Auxiliary Standard Operating Procedures


SUBJECT:

Prior Year Balance Sheet Adjustments (4999)

SOURCE:

Auxiliary Accounting, Financial Management Services

DATE ISSUED:

March 2006

DATE OF LAST REVISION:

March 2015

ASOP NO:

11.0

RATIONALE:

To provide guidelines for determining the necessity of, and proper procedures for recording prior year balance sheet adjustments.

ASOP:

On occasion, a unit will identify a need to make an adjusting accounting entry related to the prior year. Since we do not allow users to record a transaction to fund balance directly, the Prior Year Balance Sheet Adjustment (object code 4999) was created to easily identify adjustments related to prior year activity. Object code 4999 is to be used for prior fiscal year activity and not prior period activity. Under no circumstance should 4999 be used for current year adjustments. There are certain instances when 4999 should not be used to adjust prior year activity. For example, bad debt expense and sales returns and allowances are both considered expected and normal activities and should not be reported as prior year adjustments.

 

The entry must then be recorded using an Auxiliary Voucher (Adjustment) or through the KFS Customer Credit Memo (CRM).

 

When the CRM is used to adjust or error correct a prior year KFS Accounts Receivable invoice (INV), it will automatically post to object code 4999. This is not always the correct object code as it depends on the purpose of the CRM. If it is determined that it should not post to 4999, a General Error Correction (GEC) document will need to be done to move the funds from 4999 to the appropriate object code. Please contact Non-Student Accounts Receivable to determine if 4999 is appropriate for your CRM.

 

EXAMPLES

 

Example 1: After fiscal year end it is determined that the inventory amount recorded is higher than a physical count, completion of a prior year balance sheet adjustment using object code 4999 is necessary.

 

AVAD

 

Object Code

Debit

Credit

Balance Sheet Adjustment

4999

$xxxx

 

     Inventory

83xx

 

$xxxx

 

Example 2: After fiscal year end it is determined that duplicate KFS Accounts Receivable invoices were created in the prior year for the same service. A KFS Credit Memo would be generated in the current year but since it is crediting a prior year invoice, it will automatically post to object code 4999.

 

 CRM 

 

Object Code

Debit

Credit

Balance Sheet Adjustment

4999

$xxxx

 

     Inventory

8118

 

$xxxx

 

Example 3:After fiscal year end, a customer has returned some goods that were invoiced to them in the prior fiscal year. A KFS CRM will be created for the portion of goods returned. The KFS CRM will automatically post to 4999 since it is for an INV created in a prior fiscal year. However, since this is a return of goods, it is considered a sales return and a normal part of business and not a prior year adjustment. A GEC will need to be done to move the credited amount to the proper object code.

 

 CRM 

 

Object Code

Debit

Credit

Balance Sheet Adjustment

4999

$xxxx

 

     Inventory

8118

 

$xxxx

 

 GEC 

 

Object Code

Debit

Credit

Returned Items

59xx

$xxxx

 

     Balance Sheet Adjustment

4999

 

$xxxx

 

RESPONSIBLE

ORGANIZATION:

 

Auxiliary Accounting, Financial Management Services