We are excited to share some travel updates with the University Community. Through our partnership with Egencia we were able to negotiate an agreement with United Airlines (UAL) to offer our travelers discounted rates on all business and personal travel as well as the opportunity for employees to earn additional UAL amenities!

When booking University travel on United Airlines through Egencia, travelers will automatically receive a 2% – 6% discount on their airfare. Additionally, travelers are eligible for personal travel discounts through United’s Break from Business program. United gives you up to 10% off your personal travel when you book by December 31, 2024. Instructions on how to sign up and utilize these benefits for personal travel can be found here.

For more information on the United Airlines program, please visit our Partnerships page for details. Check out the Travel Resources SharePoint for the most up-to-date information as it becomes available.

Thank you to all of you who use Egencia to book University-sponsored travel! The more our travelers utilize Egencia, the more we’re able to offer more and bigger things to our travelers.

This memo is meant to provide guidance on the accounting and financial reporting implications that arise from service agreements, and how the financial reporting affects Loyola University Chicago’s (LUC) annual tax return reporting. Service agreement AUs are used to capture the financial activities related to contracts/agreements whereby LUC is providing a service to an external entity. The entity is paying LUC for a specified service, and LUC is billing the entity for its services. The procedures outlined in this memo are only for service agreement AU’s that start with 106XXX, and does not apply to grant AU’s that begin with 5XXXXX.

I. OVERVIEW

Service agreements are unique in that the activity that LUC is performing for the external entity may be considered unrelated business income (UBI). UBI is defined as an activity that is a trade or business, is regularly carried on, and the activity does not directly relate to LUC’s exempt purpose. For additional details and examples of UBI activities, please visit: https://www.luc.edu/finance/unrelatedbusinessincometaxubit/.

Every service agreement is evaluated for UBI by LUC’s Tax department. If the agreement is deemed to be UBI, then the University must report the income/loss of the activity on a fiscal year basis to the Internal Revenue Service (IRS) and determine the income tax impact, for each year that the agreement has financial activity.

II.   FINANCIAL ACTIVITY REPORTING

Service Agreement AUs – General

Only those revenues directly related to the service agreement contract should be recorded in the service agreement AU. Only those expenses directly related to the service agreement should be recorded to the service AU. Service AUs function like operating AUs, and therefore there are no “carry forwards” or “net assets” that remain in the service AU at the end of each fiscal year.

Service Agreement with Income (Revenue exceeds Expenses)

The University is required to report the income for each service agreement that is classified as UBI on the annual tax return, therefore, it is critical that the AU reflects the fiscal year activity accurately as it occurred. A service agreement AU will have income if the department collected a fee that was higher than the expenses incurred for the agreement.

Additional expenses that are unrelated to the service agreement should not be posted to the service agreement AU.

Service Agreement with a Loss/Deficit (Expenses Exceed Revenue)

A service agreement AU can have a loss/deficit if the department providing the services has spent more on expenses than the fee charged for the service provided. An overall loss at the completion of the agreement should not be common or recurring. The fee structure of the agreement should be evaluated for any future agreements.

A department should NOT transfer expenditures out of the service agreement AU if the AU is in a deficit, otherwise, the true economic benefit of the agreement is not reported correctly on the tax return.

III.  EXPENSE TRANSFERS

If service agreement expenses are initially recorded to an incorrect AU, expense transfers must be submitted. Please refer to https://www.luc.edu/finance/transfers/.

For salary incorrectly recorded in an operating or service agreement AU, submit a salary transfer request form to cfraczkowski@luc.edu.

For salary incorrectly recorded in gift or grant AUs, an updated payroll form must be submitted for the individual. During SPA review, if a payroll adjustment is needed for retroactive pay, SPA will process the adjustment.

For non-salary transactions incorrectly recorded in a gift or grant AU, submit an expense transfer form to GRNTCON@luc.edu for SPA to process.

For non-salary transactions incorrectly recorded in an operating or service agreement AU, submit the appropriate transfer form (Accounts Payable / ProCard / GL Transfer form (formerly Expense Transfer).

IV.  AU CLOSURE OR EXTENSION

Once all services are completed and all revenues and expenses are recorded for a service agreement, the AU should be closed in the general ledger. Please send an email to Financial Systems (financialsystems@luc.edu) and copy Christine Fraczkowski, cfraczkowski@luc.edu who will confirm all the balance sheet activity is zeroed out and that the AU can be inactivated.

