FIACCT 09-16_01 Fixed Assets – Monthly Reconciliation and Out of Balance Corrections

Effective: March 16, 1998
Revised: July 2, 2001

Purpose

This policy defines the procedures for the monthly reconciliation of fixed assets.

Policy

It is the responsibility of each state agency to complete the Fixed Asset Reconciliation Worksheet each month. The completed worksheet should be sent to the Division of Finance by the last business day of the month following the period reported in the worksheet. Attach copies of applicable Fixed Asset reports.
It is also the responsibility of each agency to process any necessary documents to correct errors found during the reconciliation process.

Background

A monthly reconciliation should be performed comparing year to date capital expenditures and year to date FINET Fixed Assets activity (additions, deletions, etc.). This reconciliation is designed to ensure that all purchased fixed assets are properly added to FINET Fixed Assets and Object code errors are corrected.

Once the differences have been determined, any necessary correcting entries should to be posted to either capital expenditures, or to FINET Fixed Assets, or both. Inter-Agency Transactions (IATs) are used to correct Capital Expenditure codes. Fixed Asset documents, FAs, FDs, FCs, and FTs must be processed to correct FINET Fixed Assets.

Sometimes differences occur that do not need correcting entries but should be listed on the reconciliation with an explanation. An example of this type of difference would be an asset that was found or donated and added to FINET Fixed Assets in the current year. Because found assets were usually purchased in a prior year, this would be a reconciling item. Donated assets would be a reconciling item since there aren’t any capital expenditures recorded for them.

Procedures

Responsibility

Action

Agency

Obtain a copy of the Fixed Asset Reconciliation Worksheet from the Division of Finance. The worksheet is currently available as a spreadsheet (Excel or Quatro). Complete the worksheet each month and send to the Division of Finance by the last business day of the month following the period reported in the worksheet.
Include copies of the following reports for your agency:

The current month’s FA00, Fixed Assets – Capital Expenditures Detail Report(s).
The last page of the current month’s FA9A, Fixed Asset Listing Report showing the total assets for your agency.

Instructions for Entry

Complete the reconciliation worksheet as follows:

Field

Description

Agency of Division Name

Enter the name of your agency, or if the reconciliation is for a certain division enter the name of your agency and division.

Agency Code

Enter the three-digit FINET code for your agency.

Orgs if Applicable

If the reconciliation is for a division, enter the four-digit FINET organization codes used by the division. If the reconciliation is for an entire agency leave this field blank.

Accounting Period

Enter the month and year reported by this reconciliation.

Prepared By

Enter the name of the person completing the reconciliation.

Phone

Enter the phone number of the person completing the reconciliation.

The reconciliation has three columns:

Beginning Balance

This column is copied from last month’s ending column and should show last month’s ending balances and reconciling items. At the beginning of a fiscal year (July reconciliation) this column should be blank.

Current Month’s Activity

This column is used to show the current month’s activity and to identify new reconciling items, if any, for this month. See the descriptions of each line below for additional information.

Ending Balance

This column is simply the total of the previous two columns.

YTD Capital Expenditures

Line 1, Prior Month’s
YTD Capital Expenditures

Enter the total fiscal year to date expenditures charged to Capital Object codes as of the end of last month. This amount is copied from line 3 of the prior month’s worksheet. This line will be zero (0) for the first reconciliation of the fiscal year.

Line 2, Current Month’s
Capital Expenditures

Enter this month’s total expenditures charged to Capital Object codes. Add together all the FA00, Fixed Assets – Capital Expenditures Detail Report(s) for your agency for the current month

Line 3, Total YTD Capital Expenditure

This is the total expenditures charged to Capital Object codes for your agency year to date. Add lines one and two together.

Line 4, Items Not Charged
to Correct Object Codes:

When incorrect Object codes are used on a PV, you must process an IAT to correct the codes. Line 4 should show IATs to be processed to correct this error.

Report FA3B, Fixed Asset Capital Expenditures Exception Report lists all capital expenditures for your agency for the month for which there is not a corresponding entry in FINET Fixed Assets. This report also lists all FINET Fixed Asset entries for the month for which there is not a corresponding capital expenditure. Usually, the entries on this report are simply timing considerations
and indicate a temporary out of balance condition. However, this report lists all entries of this type and can be helpful in identifying errors and corresponding transaction IDs.

Following are six common examples:

If your agency used a Capital Object code on a payment voucher for an item that should not be classified as a fixed asset, you must process an IAT to credit the Capital Object code and debit an appropriate Expenditure Object
code.

Show this amount as a negative adjustment in the Current Month’s Activity column. Next month, when the IAT has posted in FINET, you will show this as a positive adjustment in the Current Month’s Activity column. Because this error would have created a shell FA, you should delete the shell FA from the FINET Document Listing.

If your agency did not use a Capital Object code when purchasing an item that should be classified as a fixed asset, you must process an IAT to credit the Expenditure Object code that was used in error and debit the correct Capital Object code.

Show this amount as a positive adjustment in the Current Month’s Activity column. Next month, when the IAT has posted in FINET, you will show this as a negative adjustment in the Current Month’s Activity column. Because this error would not have created a shell FA, you should scratch add this asset to the Fixed Asset Subsystem by processing an FA document. See the FA – Scratch Add policy in this section of the manual.

