General Accounting - Policies, Procedures, & Guidelines
American University's financial accounting policies and procedures follow the generally accepted accounting principles of Fund Accounting as prescribed by the National Association of College and University Business Officers (NACUBO), the American Institute of Certified Public Accountants and the Financial Accounting Standards Board (FASB).
Financial Reporting Policies
The University's fiscal year ends on April 30th. Financial Statements are prepared on the accrual basis of accounting.
In order to ensure observance of limitations and restrictions placed on the use of resources available to the University, such resources are classified for accounting purposes into funds according to activities or objectives specified. Separate accounts are maintained for each fund.
Current Funds are used for transactions in support of instruction, research (including restricted purpose contracts and grants), public service and auxiliary enterprises, which provide services to the student body, faculty, staff, and general public.
Other funds and their functions are as follows:
Student Loan Funds - transactions relating to loans to students
Endowment and Similar Funds - transactions relating to gifts which allow only the income to be expended or reinvested
Plant Funds - transactions relating to investment in institutional properties, including financing indebtedness
Agency Funds - funds held as custodian or fiscal agent for others such as student organizations
Audit and Internal Control
The annual audit of the University's Financial Statements is preformed in accordance with generally accepted auditing standards of the AICPA by an independent public accounting firm. For Federally funded grants and contracts, the public accounting firm uses the Coordinated Audit Approach described in OMB Circular A-133. Audit reports and management letters are presented to the Audit Committee of the Board of Trustees.
The University's internal audit staff performs continuous reviews of financial procedures and policies. They report the results of their audits to the Audit Committee and the Independent Auditors.
Financial Management Systems
The University uses the Colleague System developed by Datatel. This system is a fully integrated on-line financial management system incorporating the following components:
General Ledger Accounting
Fixed Asset Accounting
Financial Statement Preparation
This system provides all the capabilities necessary to support the accounting and reporting requirements of state and federal agencies.
Procedures for Capital Equipment acquired with Federal Funds
The University is required by federal regulation (OMB Circulars A-110, A-21, and A-133) to ensure that equipment acquired with federal funds is properly accounted for and used for its intended purpose.
The University policy is to capitalize all equipment, either movable or fixed, with a unit acquisition cost of $5,000 or greater and a useful life of two years or more.
By May 30th of each year the Controller's Office will prepare a schedule of property and equipment acquired with Federal Funds by grant account.
This schedule will be sent to each Principal Investigator (PI) for their review. If there are no discrepancies, the PI is to sign the schedule where indicated and return it to the Controller's Office within thirty (30) days.
If there are discrepancies, the PI is to indicate which items are in error on the back of the schedule and return the form to the Controller's Office, with a copy to the Office of Sponsored Programs (OSP).
The Controller's Office and OSP will resolve the discrepancy.
Property, Plant, and Equipment Capitalization Policy
The University policy is to capitalize all equipment, either moveable or fixed, with a unit acquisition cost of $5,000 or greater and a useful life of two years or more. Acquisition value includes the cost of the equipment and any associated costs incurred to make the equipment usable for the purpose for which it was intended, including installation costs. All capital equipment, whether received directly by the ordering department or via central receiving, must be identified with an American University fixed asset tag. This tag is then entered into the university's fixed asset system. Examples of equipment include computer equipment, furniture, office machines, vehicles, and scientific equipment.
The Purchasing office must be notified when a transfer of this equipment from one location to another takes place to be able to reflect the new location on the university's records. Likewise, when a piece of equipment is purchased, the disposition of the old equipment must be handled appropriately. Purchasing must be notified to pick up the old equipment and the department disposing of the equipment must complete a fixed asset disposal form. The old equipment is the property of the university (even if there is no value) and proper disposition of the equipment is to be determined by the Vice President of Finance and Treasurer. Departments are responsible for keeping records of all purchased capital equipment so yearly adjustments can be made to the university's accounting records. Any unaccounted for or lost equipment will be charged to the department's operating budget.
Fund Accounting is the manner of organizing and managing accounting transactions by which resources for various purposes are classified for financial accounting and reporting purposes in accordance with activities or objectives as specified by donors, with regulations, restrictions, or limitations imposed by sources outside the University, or with directions issued by the University Trustees. A fund is an accounting entity with a self-balancing set of accounts consisting of assets, liabilities, and a fund balance. Separate accounts are maintained for each fund to ensure observance of limitations and restrictions placed on the use of the resources.All funds of the University are classified into major fund groups. The major fund groups of the University are its Current Funds, Loan Funds, Endowment and Similar Funds, Plant Funds, and Agency Funds. The current funds include those resources of the University expended for the purpose of performing the primary and supporting missions of the University. The term "current" means that the resources will be expended in the near term and that they will be used for the operating purposes of the University. Current funds are categorized into operating and non-operating activities. The Current Funds group has three basic subgroups: unrestricted general, unrestricted designated, and restricted.