Attachment E - Finance Overview.docx

Overview Enterprise Resource Planning (ERP) System - Finance The Program provides an integrated single Enterprise Resource Planning (ERP) System for agencies to utilize in processing their fiscal, procurement and other financial responsibilities. The ERP system has been designed to meet the accounting and reporting requirements of the Office of the Illinois Comptroller (IOC) and interfaces to/from the IOC’s Statewide Accounting Management System (SAMS) have been established. The Program also interacts with our partners via interfaces. These are described in detail in Attachment J - Interfaces.

The Program utilizes Microsoft Azure as their subservice organization to host the ERP applications.

ERP System Modules The ERP Central Component (ECC) is comprised of the following modules:

· Financial Accounting

· General Ledger

· Accounts Payable

· Asset Accounting/Management

· Material Management

· Public Sector Collections & Disbursements

· Funds Management

· Grants Management

· Controlling

In addition, the Program has implemented the Supplier Relationship Management module (SRM) which facilitates the procurement of goods and services.

User Entities There are 76 user state agencies, boards, and commissions and 1 authority. The Illinois Toll Highway Authority (ILTA) has unique business requirements from the 75 other user entities, which resulted in the need to customize the enterprise design.

Overview of Modules:

General Ledger The General Ledger module records the financial transactions of the agencies and manages the period end close process. The General Ledger and chart of accounts master data elements govern the way budgets, revenues/receipts, transfers, bonds, federal funds, or expenditures of the agency are recorded. This module is also configured for three ledgers to account for the multiple bases of accounting utilized by agencies; full accrual, modified accrual and cash basis, unless the agency specifically indicates otherwise.

Accounts Payable The Accounts Payable module records and manages accounting data for all vendors. Invoices are entered and require 2 levels of approval. New invoices can be entered in one of the following ways:

· Manual entry

· Mass Upload Template

· Interface from Legacy System

· Interface from Amplifund (grant system) A nightly batch job generates the IOC required Balance Report which provide evidence that all invoices have agency head signature. (If needed, designated end users have access to manually generate the Balance Report.) The Balance Report is emailed to specified end users for review and approved by a user with signature authority to release to the IOC for payment processing. In addition, there is a nightly batch that brings in payment details from the IOC’s SAMS into ERP. One user entity utilizes ERP to process payments to providers in the form of a debit card. An end user system role has access to maintain a debit card table that interfaces with a 3rd party vendor who establishes the debit card accounts.

This module also enables end user entities with locally held funds to process invoices and issue checks directly from ERP. Checks are cleared manually by the end user entity or via a file submitted to the ERP Production Support team.

Asset Accounting The Asset Accounting modules maintains all activity on fixed assets. Transaction codes are used to process asset additions, transfers, and retirements. Asset acquisitions utilize an asset shell that is recorded to SRM in a purchase order except when the asset is acquired via a transfer or donation. During the construction of an asset, the costs are posted to an Asset Under Construction account. Upon completion, the accumulated cost in the Asset Under Construction account is transferred to the Asset account and capitalized as appropriate.

Depreciation is calculated utilizing the straight-line method over the estimated useful life of the asset. The capitalization threshold is determined based on the asset type (e.g., land, equipment). On the first day of each month, a batch job processes the calculation of depreciation for that month and posts it to the general ledger. In addition, to accommodate a requirement from the Office of the Comptroller for STIL agencies (excluding Tollway), a second batch job is run daily for the monthly depreciation on new, disposed-of and transferred assets.

Functionality to facilitate physical inventory is also provided by this module. Inventory reports are available to be downloaded and used alongside bar-code scanners to conduct inventory activities. Upon completion, results from scanning are uploaded and a discrepancy report is made available.

Material Management Material Management records transactions for materials and the receipt of goods/services, including inventory of goods. Upon taking delivery of the materials/services, the goods receipt is completed, thus allowing the posting of invoices.

This module contains both the Inventory Management (IM) and Warehouse Management (WM) systems. The IM and WM allow for agencies to maintain and track their commodity inventories across several plants and facilities. The WM system allows for a more detailed warehouse view showing an exact bin where the goods may be. This system allows for periodic inventory for these tracked goods to be performed and any necessary adjustments can be recorded.

The Stock Transport Order (STO) process is available for agencies using WM or IM. Users can request goods to be shipped to their plant/facility from another entity within their Business Area through this process. If there is stock available, the supplying plant can perform a goods issue. Once the goods are received, the receiving plant will enter a goods receipt. It is possible for the STO process to be utilized for agencies to order from DHS warehouse plants HSSW and HSCW. STOs can be made within the DHS business area or from an approved external business area. A business area requests approval via a ServiceNow incident request and the Production Support team coordinates approval from DHS via email.

Public Sector Collection & Disbursements (PSCD) PSCD records and manages all aspects of the accounts receivable process and tracks any type of payments received by a user entity. Business partners (customers) can be accessed by all user entities, however activity recorded is segregated by each user entity and individual AR contract account and object combination. The customer master data is comprised of a three-tier hierarchy:

· Business Partner (Customer) – the central level of all data associated with the customer. Customer number is based on SSN, FEIN, or a unique agency ID. All agencies have access to this level, though SSN and FEIN are only visible to those users with the necessary role.

