Chart of Accounts Introduction to Object Codes

1. Chart of Accounts Introduction to Object Codes ALASBO Power Lunch March 18, 2008 Presented by Elwin Blackwell, Internal Auditor Department of Education & Early Development

2. Object Codes Object Codes are defined as: The financial activity represented by a specific transaction. Revenue object codes refer to the source and type of specific revenues. Expenditure object codes describe the service or commodity obtained as a result of a specific expenditure. Balance sheet object codes refer to the asset acquired, liability incurred, or balance in a specific fund.

3. Object Codes Object Codes are divided into three types of objects. • Revenue Objects • Expenditure Objects • Balance Sheet Objects All Object codes will be reported by required code format.

4. Revenue Object Codes Revenue Object Codes – are additions to the net current assets of a fund excluding other Financing Sources and Expenditure Refunds. • Local Revenue Sources – City/Borough Appropriations or Earnings on Investments • State Revenue Sources – Foundation program revenue • Federal Revenue Sources – Impact Aid, Medicaid, etc. • Other Revenue Sources - Proceeds from Sale of Property

5. Revenue Object Codes Revenue Object Codes • Revenue object codes will be reported in funds but will not be segregated by function. • Optional revenue object codes are supplied for the districts use.

6. Expenditure Object Codes Expenditure object codes are decreases in assets or increases in liabilities which decrease the amount of fund balance available. Expenditure objects are grouped in two ways • Employee Salaries and Benefits (Personnel costs) & • Materials, Supplies, Services & Other

7. Expenditure Object Codes Once again optional objects are provided for the district to account for expenditures or services in further detail. If optional objects are used they are to be aggregated and reported at the required object level. Expenditure objects will be reported in funds and functions. Expenditure objects should not be reported by fund only.

8. Balance Sheet Account Object Codes Balance Sheet Account Object Codes – are provided to identify the type of items owned, owed, and fund balances. Balance Sheet Account Object Codes are divided into three groups. • Asset object codes • Liability object codes • Fund Balance object codes.

9. Equipment Equipment is defined as expenditures for furnishings, classroom or office equipment, vehicles, generators and other equipment. When capitalizing equipment the district should use the capitalization threshold established by the district. The federal government for grant management purposes uses a $5,000 threshold for capitalizing equipment. Most districts have adopted this threshold.

10. Equipment Difference between Equipment and Supplies: If an item does not meet all the following criteria for equipment then it should be recorded as a supply. • Lasts more than a year • You would repair rather than replace • Independent unit rather than being incorporated into another unit item • Cost of tagging and inventory are a small percent of item cost • Exceeds minimum dollar amount (with due regard for group control of some items)

11. Points or Ponder Object Codes Things to remember when coding expenditures to the Objects • Liability insurance is to be recorded in District Administration – Support Services (function 550) under Insurance and Bond Premiums (object code 445) • If the district is claiming any indirect cost they need to be recorded in District Administration – Support Services (function 550) under Indirect costs (object 495). The indirect costs expensed in the special revenue funds also will use function 550, object code 495. • Property and Automobile Insurance has to be recorded in Operations and Maintenance of Plant (function 600) under Insurance and Bond Premiums (object code 445) • Energy costs which includes electricity is to be recorded in Operations and Maintenance of Plant (function 600) under Energy (object code 435)

12. References Document Location • Uniform Chart of Accounts http://www.eed.state.ak.us/publications/COA2000.pdf