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Appendix E
3Q Processing Manual For User Departments

Introduction to 3Q Accounting

During the period OUT OF RESIDENCE, salary is charged to subaccount 1099 or 1199 subaccounts only. Two charges against salary subaccounts (1000-1089 or 1100-1189) appear during each month IN RESIDENCE: Item #1: the difference between 1/9 and 1/12 of the annual salary; Item #2: 1/12 of the annual salary.

During the period in residence, the amount of charge line item #1 is simultaneously credited to accrual accounts (subaccount 1099 or 1199). The net effect on all accounts and subaccounts is that the employee receives 1/12 of his salary each month of the contract period. Department administrators who prepare MAFs must remember that the amount to be paid each month should be 1/12 the annual salary amount, and that ONLY salary subaccounts (1000-1089 or 1100-1189) are allowed.

In the three examples that follow, the faculty member is paid $75,000 salary per year, the appointment begin date is 7/1, and the period in residence for this academic year is from 10/1 through 6/30. Based on this information, the Payroll System determines that the faculty member is to be paid over a 12-month period starting in July, but will not actually start working until October. The department places a value of ‘Y’ in the Accrual? field, and uses the figure $6,250 as the monthly salary amount on the Academic Form.

Example A: 100% of Salary is Charged to a Ledger 4- Account

On the MAF, the department indicated that salary was to be charged 100% to 4-11111-1000. 3Q processing generated the following entries:


Expense Account, FAS 4-11111
Accrual Sub, -1099 or -1199
Salary Subaccount, -1000
Month
debits
credits
Item #1
Item #2
Jul.
6,250.00
   
---
---
Aug.
6,250.00
 
---
---
Sept.
6,250.00
   
---
---
Oct.    
(2,083.34)
2,083.34
6,250.00
Nov.  
(2,083.34)
2,083.34
6,250.00
Dec.  
(2,083.34)
2,083.34
6,250.00
Jan.  
(2,083.34)
2,083.34
6,250.00
Feb.  
(2,083.34)
2,083.34
6,250.00
Mar  
(2,083.34)
2,083.34
6,250.00
Apr.     
(2,083.32)
2,083.32
6,250.00
May    
(2,083.32)
2,083.32
6,250.00
Jun.
_________
(2,083.32)
2,083.32
6,250.00
    18,750.00
(18,750.00)
$18,750.00 56,250.00

In this example, 3Q processing will perform all of the accounting operations using the same six digit ledger 4- account; net effect is to pay 1/12 of annual salary per month.

Example B: Salary is Split 50/50 Between Ledger 4- Accounts

On the MAF, the department indicated that salary was to be charged 50/50 to 4-11111-1000 and 4-22222-1000. The department administrator used $3,125 as the monthly amount of salary to be charged to each account. In the DISTRIBUTION INFORMATION section of the PAF, administrators enter the figure 50.00% for each account: remember, on the PAF, the percentage determines what dollar amount is charged.

Expense Account, FAS 4-11111
Accrual Sub, -1099 or -1199
Salary Subaccount, -1000
Month
debits
credits
Item #1
Item #2
Jul.
3,125.00
   
---
---
Aug.
3,125.00
  
---
---
Sept.
3,125.00
   
---
---
Oct.     
(1,041.67)
1,041.67
3,125.00
Nov.    
(1,041.67)
1,041.67
3,125.00
Dec.  
(1,041.67)
1,041.67
3,125.00
Jan.    
(1,041.67)
1,041.67
3,125.00
Feb.  
(1,041.67)
1,041.67
3,125.00
Mar   
(1,041.67)
1,041.67
3,125.00
Apr.    
(1,041.66)
1,041.66
3,125.00
May    
(1,041.66)
1,041.66
3,125.00
Jun.
________
(1,041.66)
1,041.66
3,125.00
    9,375.00
(9,375.00)
9,375.00 28,125.00

Expense Account, FAS 4-22222
Accrual Sub, -1099 or -1199
Salary Subaccount, -1000
Month
debits
credits
Item #1
Item #2
Jul.
3,125.00
  
---
---
Aug.
3,125.00
 
---
---
Sept.
3,125.00
 
---
---
Oct.   
(1,041.67)
1,041.67
3,125.00
Nov.  
(1,041.67)
1,041.67
3,125.00
Dec.  
(1,041.67)
1,041.67
3,125.00
Jan.  
(1,041.67)
1,041.67
3,125.00
Feb.  
(1,041.67)
1,041.67
3,125.00
Mar  
(1,041.67)
1,041.67
3,125.00
Apr.  
(1,041.66)
1,041.66
3,125.00
May  
(1,041.66)
1,041.66
3,125.00
Jun.
________
(1,041.66)
1,041.66
3,125.00
    9,375.00
(9,375.00)
9,375.00 28,125.00

Notice that as in the above example, 3Q performed all of the accounting operations within the six digit ledger 4-accounts; the net effect for both accounts is to pay 1/12 of the annual salary per month.

