in Fund (FUN2).
Key Concepts
Referencing The various steps in expenditure accounting that apply to the same purchasing event
Facility are linked together in AFS by referencing the preceding document. For example,
when a payment voucher is entered against a previously entered purchase order, one of the items coded on the payment voucher can be the document ID identifying the purchase order. In the same manner, manual warrants may reference payment
2 - 6 ISIS/AFS USER GUIDE, VOL. II (07/03)
- Open items and partially closed items are not affected by the purge process.
- Payment vouchers, purchase orders and requisitions which have been marked closed are removed from the tables based upon a date parameter as specified by OSRAP. For instance, the date parameter could be set so that all items which have been closed for more than 90 days are removed from the tables. Items can be removed from the tables based on different parameters. For instance, requisitions and purchase orders can be removed based on a different date parameter than payment vouchers. Also, requisitions and purchase orders from the Contract Financial Management System (CFMS) are purged on a different basis than the requisitions and purchase orders from AGPS and AFS.
More information about the purge process can be found in the ISIS/AFS User Guide, Volume II, Chapter 5- Accounting Period Clearing and Closing.
The contents of each open item table are explained later in this chapter under the section that addresses the transaction related to the specific table (for example, a discussion on Open Requisition Inquiry may be found in the section on Requisitions).
Open Item All expenditure transactions are posted to the Current Detail General Ledger
Ledgers (GENLED). In addition, open purchase orders and payment vouchers are also
maintained in the following ledger files:
- Open Purchase Order Ledger File (POOPEN)
- Open Payment Voucher Ledger File (PVOPEN)
These ledgers contain a separate record for each detail transaction (original entry) and for each modification made to the original entry, for purchase orders and payment vouchers. These ledgers also contain a separate record for each referencing transaction. For example, in the Open Purchase Order Ledger file, a Payment Voucher that references a Purchase Order is also stored in the Open Purchase Order Ledger. Any Manual Warrant or Automated Disbursement (check) that references a Payment Voucher is also stored on the Open Payment Voucher Ledger. These referencing transactions are stored in the appropriate Open Items Ledger until the Purchase Order or Payment Voucher is purged from the Ledger, at which time the referencing transactions are also purged from the Ledger. This provides a complete inception-to-date tracking capability on open purchase orders and payment vouchers for reporting purposes.
More information on the purge process for the Open Items Ledgers can be found in the ISIS/AFS User Guide, Volume II, Chapter 5- Accounting Period Clearing and Closing.
ISIS/AFS USER GUIDE, VOL. II (07/03) 2 - 7
Other Tables Besides the Open Items tables, other screens exist in AFS to summarize expenditure
activity. Most of these tables are discussed in the Budgeting chapter (chapter 1) of this guide. Tables discussed in the budgeting section include: Expense Budget Inquiry (Extended) (EEX2), Expense Budget Summary Inquiry (Extended) (EESM), Organization Rollups by Object Code (OROC), Expenditure Summary Inquiry (ORGE), and Organization by Object Inquiry (EORG). (ORGE and EORG do not include continuing appropriations). All of these tables compare budgeted amounts with actuals. There are additional tables which show only actual amounts. They are: Object/ Sub-Object Inquiry (OBSO), Organization/Sub-Object Inquiry (ORSO), Reporting Category/Sub-Object Inquiry (RCSO), and Reporting Category/Object Inquiry (RCOB). All of these tables show actual Pre-Encumbered, Encumbered, and Expended amounts as of the previous business day (they are updated by a nightly batch process). More information on all of these tables may be found in the ISIS/AFS Online Features.
Canceling Outstanding (open) purchase orders, and payment vouchers should be canceled
Expenditure (closed) in AFS when it becomes known that a purchase is not going to be made.
Transactions Canceling the transaction reverses the obligation and closes the item on the
appropriate open item table. Canceling is achieved by "zeroing out" the line in the following manner:
- Complete the header of the appropriate transaction input screen with the same document ID used on the original document, and an "M" in the action field.
