Accounts Receivable and Reimbursement Reconciliation

DEPARTMENT OF FINANCE

STATE OF CALIFORNIA

ACCO U N TS R E CE IVA B LE A N D

REIMBURSEMENT RECONCILIATION

Month-End Close Training – February 2024

COURSE OBJECTIVE

To obtain the essential knowledge and skills necessary to perform

accounts receivable and reimbursement reconciliations.

 Statewide Policies and Procedures

 Basic Rules of Accounts Receivable

 Accounts Receivable Journal Entries

 Treatment of Accounts Receivable at Year-End

 Reports and Queries

 Accounts Receivable Reconciliation Tips

ACCOUNTS

RECEIVABLE

ACCOUNTING

STATEWIDE POLICIES AND PROCEDURES

• State Administrative Manual (SAM) Section 7901 – Reconciliations will be

prepared monthly within 30 days of the preceding month, except for property

reconciliations.

• SAM Section 8294 – Accounts receivable (AR) should be recorded in a manner

that allows for aging analysis. The account balances of all receivables should be

classified by the amounts due or past due by varying lengths of time, allowing

departments to monitor and manage receivables. All departments must

complete accounting, aging analysis, and reconciliation of outstanding

receivables at month-end.

STATEWIDE POLICIES AND PROCEDURES

• Reconciliation benefits include:

o Prompt and accurate billing

o Routine customer account monitoring

o Minimizing discrepancies between the general ledger and subsidiary

ledgers

• Government Code section 16583.2 requires departments to submit accounts

receivable information to the State Controller’s Office (SCO) detailing its

accounts receivables.

BASIC RULES OF ACCOUNTS RECEIVABLE

• SAM Section 8291 – AR is defined as a claim against a debtor, such as a

person, business, or governmental entity for money owed to the state.

• Characteristics common to all ARs:

o Legal authority exists to bill for the amount owed.

o The amount due is derived from the mathematical calculation, fees, or other

method to arrive at the amount.

o Sufficient documentation exists to support the AR.

• An invoice or other type of claim document will be prepared and sent as soon

as practical and within 30 days after the event, giving rise to the AR.

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Billed revenue:

Debit 1200000 Accounts Receivable – Revenue

Debit 124XXXX Due From Other Funds/Appropriations*

Debit 126XXXX Due From Other Governments

Credit 41XXXXX Revenue

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Billed reimbursements:

Debit 1200050 Accounts Receivable – Reimbursements

Debit 124XXXX Due From Other Funds/Appropriations*

Debit 126XXXX Due From Other Governments

Credit 48XXXXX Reimbursements

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Billed abatements:

Debit 1200100 Accounts Receivable – Abatements

Debit 124XXXX Due From Other Funds/Appropriations*

Debit 126XXXX Due From Other Governments

Credit 5XXXXXX Expenditure

* Account 124XXXXX must include values in the Affiliate (BU) and Fund Affiliate (Fund) fields. The

information will be included in the Year-End (YE) Subsidiaries on File Report generated from FI$Cal.

Adding the Affiliate and Fund Affiliate on both the debit and credit lines will be helpful for research

purposes.

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Alternate journal entries to record billed deferred receivables for revenue and certain types of

reimbursements, abatements, and accounts receivable-other.

Billed deferred revenue, reimbursements, abatements, and other receivables invoices:

Debit 1200000 Accounts Receivable – Revenue

Debit 1200050 Accounts Receivable – Reimbursements

Debit 1200100 Accounts Receivable – Abatements

Debit 1209900 Accounts Receivable – Other

Credit 1290000 Provision for Deferred Receivables **

** The Alternate Accounts for Account 1290000 Provision for Deferred Receivables are standardized statewide-level

COA values and must not exceed the related accounts receivable recorded in the system. The YE Subsidiaries on File

Report generated from FI$Cal will include the information.

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Account 1290000 – Provision for Deferred A/R Authorized Alternate Accounts

Account

Alternate Account

Description

1290000 1200000998 Provision for Deferred A/R-Revenue

1200050998 Provision for Deferred A/R-Reimbursement

1200100998 Provision for Deferred A/R-Abatement

1200150998 Provision for Deferred A/R-Dishonored Checks

1200200998 Provision for Deferred A/R-Cash Short

1209100998 Provision for Deferred A/R-Audit Except

1209400998 Provision for Deferred Contingent A/R

1209900998 Provision for Deferred A/R-Other

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

SAM Section 8201 - Income and receivable transactions are closely related, and

many policies address both types of accounts.

• Ensure all receipts are processed and deposited timely.

