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Index - Same Level Subject

Introduction
Inventory
Cost Acccounting
Chart of Accounts
Budget Formation
Standard Unit Costing
Managerial Accounting
Auditing
 

Index - Child Subjects

Introduction

If cost accounting is to evaluate divisions, departments, or projects and/or people then a functionally classified chart of accounts must be used. 

This Page is an example of a Chart of Account Codes to be used in accessing costs of an organization.

Standardization

The chart of accounts should be standardized on some nationally recognized system in order to be able to make comparisons across organizations. In the U.S. the Chart of Accounts for Hospitals published by the American Hospital Association and/or the Medicare Reporting System provides a starting point for most accounting systems in the US 

The record layout below is a starting point for the recording of the necessary information to apply costs to organizational units. 

Requirements

Current Cost Accounting and Expense accounting requires that information is presented in various formats. No one reform will work for all purposes. The some of the stakeholders in the use of information are:

• External

• Internal Management

In general, the requirements for external sources (such as taxing authorities or Regulation authorities) can NOT be used for internal management. Too often we find that an organization sole use of an accounting system is to produce reports for external consumption.

Some requirements are:

• Type of transaction
• Transaction in detail
• Source of funds
• Cost center
• Type of cost (variable or fixed)

Detail information provides the organization the ability to "cut and dice" data in order to project trends and prevent problems and take advance of opportunities. It should provides a view of the future, a "forward" looking view..., and not just be used to determine what has happened in the past (other wise...why do it?)

Type of transaction.

• Assets (balance sheet accounts)
• Liabilities (balance sheet accounts)
• Revenues
• Expenses
• Transfers

Source of funds:

• Unrestricted
• Restricted
• Grants
• Appropriations
• Endowments

Cost Center

• Organization
• Division
• Department
• Project
• Employee

Example

Record Layout

This may look like a lot of information to key into every transaction, but in most cases this information can be created automatily by the accounting system. As examples:

Each unit/cost center can be coded as to the type of function they perform, and if the expense is direct or overhead. In many cases, the product master will carry the GL expense code.

Question? How do you assign the donor number when there may be more than one donor funding the project? Answer: assign a donor number that represents more than one donor. Example

            ODA            = 100

            USAID          = 200

            UNICEF        = 300

but        ODA and USAID = 1-4000.

            ODA and UNICEF = 1-4500

            USAID and UNICEF = 1-4700

Organization Units  

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