Original Issuance Date: June 1973

Last Revision Date: January 25, 2022

1.     Policy Purpose

This policy identifies the basic accounting activities to be performed within the University of Wisconsin System and establishes requirements for each accounting activity. Accounting policies and practices shall be consistent for all funds regardless of source and for all business units, which comprises all UW institutions, including UW System Administration.

2.     Responsible UW System Officer

Vice President for Finance

3.     Scope

This policy applies to all UW System institutions, including UW System Administration.

4.     Background

In accordance with Wis. Stat. § 36.09(2)(a), UW System Administration is responsible for planning the financial and physical development of the system, maintaining fiscal control, and compiling and recommending the UW System’s operating budgets. UW System Administration has entered into a delegation agreement with the State of Wisconsin’s Department of Administration to document a shared understanding with regard to accounting, auditing and internal control activities. This policy further defines these activities for all UW business units

5.     Definitions

Allotment:  The statutory action of granting authority and distribution of resources to the Board of Regents for specific expenditures

Budget:  An estimation of revenue and expenses over a specified future period of time that, when approved by the Board of Regents, establishes authority to receive and expend a given amount of resources to accomplish a set of goals

Budget Control:  A process used to track and control the budget-related business transactions and prevent unauthorized deficits

ERP (Enterprise Resource Planning) System:  Integrated software or a software suite that connects multiple aspects within a business and is used to plan and manage daily business activities such as payroll and human resource functions, financial operations and supply chain management

6.     Policy Statement

The general objectives and constraints under which this policy will be implemented are:

  • Financial control must be sufficient to maintain the integrity of the System’s legal, budget, and reporting requirements.
  • An economical and effective accounting system will be maintained regardless if accounting operations are decentralized, to the greatest degree possible.
  • UW System Administration will be the sole interface with the State Department of Administration for accounting purposes.

 

A. Budget and Allotments

The budget and the allotment establish the authority to receive and expend a given amount of resources.

After the budget has been approved by the Legislature and the allotments have been made by the State Department of Administration, the accounting process is initiated. Budget and allotment adjustments, appropriately authorized, allow for movement of funds.

Upon determination of the amount of appropriations by the Legislature and the completion of the annual operating budget, UW System Administration will prepare allotment requests to the Department of Administration.

Budget control will be exercised by UW System Administration at the budgetary levels of: Business Unit, Fund, Department, Program Code, and Major Class. Adjustments to the printed annual operating budget are reported to the Board of Regents through the Vice President for Finance and Controller on at least a semi-annual basis.

B. Revenues

Information concerning actual and unrealized income should be maintained and reported for all funds by budgeted revenue categories as defined by the budget. Comparisons of current and periodic revenue projections with budget estimates of revenue are necessary for possible revision of expenditure budgets.

Each UW business unit will be responsible for collecting, depositing and properly distributing all revenues. Receipts will normally be deposited in local banks on a daily basis. All collections must be deposited in the State Treasury within a week (see s. 20.906(1), Wis. Stats.). To maximize interest earnings, revenue should be transmitted as soon as possible to the State Treasurer. The appropriate UW System Administration personnel should have signature authority on all local banks for transferring funds to the State Treasury. Distribution of the revenue to the proper uniform chart of accounts should be made as soon as possible, but no later than two weeks following deposit in the State Treasury.

Each unit should maintain records for each budget revenue classification and have available for submission to UW System Administration revenue information at the budget level.

C. Expenditures

To facilitate budget and allotment control of expenditures, an encumbrance accounting system will be utilized for all funds. Encumbrances will cover personnel costs as well as supplies and capital.

Disbursement of funds will be made after appropriate authorization and pre-audit, including verification that the specified funds are available at the various levels of control.

I. General

Expenditures will originate with the respective UW business units and will flow into the UW System’s finance ERP System. UW System Administration will monitor transactions for policy and procedural compliance, relying on reports and analytical analyses. Respective units are responsible for writing of checks and processing the necessary adjusting journal entries. UW System Administration is responsible for the final accounting processing, and the preparation and reconciliation of all external reports. The UW System’s finance ERP system will be used to accumulate and maintain the required data elements in accordance with UW System Administration specifications.

All business units will utilize a single system-wide accounting code structure. Each business unit will be responsible for properly coding its accounting data in accordance with the uniform chart of accounts structure.

II. Pre-Audit

Each business unit is responsible for determining that every expenditure it makes or recommends is in accordance with Wisconsin State Statutes and the policies of the University. Further, unit approval must provide assurance that funds are available. Thus, a pre-audit function must be carried out at each unit.

III. Supplier Payments

Each invoice from a supplier will be pre- audited and forwarded to the appropriate business unit for further processing and payment. The preaudit process can be an electronic invoice to PO match within set tolerances as defined in the UW System’s Finance ERP system. UW System Administration will interface required data files to the Department of Administration for funding the parent bank account.

Emergency payments can be processed by the business unit using the emergency check process or through the local contingent fund.

D. Reconciliation

The financial records of the University must be reconciled with those of the Department of Administration as recorded in the State’s ERP system. Such reconciliation will be facilitated by the consistent handling of financial transactions by all UW business units.

The primary responsibility for the statutory requirement for reconciliation between the University and the Department of Administration shall rest with UW System Administration. However, each business unit will be responsible for currently reconciling its records with UW System Administration to facilitate the System-DOA reconciliation.

E. Reporting

Each UW business unit shall be responsible for providing required monthly, interim, and annual financial reports as requested by the UW System Office of Finance, which will coordinate the compilation and release of such reports.

Each business unit will provide financial data on budgets, revenues and expenditures to UW System Administration. Auxiliary operations will report on a full accrual basis in accordance with the uniform reporting system already in existence. All other operations will be reported on a modified accrual basis. Reports from units may be required on a monthly, quarterly, semesterly, annual, or as-needed basis.

Reports will be in accordance with the uniform chart of accounts and will include the level of detail as required by Department of Administration and/or UW System Administration. Monthly revenue and expenditure reports for UW System Administration purposes will contain required data elements as required at the time of the requests.

Financial data supplied by the business units for the Annual Financial Report will include detailed expenditures using the complete uniform chart of accounts. Revenues will be detailed by source. In addition to the revenue and expenditure reporting in the Statement of Revenues, Expenses, and Changes in Net Position, each business unit will work collaboratively with UW System Administration to develop a year-end Statement of Net Assets for its respective business unit in accordance with generally accepted accounting principles (GAAP) for governments as prescribed by the Governmental Accounting Standards Board (GASB), the National Association of College and University Business Administration (NACUBO) guidelines, and the Audit Guide for Educational Institutions, as published by the American Institute of Certified Public Accountants.

7.     Related Documents

None

8.     Policy History

Revision 2: January 25, 2022

Revision 1: December 9, 2019

First approved: June 1973

9.     Scheduled Review

January 2027