Example C: Grant Account is to be Charged with a Specific Dollar Amount

In this example, a specific amount of salary will be charged to a grant, for effort expended on that sponsored project. The department determined that the faculty member would spend 20% of their effort during the period in residence. At the current salary level, this translates into $15,000. If the department administrator was aware of this source of funding in July, they would simply divide the $15,000 by 12, and charge that amount ($1,250.00) to 5-11111-1000 on the MAF. On the PAF, this would translate into a percentage of 20.00%.

In this example, the balance of $5,000 per month, or 80.00% of the monthly salary, is expensed to 4-11111-1000. As in Example A and B, above, 3Q will perform all the processing within the six digit ledger 4- account.

Expense Account, FAS 4-11111
Accrual Sub, -1099 or -1199
Salary Subaccount, -1000
Month
debits
credits
Item #1
Item #2
Jul.
5,000.00
   
---
---
Aug.
5,000.00
 
---
---
Sept.
5,000.00
 
---
---
Oct.   
(1,666.67)
1,666.67
5,000.00
Nov.  
(1,666.67)
1,666.67
5,000.00
Dec.  
(1,666.67)
1,666.67
5,000.00
Jan.  
(1,666.67)
1,666.67
5,000.00
Feb.  
(1,666.67)
1,666.67
5,000.00
Mar  
(1,666.67)
1,666.67
5,000.00
Apr.  
(1,666.66)
1,666.66
5,000.00
May  
(1,666.66)
1,666.66
5,000.00
Jun.
________
(1,666.66)
1,666.66
5,000.00
    15,000
(15,000)
15,000 45,000

In the above example, 3Q processing charged the ledger 4- account during the period OUT of residence. However, as discussed above, in Section II of this document, 3Q processing will NOT charge the grant account during the period out of residence. In addition, the accrual amount charged each month to the grant must be placed somewhere in order to pay the salary during the period out of residence. Instead of using the -1099 subaccount of the grant account, though, a separate account must be used: the department 3Q ACCRUAL ACCOUNT. This account is either a ledger 2- or 4- that was designated by the department, and is stored on the Payroll System Department Table. The account number can be changed upon request by contacting HRM. The same accounting entries shown in all the examples above continue to happen, but are split between grant account and the 3Q accrual account.

In this example, the department accrual account is 4-33333. The combined activity on the accrual subaccount, and the salary subaccount of the grant would appear as follows:

Example C: Grant Account is to be Charged with a Specific Dollar Amount (continued)

3Q Accrual Account, FAS 4-33333
Expense Account, FAS 5-11111
Accrual Subaccount, -1099
Salary Subaccount, -1000
Month
debit
credit
Item #1
Item #2
Jul.
1,250.00
   
---
---
Aug.
1,250.00
   
---
---
Sept.
1,250.00
   
---
---
Oct.    
(416.67)
416.67
1,250.00
Nov.  
(416.67)
416.67
1,250.00
Dec.  
(416.67)
416.67
1,250.00
Jan.  
(416.67)
416.67
1,250.00
Feb.  
(416.67)
416.67
1,250.00
Mar    
(416.67)
416.67
1,250.00
Apr.    
(416.66)
416.66
1,250.00
May    
(416.66)
416.66
1,250.00
Jun.
_______
(416.66)
416.66
1,250.00
TOTAL

3,750.00

     

11,250.00

If the department administrator discovers that there is an alternate source of funding available while the faculty member is in residence, a PAF should be submitted to reflect the changes in funding. The following process may be useful in figuring things out.

Case 1: The individual worked/will work on the grant an equal amount of time each month in residence.

a. Divide the total dollar amount available on the grant by 12.

b. Calculate the percent of MONTHLY salary represented by the 1/12th amount.

c. Update the Distribution Information section of the PAF to indicate the percentage of the monthly salary that corresponds to the 1/12th amount, in this case, 20.00%.

