BOP Program Statement 8540.03 § 11

To ensure the financial records accurately reflect FPI’s financial position, the following

procedures are done before or immediately following the monthly closeout. The Deputy

Controller, Financial Accounting and Budgeting, closes the financial records for the corporation.

Field and Remote Locations have until the 2nd workday of each month to complete the

“closeout” or enter data for their locations. The Corporate Reporting section has discretion to

open and close accounting periods after the second work day to perform routine monthly

corporate-level adjusting entries (e.g., Warranty Accrual, Capitalization of Overhead, and

governmental conversions). Once the Controller’s office has been notified that the books are

closed at the corporate level, authorization from the Controller’s office is required before

opening the accounting period.

The following responsibilities are designated for Central Office (Corporate Operations and

Central Office Business Office), Field Business Offices, and CAR.

P8540.03 03/18/2015 9

a. Corporate Reporting Section. The Deputy Controller, Financial Accounting and Budgeting,

completes the following:

■ Obtain a written explanation for cash differences from the Chief of Disbursements or the

Chief, CAR.

■ Reverse accrual documents generated by location using the current month date.

■ Run the open item clearing transaction for OIM general ledger accounts for the current

month.

■ Execute the WIP calculation and promptly notify field locations of completion.

■ Execute the 95% WIP calculation after completion of the WIP and distribute to all locations.

■ Perform the Collective Settlement of Production Orders and the posting entries made by the

WIP calculation process.

■ Ensure the material management period is closed on the last day of the month and the

controlling and financial posting period is opened for the new month.

■ Settle internal orders for assets to Assets Under Construction

■ Execute the Assessments for Periodic Re-posting, Assessments (Plant to Plant), and

Assessment (Plant Level from Support to Production), for all plants.

■ Calculate and post the depreciation for the preceding month before closing the period, but not

later than the first work day of the new month.

b. Corporate Reporting Reconciliations. The Deputy Controller, Financial Accounting and

Budgeting generates reports for specific general ledger accounts for comparison.

■ Inventory. Generate the general ledger Account Balances Report for:

 G/L Account 151100, Raw Materials and Supplies.

 G/L Account 152100, Finished Goods Manufactured.

 G/L Account 152710, Sub-Assembly Manufactured.

These accounts are compared to the List of Stock Values: Balance Report for valuation classes

3000 (Raw Materials), 7920 and 3100 (Finished Goods), and 7900 (Sub-Assemblies).

■ Consignment Payable. Generate the Consignment Payable Liability Display Report for G/L

Account 211100, Consignment Payable Open Item Management, and compare to the Settle

Consignment/Pipeline Liabilities.

■ Work in Process. Generate the Account Balances Report for G/L Account 158100, Work in

Process, and compare to the WIP Calculation report for the previous period.

P8540.03 03/18/2015 10

■ Building and Improvements/Accumulated Depreciation. Generate the general ledger

Account Balances Report for:

 G/L Account 173000, Building and Improvement (B&I).

 G/L Account 173900, Accumulated Depreciation (M&E).

These are compared to the Asset Balance Report for class codes 1000 through 1300, using the

book value option selection.

■ Machinery and Equipment/Accumulated Depreciation. Generate the general ledger

Account Balances Report for:

 G/L Account 175100, Machinery & Equipment - Operational

 G/L Account 175900, Accumulated Depreciation - M&E

These are compared to the Asset Balances Report class code 2000 through 2300, using the

book value option selection.

In addition, G/L Account 175800, M&E Adjustment, should be in balance with the spreadsheet

support subsidiary.

■ Construction. Generate the general ledger Account Balances Report for G/L Account

172000, Capitalization of Settled Internal Orders, and compare with the Asset Balance

Report for class code 4000 and the Internal Orders Report, for Order Type 0600.

■ Capital lease Assets. Generate the general ledger Account Balances Report for:

 G/L Account 181000, Fixed Assets – Capital Leases.

 G/L Account 181900, Accumulated Depreciation – Capital Leases.

These are compared to the Fixed Assets Report for class code 2500, using the book value

option selection.

■ Internal Use Software. Generate the general ledger Account Balances Report for:

■ G/L Account 183000, Fixed Assets – Internal Use Software.

■ G/L Account 183200, Internal Use Software in Development.

■ G/L Account 183900, Accumulated Depreciation – Internal Use Software.

P8540.03 03/18/2015 11

These are compared to the Fixed Assets Report for class code 2600 and 2650, using the book

value option selection.

