FY07 - April 2007 - ISSUE 10
*** UIS/OAS Financial News ***
University News
and Announcements
It is not uncommon for the
actual payment of goods and services to take place in a different accounting
period from the consumption of those goods and services. Prepaid expenses are
expense that have been paid for but have not yet been fully used or consumed at
the end of the accounting period. Examples of typical prepaid expenses
include:
- Annual maintenance
contracts
- Dues and memberships
- Rents
The University
recently issued a new policy regarding prepaid expenses, which says that any
payment greater than or equal to $5,000 that relates to services provided to
the University over a defined period of time that crosses fiscal periods must
be recorded as a prepaid expense, with the portion of the amount relating to
the next fiscal period charged to object code 0540. The full policy can be
found at HU
Prepaid Expense Policy.
If you have
any questions regarding the policy, please contact your financial partner.
Important Dates and
Reminders
The
University deadline for closing FY07 capital assets will be on June 8,
2007. Please plan accordingly
and be sure to:
·
Complete
and submit the Capital
Project Approval Form (e.g. Form 1) to
your Business Director for approval of each planned capital asset purchase prior
to purchasing equipment. The Executive Director’s approval is also
required if cost of capital asset is greater than $10,000 (>$5,000 for
OAS).
·
Please
remember to leave enough time to order, receive, and pay for equipment by June
8th. Submit all capital related invoices to Accounting with
proper coding for payment prior to May 25th, which should
allow sufficient time for processing.
Note: The University can not close an
asset by the deadline of June 8, 2007 unless all invoices have been processed
and posted to the General Ledger.
·
Confirm
that all equipment will be operational by June 30th
Forms and invoices for capital purchases received after the
deadlines stated above will be processed in fiscal year 2008. If you have any
questions, please contact your financial partner.
Policy Highlights and
Updates
As the fiscal
year-end approaches, it is critical that UIS/OAS managers know where their
businesses or units will end the year financially, so that they can make
critical decisions on where to spend and save. The success of a business
depends in large part on the reliability of financial forecasting, which is the
process of predicting an organization’s future financial performance. Within UIS/OAS, original assumptions
made in the previous Corporation Budgeting cycle must all be verified and
updated during the forecasting process to reflect known changes and the most
current information available. Any change could have a significant financial
impact on a business’ operating results, which may require management to take
appropriate action prior to the end of the fiscal year.
Financial forecasting is
considered very business specific, taking into account how each business group
operates as well as its individual internal and external business
drivers/challenges. From early in the fiscal year through year end, the
process needs to be flexible and can change over time as information becomes
available. Consequently, there is no one single method used to create a
business financial forecast. Some of the most common techniques used today
include:
·
Current Year Budget
·
Straight Line
·
Year to Date Actual Plus Estimated
Future Spending
·
Historical/Prior Year Data
For more details, including
information on each of the above listed methodologies, please refer to the UIS/OAS
Policy on Financial Forecasting or see your financial partner.
UIS/OAS acknowledges that, on
occasion, individual employees may be recognized for their work related
achievements by giving a gift card. Managers should be aware that gift
cards are considered and handled the same as cash and are taxable, regardless
of the dollar amount issued. Below are the procedures to follow for
reimbursement for the purchase of gift cards.
Gift cards must be purchased
for Harvard Staff using employee out of pocket funds (not the PCard or GE Corporate
Card). Please contact the CAIT HR Department at 617-495-5314 to provide all
information required to complete the Extra Compensation Form (including
a brief explanation of why the gift card will be issued). CAIT HR will
complete the form and forward to HU Payroll for processing. Payroll will add
the gift card amount to the recipient’s ordinary income to be included on the
year-end W-2 form. The employee that paid for the gift card with out of pocket
funds will be reimbursed as a ‘third party’ in the next paycheck for the full
amount (grossed up).
Please refer to the section
on Work Related Achievements within
the UIS/OAS
Use of Department Funds Policy for more information on
appropriate occasions to give gifts.
Helpful Hints
We hope that
this issue of the UIS/OAS Financial News has been helpful and informative. If
you have any questions, or would like to see a specific topic covered in a
future publication, please email us at uisfin_news@harvard.edu
