Reimbursement Billing (CA103)

Process Group/Policy Details

• Subject:  Cost Accounting

• Process Group: Reimbursement Billing

• Title of Policy: CA_ Reimbursement Billing

• Effective Date: 07/01/2014

• Approved/Revision Date: 07/01/2014

• Approved by: State Controller

Process Group Description

Reimbursement Billing

• This process groups includes automatic reimbursement billing to create receivables and generate revenue based on grant allowable expenditures incurred by the State. Manual reimbursement can be used when grant funds are received in advance.

Rationale or background to policy:

• CORE Reimbursement Billing allows for timely reimbursement of State expenditures from the federal government and other grantors. The cash drawdowns will comply with the Cash Management Improvement Act (CMIA) or other reimbursement specific grantor requirements.

Policy Statement:

CA.PO.04 CA_Reimbursement Billing

• Departments shall use Reimbursement Billing to create receivables and generate revenue based on grant allowable expenditures incurred by the State and to stay in compliance with CMIA-mandated draw patterns. The reimbursement process integrates Cost Accounting functionality with the Accounts Receivable module. Upon reimbursement receivable (RE) transactions are generated, either manually or automatically, to recognize revenue and the related receivable. The cash receipt (CR) transaction then liquidates the receivable when the cash is received by the Treasury. Automated reimbursement is the best practice as it reduces the likelihood of data entry errors and CMIA non-compliance.

CA.PR.04.1 Automated Reimbursement

• For grants that use a drawdown approach based on incurred cash expenses, the automated reimbursement process can help reduce the long-term maintenance usually needed to process manual revenue transactions based on eligible spending.

  • The automated reimbursement batch job will pick up submitted transactions containing cost accounting elements that have been marked eligible for reimbursement during grant, project, and/or, task order setup.

    • Reimbursement Eligible indicators are on Program, Program Phase, Funding Profile, Object, and Activity tables.

  • The automated reimbursement batch job will run in 3 steps:

    • Reimbursement (Selection and Calculation)

      • This is the first of the 3 required processes within the automated reimbursement cycle. This job performs the following tasks:

        • Gathers appropriate accounting data that has been charged against cost accounting structures associated to cost reimbursement agreements

        • Applies funding split rules for costs associated to programs classified as “Back End Split”

        • Populates the Drawdown Group/Drawdown Department values from the Major Program or Program tables on all the records selected for processing which have a Drawdown Group defined

        • Creates the input file for the next major process, “Reimbursement Generation”, in the automated reimbursement cycle

    • Reimbursement Generation

      • This is the second of the 3 required processes within the automated reimbursement cycle. This job performs the

      • following tasks:

        • Reads output from the Selection and Calculation process

        • Selects records based upon user-defined values entered on the Reimbursement Frequency Date table and on the Reimbursement Generation Custom Parameter table

        • Applies CMIA drawdown rules for programs identified as such

        • Applies maximum reimbursement amounts for Non-CMIA programs

        • Processes negative or modified / reclassified records

    • Reimbursement Output

      •  This is the last of the 3 required processes within the automated reimbursement cycle, This job performs the

      • following tasks:

        • Generates, loads, and submits transactions to record the accounting events of the automated reimbursement cycle, and records the results in the Reimbursement

        • History (REIMHIST) table – Receivable (RE), Cash Receipt

        • (CR), and Internal Exchange Transaction (IET).

•  Each process above has a parameter table requiring set up prior to the batch execution.

•  The automated reimbursement batch job will be kicked off centrally on a nightly basis by OIT; however reimbursement frequency is specified and configured departmentally.

•  Grants and projects that incur reimbursable costs will have a reimbursable budget 39 or 40 selected on the Major Program table during initial set up.

CA.PR.04.2 Manual Revenue Recognition

• • In a case where grants are funded in advance, the automated reimbursement process is not applicable.

    • Departments will manually process Cash Receipts (CR) up front to record the money as debit to cash, credit to deferred revenue. This process will use Event Type AR53. The department will specify the BSA in addition to the Revenue Source code, and it would be tied to a specific Program (grant) on the transaction.

      • • Departments may also enter the grantor (or awarding) Customer on the Vendor Customer field in the Vendor section of the transaction.

    • Transactions will use the typical expenditure processing method to record the debit to accrued expense and credit to disbursements payable. When disbursed, it will be a debit to disbursements payable and a credit to cash (or warrants payable).

    •  Periodically, a Journal Voucher (JV) will be needed to debit deferred revenue and credit earned revenue by the departments over the lifetime of the grant. Use event type GA05 which debits “generic liability” (Deferred Revenue will be keyed in) and credits “Collected earned revenue correction” (Appropriate revenue source code will be keyed in).

    • Alternatively, if the grantor allows unrestricted use of the funds the revenue should be recognized when received as earned revenue. In this instance, the Cash Receipt (CR) would debit cash and credit earned revenue Event Type AR02. No JV would need to be used periodically.