Journal Entry Documentation

Purpose: To present procedures to create, document, reference and review journal entries. Documentation is a key element in providing support to a journal entry and explains the purpose of why the journal entry was created. Journal entry documentation is needed for the reviewers and/or approvers of the journal entry and, most importantly, for CSUs external auditors. Additionally, Federal auditors carefully examine the transfer of costs made by universities. Thorough explanations and documentation is essential to avoid audit comments and possible disallowances. I. Types of Journal Entries A. CIS Journal Entries Typical entries that are created using the Campus Information System (CIS) are: subcode reclass, correction of accounts, correction of an error, recurring monthly entries, accruals and reversals and redistribution of revenues and expenses between departments and accounts etc. 1. CJE-correcting journal entry are typically done to correct errors within 90 days of the original error. 2. JE journal entry original entry to record activity. Ex. interest income B. Direct journal entry into FRS This type of entry can be done if the person entering the journal entry into FRS has access to enter journal entries into FRS. Access is restricted to specific areas on campus. Additionally, these types of entries cannot be made if the total amount of the entry exceeds $100k which will be blocked from entry in FRS. Restrictions, such as this, are in place for internal control purposes. II. Characteristics of a Well Documented Entry A well documented entry provides answers to the following questions: A. What are you trying to correct/change/record? B. Why are you preparing the entry? In the remarks or comments section of a journal entry, describe completely why the entry is being made and what the journal entry does so a reasonably informed person would be able to understand the purpose of the entry. If it is a correcting journal entry, it should explain why the error occurred originally. C. Are amounts substantiated and approvers documented?

III.

Documentation

A. B.

Documentation should be able to provide the reviewer with a clear purpose as to why you are making the entry. Documentation must also be clearly labeled and should be understandable to the reviewer or any other person inquiring about the entry. Some of the common documents used for support are: FRS reports - such as e-print reports or FRS screen shots. Invoices C. Supporting schedules such as excel documents and stand-alone reports from independent operating systems (ex. QuickBooks). These schedules are prepared by the department and should include the name of the preparer. Supporting schedules are to be reviewed by the individual creating the entry to ensure totals and formulas are accurate. Review marks (discussed later) should be noted on the schedules to ensure accuracy of the schedule. All assumptions used in creating the schedules should also be noted. D. Description of processes - processes or how operations are working should be documented to give the reader a better understanding of how a separate system may work. These processes should be maintained at the college or department and may not be required to be submitted with each journal entry unless the process can provide a better understanding of the entry. E. Templates- A monthly template may be used for recurring monthly entries. F. Downloads/Queries -Queries must be referenced to FRS amounts and also how and what accounts were queried. G. T-accounts Although the inclusion of written T accounts should not be the entire support for an entry, it provides a basic understanding of how an entry should work. T accounts show the flow of debits and credits and can be useful in helping a reviewer or reader understand the flow of a journal entry. H. Other documents if specific e-mails or word documents provide a better understanding of the entry, you should attach those documents to the entry. Previous journal entries that were done incorrectly can provide support on a corrected journal entry. Information that does not clearly direct the reader to why the entry is being made should be omitted. IV. Preparer review The preparer should review the entry prior to submitting to the approver or next level reviewer. The preparer should review the entry for: A. Possible Errors a. Review the sub code or account control being used. All subledger codes should be matched with subledger accounts and all account control codes should be matched with general ledger accounts. b. Make sure that the debits and credits are not reversed.

c. Original batches and original dates referenced in the journal entry are correct. d. Amounts are correct B. Reasonableness - it is important that the numbers are reasonable and that they reflect the support. Any recurring entries that are made should be similar to prior months entry. C. Completeness remarks/comments should be clear and complete in content and documentation should fully explain what the journal entry is doing. V. Reviewer After completion of the journal entry, the preparer needs to submit the journal entry to the next level reviewer. A reviewer is someone who is authorized to review journal entries in your department. It is required that CIS entries with supporting documentation over $100k be submitted to your assigned Assistant Controller for your area. Randomly, at an approvers request, documentation should be provided to support an approvers decision to accept the journal entry. An approver/reviewer signs and dates the journal entry (for CISapproves the entry) once he or she acknowledges that the entry is: A. Complete the journal entry is properly referenced and supporting documentation is attached. A reviewer should also use tick marks to verify to a possible reader that the reviewer has also verified amounts of the preparer. Most reviewers use a different colored pencil or marker to indicate that they have reviewed the underlying documents. B. Reasonable the amounts are reasonable to the support. C. Accurate amounts and accounts are accurate and tie out to the support. D. Appropriate the journal entry is appropriate to the specific accounts based upon fund requirements, budget and account activity. Examples of Journal Entry documentation Examples of Comments/Remarks

VI. VII.

VIII. Record Keeping All journal entries and complete supporting documentation should be filed in assigned binders and stored in assigned areas. Journal entry binders should be kept current and complete. A good suggestion is to keep the current years journal entries in a visible red binder. Additionally, if you are out of the office and a journal entry is needed or requested, all documentation should be available at the time of the request. The Universitys retention period for journal entries is 6 years.

Journal Entry Documentation - Examples The following example is a correcting journal entry used to adjust expenses for WebCT maintenance. The entry recognizes the expense incurred in the appropriate fiscal year. This example is presented in the video.

Page 1 of CIS Entry 2 of CIS Entry 3 of CIS Entry Page Page

The next example is a journal entry (one in a CIS format and the other in a direct JE format) that is used to distribute fees collected to the appropriate accounts in Intensive English.

J ournal Entry showing fee distribution

The next example shows how to document an entry when cash is received in one fiscal year and will not be earned until the next fiscal year.

J ournal Entry docum enting deferred revenue