Prepaid Expenses – Back Office

This document provides technical guidance for users managing prepaid expenses within the FLEX system. The Prepaid Expenses module facilitates the addition, deletion, viewing, and maintenance of prepaid expense records, and automates monthly amortization posting.

1. Module Overview

The Prepaid Expenses module is designed to streamline the management of expenses paid in advance, ensuring accurate financial reporting through systematic amortization.

  • Core Functionality:
    • Add new prepaid expense records.
    • Delete existing prepaid expense records.
    • View and maintain details of prepaid expenses.
    • Automate monthly amortization posting.
    • Automatically update current expense balances after posting.
    • Maintain a historical record of all postings for each expense.

2. Accessing the Prepaid Expenses Module

The Prepaid Expenses module is accessible from the FLEX Main Menu.

  • Navigation Path:
    • GL/Accounting
    • Prepaid Expenses
    • Prepaid Expenses (to view the main screen)

3. Main Prepaid Expenses Screen

Upon accessing the module, the main screen displays a list of all existing prepaid expenses.

3.1. Filtering Options

Users can filter the displayed prepaid expenses to quickly locate specific records.

  • Filter Criteria:
    • From Key #: Filter by the starting key number.
    • To Key #: Filter by the ending key number.
    • Description: Filter by a specific description.
    • GL Account: Filter by a General Ledger (GL) account number.
    • Branch: Filter by a specific branch number.

3.2. Action Buttons

The main screen provides several action buttons for managing prepaid expense records:

  • Add: Initiates the process to create a new prepaid expense record.
  • Edit: Allows modification of an existing selected prepaid expense record.
  • Delete: Removes a selected prepaid expense record from the system.
  • History: Displays the posting history for the selected prepaid expense.
  • Audit: Provides audit trail information for the selected prepaid expense.
  • Post Amortization: Initiates the monthly amortization posting process.

4. Editing/Adding a Prepaid Expense (Edit Prepaid Expense Screen)

When adding a new expense or editing an existing one, the “Edit Prepaid Expense” screen appears, allowing detailed configuration.

4.1. General Information Fields

  • Prepaid Key:
    • Required Field.
    • Displays the credit union assigned key number for the expense.
    • Used for sorting or categorizing expenses in reports.
  • Description: Enter a credit union-defined description of the prepaid expense.
  • Invoice #: Enter the invoice number, if applicable.
  • Department: Enter the department number, if applicable.
  • Quantity: Enter the quantity of items associated with the prepaid expense, if applicable.
  • Branch: Select the branch number for the location of the prepaid expense, if applicable.

4.2. Balance Information

  • Original Amount: Enter the initial cost of the prepaid expense.
  • Current Balance:
    • Enter the current balance of the expense.
    • For new expenses, this may be the same as the “Original Amount.”
  • Amortization Periods (months):
    • Enter the total amortization period in months.
    • The system uses this to calculate the monthly amortization amount (Original Amount / Amortization Periods).
  • Remaining Periods:
    • System-calculated field (not maintainable).
    • Indicates remaining months until the expense is fully amortized based on original amount and current balance.
  • Start Date: Enter the date the expense was incurred.
  • Ending Balance:
    • Optional field.
    • If not fully amortizing the expense, enter the dollar amount to be retained.
    • Amortization will continue until the current balance reaches this amount.
    • Similar to “Estimated Salvage Value” in Fixed Assets.

4.3. Amortization Definition

  • Amortization Method:
    • Currently, only Straight Line Amortization is supported.
  • Amortization Frequency: Select the frequency for posting amortization.
    • M: Monthly, on the last day of the month.
    • 1: Monthly, during the month, on the same day each month based on the “Next Interface Date” (cannot use 29th, 30th, or 31st).
  • Calculated Amortization Amount:
    • System-calculated field (not maintainable by default).
    • Based on “Original Amount” divided by “Amortization Periods (months).”
    • Can be overridden by the “Forced Amortization Amount” field.
  • Forced Amortization Amount:
    • Enter an amount if it differs from the “Calculated Amortization Amount.”
    • If left blank, the system uses the calculated amount.
    • If an amount is entered, it overrides the system’s calculation.
  • Next Interface Date:
    • Enter the next date amortization is due to post to the general ledger (typically month-end).
    • Note: The system checks this date when “Post Amortization” is selected. Amortization will not post if the “Next Interface Date” is after the “Journal Entry Effective Date” used in the post option.
  • End Date:
    • Optional field.
    • Used to identify the date the expense was fully amortized.
    • Similar to “Out of Service Date” in Fixed Assets.

4.4. General Ledger Interface

This section defines how the prepaid expense interacts with the General Ledger.

  • Prepaid Expense Account: Enter the GL account for the original amount of the prepaid expense.
  • Amortization Allowance:
    • Enter the GL account for the amortization allowance of the expense.
    • For prepaid expenses, this is usually the same GL account as the “Prepaid Expense Account.”
    • This account will be credited when amortization expense is posted.
  • Monthly Expense 1-12:
    • Enter the GL account(s) for the amortization expense.
    • Up to 12 different GL amortization expense accounts can be used.
    • If multiple accounts are specified, enter the percentage of total amortization that will post to each account.
    • These accounts will be debited when amortization expense is posted.
  • Total: If allocating amortization expense to multiple GL accounts, the sum of all percentages must equal 100%.

4.5. Notes

  • Optional field for adding comments or additional notes to the prepaid expense record.

5. Posting Amortization

The “Post Amortization” function initiates the journal entries for posting monthly amortization.

  • Access: Select Post Amortization from the main Prepaid Expenses screen.
  • Journal Entry Effective Date:
    • Enter the effective date for the journal entry.
    • Any prepaid expense with a “Next Amortization Date” on or before this date will be included.
    • A future effective date can be used to post items ahead of schedule.
  • Update Files?
    • FLEX strongly recommends running a worksheet (selecting “No, Generate Worksheet Only”) and verifying data before choosing “Yes, Post.”
    • Yes, Post: Posts the amortization entries to the General Ledger.
    • No, Generate Worksheet Only: Generates a report of the proposed entries without posting them, allowing for review.
  • Post to Pending?
    • This option only displays if the previous month’s general ledger is still open.
    • If selected, journal entries will post to the pending month.

5.1. Reports Generated During Posting

Two reports are generated when posting amortization:

  • Prepaid Expense Journal Entries: Shows all entries made to GL accounts during amortization posting, including the total amount of amortization posted.
  • Prepaid Expense Posting: Lists the amortization posting for each prepaid expense and its new balance after posting.

6. Reports

Several reports are available to provide insights into prepaid expenses. These reports can be found under GL/Accounting > Prepaid Expenses > Reports from the FLEX Main Menu.

  • Prepaid Expense Listing by GL (End Date):
    • Generates a report of all prepaid expenses grouped by general ledger accounts.
    • Items only appear if the end date in the expense record is on or before the report date.
  • Prepaid Expense Listing by GL (Start Date):
    • Generates a report of all prepaid expenses grouped by general ledger accounts.
    • Prompts the user to show “Original” or “Remaining Periods” on the report.
  • Prepaid Expense Listing by Key:
    • Generates a report of all prepaid expenses sorted by key.
    • Prompts the user to select whether “Start Date” or “End Date” should appear on the report.
  • Prepaid Expense Transaction List:
    • Lists prepaid expense transactions that have been posted.
    • Prompts the user for an individual expense key or all expenses, and a date range for transactions.