B013 FINANCIAL RECORDS SYSTEM (FRS)

U NIVERSITY OF M IAMI FINANCIAL POLICIES & PROCEDURES FINANCIAL RECORDS SYSTEM (FRS) B013 Revised 2/03 Reviewed 11/06 INTRODUCTION The University uses a computerized accounting system called the Financial Record System, known by the acronym FRS. FRS is comprised of a Financial Accounting application, an Accounts Payable Application, a Purchasing Application and a Payroll Application. All applications access common data base records and provide similar layouts for use by transactions. FRS is an on-line system that has flexible and comprehensive accounting. • General Ledger (assets, liabilities, fund balance) a. General Ledger Attributes b. General Ledger Dollar fields • Subsidiary Ledger (revenues and expenditures) a. Subsidiary Ledger Attributes b. Subsidiary Ledger Dollar fields • Open Commitment • Financial Accounting Batch • Direct Transactions • Financial Accounting Suspense This section is intended to explain the accounting principles and systems concepts that are embodied in FRS and consist of: • A statement of basic principles and concepts of the system. • A description of manuals available that provide accounting information. • An explanation of the computerized system as it relates to the flow of accounting information. • An explanation of the classification of information. • A discussion of the reports produced by the system. BASIC PRINCIPLES AND CONCEPTS OF THE SYSTEM The basic concept of FRS is to provide a unified system for financial management, which also serves all levels of operational management. A major objective of the system is the development of a primary and reliable source of financial data from which managerial determinations can be made. Specifically, the intent of the system is to provide: 1. Timely and comprehensive reports satisfying the operational needs of departments, and the informational needs of top-level management and the Board of Trustees. 2. Control of revenues, encumbrances and expenditures. 3. Accounting support of budget estimates. 4. An audit trail and a basis for verification of the accountability of persons administering University funds. 5. A means of accounting for certain individual transactions, such as encumbrances and vouchers payable. 1 of 11

6. A historical record of all financial transactions. The system establishes methods whereby expenditures of University funds and collections of University resources are recorded and reported in a manner that allows for fiduciary responsibility and effective resource control. There are a number of basic accounting and reporting principles, which are generally recognized as being essential to the effective administration of University fiscal affairs. The financial concept and system design used in FRS is based on these principles. The procedures, controls, and reports which comprise FRS, reflect the practical application of the theories from which these principles have been developed. FRS MANUALS AND DOCUMENTATION The University maintains the following manuals, which provide historical information: 1. The Financial Accounting System User's Manual*, which explains the accounting principles, and system concepts, which are embodied in FRS. 2. The User Manual of Operation*, which provides historical information necessary for the general use of the system by the Controller’s Office. 3. The Account Control and the Sub-Object Code Listing and Descriptions, which provides a list of account controls for use in coding assets, liabilities and fund balance and the sub-object codes for use in coding revenues and expenditures, and explains their proper usage. This listing is currently maintained on the Controller’s web site at http://www.miami.edu/controller under Accounting Information. *The appropriate detailed manual should be consulted either by Information Technology or by the Controller’s Office for answers to specific questions. CLASSIFICATION STRUCTURE The classification structure reflected in FRS is a hierarchy of general to specific classifications applied to every account number. These classifications are stored as attributes in the database and are assigned by the Controller’s Office to new accounts created in the FRS online system. The hierarchy levels are as follows: A. Fund Classification 1. Fund Groups (Primary Fund) – This 2-digit field identifies the fund in which the account and its corresponding activity are reflected. (A fund is an accounting entity with a self- balancing set of accounts consisting of assets, liabilities, a fund balance, revenues and expenditures. Separate accounts are maintained within each fund to insure observance of limitations and restrictions placed on use of resources. For internal reporting purposes, funds of similar characteristics are combined into fund groups). The University’s funds are: Current Funds • Unrestricted: 10 = General, 2x = Designated (where 21 is Medical, 22 is Coral Gables, RSMAS and South Campus, 23 is University of Miami Hospital and Clinics (also known as 2 of 11