- Code the line to be canceled exactly as it exists in the open item table, including the outstanding line amount. Code a "D" in the increase/decrease column, which decreases the line amount to zero. (If a line has been partially cleared, it can only be decreased by the outstanding amount.)
Accounting Basis AFS performs various functions that ensure proper expenditure accounting
for Expenditure procedures.
Processing
- Users code only the expenditure line of an expenditure transaction on input documents (except for the payroll and certain journal voucher transaction types). AFS automatically generates the implied offset, or balance sheet, entry. The actual offset entries generated are listed in subsequent sections of this chapter.
- AFS automatically closes a pre-encumbrance when an encumbrance is recorded against it. For example, in addition to the entry generated to offset the encumbrance, other entries are generated to reverse the original pre-encumbrance transaction.
- Similarly, AFS automatically reverses an encumbrance and reserve for encumbrance when an expenditure is recorded against it.
ISIS/AFS USER GUIDE, VOL. II (07/03) 2 - 9
To preserve consistency between budgetary and accounting data maintained at different levels of detail, AFS automatically sums to the level of the budget before applying budgetary controls and updating balances in the budget tables. Thus, users need only code each transaction properly from an accounting standpoint; AFS performs the rest automatically.
Accounting distribution consistency must be preserved between succeeding documents in the purchasing chain. For example, when a payment voucher references a purchase order, the accounting distribution must be the same on both documents. However, the accounting distribution may be "exploded" on the succeeding document, so that it includes additional codes not on the previous document. For example, optional codes such as job number and sub-object may be added to a payment voucher, even if these codes were blank on the referenced purchase order.
Budgetary Three budgetary controls on spending may be implemented in AFS. Each one is
Controls selected on a fund basis. They are listed below and described in detail in Chapter 4,
"System Controls and Options", in the ISIS/AFS User Guide, Volume I.
- Appropriation Full Control. The unobligated balance (or budgetary authority) of the appropriation must be greater than or equal to the new obligation. This is the level of full control for Louisiana.
- Appropriation Category Full Control. The unobligated balance on the matching appropriation category budget line must be greater than or equal to the new obligation. Budgets are not controlled at this level in Louisiana.
- Expense Budget Full Control. The unobligated balance on the matching expense budget line must be greater than or equal to the new obligation. Budgets are not controlled at this level in Louisiana.
AFS rejects any transactions that do not meet the budgetary controls selected for the fund.
2 - 10 ISIS/AFS USER GUIDE, VOL. II (07/03)
Obligations When purchase orders, payment vouchers, and manual warrants are tested for
compliance with budget controls, obligations are defined as:
ENCUMBERED EXPENDED AMOUNT AMOUNT
When requisitions are tested for compliance with these controls, obligations are defined as:
PRE-ENCUMBERED + ENCUMBERED + EXPENDED AMOUNT AMOUNT AMOUNT
However, pre-encumbrances never affect fund balance because they are not included in the annual closing calculation of fund balance.
Some less strict budgetary controls may also be selected. These are the expense budget, appropriation category and appropriation "presence" controls, which require only that budget or appropriation lines that match the accounting distribution on the document exist for the obligation. When "presence" controls are in effect, available funds are not checked. These controls are also discussed in detail in Chapter 4 of the ISIS/AFS User Guide, Volume I. This control is not in effect for Louisiana.
Organization, There are four options in the system that have a direct impact on the way you code
Activity, and expenditure transactions. These are the:
Function Controls
- Appropriation Organization Option, and
- Expense Budget Organization Option
- Expense Budget Activity Option
- Expense Budget Function Option
These options are chosen for each fund/agency combination, and are recorded in Fund Agency (FGY2).
The Appropriation Organization Option has one of the following values:
- "Y" means that an organization code is required on all budget and accounting transactions.
