Finance Division

The Financial Procedures Manual

Chapter 10

Month–End Guidance

Also available on-line at: Issued: May 2006

http://www.admin.cam.ac.uk/offices/finance/procedures Revised July 2010
 Month-End Guidance

Contents

1. Purpose of Month-End Procedures 2

2. How to use this Guidance 3

3. Month-End Timetable
3.1 Overview of Processes 4

4. Detailed Month-End Guidance

4.1 Purchasing 5
4.2 Accounts Payable 5
4.3 Accounts Receivable (including Internal Trading 6
& Banking)
4.4 Inventory 8
4.5 Fixed Assets 8
4.6 Grants 9
4.7 General Ledger 9

5. Glossary of Terms 10

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 Month-End Guidance

1. Purpose of Month-End Procedures

Month-end procedures are tasks performed every month (or period) prior to and
following the closedown of the relevant CUFS modules (e.g. the General Ledger).

CUFS modules are ‘closed down’ for each period as this provides a clear “cut-off”
point to review (or to report on) the financial position of the department/University.

It is good practice to closedown financial systems for each period to allow the
institution to compile its management accounts (e.g. showing the actual expenditure v.
budget) to assess its financial position. Therefore, month-end procedures will involve
running reports to check transactions and balances, as well as preparing management
accounts to assess the financial position of the Department.

Departments should ensure that a member of staff is responsible for ensuring month-
end procedures are completed – typically the Departmental Administrator.

The benefits to Departments of month-end procedures include:

¾ Providing a cut-off point on which to report on the financial position of the

department. This is essential for accurate management reporting.

¾ Helps to ensure transactions/invoices are processed in the correct GL period.

¾ Prevents backposting of transactions by closing off earlier periods so

previously reported financial information is not affected.

¾ Improving your efficiency by routinely completing pre-planned procedures to a

set timetable.

¾ Helps with the preparation of your department’s year-end accounts.

¾ Helps to improve the University’s financial position by:

~ allowing good quality management information to be produced for better
decision-making;
~ for collecting debts from our customers more quickly; and
~banking receipts more promptly

This document provides a summary of the general departmental month-end

procedures. It is intended for the guidance to be flexible and departments may wish to
amend and add to these procedures based upon their own organisational
requirements. As such this document only provides a guide of minimum best practices
for departments and does not represent a definitive list of month-end procedures.

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 Month-End Guidance
2. How to use this Guidance

This guidance sets out the key procedures that departments should be undertaking
each month, analysed within each CUFS module. It has been prepared in the context
of the University’s overall month-end timetable.

The guidance can be adapted by departments to meet their own requirements. This
guidance should be used together with the Finance Training Manual - `How to Run
Month-End’, which expands upon these instructions to include the relevant CUFS
reports.

How to Run Month-End Manual available at:

http://www.admin.cam.ac.uk/offices/finance/training/manuals

3. Month-end Timetable

The closing dates for each ledger are as follows:

Module Working Day 3 Working Day 4 Working Day 5

Accounts Receivable
Accounts Payable
Grants
Inventory
Purchasing
Last day for Deposit Movements
General Ledger
Fixed Assets
September Month End 5 October 2010 6 October 2010 7 October 2010
October Month End 3 November 2010 4 November 2010 5 November 2010
November Month End 3 December 2010 6 December 2010 7 December 2010
December Month End 5 January 2011 6 January 2011 7 January 2011
January Month End 9 February 2011 10 February 2011 11 February 2011
February Month End 3 March 2011 4 March 2011 7 March 2011
March Month End 5 April 2011 6 April 2011 7 April 2011
April Month End 4 May 2011 5 May 2011 6 May 2011
May Month End 3 June 2011 6 June 2011 7 June 2011
June Month End 5 July 2011 6 July 2011 7 July 2011

All modules will close at 5pm on the stated days.

Working days for each month except January which is extended by 4

working days.
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3.1 Overview of Processes
Month End Guidance
Last working
Module day of calendar
month
3 4 5 6 7
Run and Action Open PO (UFS) Report PO Module
Purchasing Closed

Run Invoice Register Report

AP Module
Accounts Closed
Run Invoice on Hold Report
Payable

Run ‘Incomplete (AR) Invoices Report’

Accounts Run ‘Ageing 7
Run ‘Unapplied Receipts Register’ Buckets by
receivable Account’ report
(inc. Cash
Run ‘Receipt Register Report’ and complete receipt batches AR Module Credit control
and
Closed procedures – send
Banking ‘Dunning Letters’
Arrange for banking of monies
and
Internal Claim BACS receipts from weekly F.D. spreadsheet Process petty cash
Trading ) journal
Internal Trading: raise any AR invoices/process any AP invoices

Expenditure posted to dummy suspense Grants should be corrected

Grants Grant
Module
Funds check failures should be reviewed and cleared Closed

Review status of all grants on a cyclical basis

Stocktake or Inventory
cycle count Module Run ‘Value of
Inventory Closed Inventory’ report
Run ‘Material Distribution’ report

