Office of Origin: Finance
Date Adopted: 10-05-17
Date Reviewed: 10-05-17
Last Date Modified & Approved: 10-05-17

This document defines the process that ensures that all manual journal entries recorded in Lake Michigan College’s (the College) general ledger are properly prepared, reviewed, approved, and recorded in accordance with generally accepted accounting principles.

All employees responsible for preparing, entering, or approving journal entries must possess an appropriate level of financial knowledge.

All journal entries are required to have supporting documentation. Supporting documentation consists of source documents, supportive calculations, and/or other items necessary to substantiate the completeness and accuracy of the journal entry.

Manual journal entries can be defined in one of seven different categories.

1. Recurring Entry – A journal entry that is recorded each period. The risk of misstatement is mitigated through the performance of monthly reconciliations. These entries may include bank sweep account transfers, daily auxiliary receipt activity, uploading procurement cards and contracted labor charges.
2. Accrual/Deferral Entry - A journal entry that impacts accounts payable, other accrued liabilities or deferred revenue. Examples include entries to recognize expenses incurred but not recorded, entries for compensation earned but not recorded, and tuition revenue received but not earned.
3. Allocation Entry – A journal entry that distributes costs based on usage or other similar methodology.
4. Estimate Entry - A journal entry requiring subjectivity or judgment to calculate. These entries typically impact bad debt, actuarial liabilities, and other reserves.
5. Internal Entry - A journal entry that reflects internal activity, transfers, reclassifications or corrections and has no consolidated impact.
6. Budget Entry – A journal entry that is created to control the maintenance transactions within the College’s operating budget.
7. All other entries - A journal entry affecting net assets not previously defined.

All manual journal entries must be approved in accordance with the College’s Approval Matrix, which outlines the minimum required approval level based on journal entry type and journal entry amount. The Approval Matrix is shown following:

Minimum Approval Level *

* Based on impact of individual balance sheet or income statement category (e.g., assets, revenues), which will be ½ of the journal entry "control total"

Responsibility: Director of Finance
Reference: