Policies & Procedures


 

Section: ACT
Part: POL
Statement No.: 1.1
Date: 07/01/08
University of North Carolina - General Administration
Administrative Policies and Procedures Manual
Title: Financial Record System (FRS) Structure

 

1.     An account is the basic building block of the FRS. An FRS account contains a broader grouping of information than is normally found in most accounting systems.

 

An FRS account is a collection of both dollar and descriptive data concerning a particular activity. An account can be recognized by the following characteristics:

      It contains the records for a particular function or activity

      It has one primary person responsible for its activity

      It receives its financial support primarily from one source

      It has two major kinds of data:

1)    Descriptive information (called attributes)

2)    Dollar records

 

Accounts can be established for a variety of purposes. For example, an account would be established for any of the following purposes:

      A balance sheet for an account in the general ledger

      A sponsored project

      A cost center

      A departmental instructional function

      A public service function

      A service activity

 

A unit might have any number of different accounts, as shown in the example below:

      A state supported instructional account

      A number of federally or privately funded research projects

      A number of departmental service activities

 

A unit might have any number of different accounts for the same basic function, as shown in the following example:

       An instructional function broken down into a number of accounts each representing a field of interest within the subject

 

An individual might have any number of different accounts for which he or she is responsible, as shown in the following example:

       A number of accounts for various research activities or a number of accounts for different funding for the same research activity

 

       What is important is that each account must be unique in that it covers only one function or activity, has

        only one person responsible for it, and gets its funding from primarily one source.

 

2.     All the accounts within the FRS are contained in either the General Ledger or a Subsidiary Ledger.

 

 

Subsidiary Ledgers - The accounts used by most departments will be part of a subsidiary ledger. One exception is trust funds that are often contained only in the general ledger. Subsidiary ledgers contain the revenue and expenditure accounts. Each account, depending on its nature, will show data on the fiscal year basis (July 1 to June 30) or on a project-to-date basis (from the date the project began to the present date). For example, a grant would be on a project-to-date cycle, while a state account would be on a fiscal year cycle. The basic dollar data shown in these accounts are budgets, revenues, expenditures, encumbrances and budget balance available.

 

General Ledger - The general ledger accounts are used to record claim-on-cash, accounts receivable and other assets, accounts payable and other liabilities and fund balance. Some general ledger accounts will be used to record specific fund additions and fund deductions as account activity occurs. Others, with related subsidiary ledger accounts, will carry summaries of the budgets, revenues and expenditures that are in the subsidiary ledger.

 

Relationship of Ledgers - The subsidiary and general ledger accounts have a predefined relationship designed into the system. In some cases there are many subsidiary ledger accounts reporting to one general ledger account. In other instances there is a one for one relationship between the two ledgers. Any transaction posted to a subsidiary ledger account is automatically posted to its related general ledger account to update the claim on cash, fund balance and the appropriate summary revenue or summary expenditure control. The updating of the general ledger is performed simultaneously with the processing of each subsidiary ledger transaction, causing the ledgers to be always in balance with each other.