Fixed Assets Run ‘Fixed Asset

AP Invoice (tick ‘Track as Asset’ box)
Fixed Module Additions’ report
Closed
Assets Inform Finance Division of fixed asset disposals

Review and process journals for deposit account movements Run ‘Budget v. Actual
‘Report (UFS)’
General
Ledger Review and clear departmental suspense accounts/review GL GL Module
accounts for miscodings and correct as necessary Closed Review the ‘Departmental
Summary Report’
Journal expenditure to match correct income (source of funds) distributed by Finance
Division
4. Detailed Month-End Guidance

4.1 Purchasing
An overview of the purchasing cycle is given as follows:
Supplier Receipt Payment to
Requisition Selection Purchase Order Goods/Services Supplier

Raising an Quotations Raise Purchase Receive Goods Purchase

internal Contracts Order and Services Invoice
purchase Pre-Suppliers Payment
requisition

Although raising a purchase order creates a commitment on CUFS, once

goods/services have been received then this becomes a legal obligation to pay the
supplier. Prior to the month-end we should establish that any incomplete purchase
orders are actioned and closed.

Quarter-End Guidance - Purchasing

¾ Each quarter-end run Open Purchase Orders Report (UFS) to identify

incomplete purchase orders
¾ Close purchase orders by receiving the goods, matching against the
invoice, /cancelling the order or manually closing the order.

4.2 Accounts Payable

Accounts Payable (AP) describes the procedure for processing supplier invoices and
employee expense claims, and other disbursements processed via the AP module. A
summary of the AP cycle is given as:

Invoice Entry Coded to an Account Approval Payment

Enter Invoice Matching Primary and Payment of

Using the Invoices to Secondary Supplier/
Batching Purchase Approval of Employee by
System Orders (where Purchase Cheque:
raised) Invoices Finance
~coded directly Division
to relevant
account/project
 Month-End Guidance

Month-End Guidance – Accounts Payable

¾ Approve all AP invoices for the month (this is ongoing).

¾ Review supplier statements and check all invoices are secondary
approved/or current (i.e. not due for payment).
¾ Review employee expense claims/advances to ensure they are up-to-date
and processed
¾ Review credit card statements to supporting receipts/vouchers and journal
expenditure from the department suspense account to relevant cost centre.
¾ Run Invoice Register (CAPSA) report to identify invoices not primary
approved.
¾ Run Invoices on Hold (CAPSA) Report to list invoices placed on hold and
then action all holds, as necessary.
¾ Review and approve any invoices that are coded to a project and are now
“unapproved” as a result of the AP Tie Back process.

4.3 Accounts Receivable (Including Internal Trading &

Banking)
Accounts Receivable concerns income generated from sales for services rendered
with the following steps being involved.
Send to Debt
Invoice Customer Receipts Management
Raise Sales Invoice Sent to Income Credit Control
Invoice Customer Collected and Statements/
Receipted Dunning
Letters

It will be necessary to raise sales invoices promptly to ensure income is collected quickly.

4.3.1 Internal Trading

Internal Trading refers to inter-department (internal to the University) purchases and
sales – when one department trades (sells goods or services) to another department.
Dept A Dept B Finance Division
Sales Invoice Action Invoice Reviews

Raise Internal Locate Internal Finance

AR Invoice AP Invoice on Division
CUFS, code to Reviews
appropriate Matching of
Dept account AP and AR
& approve. Invoices

Disputes
When invoices are disputed, queries should
be resolved by referring to Head of
Department in the first instance. Final
Arbitration is with the Finance Division

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 Month-End Guidance

4.3.2 Banking
It is important to ensure that all monies (cash and cheques) received during the month
are banked and receipted promptly and at least weekly. It will also be necessary to
balance your petty cash float each week.

Month-End Guidance

Accounts Receivable (AR)

¾ Complete AR invoices, credit notes and batch receipts for the month (this is
ongoing).
¾ Print and send AR invoices and customer statements.
¾ Print and send Dunning letters as part of credit control.
¾ Run Incomplete Invoices report to identify any incomplete sales
transactions and complete/cancel transactions as necessary.
¾ Run Unapplied Receipts Register to identify any receipts unapplied to
specific invoices and match these receipts to the invoices report.
¾ Run Ageing 7 Buckets by Accounts report to show invoices with no
remittance, and review – use for credit control.
¾ Review and write-off bad debts (with the Head of Department approval).

A. Internal Trading
¾ Raise Internal Trading AR invoices promptly to departments in accordance
with agreed terms.
¾ Process Internal Trading AP invoices promptly (within the same month if
possible)
¾ Review and agree Internal Trading invoices in dispute and refer to
arbitration as necessary.

B. Banking
¾ Complete all receipt batches for cash and cheques received on or before the
last day of the month.
¾ Run the Receipt Register report for cash receipt batches.
¾ Arrange for banking of all monies received up to the last day of the month
(including vending machines, photocopier sales, pay phones, key deposits).
¾ Claim BACS receipts/bank transfers from the weekly Finance Division
spreadsheet.
¾ Process monthly petty cash journal for balancing your petty cash float.

