What is Accounting
Accounting is the language used to communicate information about
the financial condition and operations of all types of organizations.
Using money or currency as its common denominator, accounting is
the information system that records, evaluates, compares, and
reports the financial activities of an organization.
Accounting information serves many purposes depending upon the
users of the information. Various groups and individuals, such as
managers, deans and directors, vice chancellors, and outside
regulatory agencies, use accounting information to make informed
decisions about the organization.
Accurate and complete accounting information is used to:
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Effectively allocate and use an organization’s resources.
Understand the operations and financial activities of an organization.
Evaluate the effectiveness and efficiency of operations.
Make investment decisions.
University Accounting Objectives
University accounting objectives are similar to those of other types of
organizations. Like businesses and corporations, the university is
concerned with the effective use and allocation of the
organization’s resources, and the accurate and effective reporting of
financial activity.
However, businesses and corporations operate to maximize their
profits while providing goods and services. A university, on the
other hand, operates to meet certain needs without a profit motive
by providing goods and services; namely education, research, and
public service. This fundamental difference is the basis for the
special reporting requirements of university accounting. Providers
of the funds used by a university to carry out its mission often have
special guidelines or restrictions concerning how those funds may
be used.
University Accounting Overview
The terms "university accounting" and "fund accounting" are used by colleges
and universities, as well as government and other not-for-profit
organizations, to refer to the unique accounting requirements of not-forprofit entities. Since funding for these organizations is often provided by
legislative bodies, foundations, and donations, special accounting and
reporting requirements are used to account for their financial activities.
In Module I of this web-based training series, you were introduced to the
University’s financial resources including many of the departments in the
Finance Division. Although these groups maintain and administer the
University’s official accounting and financial records, much of that
information originates with the financial activities in campus departments
like yours. In other words, you are a crucial part of the financial reporting
process for the University. Therefore, it is critical that you understand the
accounting policies and procedures of the University.
Understanding the basic structure of University accounts is a good place to
begin. Let's get started.
Chart of Accounts
All of the accounts and the account numbers used by the
University are referred to as the chart of accounts. The
chart of accounts is a listing of the accounts in a logical
order consistent with the layout and structure of
financial statements and reports. Classes or groupings
of similar accounts are assigned account numbers
within specified ranges. This helps ensure more
accurate reporting and makes it easier to identify and
summarize groupings of similar accounts.
The University's chart of accounts is maintained by
Financial Affairs. Let's take a look at the components
that make up the account number to get a better
understanding of the UA accounting structure.
Company Cost Center (CCC)
A company cost center (normally referred to as cost
center) is the smallest classification in our accounting
structure hierarchy. It is the basic building block of the
Departmental Accounting, Reporting, and Tracking
(DART). When any transaction or financial activity takes
place, a cost center is used to record the accounting
information. Each cost center is assigned a budgetary
unit.
Company
XXXX
Center
XXXXX
Function
XX
Project
XXXX
The University’s cost center structure consists of a 15digit number made up of four sets of identifiers.
Company
The first four digits in the company cost center
refer to the company to which a cost center
belongs. It identifies the type of fund and fund
location.
Company - first 2 digits
01 – General fund – Current funds
02 – Auxiliary funds – Current funds
03 – Gifts and grants – Current
funds
04 – Research – Current funds
05 – Loan funds
06 – Endowment funds
07 – Plant funds
08 – Renewals and replacements
09 – Debt retirement
10 – Physical properties
11 – Agency funds
99 – Cash Pool
Company - third digit
Note: does not pertain to auxiliary or
federal formula fund companies
0 – General
1 – Dedicated funds
2 – Service and Revolving
3 – Grants and Contracts - Cost Sharing
4 – Dedicated funds
5 – Cost Share Centrally funded
67 – Gifts and grants
8 – Restricted gifts
9 – Foundation funds
Company - Location of fund - last
digit
1 – System Administration
2 – Fayetteville
3 – Agriculture Experiment Station
4 – Cooperative Extension Service
5 – Archeological Survey
6 - Criminal Justice Institute
7 – Clinton School
8 – AREON
9 – Winthrop Rockefeller Institute
Cost Center
The next five digits identify the department and/or organizational
entity within a department for which financial information is
maintained. These company cost centers are assigned to
departments by one of three offices depending upon the type of
fund.
The offices responsible for these accounts are:
 Financial Affairs
• State appropriations
• General funds
• Auxiliary funds
 Research Accounting
• Grants and sponsored programs
 Property Accounting
• Plant funds
• Renewals and replacement funds
Cost Center – Function
The next two digits identify the function of the cost center. The function code describes the purpose or type of
activity for which a cost center will be used.
