Date: Thu, 19 Nov 2015 20:33:51 +0000
To: "acqnet-l_at_lists.ibiblio.org" <acqnet-l_at_lists.ibiblio.org>
Since I work as an accountant, I will go ahead and jump into this conversation and give you my two cents worth. Keep in mind it probably isn’t worth more than that since each institution will implement the procedures they determine to be the most accurate and correct reflection of their financial position. Several of you have mentioned the catalyst for a change to this approach is liable to be the result of external auditors, and in many instances this will be the case - this approach does comply with GAAP for financial reporting purposes, and this is a very important concept to accountants. However, I thought I would describe three factors for consideration that I might discuss with my University Accounting Office if I found myself having to deal with the approach that initiated this thread of emails: · I am going to venture that in most libraries, the practice is to pay for a subscription each year, and the University’s expense report would reflect the full cost of that prescription each year. In addition, subscriptions are generally paid around the same time each year (although the writer of a previous email indicate that their payment dates fluctuated). Based on my experience with library materials budgets, by being consistent with this practice, over the long run there is going to be no difference that would affect the outcome of the reported financial statements. · Another writer put this concept in a little different terms: to ensure that reported expenses only reflect what was received in the time period being reported. This might be more pertinent with printed materials that are received evenly over the subscription time period. However, much of what we purchase (and I am making an assumption this is the same for many of you) now comes in electronic format. When the access switch is “turned on”, we generally get access to everything we purchased all at one time. As a result, for electronic subscriptions we are getting access to everything we paid for in the year in which it is paid. · A concept that runs throughout both of the above points is the concept of materiality – another concept important in the world of auditing. I would be very surprised if implementing the approach that has been described (accounting for expenditures in different fiscal years) even comes close to creating a material difference in the results of the University’s financial statements when compared to the results that would be achieved if consistently recognizing the full cost in the year paid. Assuming this is true, then for no material difference in reporting, there is a significant cost being added in time and effort to maintain this approach. I hope all of this makes sense. I will mention again that this is just my two cents! Catherine Gerdes, CPA Asst. University Librarian, Financial Planning and Administrative Services UNC Chapel Hill University Libraries 208 Raleigh St., CB#3904 Chapel Hill, NC 27599 (919) 962-3989 (919) 962-8936 (fax) From: ACQNET-L [mailto:acqnet-l-bounces_at_lists.ibiblio.org] On Behalf Of acqnet-l_at_lists.ibiblio.org Sent: Thursday, November 19, 2015 12:30 PM To: 'acqnet-l_at_lists.ibiblio.org' <acqnet-l_at_lists.ibiblio.org> Cc: 'Scharstein, Salter' <ScharsteinM_at_cofc.edu> Subject: Re: [ACQNET-L] Invoice payment -- "general accounting practice" Yes, GAAP is the reason why our institution must follow this accounting practice. It is actually mandated in a Kentucky Revised Statute (http://www.lrc.ky.gov/statutes/statute.aspx?id=39927). This is not something that we can “convince” the accounting office to change because it is “standard in libraries.” We just have to deal with it. Worth mentioning for those of you who don’t have to deal with this, our institution actually does pay the vendor the full amount on the invoice in that fiscal year. But then our accounting office CREDITS our collections account in the current fiscal year for the portion of the subscription that is not part of that fiscal year (so it ends up looking on the budget book like we haven’t spent all our funds). Then, on July 1 the following year, they DEBIT that amount that was credited (so it looks in the budget book like we’ve over spent our funds). At that point we have to be sure that the accounted surplus is carried forward to the next year to cover the debit (this usually doesn’t happen until October). We’re constantly playing catch up. It is so confusing and it took me probably 5 years to really get an understanding of how to manage it. I’m still never completely sure near the end of the fiscal year how much money we have left, because I have to pull reports from Banner and go through and find all the invoices that they’ve split and track that on a spreadsheet, and if I manage to miss one, then the total is off and it will appear that we have more left than we really do. We do not track the invoices this way in our library acquisitions system. This enables me to pull an accurate report from that system and compare it with the Banner report. We too have attempted to align subscriptions as much as possible on a July 1 – June 30 cycle to avoid the accounting nightmare. Kelly Smith Coordinator of Collections and Discovery Eastern Kentucky University Libraries email kelly.smith2@eku.edu<mailto:kelly.smith2@eku.edu> | research guides<http://libguides.eku.edu/prf.php?account_id=300> [EKU-Libraries-Logo---Maroon]<http://www.library.eku.edu/> From: ACQNET-L [mailto:acqnet-l-bounces_at_lists.ibiblio.org] On Behalf Of acqnet-l_at_lists.ibiblio.org<mailto:acqnet-l_at_lists.ibiblio.org> Sent: Thursday, November 19, 2015 8:27 AM To: acqnet-l_at_lists.ibiblio.org<mailto:acqnet-l_at_lists.ibiblio.org> Cc: Scharstein, Salter <ScharsteinM_at_cofc.edu<mailto:ScharsteinM_at_cofc.edu>> Subject: