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> Financial Services Department > Services > Financial Management of Purchase Orders > Overview of Accounting Process f
Purchase Orders
A reservation (commitment) is made against the departmental budget recorded in the Funds
Management (FM) accounts (CFC or CFC/Fund combination)
If a purchase requisition has already been created in FIS, there is no financial impact on the amoun
of budget reserved for this transaction; the reservation (commitment) against the departmental FM
accounts already exists. The actual commitment is moved from the purchase requisition to the
purchase order.
If a purchase requisition is not already created, the purchase order transaction is created and a
reservation is made against the budget in the departmental FM accounts.
The commitment (reservation) against the budget in the departmental FM accounts remains
unchanged.
DR: Expense (against the departmental cost center or internal order only)
CR: Accrued Liability account (G/L 537000)
The posting of the GR document represents the acceptance of the goods and/or services as delivered, and
records this as an "accrued" University liability. An "accrued" liability is one where we (UofT) acknowledge
that a payment is owed to an external party, but no formal request (e.g. invoice) for payment has been
received.
Formal request for payment by a vendor for goods and/or services delivered.
The PO commitment (reservation) is reduced by the amount requested in the invoice and a
corresponding amount of budget is made available for payment
An "actual" expense transaction is recorded at this time Note: The same budget dollars tha
had been reserved by the PO transaction are now being used to issue payment to the vendo
the PO commitment transaction is replaced with an "actual" expense transaction.
There is no activity as a result of this transaction; the CO accounts are only updated at the
point that the GR document is posted.
Since a request for formal payment has now been made, the IR document results in the following
posting to the UofT accrual and vendor accounts
Goods Receipt document recorded, but payment to the vendor was not
processed using the Invoice Receipt process (e.g. entered as a "certified
invoice")
Two steps are required:
1. Reverse the Goods Receipt document; see the quick reference guide: Goods Receipt
Reverse
2. Cancel Purchase Order; See the quick reference guide: Finalize and Cancel Purchase
Order
If you have any further questions, please contact your FAST Team Faculty Representative.
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University of Toronto
E: webmaster.financialservices@utoronto.ca | P: 416-978-2140 | Fax: 416-978-5572
Financial Services Department, University of Toronto, 215 Huron St, 2nd floor, Toronto, ON, M5S 1A2