General Information

Concepts & Definitions

How to Run a Cost Center Hierarchy

Chart of Accounts

• G/L Accounts - Expenditures
• G/L Accounts - Revenue
• G/L Accounts - Transfers

Retention Policy

Collecting Sales Tax from Related Groups

Allocations

Concepts & Definitions

Cost Object

Within SAP, a cost object is considered either a cost center or WBS element. Cost centers are used to track income and expenses for state-aided (non-revolving and revolving), auxiliary and other types of funds (endowments). WBS elements are used to track income and expenses for grants, loans and plant funds. The new cost centers and WBS elements are entirely numeric. There is visual recognition built into the numbering structures to identify the campus, fund type, sub-program and department.

Following is the SAP cost object structure for a cost center and WBS element.

The first digit of a cost object (cost center or WBS element) identifies the campus association (UNL=2 and CA=9). The second digit identifies the University fund type.

Cost Center Fund Types

• 1 = State-aided non-revolving
• 2 = State-aided revolving
• 3 = Auxiliary
• 9 = Other

WBS Element Fund Types

• 4 = Federal Letter of Credit (LOC)
• 5 = Federal Advance
• 6 = Trust Life to Date (LTD)
• 7 = Trust Year to Date (YTD)
• 9 = Other

The third and fourth digit identifies the sub-program. A sub-program serves to group a general area of responsibility such as a college or an administrative area. A department (fifth and sixth digit) is a further breakdown of a sub-program as defined by the campus. Within the numbering structure for a cost center and a WBS element, the sub-program and department segments must be viewed together as a department is not unique across sub-programs. The seventh through tenth digit of a cost center identifies individual cost centers within a sub-program/department. The seventh through tenth digit of a WBS element identifies a project within the sub-program/department. The eleventh through thirteenth digits identify individual WBS elements within a project.

Every cost object is associated to a business area. A business area identifies a university fund group (i.e. general, auxiliary, restricted) and a source of funding (i.e. state-aided, federal). Each business area has an association to a state program number (i.e. 2130 = state-aided revolving for 711 state program).

Valid UNL & Central Administration Business Areas

How to Run a Cost Center Hierarchy

Log onto SAP and follow the path: Accounting > Controlling > Cost Center Accounting > Master Data > Cost Center Group. Double click on Display.

When prompted on the next screen, enter the appropriate cost center group - a specific cost center group or UNL for the entire campus. Hit the execute icon (green check mark in upper left corner.) Use the expand and collapse icons as needed.

Collecting Sales Tax from Related Groups

Departments in the business of providing services and products must collect sales tax from related groups/ancillaries. These groups are housed on or near campus but are not actually part of the core activity of the university. Some examples of groups falling into this category are:

Departments must assess the current 7% (Lincoln 1.5% plus state 5.5%) sales tax on all sales involving these groups unless they have a current Sales Tax Exemption Form (Form 13) on file. The assessment of the current sales tax would also apply to all sales outside UNL for which you do not have a Sales Tax Exemption Form. If you have any questions, please contact Susan Howard via email or at 472-5277.

Allocations

GRADUATE HEALTH ALLOCATIONS

Allocations to cover graduate health insurance costs for eligible students are made once during the spring and fall semesters. Because allocations are not processed during the summer, the spring allocation is higher to compensate for the lack of summer allocation.

The allocations are calculated as follows: Student Accounts provides a list of eligible students, which is then compared to appointment data on SAP to associate cost objects for each student based on valid wage types. The total payroll for each student on the identified cost object(s) is divided by the total payroll for that student to determine a health percentage. This percentage is multiplied by the health insurance cost for each student resulting in the amount allocated to each cost object for each student.

GRADUATE TUITION ALLOCATIONS

Allocations to cover tuition for eligible graduate students are made once during the spring and fall semesters.

The allocations are calculated as follows: A list of eligible students is generated from Student Accounts, which is then compared to SAP appointment data to associate cost objects for each student based on valid wage types. Each student's total payroll on the identified cost object(s) is divided by the total payroll for all eligible students for that calculation period to determine a tuition percentage. This percentage is multiplied by the total graduate student tuition cost for the respective calculation period. The result is the amount allocated to each cost object for each student.

UNEMPLOYMENT ALLOCATIONS

Unemployment allocations are processed quarterly against eligible cost centers. Unemployment costs for state aided cost centers are paid centrally so no allocations will be assessed against individual state aided cost centers. Grants awarded after October 1, 2003 will be included in the allocations whereas grants awarded before then do not receive allocations.

The allocations are calculated as follows: A salary extract from SAP is run to collect the salaries and wages posted to each cost object. Examples of salaries not included in this process are those charged to student GL's, fellowships, professorships and internships. An allocation percentage is derived based on the amount needed to cover unemployment costs based on the total eligible payroll. This percentage is then applied against the total salaries on eligible cost objects to determine the amount allocated to each cost center.

WORKER'S COMP ALLOCATIONS

Allocations for Worker's Compensation are processed identically to Unemployment except that salaries on student GL's are not excluded.

For questions on the allocation process, please contact Nora Huscher via email or at 472-7919.