Cambridgeshire County Council Accounts Database Training Materials

Month end Processes

Part 4 Journals

Cambridgeshire

Part 4 Journals

Journals, Virements and Reprofiling

Virements and Re-profiling

Journals

Journal Naming Protocol

A note on summary accounts and detailed accounts

Before entering a journal

Actual Journals on-line

Month end Processes

Part 4 Journals

Journals, Virements and Reprofiling

Journals are required where elements of expenditure or income have been
miscoded, and without recoding them there will either be difficulty in reconciling
management information, or a material misstatement of the financial end of year
accounts.

Virements and Re-profiling

A virement is a movement in the balanced budget: the council works to a fixed
budget each financial year which is fully allocated at the start of the year. Therefore
no additional expenditure can be approved without a planned cutback/
retrenchment elsewhere. And, this has to be within the overall revenue budget, or
within the council's usable savings: there can be no cross-fertilisation between
revenue and capital, or revenue and earmarked savings. This is different to the
private sector where budgets are frequently flexed each quarter, and this may be
upward or downward with no matching change in other expenditure or income
budgets.

The aim of virement is:

• To show how you intend to react to budget pressures

• To show the financial impact of any service changes you might make

• To reset the targets for yourself
DO NOT:

• Vire every month just to hide problems

A reprofiling is a shift in the expected timing of the budget, the total of which will not change.

The budget should not be re-profiled unless:

• There is a change in policy

• There is a large amount of expenditure that has been profiled incorrectly
Virement and reprofiling should be a financial expression of the management actions
undertaken, not an end in themselves.

Journals

In general, in an integrated system like the eBusiness Suite, it is a bad idea to do
journals in the general ledger if they relate to items that have originated in sub-
ledgers (i.e. Payroll, Purchasing, Accounts Payable or Accounts Receivable).

The reasons for this are:

• Loss of audit trail: the entry in the sub-ledger has been approved on a certain
code if this code is then changed the approval could be said to be removed,
consistent recoding therefore questions the value of approvals;

• The value of reports from the sub-ledgers, which is why we enter such
detail into them, is reduced, thus negating the point of having them;

• The sub ledgers and general ledger become irreconcilable. This can lead
to a loss of overall financial control;

• Journals take time (a valuable resource): clearly therefore you need to
make sure that the journal is adding value;

• Adjusting journals which are done as actuals, when the item they seek to
adjust is a commitment, leads to problems reconciling the cashbook and
key control accounts.

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Month end Processes

Part 4 Journals

Journals for items originating in the Payroll, Projects or Property modules must always
be actioned in these modules. This will ensure that these modules remain accurate and
ensure that financial control can be maintained.

By far the best solution is to always get things right at the start of the process:

• If things are set-up wrong, i.e. a particular expenditure type is not available to
pick on a projects order, or there isn't a purchasing category to select the right
subjective code for in purchasing, then this can be solved by raising the issue
with the appropriate helpdesk.

• There is never an excuse to get certification slip invoices wrongly coded as the
certification slip occurs at the same time as payment: if you don't know where
something will be funded from by the time the invoice arrives, then this brings
into question general financial control in the team.

However amendments can be actioned, but how the correction is undertaken will
depend on where the item is in the system, for example:

• Purchase order commitments are shown in the general ledger: if a commitment is
on the wrong code, ask the Procure to Pay team to recode the item. It will then
have to be re-approved, but this is entirely appropriate.

• If a miscode hasn't been spotted by the time a GRN goes against the order, then
it can be a longwinded process to get it right (reversing GRN, changing order, re-
approving order, re-entering GRN). Sometimes in these circumstances a general
ledger journal may be the best approach.

• Payroll errors must be reported back to your HR adviser for correction and to
your financial adviser for information- never journal payroll costs yourself. HR
will backdate the change to the correct point in time which will automatically
create a journal in GL the next time the payroll is run. The information required
(by the 6 th of the month) is:

o Group no. ie 999

o Employee no. ie 876333

o Job No. ie 2

o % code split - ie 50% H666000 01 200 000, 50% H667000 01 200 000.

The purpose of a subjective code is to describe what is being bought, at a reasonable
level of detail sufficient to deliver internal management information and external
reporting requirements. Subjective codes are not intended to describe why expenditure
is being made: that is the role of the objective. If subjective codes, as they stand, do not
allow you to adequately manage your budgets, talk to your financial adviser about using
additional cost centres / the objective code as a means of making your financial reports
more relevant without the use of journals.

