SECTION 1: Fiscal Officer Responsibility

1. Policy
2. Daily Accounting Activity
3. Overdrawn Accounts

I. Policy

University policy requires every fiscal officer to maintain consistent oversight of every account for which they are responsible. This responsibility may be delegated only to an officially appointed Fiscal Officer Delegate on the account. This responsibility may not be delegated to any other employee, including student employees. A timely and consistent review of account activity allows the department to know the balance in its accounts at all times and provides information to meet reporting requirements. The university accounting system is the official financial record for Michigan State University and therefore, Fiscal Officers are required to review account activity in the financial system in a timely fashion.

Various systems/reports are available for Fiscal Officers to reference when reviewing accounts. Regardless of the system/report used, the information for monthly review must include the transaction detail for the account. In addition, Fiscal Officers must maintain documentation that substantiates the review was conducted. Recommended systems/reports to be used for account review include:

• Office of the Controller Reporting system (Power BI)
• Business Intelligence (BI) system reports (Activity Review report – FIN500, Operating Statement - FIN049, Cash Account Activity Statement – FIN110)

On a monthly basis, all posted budget, revenue, and expense transactions must be verified with supporting documentation to ensure the amounts are correct, and all transactions have posted to the correct account number. In the event that errors are discovered during this review, it is the account Fiscal Officer’s responsibility to correct any errors by either 1) contacting the department that originated the error and requesting correction; or 2) processing an eDoc to correct the transaction(s). All corrections should be made in a timely manner (typically within 90 days). During periods of Fiscal Officer transition, it is important for there to be continued oversight of transactions, including accounting and payroll. In all cases, the College/Major Administrative Unit’s Budget Officer is responsible for ensuring these controls are maintained.

Each business day, updated general ledger activity is posted in the financial system so that the BI reports noted above and other reporting systems can be run on demand. Fiscal Officers are encouraged to review account activity frequently and not wait for month end. Frequent review allows the possibility for error correction prior to month end. See the “Account Review FAQs" and the "Account Review Checklist” for further information.

II. Daily Accounting Activity

Selected e-docs include:

Review and approval of transactions is the responsibility of the account’s Fiscal Officer or Fiscal Officer Delegate. Responsibility to review and approve transactions may not be assigned to other employees, including students. It is against policy for a Fiscal Officer or Fiscal Officer Delegate to log into the Financial System and then assign unauthorized users to perform functions and approvals.

Monthly cut-off: Financial processing transactions will usually be reviewed and processed by the Accounting Office in the order received. Excluding June (fiscal year-end), there are no specific central monthly cut-off dates or policies for transactions. To ensure that transactions are fully approved and therefore recorded in a specific month, please process documents well before the end of the month. Generally, transactions that are departmentally approved and awaiting the Accounting Office’s approval will be recorded that month if received no later than seven (7) business days before month end.

III. Overdrawn Accounts

An overdrawn account is an account where expenses paid exceed income received (or in some cases, budgeted expenses) creating a negative account balance. In general, overdrawn accounts are not permitted, and Fiscal Officers are responsible for managing their accounts to maintain positive balances. The finance system allows flexibility for departments/Orgs to tailor their chart of accounts to their specific business activities and fiscal oversight processes. This may result in temporary overdraft positions of certain account types throughout the fiscal year depending on timing of revenues and expenses. However, Fiscal Officers are responsible to make necessary ledger entries to fund overdrawn accounts, where applicable, at least on a quarterly basis.

Departments/Orgs can monitor account balances through the Office of the Controller Reporting System (Power BI) using the Balance Dashboard or through other reporting systems like Cognos BI Reports or Query Studio. Departments/Orgs should ensure the report they reference is using the same formula for determining the account balance as noted in the below tables.

1. Accounts Subject to Office of the Controller review and correction

   The following list of account types/sub-funds should never be in overdraft status (see Table 1). Please see additional information below regarding each category.

   Table 1

   Account Type	Sub-Funds	Account Balance Computation	Overdraft Oversight	Spending Guidelines
   Endowment Spending	DE, DM, DX, RH, RM, RT	Available Balance Before Encumbrances[1] + Encumbered Income	Controller	Spending should not exceed the available balance plus expected annual spending policy distributions for the current fiscal year.
   General Fund	GA, GC, GD, GH, GL, GP, GR, GS, GT, GU	Budget Expense – Actual Expense + Net Transfers	Controller	Spending should not exceed budgeted allocations.
   Gifts	RB, RD, RL, RN, RW	Available Balance Before Encumbrances[1]	Controller	Gifts should not be spent until received.
   MAES/MSUE	RA, RE	Budget Expense – Actual Expense + Net Transfers	Controller	Spending should not exceed budgeted allocations.
   Plant Reserves	PT, PU, PV, PW	Available Balance Before Encumbrances[1]	Controller	Plant Reserves should not be spent until received.
   Self-Supporting –Operating Activities[2]	DN, DR, DS, DT, DY, RX, RY, XT	Available Balance Before Encumbrances[1]	Controller	These activities are meant to be self-supporting and are generally funded from within the unit.