• Record income and receivables timely, with the correct amounts, and in the

proper accounts.

• Review and monitor income and receivables in a timely manner.

• Monitor billed and collected receivables and analyze variances.

• Develop internal policies and procedures to ensure that amounts due to the

state are correctly identified, tracked, managed, and collected on time.

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Cash payment is applied for revenue, reimbursements, and abatements (no invoice

was issued - unbilled):

Debit 1109300 Pending Cash Transfers – AR

Credit 41XXXXX Revenue

Credit 48XXXXX Reimbursements

Credit 5XXXXXX Expenditure

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Billed revenue, reimbursements, and abatements cash payment is applied:

Debit 1109300 Pending Cash Transfers – AR

Credit 1200000 Accounts Receivable – Revenue

Credit 1200050 Accounts Receivable – Reimbursements

Credit 1200100 Accounts Receivable – Abatements

Credit 124XXXX Due From Other Funds/Appropriations

Credit 126XXXX Due From Other Governments

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Billed deferred revenue and certain types of reimbursements and abatements cash payment is applied

(payment was received in the same fiscal year):

Transaction 1: Record the cash receipt as Revenue, Reimbursements, and Expenditures using the Direct

Journal Payment (DJP) application method.

Debit 1109300 Pending Cash Transfers – AR

Credit 41XXXXX Revenue

Credit 48XXXXX Reimbursements

Credit 5XXXXXX Expenditure

AND

Transaction 2: Reverse/Reduce the AR

Debit 1290000 Provision for Deferred Receivables

Credit 1200000 Accounts Receivable – Revenue

Credit 1200050 Accounts Receivable – Reimbursements

Credit 1200100 Accounts Receivable – Abatements

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Billed accounts receivable - other cash payment is applied before appropriation

reverts:

Transaction 1: Record the cash receipt as Reimbursements or Expenditures

using the DJP application method.

Debit 1109300 Pending Cash Transfers – AR

Credit 48XXXXX Reimbursements

Credit 5XXXXXX Expenditure

AND

Transaction 2: Credit the AR‐Other.

Debit 1290000 Provision for Deferred Receivables

Credit 1209900 Accounts Receivable – Other

ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Billed accounts receivable - other cash payment is applied after appropriation

reverts:

Transaction 1: Record the cash receipt as Refunds to Reverted Appropriations

using the DJP payment application method.

Debit 1109300 Pending Cash Transfers – AR

Credit 5901000 Refunds to Reverted Appropriations ***

*** Use the Prior Year ENY to record the accounting entry for a direct journal payment.

AND

Transaction 2: Reverse/Reduce the AR‐Other

Debit 1290000 Provision for Deferred Receivables

Credit 1209900 Accounts Receivable – Other

TREATMENT OF

ACCOUNTS

RECEIVABLE

AT YEAR- END

Reverting Appropriations

Subsidiaries on File

Account 124XXXX – Due from Other

Funds/Appropriations must include values in the

“Affiliate” (BU) and “Fund Affiliate” (Fund) fields.

The Alternate Account used for Account 1290000 -

Provision for Deferred Receivables must not exceed the

amount of the related accounts receivable.

TREATMENT OF ACCOUNTS RECEIVABLE AT YEAR- END

Prior to the year-end closing process, AR abatements

and reimbursements for reverting appropriations not

collected by June 30 must be reclassified to Account

1209900 – Accounts Receivable-Other and offset by

Account 1290000-Provision for Deferred Receivables.

See Year-End A-4 Entry and SAM Section 10603.

The State Controller’s Office Agency Reconciliation

Report provides appropriation reversion dates. Identify

reverting appropriations that contain any date within

the fiscal year-end (commonly June 30) in the

Reversion Date column.

Reverting Appropriations

Subsidiaries

on File

REPORTS AND QUERIES

For Reconciliation:

• Trial Balance Report

o Shows a snapshot of the balances of each general ledger account at a point in time.

The report includes cumulative totals of the debits and credits posted to each

account.

o Main Menu > FI$Cal Processes > FI$Cal Report > GL Reports > Trial Balance Reports

• DFQ_AR_21_ITEM_AGING

o Categorizes unpaid AR Items into intervals based on the payment status. Typical

intervals are current (not overdue), 1-30, 31-60, 61-90, and over 90 days overdue.

• DFQ_AR_09_CUSTOMERS_ACCT_HIST

o Displays customer item balances and any adjustments (i.e., payments, credit memo

applications, write-offs) applied to the item.

