Lecture 3b: Acquisitions Funds, Budgets, and Accounting


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Collection Development portion of course offered in Nov-Dec 2005 at Temasek Polytechnic, Singapore

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  • Lecture 3b: Acquisitions Funds, Budgets, and Accounting

    1. 1. Lecture 3b: ACQ Funds, Budgets, and Accounting Development and Management of Collections
    2. 2. ACQ Funds, Budgets, and Accounting <ul><li>Objective: To understand the sources of ACQ funds and how the funds are allocated, expended, and accounted for </li></ul><ul><li>Coverage: </li></ul><ul><li>Sources of ACQ Funds </li></ul><ul><li>ACQ Budgets </li></ul><ul><li>Accounting </li></ul>
    3. 3. 1. Sources of ACQ Funds <ul><li>Appropriations </li></ul><ul><ul><li>Funds from parent organization </li></ul></ul><ul><ul><li>On-going expenditure – annual </li></ul></ul><ul><li>Gifts </li></ul><ul><ul><li>Endowments from foundations or wealthy organizations </li></ul></ul><ul><li>Grants </li></ul><ul><ul><li>Additional funds from parent organization or other sources </li></ul></ul><ul><ul><li>“ Development” budget </li></ul></ul><ul><li>Others </li></ul><ul><ul><li>Revenues, such as fees & charges, fines, etc. </li></ul></ul>
    4. 4. Basic terminology & elements <ul><li>Budget </li></ul><ul><li>Funds </li></ul><ul><li>Vote </li></ul><ul><ul><li>Recurrent Vote </li></ul></ul><ul><ul><li>Development Vote </li></ul></ul><ul><li>Encumbrances or Commitment </li></ul><ul><li>Unencumbered </li></ul><ul><li>Expenditure </li></ul><ul><li>Pre-payments </li></ul>
    5. 5. Basic terminology & elements <ul><li>Month to Date (1/9/04 to 31/9/04) </li></ul><ul><li>Year to Date (1/1/03 to 31/12/03) </li></ul><ul><li>Projection </li></ul><ul><li>Price is the list price of an individual item </li></ul><ul><li>Cash balance = Allocation – Expenditure </li></ul><ul><li>Free balance (Estimated balance) = Actual balance – Encumbrance </li></ul>
    6. 6. 2. ACQ Budgets <ul><li>Who prepares/authorizes? </li></ul><ul><ul><li>ACQ / Collection Development Librarians </li></ul></ul><ul><ul><li>Library Director </li></ul></ul><ul><ul><li>CEO / Finance Director </li></ul></ul><ul><li>Factors to consider when planning for the budget: </li></ul><ul><ul><li>Monographic resources vs continuing resources </li></ul></ul><ul><ul><li>Base budget = total amount paid in previous year less cancellations and cessations </li></ul></ul><ul><ul><li>Estimated inflation rate = estimate dollar amount required to meet inflation </li></ul></ul><ul><ul><li>Foreign currency fluctuations = difficult to predict </li></ul></ul><ul><ul><li>Source of funds – on-going or short-term </li></ul></ul><ul><ul><li>Non-print resources vs equipment to view/read such resources </li></ul></ul>
    7. 7. 2a. ACQ Budgets <ul><li>Organization of a budget </li></ul><ul><ul><li>Types of resources purchased </li></ul></ul><ul><ul><li>Subject disciplines </li></ul></ul><ul><ul><li>Library programmes </li></ul></ul><ul><ul><li>Languages </li></ul></ul><ul><li>Allocation methods </li></ul><ul><ul><li>Budget structure </li></ul></ul><ul><ul><li>Monographic resources vs continuing resources </li></ul></ul><ul><ul><li>Collection development policy/goals </li></ul></ul><ul><ul><li>User demographics </li></ul></ul>
    8. 8. 2a. ACQ Budgets <ul><li>Establishing a budget </li></ul><ul><ul><li>Create funds based on the budget structure </li></ul></ul><ul><ul><li>Allocate budget to each fund </li></ul></ul><ul><ul><li>Assign appropriate funds to each title purchased </li></ul></ul><ul><ul><li>Record all transactions accurately </li></ul></ul><ul><li>Adjustments/revisions </li></ul><ul><ul><li>Monitor encumbrances and expenditure regularly to ensure proper control </li></ul></ul><ul><ul><ul><li>do not overspend or underspend the allocation </li></ul></ul></ul><ul><ul><ul><li>“ equitable” expenditure across all funds </li></ul></ul></ul><ul><ul><li>Adjust spending, where possible </li></ul></ul><ul><ul><li>Revise allocation, when needed </li></ul></ul>
    9. 9. 3. Accounting <ul><li>Functions/Purposes </li></ul><ul><li>Procedures </li></ul><ul><li>Monitoring/reporting methods </li></ul><ul><li>Auditing requirements </li></ul>
    10. 10. What is Accounting? <ul><li>About people & businesses </li></ul><ul><li>About recording of data </li></ul><ul><ul><li>Keep all details of business transactions such as cash received; cash paid out; goods bought & sold; equipment bought for office use; etc. </li></ul></ul><ul><li>About classifying & summarising </li></ul><ul><ul><li>Data has to be sorted out in order to be useful to the business. It has to summarise how much profit or loss has been made during a particular period </li></ul></ul><ul><li>About communicating information </li></ul><ul><ul><li>Interpret what has been learned from the summarised data. Is the business performing well financially? </li></ul></ul>