■ GRIR. The Deputy Controller, Financial Accounting and Budgeting, generates the general

ledger Account Balances Report for G/L Account 232100, Goods Receipt/Invoice Receipt,

and compares to the General Ledger Line Open Item Report for G/L Account 232100, Goods

Receipt/Invoice Receipt.

■ Accounts Payable. The Deputy Controller, Financial Accounting and Budgeting, generates

the general ledger Account Balances Report for G/L Account 211000, Accounts Payable

Open Item Management, and compares to the Vendor Line Item Display Report.

c. Central Accounts Receivable. The Chief, CAR, completes the following:

■ Ensures that cash differences for the previous month are explained in writing and that

appropriate adjustments are made.

■ Ensures blocked billings are investigated for a determination of release, before processing the

final Billing Due List. Exceptions for year end are noted in the Year End Closing

Instructions.

■ Generates the Billing Due List, ensuring all billable items are billed by the close of business

on the first business day of the month. Exceptions for year end are noted in the Year End

Closing Instruction.

■ Ensures customer advances are updated, not later than close of business, on the first business

day of the month.

■ Prepares the Statement of Transactions, SF224, for Agency Location Code (ALC) 15-08-

0007 with an explanation of any differences, and submits to the Corporate Reporting Section.

■ Notifies field locations when billings have been completed for the month.

d. Central Accounts Receivable – Reconciliations. The Chief, CAR, generates reports for

specific general ledger accounts for comparison purposes.

■ Accounts Receivable. Generate the general ledger Account Balances Report for:

 G/L Account 131000, Accounts Receivable; Govt. Billings

 G/L Account 131500, Public Billings.

These are compared to the Customer Line Items Report.

■ Customer Advance. Generate the general ledger Account Balances Report for:

P8540.03 03/18/2015 12

 G/L Account 231000, Advances Payable.

 G/L Account 231010, Progress Payable.

 G/L Account 132100, AR - Credit Card Clearing – VISA.

 G/L Account 132200, AR - Credit Card Clearing – Discover.

 G/L Account 132300, AR - Credit Card Clearing – MasterCard.

 G/L Account 132400, AR - Credit Card Clearing – American Express.

 G/L Account 136100, Unapplied Payments – Lockbox (Contra).

 G/L Account 136200, Unapplied Payments – Credit Card (Contra).

 G/L Account 136300, Unapplied Payments – Non-Treasury (Contra).

 G/L Account 136400, Unapplied Payments – GOALS/IPAC (Contra).

 G/L Account 138000, Long Term Receivable.

These are compared to the List of Open Down Payments (Customer) Report and differences

reported to the Deputy Controller, Financial Accounting and Budgeting.

e. Central Disbursements. The Chief of Disbursements prepares the SF224 for ALC 15-08-

0001, with an explanation of any differences, for submission to the Corporate Reporting Section

f. Field Location Tasks. The remote accountant and prime business manager ensure

completion of the following tasks (some tasks are performed before certain transactions

generated by the Corporate Reporting Section for monthly closeout):

■ That manual journal entries for miscellaneous asset and liability accounts, including

allowances, are completed and approved.

■ That all required accruals are completed. In addition, an estimate for inmate payroll is

entered if payroll has not been calculated by the closeout date.

■ That G/L account 222000, Accrued Expenses, includes an accrual for utilities.

■ The reversal of all accrual documents generated by their location(s) using the current

month’s date.

■ That the system-generated accrual document list is reviewed to ensure reversal dates are

reasonable and errors have not occurred.

■ That all approved transfer of expenses to Central Office is charged to the appropriate G/L

Administrative and Expense Accounts (i.e., 620000 series) and their cost centers. These

expenses are transferred to Central Office via the financial information system re-posting

function. The text field contains the reason for the transfer (i.e., John Smith – Remote

Accountants Training). Any amount remaining in the 620000 G/L Accounts is reclassified

by the Corporate Reporting Section.

P8540.03 03/18/2015 13

■ That all shipments and other material transactions for the month are keyed into the financial

information system by the last calendar day of the month.

■ That all asset transactions, including transfers and construction projects, 100% completed

during the month are settled and transferred to an active asset. While Corporate Reporting

settles construction projects at month end, the field notifies Corporate Reporting upon

completion of projects to ensure that appropriate costs are allocated.

■ That WIP value agrees with the G/L Account 158100, Work in Process. The results must be

analyzed and errors corrected or the FFA notified.

■ That the respective Cost Center Expense Report(s) and Profit Center Income Statement(s) are

analyzed for accuracy, validity, and reasonableness, making necessary adjustments.

Significant irregularities are reported to the FFA.