 Instructional function codes – begin with 1
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10 - Instruction
11 - On-Campus Credit Instruction
12 - Instructional Support
13 - Off-Campus Credit Instruction
14 - Non-Credit Instruction
15 - Instruction Cost-Sharing
16 - Academic Advising
17 - Faculty Development
 Research function codes – begin with 2
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20 - Research
21 - Sponsored Research
22 – University Supported Research
23 - Sponsored Research Cost-Sharing
24 - Agri. Experiment Station Research
 Public Service function codes – begin with 3
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30 - Public Service
31 – Public Service
32 - Public Service - Cost-Sharing
33 - University Sponsored Public Service
 Academic Support functions – begin with 4
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40 - Academic Support
41 - Libraries
42 - Museums and Galleries
43 - Organized Activities
44 - Other Academic Support
45 - Academic Support - Cost-Sharing
 Other function codes
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Beginning with 5 – Student Services
Beginning with 6 – Central Administration
Beginning with 7 – Facilities Management
Beginning with 8 – Scholarship and Fellowship
Cost Center - Project
The last four digits of the cost center are used to
further define the cost center. Usually
referred to as the project. Primarily used for
project reporting in the Agricultural
Experiment Station area.
Departmental Accounting Cost (DAC)
The departmental accounting cost center is normally the company cost center, but in
the case of the Agri Experiment Station, does not include the last four digits
(project) of the cost center number. Special processing is used for Agriculture
Experiment Station cost centers where the last four digits in the cost center in the
balance file will be set to 0100 (except for companies 0133, 0373 and 0403 which
will be set to 0001).
Agriculture Experiment Station uses the last four digits of the company cost center
(called the project number) to support project accounting. The budgets for these
projects, however, are posted to the departmental accounting cost centers (DAC).
Expenditures are maintained and tracked at the project level. Normally, Agriculture
Experiment Station prefers to view the balances at a summary level and therefore,
DART employs the use of the departmental accounting center (DAC) which is
defined as agriculture's cost centers ending in 0100 or 0001. All accounting
transactions for Agriculture are posted to the cost center and the departmental
accounting center which will give them the opportunity to view their financial
activity at a departmental accounting center level or the cost center project level.
Budgetary Unit (BU)
A budgetary unit is an organizational entity that
either receives a budget or has staff. It exists
between the cost center and department
levels. All cost centers are associated with a
budgetary unit, and all budgetary units are
associated with a department. Only those cost
centers associated with the entered budgetary
unit will be displayed.
Chancellor
Provost and Vice
Chancellor for
Academic Affairs
Vice Chancellor for
Finance &
Administration
Dale Bumpers College of
Agricultural, Food & Life Sciences
College of Engineering
Fay Jones School of Architecture
J. William Fulbright College of Arts &
Sciences
School of Continuing Education and
Academic Outreach
College of Education and Health
Professionals
Graduate School
Sam M. Walton College of Business
School of Law
Honors College
University Libraries
Accounting
Economics
Finance
Information Systems
Management
Marketing & Logistics
WCOB Dean’s Office
Applied Sustainability Center
Center for Economic Education
Ctr for Management & Executive
Education
County Financial Management
System
Center for Retailing Excellence
Bus Admin Lab Equipment
Garrison Financial Institute
BASIS
Facilities Management
Information Technology
Research Institut
Outreach Programs
Financial Affairs
Financial Management & Analysis
Radio Frequency Identification
Center
Human Resources
Small Business Development
Center
Vice Chancellor for
Government &
Community Relations
Business Affairs
Vice Chancellor for
University
Advancement
Information Technology Services
Supply Chain Management
Research Center
University Police
Tyson Ctr-Faith & Spirituality in
Workpl
Vice Chancellor for
Intercollegiate
Athletics
The Sustainability Consortium
Affirmative Action
Vice Chancellor/Director
Level (VC)
Dean/Director/Associate
Vice Chancellor Level
(DDAVC)
Departments (DP)
Budgetary Units (BU)
Departmental Category
A code, eight characters or less, used to categorize budget, expense, estimated revenues, revenues, and
other financial activity at a more detail level useful to departments. For example, "SupOff" is the
departmental category for office supplies, which would be considered maintenance at the institutional
level. These categories may be listed by using a list such as LCAT in DART. If a category is needed that does
not occur on the list, then Financial Affairs should be contacted to create the category.
Institutional Category
A predefined code, eight characters or less, used to identify highest level of categorization of budget. This is
the level at which the institution budgets. For example, "Maint" is the institutional category for
maintenance. Departments may break their budgets down into a more detailed category, but it must be
within the same institutional category.
