Balances and Funds for Year-End Close

Manage Balances for Year-End

All final FY21 unencumbered balances (except Funds A0000, A0018, and G0001/G0002) will roll into FY22 and become the FY22 beginning balance in the same Department-Fund-Program charstring.

In preparation for the fiscal year closing, financial managers should review Spendable Balances by Fund and Department. Review of Spendable Balances by Program is also recommended for those organizations that utilize the Program ChartField to manage activities.

  •  Fund: Review Fund balances within your organization. Activity should be appropriate to the Fund source and in compliance with donor restrictions. Wherever possible, charge the most restricted source first, to help ensure that donor funds are utilized in advance of stewardship reporting of these sources.
  • Department: Review overall balances, revenues and expenses.
  • Program: While the University looks at the overall organization balance, specific Programs may also be used to monitor and track activities. The level of Program monitoring will depend on your organization and on the individual for whom the report is being run.
  • Account: Ensure Accounts are as accurate as possible. Confirm that Accounts enable you to manage and track revenues and expenses. Accounts are used to monitor compliance with Fund restrictions and aid in future budget development.
Process to review funds, 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 organization, 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 the main department chartstring for the given Fund (e.g. No Program)

Address (Negative) Balances

  • Allocate additional monies and/or move expenses using the appropriate Prime Journal.
  • Allocate unspent balances from specific Programs back to the main chartstring for the selected Fund.
  • Leave the negative balance and allocate additional monies 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.
  • Outdated or incorrect chargeout strings - Departmental Charges and other Internal Service Charges are applied to the wrong chartstring.
  • Unanticipated overspend – Sometimes unanticipated expenses occur. Move overruns to another source.
  • Planned overspend - Annual allocation is fully expended and negative balances will be cleared with the next fiscal year's allocation/payout, as part of a plan to spread large costs across several fiscal years.
  • Cross fiscal year activity – Sometimes expenses are incurred late in the current fiscal year for activities in 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.

Are Negative Balances Acceptable?

  • Negative balances can occur and may be acceptable depending on the Fund and organization 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 organization’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.