An FC (modification) document was processed in FINET Fixed Assets without a corresponding entry to FINET capital expenditures.
Process another FC reversing the one above if it was incorrect and show this adjustment on line 13. Or, process an IAT in FINET to capital expenditures matching the FC amount if this is a current year asset. Or, show this adjustment on line 11 if this is an old year asset.

An FD (deletion) document was processed in FINET Fixed Assets for an asset acquired in the current fiscal year without a corresponding entry to FINET capital expenditures.

Process an FA reversing the FD above if it was incorrect and show this
adjustment on line 13. Or, process an IAT in FINET capital expenditures matching the FD amount.

An FA (scratch add) document was processed in FINET Fixed Assets
without a corresponding entry to FINET capital expenditures. Process an FD reversing the FA above if it was incorrect and show this
adjustment on line 13. Or, process an IAT in FINET capital expenditures matching the FA amount if this was a current year expense. Or, show this adjustment on line 11 if this is an old year asset.

An agency or Surplus Property posted sales revenue to a Capital Object code (negative expense) in FINET.

Process an IAT to move the revenue for the sale of fixed assets equipment to Object code 2796, Sale of Fixed Assets Equipment; Object code 2792, Sale of Fixed Assets Buildings; or Object code 2793, Sale of Fixed Assets Land.

Line 5, Corrected Capital Expenditures

This is the corrected amount of capital expenditures that should have been charged to Capital Object codes. It is the total of lines 1 through 4. Line 5 balances must always equal line 14 balances.

YTD Fixed Asset Activity – Excluding Type X Assets

Line 6, Previous Month’s YTD Fixed Asset Activity

Fiscal year to date total changes made to FINET Fixed Assets for your
agency/division as of the end of last month. Enter the amount reported on line 10 of last month’s reconciliation. For the beginning of a fiscal year, this amount should be zero (0).

Line 7, Current Month’s Fixed Asset Balance

Enter the Total Cost for Organization(s) or Agency (Excl Information-Only) from the current month’s report FA9A, Fixed Asset Listing Report. This represents the total value of your agency’s capital assets.

Line 8, Prior Month’s Fixed Asset Balance

This is last month’s Total Cost for Organization(s) or Agency (Excl Information- Only) from report FA9A, Fixed Asset Listing Report. This same amount is found on line 7 of last month’s reconciliation worksheet.

Line 9, Current Month’s Fixed Asset Activity

This is the difference between this month’s and last month’s fixed asset total values, and represents this month’s FINET Fixed Assets activity. Subtract line 8 from line 7 to calculate the current month’s fixed asset activity and enter the amount in the Current Month’s Activity column.

Line 10, YTD Fixed Asset Activity

This is the total change in your agency’s fixed asset value for the fiscal year. Add lines 6 and 9.

Line 11, Fixed Asset Activity Not Related to YTD Capital Expenditures

These are reconciling items that were not and should not have been coded to Capital Object codes in the current fiscal year.

Examples are:
Assets purchased in prior years and retired in the current year must be added back.
Assets constructed and expended by DFCM and added to your agency’s fixed asset listing must be subtracted out.
Found assets added to FINET Fixed Assets this year must be subtracted out.
Donated assets added to FINET Fixed Assets this year must be subtracted out.
Trade-ins used to purchase current year assets must be subtracted out. The recorded cost in FINET Fixed Assets of an asset received in an exchange (trade-in) is the fair market value of the asset received. The recorded expenditure, however, is the net amount paid. The difference between the fair market value and the recorded cost represents the value of the trade-in to be subtracted out.

Line 12, YTD Fixed Asset
Activity Related to YTD Capital Expenditures

After you adjust for items not related to YTD capital expenditures on line 11, you are left with fixed assets activity that should be related to capital expenditures. This is line 10 plus or minus each item on line 11.

Line 13, Fixed Asset Corrections Needed.

These are items for which a FINET Fixed Assets document needs to be processed. List each item separately. Process an FA, FD, FC, or FT to correct FINET Fixed Assets for these items. These items can usually be identified on the FA3B, Fixed Assets Capital Expenditures and Exception Report.

The following are three examples:

Fixed assets were purchased during the month by processing FINET payment vouchers that were coded to Capital Object codes; however, the shell FAs that were automatically posted to the FINET Document Listing were not completed and posted to FINET Fixed Assets. Complete the shell FA and show this amount as a positive adjustment in the Current Month’s Activity column.

In the month that the shell FA is posted to FINET Fixed Assets, show this amount as a negative adjustment in the Current Month’s Activity column. This will clear the reconciling item from the reconciliation.

An item was added to FINET Fixed Assets in error. Process an FD
document to delete the asset from FINET Fixed Assets. Show this amount as a negative adjustment in the Current Month’s Activity column.

In the month that the FD document posts to the Fixed Asset Subsystem, show this amount as a positive adjustment in the Current Month’s Activity column. This will clear the reconciling item from the reconciliation.

An IAT or JV was posted in FINET which increased or decreased capital with no corresponding change to FINET Fixed Assets.

Reverse the IAT or JV if it was incorrect and show this adjustment on line 4. Or, process an FA document (scratch add) to add an asset if the IAT or JV paid for an additional asset. Or, process an FD to delete an asset if the IAT or JV recorded the deletion of an asset. Or, process an FC to change the value of an asset if the IAT or JV changed the value of a capital account.

Line 14, Corrected YTD Fixed Asset Activity

This is the corrected amount of fixed asset activity for the fiscal year. It is the total of line 12 plus or minus each item on line 13. Line 14 balances should always equal line 5 balances.