Chart of Accounts Continued

At Ohio University, there are two separate account structures: the General Ledger and the Grants Module structure known as Project-Task-Award (P-T-A).

Understanding these structures is essential for accurately recording transactions, ensuring compliance, and producing reliable financial reports. In this article, we will focus on the General Ledger account structure.

To get started, let’s level set on some terminology:

Chart of Accounts (COA) Structure: A structured set of segments used together to describe the full context of a financial transaction. The full COA structure in the General Ledger is:

Entity-Source-Organization-Activity-Function-Object

Segments: A component of the account string. Each segment has a name, defined length, and a set of possible values. 

Value: A specific code selected within a segment.

In this edition, we will explore the first two segments of the COA Structure – Entity and Source.

Entity

The Entity segment in Ohio University’s Chart of Accounts (COA) is:

• a two-digit code used in every financial transaction and is the first segment in the COA
• Used to identify how that transaction is summarized for various financial reporting needs. 
• Classifies Operating vs non-operating entities. 

In practical terms, Entity tells the financial system which legal organization or reporting unit a transaction belongs to, helping with both internal management reporting and external audits and reporting.

Here are examples of Entity values and their meanings showing how different parts of the University’s financial ecosystem are separated for reporting:

The Entity segment provides the first layer of classification. It allows the University to:

• Distinguish major components of the institution that require separate balance sheets for external reporting. Examples include:
  • Ohio University (entity 1X) vs the Auxiliaries units (Entity 20-24) or 
  • Ohio University (Entity 1X) vs Ohio University Foundation (Entity 5X)
• Ensure accurate financial consolidation across different operational units (e.g., Ohio University (Entity 10) + Auxiliaries (Entity 20-24)

The Entity segment becomes part of every financial record so that transactions from diverse units (Ohio University vs Ohio University Foundation vs Auxiliaries, etc.) can be identified, aggregated, and reported separately or in consolidation as needed. 

Operating vs. Non-Operating Entities

Ohio University also distinguishes between operating and non-operating entities:

• Operating Entities: Units engaged in ongoing operations like colleges, academic support units, auxiliary services, and various administrative functions.
• Non-Operating Entities: Entities that are not part of normal operations such as endowments, internal bank, agency or custodial funds (ex., a student organization), etc.

This distinction is important for budgeting, audits, internal reporting, and compliance because different rules and analyses can apply depending on whether an entity is operational or not.

The Entity segment supports transparent financial management and is a foundational part of the University’s accounting structure. For a complete list of Entity values please see Entity Segment Quick Reference Guide | Ohio University

Source

Within the COA structure, each segment captures a different dimension of financial activity such as who is spending, what is being spent, and importantly, where the funding originates and the Source tells us where the funding is coming from.

The Source segment is a key component of the General Ledger account structure. It is defined as:

• A six-digit value
• Used to identify how a transaction is funded
• Classified based on funding restrictions 

In essence, the Source segment answers the question: “Where did the money come from, and what limitations are placed on its use?”

Why the Source Segment Matters

The Source segment plays a critical role since funding in higher education often comes with varying levels of restriction. Proper classification ensures:

• Compliance with donor and sponsor requirements
• Accurate financial reporting
• Transparency in how funds are used
• Better institutional decision-making

Restrictions are typically imposed by external parties, such as donors, grant sponsors, or government entities. 

Categories of Source Values

Unrestricted AKA Unrestricted Operating

These funds:

• Have no external restrictions
• Can be used at the institution’s discretion for operational needs
• Include Auxiliary Funds (such as Housing & Culinary) and Unrestricted Endowment Distributions
• A common example of Source is 100000 – General Unrestricted, which is widely used across Ohio University units

Designated

These funds:

• Have no external restrictions and are unrestricted operating funds that executive leadership or departments have internally earmarked for specific spending purposes
• Examples include conferences & workshops, research incentive funds or start-up accounts

Restricted

These funds:

• Are provided by external organizations or sources
• Must be used for specific purposes as defined by the provider of funds
• Examples include financial aid funds, sponsored research grants, and donor-restricted gifts

Tracking the various sources of funds in this manner ensures accountability and proper stewardship of funds. For a complete listing of Sources, please see Source Segment | Ohio University

Up Next

In the next edition we will explore the Organization and Activity segments of the General Ledger Chart of Accounts.

Questions about the chart of accounts or have a question about what segment value to use? Please contact financecustomercare@ohio.edu