Remember that Cambridgeshire set-up the eBusiness Suite coding, so almost
every link between something you pick from a list and an account code that it
generates can be changed. This doesn't mean to say it's quick or easy however.

©Cambridgeshire County Council V. 1 .0

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Month end Processes

Part 4 Journals

Journal Naming Protocol

When entering a journal or interpreting one that someone else has entered, it is
important to understand and apply the protocol as follows:

Example: AK322 130404 CodeCor 9

a b c d

a) User ID of person entering journal.

To look up the name, in Outlook;

o Go to Inbox
o Select NEW

o Key in the user id in the To 5 field
o Press tab

o The user name will appear. You can then either call the user or email to
get the required details about the journal posted.

b) Date in format DDMMYY

c) Reason Code:

Intlnv = internal invoice ResCr = Reserved Creditor Misc = miscellaneous

CodeCor = code ResDr = Reserved Debtor Pay = payroll

correction

IntRech = internal ErrJT = error on journal FundAII = funding

recharge transfer allocation

d) Consecutive journal number that day
Line Description

Example: Internal Invoice 52534, 1st Aid course, held 23-26 Mar 04.

Contact Jane Smith ext 7379, Health & Safety.

This should include any relevant reference information, the date / period, and a contact
number of a person who can immediately explain the reason and basis of the charge
(i.e. not just the person entering the journal).

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Month end Processes

Part 4 Journals

A note on summary accounts and detailed accounts:

One summary account template is set up in Cambridgeshire: Cost Centre Total. This
summarises, for each combination of cost centre, objective and project group code, the
expenditure and income into 10 categories. Example:

Cost Centres used Subjectives used

S245000

{01200, 21300, 30000, 30100, }
{40050, 43000, 81000, 90220}

Summary Accounts that would be seen

2

S245000

3

4

8

y

S01

0000

1 S20

4540 P

T

T

Objectives Project Group
{S01 , S20} {4540}

i.e. S245000-0-S01-0000-T-T, S245000-8-S20-0000-T-T,

S245000-8-S01 -4540-T-T
Selecting the account:

When you tab / use the mouse to select the first line in the "Accounts" area of the
screen, a pop-up appears:

EE Find Accounts Y//// r

Cost Centre G150000
Subjective
Objective
Project Group
Balancing
Spare

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Month end Processes Part 4 Journals

You can either enter the data here if you know it (this speeds things up) or select
from the drop-down menu (the three dots). If you leave a field blank, everything
will be brought back, so if you want to see everything on your cost centre, simply
type that into the cost centre field and select OK.

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Month end Processes

Part 4 Journals

Before entering a journal

Checklist:

• Provide a spreadsheet, give it a working paper reference, print the working paper
and ensure that this is kept in a cross-referenced file for audit review

• Ensure you follow the journal naming protocol

• In case of complex calculations, get someone else to check your working papers
before continuing

• Where journals are required outside your range of codes, create a spreadsheet
working paper and send this to your financial adviser for their action.

Suggested working paper layout:

Although it is not a formal requirement to keep journal working papers, nor to get
journals approved before / after they are actioned, it is best practice to do so, and the
following layout ensures:

• Easy cross-reference to information used to create the journal

• Something for the budget holder to review, so they can see where errors are

occurring and at what rate

JOURNAL WORKING PAPER

Cause of error

1

Original order coded wrong

2

Code not available attir

Tie of expend / income
m financial years

Financial Year

3

Change of code betwee

Month

4

Recode to maximise grant income

5

Internal charge made to wrong code

Purpose of journal

Journal done by

Journal name

ORIGINAL JOURNAL REF

SUBLEDGER DETAILS

Item (journal line)

Original accounting code

Amount

GL journal batch

GL line number

Date

Order /AR/AP

Supplier / Debtor / Internal ref

New Accounting Code

Cause of error

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Where the journal >£1000, Budgetholder should sign either before or immediately after journal is done

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Month end Processes

Part 4 Journals

Actual Journals on-line

From the Main Menu, choose Actual Journal:

Every journal has to be assigned to a batch, so the first step is to enter a New Batch.
Although the following screen is headed "Find Journals", it can also be used to enter
new journals and batches, so select New Batch:

£=Find Journals '///////////////////////////////////////////////////. _!? 71 X

NB if you have no reason to want to enter a specific Batch Name and Description, or
are only entering one journal, then just select New Journal at this point.