Re: [ACQNET-L] Invoice payment -- "general accounting practice" Hi all – My understanding (not being an accountant!) is that it should really be capitalized “General Accounting Practice” as in “Generally Accepted Accounting Principles (GAAP)”. Those of you who are serialist will remember that standing order title from years past, perhaps! Part of GAAP is an accounting standard that has to do with paying for transactions in the year in which they actually are received/service is delivered. So if you are on a fiscal year July-June, you should only be paying for transactions that you “receive” in that time period. Our Budget Office implemented this 7-8 years ago here. We reconcile it just before fiscal close so if extra money is due to us, we can spend it before the end of year. (Likewise, if we “owe” the University money, we have to reconcile that before the end of year.) And my understanding was that it was implemented as a result of an auditor recommendation. So it really is an industry standard that auditors look at. They aren’t trying to make our lives more difficult – I don’t think! janet Janet B. Morrow Head, Resource & Discovery Services Northeastern University Libraries 360 Huntington Avenue 260 Snell Library Boston, MA 02115 j.morrow_at_neu.edu<mailto:j.morrow_at_neu.edu> 617-373-4959 [cid:828F9036-16F3-4751-97D4-D48023519AC3] From: ACQNET-L [mailto:acqnet-l-bounces_at_lists.ibiblio.org] On Behalf Of acqnet-l_at_lists.ibiblio.org<mailto:acqnet-l_at_lists.ibiblio.org> Sent: Wednesday, November 18, 2015 4:45 PM To: acqnet-l_at_lists.ibiblio.org<mailto:acqnet-l_at_lists.ibiblio.org> Cc: Scharstein, Salter Subject: Re: [ACQNET-L] Invoice payment -- "general accounting practice" Hi all. I'm curious to know what the point is of said "general accounting practice"? Can anyone explain the reasoning for keeping the accounts this way, besides creating, " a lot of extra record-keeping!"? Does it save money in each fiscal year doing this "general accounting practice"? Or is it a more accurate picture of what is truly spent within a fiscal year by keeping the books in this manner? Thank you. -Carol Kornhauser On Wed, Nov 18, 2015 at 2:35 PM, <acqnet-l_at_lists.ibiblio.org<mailto:acqnet-l_at_lists.ibiblio.org>> wrote: This happened to us at the College of Charleston probably 15 years ago. It creates a lot of extra record-keeping! We are happy to answer any questions you might have. I have a fantastic accounting assistant, Salter Scharstein. Katina Strauch From: ACQNET-L [mailto:acqnet-l-bounces_at_lists.ibiblio.org<mailto:acqnet-l-bounces_at_lists.ibiblio.org>] On Behalf Of acqnet-l_at_lists.ibiblio.org<mailto:acqnet-l_at_lists.ibiblio.org> Sent: Wednesday, November 18, 2015 10:27 AM To: acqnet-l_at_lists.ibiblio.org<mailto:acqnet-l_at_lists.ibiblio.org> Subject: [ACQNET-L] Invoice payment -- "general accounting practice" Hi all, I am hoping to find out if your institution’s Accounting Office is doing something similar to what our College’s Financial Services Office calls “general accounting practice.” Recently, we were informed by our Financial Services Office that payments for renewals/subscriptions will come out of our budget matching exactly when the subscription term takes place. Our fiscal year starts June 1 and ends May 31 the following year. Say we just a renewal invoice for database subscription for 01/01/2016 – 12/31/2016 that is billed at 1200.00 for the renewal. Our Accounts Payable is now splitting the $1200 into two fiscal year because the subscription period falls into two separate fiscal years. So this is what they are doing now – they split the total into two amounts by charging five months of the subscription (Jan. 1 – May 31, 2016), $500 against current fiscal year budget. And holding $700.00 to be put against next fiscal year which it starts on June 1, 2016. They would still pay the whole bill in full $1200 to the vendor/provider. So basically at the Library we have to invoice $500 for current fiscal year in our ILS and set a reminder to invoice the other $700 when new fiscal year starts in June. We’ve never had to invoice this way for the past 12 years since I’ve been here until very recently. The Accountant in our Financial Services Dept. called this as a “General Accounting Practice.” I was wondering how general this practice really is as she calls it and if any other institution’s Accounting Office/Dept. is doing something similar? I guess I’m looking for endorsement to this “general accounting practice” to lower my blood pressure … sigh! Thanks in advance for any information you are willing to share! Best, Dung-Lan ********************************************* Dung-Lan Chen Bibliographic Services/Acquisitions Librarian Lucy Scribner Library Skidmore College 815 N. Broadway Saratoga Springs, NY 12866 Voicemail: 518-580-5511<tel:518-580-5511> Fax: 518-580-5541<tel:518-580-5541> Email: duchen_at_skidmore.edu<mailto:duchen_at_skidmore.edu> ********************************************* _______________________________________________ ACQNET-L mailing list ACQNET-L_at_lists.ibiblio.org<mailto:ACQNET-L_at_lists.ibiblio.org> http://lists.ibiblio.org/mailman/listinfo/acqnet-l -- Carol Kornhauser Acquisitions Coordinator Shadek-Fackenthal Library carol.kornhauser_at_fandm.edu<mailto:carol.kornhauser_at_fandm.edu> p. 717-291-3841 | f. 717-358-4436 USPS Mailing Address Franklin & Marshall College Library Acquisitions P.O. Box 3003 Lancaster, PA 17604-3003 FedEx/UPS/Airborne/DHL Mailing Address Franklin & Marshall College Library Acquisitions 415 Harrisburg Avenue Lancaster, PA 17603-2615 .לִמְנוֹת יָמֵינוּ, כֵּן הוֹדַע; וְנָבִא, לְבַב חָכְמָה So teach us to number our days, that we may get us a heart of wisdom. _______________________________________________ ACQNET-L mailing list ACQNET-L_at_lists.ibiblio.org http://lists.ibiblio.org/mailman/listinfo/acqnet-l
