1101 PR.03 Journal Entries

    Revision Date: 
    November 16, 2017

    Contents

    Journal entries are used to:

    • correct errors that have been posted to the General Ledger that cannot be corrected from the original source system;
    • initiate a transaction in the General Ledger for a transaction that takes place outside the integrated applications that automatically post to the General Ledger; and
    • initiate a record for a transaction that is entirely internal to the University.

    This document describes the procedure for making manual journal entries online.

    For more information about interface systems and becoming a recognized interface system owner, please visit the training guide on How to Create a Spreadsheet Journal File (MFT).

    This procedure assumes familiarity with the University’s Chart of Accounts (COA) and its terminology.  For detailed information, refer to the COA website.

    General Ledger

    The General Ledger is the formal ledger that contains all of the University’s financial statement accounts.

    The results of transactions that take place in the Purchasing, Business Assets, Accounts Receivable, Accounts Payable, Payroll, and Payroll Costing applications are journalized and posted to the General Ledger on a daily basis.

    Interfaced Accounting Journals and manual Accounting Journal entries are used to:

    • record economic events that take place outside the integrated applications mentioned above. Such events include transactions with parties external to the University, or internal transactions such as interdepartmental sales or transfers and adjustments of estimates;
    • correct errors in transactions that have been incorrectly posted to General Ledger accounts; and
    • interfaced and manual journal entries are created in COA segment format and, once authorized, are posted to the General Ledger according to an established schedule.

    Journal Entries

    Journal entries provide the tools for preparing, validating, and processing manual journal entries and interfaced entries.

    Yale’s business rules are applied in Journal entries, and only those entries passing validation can be posted to the General Ledger.  Journal entries awaiting approval or correction are stored until they are corrected and/or approved and submitted.

    What is a Journal Entry?

    A journal entry is an accounting transaction consisting of a group of entry lines (a journal) that debit and credit account numbers.  The total dollar amount of debits for the journal must equal the total dollar amount of credits.

    Cost Center Financial and Accounting Specialist prepare manual journal entries by entering data into the online Journal Entry.

    Departments without system access or without personnel trained in online entry may work with designated transaction processing center.

    Journal entries are not posted to the General Ledger until the Cost Center Manager authorizes them.

    Journal entries must be prepared and submitted in a timely manner, based on regular monitoring of financial reports.

    Assemble Information

    Assemble information for each entry as follows:

    • If making corrections to transactions that have already been recorded, refer to the records of those transactions for precise account numbers to use for the corrections, and have ready the account numbers to which the dollars should be transferred.
    • Assemble any source documents related to the entry to provide information for required and optional fields.

    Paper journal entry forms are available on the Policies and Procedures website.  You may use these forms to collect and organize information about each entry to facilitate online processing.  Each completed form must designate only one journal appropriate to all of the line items on the form.  Do not combine Journals on one form.

    • If you do not have online access, you may also submit the paper forms to your transaction support center for processing, as described below.

    Entries Involving Sponsored Awards

    Certain restrictions apply to cost transfers involving sponsored awards.  Read carefully Procedure 1305 PR.02 Cost Transfers Involving Sponsored Projects before preparing such transfers.

    The Office of Sponsored Projects (OSP) monitors transfers made against sponsored awards and reviews them for compliance.  Thorough explanation and retention of backup documentation is required in every case.

    Business Rules for Manual Journals

    Both online and paper journal entries must be made in journals.

    A journal:

    • includes two or more entries where debits equal credits;
    • uses only valid COA segment combinations;
    • specifies batch totals and certain other required data to ensure the completeness of journal entry processing;
    • contains adequate descriptive information in required and optional attribute fields;
    • may include multiple lines with a single offsetting account, subject to business rules applicable to individual lines and related offsets; and
    • must be balanced - the total debit amount must equal the total credit amount.

    Online Entry

    Follow the steps described in the Create Manual Journal Entry Training Guide to access and create the journal entries required to record your data.

    A journal entry journal must be authorized online before it is posted to the General Ledger.

    Paper Forms

    • Obtain the form for the journal entry you wish to create from the Policies and Procedures website;
    • Complete a separate form for each batch.  Be sure to enter all required data for each batch and line entry.  Use multiple forms for batches containing more than a few lines; and
    • Submit the completed form to your designated transaction processing center.         

    How to Authorize Journal Entries

    The Cost Center Manager must approve each non-grant journal entry charged to their department before it can be posted.

    • To authorize online journal entries, follow the steps in the Create Manual Journal Entry Training Guide.

    Review each entry for accuracy, validity, and appropriateness.  Authorize correct entries.

    • Entries involving sponsored awards must be in accord with Procedure 1305 PR.02 Cost Transfers Involving Sponsored Projects.
    • If an entry is incorrect, correct the incorrect information or notify the preparer that corrections are needed.

    After authorization, the system posts the data to the General Ledger according to an established posting schedule.  To correct any error after it has been posted, you must prepare a new journal entry.

    Record Retention

    Departments must retain for 7 years supporting documentation for journal entries that do not involve sponsored awards.

    Generally, documentation supporting sponsored award cost transfers must be kept for 3 years following the submission of the final financial report, unless the terms of the award specify a longer retention period.  Documentation should be retained with a record of the transfer.

    Either of these retention periods may be extended if there is a related pending litigation or audit matter.

    Refer to Yale’s Records Retention Schedule for more information.