Departmental Project
A predefined code, eight characters or less, used to identify highest level of categorization of budget. This is
the level at which the institution budgets. For example, "Maint" is the institutional category for
maintenance. Departments may break their budgets down into a more detailed category, but it must be
within the same institutional category.
DART Periods
DART is designed to provide users in departments with flexibility in developing a plan for expenditures from University centers, and in
monitoring those expenditures. Thus while we normally think of accounting periods in terms of the past, in DART they are also open far into
the future. This means that in some cases you may post an entry that will be effect at a future date, and that entry will not affect balances until
the month in which that entry is effective. An example would be an entry of a planned expenditure. Another example would be salary
encumbrances (posted in a batch process) that are spread across periods in the fiscal year. DART periods are normally described in terms of a
base month. This base month will be either the open period in accounting (per the calender in GJIM), or the period most recently closed. The
DART period will remain open longer than accounting periods so that departmental users have some extra time to change the categories on
accounting transactions. This may need to be done for various reasons, such as assigning categories to Physical Plant charges. Note that no
additional transactions will be posted to the period during this time; it is only for changing the category. There will be a different number of
periods open from the base month depending on the type of activity. Entries may be made to budget, estimated revenue, encumbrances, and
planned activity across 17 periods into the future. Entries may be made to commitment, revenue, expenditures, pending activity, and transfers
across 8 periods into the future. Note that individually these transactions may be further limited by the applications that create them, such as
UPS.
A good example of this is the ability to spread University budget and balance forward entries across periods to place the budget in the periods
in which the expenditures are expected to occur. Consider an example where March is the base period. Budget of $12 will be posted into the
July period by the University. If the department so desires, it may distribute that budget over the periods in that fiscal year (July - June),
perhaps in an even distribution of $1 per month.
DART Sequence Codes
DART is designed to provide departmental users with flexiblity in classifying and viewing their accounting transactions. One feature which
gives departmental users flexibility in viewing their transactions is the use of sequence codes. A sequence code is a three-character number
which defines the order in which categories will be displayed. The code also allows for broad groupings of categories. Each category is
assigned a sequence code when it is created. There are two types of sequence codes: institutional and departmental. Institutional sequence
codes are the institutionally-generated sequence codes that are assigned at the time a category is created. Departmental sequence codes
are the unique sequence codes that the departmental user assigns to the category when the user adds the category to their company cost
center. A departmental user has the option of using the sequence codes as they are assigned or they may change them via the CDC (Center
Dept Category maintenance) function at the time the user establishes their company cost center/category combinations.
It is important to keep in mind when establishing your own sequence codes which categories you want to be grouped together. For example,
computer supplies (SupComp) has a sequence code of 002 and computer expenses (CompExp) and computer maintenance (CompMntc)
have a sequence code of 320. If you wanted to group the above expenditures together, you would need assign your own departmental
sequence code. SupComp (110), CompExp (111), and CompMntc (112) might be an example. This would allow you to view these
expenditures grouped together. The downside in this example is that you would not be able to view SupComp with the rest of your supplies
type categories.
Glossary terms:
Restricted or not
Cash at cost center level
Life-to-date balance information
Available Funds Balance
Several activities will affect the available balances that are maintained by the system:
Transactions entered directly into the system by department users in an effort to closely estimate
available funds. These are planned or expected entries, and do not have a permanent effect on
fund balance, but are estimating tools. These must be reconciled or removed (automatically or
manually) from the system as the actual transactions are posted to the accounts.
Those updates to the available funds file generated by the system as a result of a pending system
generated transaction, such as a GJIM funds transfer, or a retroactive LABOR payroll distribution
change. These must be reconciled out of the system, by the system, as the actual transactions are
approved and posted to general ledger. When a transaction is approved and is posted, or is
rejected, the shadow entry which previously affected available funds for the center will be
eliminated or reconciled away.
Commitment (requisition) entries, supported by detail in the UPS system, which do not have a
permanent effect on fund balance.
PO encumbrance entries, supported by detail in the UPS system, which have a permanent effect on
fund balance, and salary encumbrance entries, supported by detail in the PSB system, which do not
have a permanent effect on fund balance, i.e., those encumbrances do not carry over into future
fiscal years.
Expense transactions created via an invoice approving function in the UPS system.
Revenue or expense transactions that are created by other modules, such as LABOR, internal
orders, payroll, cash receipting, and GJIM.
Transactions and updates which do permanently affect fund balance comprise the official record of the
institution; transactions and updates which do not permanently affect fund balance are provided to supplement
the official record for management purposes.