The following procedures and guidelines are applicable to the University of Arkansas at Little Rock (UA Little Rock) and are in compliance with recommendations from Internal Audit in the University’s Bond Covenant Compliance Audit Report for the years ended June 30, 2012 and June 30, 2013.
I. Types of Journal Entries
There are various types of journal entries generated by Financial Services and other departments at UA Little Rock, as follows:
- Banner System Generated Journal Entries. This type of entry is created via postings from the payroll, accounts receivable, fixed assets, and accounts payable subledgers.
- Manual Journal Entries. This type of entry is processed directly in Banner using FGAJVCD (Journal Voucher Entry), FGAJVCQ (Journal Voucher Quick), FGAJVCM (Journal Voucher Mass Entry) forms. Access to these Banner screen forms is restricted to specific users and departments on campus. Manual journals are used to correct errors, process JE reversals and monthly recurring entries, and record incoming ACHs for grant funds and outgoing wires. Manual entries must be prepared using the MS Excel Journal Voucher Form template.
- Electronically Imported Journal Entries. This type of entry is uploaded via the GURFEED process and used to allocate purchasing card charges, investment income, and telephone charges.
- BOSS (Self-Service) Journal Entries. This type of entry is processed through BOSS and utilized for internal billing. Internal chargebacks are used to order and pay for goods or services provided by university documents. Billing departments must maintain appropriate documentation for audit purposes. (Examples include: Printshop, Facilities Management, and DSC)
Proper documentation should provide enough detail to satisfy an auditor. Proper documentation also reduces and/or eliminates the need for individual recollection by the person who created the journal entry/voucher.
The following documents may be used for journal entry/voucher support:
- Reports. This can include e-print reports, trial balance reports, and Banner screenshots.
- Invoices. Copies of the original vendor invoice.
- Supporting Schedules. Examples of supporting schedules include Excel documents and standalone reports from independent operating systems (ex. QuickBooks). Schedules prepared by other departments 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 in these procedures) should be noted on the schedules to ensure accuracy of the schedule. All assumptions used in creating the schedules should also be noted.
- Download/Queries. Queries must be referenced to journal entry amounts and also how and what accounts were queried. (Query language must accompany the journal entry to verify and reproduce query results.)
- 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.
- Description of Processes. Processes on how operations are working should be documented to give the reader and/or auditor a better understanding of how a separate system may work. These processes should be maintained at the department level and may not be required to be submitted with each journal entry unless the process can provide a better understanding of the entry.
The preparer should review the entry prior to submitting to the approver or next level reviewer. The preparer should review the entry for the following:
- Possible Errors. The voucher must be reviewed to ensure the correct FOAPAL is being used, debits and credits are not reversed, original dates and document numbers are being referenced correctly, and amounts are correct.
- 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 month’s entry.
- Completeness. Remarks/comments should be clear and complete in content and documentation should fully explain what the journal entry is doing.
After completion of the journal entry, the preparer needs to submit the journal entry to the next level reviewer. An approver is someone who is authorized to review journal entries in each department.* An approver/reviewer signs and dates the journal entry once he or she acknowledges that the entry is:
- Complete. The journal entry is properly referenced and supporting documentation is attached. A reviewer should also use tick marks or other indicators to verify to a possible reader that the reviewer has verified amounts of the preparer.
- Reasonable. The amounts are reasonable to the support.
- Accurate. Amounts and accounts are accurate and tie to the support.
- Appropriate. The journal entry is appropriate to the specific accounts based upon fund requirements, budget and account activity.
*The preparer and approver cannot be the same individual.
After the journal entry has been reviewed, it is forwarded to the Fiscal Support Analyst or other staff member in General Accounting for data entry.
Once the journal entry has been entered into the financial system, the completer reviews it a final time and posts the entry to the general ledger.
VII. Purpose, Comments, and Remarks
The Journal Description must describe the purpose of the journal entry.
Example: Corr acct charged on I0560754
Note: Journal Descriptions may be up to 35 characters long. However, the Purpose on the Journal Voucher Form template is unlimited and should thoroughly explain the reason for the journal entry. A reasonably informed person should be able to understand the purpose of the entry. (Ex: To correct the accounts charged on I0560754 Home Depot-Check #C00528395. To record merchant fees for the month of June 2012).
Line Descriptions must describe the entry. The explanation may be the same as the Journal Description or it may be different.
Examples of Line Descriptions:
Line 1 – Merchant fee Music June 2012
Line 2 – Merchant fee Fin Srv June 2012
VIII. Record Keeping
All journal entries and supporting documentation processed in Financial Services are scanned and stored in ImageNow. In addition, journal entries are kept on file for one year in the General Accounting area and transferred to the warehouse upon completion of the annual audit.
The university’s retention period for journal entries is governed by the Legislative Audit Retention Policy.(1)
(1)Upon completion of the university’s audit, any documentation covered by Ark. Code Ann. 19-4-815 and 19-4-1108 that has not been properly stored by means of electronic imaging shall be retained for three (3) years after the audit date. Documentation that has been stored by means of electronic imaging, except as noted by the auditor-in-charge, may be properly disposed of as of the date of the audit exit conference. This policy does not override longer periods of retention required by laws or regulations of other agencies or parties to which the university must adhere.