REPORTS AND QUERIES

For Research:

• ZZ_PAR_ITEM_REASON

o Used to validate and identify common errors for SCO Collections of Payroll Accounts

Receivable and SCO Transfer of State Share from Payroll Revolving Fund interfaced

into FI$Cal.

o Assist with determining if the AR Item Processor needs to adjust the employee

Payroll AR Item balance for SCO collection posted to Account 590100 - Refunds to

Reverted Appropriations.

• DFQ_AR_13_CASH_RECEIPT_DETAIL

o Used for researching billed and unbilled cash receipts and remittances.

• DFQ_AR_04_ITEMS_VALIDATION

o Used to obtain a list of AR item transactions.

ACCOUNTS RECEIVABLE RECONCILIATION TIPS

• Identify and research any differences between source documents and the AR

Item Account, Alternate Account, and Fund/Fund Affiliate used.

• Reconcile detailed accounts receivable subsidiary amounts with the general

ledger control totals.

• Reconcile cash receipt postings to accounts receivable subsidiary records.

• Review and reconcile the employee ARs recorded in the department’s books to

SCO records.

ACCOUNTS RECEIVABLE RECONCILIATION TIPS

• Review and reconcile the employee ARs recorded in the department’s books to

SCO records.

• Review and reconcile ARs maintained in departmental records (e.g., program

records, payroll records, etc.) with the accounting records.

• Review AR reports monthly to ensure there is ongoing collection activity.

• Retain AR source documents (e.g., invoices), collection effort documentation,

payment history, and adjustment for at least four years following the payment of

the receivables.

 Project Costing For Reimbursement Billing

 Reports and Queries

 Reimbursement Reconciliation Tips

REIMBURSEMENT

RECONCILIATION

WITH PROJECT

COSTING

PROJECT COSTING FOR REIMBURSEMENT BILLING

• Project Costing (PC) accounting for reimbursement accumulates all accounting

data in one place for a specific function, activity, or contract, even though

multiple appropriations, programs, and/or funding sources may have been

included.

• PC accounting usually requires:

o Maintaining and reporting accounting information for a period that overlaps

several appropriation years

o Reporting period different from the state fiscal year

REPORTS AND QUERIES

For Reconciliation:

• DFQ_KK_16_REIMB_RECON

o Data are from C_DTL_REC, C_DTL_EXP, and C_DTL_ENC utilizing project costing for

reimbursements.

o Fields include Fund, ENY, Program, Appropriation Reference, Project, Activity, and

Source Type.

• Final Budget Report, Report No. 6

o Provides a summary status of appropriations, including expenditures,

encumbrances, reimbursements, transfers, and balances as of a specified period for

each appropriation.

o Main Menu > FI$Cal Processes > FI$Cal Report > GL Reports > Final Budget Report

REPORTS AND QUERIES

Report No. 6 Financial Elements – Reimbursements (F – Account)

Appropriations Normal balance is a Debit for Scheduled and Miscellaneous

Reimbursements. Unscheduled Reimbursements should have zero in

this column.

Expenditures Account 48XXXXX. The normal balance is a Credit for earned

reimbursements.

Encumbrances/Allocated

Encumbrances

Zero - not applicable.

Prior Year Encumbrance

Reversals

Zero - not applicable.

Budgetary Expenditures Same as the Expenditures column.

Balance Calculated as the sum of Appropriations (Adjusted) and Budgetary

Expenditures. Normal balance is a Debit for Scheduled and

Miscellaneous Reimbursements, and a Credit for Unscheduled

Reimbursements.

REPORTS AND QUERIES

For Research:

• DFQ_KK_01_ACTIVITYLOG_SUP_PROJ

o Provides detailed data on all project-related transactions.

o Assists with determining if the AR Items established contain or do not contain

the correct Project and Activity.

• DFQ_AR_13_CASH_RECEIPT_DETAIL

o Used for researching billed and unbilled cash receipts and remittances.

REIMBURSEMENT RECONCILIATION TIPS

• A difference between DFQ_KK_16_REIMB_RECON and Final Budget Report,

Report No. 6, usually means that Commitment Control has reimbursement

transactions with no project and activity.

• Reimbursements should not be higher than expenditures. If it is, run the

DFQ_KK_01_ACTIVITYLOG_SUP_PROJ query to review the entries. Some of

the causes may include:

o Expenditure transactions with no project and activity.

o Duplicate entries from AR Items and AR Payments.

QUESTIONS

Contact the FSCU Hotline.

FSCU Hotline Phone: (916) 324-0385

Email: FSCUHotline@dof.ca.gov

SURVEY