NOTE: For audit purposes in this example, you should also indicate that the change in funding begins the first day of the period in residence, and ends on the last day of the period of residence.

d. Prepare Form UPP 103 (see Section VI, below) to transfer salary during any months that have already passed, but for which the salary was not charged.

Case 2: The individual worked/will work on the grant an equal amount of time each month for only a portion of the period in residence.

a. First determine the number of months during which the individual will expend effort on the project. For example, let’s say that the individual will spend enough effort on the project during the last six months of the period in residence to justify a $15,000 charge to the grant. A total of $15,000, must be charged during the employee’s last six months IN RESIDENCE, including both the accrual and monthly salary amounts.

b. Calculate the total monthly earnings RATE. In this case, the monthly earnings rate is equal to the total dollar amount you can charge the grant during the remaining months of the period in residence, or

  • $15,000/6 months remaining = $2,500/month

    Remember that this figure is the sum of the 1/12th monthly salary amount, PLUS the ACCRUAL AMOUNT. Another way to think of this figure is that it represents 1/9th of some total annual salary amount.

c. Annualize the monthly earnings RATE. Remembering that this RATE corresponds to 1/9th of some annual salary, you simply multiply the RATE by 9, or

  • $2,500 earnings rate * 9 months in residence = $22,500 annualized salary

d. Determine a monthly amount by dividing the annualized salary by 12, or

  • $22,500 annual salary/12 months = $1,875/month

    This is the correct figure to use on the MAF, as well as the RATE in the ASSIGNMENT INFORMATION section of the PAF.

e. Determine the percentage of monthly salary represented by the figure in Step d., above:

  • $1,875 per month charged to grant/$6,250 total monthly salary = 30.00%

    This is the correct percentage to use in the DISTRIBUTION INFORMATION section of the PAF. As stated above, for audit purposes in this example, you should also be sure to indicate that the change in funding begins the first day of the period in residence, and ends on the last day of the period of residence.

f. Finally, you can check your work by performing the calculation in reverse.

The following table shows the manner in which the credits and debits would appear on the grant account as well as the 3Q accrual account.

3Q Accrual Account, FAS 4-33333
Accrual Subaccount, -1099
Expense Account, FAS 5-11111
Salary Subaccount, -1000
Month
debit
Credit
Item #1
Item #2
Jan.    
(625.00)
625.00
1,875.00
Feb.  
(625.00)
625.00
1,875.00
Mar  
(625.00)
625.00
1,875.00
Apr.  
(625.00)
625.00
1,875.00
May  
(625.00)
625.00
1,875.00
Jun.    
(625.00)
625.00
1,875.00
TOTAL     ($3,750) $3,750 $11,250

Example D: 3Q Appointment Combined with a 4Q Administrative Allowance

Department Chairmen and other academic administrators are paid an administrative allowance each month, in addition to their regular salary. Because the administrative work is performed continuously throughout the year, most administrative appointments do not accrue. The period over which the allowance is paid equals the period of residence for that appointment, 12 months in both cases.

NOTE: On the MAF, department administrators would leave the period of residence blank for this appointment, and would place an ‘N’ in the Accr column.

In the example below, the administrative allowance appears in the far right column. The allowance provides an additional $15,000 in salary for the individual. Note that the allowance contributes in no way to the accrual activity.

Dept. Accrual Acct.
4-11111-1099
Expense Account
4-11111-1000
Expense Account
4-22222-1019
Month
debits
credits
Item #1
Item #2
Adm. Allowance
July
6,250.00
   
---
---
1,250.00
Aug.
6,250.00
 
---
---
1,250.00
Sept.
6,250.00
 
---
---
1,250.00
Oct.  
(2,083.34)
2,083.34
6,250.00
1,250.00
Nov.  
(2,083.34)
2,083.34
6,250.00
1,250.00
Dec.  
(2,083.34)
2,083.34
6,250.00
1,250.00
Jan.   
(2,083.34)
2,083.34
6,250.00
1,250.00
Feb.  
(2,083.34)
2,083.34
6,250.00
1,250.00
Mar  
(2,083.34)
2,083.34
6,250.00
1,250.00
Apr.  
(2,083.32)
2,083.32
6,250.00
1,250.00
May  
(2,083.32)
2,083.32
6,250.00
1,250.00
Jun.
________
(2,083.32)
2,083.32
6,250.00
1,250.00
    18,750.00     56,250.00 15,000.00

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