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Object Codes for Expenditures

Every financial entry made to an expenditure account must have an object code that appropriately identifies the nature of the expense. Departments must utilize object codes in a consistent manner and exercise care that expenses are recorded to the code that most accurately describes the charge.

This accuracy is important to ensure proper financial and management reporting. It is also important to utilize proper codes so that costs which are considered unallowable can be properly aggregated and excluded when calculating the facilities and administrative rate in accordance with the Code of Federal Regulations (CFR) Part 200.

  • Payroll object codes are based on employment codes within the payroll system. The payroll system will assign the appropriate expenditure object code. For further information see related link to "Payroll Object Codes."
  • Non-Payroll object codes are determined by the person posting the financial entry for an expense. (Object codes for financial entries on balance sheet and revenue accounts are assigned by a program within the financial system.) Some types of expenses cannot be charged to a contract or grant project; the object codes for these types of expenses are coded as unallowable or warning.

The correct use of an object code is also important in relation to indirect costs. (Indirect costs are also referred to as "facilities & administrative costs" (F&A) and "overhead.") For a breakdown of the established F&A base codes, see the related link, "Base and Object Codes Table for Indirect Costs."

Contract and grant indirect costs are those that have been incurred for common or joint objectives and which cannot be identified specifically with a particular project. Elements of indirect costs include: maintenance of operation of physical plant, use allowance for buildings and equipment, general administration and general expense, department administration expense and student service expenses. These costs must be included in all budgets for contract and grant solicitations to secure reimbursement of indirect expenditures.

For contract or grant funds - the financial system stores, on the account-fund table, the applicable overhead rate and expenditure base code that will be used for the automated overhead calculation. During the end-of-day financial system processing, the system looks at each transaction and does a look-up of the acct/cc-fund; if overhead is indicated, the system does a look-up of the base code and its associated expense object codes. It then applies the indirect cost rate to the transaction amount resulting in an indirect cost transaction. That entry is then applied to the general ledger using sub code 9H, the object code is assigned by the system based on the fund source (i.e., federal grant, federal contract, state agency, etc.).