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Accruals - Accrued Expense

Used when goods or services are received this fiscal year and will be paid for next fiscal year. This is required for items of $10,000 or more, optional for items $1,000 or more, and should not be done for items under $1,000.

Examples:

• You received delivery of a $1,200 computer on June 29th and the invoice won't post until July's fiscal period begins (i.e., the fourth business day in July).
• Sub contract on contract and grant has rendered service for 4 months of the current fiscal year but invoice will not be sent until several months into the next fiscal year.
• Consulting work on web page design completed June 15th and the invoice posts August 20th.

Encumbrances vs. Accrued Expense
Encumbrances are used to record obligations for goods and services which will be provided in future fiscal periods. If the goods have been received or the service completed as of June 30th, and the invoice will not be processed until the next fiscal year, the expense must be accrued (if over $10,000) on an AV or YEAV document. If the goods are received or the service provided AFTER June 30th, the expense should be encumbered.

If you have encumbered an expense on a purchasing document and you accrue it for the current fiscal year, this may cause an overdraft in your account; however the correct balance will be restored when the AV or YEAV reverses in the new year.

Capitalized Equipment and Leased Space
Capitalized equipment (at or above $5,000) and space leases will be accrued by Capital Asset Accounting and do not need to be accrued by campus departments. Please make sure the correct receipt date is entered in CAMS before June Prelim closes.

To record an accrued expense using the AV or YEAV:

1. DEBIT the same Full Accounting Unit (FAU) used when the item was paid.
2. Offset (CREDIT):

   Account	Account Description	Object	Object Code Description	DR/CR
   1154300	Audited Vouchers Payable	0300	Accrued Expense	Credit

Remember:

• There will be an invoice paid/posted to next fiscal year's ledgers for goods/services received in the current fiscal year.
• Enter a reversal date in the YEAV document (greater or equal to July 20, 20XX).
• Must include the date the goods/services were received, vendor name, purchase order number or invoice number and an adequate explanation. If an estimate is used, include the calculation method in the explanation.
• You do not need more than one line for the Accrual account.
• The reversal of the YEAV will offset the invoice payment for a net effect of $0 in the period it was originally posted. Or, leave the difference between the amount accrued and the invoiced amount if the accrual was an estimate.

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