■ That the data in the 95% WIP calculation spreadsheet distributed by Corporate Reporting is

validated and corrected, if necessary. In addition, calculations are performed and a journal

entry posted for the 95% WIP adjustment for the period.

■ That the 95% Finished Goods and Sub-Assemblies Report is run. Calculations are performed

and a journal entry posted for the 95% Finished Goods and Sub-Assembly adjustment for the

period.

■ That all OIM accounts are monitored for accuracy.

■ That all production orders are settled and resolution of settlement errors occurs by the last

calendar day of the month.

■ That all goods received have been posted by the last workday of the closeout period.

■ That the List of Stock Values: Balance Report is validated for accuracy and any irregularities

reported to the FFA.

■ That the Material in Transit Report is reviewed to ensure all items are physically in transit

and appropriate actions taken, if required. Any inventory items purchased on a Stock

Transfer Order (STO) for use other than in production or sale are removed and charged to the

appropriate expense account and cost center.

■ That the material list is reviewed for price discrepancies.

g. Field Location Reconciliations. The remote accountant or prime business manager ensures

that the following reconciliations are completed as part of the period closeout:

■ Cost Center/Profit Center. The remote accountant or prime business manager generates a

Cost Center Report (Controlling) that displays any re-postings from one cost center to

another and the Profit Center Report. These reports are compared to ensure agreement at

period close.

■ If a G/L account appears on the Cost Center Report under the heading “Statistical

Postings,” an error has occurred, probably from incorrect data entry during the original

P8540.03 03/18/2015 14

transaction (i.e., posting without a cost center or posting with a cost center and production

order). The transaction is reversed using the Cancel Material Document: Initial Screen

and re-entered correctly. If the error cannot be corrected, documentation is submitted to the

FFA for assistance.

■ Cost of Production. Production flow accounts or overhead accounts accumulate costs

incurred during the production process and are always associated with a production order.

Accuracy of posting to these accounts results in good inventory valuations. The remote

accountant or prime business manager generates the Cost Centers: Actual/Plan/Variance:

Selection report and the Selection: Profit Center: Plan/Actual/Variance to ensure the total

applied overhead amounts are in agreement.

 G/L Account 640100, Machine Hour Cost.

 G/L Account 640200, Run Cost.

 G/L Account 640300, Set Up Cost.

■ General Ledger Applied Overhead Accounts - Financial Module:

 G/L Account 653400, Raw Materials Consumed.

 G/L Account 653450, Factory Output Raw Materials.

 G/L Account 653500, Sub-Assembly Consumed.

 G/L Account 653550, Factory Output Sub-Assembly.

 G/L Account 653600, Finished Goods Consumed.

 G/L Account 653650, Factory Output Finished Goods.

 G/L Account 653700, WIP calculation Contra Account.

h. Field Office Report Submission. The remote accountant or prime business manager

prepares and submits the following spreadsheets and forms to the FFA upon completion, but not

later than the third workday of the month:

■ Monthly Data Certification Form.

■ Monthly Slow Moving Analysis Spreadsheet(s) for raw materials, finished goods, and sub-assemblies.

■ Valuation spreadsheet for Lower of Cost or Market (95%) and Reconciliation of General

Ledger Account 152800 Spreadsheet.

■ Valuation spreadsheet for (95%) Work in Process Adjustment (modified from 95% report

provided by Corporate Reporting).

■ Valuation spreadsheet for Lower of Cost or Market (95%) for Finished Goods and Sub-assemblies.

P8540.03 03/18/2015 15

Note: The data for the 95% adjustment(s) are downloaded to an EXCEL spreadsheet distributed

by FMB. The spreadsheet(s) are designed to facilitate electronic consolidation and cannot be

modified.

Individuals signing the Monthly Certification Form are accountable for its accuracy. The

signatures indicate the information was reviewed and accurately reflects the ending general

ledger balances and an adequate explanation of differences.

i. Field submissions to Support Centralized Accounts Receivable (CAR). As required by

the Program Statement Revenue Recognition the FOB Destination tracking to support revenue

recognition parameters is based on summary information provided monthly by each field site to

support in-transit time cutoff dates. In-transit times are compiled by program.

j. Field Submissions to Centralized Accounts Receivable (CAR). By the third work day of

each month, field locations having progress payments submit a reconciliation of customer

balances to the CAR Accountant.

By the third Wednesday of the month, the following reports/spreadsheets are submitted via e-

mail to the GroupWise address CS_AR:

■ FOB Destination in Transit summary spreadsheet.

■ U.S. Mail spreadsheet

■ Sales Order Validation spreadsheet.