Description
Capital costs are fixed, one-time expenses incurred on the purchase of land, buildings, construction, and equipment used in the production of goods or in the rendering of services.
Capital Construction Project Accounting Process
Project accounting for all capital construction projects is provided by the Division of Budget and Finance. Once funding is authorized for a capital construction project, all project accounting services from account creation through invoice payments on the project, and ultimately project close-out are provided by Wayne F. Allen and Robert E. Lyons of the Department of Financial Services. This revised procedure for capital construction projects accounting will simplify and unify the project accounting services required for the project, eliminate redundancy, and provide a streamlined approach to project accounting services required by the project managers for all capital construction projects.
Definition of Capital Construction Project
Capital construction projects are defined as those projects that are fully or partially funded by “Capital Funding”. Capital construction projects are funded through five different funding mechanisms, Maryland Consolidated Construction Bond Loan (MCCBL), Academic (or Auxiliary) Revenue Bond (ARB), PAYGO, UMB’s Facilities Renewal Funds, and other UMB Matching Funds. a. Projects authorized by the State Legislature through UMB’s normal capital budget process are authorized by the Legislature from four sources: (i). (ii). MCCBL (previously known as GCL funds) State government obligation bonds authorized for specific capital projects; ARB issued by the University of Maryland as authorized by the State Legislature.
(iii). PAYGO Funding authorized by the State Legislature for capital projects. PAYGO funding is State operating budget surplus authorized for capital projects. This source of funds is treated in all ways as traditional capital funding. (iv). Other UMB Matching Funds authorized by the State Legislature or the University of Maryland Board of Regents. Matching funds is a non- traditional sources of capital funding that may become increasingly more frequent as authorized capital funding for specific projects. Authorized matching funds for capital projects may include private fund raising. These funds may originally be deposited in foundation accounts. Matching funds are an integral part of a capital project’s total authorized funding, and will be transferred to UMB accounts as required. For procurement purposes, A&E or construction contracts for capital construction projects funded, in whole or in part, by authorized matching funds will cite “campus funds’ as the source of funds. Matching funds will be the last fund source used for payment of invoices on A&E or construction contracts that include the matching funds as a source of funds. b. Projects funded through MCCBL funds can also be authorized by the State Legislature to other State agencies. Project funding of this type is usually for asbestos or CFC abatement projects issued by the State Department of the Environment; or for ADA compliant projects, issued by the State agency responsible for ADA projects.
-1-
c. UMB campus facilities renewal projects funded by UMB funds. These projects are only authorized by the Vice President for Administration and Finance. For control purposes, each authorized campus facilities renewal project is assigned its own FAS account number (02-7-77xxx plant fund accounts). Note: Exceptions to the general rule that campus funded facilities renewal projects are capital projects do occur. Current accounts in the 02-7-77xxx range that are not capital projects by definition are: 02-7-7710602-7-77105Deferred Maintenance Program Energy Conservation
These accounts are managed by Facilities Management. All new accounts that are to be managed by Facilities Management will be identified at the creation of the account, and affected parties will be notified. Typically large capital construction projects may be funded by a single source of funds, or any combination for the five fund sources listed above. Project accounting for all capital construction projects is provided by the Division of Budget and Finance.
Capital Project Accounting Responsibilities.
Capital project accounting responsibilities within the Division of Budget and Finance are assigned to Wayne F. Allen and Robert E. Lyons of the Department of Financial Services. Specific responsibilities for the project accounting services provided are described for the convenience of the project manager and other parties affected by the reorganization of capital construction project accounting.
Capital Project Accounting Services
Capital Project Accounting Services provided include: • • • • • • Account Creation Funds Control Requisition Approval Processing of Purchase Orders, Contracts and Amendments, Notices to Proceed, Journal Entries and IDT’s. Payment of invoices Maintenance of Project Accounting Financial Reports and Records. (This includes the reconciliation of project accounting reports to the Financial Accounting System, and the review of project accounting financial reports with the project managers. This information will be posted in the Public folder Outlook). Project Closeout
•
Account Creation:
All inquiries or request regarding new account creation for capital construction projects must be directed to Wayne F. Allen or Robert E. Lyons. Capital construction project account creation action is accomplished in one of two ways:
1. All MCCBL (or GCL) funded projects are assigned an FAS general ledger memo
account number only by Systems Headquarters. An account initiation advice is submitted to David C. Cheuvront, Manager of Quality Assurance, Department of Financial Services. Upon receipt of the account initiation advice, the general ledger memo account is established on UMB’s financial system with the authorized funding.