    11. 11. Fund accounting <ul><li>Allocation </li></ul><ul><ul><li>How much money is there to spend? </li></ul></ul><ul><li>Encumbrance </li></ul><ul><ul><li>How much will a purchase probably cost? </li></ul></ul><ul><li>Payment </li></ul><ul><ul><li>How much is actually spent? </li></ul></ul><ul><li>Balance </li></ul><ul><ul><li>How much money is left? </li></ul></ul>
    12. 12. Importance of fund accounting <ul><li>Be accountable for the expenditure of all received funds </li></ul><ul><li>To monitor expenditure throughout the year & avoid over/under spending </li></ul><ul><li>Provide timely & specific information of the fiscal situation of the organisation </li></ul><ul><li>As a basis for budgetary planning </li></ul><ul><li>To prepare for financial audit </li></ul><ul><li>To pay creditors promptly, accurately & maintain good PR </li></ul>
    13. 13. Invoices <ul><li>Documents issued by vendors that contain all financial details of a purchase/transaction </li></ul><ul><li>Easier to handle smaller number of invoices from agents than numerous invoices from publishers </li></ul><ul><li>Discounts, handling charges, shipping fees will appear </li></ul><ul><li>Major international agents are offering on-line invoices </li></ul><ul><li>Invoices could be on tape for direct input into the local system </li></ul><ul><li>Have to be thoroughly checked before they can be approved for payments </li></ul><ul><li>Late charges apply if payment after due date </li></ul>
    14. 14. Checking invoices <ul><li>Date stamp invoice upon receipt of shipment </li></ul><ul><li>Check items listed against items received </li></ul><ul><li>Check items listed against original order records/PO </li></ul><ul><li>Resolve discrepancies with vendors </li></ul><ul><li>Note PO # & fund to be charged </li></ul><ul><li>Note vendor # </li></ul><ul><li>Approve – initial & date </li></ul>
    15. 15. Invoice payments <ul><li>Send original copy of approved invoice to finance section </li></ul><ul><li>Keep duplicate invoice in files for future reference by auditors </li></ul><ul><li>File by vendor & invoice date </li></ul>
    16. 16. Vouchers <ul><li>It is an internal accounting document issued by library to authorise finance section to disburse cash to pay the invoice </li></ul><ul><li>It is forwarded together with the approved invoice </li></ul><ul><li>Information found on vouchers are </li></ul><ul><ul><li>Name & address to which the cheque is to be issued </li></ul></ul><ul><ul><li>Invoice number, date, & exact amt in local currency </li></ul></ul><ul><ul><li>Details of the purchased items </li></ul></ul><ul><ul><li>Authorised signature </li></ul></ul>
    17. 17. Credit Memos/Notes <ul><li>A document issued by vendors & used to offset/contra an amt or portion of an outstanding invoice from the same vendor </li></ul><ul><li>A document used in place of a cash or cheque refund over an acceptable time period </li></ul><ul><li>Amount of money received should go back to the fund from which the original payment was made </li></ul>
    18. 18. Statements <ul><li>A document from vendor containing information such as paid invoice, outstanding invoice, credit memos </li></ul><ul><li>It is issued regularly, monthly or quarterly </li></ul><ul><li>It is also known as Vendor’s Statements </li></ul><ul><li>Discrepancies between statements & library internal accounts/records are common </li></ul><ul><ul><li>Payments processed but vendor yet to receive by the time the statement is generated </li></ul></ul><ul><li>ACQ staff have to verify accurateness of each statement received </li></ul>
    19. 19. Typical problems in fund accounting <ul><li>Different vendor name on invoice & cheque </li></ul><ul><li>Inconsistencies in amounts on invoice, cheque & voucher </li></ul><ul><li>Incorrect fund account/class used </li></ul><ul><li>No invoice, no payment records but voucher available </li></ul>
    20. 20. Some solutions <ul><li>Check all files </li></ul><ul><li>Check system </li></ul><ul><li>Check with finance department </li></ul><ul><li>Check with vendors </li></ul>
    21. 21. FY-end Processing <ul><li>Annual budget </li></ul><ul><ul><li>Creation of new budgets </li></ul></ul><ul><ul><li>Encumbering of outstanding orders </li></ul></ul><ul><ul><li>Serial/Standing orders </li></ul></ul><ul><li>Project/development budget </li></ul><ul><ul><li>Span across FY </li></ul></ul><ul><ul><li>Carry forward balance </li></ul></ul>