Accounting Manual

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Advances and Spend Authorizations Contents Advances – General Information ................................................................................................................................................................................... 1

Personal Charges on Expense Reports ........................................................................................................................................................................... 2

Spend Authorization with Cash Advance ....................................................................................................................................................................... 4

Clearing Spend Authorizations with Expense Reports (Substantiated Business Expenses) ...................................................................................... 6

Repaying Unspent Cash Advance Balance on Spend Authorizations ........................................................................................................................ 7

Recognizing Loss for Uncollectible Cash Advance Balance on Spend Authorization ................................................................................................. 7

Spend Authorization - Study Participant Advances ....................................................................................................................................................... 8

Balances on Department Accounts – Assets & Liabilities Report .................................................................................................................................. 9

Advances – General Information Advances come from three areas:

1. Personal charges on Expense Reports (P-card) 2. Spend Authorizations – Travel and Expense Advance 3. Spend Authorizations - Study Participant Advances

When the transactions in these areas are completed, either through the creation of an expense report for personal P-card charges or issuance of cash, debit card, or gift card through a spend authorization, a receivable (debit) is booked in the general ledger on ledger account 11015 (Receivable - Expense Advance & Personal Expenses). This receivable almost always is recorded on a centrally-defined chart of accounts (COA) combination. As a result, all repayments need to be booked to these centrally-defined accounts. These are defined by each business process below. If repayments have been booked to local/departmental accounts in error, this document also contains guidance on how to clear those lingering general ledger balances.

To view or monitor advances in Workday, use either the “My Cash Advances” or “Find Spend Authorization / Cash Advances - Yale” report.

Accounting Manual

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For more information: • Instructions on completing financial business processes in Workday, please search for the appropriate user guide on the Workday

training website. • Procedure that discusses personal charges on university purchasing cards (P-card) – 3215 PR.01 • Procedure for Yale Spend Authorization (Cash Advance) – 3215 PR.03

Personal Charges on Expense Reports When an individual charges personal expenses on a P-card and creates/completes an expense report:

• Select Expense Item = Employee Personal Expense. • This routes the expense report to Accounts Payable for further action. The central expense processing team:

o changes the Expense Item to “Net Personal Expense Adjustment – Central Procurement Only” and o changes the COA combination to the account shown below (YD000001.CC0372.PG00363.PJ028888).

• When the expense report process completes, the receivable is recorded (11015 – Receivable – Expense Advance & Personal Expenses) through the ledger accounting shown below.

Accounting Manual

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Repayment of the personal charge occurs through an employee payroll deduction. The Accounts Payable team provides the necessary information to the Payroll department for processing in the following month’s payroll. This creates a credit to the original transaction’s COA combination (see above) as follows: 11015…YD000001.CC0372.PG00363.PJ028888.FD01 + Employee worktag from the original expense report In the event that a specific circumstance (such as terminated employment) prevents repayment through employee payroll, the department business office should obtain a check from the responsible individual and process a Cash Sale using the following information:

• Revenue Category = RC152 – Repayment of Personal Expenses • COA Combination = YD000001.CC0372.PG00363.PJ028888 • Employee Worktag = Employee worktag from the original expense report (this is not the Assignee worktag) • Memo = Ensure this field contains the original expense report number (EXP-xxxxxxx).

Accounting Manual

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Past issue – When a department books a cash sale to this central account, it used to be difficult to print the tracking slip due to cost center security. This is no longer the case. See the Cash Sale guide for instructions on printing slips when completing a Cash Sale for another cost center (to which you are not assigned). If a check cannot be obtained and the department must recognize a loss, the department business office should process a journal entry:

Dr. 81048 (Losses and Writeoffs)/SC292 (Losses) + departmental COA combination (no Employee worktag) Cr. 11015…YD000001.CC0372.PG00363.PJ028888.FD01 + Employee worktag from the original expense report

Assignee is not used on the initial expense report transaction or on the repayment – both are using the central COA combination shown above. Special note for personal p-card charges incurred prior to February 2019 – the project used to record the receivable was PJ000001 instead of PJ028888. Therefore, any cash sale repayments should use PJ000001. If there is a question about which project to use, open the expense report in the system, click on the related actions tab, and select “View Accounting”.

Spend Authorization with Cash Advance Cash advances, for both travel/expense and study subject participants, are paid using spend authorizations. When the spend authorization is completed and approved, the accounting system creates a commitment journal entry to acknowledge that a payment or expense is planned. This occurs in the commitments ledger and is not considered an “actuals” transaction.

• The COA on the receivable ledger account (LA 11015) corresponds to the COA combination entered by the preparer. • The COA on the liability ledger account (LA 20023) is a pre-determined central account combination. • The Employee worktag is present on both the debit and the credit.

Accounting Manual

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When the spend authorization is settled through a payment to the worker, the commitment journal shown above is automatically reversed. The accounting system books a credit to the university’s cash account and a debit to a central receivable.

Accounting Manual

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Clearing Spend Authorizations with Expense Reports (Substantiated Business Expenses) Spend authorizations are cleared when the employee submits an expense report and connects that expense report to the open spend authorization.