- "A" means that an organization is required on accounting transactions, but precluded on budget transactions.
- "N" means that the organization code is optional on accounting transactions and precluded on budget transactions. There are no organization codes in the appropriation budget (for this fund/agency).
2 - 12 ISIS/AFS USER GUIDE, VOL. II (07/03)
Check Cash Besides budgetary controls, transactions which impact cash may also be subject to
Indicator a Cash Check. The Check Cash Indicator is established for the appropriation and has
three options: " C " (Cash [CASH]), " M " (the available cash for the appropriation), or " N " (no cash check). Cash balances on CASH and Appropriation Inquiry (Extended) (EAP2) are checked by the following documents: AD, CI, EF, II, J4, J6, MW, OC, PV, P1, PVQ, SN, and TR. If there is insufficient cash, the user will receive an error message.
The Cash Check Indicator is explained in detail in Chapter 4 of the ISIS/AFS User Guide, Volume I.
Prior Document The Prior Document Reference Option affects the way that you code transactions.
Reference Option The option is chosen in System Control Options (SOPT), and is either "Y" or "N".
Since this option is set to "Y" for Louisiana, it affects coding requirements in the following manner:
- You do not have to code the accounting distribution on original entries when a previous document is referenced. For example, if a payment voucher references a purchase order, the fund, agency, object, etc., do not have to be coded on the referencing transaction. The system will infer the accounting distribution from the referenced document. If the accounting distribution is coded, all codes must match the codes on the referenced document. More codes may be added to expand the accounting distribution. For example, optional codes such as sub-object may be added to the accounting distribution.
- You do not have to code the accounting distribution on modifying transactions. For example, if a modification against a previously entered purchase order is entered, the fund, agency, object, etc., do not have to be coded. The system will infer the accounting distribution from the previously entered line. If the accounting distribution is coded, it must match the previously entered line.
Previously entered codes in the accounting distribution cannot be changed and new codes can not be added on modifying transactions. (This is true whether the Prior Document Reference Option is "Y" or "N". If you want to change the accounting distribution, you must cancel the transaction and reenter it as a new line.)
Prior Year In the State of Louisiana a payment voucher can include a reference to a prior year
Encumbrances Purchase Order only with a multi-year appropriation.
When expenditures refer to prior year encumbrances, the expenditure (payment voucher or manual warrant) may be coded exactly as it would normally be coded (referencing the previous year's Purchase Order), as long as the expenditure is less than or equal to the encumbrance amount. When the expenditure is equal to the encumbrance or is less than the encumbrance with a Partial/Final Indicator of "F", the prior year's encumbrance is closed.
ISIS/AFS USER GUIDE, VOL. II (07/03) 2 - 13
AFS provides a special facility that allows you to liquidate outstanding purchase orders at year end for the prior fiscal year. All outstanding purchase orders, that have not been rolled previously, will be rolled into the new fiscal year. If a purchase order has been rolled before, it will be closed in the prior fiscal year, but not^ rolled into the new year. In the State of Louisiana, regular appropriation purchase orders are rolled over to the new year as part of the 8/14 close process.
Vendor Related The AFS tables provide information that can be valuable for researching vendor pay-
Research ment problems, analyzing purchasing trends, and complying with governmental
reporting requirements. The tables offer the following types of information:
- Vendor (VEN2) records vendor codes. Vendor codes are exclusively entered on the AGPS Common Vendor Screen (VENC). A vendor's complete name and address is stored on Vendor (VEN2) in AFS to be available for reports, and for the automated check-writing activity.
- Open Purchase Order Header Inquiry (OPOH), Open Purchase Order Line Inquiry (OPOL), Open Payment Voucher Header Inquiry (OPVH), and Open PV Line Inquiry (OPVL) all have vendor as their first key field. This permits online table searches on vendor code.