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Month end Processes

Part 4 Journals

The fol lowing screen is dis played

Check the
month: you
can only
enter journals
to current or
future months

DOUBLE-
CHECK YOU
ARE USING
THE RIGHT
BALANCE
TYPE, IE
ACTUAL

Batch (Cambs Set of Books) V////^

Accept
defaults

Enter an optional Batch name and Description to identify the batch on general ledger
and journal entry reports. You cannot have duplicate batch names in the same
accounting period, but you can reuse Description

If you do not enter a batch name, General Ledger will create a default name from
the source, combined with a unique batch ID and the system date. Description
would be blank.

Enter an optional Control Total if you want to verify the total debits for your journal
batch against the batch control total. You can also enter a control total at the journal
entry level.

Choose Journals to start adding a New Journal to the batch

NB If you entered a period at the batch level, you must use the same period for each
journal entry in the batch.

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Month end Processes

Part 4 Journals

Completing the Journal screen
The initial screen:

Journals (Cambs Set of Books) - [New] yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy

Period

Line Account

Acct Desc

More Details

ate
rce
get

27-APR-2005

Manual

Debit (GBP)

GBP

27.APR.2005

User

1

I*

Credit (GBP) Description

The yellow and white fields are the ones to complete:

Journal (ie
journal name)

Complete as per the journal naming protocol

Category

Choose one from Adjustment (adjusting journal entry),
Internal Charge (for internal trading), and Miscellaneous. Do
not use categories freely as some are retained for specific
use, and using them wrongly can create central reconciliation
problems.

Description

Be as complete in this field as possible, in order to reduce
further queries. Use working paper cross-references. If
referring to an individual, give their full phone number. See
the journal naming protocol for more.

Control Total

Leave blank

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Month end Processes

Part 4 Journals

Line:

Line number

you

Cost Code

Type a 1 into the first line, then all other lines will be numbered for
Use the popup box (below) to select cost codes.

[Accounting Flexfield

You can only use codes that relate to your responsibility and budget organisation

If using a new or unfamiliar combination also use the Combinations button to check it is
active before you proceed: enter a cost centre or subjective segment value then click
combinations. The form will go blue, then click OK, select any line to use the whole
code combination.

Accounting Flexfield

L310001%

OK

Cancel

Find

Cost Centre

Subjective

Objective

Project Group

| Balancing

I Spare I

I L31 0001

01 200

000

0000

00

0000

L310001

01340

000

0000

00

0000

L31 0001

02200

000

0000

00

0000

L310001

02340

000

0000

00

0000

L31 0001

04200

000

0000

00

0000

L310001

21100

000

0000

00

0000

L31 0001

35140

000

0000

00

0000

L310001

70790

000

0000

00

0000

L31 0001

80050

000

0000

00

0000

L310001

81000

000

0000

00

0000

Debits and Credits:

All numbers must be positive - do not use negatives in the credit column

Entering descriptions at line level:

The journal will automatically copy the description you entered before but you can
change each line if you want to.

Do not use:

• More details

• Change currency

• More actions

©Cambridgeshire County Council V. 1 .0

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Month end Processes

Part 4 Journals

Example of completed journal screen:

Oracle Applications - *** CADI Database ***

File Edit View Folder Tools Window Help

JJUMI^IMIJai^JMIHI^IMIMIJaiai -mi

[mi %> & \ t

^Journals (Cambs Set of Books) - AZ924 270405 Misc 1 27-APR-2005 1 3:58:30

1

AZ924 270405 Misc 1

Pe

Catec
*_

Balance T
Descrip
Control Tota

Apr 05

Effective Date

27JVPR-2005 ]

Miscellaneous

Source

Manual

A

Budget

Original order wrong,

working paper JH0506/apr/1

GBP

27J\PR^005

User

1

Line Account

1

B534000 -30000 -000 -0000 -00 -0000

2

J

B534000 -08000-000-0000-00-0000

Original order wrong, working paper JH0*

24.56

Order 277456 Training for J Fresh

24.56

, , , , , , , , , .■ ,

Acct Desc

Improving Financial Manag-Staff Training & Developm- /-/-/- /

More Details

Change Currency...

More Actions

Jf S X

Note that here the 2 nd line of the journal has a different line description to the journal
description: this is because when reviewing the information under the 08000 (training)
code, it will be more useful for an accurate description to appear than a simple
"recoding" message.

^ After you have finished entering your journal and it balances, click the Save icon

Until you see the following message - which will appear in the bottom left of your
screen, with the right number of lines - the journal has not been finished and would
remain incomolete and not be oosted.

NB a journal of two lines is 3 records because it is two journal lines + the header
information. All journals should have records of (number of lines + 1).

Exit using the X at the top right.

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