Accrual Accounting
FIN-ACC-350
About This Policy
- Effective Date:
- 07-01-1996
- Date of Last Review/Update:
- 07-01-1996
- Responsible University Office:
- Office of the University Controller
- Responsible University Administrator:
- Vice President and Chief Financial Officer
- Policy Contact:
Anna Jensen
Associate Vice President and University Controller
Office of the University Controller
anjensen@iu.edu
- Policy Feedback:
- If you have comments or questions about this policy, let us know with the policy feedback form.
Policy Statement
All University operations should be maintained and compliance reports prepared on the accrual basis of accounting at the end of the fiscal year. Revenues should be reported when earned and expenditures reported when materials or services are received or used.
Procedures
Indiana University is currently recording most transactions on an accrual basis. This policy is intended to clarify which method of accounting is required by the AICPA Audit Guide. Office of the University Controller coordinates the year end journal entries, including accruals, for the University on non-auxiliary accounts.
The auxiliary document can be used to record entries that do not affect cash. This document is located in the Kuali Financial System (KFS).
Definitions
Accrual Accounting: Is the matching of revenue and expense. The revenue/expense should be recorded in the period that the event happened. The revenue and expense that are correlated to each other should be recorded in the same period. If there is not any revenue generated by the expense then the expense should be recorded when it occurs not when the cash is paid.
History
The source to this policy is:
AICPA Audit Guidelines, Generally Accepted Accounting Principles, Chief Accountant