- Open Payment Voucher Line Inquiry (OPVL) contains a last check number field and a last payment date field. Open Purchase Order Line Inquiry (OPOL) contains a last voucher reference number field and a last voucher reference date field. This information facilitates immediate online research for questions from vendors concerning payment.
- Vendor (VEN2) includes a last action date field and a total expended amount field. This information can be used as an aid in purging unused vendors from the table and for assistance in vendor analysis. Vendor (VEN2) also includes a 1099 indicator, to mark vendors subject to 1099 processing.
- Vendor Zip Code Inquiry (VZIP) displays vendors in vendor name, vendor zip code order.
- Vendor Name Inquiry (VNAM) displays vendors in vendor name and vendor code order.
- Alternate Vendor Name (VNA1) displays vendors on Vendor (VEN2) with a name in the NAME2 field, in alphabetic order. It also displays the name in the NAME field and the vendor code.
ISIS/AFS USER GUIDE, VOL. II (07/03) 2 - 15
- A Hold indicator, for payment halting activity for a single vendor;
- A status code, telling the status of the vendor (Active, Casual, etc.),
- A Prevent Deletion indicator to mark a vendor that should never be deleted, regardless of other criteria;
- EFT status (indicates whether the vendor may receive payment through electronic funds transfer).
Vendor Alternate Alternate addresses for vendors are recorded by varying the final two characters of Addresses the vendor code. The first nine characters of the vendor code must be identical for all alternate addresses of a single vendor. Each alternate address is recorded as a separate vendor record. The use of alternate addresses allows, for example, vendor payments to be sent to a separate location from purchasing information.
Purging Old Vendors From time to time it is desirable to "clean up" Vendor (VEN2) by removing vendors who have had no activity for a long period of time. AFS provides a Vendor Table Maintenance program (VNPG) to assist this process. This program is executed in conjunction with AGPS.
More detail on the Vendor Purge process is available in Chapter 7- Special System Features.
Requisitions
A Requisition (RQ) transaction is a statement of a possible future purchase. Requisitions are exclusively entered in AGPS.
The requisition transaction does not obligate amounts in a fund; i.e., it does not cause amounts to be subtracted from fund balances. It is considered a "memo" transaction because it records data that may be helpful to managers in carrying out their daily planning and forecasting duties.
When a Requisition (RQ) transaction is processed in AGPS, lines are created on Open Requisition Inquiry (OPRQ) and Open Requisition Line (OPRL). These lines will remain in the open requisition tables as purchase order documents referencing the requisition are accepted. An accepted purchase order referencing a requisition will close the requisition based on the Partial/Final indicator of the referencing document. If the indicator is "P", then the open requisition amount is reduced by the referencing purchase order line amount. If the indicator is "F" for a purchase order, then the requisition referenced by the lines of the order is closed completely.
2 - 16 ISIS/AFS USER GUIDE, VOL. II (07/03)
The transaction referencing a requisition line must have the same accounting distribution as that recorded on the requisition line, but amounts do not have to be the same.
Logic Tests When either the Expense Budget Control Option, the Appropriation Category
Control Option, or the Appropriation Control Option is "C" for full control, there must be funds available to cover the amount of the requisition or the requisition will be rejected. (Available amounts are stored in the budget tables.) Remember, however, that the available amount will not be reduced as a result of the requisition. When requisitions are being validated for compliance with budgetary controls, obligations are considered to be:
PRE-ENCUMBERED + ENCUMBERED + EXPENDED AMOUNTS AMOUNTS AMOUNTS
Accounting Model New requisition lines are posted to the Current Detail General Ledger (GENLED)
and Ledger in the following manner:
Dr Pre-encumbrances Cr Reserve for Pre-encumbrances
The reserve for pre-encumbrances balance sheet account is inferred from System Special Accounts (SPEC). It cannot be overridden. The amount posted is the line amount from the requisition transaction. Figure 2-3 illustrates the accounting model for requisitions.
