501.0 Closing Dates-Criteria

GENERAL CRITERIA: The period-end accounting balances must measure all accounting transactions for the same period of time.

  • The accounting period must be closed within a reasonable number of days to provide assurance that period-end accounting balances provide timely information. Timely information means that the period-end balances are considered up-to-date and not outdated.
  • The measurement of financial activity recorded must be consistent among like accounting periods. for example, PSU must use the same policies and methodologies for reflecting accounting activity for all 12 monthly accounting periods.

FISCAL YEAR CRITERIA: Fiscal year close is considered a "hard close" to provide for the preparation of the annual financial statements. To ensure a "hard close," PSU follows the annual closing of the books instructions and record year-end revenue and expense accruals in the period 14 year-end accrual period. The year-end accounting records showing all revenue realized and all expenses incurred as of June 30 become the basis for the annual financial statements, and the external audit of the financial statements.

At the closing of period 14, revenue and expense balances should be recorded as follows:

  • REVENUE:  all revenue earned whether or not received 
  • EXPENSE: all expenses incurred whether or not paid
  • DEFERRED REVENUE: monies received but not yet earned
  • PREPAID EXPENSE: monies paid for goods and services not yet received

QUARTER END CRITERIA: Quarter close is considered a "hard close" to provide for the quarterly management reports. Quarterly close includes:

Units are required to clear their clearing funds to help ensure that revenues and expenses are recorded in the correct funds on a consistent basis. 

Quarterly accruals are not required to include expenses from the end of a billing cycle to the end of the quarter. For example, the billing cycle for procurement cards runs from the 27th to the 26th of the following month. The quarterly close contains all full months of procurement card activity, but is not required to include an accrual of procurement card expenses from the 27th to the end of the month. Additional examples of billing cycles that end before the last day of the month might include telecom, utilities, and mailing center, etc.

MONTH END CRITERIA: Monthly close does not necessarily measure all revenue and expense on the accrual basis. For example, quarterly tuition revenue is generally recognized in full in the first month of the quarter, and not spread among the remaining months of the quarter. The monthly close is a snapshot of the accounting records that, once closed, do not change. For institutional and departmental monitoring, the month-end accounting records should reflect all revenue and expense as of the end of the month and reasonable efforts must be made to record financial activity in the correct month.