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 Month-End Guidance

4.4 Inventory
These procedures only apply to departments using the CUFS Inventory module. It
will be important for the departments with stores to ensure an accurate record of stock
is maintained and that stock is allocated accurately within the department.

Month-End Guidance – Inventory

¾ Ensure stock is physically secure (on-going)

¾ Complete all inventory issues and receipts (ongoing during the month).
¾ Undertake monthly stock take or cycle count, check against records and
investigate any differences
¾ Run Value of Inventory report to review stock items.
¾ Run Material Distribution Retail Report showing issues of stock items with
the department.

4.5 Fixed Assets

Departments will wish to monitor their fixed assets using the Fixed Assets module
from time to time. In order to maintain the university’s Fixed Asset Register,
departments must ensure that when processing AP invoices for Fixed Asset purchases,
they tick the “Track as Asset” box.
Departments Finance Division Finance Division
Fixed Asset Fixed Asset
Addition Capitalised
AP
APInvoice
Invoice Addition
Details listed Capitalised
Fixed Asset is
Processed – in holding area capitalised and
Tick “Track as of the Fixed journals
Asset” box Asset Module created in
General
Ledger

Month-End Guidance – Fixed Assets

8
¾ AP Invoices: tick “Track as Asset” box all fixed assets > £2,000 (on-going
process).
¾ Notify Finance Division (via Fixed Asset Helpdesk) of any fixed assets
disposals during the month.
¾ Review Departmental Fixed Asset Report for accuracy, sent out quarterly to
departments by the Finance Division.
¾ Run Asset Additions report to check new additions during the quarter (not
monthly).

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4.6 Grants
The Grants Module records expenditure and income for the University’s research
grants and contracts. Research grants are governed primarily by the length of the grant
rather than accounting periods (months), and therefore departments will need to be
pragmatic when considering their month-end procedures.

Month-End Guidance – Grants

The following tasks should be undertaken monthly

¾ Review expenditure posted to your dummy suspense grants and re-post
expenditures to clear the dummy grant to zero.
¾ Review and clear funds check failures.
¾ Check for unposted pre-approved batches
¾ Correct VAT errors as advised by the Tax & Property Finance Section

The following task should be undertaken quarterly

¾ Check the status of all grants and take action to correct erroneous
items/resolve overspends and underspends

4.7 General Ledger (GL)

The GL is at the heart of CUFS, collating information from the sub-ledgers of all of
the University’s financial transactions. The GL is used for processing journals,
account enquiries and running reports.

Note on Accruals and Prepayments: When preparing your departmental accounts,

accruals and prepayments can be used to:
‰ more accurately reflect your financial position
‰ to monitored your final position
At present Departments are not expected to accrue their income/expenditure until the
year-end, however if the amounts are material then they should be processed on a
monthly basis. Advice is available from your Finance Adviser.

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 Month-End Guidance

Month-End Guidance – General Ledger

Pre-GL Close
¾ Review any unposted GL journals. Take actions accordingly.
¾ Review and clear any departmental suspense accounts.
¾ Journal (or transfer) expenditure to match to correct source of funds.
¾ Review GL transactions for potential miscodings and correct as necessary.
¾ Review expenditure on Non-Recurrent grants to ensure not overspent.
¾ Review and monitor Trust Funds: Finance Division distribute Trust Funds
Statements monthly.
¾ Review and process journals for Deposit Account movements.

Post-GL Close
¾ Run Budget comparing to Actual (CAPSA) report to review the
department’s transactions and balances.
¾ Review the Department’s Summary Report distributed by the Finance
Division.

5. Glossary
Accounts Payable Module within CUFS specifically for processing payments of all
Module suppliers, both internally and externally, as well as payments to staff
for expenses.

Accounts Module within CUFS specifically for the income collection process,
Receivable Module including:
ƒ invoicing of customers (both internally and externally)
ƒ receiving income
ƒ managing overdue debts.

CUFS Cambridge University Financial System.

The accounting software package, Oracle Financial, used by the
University to record its financial transactions.

Fixed Assets Assets are items that the University owns and uses. A fixed asset is an
asset that we retain for more than one year (e.g. a vehicle).

Fixed Asset Module within CUFS specifically for recording details of fixed assets.
Module
General Ledger Module within CUFS for processing journals and collating
Module information from other modules about transactions and producing
reports. The information is utilised for management and reporting
purposes.

Grants Module Module within CUFS dealing with the detailed recording of income
and expenditure for research grants and capital projects.

Inventory Module Module within CUFS specifically for recording stock/stores for a
department, taking account of movements of the stock.
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 Month-End Guidance
Management Financial Information, often showing income/expenditure for an
Accounts entire institution and reported to senior management as a basis for
decision making.

Month-End Tasks and procedures repeated each month:

Procedures ƒ to ensure financial transactions are processed
ƒ so subsequently, financial information is analysed as part of the
preparation of Management Accounts.

Period An accounting period of time – ie. a month for breaking down the
financial year (i.e. into 12 monthly periods).

Purchase Ordering Module within CUFS specifically used to process purchase orders.
Module

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