MEMORANDUM


Table of Contents

MEMORANDUM
  • Progress
  • Major issues
  • Plans

  • MEMORANDUM

    To:

    BASIS Steering committee
    Gerry Bomotti, Gene Buckley, Dick Cottrill, Tom Dorre, David Holmes, David Martinson, Susan Unger, and Bob Zimmerman

    From:

    W. David Wimberly

    Copy:

    Colleen Briney and William Rains
    BASIS II project file and discussion list

    Subject:

    BASIS II July status

    Progress

    Progress seems to have slowed considerably during July. This is partially due to vacations and people being out. However, it can also be attributed to the reality check provided by facing head on some of the issues that have been outstanding while simultaneously attempting to develop a design that will efficiently accomplish what we know is needed. These points will be made evident in the following report.

    Meetings held during July included the following:

    7/08

    This was a meeting of the central project team, devoted primarily to a discussion of ideas for encumbering and processing Inter-Departmental Orders. Agreement was reached on many concepts, but further details still remain to be worked out. Significant points made were:

    • Requests for inter-departmental services will need to be initiated within our new system so that the associated dollars can be encumbered. Service departments will need to "pick up" their orders out of our system.
    • The concept of allowing departments to approve inter-departmental charges before they are posted is being considered. This idea has strong support from the units being charged and is identical to what is done for outside vendors. However, there is a concern from the service departments and the central administration that this function may not be performed in a timely manner. (Of course this is the same concern that exists with departmental approval of invoices and one of the reasons for the current negative confirmation procedure.)
    • The Computer Store and Purchasing need custom facilities for processing departmental orders so that they can be entered, reviewed and tracked appropriately. We apparently need to treat the Computer Store very much like an outside vendor.
    • The Account Numbers used by service departments for their charges are frequently incorrect and must be changed after the fact via journal voucher.

    This was also the meeting where we learned of the tax law change. As of last March, sales tax is to be computed based upon the tax rate effective where the sale is made and not where delivery is made (unless the sale is made out of state). This is relevant to our project if we are going to encumber sales tax using the correct rate, since the local tax will vary.

    7/09

    This was a meeting with Financial Affairs and Research Accounting to discuss responses to a survey prepared by Research Accounting and completed by Principal Investigators and departmental bookkeepers who deal with research funds.

    7/10

    This regular Friday meeting of the central project team dealt with some follow up issues regarding internal orders and reviewed concepts for travel processing within the new system. Anna Willis attended and provided insight regarding travel considerations.

    7/13

    This was a meeting of the Financial Affairs Advisory group. The main topics discussed were internal orders and advance purchase orders.

    7/14

    This was a large meeting with Research and Sponsored Programs, researchers, and bookkeepers who deal with research projects. This was very interesting because it was one of our first encounters with users from an academic office. There were obvious misunderstandings about the new system and a great deal of reservation was evident. Concerns that were expressed included perceived problems in recording receipt of goods within the department, a strong desire to continue to see the vendor's invoices within the department, and the need to streamline processing and make it easier to get things done rather than making it more difficult (this is what they fear funds checking will do).

    7/15

    This regular meeting of the central project team is where Financial Affairs first presented the concept of not requiring receiving. This new approach left many of us in shock and served as the topic of discussion in several subsequent meetings. Other issues discussed (after the dust settled) included: the need to know the number of items packed in order to interface with inventory systems, tolerances for an order, concepts of the invoice entry process, and the accounting distribution desired for tax and freight.

    7/21

    This was a walk-trough with Chemistry hosted by Mary Kienker. Their office procedures were reviewed, the "Grant Manager" PC software demonstrated, and information exchanged on the topics of encumbering salaries and departmental receiving.

    7/22

    This was a walk-through with Agronomy hosted by Deanna Nickel. Their office procedures and use of the "PUBS" system were reviewed.

    7/24

    This meeting of the central project team further refined concepts that would be employed if departments are not required to perform receiving. Methods for establishing the accounts payable liability at year end were a part of this discussion. Additionally, a definition was sought regarding what determines an accounts payable liability, what event it is based upon and on what date it is effective.

    7/29

    This meeting of the central project team continued to address the issue of receiving alternatives. Discussion of the possibility of shifting from accrual accounting to cash accounting was raised in relation to this topic. An additional topic was sales tax: items exempt from sales tax versus tax exemption due to purchases for resale, treatment of bids so that the tax effect is considered for all vendors, and complexities introduced when the estimated tax (including local portions) is distributed across all items of an order for the purpose of encumbering (freight is similar).

    7/31

    John Stokes from Research and Sponsored Programs was invited to this central project team meeting to clarify items included in the 7/14 RSSP meeting summary and to discuss funds checking options. John will be working with Research Accounting to determine if additional budget categories would aid in budgeting and funds checking within the research arena.

