R⋆STARS Data Entry Guide

Chapter #10

Revenue Cycle

PURPOSE

This chapter is intended to provide system users with an understanding of the revenue and cash receipts procedures within R⋆STARS. Additionally, the reporting capabilities of R⋆STARS are discussed and are followed by revenue and invoicing examples.

Table Of Contents

10-1 OVERVIEW OF REVENUE AND CASH RECEIPTS CYCLE

10-2 REVENUE REPORTING

10-3 REVENUE EXAMPLES

10-4 ACCOUNTS RECEIVABLE INVOICE –  EXAMPLE

10-5 FINANCE CHARGES

Interest and late Charge Eligibility Criteria

10-6 TRANSFERS TO CENTRAL COLLECTION UNIT

10-7 DEPOSIT RECONCILIATION

Deposit Record requestable reports

10-1 OVERVIEW OF REVENUE AND CASH RECEIPTS CYCLE

Revenue collection is a key activity for most R⋆STARS users. The annual budget passed each year by the Legislature is dependent upon revenues received during the year. The collection of revenues earned by the user must be carefully monitored and controlled to provide funds necessary to operate the state.

Six types of transactions to record actual revenues and cash receipts are available within R⋆STARS. Accounts Receivable invoicing is also a feature of R⋆STARS. As shown in the following diagram, the Revenue and Cash Receipts Cycle consists of accrual recognition, collection of accruals, cash receipts not previously accrued, Reduction of Expense, deferred revenue recognition, invoicing,  and accumulation of interest on delinquent receivables.

Accrual Recognition

Accruals are revenues that have been earned but not yet received. For example, claims against grants are recorded as Accounts Receivable and Revenue. Accrued revenues are entered manually or system generated by  R⋆STARS. Several types of transactions are available to record accrued revenues. Some of the more common ones are shown here:

◾ Record accounts receivable/due from other governments (with or without Document Financial Table support) for revenue accrued

◾ Record income taxes receivable and liability to outside agencies

◾ Record accounts receivable for external grant and project billings

Collection of Accrued Revenues

Collection of accrued revenues are cash receipts in payment of revenues previously earned. For example, payment in April of income taxes owed from the preceding calendar year represents a collection of accrued revenues.

Collections of accrued revenues are entered manually or system generated by R⋆STARS. Several types of transactions are available to record the collection of accrued revenues. Some of the more common ones are shown here:

◾ Record receipt of revenue previously accrued

◾ Record collection of income taxes

◾ Record collection of external grant and project billings.

Cash Receipts Not Previously Accrued

Cash receipts not previously accrued come in many different forms. Some examples include:

◾ Cash received as revenue is earned, such as payment of a traffic ticket on the day it is issued

◾ Cash received for deferred revenues, such as pre-payment of income taxes

◾ Cash received that is due to another organization, such as payroll deductions for health care plans

Collection of cash not previously accrued is entered manually into R⋆STARS. Several types of transactions are available to record this category of cash receipts. Some of the more common ones are shown here:

◾ Record cash receipts not previously accrued

◾ Record cash receipts and credit a liability

Expenditure Refunds (Reduction of Expense – ROX)

Reductions of Expense (ROX) or reimbursements are cash receipts collected because of a refund relating to an overpayment of an expenditure. For example, if an invoice for five desks is paid in full, but only three are received, the refund for the price of two desks is an ROX (or reimbursement).

ROXs for current and prior year expenditures are entered manually into R⋆STARS using various transaction codes.

Deferred Revenue Recognition

Deferred revenue is recorded when cash is received for something that has not yet been earned. For example, income taxes paid in the third quarter for the fourth quarter are recognized as deferred revenue in the third quarter. In the fourth quarter, it would be recognized as revenue since that would be the period in which it was earned.