-2-
2. All campus funded facilities renewal accounts (02-7-77xxx) are coordinated through
Wayne F. Allen and Robert E. Lyons. Upon receipt of the authorization for a capital construction project, the account creation is submitted to David C. Cheuvront, specifying the project budget, the source of funds for the project, the title of the account, and the signature authority. Note: Accounts are not created in the financial system for academic (or auxiliary) revenue bond funds.
Funds Control:
All capital construction projects have a specified maximum budget. Regardless of the source(s) of funds, no project has unlimited spending authority. To guarantee that the project funding is not exceeded, all documents that obligate the project funds must be submitted to Wayne F. Allen or Robert E. Lyons of the Department of Financial Services. This includes all documents described further in this document. All project fund control files will be available on the Outlook capital project public folder.
Requisition Approval:
All requisitions to obligate funds on an authorized capital construction project must be approved by Wayne F. Allen or Robert E. Lyons. This includes all purchase order requisitions, contract requisitions, and contract change order requisitions. All requisitions for a capital project are recorded on the project’s fund control file established at the time that project funding is authorized and all related FAS accounts for the project were created. This review and approval process provides the assurances that the overcommitments for each capital project’s authorized funding will not occur.
Processing of Purchase Orders, Contracts and Amendments, Notices to Proceed, Journal Entries and IDT’s”
Copies of all purchase orders, contracts and contract amendments will be provided to Wayne F. Allen and Robert E. Lyons of the Department of Financial Services by the Office of Procurement Services. This serves two purposes: first, it ensures that the project fund control records are correct and complete; and second, it provides complete documentation for processing capital project invoices for the Department of Financial Services. Invoices without proper documentation or authorization to support and approve the payment will not be processed. Any Notice to Proceed authorization to commit capital project funds must be approved by Wayne F. Allen or Robert E. Lyons of the Department of Financial Services. This ensures that all commitments against the capital project funding are properly accounted for, and enables the initiation of a declaration through UM Systems Headquarters if the notice to proceed requires reimbursements from Maryland State government obligation bonds (MCCBL or GCL) or ARBs. All journal entries or IDT’s submitted against capital project funding must be approved in advance by Wayne F. Allen or Robert E. Lyons.
-3-
Payment of Invoices:
All invoices for capital construction projects will be submitted to Wayne F. Allen, Associate Director for Payroll and General Services. All invoices must be approved by the project manager prior to submission. The processing of invoices requires that copies of purchase orders and contracts, for which the invoices are submitted for payment, be provided in advance to the Associate Director for Payroll and General Services. Depending on the source of funding for the capital project, invoices will be paid through UMB accounts payable or through Systems Headquarters. NOTE: (Receipt of Checks Related to Capital Projects. All checks received from contractors or vendors for reimbursements must be submitted to Wayne F. Allen or Robert E. Lyons of the Department of Financial Services for deposit to the correct capital project source of funds. This includes any checks received from contractors for penalties cited by the State of Maryland).
Maintenance of Project Accounting Financial Reports and Records:
The capital project fund control schedule is one part of the accounting financial reports maintained by Wayne F. Allen or Robert E. Lyons. Separate financial reports are maintained for large renovation or construction projects for the construction and architectural contracts. The project accounting financial reports are regularly reconciled to the Financial Accounting System, or to the academic revenue bond payment records maintained by Systems Headquarters by Wayne F. Allen or Robert E. Lyons of the Department of Financial Services. The project accounting financial reports are periodically reviewed with the project manager. This provides for the coordination of both sets of capital project records. The review with the project manager also factors in anticipated or planned project costs that may result in change order requisitions. This review further ensures proper accounting of all project costs within the project budget. All project accounting financial reports will be available in the Outlook public folder.
