Accruing for Expected Award Expenses
Expense accrual is the recording of the cost for a product or service that has been delivered but not recorded in the General Ledger (GL).
Non-payroll expenses not reflected in any other fund and intended as adjustments for the Award Closeout Instructions should be processed directly in BFS as accrual journals. This will ensure that all direct expenses are recorded in GL at award close and included in the final invoice. Payroll expenses are never accrued because they are already posted to the GL in the month they are incurred.
Examples of Expenses to Accrue
- Subaward services performed where the invoice has not yet been received and/or processed
- Recharges which have not yet shown up as expenses in the GL
- Travel which occurred within the award period but the expense has not yet been recorded in the GL for the award.
Award Accruals are Not Used For
- Estimated expenses for goods or services which were not incurred before the award expiration date.
- Credits that are intended to remove deficits temporarily. Please use cost transfers to allow for timely billing and reverse them on the following month if these expenses are allowable.
- Cost transfers
- Non-payroll expenses must be processed using their actual accounts and with proper justification in place when other restricted funds are used.
- Salary cost transfers, and when required benefits cost transfers, must be processed in UCPath.
When and How to Accrue
The objective of closeout accruals is to ensure that all expenses are included in the final invoice submitted to the sponsor and represented in the General Ledger (GL) that supports Award Closeout Certification. This will keep our processes in line with the federally mandated requirements.
Accruals should be posted by the GL Close of the 2nd month after the award's expiration date. In order for the costs to be included in the award closeout GL, the RA must enter accruals no later than in the first five days of the 3rd month since project end date. Some awards may have a shorter Adjustment Period defined in their terms and conditions.
On the first business day of the 3rd month after the award expires, run a CalAnswers report to determine which anticipated expenses have not yet been posted. Once you have determined what to accrue, process the accrual journal entry before the cut-off date for the second accounting period following the award expiration.The accounting period cut-off date for each month is listed on the BFS General Ledger Monthly Close Schedule in the row labeled ‘Enter all other Temporary Budget Journals/Approve Online Financial Journals’.
To record an expense accrual:
- You will need the full chartstring for each direct expense you intend to accrue
- Use the COA Validation page found in the BFS RA Grants WorkCenter to look up the Project and Activity values for each chartstring
- Navigate to 'Create/Update Journal Entries'
- All accrual journals must be marked as self-reversing to ensure the expenses are not recorded twice
- Accruals not marked for a reversal on the following month will be stopped by the Financial Accounting and Controls (FAC)
- In the Journal Entry Reversal field, select 'Beginning of Next Period' and click OK
- You may enter as many rows as necessary in the accrual journal, and finish the entry with an Accrued Liability Chartstring row
- Always use Account 23090 for ‘other accrued liability’ in this row
- Post the accrual
- You will see it in CalAnswers the next day, after the overnight upload process has run.
Example of an Accrual Journal for Travel Expenses on Account 57214 - Non-Air Fare
| BU | Account | Fund | Dept ID | Function | CF1 | CF2 | PC BU | Project | Activity | Analysis Type | Journal Line Description | Amount | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debit | 10000 | 57214 | 22698 | 23845 | 44 | CGACC | GM100 | 1000201 | 01 | GLE | Accrued Travel | 100 | |
| Credit | 10000 | 23090 | 22698 | 23845 | GM100 | 1000201 | 01 | GLR | Accrued Travel | (100) |
Recording Payroll Costs
To enable timely closeout of award funds where payroll information has not been updated in the GL, the transfer of payroll expenses will temporarily be allowed via an auto-reversing journal entry (not an accrual). This applies only during the adjustment/closeout period for expiring awards (from expiration date to 90 days or more after expiration). This procedure has been implemented due to the lag between submitting a Salary Cost Transfer (SCT) in UCPath and seeing the subsequent payroll correction in the General Ledger. Please refer to the Transfers for Payroll Expenses page for more information.
Process any payroll transfer journal entries after payroll posts but before the cut-off date for the second accounting period following the award expiration.
Finalizing Accrued Expenses at Award Closeout (90 Days After Expiration)
On the first business day of fourth month after the award expires, around 90 days following expiration, run a CalAnswers report to check that actual expenses have been posted and match the accrued amount.
- If the actual amount has not posted or is incomplete, re-accrue for the expected expense using another self-reversing accrual
- This gives an additional 30 days for actual expenses to post
- If the actual amount is $300 or more over the accrued amount, submit a Closeout Exception Request as soon as possible
- If the actual amount is less than the accrued amount, please contact CGA to revise the Final Financial Report and process a refund to the sponsor.
Example Timeline of When to Process Accruals for an Award
October 1 to October 7
- Check the GL to determine if an accrual is needed
No Later than October 7
- Accrue expense before the cut-off date of the second GL cycle following the award expiration
- Date the accrual entry for September 30 with an automated reversal on October 1
October 10 to October 29
- Submit a Closeout Certification form to CGA by the next business day
- CGA will send a Final Financial Report/Invoice to the sponsor on October 29
November 1 to November 7
- Check to see if the actual expense was recorded
- If the actual expense is greater than the accrual, clear the deficit
- If the actual expense is less than the accrual, contact CGA
No Later than November 7
- If the actual expense is not recorded or is incomplete, record a subsequent accrual
- Date the subsequent accrual entry for October 31 with an automated reversal on November 1.
Award Inactivation (120 days after expiration)
If the actual expenses still have not posted by 120 days after the award expiration, the department is responsible for the costs. CGA will revise the final invoice, reduce the award budget, refund the sponsor for the accrued amount, and inactivate the award fund. The department is responsible for any accrued expense where the actual cost has not posted to the GL by 120 days from the award expiration date.