Visit Show Me the Steps for easy instructions on how to use CU*BASE to complete tasks related to general ledger processing.
Subsidiary processing provides the ability to track the detailed accounting life of fixed assets (including land, leased assets, and buildings), prepaid expenses, and accrued expenses, all separately from the general ledger history. Subsidiary processing gives two distinct benefits:
First, the system can also track and maintain a detailed history of “non-accounting” issues such as where the item was purchased, maintenance contracts, inventory information, etc.
Second, subsidiary items can be grouped so they can be tracked using a single or limited set of general ledger account numbers. This summary of the detail is much more effective as an analytical tool, showing trends and the gross effect of the subsidiary items versus the independent detail (e.g., 5% Fixed Asset / Total Assets Cap).
Subsidiary processing is one more example of centralized data that can be shared throughout several credit union departments for inquiry and control. Management should understand that these programs are for the management of key credit union assets and liabilities, not only the accounting of their associated expenses.
The responsibility of working directly with the subsidiary history is generally best limited to a single person or department. However, the acquisition of fixed assets and authorization of payments will often involve several people or departments. One way to make sure that a credit union can control the activity in a subsidiary history is to use a clearing account.
The credit union manager authorizes the payment for a new PC for his desk on April 15. The check is cut crediting the bank and debiting the fixed asset clearing account. The accounting department sets up the subsidiary item on April 27, using the fixed asset clearing account as the offset for the purchase.
The credit union manager authorizes the payment of the credit union's real estate taxes on April 15 for $17,500.00. The accrued to date liability had a balance of $16,000.00. The manager cuts the check against the subsidiary clearing account. Therefore, the accounting department could make an expense adjustment to the subsidiary history later in the month to reflect the additional expense and the payment of the liability.
By using a clearing account, the accounting department does not need to worry about posting details throughout the month to the subsidiary tracking software. Once or twice a month, the accounting department can clear the account by offsetting the history to the individual subsidiary items. At the end of the month, the clearing account balance is zero, and all of the details accumulated throughout the month are accounted for and properly designated in the subsidiary system.
Following is a summary of the normal sequence of events that take place each month to manage Subsidiary Processing:
Throughout the month, add subsidiary items, and perform needed maintenance and/or adjustments to subsidiary items.
a work file for each subsidiary
This takes a “snapshot” of all subsidiary ledgers and calculates the monthly expense amounts for each item. This work file can be modified for the current month before it is posted, if necessary.
the work file and create
the monthly subsidiary journal entries.
This enters the monthly expense amounts into the subsidiary ledgers, subtracts one month from the remaining life of all subsidiary items, and generates journal entries which will later be posted to the G/L.
the journal entries to
This takes the journal entries created in Step 3 and posts them into the General Ledger.