Project Closeout:
Upon completion of a capital construction project, Wayne F. Allen or Robert E. Lyons of the Department of Financial Services and the project manager review the project accounting financial reports and the project manager’s records. This review is performed prior to the project closeout meeting between Facilities Management and the contractor. Upon completion of the project and final reconciliation of the project records, all accounts are prepared for account deletion action by Wayne F. Allen or Robert E. Lyons of the Department of Financial Services. During the reconciliation of the project records, any uncommitted balance remaining in a project’s source of funds will be resolved on the basis of the specific source of funds, as follows: a. MCCBL (or GCL) funds will be reverted to the State of Maryland for use as recycled MCCBL (or GCL) for other State of Maryland capital projects. b. PAYGO funds will be reverted to the State of Maryland general funds. c. ARB funds issued by the University will be reverted to UMB upon completion of all capital contracts for all University capital projects for which the specific bond resolution has been authorized by the Board of Regents. This reversion will occur within twelve months of the final expense payment for the bond resolution, and is typically applied as a credit to the project’s debt service.
-4-
d. Uncommitted matching funds will be reverted to a foundation account after all funding obligations on all contracts issued for the related capital construction project have been met. e. UMB campus facilities renewal funds will be transferred to the UMB facilities renewal cash account (02-7-77025). A deficit will rarely, if every, occur on a capital construction project. MCCBL (or GCL), ARB, PAYGO, and other UMB Matching Funds have maximum authorized funding levels. Occasionally, due to unforeseen contingencies, it may be necessary to request, through UM Systems Headquarters, the use of MCCBL or ARB contingency funds, Available contingency funds are nominal, but may resolve unusual minor project deficits. Effective fund control financial procedures and regular review of project records with the project managers will virtually eliminate project deficits on these sources of funds. Project deficits on UMB campus facilities renewal funds can be resolved in two possible ways: First, additional funding to offset the deficit authorized only by the Vice President for Administration and Finance; and second, by additional funding provided by the project client, school or program.
-5-
doc_407357142.pdf
Capital costs are fixed, one-time expenses incurred on the purchase of land, buildings, construction, and equipment used in the production of goods or in the rendering of services.
Capital Construction Project Accounting Process
Project accounting for all capital construction projects is provided by the Division of Budget and Finance. Once funding is authorized for a capital construction project, all project accounting services from account creation through invoice payments on the project, and ultimately project close-out are provided by Wayne F. Allen and Robert E. Lyons of the Department of Financial Services. This revised procedure for capital construction projects accounting will simplify and unify the project accounting services required for the project, eliminate redundancy, and provide a streamlined approach to project accounting services required by the project managers for all capital construction projects.
Definition of Capital Construction Project
Capital construction projects are defined as those projects that are fully or partially funded by “Capital Funding”. Capital construction projects are funded through five different funding mechanisms, Maryland Consolidated Construction Bond Loan (MCCBL), Academic (or Auxiliary) Revenue Bond (ARB), PAYGO, UMB’s Facilities Renewal Funds, and other UMB Matching Funds. a. Projects authorized by the State Legislature through UMB’s normal capital budget process are authorized by the Legislature from four sources: (i). (ii). MCCBL (previously known as GCL funds) State government obligation bonds authorized for specific capital projects; ARB issued by the University of Maryland as authorized by the State Legislature.
(iii). PAYGO Funding authorized by the State Legislature for capital projects. PAYGO funding is State operating budget surplus authorized for capital projects. This source of funds is treated in all ways as traditional capital funding. (iv). Other UMB Matching Funds authorized by the State Legislature or the University of Maryland Board of Regents. Matching funds is a non- traditional sources of capital funding that may become increasingly more frequent as authorized capital funding for specific projects. Authorized matching funds for capital projects may include private fund raising. These funds may originally be deposited in foundation accounts. Matching funds are an integral part of a capital project’s total authorized funding, and will be transferred to UMB accounts as required. For procurement purposes, A&E or construction contracts for capital construction projects funded, in whole or in part, by authorized matching funds will cite “campus funds’ as the source of funds. Matching funds will be the last fund source used for payment of invoices on A&E or construction contracts that include the matching funds as a source of funds. b. Projects funded through MCCBL funds can also be authorized by the State Legislature to other State agencies. Project funding of this type is usually for asbestos or CFC abatement projects issued by the State Department of the Environment; or for ADA compliant projects, issued by the State agency responsible for ADA projects.
