Balances and Funds for Year-End Close

Manage Balances for Year-End

All final FY20 Available Balances (except A0000, A0018, and G0001/G0002 Funds) will roll into FY21 and become the FY21 Beginning Balance. In preparation for year end, departments should review Spendable Balances by Fund and Department. Review of Spendable Balances by Program is also recommended for those departments utilizing the Program ChartField to manage activities.

  •  Fund: Review Fund balances within your department and understand restrictions. Activity should be appropriate to the Fund source and in compliance with any donor restrictions.
  • Department: Review overall balances, revenues and expenses.
  • Program: While the University looks at the overall department balance, departments may monitor and track specific Program activities. The level of Program monitoring will depend on your department and on the individual for whom the report is being run.
  • Account: Ensure Accounts are as accurate as possible. Confirm that Accounts used in your department(s) enable you to manage and track revenues and expenses. Accounts are used to monitor compliance with Fund restrictions and aid in future budget development.
Image of the process to manage balances for year end close, as outlined on this page

Review Balances - Use Reports

  • Fund: Run Spendable Balance choosing Fund for first column to review Fund balances.  Focus on negative balances as these may include unexpected transactions that need to be investigated and corrected.
  • Fund Restrictions: Run Fund Restriction with Spendable Balance to review restrictions.
  • Department: Run Spendable Balance choosing Department for the first column to understand the fiscal health of your organization.
  • Program: If it is a practice to use Program to track activities in your department, run Spendable Balance choosing Program for the first column to review Program revenues and expenses.
  • To isolate negative balances for review, run the Spendable Balance report, and on the first prompt page, choose to display spendable balances less than zero.
  • Account: Run Revenue and Expense and/or Monthly Actuals to review Accounts to understand current and year-to-date revenues and expenses at a more detailed level.

Assess Balances

  • Understand your department’s overall negative balance management practices.
  • Determine negative balance cause(s).
  • Review Fund Balances
  • Review Fund Restrictions
  • Identify anticipated allocations
  • Determine whether unspent allocations will return to central department chartstring (e.g. No Program)

Address (Negative) Balances

  • Allocate additional monies and/or move expenses using the appropriate journal method.
  • Allocate unspent balances from specific programs back to central department balances.
  • Leave the negative balance and allocate additional monies in the next fiscal year.
  • Leave the negative balance with the knowledge that additional revenues are expected next fiscal year.

Understand Negative Balance Common Causes

  • Labor Accounting chartstring distribution defaults – In Labor Accounting the chartstring Fund distribution for some salaries is defaulted to A0000 or A0001. Any corrections, if necessary, must be made in Labor Accounting to move these expenses.
  • Departmental Charges and other Internal Service Charges are applied to the wrong chartstring.
  • Unanticipated overspend – Sometimes unanticipated expenses occur.
  • Annual allocation is fully expended and negative balances will be cleared with the next fiscal year's allocation.
  • Cross fiscal year activity – Sometimes expenses are incurred in the current fiscal year for the next fiscal year. For example, purchases made now for travel which will occur this summer (in FY21) may result in a negative balance until monies are received in the next fiscal year.
  • Transactions coded in error - a transaction was meant to post to Fund B1234, but instead posted to B1243. These transposition errors will create a negative balance, and should be easy to isolate and correct using the Spendable Balance report, displaying spendable balances less than zero to isolate negative balances.

Are Negative Balances Acceptable?

  • Negative balances can occur and may be acceptable depending on the Fund and departmental practices.
  • Recognize and take action when there are consistent negative balance issues on a particular chartstring.
  • In some cases, negative balances may be rolled to cover activities that cross fiscal years.
  • Negative balances may be rolled in anticipation of Fund allocations that will occur in the next fiscal year.
  • Negative balances do not need to be rolled as a method of tracking actuals for planning purposes. Clear negative balances and utilize Budget v. Actual reports to understand and analyze past expenditures.
  • Negative balances on Programs on the General Fund are permissible if the Department’s overall expense budget exceeds its actual expense total (positive budget-to-actual variance).

Clear Negative Balances If:

  • Negative balance is on Fund where it is not permissible at year end.
  • Negative balance is on a “one-time” Fund and no further revenue is expected.
  • Your department’s practice is to maintain Fund balances and clear negative balances.
  • Upon review of the overall chartstring combination and Fund restriction, expenses should be moved.
  • Additional spendable balance is available for allocation.

Roll Negative Balance If:

  • Additional monies are available or will be available, and will be allocated at the start of the next fiscal year (such as from new gift payments, additional endowment payout).
  • Transactions are properly recorded, but no additional monies are available. You have no choice but to roll the negative balance. These negative balances may still need to be addressed/managed in the new fiscal year.
  • Your department’s practice allows you to roll negative balances forward in certain situations and on certain chartstring combinations, such as for large, multi-year equipment payoffs.

Learn how to use journals to perform balance cleanup.