MEMORANDUM

November 4, 1992

Table of Contents

MEMORANDUM


MEMORANDUM

To:

Gerry Bomotti

From:

BASIS II Central Project Team

Copy:

Tom Dorre, David Martinson, and Bob Zimmerman

Subject:

BASIS II Issues for Management Approval

The following are issues or directions that the BASIS II central project team has taken that may require management approval since they represent change from current policy or practice. Representatives from the central project team (a minimum of Colleen Briney, Bill Moody, William Rains, and David Wimberly) would like to schedule a meeting to discuss these issues. They are only briefly stated here and do not include an analysis of their implications, which could be lengthy. Further documentation can be prepared upon request.

These items should be considered in light of the following assumptions and points that we feel require emphasis.

The following points represent recommendations of the BASIS II central project team:

  1. The system is intended to be primarily paperless, and features to facilitate printing of documents or transactions are intentionally omitted. For this to be successful, transactions and activity history within the system must be retained on-line indefinitely. Controls have been designed into the system to ensure its integrity and to satisfy anticipated concerns of various audit offices.

  2. The current system of "negative confirmation", whereby invoices are paid unless departments request payment to be held, will be replaced with a system of positive confirmation. Acknowledgement of receipt of goods will be required to be performed by departments. A receipt must include an indication of the acceptability of the merchandise. If acceptable, this receipt will serve as approval to pay the associated invoice if it falls within predefined maximum acceptable price. This receiving function should be performed as goods are received, although it may be performed after the invoice has been received and entered to the system by Accounts Payable. The implications of this change are vast, the most significant being the physical management of invoices between the time they are entered and the time they are vouchered/paid (it is hoped that imaging will provide the solution to this problem). Another significant potential problem is the delay that may occur in vendor payments due to lack of receiving by departments (this was the case when positive confirmation was last used). Lastly, departments have openly voiced disagreement with the concept of mandatory receiving and would prefer to "see" and approve invoices before they are paid.

  3. Purchases against blanket orders must be recorded by departments by logging in the purchase noting the date of purchase, amount of purchase, and any receipt or ticket number. This should ideally occur as these purchases are made, however, they may be recorded at any time but are required before payment will be made to the vendor (see the problems noted above). The invoice for these purchases may be entered by Accounts Payable prior to the record of receipt being entered.

  4. Available funds checking and the commitment of funds will occur as lines of a requisition are entered, and will precede the approval of that requisition. If rejected, the system would un-commit the funds.

  5. Commitments and encumbrances will include sales/use tax calculated using a flat percentage (if not tax exempt) and optionally freight. These values are determined per item.

  6. Commitments and encumbrances will be maintained at a summary level on the available funds file. They will exist on the requisition and purchase order files with a net value for up to four concurrent accounting periods. This will allow for production of an "Open PO Report" that matches a department's DBR. There are no plans to summarize commitments or encumbrances and load them to General Ledger, although this would be possible.

  7. No security will be imposed that would restrict what company cost centers may be specified on a requisition.

  8. Most actions that would increase costs or change the cost distribution will necessitate a TARGET transaction where the appropriate management approval is obtained. This would be the case with requisitions, cost transfers, budget transfers, internal invoices, changes to distribution, and PO supplements to add lines, increase quantities or raise the maximum allowable price.

  9. The expense will be charged and an accounts payable liability will be created for vendor invoices for "received" goods. The date of these transactions will be the date of receipt as long as the date is within an open period, otherwise it will be the oldest open period date. At fiscal year end, closing entries will be created to record these same entries, based upon the purchase order amount, for orders that have been received but for which the invoice has not been entered. In the new year, these entries will be automatically reversed. These entries will be dated 6/30 and 7/1 respectively.

  10. The cost for a requisition and the resulting purchase order may be split among 10 different cost centers based upon either percentage distributions or fixed dollar allocations specified by item. (Percentage distributions may be specified one time for an order and automatically applied to all lines of the order.)

  11. Travel Authorizations will be entered electronically and must reference associated requisitions required for conference registration, air fare, or other items.

  12. A travel reimbursement check will be less the amount of any advance provided the employee. The accounting between the cost centers charged for the travel and the travel advance fund will be automated.

  13. Financial Affairs will be responsible for reviewing, on a daily basis, Purchase Orders whose system assignment of an object code is potentially incorrect. Corrections to this system assigned object code will be made as necessary.

  14. Departments will be responsible for selecting the budget category for an item if at least one research cost center is being charged.

  15. Installment payments that will span fiscal years will be established with lines representing the payments for the current fiscal year. Once budgets are loaded for the new year, the PO will be supplemented by adding lines representing payments for the new year. This PO supplement must be initiated by the department responsible for the order.

  16. The "Reallocation of Funds" process will be split into two separate processes, one specifically for budget transfers and the other to make position and position funding changes (eventually a BASIS I transaction).

  17. The addition of new vendors and the maintenance of vendor names will be centralized, or at least supervision of this maintenance will be centralized. The Purchasing Office is targeted to perform this function.

  18. The system must be capable of providing data to support the preparation of federal reports required of the Agriculture Experiment Station and the Cooperative Extension Service. This means it must be capable of identifying expenditures by the period of obligation. Currently this is accomplished by these organizations performing dual data entry and maintaining separate systems to support their reporting needs.

  19. The system will provide the ability to restrict partial payments. This will be based upon a flag maintained on the PO by the Purchasing Office. It is anticipated that this restriction would be applied to bid items and other large dollar purchases.

  20. Accounts Payable check numbers will be system assigned as invoices are grouped, approved and vouchered. The physical printing of the checks will be performed at a later time using a laser printer capable of printing the necessary MICR codes (including check number) and a digitized signature. This printer should be located in the Treasurer's Office.

  21. An office and personnel must be designated as the TARGET administrator, responsible for maintaining the necessary data definitions (primarily transaction routing tables) required by TARGET.
Please contact Colleen Briney, Bill Moody, William Rains or David Wimberly to set up a meeting to discuss these issues.