    In some respect we have made great strides because two of our previously identified "Major issues" were addressed in July: departmental receiving and dating of expense transactions. This is expressed with reluctance for two reasons: (1) there is still a strong feeling that receiving is the right thing to do and (2) receiving has not been eliminated as a system requirement but departmental invoice approval has been added. However, now I believe we have faced the reality of this situation. From the beginning departmental receiving has been recognized as probably too much to expect, which is the reason it has been listed as a major issue. The new proposal is to still allow departments to perform the receiving function (which can authorize AP to pay the invoice if it is within prescribed tolerances), but this is optional. The alternative for the departments will be to approve an electronic version of the vendor's invoice, one that will be entered by AP as soon as it arrives within their office. The date of the expense and the AP liability would be the departmentally reported date of receipt or "acceptance", as long as that accounting period is open. Please note that this is only a summary explanation and that this concept is still evolving. There are still problems to be worked out, the most significant being how Accounts Payable can physically keep up with the invoices while they are awaiting departmental approval.

    Only limited progress was made during July in the area of design and development of the data requirements for the system. The documentation for the vendor related data was updated and redistributed. Some progress was made in defining our requisition files, but these are not yet ready for distribution.

    On the technical side, we have decided to do program generation using Natural ISPF's Edit Macros. The decision to use edit macros over copy code was based upon the anticipated evolution of the program models themselves. With copy code, separate versions of each code segment would have to be maintained since it would be impossible to upgrade all programs to the latest model at the same time. With edit macros, each program is completely self contained, and yet when it is regenerated, the code for the latest version of the model is used. Edit macros have now been written and we are in the final stages of testing the results by generating a new NSM Maintenance System.

    Major issues

    The feasibility of departmental receiving and the method for dating expense transactions have both been removed from this list based upon the progress noted. The first two items are new as of this reporting period.

    1. The change in the sales tax law previously mentioned impacts the system if we are going to accurately encumber the estimated tax. To do so, the system would need to know the proper tax rate which is now based upon where the sale is made and whether the vendor collects Arkansas sales tax (rules for use tax are different). A practical way of obtaining this information has not been identified.

    2. Encumbrance of tax and freight are posing design problems for Computing Services. This is due to the need to distribute these costs first across the lines of the order summarized by the budgetary categories needed for funds checking and then across multiple cost centers that are to share those costs. This is complicated when you consider (1) the applicable budgetary categories may be different for the different cost centers on the same order, (2) the cost center distribution may be specified by percentage or dollar value, (3) any change to one line of the order affects the way the tax and freight were distributed and forces a complete recalculation of the encumbrances, and (4) the net encumbrance per cost center and budgetary category must be maintained by accounting period. I am confident we can solve this problem but it may require some give and take. We feel that it is imperative that the solution be fairly efficient in terms of the machine resources required due to the frequency with which it will be executed.

    3. There is a need to replace or interface with various inventory systems. The areas that have a possible interest in such a facility include: Scientific Supplies, Dining Services, Physical Plant and Cooperative Extension Service.

    4. Inter-departmental orders pose unique problems and will require changes to the way much business is transacted across campus.

    5. A method of identifying and reporting federal expenditures by the period of the obligation needs to be identified.

    6. The need for word processing-like capabilities for requisition and purchase order descriptions persist. We need to find some time to do some prototype work in this area.

    7. The requirements of the system remain chock full of exceptions and special handling requirements. We hope we can document all of them and develop a system that takes them into consideration.

    Plans

    The following are our plans for August:

    1. Define and document the data requirements for requisitions, "bid" type entities, "contract" type entities, and purchase orders.

    2. Determine the budget categories and methods of funds checking needed within the research area.

    3. Revisit funds checking and firm up outstanding issues such as tolerances and levels of funds checking. Write up and publish these concepts for further comment.

    4. Design the system components for maintaining encumbrance balances and performing funds checking.

    5. Distribute for comment some of the internal documentation that has been developed: vendor processing features, glossary of terms, and initial requisition files.

    6. Discuss and develop a firm approach for addressing the processing needs for internal orders. Write up this aspect of the system along with travel processing and publish these for comment.

    7. Firm up the concepts related to receiving and/or departmental approval of electronic invoices. Write this up and publish for comment.

    8. Initiate development of programs to process vendor related data components.

    9. Update the NSM Architecture documentation for version 2, develop a basic TARGET function module model program, and update the TARGET and NSM Maintenance System functional specifications.

    10. Meet with more departmental "bookkeepers" regarding some of the basic concepts we plan to incorporate into our system and solicit their opinions and feedback.

    Please feel free to raise any questions or concerns prompted by this report.