[Accounting] Cost Center Activity Review: Guidelines and Reports
St. Cloud State University is an agency of the State of Minnesota and follows the State’s fiscal year of July 1 through June 30. Budgets for each fiscal year are allotted to deans, departments, and centers in accounts called “cost centers.” Each cost center has a designated “responsible person” who is a university employee, usually the chairperson or director.
Account activity needs to be reviewed periodically to ensure any errors are detected and corrected promptly. It is recommended that this review be performed at least monthly and that copies of source documents such as budget transfers, purchase orders, 1400 internal requisition forms, service center requisition forms, etc., are retained in a file or binder for reference and comparison.
Persons responsible for these accounts may monitor them using Accounting on the Web. The online queries provide up-to-date information on account balances, open commitments, and transaction details needed to review a cost center. Accounting reports of this same information can also be run for viewing or printing. The report names and parameters needed to generate and view or print these reports can be found below near the bottom of this page.
Guidelines for Reviewing Cost Center Activity
Review Budget Transfers
Verify budget transfers have been processed. Look for “CB” entries in the Transaction Detail Search. If the dollar amounts and object codes match your copies, check them off on your documents and mark your copies as processed. Call the Accounting Department in the Business Office if there is an error on the transaction, if a transfer is missing, or if there is a transfer for which you do not have a record.
Compare the Total at the bottom of the Current Budget Column either online or on the Budget Balance Available report to the Total from the last time you reconciled. If the amounts are different, make sure you can account for the change. You should have copies of budget transfers that move budget between cost centers.
Review open purchase orders through the online Encumbrance Search or on the Open Commitment report. Contact the Purchasing Department in the Business Office if you do not recognize a purchase order as belonging to your department. You should also contact the Purchasing Department if an order continues showing unpaid when you know the goods or services have previously been delivered. The Business Office may not have received the invoice or the receiving report.
Verify payments have been processed. Look for “PV” entries on the Transaction Detail Search. Compare the transactions to your copies of purchase orders and 1400 internal requisition forms. Check them off on your documents and mark your copies as processed. Contact the Purchasing Department if there is an error on a transaction, if a payment is missing, or if there is a payment you do not recognize.
Review Service Center Charges
Look for “JC” and “JG” entries on the Transaction Detail Search. Most of these will be for charges incurred through on-campus service centers. Examples of service center activity include printing, postage, telephone, motor pool mileage, central stores supplies, computer store, etc. For some of these you may want to make note of the actual amount of the charge on your copy of the requisition or job request form. You can generally match your form number to the number in the reference or description field on the transaction. For others, such as small incidental postage charges, it may not be worth your time to track each of these. All of the JC and JG chargeback entries should still be reviewed for reasonableness and appropriateness. An error might be telephone charges for numbers you do not recognize, or motor pool charges for someone not in your department. The service centers make their own entries on campus. Please contact the service center department directly if you question a chargeback transaction.
Review Travel/Business Expense Reimbursements
Match “PR” transactions to your copies of employee reimbursement forms. Check them off on your documents and mark them as processed on your copies. Contact the Accounting Department if entries appear for names not in your department, or if transactions do not appear for forms you have submitted. Keep in mind these reimbursements follow the payroll cycle and deadlines, and they are generally posted to your account during the week after the payday they appear on the employees’ paychecks.
The IFO and MSUAASF bargaining agreements specify that a certain dollar amount shall be budgeted for each full-time faculty or administrator for professional development. St Cloud State University allots this amount to each department’s separate professional development cost center in object code 2221 out-of-state travel. The budget authority table has been set up in these accounts so that object codes 1000 through 3999 will automatically draw budget from object code 2221. Only expenses defined as professional development in the IFO or MSUAASF contracts will be allowed in these cost centers. Budget transfers in or out of these accounts will not be allowed. Each department is responsible for accounting for its professional development budget as it deems appropriate.
Travel and business expense reimbursement policies, guidelines, and forms are available in the Travel/Business Expenses section of this web site. The employee expense report form is also available in “enterable rich text” format at the State of Minnesota Employee Self Service website under Payroll Forms.
Review Budget Balance Available
Departments are responsible to spend within their budget. Monitor the Budget Balance Available column on the online Cost Center Search screen (or Budget Balance Available report). Negative amounts indicate the budget has been overspent. A budget transfer should be submitted to the Business Office to clear up any negative balances.
Descriptions of Common Accounting Reports
The MnSCU office of the chancellor has stated that their intent in designing the web accounting application was that a hard copy report would not necessarily be needed. Some users prefer to view their balances and transactions online, or perhaps utilize the download in Microsoft Excel function when performing a more detailed analysis of individual transactions. Accounting reports of this same information are available and can be run for viewing or printing. The common accounting reports are listed below.
