Spendable balance review is important to ensure departments are not over-spending any individual funding source, whether it be general, project, research, gift or at the departmental level. As a financial manager, you should perform spendable balance financial review on a monthly basis. Depending on your organization’s funding sources, chart structure and activity, the review would be done at multiple levels (department, fund, program, sponsored project) and across all groups of financial activity that pertain to your organization.
Fund determines the spendable balance calculation. Spendable balance is either controlled by expense budgets or actual revenue entries. This differentiation also determines if fiscal year-end spendable balances roll forward to the following year.
Spendable Balance Types
Departmentally Managed Funds
Non-general, non-sponsored and non-capital funds are considered to be departmentally managed. We recommend starting your financial review of departmentally managed funds with the Spendable Balance IW report. The Revenue and Expense and Monthly Actuals IW reports are also helpful, high-level reports that enable a successful financial review.
At the beginning of the year, review the carry-forward balance from last year and the current-year revenues for accuracy (Spendable Balance). Complete Assignment Journals where necessary to move spendable balances to departments and programs where you have committed support for the fiscal year (such as faculty research allocations).
Track Year-End Goals
Review spendable balances relative to fiscal year-to-date activity to know if the remaining balance will be sufficient to meet year-end goals. (Use the Spendable Balance Report.)
Mind Negative Spendable Balances
Review chartstring(s) with negative spendable balance using the Spendable Balance Report. Though a negative balance is sometimes justified, you should be familiar with them and be able to explain why the deficits are being held.
Person-Specific Negative Balances: When a person-specific program has a negative balance, the balance should be discussed and resolved with that individual (e.g. faculty member).
Starting Work on Projects Funded in the Following Year: In some cases, you may need to charge an expense in the current fiscal year to get started on work supported by pledged gifts or other monies that are to arrive in the next fiscal year. This may cause a temporary closing negative balance.
Assignment Journals: Although negative balances at the department/program level are acceptable as long as the overall fund balance is positive, please note that the department/program ending negative balances will roll into beginning balance for the next fiscal year if no Assignment Journals are made.
Reclassing Expenses: If the overall balance on a fund is negative, and no additional monies are expected, expenses should be reclassed to another fund where restrictions are met.
Review activity trends and investigate unexpected items using the Monthly Actuals Report. Activity trend review serves to spot trends, anomalies, and exceptions. It also helps you see see if overall patterns of income and expense align with expectations.
Review revenue, personnel expense and non-personnel expense to ensure they are reasonable to expectations (Revenue and Expense Report).
Recommended Spendable Balance Report Prompts
Fund Spendable Balance
Each Fund/ Fund Type follows a specific set of rules regarding roll forward balances, how spendable balance is calculated, and whether or not Assignment and Transfer Journals are allowed. The Fund Balance Guide summarizes the rules for each.