Accounting Procedures Handbook

12 LIABILITIES 3. Capital Leases a. Purchasing department solicits bids from financing organizations. b. Purchasing department awards the contract after examining all bids. c. Purchasing department obtains a contract with successful financing company to fund the lease expense and ensure terms of contract include “Non-Appropriation” clause. d. The institution selected escrows the funds needed to lease the asset. e. School construction accountant adds the escrow amount to the Capital Lease spreadsheet. f. Board draws down the escrowed funds as needed to pay vendor invoices. g. The vendor submits invoices to the bank holding the escrow funds. h. The bank pays the invoices from the escrowed funds. i. Payments are typically made yearly to the bank to repay the lease. j. School construction accountant updates the escrow balance analysis spreadsheet monthly for interest paid on the escrow account. k. School construction accountant updates the capital lease spreadsheet for any drawsor payments on the lease. l. School construction accountant prepares and submits any journal entries for approval via BusinessPlus workflow to reflect any activity on the account. m. Submit capital lease spreadsheet to Comptroller as needed for Board meetings.