- AC0513CP Budget Balance Available
- AC0519CP Open Commitment Report
- AC0531CP Transaction List
- AC0542CP Agency Accounts
Budget Balance Available Report - AC0513CP
This report summarizes the status of the cost center. The columns on this report include:
- Original Budget: Represents the starting point of the budget at the beginning of the fiscal year. It is for reference only and will not change during the year.
- Current Budget: Represents the current budget allotment. This value may change as budget amounts are increased or decreased, or as amounts are moved between line items.
- Encumbrance: Represents budget earmarked for open purchase orders. These amounts have been deducted from the budget balance available.
- Current Month Activity: Summarizes expenses charged to the cost center during the current month.
- Year-to-Date Activity: Summarizes expenses charged to the cost center during the current fiscal year. The year-to-date amounts include current month activity.
- Budget Balance Available: Current budget less encumbrances less year-to-date activity. A positive amount generally indicates budget available to spend. A negative amount generally indicates budget overspent. A budget transfer should be submitted to clear up any negatives in the budget balance available column.
Budgets are categorized into line items identified by object codes. These four-digit numeric object codes define the types of expenditures and revenues. In general, object codes are grouped:
- 0xxx Payroll
- 1xxx Services
- 2xxx Fees and Travel
- 3xxx Supplies and Materials
- 4xxx Equipment
- 9xxx Revenue
Budgets are maintained according to a “budget authority table.” This means there are certain object codes that have “authority” over others, similar to a parent/child relationship. The budget is maintained in a “parent” object code and the “child” object codes automatically draw their budget from the parent.
For most cost centers, object codes beginning with 1, 2, or 3 will not carry their own budgets but instead will draw budget from parent object code 0999 “Non Salary Budget.” On the Budget Balance Available report these object codes are displayed as indented under code 0999 to indicate they are “children” of the “parent” object code 0999.
Student payroll is budgeted separately within its own line item using object code 0910. Equipment is also budgeted separately within object code 4000.
Professional development cost centers are set up with parent object code 2221, allowing expenditures in most object codes to draw budget from parent code 2221.
Open Commitment Report – AC0519CP
This report lists purchase orders for a cost center or range of cost centers.
Transaction List – AC0531CP
This report includes details of all transactions for a designated date range sorted by object code. Each transaction is assigned a Serial Number that refers to the documentation either in the Business Office files or elsewhere (depending on the transaction type).
The transaction types are:
- CB Current Budget transactions will affect the amounts in the Current Budget column seen either online or on the Budget Balance Available report. CB transactions can occur within a single cost center between line item object codes and have no effect on the total current budget amount. CB transactions can also occur between two different cost centers and will have the effect of increasing the total current budget in one cost center and decreasing the total current budget in another cost center.
- CP Cash Receipt entries represent receipts deposited to the cost center.
- EN Encumbrance entries occur when purchase orders are generated. Encumbrances have the effect of encumbering or setting aside funds for open purchase orders. A negative encumbrance entry is generated when a purchase order is cancelled or when it is paid. If a purchase order is cancelled the budget should no longer be set aside so the encumbrance is backed out. Similarly, when a purchase order is paid the amount no longer needs to be encumbered so the encumbrance is backed out.
- JC Journal Voucher entries can represent charges at an on-campus service center. Journal Vouchers are also used to make correcting entries when the wrong cost center has been used on a transaction.
- JG These Journal Entries are used for on-campus service centers and for other internal charges such as student payroll.
- PR Payroll Vouchers are entries to post payroll transactions, including business and travel expense reimbursements.
- PV Payment Vouchers represent payment transactions, such as checks written to vendors.
Agency Account Cash Report – AC0542CP
This report would only be used for an agency account. Agency accounts are six digit cost centers that all begin with 900xxx. These are funds held by St. Cloud State University as custodian or fiscal agent for student organizations or other campus activities.
Agency accounts have a cash balance rather than a budget like most cost centers on campus. This report shows the current cash balance, along with a current month and year-to-date summary of receipts and expenditures for the most recent fiscal years.
Parameters needed to run common accounting reports
Accounting reports can be run out of Accounting on the Web. Although you may want to customize reports to your individual needs, sample report parameters commonly used are listed below:
- AC0513CP Budget Balance Available
- AC0519CP Open Commitment Report
- AC0531CP Transaction List
- AC0542CP Agency (900xxx) Account Cash Balance
Parameters needed to run reports for select Departments or other Functional Area
Special department coding used when cost centers were created allows a report to be run on an entire group of cost centers at once. The report parameters needed to do this are listed below:
- College of Liberal Arts
- College of Science and Engineering
- Facilities Management
- Herberger Business School
- Learning Resources and Technology Services
- School of Education
- School of Health and Human Services
- School of Public Affairs
- Sponsored Programs
- Student Life and Development
- Student Senate Finance Committee
- University Advancement
Most of the information above and a limited sample of report result printouts can be found in this cost center review summary document.