• When users submit an expense report to clear a spend authorization with cash advance, Workday applies all lines of the expense report against the spend authorization. The system does not allow you to apply only a portion of the expense report against the spend authorization. Yale is requesting that Workday enhance current functionality to allow a portion of the expense report to be applied to an open spend authorization. In the meantime, you will need to create a separate expense report for those out-of-pocket expenses you do not wish to be applied to the spend authorization.

Accounting Manual

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• When the expense report is completed, the system reverses the entry to LA 11015 shown above with a credit and debits actual expense(s) (based on the Expense Item provided in the expense report) to the departmental account entered on the expense report.

Repaying Unspent Cash Advance Balance on Spend Authorizations If the spend authorization included a cash advance and there are remaining funds to be returned, repayment of any unspent cash must be by check. Repayments by Cash Sale do not automatically connect to the original spend authorization. They must be applied by the Accounts Payable team. For the Cash Sale to properly route to Accounts Payable, departments must use RC153. To properly complete the repayment of unspent cash, departments must process a Cash Sale using the following information:

• Revenue Category = RC153 – Repayment of Cash Advance • COA Combination = YD000001.CC0372.PG00363.PJ028913 • Employee Worktag = Employee worktag from the original spend authorization (this is not the Assignee worktag) • Memo = Ensure this field contains the original spend authorization number (AUTH-xxxxxx). Past issue – When a department books a cash sale to this central account, it used to be difficult to print the tracking slip due to cost center security. This is no longer the case. See the Cash Sale guide for instructions on printing slips when completing a Cash Sale for another cost center (to which you are not assigned).

Assignee is not used on the initial spend authorization or repayment – both are using the central COA combination shown above. Special note for advances made prior to February 2019 – the project used to record the receivable was PJ000001 instead of PJ028913. Therefore, any cash sale repayments should use PJ000001. If there is a question about which project to use, open the cash advance and select the worker payment tab. Using the related actions glass next to “Cash Advance Payment” select Accounting > View Accounting.

If the spend authorization included reloadable debit cards and there is remaining funds to be returned, the department business office must request removal of the remaining balance on the cards by contacting Treasury. The department business office must provide the following information to Treasury: cardholder name; remaining balance amount; and the spend authorization number. Treasury will unload the remaining balances on the cards and notify Accounts Payable. After such notification, Accounts Payable will reduce the cash advance outstanding balance in Workday. Recognizing Loss for Uncollectible Cash Advance Balance on Spend Authorization In limited circumstances, a department may have an open cash advance where there are no substantiated expenses and the department cannot collect the balance. In such instances where a department must recognize a loss for an uncollectible cash advance balance on an open spend authorization, an expense report must be submitted to properly liquidate the commitment and recognize the loss. A new expense item,

Accounting Manual

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EX0242, Losses-Uncollectible Spend Authorization, must be used when processing the final expense report to close out the advance. This will automatically reverse the central receivable from the spend authorization payment and will book a debit to the departmental COA combination on LA 81048 (Losses and Writeoffs)/SC292 (Losses).

To properly recognize a loss and liquidate the commitment, the department must process an expense report, ensuring that the final expense report box is checked. Reference the workday training guide for details on checking the final expense report. The department must use the expense item noted above to charge the loss (expense) to the appropriate non-sponsored COA string. All expense reports submitted with expense item, EX0242, Losses-Uncollectible Spend Authorization, will automatically be routed directly to the P2P Cost Center Unlimited Approver. In addition, losses >= $50 will be routed to the Controller for approval.

Use of this method and recognizing losses on spend authorizations are expected to be limited and will often be done in conjunction with consultation with Accounts Payable and/or the Controller’s Office. Department business offices should not process a journal entry to clear a spend authorization with an outstanding cash advance balance. Repayments by journal entry do not connect to the original spend authorization.

Reviewing spend authorizations is a required step on University Form 1101 FR.01 Financial Review Checklist. Departments should be ensuring open authorizations are cleared timely and in accordance with Procedure 3215 PR.03 Yale Spend Authorization (Cash Advance). It is important to make every effort to recover any unused cash advances balances from current or terminated employees before processing a loss of this nature. If you have any questions, please contact Financial Compliance at financial.compliance@yale.edu.

Spend Authorization - Study Participant Advances All study participant advances that originate from a Workday Spend Authorization follow the same process documented in “Spend Authorization with Cash Advance” that begins on page 3 of this document. The process and guidance for evaluating open balances on ledger account 11015 in the departmental account is also consistent – see the following section in this document entitled “Balances on Department Accounts – Asset & Liabilities Report”.

Yale Center for Clinical Investigation (YCCI) has a standalone process that provides prepaid cards for payments to study participants. This process is wholly managed by YCCI and the university Treasury department. The advance balances also reside in ledger account 11015 (in the YCCI cost center), but are not part of the Spend Authorization Advance function in Workday.