If the service agreement end date needs to be extended, please email financialsystems@luc.edu to alert them of the new end date. The end date should mirror the agreement’s end date unless an exception is needed. If an amended contract is available, please include it with the extension request.

To view your department’s service agreement AUs, access the Service Agreement balances report in BI: Accounting Unit Reports > Service Agreement Balances – 106XXX.

If the AU status column is Active “A” and the project has ended, please inactivate the AU.

BI Login: https://bi.luc.edu/

V.  END OF FISCAL YEAR REPORTING: REVENUE DEFERRALS/EXPENSE ACCRUALS

Service agreement AUs need to be reviewed, especially at the end of the fiscal year, so that revenue and expense are recorded properly. Please refer to the General Accounting Presentation on the Finance’s Year End Information Sessions site for further details on preparing and submitting year end deferral and accrual entries, where to find the forms, and their associated deadlines by department.

Revenue Deferral

If a service agreement’s activity is not complete by fiscal year end (June 30^th) and activity will continue into a subsequent fiscal year, the PI/financial administrator MUST review if A REVENUE DEFERRAL JOURNAL ENTRY may be necessary. A revenue deferral is needed when revenue is recorded in advance of completing the service obligations outlined in the agreement.

Revenue Deferral Example: AU 106XXX received a payment of $75,000 during the current fiscal year. Only $50,000 worth of services has been completed this year and the remaining services will be completed in the following year. A deferral entry for $25,000 should be submitted to defer the revenue to the next year.

DR 106XXX-3690 (other income)         $25,000  Defer Revenue to FYXX
CR 106XXX-2210 (deferred revenue) ($25,000) Defer Revenue to FYXX

Expense Accrual

If by the end of the fiscal year the agreement has incurred expenses that have yet to be invoiced, an expense accrual should be submitted. Every effort should be made to ensure that all salary and non- salary expenditures are recorded by the end of June.

Expense Accrual Example: AU 106XXX has shipping expenses of $17,000 that have not posted to the AU as of June 30^th. The department has yet to receive the invoice from the vendor. An expense accrual should be set up to reflect those expenses as of June 30^th.

DR 106XXX-6220 (shipping)                $17,000  Accrue ABC Shipping
CR 106XXX-2030 (accrued expense) ($17,000) Accrue ABC Shipping

Conclusion

The guidance in this memo is effective immediately and special attention should be made for the upcoming year-end on June 30, 2024. We thank you in advance for your collaboration in ensuring that the University’s financial statements and tax returns are accurate and prepared in accordance with Generally Accepted Accounting Principles and IRS regulations.

If you have any questions on this memo, please contact us.

General Accounting Department: Tinesa Beyers or Christine Fraczkowski

Tax & Financial Compliance: Maria Araque

Loyola Community,

Loyola’s Fiscal Year-end of June 30, 2024, is rapidly approaching! Please review the important year-end deadlines below.

Why is the Fiscal Year-end so important?
The University is required to prepare financial statements in accordance with Generally Accepted Accounting Principles (GAAP). The financial statements provide an overview of the financial position of LUC as of June 30th; therefore, it is critical that all revenues and expenses that relate to the fiscal year (July 1 – June 30) are captured accurately.

Year-End Procedure and Deadline Presentations
The Financial Services Division Fiscal year end presentations can be found at the following link: https://www.luc.edu/finance/fiscalyear-endinformation/

Accounts Payable
Departments should ensure that all invoices for goods received, or services rendered during FY2024 are reflected in the FY2024 financials.

• June 3, 2024: All requests, including Expense Reimbursements, for May 2024 and prior are due to AP.
• June 14, 2024: Invoices with Sponsored Program Accounting Units (2XXXXX, 5XXXXX, etc.) are due to AP to ensure they are processed in FY2024.
• July 1, 2024: All requests, including Expense Reimbursements, for FY2024 are due to AP.
• Requests must be received by Monday, July 1, 2024, at 4:00pm to ensure they are posted in FY2024.
• Please contact your vendors for electronic invoices if paper invoices are on campus and not accessible.
• Please indicate on the payment requisition form if the request is for FY2024 or FY2025 to ensure the request is posted in the appropriate fiscal year.
• July 5, 2024: Expense Transfer forms for AP transactions are due to AP.
• Please use the appropriate AP and ProCard Expense Transfer form. https://www.luc.edu/finance/accountspayable/apexpensetransferforminstructions/
• July 1, 2024: FY2024 Expenses NOT posted by July 1st may be accrued by the AP department.