UMHC), and 24 is Anne Bates Leach Eye Hospital (also known as ABLEH), • Restricted: 30 = Sponsored Programs, 40 = Restricted gifts – (Non sponsored), Funds Other Than Current 50 = Student Loans, 60 = Endowment and Similar (Permanent, Term, Quasi), 70 = Annuity and Life Income, 8x= Plant (where 81 is unexpended, 82 renewal and replacement, 83 retirement of indebtedness, and 84 net investment in plant), and 90 = Agency. See policy B010 for an explanation of each of the above fund groups. 2. Sub funds – This 2-digit field identifies logical and unique divisions within a Fund group. For example, the loan fund and the restricted sponsored fund have as additional identifiers sub fund designations, which indicate their funding source as either federal or non-federal funds; endowment accounts are identified as either permanent, term or quasi; and annuity is further identified as life income or annuity based on their sub fund designations. 3. Campus – This 2-digit field identifies the different campuses. The valid values are: 10 for Medical Campus, 20 for the RSMAS and Richmond Campuses, 30 for the Coral Gables Campus and 40 for South Campus. 4. Year End Processing – This 1-digit field determines whether the account will maintain its balance on a fiscal year or project year basis. Most accounts carry their balances on a fiscal year basis and will be coded with an “F” in the Year End Processing field. Other accounts, primarily sponsored programs, plant accounts (construction/renovation projects) and agency accounts, are coded with a “P” in the Year End Processing field, which indicates that the account will maintain balances in both, a fiscal year basis as well as a project year basis (i.e. balances will be tracked in FRS from the inception of the account). B. Object Classifications The FRS system uses a 4-digit field to identify a transaction as affecting an asset, liability, revenue, expense or fund balance (net asset for external reporting) item. If a transaction affects a part of the account’s balance sheet (statement of financial position), the 4-digit field is called an Account Control and has a G in front of the number. If a transaction affects a part of the account’s statement of activities (revenues, expenses and transfers), the 4-digit field is called a SubObject Code and has an S in front of the number. 1. Account Control – This 4 digit field allows the transaction to be coded to a specific asset, liability, or fund balance (called net asset for external reporting) group within an account. For example, 1321 represents accounts receivables, 2100 accounts payable, etc. For a list of valid account controls, please contact the General Accounting section of the Controller’s Office. Please note that in order to maintain the system in balance, FRS does not allow transactions to directly update cash or fund balance (net assets). When a transaction is processed, the FRS system itself automatically performs indirect updates to cash and net assets. There is, however, one type of transaction code that allows entries to directly affect cash and net assets. This type of transaction code, which is limited in use to the Controller’s Office, must be used with extreme care since it changes the fiscal year beginning balance of an account. 3 of 11

2. SubObject – This 4 digit field allows a transaction to be recorded in a specific revenue, expense or transfer group within an account. Revenue SubObject codes begin with digit 0, expense SubObjects begin with digits equal to 1 or higher, and transfer SubObjects begin with digit 7. For example, tuition and fees revenue SubObjects fall within the range of 0022 to 0100, salary expense falls within the range of 1000 to 1999, fringe benefits expense fall within the range of 2000 to 2999 and transfers fall within the range of 7000 to 7999. For a complete list of valid SubObject codes, please visit the Controller’s Office web page at http://www.miami.edu/controller and click on Accounting Information. C. Financial Classification Levels Financial classification codes allow expenditures to be grouped by function for internal as well as external financial reporting. Because financial classification is coded at the account level, all expenditures within an account are grouped within the same function. 1. Financial Classification Level I - This 2-digit field identifies the broad, general classification of operating expenses. The following categories are used: 50 = Educational and General Expenditures 60 = Auxiliary Enterprises Expenditures 70 = Hospitals and Clinics Expenditures 80 = Patient Care Expenditures (excludes hospitals and clinics) 2. Financial Classification Level II – This 2-digit field identifies the functional classification of operating expenditures which are ultimately grouped together to comprise the financial classification Level I totals. For example, “Instruction”, "Research", and "Academic Support" are Level II areas that ultimately roll up within Level I as "Educational and General Expenditures". The following are examples of different financial classification codes: instruction = 5010, public service = 5013, research = 5020, academic support = 5040, student services = 5050, institutional support = 5060, operations and maintenance of plant = 5070, and scholarships & fellowships = 5080. The first two digits of each of the codes = 50 and ultimately groups all of these expenses within Educational and General Expenditures. D. Organization Responsibility (Structured at four levels) 1. Division – This 2-digit field represents the highest level of organizational responsibility within the University. Examples are: 10 = President, 20 = Provost, 30 = Medical Affairs, 40 = Business and Finance, 50 = Advancement. 2. School – This 2-digit field represents each school or major subdivision of the University. 3. Department – This 5-digit field represents each department or center within each school or major subdivision of the University. A listing of Department numbers can be found on the Controller’s Office web page at http://www.miami.edu/controller and click on Accounting Information. 4. Subdepartment – This 2-digit field represents subdepartments or sections within a department. ACCOUNT NUMBERS A. Structure 4 of 11