Accounts Receivable Invoicing

The invoicing features of R⋆STARS can be utilized when recording Accounts Receivable – Billed at the invoice level. Once entered at a detail level, invoices can be run for mailing to customers. For certain transactions (T-Codes) defined in the D53 – Titles Profile with a Table ID of ARIV (Accounts Receivable Invoice), the 515 – Invoice Entry Screen must be completed and the total extensions for all related document numbers must balance against the transaction amounts when releasing the batch on the 502 –  Batch Balancing Screen. Very few agencies in Oregon use this functionality.

Accumulation of Interest and Late Charges

R⋆STARS supports the collection process by providing for the accumulation of interest and/or late charges based on user-defined parameters, aging schedules, statements, and past due notices. Separate totals for interest and principal are provided.

10-2 REVENUE REPORTING

After revenue cycle transactions have been entered, the status of accounts receivables, revenues, and ROXs (or reimbursements) should be monitored. R⋆STARS provides two types of reporting capabilities that enable users to monitor the status of the transactions:  on-line inquiry and standard requestable reports. The following sections describe on-line inquiries and the standard reports available for revenue cycle transactions.

On-line Inquiry

On-line inquiry allows the users to access the on-line system to view specific Document Financial Table records. Transactions that do not have Document Financial Table support may be viewed on-line using the General Ledger or Accounting Event Inquiry screens.

The available inquiries are:

Standard Receivable Reports

The standard reports are requested by the R⋆STARS user. Some of these reports are requested only centrally and others are requested only by the agencies. This is determined by the REQUESTABLE IND field on the D64 – Report Control Profile.

*Requested Centrally

10-3 REVENUE EXAMPLES

In this section, an example of receiving cash from an individual requesting a GED Certificate is shown below. No receivable has been previously accrued.

On 7/23/14, the Office of Community College Services receives $3 from an individual requesting a GED Certificate. Upon receipt of this money, the Office of Community College Services records the following batch type 2 transaction.

Example:

10-4 ACCOUNTS RECEIVABLE INVOICE – EXAMPLE

In this section, an example of an accounts receivable invoice transaction is shown below.

A customer is being billed for State Archives Record Use Forms. The total amount is $70.75. The bills are dated the last day of May and are due by the first day of August. The completed Revenue Receipts Transaction Entry screen to record the receivable is shown below.

Example:

The user can press   F2  -INVOICE to go to the 515 – Invoice Entry Screen.

Example:

The user can attach standard messages to invoices that are sent to customers or vendors. This can be done either by pressing the   F2  -MSG key which will interrupt the user to the 94 – Agency Message Profile, or by simply typing an agency and keyword of a previously saved message on the 515 screen. The 515 screen must be balanced against the related document before the transaction can be released.

Example:

If   F2  -MSG is pressed, the user is taken to the 94 profile. A new message may be added or old messages may be updated. For a new message, agency and keyword and text must be entered and saved. The agency and keyword are then displayed when interrupting back to the 515 screen. After the invoice and message are saved, and if enter (inquire) is pressed, the first line of the message associated with the keyword is displayed on the 515 screen.

Example:

As stated before, for certain T-Codes defined in the D53 profile (Table ID: ARIV), the 515 screen must be completed properly. The total extensions for all related document numbers must balance against the transaction amounts when releasing the batch on the 502 screen.

If a transaction has already been released, the 515 screen will prevent the user from changing the information on this invoice, as the related transaction has been posted to the history file.

10-5 FINANCE CHARGES

R⋆STARS supports the collection process by providing for the accumulation of interest and late charges (flat fee amount) based on user defined parameters, aging schedules, statements, and past due notices. Separate totals for interest and principal are also provided.

The overnight batch process (DAFM310) reviews accounts receivable documents in the Document Financial Table for eligibility for interest and/or late charge calculation. Control indicators maintained on the 25 –  Agency Control Profile determine when the interest calculation process is performed and for which month the interest and fees are posted. If the accounts receivable documents meet the criteria for eligibility listed below, interest will be calculated and an accounting transaction will be generated for recording the interest and/or late charge amounts. Interest is calculated utilizing the interest rate in one of the following profiles:

◾ 53 – Agency Document Control Profile –  The interest rate is taken from this profile if the document type is subject to interest.

