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Saturday, Aug 17, 2019

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Financial System Enhancements

Major project milestones and segment highlights


The Financial System Enhancements (FSE) project represents a combination of initiatives planned to be available in November 2017 and includes the Chart of Accounts Redesign (COA), a new Financial Approvers tool and the new Oracle Grants Accounting Module, and supported by enhanced reporting capabilities within Oracle Business Intelligence (OBI).

Human Resources Dashboard Release
The Human Resources (HR) Dashboard has been released to representatives from each planning unit. Planning unit CFAOs establish access to any dashboard. The project team will communicate to impacted users regarding training resources and availability. Additional dashboards for financial data and grants data are currently under development and will be piloted with appropriate Partner Groups and released to campus in November.

Planning unit mappers to Vet Converted General Ledger
Planning unit mappers have been invited to one of several sessions held in June and July to review their mapped General Ledger data and make final recommendations for changes.

Pilot Group established for Internal Awards
The COA Partner Group representatives are participating in a pilot group to walk through the process of setting up Internal Awards (research incentives, start-up funds, professional development grants, etc.) in the new Oracle Grants Accounting Module. This pilot group will continue throughout July and will help inform training for Internal Award set up for other Planning Units.

Additional Resources
Visit the COA website for an updated COA Mapping Introduction presentation and an updated COA Quick Reference Guide. A training schedule will be published to the website and distributed to planning units in July.

Each month, a feature of the Financial System Enhancements will be highlighted to help prepare for the upcoming changes.

FSE Highlight: COA Structure, Hierarchies, and the Activity Segment

Chart of Accounts Structure: The COA Structure identifies how you will account for transactions. There will be two structures: one for the General Ledger and one for “Grants”, which will encompass Internal Awards, Capital Projects, and Sponsored Projects.

The new General Ledger COA Structure will be comprised of six segments, each with a defined segment length and set of possible values. 

Chart of Accounts Segment Structure

Cost Center: segment values used together in a transaction (excluded natural account/object)

  • Existing: Fund Type – Fund – Organization – Project
  • Future: Entity – Source – Org – Activity – Function

Hierarchies: structure for summarizing segment values. Also known as “parent” values.

  • Parent values are summary codes used for reporting
  • Child values are values used for posting transactions

The Activity Segment
Activity Segment blockThe Activity (ACTV) segment is a four-digit value that identifies why the transaction is occurring. This segment is unit-defined, and allows departments to identify internal purposes for spending and associated revenues. There will be joint values defined at the University level and a range of values available to be determined at the planning unit level. The Activity segment was added to assist in reducing the need for many shadow systems currently used for monitoring and reporting.

When we talk about the purpose of the transaction, it refers to the objective of the spending (e.g., conducting research, recruiting employees, staffing for Halloween, etc.). You may notice that “purpose” is used in defining both the activity and the function segment. These similar segments exist because they track different purposes; function tracks high level spending classification as defined by the government or accounting standards (e.g., instruction, research, etc.). The activity segment allows planning units to define purposes of spending related to their specific needs. 

As part of the mapping exercise, planning unit members developed lists of potential activity code values. In some cases, these codes were used in mapping or translating the old cost centers to the new COA structure. Some units also developed codes that they plan to use in the future, after the new COA is live. Working with these lists, there were often repeating values that multiple units plan to use for tracking. A portion of the activity code range is designated for “shared” values. Shared values are defined centrally and can be used in coding transactions by any unit in the university. 

The Function Segment

Function segment blockThe Function is a two-digit value that identifies why the transaction is occurring, such as instruction or sponsored research. University expenditures are recorded by a combination of functions established by the National Association of College and University Business Officers (NACUBO) for higher education and Office of Management and Budget (OMB) Circular A-21. The function value is required for each expense transaction on both University and Foundation accounts. Function is not a required value for balance sheet and revenue accounts. The Function segment is important and is used in the preparation of various required financial, regulatory, and activity-related reports. 

The Function classifies an expense transaction by its intent – i.e. why an expense was incurred rather than what was purchased (as in the Object Code field). The Function value helps both internal and external parties (such as donors, government agencies, creditors, etc.) better understand how the entities use their resources in order to achieve their missions.

The Federal Government’s Office of Management and Budget (OMB) Circular A-21 functions also provide a uniform method of grouping costs into various direct and indirect cost pools for the primary purpose of calculating indirect cost reimbursement rates on sponsored projects. These rates are submitted to the Federal government for approval in the University's Facilities and Administrative (F&A) Cost Rate Proposal, which is a cost study required by OMB Circular A-21.

A detailed definition of Function can be found on the Segment Structure and Order page of the COA website

How to Use Functions for Transactions
In the broadest sense, most Organizations have a Function that is standardly used (i.e. an academic department would normally use the Instruction Function 10). For transactions that are posted to a Project-Task-Award (PTA) in the Grants Accounting module, the Function value has already been determined when the PTA is setup (i.e. Departmental Research, University Research, Sponsored Research, etc.). In certain areas, such as a Dean’s Office, that spends resources for a variety of purposes, the Function value may need to change with each transaction to ensure that the Function value is accurate.   

In an academic planning unit, the Dean's Office generally spends funds for multiple purposes necessitating the need to select a different Function for various transactions. Presented here are some scenarios that provide examples on how to properly select and code an expense for the Function segment in the chart of accounts:

Fundraising Trip:
The Dean travels to meet with a group of donors to share opportunities to provide funding for a research program within the college. When the travel expenses are coded for this trip Function 92 – Fundraising & Development should be used to code the charges.  

Summer Teaching:
The Dean has set aside funds for summer teaching appointments in the college for summer sessions. When the payroll is coded for a faculty member being paid from these funds, if within the Dean’s organization, Function 10 – Instruction should be used.

College Research Program:
The Dean has funds set aside to provide additional research funding as part of a strategic investment to grow research within the college for a particular discipline. When expenses are paid Function 19 – Department Research should be used.

Information Technology Enhancements:
Funds have been set aside in the Dean’s Account to provide funding for technology enhancements to support students and Faculty in classroom. When the items are purchased for this initiative from the Dean’s Account they should be charged to Function 40 – Academic Support.

Supplies for the Dean’s Office:
The office administrator purchases office supplies for use within the Deans office. When this purchase is expensed Function 42 – Deans & Provost should be used.

Questions? Visit the COA Website for information, reach out directly to your Planning Unit’s Change Network member(s) to share feedback or ask questions, or contact the FSE Project Team at coa@ohio.edu.