BRIEF

Policy Summary

This policy establishes guidelines for accrual accounting requirements for liabilities incurred. Berkeley Lab maintains its accounts and prepares financial statements on the accrual basis of accounting in conformity with Generally Accepted Accounting Principles (GAAP). All obligations for materials received or services performed are to be recognized in the Berkeley Lab Financial Management System (FMS) in the period incurred. A balance should be maintained between the effort required to measure and accrue costs and the added value of that effort.

Who Should Read This Policy

All Laboratory employees with financial responsibilities

To Read the Full Policy, Go To:

The POLICY tab on this wiki page

Contact Information

Manager, General Accounting
Manager, Payroll
Manager, Accounts Payable

POLICY

A. Purpose

This policy establishes guidelines for accrual accounting requirements for liabilities incurred. Lawrence Berkeley National Laboratory (Berkeley Lab) maintains its accounts and prepares financial statements on the accrual basis of accounting in conformity with Generally Accepted Accounting Principles (GAAP).

B. Persons Affected

All employees with financial responsibilities at Berkeley Lab

C. Exceptions

Not applicable

D. Policy Statement

D.1 General

1. All obligations for materials received or services performed are to be recognized in the Berkeley Lab Financial Management System (FMS) in the period incurred. A balance should be maintained between the effort required to measure and accrue costs and the added value of that effort. This policy is applicable to all incurred obligations for payroll, goods, services, travel, and subcontracts. If not automatically captured in the FMS, liabilities will be measured using accurate, complete, and current information available.

D.2 Procedures

1. Payroll will accrue and report all payroll and related liabilities.
2. Disbursements will record all nonpayroll obligations.
3. The department or division will identify and report to Disbursements all other unrecorded obligations of the Laboratory. Each department or division is responsible for reviewing and analyzing the circumstances that apply to the unrecorded liability, using discretion to determine if a manual accrual is appropriate.
4. An accrual is appropriate and required if it is considered material (substantial likelihood that omission of the accrual would affect or influence decisions).

D.3 Accrual Process

1. To record a manual accrual in the FMS, the following information must be submitted to Disbursements by the last Thursday before the close of the last month of the accounting period and kept on file as documentation with the requesting department or division:
   1. Accrual amount
   2. Beginning and ending date of the accrual period
   3. Basis and justification for determining amount accrued
   4. Project ID
   5. Purchase order/subcontract number
   6. Resource category
   7. Indication that the accrual is reversing or nonreversing

D.4 Accrual Criteria

1. During the Fiscal Year
   1. Manual accruals are not required for:
      1. Services. If the service was provided during the current reporting month, and the invoice was received and approved by month end
      2. Goods. If the item(s) and the invoice were recorded as received in the FMS in the current reporting month, or if receipt was required, and the item(s) were recorded as received in the FMS, but an invoice was not submitted. (An automatic monthly accrual would be generated in the FMS.)
   2. Manual accruals determined to be material are required on a fiscal quarter basis for:
      1. Goods. If the item(s) were received by the department or division, but an invoice was not received
      2. Services. If the service was provided before the end of the fiscal quarter, but the Laboratory was not billed for the services provided, or if the vendor is custom-building an item or performing on a construction subcontract, an accrual is required for the percentage of the item or subcontract estimated to be completed before the end of the fiscal quarter.
2. At Fiscal Year-End
   1. Manual accruals are not required for:
      1. Services. If the service was provided during the fiscal year, the invoice was received by Disbursements, and department or division certification was provided
      2. Goods. If the item(s) were recorded as received in the FMS prior to the close
   2. Manual accruals determined to be material are required at fiscal year-end for:
      1. Goods. If the item(s) were received by the department or divisions, but the invoice was not received by Disbursements by September 30, or If the item(s) were shipped but not received by September 30, and the contract covering the item(s) ordered stipulated freight on board (FOB) shipping point (the Laboratory takes possession when the item is shipped). Documentation is required for the vendor shipping date.
      2. Services. If the service was provided during the fiscal year, but the invoice was not received by Disbursements by September 30, or If the vendor was custom-building an item or performing on a construction subcontract, an accrual is required for the percentage of the item or subcontract estimated to be completed by September 30.

E. Roles and Responsibilities

Each department or division is responsible for updating and maintaining an accrual worksheet identifying the current month end balance for each project and the accruals for each purchase order.
The Office of the Chief Financial Officer (OCFO) is responsible for monitoring proper documentation and reconciling the liability accrual accounts. The OCFO will conduct quarterly reviews of selected accrual transactions executed by the departments or divisions to evaluate compliance with policy and the status of the liability accrual accounts.

F. Definitions/Acronyms

G. Recordkeeping Requirements

None

H. Implementing Documents

None

I. Contact Information

Manager, General Accounting
Manager, Payroll
Manager, Accounts Payable

J. Revision History

DOCUMENT INFORMATION

Source Requirements Documents

DOE Accounting Handbook, Chapter 11, Liabilities

Implementing Documents

None