-1-
c. UMB campus facilities renewal projects funded by UMB funds. These projects are only authorized by the Vice President for Administration and Finance. For control purposes, each authorized campus facilities renewal project is assigned its own FAS account number (02-7-77xxx plant fund accounts). Note: Exceptions to the general rule that campus funded facilities renewal projects are capital projects do occur. Current accounts in the 02-7-77xxx range that are not capital projects by definition are: 02-7-7710602-7-77105Deferred Maintenance Program Energy Conservation
These accounts are managed by Facilities Management. All new accounts that are to be managed by Facilities Management will be identified at the creation of the account, and affected parties will be notified. Typically large capital construction projects may be funded by a single source of funds, or any combination for the five fund sources listed above. Project accounting for all capital construction projects is provided by the Division of Budget and Finance.
Capital Project Accounting Responsibilities.
Capital project accounting responsibilities within the Division of Budget and Finance are assigned to Wayne F. Allen and Robert E. Lyons of the Department of Financial Services. Specific responsibilities for the project accounting services provided are described for the convenience of the project manager and other parties affected by the reorganization of capital construction project accounting.
Capital Project Accounting Services
Capital Project Accounting Services provided include: • • • • • • Account Creation Funds Control Requisition Approval Processing of Purchase Orders, Contracts and Amendments, Notices to Proceed, Journal Entries and IDT’s. Payment of invoices Maintenance of Project Accounting Financial Reports and Records. (This includes the reconciliation of project accounting reports to the Financial Accounting System, and the review of project accounting financial reports with the project managers. This information will be posted in the Public folder Outlook). Project Closeout
•
Account Creation:
All inquiries or request regarding new account creation for capital construction projects must be directed to Wayne F. Allen or Robert E. Lyons. Capital construction project account creation action is accomplished in one of two ways:
1. All MCCBL (or GCL) funded projects are assigned an FAS general ledger memo
account number only by Systems Headquarters. An account initiation advice is submitted to David C. Cheuvront, Manager of Quality Assurance, Department of Financial Services. Upon receipt of the account initiation advice, the general ledger memo account is established on UMB’s financial system with the authorized funding.
-2-
2. All campus funded facilities renewal accounts (02-7-77xxx) are coordinated through
Wayne F. Allen and Robert E. Lyons. Upon receipt of the authorization for a capital construction project, the account creation is submitted to David C. Cheuvront, specifying the project budget, the source of funds for the project, the title of the account, and the signature authority. Note: Accounts are not created in the financial system for academic (or auxiliary) revenue bond funds.
Funds Control:
All capital construction projects have a specified maximum budget. Regardless of the source(s) of funds, no project has unlimited spending authority. To guarantee that the project funding is not exceeded, all documents that obligate the project funds must be submitted to Wayne F. Allen or Robert E. Lyons of the Department of Financial Services. This includes all documents described further in this document. All project fund control files will be available on the Outlook capital project public folder.
Requisition Approval:
All requisitions to obligate funds on an authorized capital construction project must be approved by Wayne F. Allen or Robert E. Lyons. This includes all purchase order requisitions, contract requisitions, and contract change order requisitions. All requisitions for a capital project are recorded on the project’s fund control file established at the time that project funding is authorized and all related FAS accounts for the project were created. This review and approval process provides the assurances that the overcommitments for each capital project’s authorized funding will not occur.