Instead of requiring that each of the above classifications be separately and independently coded on each accounting transaction, FRS stores all of these classifications as attributes at the time of account creation. This is possible because the classification of items is pre- determined before an account is opened. The account number serves as the key to the on-line FRS screens. As account numbers are selected, the attributes are displayed on various screens. The account number structure is a 6-digit alphanumeric combination. Account numbers that begin with digit 0 are part of the balance sheet (general ledger in FRS terms) and account numbers that begin with digits other than 0 are part of the statement of activities (subsidiary ledger in FRS terms). Within the subsidiary ledger, the first digit of the account number represents the fund group designation. The next five digits identify the distinct account number. For example, an account that begins with digit 1 falls within fund group 10 (unrestricted). For the most part, there is a one-to-one relationship between a general ledger account and its subsidiary ledger account. There are some exceptions to this rule such as subsidiary ledger accounts used by ABLEH, all of which share only one general ledger account. The many subsidiary accounts to one general ledger account grouping is done through account mapping. Accounts consist of 6 digits and are classified as follows: Fund 1st digit of Account # 1st two digits of Acct. # Subsidiary Ledger General Ledger Unrestricted 10 1 01 Designated: 2x: Medical 21 3 02 Gables, Rsmas, 22 4 02 South Campus UMHC 23 5 02 (Other than 500xxx ABLEH 24 5 025000 (Must start with 500 Restricted – Sponsored 30 6 03 Restricted – gifts 40 7 04 Student Loans 50 28 05 Endowment 60 26 06 Annuity & Life Income 70 24 07 Plant: 8x: Unexpended resources 81 8 08 Renewals/repla 82 8 08 cements Retirement of 83 8 08 Indebtedness Net Investment in Plant 84 8 08 Agency 90 9 09 B. Authorization The Controller is responsible for opening all accounts and assigning all appropriate FRS system coding. The routing of account request forms is as follows: 5 of 11

• Endowment and annuity accounts must be submitted directly to the Treasurer’s Office • Student Loan accounts must be submitted directly to the Office of Student Accounts in Treasury Operations. • All Medical School accounts require the approval of the Medical Finance Office prior to submission to the Controller’s Office. • All other schools require the signature of the Dean or designee prior to submission to the Controller’s Office. • Requests for sponsored program accounts are directed to Sponsored Programs - Fiscal Management. • Requests for plant accounts for construction and renovation must be submitted by the Real Estate Office or by Facilities Administration (Medical or Gables). All account request forms must clearly indicate the purpose for which the account is to be used and the names being proposed as the authorized signers. Additional documentation, which will vary with the type of account, must accompany the request. Additionally, all account request forms must identify the funding source. All account requests must be approved by the Controller or designee before the account is created in FRS. PRINCIPAL FUNCTIONS OF THE COMPUTERIZED SYSTEM The computer programs that comprise the FRS package perform eight principal functions. This section describes each of these functions, the theory on which it is founded, and the mechanics of the processing flow. A. FRS input may be on either a Real Time (on-line) data entry basis or through information entered in a batch mode also called Data Collect mode. The University has elected a combination of processing modes, which use On-line Screens and Data Collect Screens. B. Account Maintenance: all FRS account attributes are processed on a real time basis and are maintained in specific FRS screens assigned to each subsidiary ledger account (revenue or expense) and the corresponding general ledger account (balance sheet account). Account flags are set to “on” or “off” through a batch mode (data collect). The account attributes must be updated before transactions can utilize the master file information and a transaction can be processed. Since the absence of required master file information will cause an accounting transaction to be rejected, the system automatically processes the day's account file maintenance before processing the accounting transactions. C. Table and Module Update: description translations and verifications of several FRS codes are modified through the use of Table and Module update procedures which are maintained by the Controller's Office. Translated codes include: 1. Sub-object 2. Account Control 3. Division 4. School 5. Department 6. Campus D. Transaction Processing: An accounting transaction is made up of several standard data elements, including: 6 of 11