◾ 54 – Agency Receivable Document Exemption Profile  – The interest rate is taken from this profile if a particular document (with a document type on the 53 profile) is subject to a different interest rate calculation. Documents that are exempt from interest and late fee calculations are also entered in the 54 profile.

Interest and late Charge Eligibility Criteria

◾ The document has been given final approval.

◾ There is an entry in the 53 profile for the Agency and Document Type.

◾ The document balance is greater than zero.

◾ There is no interest activity for the document in the month specified in the 25 profile.

◾ The document due date, compared to the current date, is equal to or greater than the number of days past due on the 53 profile, i.e., the number of days before calculating interest have expired.

◾ There is not an entry in the 54 profile for the document with an override Exempt from: ...Interest and Late Fee Calculation: indicator of Y.

These Profiles, their elements and detailed coding instructions are described in Chapter 6.

See the examples below:

Screen A:

The 53 profile has an entry for agency 109 and document type AR, and is therefore subject to interest accumulation.

Screen B:

The 54 profile, has an entry for a specific document and an overriding the interest rate defined in the 53 profile.

Screen C:

The 54 profile, has an entry for a specific document and has exempt from interest and late fee calculation by setting the indicator to Y. This also overrides the 53 profile.

10-6 TRANSFERS TO CENTRAL COLLECTION UNIT

R⋆STARS supports the ability to automatically transfer delinquent receivables to a central collection unit.

The overnight batch process (DAFM310) reviews accounts receivable documents in the Document Financial Table for eligibility for transfer to collections. Control indicators maintained in the 25 profile determine if the transfer process is performed. If the accounts receivable documents meet the criteria for eligible documents listed below, the receivable will be transferred to collections.

Transfer to Collection Eligibility Criteria

◾ The document balance must be greater than zero.

◾ The document type is listed in the D54 – System Parameters Table as eligible.

◾ The Subject to Transfer: indicator in the 53 profile is Y for the document type.

◾ The number of days before transfer has expired.

◾ There is not an entry in the 54 profile for the document with an Exempt From: ... Transfer to Collections: indicator of Y.

Specific documents that are exempt from transfer to collections are entered in the 54 profile.

The example below illustrates the combined use of the 53 and 54 profiles to determine collection eligibility.

Screen A

The 53 profile, has an entry for agency 109 and document type AR, with a Subject to Transfer indicator of Y.

Screen B

The 54 profile, has an entry for a specific document with an Exempt From: ... Transfer to Collections: indicator of Y. Thus, this document will not be transferred.

10-7 DEPOSIT RECONCILIATION 

The deposit reconciliation process described in this section is the automated process for reconciling the deposit transactions entered into R⋆STARS with the transactions processed at the bank. The transaction codes used to process the deposit transactions into the system do not post to the general ledger account for Cash on Deposit with the Treasury. Instead they post to a general ledger account for Unreconciled Deposits. Funds posted to Unreconciled Deposits cannot be expended until the Deposit is reconciled with the Treasury. Once the process has reconciled the transactions, a system generated transaction posts to Cash on Deposit with the Treasury and reverses the Unreconciled Deposit entry.

The deposit transactions reconcile based on the Financial Agency, Account Number (entered in the Agency Code 3 field), the Deposit Number, and the amounts from both the R⋆STARS deposit transaction and the Bank’s deposit transaction. The first three elements create a unique record on both the R⋆STARS system and the Treasurer’s system. Records that match exactly will get a Release Status of Y (yes). Records that do not match exactly will get a Release Status of N (no).

