June, 2016 - FMS Newsletter
Financial Management Services

In This Issue


June, 2016

Year-End Closing at a Glance

The 2016 Year-End Closing Newsletter provides our readers with information that will be helpful throughout the year-end closing process.


Specific items that you should be aware of are discussed in the Year-End Closing Overview.


Included in this newsletter is a Year-End Closing Schedule. You may want to print out a copy so you can access it more easily.

IRS Form 8300 - Cash Payments Over $10,000 Received

Report of cash payments over $10,000 received in a trade or business

When your organization receives payments from customers and the total payment, from any one customer, for any transaction (or set of related transactions) exceeds $10,000 within a 12 month period, Indiana University is required to report this to the IRS.

Specifically, this rule applies to all payments made with cash. The IRS defines cash as currency and coins (the thing commonly referred to as cash) but also bank drafts (checks and ACH payments), traveler’s checks, cashier’s checks, and money orders. Cash does not include personal checks drawn on the account of the writer.

The IRS has a broad definition of a transaction and related transactions. Essentially, if a customer makes payments to IU for a good or service provided and the total of those payments, whether one payment or many, exceeds $10,000 within a 12 month period, the IRS wants to know about it. The payment doesn’t have to come in one lump sum for the IRS to want to know about the purchase.

To help departments comply with this IRS requirement, University Tax Service is going to assist organizations in tracking the value and timeline of payments made by customers. If your organization receives a payment by cash (see above for what cash is) from a customer in a single transaction or a set of related transactions exceeding $2,500, University Tax Services wants to know about it. You will need to complete the Cash Reporting Form found on the University Tax Services’ webpage.

For full details on the procedure, please review Tax Standard Operating Procedure 9.01. For any questions, please email University Tax Services at taxpayer@iu.edu.

Additional Resources

Tax Standard Operating Procedures 9.1 - Form 8300 Reporting Requirements

Form 8300 and Reporting Cash Payments of Over $10,000

Letter to Payer for $2,500 Cash Reporting Amounts

Letter to Payer for Form 8300 Annual Reporting

Invoice Processing

As fiscal year-end approaches, it is important to clarify the procedures that we follow in processing invoices at the end of the year. The INVOICE DATE is used to determine which fiscal year that invoice is charged against regardless of the year of the PO creation. The invoice date is the date presented on the first page of an invoice that has been assigned by the vendor.

All invoices received by AP up to and including Friday, July 1 with an invoice date of June 30 or before will be processed in the FY16 accounting books. Invoices dated July 1st or later will be processed in the FY17 accounting books.

KFS utilizes a post-back logic that books FY16 expense for invoices dated June 30 or before and processed on Tuesday, July 5. The post-back period ends on July 5, 2016. General ledger expenses book to FY17 regardless of the invoice date beginning July 6.

June or prior invoices billing service and/or maintenance contracts with begin dates of July 1, 2016 or later will be processed as received. Similarly, membership billings * for Fiscal Year 2017 memberships that expect payment in advance of June 30, 2016 will be processed as received. Accounts Payable will tabulate the invoice and accounting detail so that a financial reporting adjustment can be made to the Fiscal Year 2016 reports.

Beginning with invoice processing on July 1, 2016 the billings referenced in paragraph three will be processed by the following procedure if the purchase order is encumbered for FY2017.

  1. The invoice date on the payment request document will be entered as July 1, 2016 if the actual invoice date is June 30, 2016 or prior. KFS will book the expense to FY17.
  2. The pay date will be populated based on billing invoice date and defined procedures. For example, a June 1, 2016 membership billing * of a FY17 PO with Net 30 Day payment terms will be processed with invoice date = 7/1/2015 and pay date = 7 days from processing.

* Here is a reminder for subscription and membership payments from the Financial Management Services Newsletter, March, 2016 Subscriptions and Memberships:

  • Subscriptions should be processed on a DV (unless they require a contract signature or are software subscriptions). The billing notice is typically generated through a renewal reminder rather than through an invoice; therefore, a DV is the appropriate method for payment.
  • Memberships should be processed on a DV if the membership does not require an agreement or ongoing services/data sets (such as Cloud) which would require a security review. The $1,000 limit on Disbursement Voucher transactions applies to “Compensation for Services” and “Payments for Contractual Agreements” payment reasons and does NOT apply to subscription or membership payments.

As an additional reminder: Units requesting memberships in External Organizations are required to submit a membership application to University Administration, membership application.

The procedure documented above has been followed for the past four fiscal years.