According to Procedure 3417 PR.01 Human Research Study Participant Remuneration, OnCore must be used for all Yale School of Medicine (YSM) clinical trials offering study participant remuneration initiated on or after January 1, 2018. Additionally, OnCore must be used for all studies that have billable services. (A billable service is defined as a service ordered in, or which could generate a charge from, EPIC.)

Accounting Manual

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Balances on Department Accounts – Assets & Liabilities ReportAdvances on ledger account 11015 should always be recorded to a central cost center. As a result, departmental users should not see balances in this ledger account on their “Assets and Liabilities – Yale” report. When users do see balances, they are generally credits and arise from cash advances that have been booked to the incorrect COA combination. If the balance is a debit, please consult General Accounting in the Controller’s Office at controller.genacct@yale.edu for assistance.

Balances Related to Cash Sales Repaying Advances (Spend Authorization is Closed): For cleanup of departmental credits, the department must first ensure that there are no open spend authorizations related to this balance. If there is an open spend authorization, please consult General Accounting. If there are no open spend authorizations, the balance should be cleared using a manual journal entry as follows:

• View accounting on the original cash sale. This COA combination should match the one that appears on your LA 11015 balance report and is the COA combination for the debit on the correcting journal entry. Be sure to include the Employee worktag and the revenue category from the cash sale. Memo for this line (or somewhere in the journal header) should reference the cash sale number.

• The credit for the correcting journal entry will come from the original transaction: o If Spend Authorization - To find the credit for your entry, go back to the original spend authorization. Click on the worker

payment tab. Using the related actions glass next to “Cash Advance Payment”, click Accounting > View Accounting. (Do not click on the related action glass in the grid – this connects you with the initial spend authorization entry in the Commitments Ledger. This commitment reverses when the advance payment is made to the worker.) The credit should be recorded to this central COA with 11015 – again, please be sure to include the employee worktag from that transaction and any spend category from that line. Memo should include Auth #.

o If Expense Report – View accounting for the expense report. Find the corresponding debit (either 11015 for a personal P-card charge, or true expense if the P-card and the responsible person were not the same individual). The entry should reverse exactly that COA, ledger account, spend category, and employee worktag.

• Example – from Spend Authorization (where the cash sale used RC153): Dr. 11015…YD000220.CC1234.PG00032.PJ456123.FD18.RC153 + Employee worktag from the cash sale Cr. 11015…YD000001.CC0372.PG00363.PJ028913.FD01 + Employee worktag from the original spend authorization

Some users have been unable to access the “View Accounting” associated with the Spend Authorization payment and/or have no Related Actions on the worker payment. In the event your visibility to this information is limited, please contact sharedservices@yale.edu for assistance. Kindly provide the Spend Authorization number in question and reference this guidance. The objective is to offset the exact COA from both transactions.

Accounting Manual

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Balances Related to Cash Sales Repaying Personal Charges on P-card: If the cash sale was to repay a personal charge that was incurred on a departmental P-card (where the worker connected with the P-card is not the person responsible for repaying the personal charge) the department processes a cash sale using RC152 and a departmental COA.

• This creates a credit that is visible on the assets and liabilities report in LA 11015. • The original P-card transaction cannot be recorded in the expense report as a personal charge because the funds should not be

deducted from the p-card holder’s paycheck. The expense report should record another “true expense” Expense Item using a departmental account with a memo indicating the employee responsible for repaying the personal charge.

• A journal entry is then required to debit the COA combination from the cash sale and credit the COA combination from the expense report.

• Example where the same departmental account was used, the Expense Item used was “Other Expense”, and the cash sale used RC152 (which generated an expense to 81051/SC298):

Dr. 11015…YD000220.CC1234.PG00032.PJ456123.FD18.RC152 + Employee worktag from the cash sale Cr. 81051…YD000220.CC1234.PG00032.PJ456123.FD18.SC298 + Employee worktag from the original expense report

See flow chart on next page.

This only works where there is no longer an open spend authorization and the balance came from a Cash Sale.

See details on page 9.

YES

NO

YES YES

NO

NO

NO NO

To determine the appropriate COA to offset a credit balance in ledger account 11015

NOTE: Memo line for each transaction on the journal entry MUST include the Cash Sale # and AUTH #/EXP#.

Is the balance listed for a prior year?

Rerun report for June of preceeding year until balance appears in "YTD" column

Is there a Spend Authorization # (Auth #)?

Is start date of Auth prior to 2/1/19?

Use PJ000001 with central COA: YD000001.CC0372.PG00363Use Employee worktag. NO

Use PJ028913 with central COA: YD000001.CC0372.PG00363Use Employee worktag. NO Assignee.

Is there an expense report referenced?

Was "personal"selected for Expense Item?

Use PJ028888 with central COA:YD000001.CC0372.PG00363Use Employee worktag. NO Assignee.

Use ledger account and spend category from the original expense report with the other COA listed on expense report

Contact General Accounting with details: controller.genacct@yale.edu

Run departmental Asset & Liablility report

Select the amount listed to obtain details then select "line memo" for transaction information.

Enter Auth # in Workday search box

Enter expense report # in Workday search box

YES YES

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