Expenditure Allocation PTA (EAPTA) Guidelines

The following are guidelines for setting up and managing Expenditure Allocation PTAs. These PTAs are specialized accounts used to accommodate repetitive allocations of expenditures where the distribution of the expenditures to benefiting PTAs cannot be determined at the time the expenditure is incurred.

These conditions necessitate the creation of an expense allocation PTA. An expenditure allocation PTA distributes expenses such as materials, supplies, services, or salaries to the PTAs that benefit from the expenditure.

EAPTA Overview

An expenditure allocation PTA (EAPTA) is a specialized departmental expenditure PTA used solely to accumulate expenditures such as materials, supplies, services, or salaries whose distribution to the PTAs benefiting from the expenditures cannot be determined at the time the expenditure is incurred.  Departments distribute (or allocate) these expenditures monthly from the expenditure allocation PTA to benefiting PTAs using an allocation methodology that:

• Produces an allocation of expense to each PTA in reasonable proportion to the benefit received.

• Logically relates to the type of expense incurred.

• Results in charges to benefitting PTAs that are allowable, allocable and reasonable.

Do not open an expenditure allocation PTA for a one-time allocation of expense or if you can direct charge the expense to benefitting PTAs. One-time allocations of expense should be justified, including a statement addressing the one-time nature of the allocation.

Salary and Non-Salary Expenditures are posted to separate EAPTAs

Salary and non-salary expenditures cannot be charged to the same expenditure allocation PTA. You must create one of the following PTAs:

1. Salary Expenditure Allocation PTA: Use only for salary expenditures including related vacation, vacation used and fringe benefits. Salary expenditure allocation PTAs are allocated monthly and cleared at year-end. These PTAs are not Organization Suspense Account PTAs. Every department has an Organization Suspense Account for salary transactions.

2. Non-Salary Expenditure Allocation PTA: Use only for non-salary expenditures such as materials, supplies, services and maintenance charges.

Expenditure Allocation PTAs or Service Center

If you are providing a service or product and you are allocating both salary and non-salary expenditures, the activity may need to be set up as a service center. Please see Appendix 1 Comparison of Expenditure Allocation PTAs and Service Center in the Service Center Manual.

Example of an Allocation Process Using an Expenditure Allocation PTA

Each month a department purchases supplies for a laboratory where several different sponsored projects are on-going. Bench scientists on the sponsored projects use these supplies in their sponsored research. At the time the supplies are purchased the department does not know how the supplies will be used on the sponsored projects. The department does know that the use of these supplies is directly related to the number of bench scientists on each project. (Each bench scientist performs similar tasks and therefore uses the supplies in the same way and rate.)

1. The department requests a non-salary expenditure allocation PTA to be opened by completing the Request for New Expenditure Allocation PTA form.

2. The department purchases the supplies and charges the supplies to the Expenditure Allocation PTA using expenditure type 55210 Laboratory Supplies.

3. The department obtains documented approval to charge users’ PTAs.   

4. At the end of the month, the department tallies the number of bench scientists working on each project for the month and calculates relative number per project to allocate the monthly expense.

5. The department initiates an iJournal crediting the Expenditure Allocation PTA and debiting the sponsored projects for their calculated share of the monthly expense using expenditure type 55210 Laboratory Supplies.

Allocating Expenditures to External Entities is not permitted

Expenditure allocation PTAs may not allocate expenditures to external entities without the approval of RAPC.  SLAC, the Stanford Hospital and Clinics and Lucile Packard Children’s Hospital are not considered external entities.  Use of EAPTAs to allocate expenses to external entities may jeopardize the University’s tax exempt status because of potential unrelated business income and expose the University to claims from third parties. Financial activities with third parties typically require signed agreements/ contracts. In addition external parties may be subject to:

• Sales tax

• Overhead  charge of 8% or higher

Expenditures Chargeable and Not Chargeable to Expenditure Allocation PTAs

Expenditures

Only salary expenditures including related vacation, vacation used and fringe benefits can be charged to salary expenditure allocation PTAs.

Only non-salary expenditures such as materials, supplies, services and maintenance charges can be charged to non-salary expenditure allocation PTAs.

The following expenditures (5xxxx) may not be charged and allocated using an Expenditure Allocation PTA:

• Expenditures in unallowable expenditure types (charge these expenditures to an unrestricted PTA)
• Expenditures that the sponsor has identified as unallowable
• Prepaid tuition allowance
• Capital equipment  and fabrications
• Financial aid
• Sub-awards (expenditure types 54710, 54720)
• Veterinary service center charges (expenditure types 58710, 58720)
• Indirect costs, infrastructure charge, VSC overhead, as separate charges.  EAPTAs may not be used as alternate PTAs  for the infrastructure charge 
• Expenditures covering multiple years (multi-year warranties, licenses, etc.) without approval from RAPC.

Departments should refrain from building up on-hand supplies beyond what is reasonably needed to anticipate actual demand.

General Ledger Codes

Only 48XXX GL codes may be used when appropriate to clear an EAPTA. All other GL codes must be approved by RAPC.

