With the University’s fiscal year-end (June 30, 2016) approaching, Finance and Administration has provided some recommended guidelines for efficient and effective year-end processing of purchases.

Accounting for departmental expenses:

In accordance with generally accepted accounting principles, Drake is required to report transactions in the proper fiscal period. For that reason, expenses are recorded in the period when goods are received and/or services are rendered. In short, items expensed to a FY16 budget will need to be received before June 30, 2016.  Factors such as budget allocation, invoice receipt, or payment issuance would not have an impact on the application of expenses within a fiscal period.

Exceptions to this general rule apply when a benefit of service or receipt of item extends into multiple fiscal years. In such cases, the following guidelines will be applied.

• Expenses less than $5,000: are charged against the fiscal year in which the majority of the expense will be incurred. (For example, if a subscription is purchased for $3,000 and covers the period of July 1, 2015, through Dec. 31, 2016, the expense would be charged to FY16)
• Expenses greater than or equal to $5,000: will be split into the fiscal years according to the percentage of benefit received during each fiscal period. (For example, if a subscription is purchased for $10,000 that covers a period of July 1, 2015 through June 30, 2017, $5,000 would be charged to FY16 and $5,000 charged to FY17)

The University’s guidelines for year-end purchases are subject to external audit. As you make purchases during this period leading up to and overlapping our fiscal year end, it is important to note when the goods or services were received so they are expensed according to reporting requirements. If the timing of receipt is not clearly noted on the invoice, it would be beneficial to call the receipt date to accounting’s attention by clearly marking the appropriate fiscal year for the expense, based on the above guidelines, on the pay request.

In order to facilitate efficient and effective year-end processing, the following timeline is recommended for the fiscal year ending June 30, 2016: Year-End Purchasing Timeline

I would encourage you to contact accounting at x3168 or accounting@drake.edu with any questions you might have.

—Heather Travis, Associate Chief Financial Officer/Controller