Expense Accruals

• Please continue to send payment requests to Accounts Payable after July 9th. AP will make the determination if the request qualifies for an accrual.
• Service POs must be accrued manually for services June 30th and prior. If you do not have an invoice for services rendered in FY2024, please send an expense accrual to the General Accounting department.

If you DO NOT have an FY2024 invoice to submit a payment requisition by July 1, 2024, submit an expense accrual form to General Accounting (accounting@luc.edu) to set up an expense accrual, documentation to support the accrual will be needed. Use the Year End Expense Accrual Form found under the General Accounting Forms.

Purchasing: Purchase Orders

• Invoices received by departments for items ordered using a purchase order should be sent immediately to Accounts Payable for payment processing.
• Purchase orders that have not been paid, but have a receipt processed against the order in the Lawson system (“received, not invoiced”) by June 30th will be accrued as an expense in FY 2024.
• Please make sure that all items that have been physically received are also recorded as “received” in the purchasing system by June 28th.
• Health Science Campus: Orders must be physically received on Dock 8 by 4:00pm on Friday, June 28, 2024.
• Lakeside and Water Tower Campus: items received by a department must be substantiated with the packing list (or signed PO, if necessary) to purchasing by no later than 4:00pm on Friday, June 28, 2024.
• There will be no exceptions made for items in transit or back ordered even if the order has been placed prior to June 30th, therefore, please plan accordingly and place all orders as soon as possible.

Procurement Card

• Procard transactions must be posted to PNC Active Pay by no later than Thursday, June 27, 2024, to be applied to the FY2024 budget as this is the end of the June billing cycle. The “posted” date is not the transaction date, so please plan on making all FY2024 transactions as soon as possible.
• Please use account code 1810 (Prepaid expenses) in active Pay for any purchases on your Procard that relate to FY2025 services/expenses if made prior to June 30th. (Examples include: Hotel deposits, conference registrations, etc.)

Payroll Adjustments

• General Accounting Payroll Adjustments: To transfer salary expenses between Operating or Endowment Accounting Units (excluding Gift or Grant AU’s), please submit a completed Salary Transfer Request Form to General Accounting (send to cfraczkowski@luc.edu) by no later than Wednesday, June 12, 2024. No salary corrections will be processed for FY2024 after this date.

• Sponsored Program Accounting Payroll Adjustments
For Salary transfers involving Gift, Grant, or 103XXX/104XXX AU’s, please refer to Sponsored Program Accounting section below.

Outstanding Gift Card Logs

Gift cards purchased on or before March 31, 2024, should have been distributed and a completed gift card log returned. If you have an outstanding gift card log, it must be sent in by no later than Friday, June 14, 2024, prior to the end of Fiscal Year 2024. It is University policy for the purchaser to complete a gift card log found at: http://www.luc.edu/finance/giftcardpolicy/.

If any gift cards have been outstanding longer than this 3-month period, please reach out to accounting@luc.edu (For AUs that begin with 1XXXXX, 4XXXXX, 6XXXXX) or grntcon@luc.edu (For AUs that begin with 2XXXXX, 5XXXXX, 103XXX, 104XXX) to confirm the cards are still in your possession and notify Accounting of when they are to be distributed.

Cash Management

Repetitive EFT’s/ACH’s

• Repetitive EFT’s/ACH’s that need to be processed in Fiscal Year 2024, must be sent electronically to the Treasurer’s Office at CashMgmt@luc.edu by Thursday, June 27, 2024, at 12pm. These transactions will be processed on June 27th and clear Loyola’s bank account on June 28, 2024.
• Any repetitive EFT’s/ACH’s that come in after 12 pm on June 27, 2024, will be processed on June 28th and clear Loyola’s bank account on July 1, 2024. These transactions will be recorded in Fiscal Year 2025.

Non-Repetitive Wire Transfers

• Non-Repetitive Wire Transfers that need to be processed in Fiscal Year 2024, must be sent in with all supporting documentation to the Treasurer’s Office at CashMgmt@luc.edu by Friday, June 14, 2024, at 12pm. If any documentation is missing or has incomplete banking information, the request will not be processed and will be returned to you for additional information to be processed in Fiscal Year 2025.