Requesting and Maintaining a New Expenditure Allocation PTA

Use the Request for Expenditure Allocation PTA form to open new EAPTAs or to request new projects and/or tasks on existing awards/projects. A guarantee award is required in order to open a new expenditure allocation PTA. (If you are using Firefox, please save a copy of the form onto your desktop to fill out.) Salary and non-salary expenditures are set up as separate expenditure allocation awards. Segregate expenditures subject to different allocation methodologies into separate project/task combinations.

E-mail change requests to information other than the above after the EAPTA has been set up should be e-mailed to Sophie He. For example, a change to the individual responsible for clearing the account, the allocation methodology, principal owner, award, project, and task manager as well as titles and other attributes may be requested by email.

Repurposing an Existing EAPTA is Not Permitted

Do not “repurpose” an existing expenditure allocation PTA. Request a new EAPTA. For instance, if an EAPTA is being used to allocate postage, do not start using the EAPTA to allocate laboratory supplies.  

Closing an Expenditure Allocation PTA

Send an email request to Sophie He documenting the specific Expenditure Allocation PTA you would like closed and explain why it should be closed.

All Expenditure Allocation PTAs must have zero expenditures and zero fund balance before they may be closed.  All expenditures must be allocated to benefiting PTAs. Any remaining expenditures that cannot be allocated to benefiting PTAs should be transferred to an unrestricted departmental PTA.  EAPTA outstanding balances are not funded.

Please remember to adjust any labor distribution schedules, purchase requisitions/orders to prevent charging the Expenditure Allocation PTA after it is closed.

All documentation pertaining to the allocation PTA must be retained in accordance with Stanford’s document retention policy Admin Guide Policy 3.1.5 Retention of Financial Records.

Managing Expenditure Allocation PTAs

Duties and Responsibilities of EAPTA Owners

Expenditure Allocation PTA Owners are responsible for:

• Documenting the allocation methodology in the EAPTA request form, the allocation iJournals or labor distribution adjustments and retaining any allocation spreadsheets or other documentation that supports the allocation of expenditures
• Allocating expenditures monthly in accordance with the documented methodology
• Allocating salaries monthly from salary expenditure allocation PTAs and clearing the salary EAPTA at year-end
• Obtaining and retaining documentation of prior approval to charge PTAs benefitting from the expense
• Periodic review and revision of the allocation methodology to prevent under or overcharging benefiting PTAs. Review EAPTA activity monthly to ensure:

• Appropriate expenditures are allocated
• The EAPTA is not over/under allocated

• Clearing the EAPTA at fiscal year-end
• Timely maintenance of the EAPTA, especially changes in award/project/task managers
• Responding to inquiries by RAPC about EAPTAs including requests for reconciliations of balances and detail support for allocations
• Responding to auditors (internal and external) about EAPTA activity

General Guidelines

• Establish a routine of clearing expenditures on a monthly basis either in the same month or the month after the charges post. It is a good business practice and good customer service to clear these charges on a timely basis to the PTAs that benefited from them. Timely allocation ensures expenditures can be associated with the month in which they provided the benefit and reduces the risk of allocating charges to sponsored projects after the sponsored project end date.

• Expenditure allocation PTAs are subject to RPH 15.8 Cost Transfer Policy for Sponsored Projects in addition to Administrative Guide Policy 3.2.3 Allocations and Offsets.  Charges in the expenditure allocation PTA older than six months may not be allocated to a sponsored project without approval of RAPC and OSR.   

• The department allocating the expense must have documented prior approval from an administrator with financial authority over the benefiting PTA before the PTA may be charged. Approval may be documented by e-mail or written request. This written approval must be retained by the department allocating the expenditures.

• The iJournal or labor distribution justification must describe or reference the allocation methodology.

• Allocate only actual expenditures posted to the EAPTA.  Do not “pre-allocate” expenditures, i.e. – do not allocate based on an invoice before the actual charge has posted.

• If you are not allocating non-salary expenditures using 58xxx/48xxx or a 58xxx/58xxx expenditure types then you allocate the expenditures in the same expenditure types as originally posted.

• Allocating in excess of actual expenses is not allowed. When this happens the EAPTA owner must rebate the excess to the population of PTAs allocated the excess during the period the gain was incurred.

• Do not allocate charges from one expenditure allocation PTA to another expenditure allocation PTA.

• Do not use one expenditure type to clear several other expenditures types except as permitted when using expenditure types 58XXX/48XXX or 58XXX/58XXX.

Allocation Methodology - Do's and Don'ts

• Allocation methodologies must be documented and auditable. Documentation should include support for the specific costs allocated and indicate how the allocation methodology is logically related to the cost being allocated. This support should be retained by the department and be available for review.

• Always remember to document why measures such as headcount, square footage or hours directly relate to the benefit received.

• Prohibited allocation methodologies include any methodology based on budgets, funding or available funds.

• Administrative expenses may not be distributed or rotated among sponsored projects. Pooled allocation methodologies may not be used to charge administrative costs to sponsored projects.