   [1]Available Balance Before Encumbrances is calculated as follows: Beginning Balance + Income – Expense + Net Transfers

   [2]Self-Supporting – Operating Activities include departmental operating accounts that are substantially funded or allocated income from within the unit to cover costs of certain activities tracked in separate accounts. Examples include DS-accounts established for various medical specialty areas (e.g. pediatrics, neurology, etc.) and XT-accounts established for various activities of auxiliary units (e.g. Parking Services, University Procurement and Logistics, etc.). Please see Table 2 below for activities in these same sub-funds that are considered Service Centers in accordance with MBP Section 6.

   All accounts that fall within the criteria outlined in Table 1 will be reviewed by the Office of the Controller on a quarterly basis. If an account has a deficit of $1,000 or more at the end of a quarter (September 30th, December 31st, March 31st, June 30th), the Office of the Controller will initiate a KFS document to clear the overdraft, which will automatically post to the ledgers. The Office of the Controller will identify primary operating account(s) within each MAU to serve as the default overdraft funding account. Overdraft balances will be cleared to these accounts by moving expenses using object code 6655 – Overdraft Expense Distribution from the overdrawn account to the default funding account. Departments/Orgs may subsequently move these amounts from the default funding account via a Distribution of Income and Expense (DI) eDoc to other departmental accounts with adequate funding at the Department/Org’s discretion, but they must use object code 6655.

2. Accounts Subject to Office of the Controller review and unit correction

   In general, the following account types/sub-funds should also not be in overdraft status. These accounts will not be included in the overdraft correction process noted above but will be reviewed throughout the fiscal year. These accounts are typically subject to more significant timing differences and other circumstances.

   Table 2

   Account Type	Sub-Funds	Account Balance Computation	Overdraft Oversight	Spending Guidelines
   Agency/Fiduciary Activities	AA, AB, AD, AM, AN, AR, AS, AT, AU	Available Balance Before Encumbrances[3]	Controller	University operations should not subsidize activities without having legal ownership.
   General Fund	GE	Budget Expense – Actual Expense + Net Transfers	Controller	Spending should not exceed total start-up package amount.
   Grants and Contracts	RC, RG	Grants (RC): Balances reviewed as part of cash draw process Contracts (RG): Available Balance Before Encumbrances[3]	Contract & Grants Administration Controller	Spending should not exceed contract agreement.
   Plant Projects	PC, PD, PE, PN, PP, PQ, PR, PS	Balances reviewed as part of plant project reviews	Joint reviews based on project	Spending should not exceed final approved funding.
   Self-Supporting –Operating Activities	DA, DC, DU, XA, XC, XH	Available Balance Before Encumbrances[3]	Controller	These activities are meant to be self-supporting and are generally funded from within the unit.
   Self-Supporting – Service Centers[4]	DN, DS, DY, XT	Available Balance Before Encumbrances[3]	Controller	These activities are meant to be self-supporting and are generally funded from fees charged to customers.

   [3]Available Balance Before Encumbrances is calculated as follows: Beginning Balance + Income – Expense + Net Transfers

   [4]Self-Supporting – Service Centers generally identify operating units that provide goods and services on a regular and continuing basis for a fee based on established rates (see MBP Section 6). Service centers are intended to break even over time and may have periods of overdraft status due to sales volume or total cost variances. In many cases, these overdrafts are recovered in future years through rate adjustments. However, if a service center account has an overdraft balance that exceeds 25% of its average annual income (based on 3 previous years) and is more than $100,000 in deficit, the account will be considered an overdraft and will need to be funded by the department rather than including the deficit amount in the billing rate lookback analysis. See MBP Section 6 for more information and considerations in evaluating service center deficits.

   For the accounts that fall within the criteria of Table 2, departments/Orgs will be contacted to prompt corrective action as needed. Additional consideration will be given when reviewing these accounts if overdrafts result from:

   • Timing differences between income and expense
   • Billing rate deficiencies
   • Clearing account activity

   All other account types/sub-funds not specifically noted in this policy will be reviewed under separate oversight processes. For specific questions regarding accounts not listed, please contact Accounting at accounting@ctlr.msu.edu.