Goods, or merchandise, are rarely pre-billed. If you order equipment or supplies in the month of June and ask for a delivery of July 1 or later, the vendor may ship your product early and issue an invoice on the date shipped. In this case, the invoice will be processed in FY16. Please keep this in mind when placing orders for products that you do not wish to take delivery of until after the fiscal year-end.

Funding Recurring Purchase Orders

At times throughout the year, but especially at fiscal year-end, recurring Purchase Orders (POs) could run out of encumbered funds. You must encumber funds for all billing expected to be paid on your recurring order through the end of the fiscal period so that payment processing is not delayed.

KFS PURAP does not allow the processing of invoices against a PO that is not funded. Indiana University receives invoices that must be paid but the payment is delayed until funds are encumbered on the PO.

The practical result of the recurring Purchase Orders being unfunded is:

  1. Multiple communication occurs between Accounts Payable and the Department and Purchasing; and
  2. Payment delays are created at no fault of the vendor.

Guide to Accounts Payable Liability Object Code 9041

Accounts Payable object code 9041 is the offset object code for invoice expenses, credit memo credits, and cash disbursements.

Reports are written and published in IUIE to study 9041 activity and status throughout the year as well as at fiscal year-end.

The Guide_to_Accounts_Payable_Liability_Object_Code_9041.pdf explains the reports available and their use.

Capital Assets Closing Information

At year end, Capital Asset Management creates a snapshot of all the university’s assets. This snapshot provides the status and location of capital assets as of June 30th which is used for financial reporting purposes and for federal and state audits. To ensure this information is as accurate as possible, please inform your capital asset representative of known asset location changes so updates can be made in KFS prior to June 30th.

In addition, all Asset Retirement, Asset Transfer, and Equipment Loan/Return Documents must be approved (not just initiated) on or before June 30, 2016. Any Retirement or Transfer document not approved by June 30th will be routed to Capital Asset Management to be held “for approval” until after final close.

To ensure that all initiated documents have been approved, run the Unapproved Documents in Inbox by Chart and Org report to view the pending documents for your organization. The report can be found in IUIE in Kuali Financial/Capital Asset Management System/Inventory Control Reports.

Capital Asset Document Type Codes are:

  • AT: Asset Transfer
  • ARG: Asset Retirement Global
  • ELR: Equipment Loan Return

If you have any questions or concerns, please contact Capital Asset Management at capasset@iu.edu.

Non-Student Accounts Receivables Write-Off Deadlines

According to IU policy I-500, Accounts Receivable balances over 12 months old and lacking current productive activity will be written off even if the invoices are placed with a collection agency. Please note the following deadlines for FY 2016 Write-Offs:

  • June 1, 2016: Any invoices that are over 365 days old as of June 1, 2016 should be written off by the billing organization.
  • June 24, 2016: Any invoices aging out to 365 days old prior to June 30, 2016 should be written off by the billing organization no later than close of business on June 24, 2016.

Non-Student AR will automatically write off remaining KFS AR invoices that are or will be 365 days old after June 24, 2016 if proof of productive activity has not been submitted to nonstdar@iu.edu by close of business on June 24, 2016.

Please ask the following questions prior to writing off an invoice to ensure you are using the correct edoc in KFS:

  1. Is the invoice a duplicate or need to be reversed? If the answer is yes, and the invoice is from the current fiscal year, please use the Invoice Correction edoc to reverse the invoice. If the invoice is from a prior fiscal year, please email nonstdar@iu.edu for additional information.
  2. Was the invoice short paid due to returns, price adjustments, or to remove open balances that will not be received due to costs associated with doing business, i.e. bank fees deducted for wire transfer payments? If the answer is yes, use a Credit Memo edoc to clear the remaining balance of the invoice.
  3. Is the balance of an outstanding invoice due to non-payment stemming from the customer not being able to pay (bankrupt, dispute, unresponsive, etc.). If the answer is yes, use the Write-Off edoc to write off the invoice as bad debt. Please do not use the Write-Off edoc to clear small balances under $1 from invoices.

Remember, writing off an invoice does not prevent you from collecting the money from the customer!

Open Training & Documentation Specialist Position

After more than two years serving as a Training and Documentation Specialist within FMS, Ben BrckaLorenz recently transferred to RPS to serve as an Accounting Services Coordinator. Ben’s departure created a vacancy within FMS Training, which we are in the process of filling. If you know of anyone who might be interested in and qualified for the position, please encourage them to apply for Posting Number 01263P through PeopleAdmin by visiting https://iujobs.peopleadmin.com/.

While we search for Ben’s replacement, Tracey Mui is covering Ben’s duties. If you have questions or need assistance from FMS Training, please contact Tracey at tozogar@iu.edu.

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