Balances and Funds for Year-End Close

Manage Balances for Year-End

All final FY22 unencumbered balances (except Funds A0000, A0018, and G0001/G0002) will roll into FY23 and become the FY23 beginning balance in the same Department-Fund-Program chartstring.

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 use 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 gift funds first, to help ensure that they are used so that stewardship reporting to donors carries the good news that their contributions are supporting intended purposes.Link to guidelines
  • Department: Review overall balances, revenues, and expenses.
  • Program: While the University looks at the overall organizational balances by Fund, specific Programs may also be used to monitor and track activities. The level of Program monitoring will depend on your organization and/or on the individual for whom the report is being run (e.g., research balances held in a faculty member’s Program).
  • Account: Ensure Accounts are as accurate as possible. Accounts should enable you to manage and track revenues and expenses. Accounts are used to monitor compliance with Fund restrictions, aid in future budget development, are the most reliable way of tracking sources and uses, and are a critical ChartField in preparation of university financial statements.
Manage Balances Review Funds & Review Restrictions

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 or overspending that needs to be investigated and corrected.
  • Fund Restrictions: Run “Fund Restriction with Spendable Balance” to review restrictions and ensure that expenses are compatible with restrictions that donors have placed on these Funds.
  • Department: Run “Spendable Balance,” choosing Department for the first column to understand the fiscal health of your organization, and that balances are reasonable to expectations.
  • 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. In some cases, year-end fund assignments to clear deficits at the Program level may be helpful in your long-run management of the fund, and to reduce “noise” on the report.
  • Isolate negative balances:  Run “Spendable Balance,” selecting “display spendable balance--less than zero.” Assess and address expenses that may need to be moved in order to avoid a deficit at the Fund level.
  • 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.
Manage Balances by running spendable balance report to review balances.

To review Account activity at a more detailed level, run the “Revenue and Expense” and/or “Monthly Actuals” Reports. As a multi-year report, “Monthly Actuals” is particularly helpful in spotting cases where unusual entries may have occurred and need investigation. Focus on current and year-to-date Account activity to ensure it is reasonable to expectations.

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” chartstring)

Address (Negative) Balances

  • Allocate additional assignments and/or move expenses using the appropriate Prime Journal; or
  • Allocate unspent balances from specific Programs back to the main chartstring for the selected Fund; or
  • Leave the negative balance and make new funding assignments in the next fiscal year.
  • Leave the negative balance if you know that additional revenues (such as pledged gifts, new endowment distributions) are expected in the next fiscal year.

Understand Negative Balance Common Causes

  • Labor Accounting chartstring distribution defaults – In Labor Accounting, the chartstring Fund distribution for some salaries defaults to A0000 or A0001, depending on the department type. Some research staff are placed on A0014, pending sponsored research or internal fund allocations. Move staff to appropriate Fund sources, if they have become available. Any corrections, if necessary, must be made in Labor Accounting to move these personnel expenses.
  • Outdated or incorrect chargeout chartstrings – Departmental Charges and other Internal Service Charges are applied to the wrong chartstring or ones no longer in use.
  • 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 FY22) may result in a negative balance at the end of one year, before funding is received in the next fiscal year.
  • Transactions coded in error – for example, a transaction was meant to post to Fund B1234, but instead posted to B1243. These transposition errors will create a negative balance; they are easy to isolate and identify 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. For example, if too many salaries are charged to a Fund relative to its normal inflow, move some in Labor Accounting to other appropriate Funds.
  • 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 on Programs within the General Fund (A0000) are permissible if the Department’s overall expense budget is greater than the actual expense total (positive budget-to-actual variance).

Clear Negative Balances If:

  • Negative balance is on a Fund where it is not permissible at year end (e.g., the General Fund for administrative departments).
  • Negative balance is on a “one-time” Fund and no further revenue is expected (e.g., an expendable gift Fund that does not have more expected receipts).
  • 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 on the same Fund (e.g., assigning from “No Program” to Programs that have deficits).

Roll Negative Balance If:

  • Additional monies are/ will be available, and 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 revenues/assignments are available. If you cannot immediately find another Fund to which the expense overrun can be moved, you may have no choice but to roll the negative balance until it can be resolved later. These negative balances may still need to be addressed/managed in the new fiscal year. Still, best practice is to clear such deficits in the same fiscal year, rather than trying to clear them up in a subsequent year, wherever possible.
  • 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.