• Allocation methodologies should be reviewed periodically to ensure they are reasonable and appropriately clear the PTA. A best business practice is an annual review. Methodologies based on sampling, surveys, etc. should be reviewed and updated at least once each fiscal year. Significant changes to the population may signal the need to review the allocation methodology.

Expenditure Allocation PTA Accounting

Accounting for Non-Salary Expenditures

General Guidelines

Non-salary expenditures may be allocated using the iJournal allocation form, new iJournal form or a feeder iJournal. Do not allocate an expenditure incurred in one expenditure type using a different expenditure type except as permitted below. The allocation may be accounted for as follows:

• The expenditure item date (EID) for non-salary transactions should be set to the first of the month in which the service was provided unless the actual date of service is used. This avoids issues with closed PTAs on sponsored projects that end during the month. For example if you are allocating October charges in November, the EID date is 01-OCT-YYYY.

• In the journal line description, document the source of the charge and the nature of the charge. (What is the charge and where did it come from?) Please note at present line description on Oracle Business Intelligence reports truncates the description after 35 characters.

• Department reference is at the discretion of the originator. For instance originators have used transaction references such as PO number, invoice number, iJournal number to aid in identifying allocated transactions.
• Do not use expenditure type 58320 INTERDEPT SVC CENTER CHRGS.  This expenditure type may only be used by service centers. See examples below.

The journal justification should document the allocation methodology, clearly state the source of the allocated expenditures, the nature of the allocated expenditures and the time period covered by the allocation journal.

Be consistent in formatting your allocation journal.  

Examples

Allocations of expense may be accounted for as follows:

• Use the same expenditure type as the original charge

The department is allocating laboratory supplies charged to ET 55210 Supplies Materials Laboratory in expenditure allocation PTA 1996125-100-AAQYY to several sponsored projects for the month of October 2012. Here the originator has identified the PO number of the supplies being allocated in the department reference.

Sample iJournal

• Use 58xxx/48xxx expenditure types combination

In some cases, it is not possible to use the same expenditure type to clear expenditures. For instance copy charges or computer use may be allocated per copies made or a percentage of computer usage. Departments may use a 58xxx/48xxx expenditure type combination to allocate these charges. Use an interdepartment revenue code (GL codes 48110- 48180) on the EAPTA and an interdepartment expenditure type (ETs 58510-58514) to record the expense on the PTA receiving the charge. 

The total dollars charged to the 48xxx revenue GL codes must offset the total dollars charged to the 58xxx expenditure types and net to zero. 

The department has a copier used by several different areas. PTA 1995126-100-AAQXX is accumulating the cost of operating the copier. A log documents the number of copies made by users by month. Users are charged by the copy. In December (2014), the department charges users for copies made during the month of November 2014.

Sample iJournal

• Use 58xxx/58xxx Expenditure Type

Used in the same situations as a 58xxx/48xxx example above. Debit the PTA receiving the charge and credit the expenditure allocation PTA using the same 58xxxx expenditure type. 

The department is allocating liquid nitrogen in expenditure allocation PTA 1026999-100-AAQWW to a sponsored projects in January 2014. 

Sample iJournal

Accounting for Salary Expenditures

Salary must be allocated (cleared) using labor distribution (LD) adjustments using the same expenditure type in which the salary was originally charged. Clearing salary transactions out of a different expenditure type may prevent fringe benefit charges and vacation accrual from properly clearing as different salary expenditure types may have different fringe and vacation accrual rates.  How To: Create Salary Distribution Adjustment in LD. Salaries are allocated monthly and the salary EAPTA is cleared at year-end. Always remember to clear any associated vacation used.

Reviewing EAPTA Activity

In addition to the expenditure statements, EAPTA owners should use the online Oracle Business Intelligence reports FIN_OP_101_Operating_Detail or FIN_OP_102_Oper_Award_and_GL_Sum. These reports document expenditures and revenue as well as prior year project balances.  Any prior year-end project balance rolled forward into the next fiscal year will appear on these reports.  Other helpful reports are: (1) OBI 279 Expenditure Detail Report and (2) OBI 153 Fund Statement report.

EAPTAs Funded in the Prior Year

If the EAPTA has been funded at year end, reverse the funding in the succeeding year no later than September month end close. RAPC rolls the prior year-end fund balance in to the EAPTA project in the current year. Unallocated expenditures must be allocated and not funded.

Fiscal Year End Project Balance Roll Forwards

Expenditures should be fully allocated as of fiscal year-end. Any year-end balances in the expenditure allocation PTAs are rolled forward each year into the next fiscal year at the project level. These balances are the net of revenues and expenditures incurred during the year plus any balance from the prior fiscal year. These ending/beginning fiscal year balances can be seen in Oracle Business Intelligence on the FIN_OP_101_Operating_Detail and FIN_OP_102_Oper_Award_and_GL_Sum reports. Schools and departments should run these reports to ensure they have not omitted allocating these balances.

EAPTA owners can expect to see the balance rolled forward by end of October in the following fiscal year.

Expenditure Allocation PTAs in Oracle

The following attributes describe the expenditure allocation PTA in the Oracle financial system: