Understanding the Chart of Accounts

What is a Chart of Accounts?

A chart of accounts (COA) is an organized list of all the financial accounts the university uses to record its transactions. Think of it as the financial filing system of the organization, it tells you where every dollar goes. Without a COA, transactions and the ability to produce accurate reports would be chaotic.

What does a COA Include?

Accounts are usually grouped into standard categories:

• Assets – what the university owns (ex., cash, inventory, equipment, land, buildings)
• Liabilities – what the university owes (loans, accounts payable to vendors, deposits held for housing or enrollment, accrued salaries (ex., 9/12 pays for faculty who chose to get paid through the summer, outside the academic terms)
• Fund Balance – what remains in various funds (ex., unrestricted or restricted) after obligations are met and shows how much of those resources are available, or restricted, for future use
• Revenue (Income) – money earned (ex., tuition, sales or services to external parties)
• Expenses – costs of running the university (ex., salaries and benefits, supplies and services)

How a COA is structured

Each account typically has:

• A category/type (ex., Asset, Liability, Revenue, or Expense)
• A unique code or number (Segment Value)
• A name describing the account
• These unique codes or numbers combine to create an account number
• An account name

The COA Structure identifies how you will account for transactions. There are two structures: 

• one for the General Ledger (GL) and 
• one for “Grants or Project-Task-Award (PTA)”, which encompasses Internal Awards, Capital Projects, and Sponsored Projects/Grants.

Why it matters

A chart of accounts:

• Keeps financial records consistent and organized. Without the COA, financial information would be a jumble of numbers with no context.
• The chart of accounts helps leaders understand where money is going and whether they’re on track with the plan (budget).
• Makes financial reporting (internal management reports and external financial statements/reports) easier to prepare and compare
• Helps management analyze performance
• Supports compliance and auditing. Many university funds have rules and restrictions (especially grants and sponsored projects). The chart of accounts helps ensure expenses are allowable, allocable, and properly documented.

At the end of the day, the chart of accounts is more than a set of numbers, it’s the structure that keeps the university’s financial system organized, transparent, and reliable. By using the correct GL accounts and PTA codes, we ensure that transactions are accurately classified, budgets are properly managed, and reporting remains consistent and compliant. Ultimately, a strong chart of accounts supports better decision-making, improves accountability, and helps the university operate smoothly, one transaction at a time. Ultimately, it’s the backbone of everything from payroll to purchasing to year-end close, one transaction at a time.