1. Transaction Code – a 2-digit code that identifies whether the transaction is a cash receipt (30), cash disbursement (40), budget allocation (20), actual adjustment – journal entries (60), or an encumbrance application or liquidation (50). 2. Account Number (subsidiary ledger) - A 6-digit number. The first digit identifies the fund group and the remaining five digits correspond to the specific account number. 3. Account Number (general ledger) - A 6-digit number. The first digit is always 0. The last four digits correspond to the specific account number. 4. Sub-object code - A 4-digit numeric account suffix used if the transaction affects revenue or expenditure (including transfers). A subobject code is attached to a subsidiary ledger account number in order to process a transaction. 5. Account Control - A 4-four digit numeric account suffix used if the transaction affects an asset, liability or fund balance addition/deduction. An account control is attached to a general ledger account number in order to process a transaction. 6. Reference Number 1 - identifies the source document of the transaction, such as a purchase order or check requisition number. It can also be used to reference check numbers or other source documents. 7. Date - if left blank, defaults to actual input date. 8. Description – of the transaction 9. Dollar amount 10. Reference Number 2 - provides additional information to help identify the nature of a transaction - can be used to refer to a previously entered document, which is to be retrieved for use in the current transaction. 11. Batch Reference number – 6-digit alphanumeric field that identifies the originator of the transaction. The first three digits are alpha characters, which correspond to an individual's initials or to a subsystem interface. The last three digits are numeric and are assigned by the originator to identify the specific transaction. 12. Bank number – identifies the specific University bank account used when a cash disbursement or cash receipt is involved. Transactions that successfully go through the system “edit processing” phase proceed to the “update phase” where each transaction is posted to the accounting files. E. Transactions that reject from the “update phase” are posted to a suspense account and a “Suspense Report Listing” is generated. . The report identifies the error with an asterisk and can be corrected on-line or through data collect batching depending on the specific transaction code used. Corrected transactions entered on-line are immediately processed. For corrections processed via data collect, the correcting batch is processed through the FRS “edit processing” phase. Correcting transactions appear in the suspense report listing generated from the next day's update, and are marked "DEL". Rejected transactions that have not been corrected are marked "OLD", and new rejected transactions that result from the latest update are marked "NEW". All rejected transactions appear in the suspense listing except for encumbrance transactions, which appear in a report titled "Error Messages from the Daily Update". If no 7 of 11

errors are present, update will occur in the normal fashion and no transactions will appear on the Error Message report. F. Collector: Several specialized automated accounting subsystems exist outside of FRS in order to perform particular accounting tasks, such as the computation of payroll. These subsystems typically handle a high volume of detailed data. Such subsystem data is gathered in the "Collector" where the accounting transactions are automatically interfaced with FRS. FRS subsystems and the frequency of their interface with FRS are presented below: • Payroll (each pay period) • Payroll Encumbrances (each pay period) • Payroll Earnings Reports – Labor distribution (monthly) • DE/GA Check Writer – check requisitions, reimbursements (BERFs) (daily) • Accounts Payable – invoice processing (daily) and check writing (twice a week) • Purchasing – encumbrance processing (daily) • Encumbrance Liquidation for Accounts Payable * (daily) • Accounts Receivable (daily) - includes parking, financial aid, student loan information, cash receipts information, and miscellaneous receivables. • Accounts Receivable (daily) – interface from IDX patient receivable system • Sponsored Program Receivable * (monthly) • Alumni/Development-gift processing (daily) • Overhead on sponsored programs * (twice a month) • Centrex – telephone bills (monthly) • Work Order System – operations and maintenance of buildings (monthly) • Duplicating - departmental copy machines and copy centers (bi-weekly or upon request) • Computer Billing (monthly) • Student Activity Fee Distribution (monthly) • Budget Roll Over for new fiscal year (annual) • Effort Reporting * (monthly) • Property Control * (monthly) * Data for these subsystems is furnished by FRS or other subsystems. All other subsystems noted furnish the data to FRS. G. Reporting: FRS reports are based on the accounting files created during the “update phase” of processing. Only valid transactions are posted to FRS, and posting can occur at any time during the month when. A job number identifies each report in the system. A report request identifying the job number tells the system which reports are to be produced. Relevant data is extracted from the accounting files based upon predefined report requests. The data is then sorted, summarized and all reports are printed and at the same time placed in an online Report Distribution System (RDS). H. Month and Year-End Rollover: Through the system option of dual processing, FRS has the ability to accept and post transactions to two different fiscal months at the same time. At each month end and year-end, the FRS data files are purged of transaction records and dollar accumulators for the "current" month's activity and the "next" month's activity is shifted and becomes the new "current" month. 8 of 11