Processing of Purchase Orders, Contracts and Amendments, Notices to Proceed, Journal Entries and IDT’s”
Copies of all purchase orders, contracts and contract amendments will be provided to Wayne F. Allen and Robert E. Lyons of the Department of Financial Services by the Office of Procurement Services. This serves two purposes: first, it ensures that the project fund control records are correct and complete; and second, it provides complete documentation for processing capital project invoices for the Department of Financial Services. Invoices without proper documentation or authorization to support and approve the payment will not be processed. Any Notice to Proceed authorization to commit capital project funds must be approved by Wayne F. Allen or Robert E. Lyons of the Department of Financial Services. This ensures that all commitments against the capital project funding are properly accounted for, and enables the initiation of a declaration through UM Systems Headquarters if the notice to proceed requires reimbursements from Maryland State government obligation bonds (MCCBL or GCL) or ARBs. All journal entries or IDT’s submitted against capital project funding must be approved in advance by Wayne F. Allen or Robert E. Lyons.
-3-
Payment of Invoices:
All invoices for capital construction projects will be submitted to Wayne F. Allen, Associate Director for Payroll and General Services. All invoices must be approved by the project manager prior to submission. The processing of invoices requires that copies of purchase orders and contracts, for which the invoices are submitted for payment, be provided in advance to the Associate Director for Payroll and General Services. Depending on the source of funding for the capital project, invoices will be paid through UMB accounts payable or through Systems Headquarters. NOTE: (Receipt of Checks Related to Capital Projects. All checks received from contractors or vendors for reimbursements must be submitted to Wayne F. Allen or Robert E. Lyons of the Department of Financial Services for deposit to the correct capital project source of funds. This includes any checks received from contractors for penalties cited by the State of Maryland).
Maintenance of Project Accounting Financial Reports and Records:
The capital project fund control schedule is one part of the accounting financial reports maintained by Wayne F. Allen or Robert E. Lyons. Separate financial reports are maintained for large renovation or construction projects for the construction and architectural contracts. The project accounting financial reports are regularly reconciled to the Financial Accounting System, or to the academic revenue bond payment records maintained by Systems Headquarters by Wayne F. Allen or Robert E. Lyons of the Department of Financial Services. The project accounting financial reports are periodically reviewed with the project manager. This provides for the coordination of both sets of capital project records. The review with the project manager also factors in anticipated or planned project costs that may result in change order requisitions. This review further ensures proper accounting of all project costs within the project budget. All project accounting financial reports will be available in the Outlook public folder.
Project Closeout:
Upon completion of a capital construction project, Wayne F. Allen or Robert E. Lyons of the Department of Financial Services and the project manager review the project accounting financial reports and the project manager’s records. This review is performed prior to the project closeout meeting between Facilities Management and the contractor. Upon completion of the project and final reconciliation of the project records, all accounts are prepared for account deletion action by Wayne F. Allen or Robert E. Lyons of the Department of Financial Services. During the reconciliation of the project records, any uncommitted balance remaining in a project’s source of funds will be resolved on the basis of the specific source of funds, as follows: a. MCCBL (or GCL) funds will be reverted to the State of Maryland for use as recycled MCCBL (or GCL) for other State of Maryland capital projects. b. PAYGO funds will be reverted to the State of Maryland general funds. c. ARB funds issued by the University will be reverted to UMB upon completion of all capital contracts for all University capital projects for which the specific bond resolution has been authorized by the Board of Regents. This reversion will occur within twelve months of the final expense payment for the bond resolution, and is typically applied as a credit to the project’s debt service.
-4-
d. Uncommitted matching funds will be reverted to a foundation account after all funding obligations on all contracts issued for the related capital construction project have been met. e. UMB campus facilities renewal funds will be transferred to the UMB facilities renewal cash account (02-7-77025). A deficit will rarely, if every, occur on a capital construction project. MCCBL (or GCL), ARB, PAYGO, and other UMB Matching Funds have maximum authorized funding levels. Occasionally, due to unforeseen contingencies, it may be necessary to request, through UM Systems Headquarters, the use of MCCBL or ARB contingency funds, Available contingency funds are nominal, but may resolve unusual minor project deficits. Effective fund control financial procedures and regular review of project records with the project managers will virtually eliminate project deficits on these sources of funds. Project deficits on UMB campus facilities renewal funds can be resolved in two possible ways: First, additional funding to offset the deficit authorized only by the Vice President for Administration and Finance; and second, by additional funding provided by the project client, school or program.
-5-
doc_407357142.pdf