For Unreconciled Deposits only:

Transactions that are in error on R⋆STARS need to be corrected by a two step process: 

1. Reverse the original transaction.

2. Enter a transaction with the correct coding/amount, deposit number, etc.

To review the document and transaction data, use the drilldown inquiry capabilities on the 63 – Cash Control Financial Inquiry. Drill down on Balance Type 34: Unreconciled Deposits.

Two control reports will be generated showing the non-reconciled records. The first will be for agency use (DAFR3321) and the second (DAFR3322) will be for the central agencies use. Both reports will list the unreconciled deposit transactions from both the agencies’ entries and the bank’s entries with the following data:  Account Number, Deposit Number, Treasury Fund, R⋆STARS Deposit Amount (net), R⋆STARS Effective Date, Bank Deposit Amount, and the Bank Effective Date.

Deposit errors on the Bank’s side of the transaction that exceed $5.00, once identified, will be handled in R⋆STARS with an on-line release process. The agency completes the Manual Request Form, attaches documentation, and faxes to Treasury. Treasury then changes the Release Status of the deposit on the 12 – Manual Deposit Release Screen to M. In the nightly cycle the RELEASE STATUS of the deposit is changed to M Manual and the system generates the necessary cash transaction.

Only Treasury staff have security to change the Release Status of a deposit. The Release Status field is changed to M and a Description must be entered. These are the only fields that a user is allowed to change on-line.

12 Manual Deposit Release Input Coding Instructions

ALL deposit transactions can be reviewed on this screen. The purpose of the 12 screen is to provide the capability of scrolling records for review and/or manually releasing to generate the reconciled cash transactions.

Control Key

◾ AGENCY – Enter the three character AGENCY. Required.

◾ ACCOUNT NUMBER – Enter the five character ACCOUNT NUMBER or leave blank. This element represents the Account Number that is entered in the Agency Code 3 field when the deposit transaction is entered in R⋆STARS.

◾ DEPOSIT NUMBER – Enter up to a fourteen character DEPOSIT NUMBER or leave blank. This element represents the Agency's deposit number to the bank.

Information Elements

◾ TREASURY FUND – The TREASURY FUND is the four character Treasury Fund that is looked up on the on the D23 – Fund Profile based on the Fund entered on the deposit transaction entered in R⋆STARS.

◾ DEPOSIT $ – SFMS – The net amount of the deposit transactions entered into R⋆STARS summarizied by the Agency, Account Number, and Deposit Number.

◾ DEPOSIT $ – BANK – The amount of the deposit transactions from the Bank’s tape summarized by the Agency, Account Number, and the Deposit Number.

◾ DATE – SFMS – The oldest Effective Date of the deposit transaction(s) entered into R⋆STARS for the control key elements.

◾ DATE – BANK – The date the bank processed the deposit per the control key elements.

◾ RELEASE STATUS – Enter the one character field as an M to manually release the deposit for processing in the overnight deposit reconciliation process. This will cause the system to generate the transaction needed to be able to spend the cash revenue. If the deposit automatically reconciled, the release status will be Y. If the deposit has not yet reconciled, the release status will be N.

◾ DESCRIPTION – If a deposit is manually released this field is required. Enter the up to forty character description that will describe why this deposit is being manually released. In Oregon, reference the Treasury’s deposit number.

Example:

Deposit Record requestable report

The DAFR3330 – DEPOSIT Reconciliation Record Report is a requestable report that displays cash receipt deposit records. The report is selected by Treasury Fund and the Reconciled field including the reconciliation date and the status. The status indicates how the records were reconciled corresponding to the SPEC SEL 1: options in the 91 – REPORT REQUEST PROFILE (e.g. Y, M and N). If the SPEC SEL 1: is set to M, only manual release deposits will be reported for a particular Treasury Fund. See the Report Guide – DAFR3330 for more information on requesting this report.

The DAFR3330 is a snapshot of the records found on the 13 – DEPOSIT Research Screen.

Example:

Agencies may find that using the 13 screen is more convenient than the report because of the immediate response instead of waiting for the report to be produced.