· Contract Account – this level is associated with a specific agency’s activities, posting of agency payment methods, interest calculations, conditions, or dunning procedures, billing methods, etc. At this level, a Contract Account number is assigned to the customer which is unique to a specific agency.

· Contract Object – this third level defines a customer’s agency account. In some cases, customers will have multiple Contract Objects within an agency that are unique to a specific program or department within that given agency. At this level, a Contract Object number is assigned to the customer which is unique to a specific agency or agency program/department.

Any adjustment, reversal, or write-off of a receivable is routed through an approval workflow prior to posting. Accounts receivables recorded as due to an agency may generate invoices and/or statements to notify customers of a debt. As receivables age, dunning functionality is available to escalate collections efforts at various age levels. In addition, auto-referral functionality to send qualified receivables to the Office of the Comptroller’s IDROP system and/or to a 3rd party collections agency can also be used by a user agency.

Payment processing consists of recording itemized check lots, applying payments either against open accounts receivable invoices, customer accounts, or as one-time unassigned (miscellaneous) payments. Payment transactions recorded allow for periodic reconciliation to bank deposits and ultimately processing of Receipt Deposit Transmittals (RDT, C-64) or Expenditure Adjustment Transmittals (EAT, C-63) to direct receipts to appropriate revenue sources and funds.

Recorded accounts receivable is aged within the system based on the due date recorded and allows for periodic reporting of accounts receivable, including the age and delinquency status of debts. User agencies have abilities to track collection status by use of indicators.

PSCD relates to the General Ledger as a subledger. As such, PSCD transactions posted to the system are transferred to the General Ledger via reconciliation key daily.

Funds Management (FM) The Funds Management module records, tracks, and reports on revenues, expenditures, commitments, obligations, and transfers. Once the annual state budget has been passed by the legislature, appropriations are established at the fund level by the IOC in SAMS and transferred via an interface to ERP. ILTA’s budget is approved by a Board of Directors. The initial budget is usually loaded by ERP team SFE and ILTA can enter budget as well. FM Availability Control (AVC) is utilized to ensure real time budget checks are performed on all transactions utilizing FM budget to verify sufficient budget is available for the transaction to be completed. FMDERIVE rules specify levels of control on a transactional basis to ensure each transaction is checked for budget availability at the appropriate level of control.

Grants Management Grants Management is utilized to maintain the details (terms and conditions) of the grant awards between the granting entity (federal, other state agencies, private, etc.) and the agency. The Grants Management module maintains the budget, obligations, actual expenditures, revenues, etc. associated with each specific grant. The grant budget can be maintained on an accrual basis or cash basis of accounting. GM Availability Control (AVC) is utilized to ensure real time budget checks are performed to ensure that consumable budget does not exceed what is available.

Controlling The Controlling process collects, analyzes, distributes, allocates and reports financial data according to Cost Objects such as Costs Centers, Internal Orders, and Projects/Work Breakdown Structures. Internal Orders or Work Breakdown structures are required cost elements that must be created and maintained to use the Grants Management Module. These cost elements along with the proper Funds Management account assignment direct transactions to the correct grant funding and approved budget.

Supplier Relationship Management:

This module controls the entry and approval of contract obligations, shopping carts, and procurement business case (PBC) transactions. Contract obligations and shopping carts (in conjunction with their follow-on purchase orders) result in budget consumption. If budget is not available for a contract or shopping cart, the system will not allow for the workflow process to be started.

Data for a new contract can be entered in one of the following ways:

· Manual entry

· Interface from Amplifund (grant agreement)

· Interface from legacy system Once approved, a nightly batch job generates the contract obligation documents (COD) and agency balancing report (ABR) documenting all approved obligations. Upon receiving ABR, designated users will review and a user with signature authority will forward to the IOC within five days. In addition, with the execution of MOU with IOC, users have the capability to submit contract attachments electronically via SRM.

Agencies can utilize the Shopping Cart/Purchase Order process as a controlled purchasing process, utilizing a 3-way match. Shopping carts can be created for goods and/or services that are sent through an agency established workflow process. Once that Shopping Cart is approved, it is converted to a Purchase Order in SRM and subsequently replicated in the ECC system. Once the Purchase Order has been created, the agency can begin performing the Goods Receipt in the system when goods or services are received/rendered. After receipt of the goods/services and receipt of a vendor’s proper bill, agencies can then make the PO payment. Shopping Carts can be standalone purchases, applied to an agency contract’s earmarked fund, or against a statewide master contract. Shopping Carts can be ordered as Direct Material carts which will pull those items into inventory for agencies utilizing the IM or WM systems.

Additionally, for exempt procurements, SRM facilitates a pre-approval PBC process required prior to entering a contract obligation. A PBC document is created and initially approved in SRM by the user entity. Subsequent approvals from Central Management Services, Department of Innovation and Technology, the Governor’s Office of Management and Budget or the Office of the Governor are routed via workflow based on the nature of request and PBC total dollar value.