REPORTS A. Introduction FRS provides many different styles and formats for reports. These can be grouped into four general types: 1. Control Reports: Daily and monthly reports used internally by the Controller's Office to analyze and ensure the FRS system is in balance. 2. Report 90: Monthly account statements provided to the authorized signer for reconciliation of individual accounts. 3. Department Trial Balances: Monthly reports provided to departments for analysis of account groups. 4. Ad-hoc Reports: On request, reports to meet specific needs of users. Although there may be some overlap in the report groupings noted, the above information reflects the principal intent of each report. Please see a detailed description of each type of report that follows: B. Detailed Descriptions of Report Types I. Control Reports. Control reports can be categorized as either a daily report or a monthly report. 1. Daily Reports: These reports are produced by FRS during the daily cycle and are collectively referred to as an "update". Each update is numbered and distributed among Controller's Office staff for review and analysis and system balancing. a. Error Messages from Daily Update b. Data Collector c. Indirect Updates to the general ledger d. Transaction Extract e. Daily Suspense Listing f. Daily On-line Transcript g. Daily Cash Receipts Listing h. Daily Cash Disbursements Listing i. Bank Account Balances j. Summary of Account Controls k. Description Load Program 2. Monthly Reports are produced by FRS during the month-end cycle. A copy of each of these reports is bound and kept in the Controller's Office for use by authorized personnel. a. Dollar summary of changes by Fund by Account Control b. Dollar summary of changes by Account Control by Fund c. Dollars in the General Ledger by Account Control d. Sub-code Summary Audit Report e. Cash Report by Bank f. General Ledger Fund Group Summary g. Subsidiary Ledger dollar summary 9 of 11

h. Open Commitment Status i. Chart of Accounts j. Principal Interest and Transfer MTD k. Principal Interest and Transfers YTD l. Deposit Report Reconciliation The above-named reports constitute a complete set of general and subsidiary records and provide the basis for the preparation of audited financial statements. II. Report 90 Report 90 is an account statement produced by FRS during the month-end cycle. Paper copies of report 90s are distributed by the Controller’s Office to departments who are not yet registered on the Report Distribution System (RDS). Otherwise, Report 90s are automatically added to RDS and can be viewed on-line by all departments with access to this on-line viewing system. Each Report 90 consists of three reports: 1. Account Statement in Whole Dollars: provides a year-to-date summary by subobject for the individual account. The report provides information for Budget, Actual, and Open Commitments. A Balance Available is shown to indicate the account's current position. 2. Open Commitments Status: provides a listing of each individual encumbrance currently outstanding against the account. 3. Report of Transactions: provides a detail listing of all transactions posted against the account for the current reporting period. The transaction listing includes the Batch Reference, which provides an audit trail to the source of the transaction. The Batch Reference listing is available on the Controller’s Office web page at http://www.miami.edu/controller. FRS users may view the information provided by the above reports on-line at any time. Forms to obtain access to view FRS on-line can be found on the Controller's Office web page. III. Department Trial Balances FRS provides these reports to University management for use in analysis of its resources. There are several versions of the Trial Balances, which are listed below: 1. Department Trial Balance Sorted by Division/School 2. Department Trial Balance - Balance Forward 3. Deficit Trial Balance 4. Revenue Trial Balance by Subobject 5. Department Trial Balance by Fund 6. Revenue Trial Balance by Division/School 7. Expense Trial Balance by Division/School 8. Department Trial Balance by Revenue/Expense 9. Medical Trial Balance by Authorized Signer 10. Department Expenditures by Signer 11. Revenue by Source of Funds 12. Expenditures by Source of Funds 10 of 11

13. Summary of Sub-Object Expense 14. Department Sub-Object Expenditures All of the trial balance reports follow the same general format. Expenditures to Date and Outstanding Encumbrances are compared with the Revised Budget and an Available Balance is computed. IV. Ad-Hoc Reports These on-request reports supplement the production FRS reports through the use of two distinct report generators: 1. FBM070, a matrix style report writer, which can generate many styles of reports including roll ups. These reports are designed and run by the Controller's Office through the use of parameter cards and a Report Description File. 2. Culprit, a flexible report writer, which runs against flat files extracted from the FRS database and used for reporting purposes. As with the FBM070, these reports are also designed and run by the Controller's Office for use in audits of FRS data. DEPARTMENTAL MANAGEMENT ACCOUNTING SYSTEM (DMAS) An FRS web front end is available to provide more flexibility and additional historical information. The web system known as DMAS provides financial information at the summary level with drill down capabilities to transactions for a period of up to 10 years. The FRS access form also gives access to DMAS and uses the same security. The form can be found in the Controller’s Office website at http://www.miami.edu/controller and click on Forms. 11 of 11

B013 FINANCIAL RECORDS SYSTEM (FRS)

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