Page 2 - Year-End Accruals and Reversals
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F IN A N C E   R EF ER EN C E  G UI D E






        OVERVIEW

        Emory uses a process in Compass known as accruals and reversals to account for expenses that belong in one fiscal year but
        are paid on funds from the next (new) fiscal year. Ultimately, this process has an impact on departmental budgets and budget
        reporting.


        THE CHALLENGE


        At Emory, expenses post in Compass in the fiscal year in which the payment was made, regardless of:

           • the invoice date
           • the month the expense was incurred
           • the fiscal year in which a department wants the expense to be incurred

        The impact to budgets is that year-end invoices received and/or processed in August and that qualify for the old fiscal year
        (i.e., goods or services received by 8/31) may not get paid until September, posting in the new fiscal year instead of the old. In
        the first 11 months of a fiscal year, this is generally not a concern. It is in the last month of a fiscal year where this process can
        adversely impact budgets if not addressed.

        Take for example a $1,000 expense incurring in May but paid in June – the budget impact is insignificant in that the expense is
        still against a budget in the correct fiscal year. If, however, that same $1,000 invoice did not get processed until the last day of
        August, when it is paid in early September it will post to the new fiscal year instead of the old one, despite a department’s
        need for it to post in the old fiscal year.


        HOW EMORY ADDRESSES THE CHALLENGE


        Emory uses a process known as accruals and reversals to address the example above. Accruals and reversals are accomplished
        in Compass via a journal entry. Think of accruals and reversals as a two-step Compass process:

         1.    Original posting of the expense

         2.    Moving the expense to the old fiscal year

        ORIGINAL POSTING OF THE EXPENSE

        Take the “journey” of a $10,000 invoice for The Shadowboxers Touring Inc. intended for FY 20 (the “old” fiscal year) on
        department 034038:

         1.    The requisition was created in Emory Express on 8/26/2020 (FY 20 – old year).

         2.    Final approval of the requisition occurred on 8/28/2020 (FY 20 – old year).

         3.    Following final approvals, a purchase order was created on 8/28/2020 (FY 20 – old year)









        EMORY ADVANCEMENT AND ALUMNI ENGAGEMENT  |  FINANCE REFERENCE GUIDE  |  Updated 10.19.21                   1
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