Credit Card Deposits/Checks/Cash

• Please reference the Cash Management presentation for updated banking information to receive electronic payments or Lockbox mailing instructions for checks.  
• Credit Card deposits should be sent to the Bursar’s office (cashier@luc.edu) by June 5, 2024, for any activity that relates to May and prior. Please do NOT combine deposits for different months.
• Credit card deposits for June activity should be sent to the Bursar’s office (cashier@luc.edu) as soon as possible after the transaction has been processed.  Final deposits are due by 3pm Friday, June 28, 2024.
• All University deposits for FY2024 should be sent to the Bursar’s office by no later than Friday, June 28, 2024, by 3pm to ensure they are recorded for FY2024.
• The Year-End Revenue Deferral/Receivable forms and instructions can be found under the General Accounting Forms under “Year End Accrual Form”

Fiscal Year-End Revenue

• Revenue Deferral: Revenue received/deposited prior to June 30th for programs or services taking place in FY2025 must be deferred to the new fiscal year.
• Revenue Receivable: Any revenues not received by June 30th that relate to services provided by the University in Fiscal Year 2024 should have a revenue receivable set up.
• Please refer to the General Accounting Fiscal Year End Presentation for more details on how to defer revenue to FY2025 or set up a receivable for FY2024.

Sponsored Program Accounting

• All LUMC-P salary adjustments in FY2024 will need to be received by SPA with all necessary approvals by Wednesday, May 22, 2024.  Please remember that LUMC-P PAFs may take longer to reach SPA than other EIFs/PAFs, sometimes up to a full two to six weeks in processing “lead time” to reach Sponsored Program Accounting.
• All PAFs and EIFs (excluding LUMC-P) for salary adjustments in FY2024 will need to be received by SPA with all necessary approvals by Friday, May 31, 2024, to ensure they are processed with the final payroll of the fiscal year. 
• Lakeside and SON: All supplemental salaries to be paid by Friday, June 14, 2024, must be completed and submitted to SPA by Friday, May 24, 2024.  All requests will be evaluated on a case-by-case basis due to return to campus protocols.
• All non-salary journal entries/expense transfer requests for FY2024 should be submitted to your SPA GA with all necessary approvals by Tuesday, June 18, 2024.
• Advances in account code 1271 & 1273 opened prior to December 31, 2023, should be substantiated & reconciled by Tuesday, June 18, 2024.  For SPA related accounts, send completed logs & supporting documentation to GRNTCON@luc.edu. 
• Overdraft incurred in May or earlier will need to be resolved by the end of May.  Overdraft occurring in June needs to be resolved by Friday, June 21, 2024.  Overdraft cannot be carried forward into the next fiscal year.
• Any budget appropriations for FY2024 must be submitted to SPA by Friday, June 21, 2024.
• Pro-card transactions for FY2024 must be posted VISA Spend Clarity by Thursday, June 27 to be included in FY2024 budgets.  Pro-card transactions not meeting the deadlines will be included in FY2025 budgets.  Note: if items are backordered, for example, and the vendor does not ‘run the card’ in time the charge will likely post in FY2025.
• For any grants with a 6/30/2024 or earlier end date that are expected to continue into the next fiscal year SPA will need one of the following provided by Monday, June 10, 2024: (a) an Advanced Account Form with appropriate back-up to guarantee expense past the end date in the absence of a fully executed agreement/extension OR (b) the fully executed agreement/extension.  Find the Advanced Account Authorization Policy and form online at http://www.luc.edu/spa/policies.shtml.
• Please contact your Sponsored Program Accounting representative for additional information and resources

Note: FY2024 budgets will be carried forward to FY2025 in July. In mid-July budgets on sponsored program reports may appear to be $0.00 and your AU may appear to be overdrawn during the reconciliation/carry-forward process, but you may continue to spend on your sponsored AUs normally during this time. Budgets will be viewable again on reports run toward the end of July. Please contact GRNTCON@luc.edu if you have questions about the annual budget reconciliation and carry forward process for the University’s sponsored programs.

If you have any questions regarding the above procedures, please contact the appropriate department (see Finance Key Contacts). The entire Financial Services team appreciates your efforts, and we look forward to a successful and efficient year-end close!