Financial Accounting and Reporting

Run SAP Lockbox Program to Apply Cash

All cash is received by the MIT Cashier and processed through its system. Within the Cashier system, a file is developed daily of all cash (both debits and credits) processed and deposited that day. This file is spooled to the VPF Control Section. Payments received, which the Cashier cannot identify with a customer or account, are posted to G/L Account 201100 - Unidentified Cash Receipts.

At a prescheduled time each day, the VPF Control Section will check for the existence of a Cashier cash file and will execute the SAP Lockbox program. The Lockbox program automates the application of cash.

The Lockbox program will split the file in two. It will place all A/R cash transactions into G/L Account 101221 - A/R Cash Clearing, and all non-A/R cash into G/L Account 900030 - Cashier's Office System Feed, and will subsequently clear all transactions by means of Journal Vouchers. A/R payments will be posted to individual customers, which will simultaneously update account 101200 - A/R General. Petty cash and other cash and expenses will be posted to individual internal orders/cost centers/projects as identified in the Cashier file.

If, for any reason, the Lockbox program should fail in attempting to post a particular transaction, the transaction will post to internal order 1069700 - Unidentified Cash Receipts. A/R personnel will research these transactions and manually execute a journal voucher to transfer the charge/credit to the appropriate internal order, cost center or project.

The Lockbox program will also generate a series of reports including a printout of the entire run and an error report that can be used to clear failed postings (see FLB1 - Apply Unprocessed Cash from Lockbox).

Use the table in Step 2 Close a Fiscal Year to review guidelines for accruals and deferrals.

 

Follow these guidelines for accounting policies for costs related to computer software development.

Cost Objects (or Cost Collectors)

A cost object is a seven-digit number used to categorize the costs and revenues associated with a particular project or activity at MIT. The terms cost object and cost collector are used interchangeably. Each cost object number is unique and assigned to only one company code. The three types of cost objects in SAP are cost centers, internal orders, and WBS elements.

Cost Center

Most auxiliary, administrative and instructional activities are in cost centers. Funding is primarily through general funds or self-funding for revenue-producing auxiliaries. The cost center number range is 1330000-1999999.

Internal Order and WBS Element – Balance Sheet

Balance sheet cost objects are used to record activity that is either not part of MIT’s revenue and expenses or is MIT activity but requires deferral to make sure it is reflected in the financial statements in the proper time period. Internal orders may or may not have an end date and are generally self-funding, while WBS elements do have end dates and funding generally originates from an external sponsor. The internal order and WBS element – Balance Sheet number range is 1000000-1329999.

Internal Order – Fund

These cost objects are for discretionary or instructional activities. Funding is from gifts, investment income, Industrial Liaison Program (ILP) fees or miscellaneous income. Internal Order – Funds are used for non-research activities, fellowships, and discretionary purposes. They may or may not have an end date, at the DLC discretion. The Internal Order – Fund number range is 2000000-4479999.

WBS Element – Fund

These cost objects are for instructional activities. Funding is from sponsors such as, government, industry or foundations. WBS Element – Funds are used for conferences/workshops, curriculum development. Available funds are based on the authorized total and have a specific end date. The WBS Element – Fund number range is 2000000-4479999.

Internal Order and WBS Elements – Internal Operations

These cost objects support unique departmental cost tracking operations within internal MIT organizations such as Facilities, Telecom, and Technology Licensing. The Internal Order and WBS Elements – Internal Operations number range is 4300000-4999999.

WBS Element – Research Project

These cost objects are for sponsored research activities. Funding is from sponsors; such as government, industry and foundations. Available funds are based on authorized total and have a specific period of performance. The WBS Element – Research Project number range is 6000000-9999999.

MIT Cost Object Category

Definition

SAP Cost Object Type

Cost Object Range

Auxiliary

Activities
that are usually self-supporting, e.g., MIT Day Camp

Cost center

1330000-1379999

General

For administrative operations and ongoing academic activities

Cost center

1380000-1999999

Fund

Discretionary activities, scholarly allowances and special instructional projects

Internal order

Fund Expendable:

2000000-2999999 Fund Pool A:

3000000-3668900

Fund Pool C:

3669000-4479999

Fund-Sponsored

Sponsored non-research activities, e.g., fellowships, curriculum development, workshops

WBS element

Fund Sponsored:

2000000-4479999

Sponsored Research

Research projects funded by external sponsors

WBS element

6000000-9999999

Balance Sheet

For activities that are not part of MIT’s revenues and expenses, or are deferred revenues and expenses

WBS element when the activity is sponsored, internal order in all other cases

1000000-1329999

----------------------

4480000-4499999

(telephone and network-related construction and renovation)

G/L accounts and cost elements classify types of revenue, expense and balance sheet transactions. The term G/L account is used in the FI (Financial) module of SAP, and the term cost element is used in the CO (Controlling) module of SAP. Departmental users most commonly work with Expense and Revenue G/L accounts. Each company code has a subset of G/L accounts based on their operational requirements.

Although most G/L accounts also exist in the CO module as cost elements, some cost elements exist only in the CO module. Examples are cost elements used for calculated costs, like employee benefits, allocations or facilities and administration charges. Similarly, there are G/L accounts in the FI module for MIT’s assets and liabilities that do not exist in the CO module.

Meetings expense are entered in G/L accounts two ways:

  • All food and beverage expenses for meetings are charged to one general ledger account - 421000, Meetings - Food and Beverages. General ledger account 421000 should be used for the purchase of all food and/or beverages associated with a meeting. Expenses for meetings, retreats, seminars, symposia, workshops or events, including food and beverages, may be allowable costs on a federal award unless the sponsor expressly states otherwise. But in order for the expense to be allowable, the meeting's primary purpose must be dissemination of technical information beyond MIT. The meeting must also be necessary and reasonable for successful performance of the federal award. Standard group meetings in which information is shared among laboratory members do not qualify as allowable costs.
  • General ledger account 421010, Meetings - Materials and Supplies, should be used for materials and supplies that are purchased for meetings. Expenses that are categorized in this general ledger account WILL BE recoverable from the federal government unless they are not allowed by the specific award.

Procurement and the VPF will review invoices and requisitions to ensure the meeting expenditures are MIT business related. For direct charges to WBS elements, care should be taken by the DLC that the specific charge is allowable on the sponsored project to which the charge is being made.

To substantiate the business purpose of the meeting expenditures, departments are still required to provide the following:

  • The purpose of the meeting (i.e., content of discussion);
  • A list of the attendees (names or group association) present at the meeting;
  • Itemized receipts with requests for payments;
  • The date and location of the meeting, if it is not self-evident.

Unclaimed/abandoned property is an asset with no activity by the owner over an extended period of time, generally three years. Types of unclaimed property can include payroll checks, expense reimbursement checks, or rent deposits.

The VPF General Ledger Accounting and Reporting (G/L) team mails claim letters in June to members of the MIT community who have unclaimed/abandoned property with specific information related to the outstanding property.

In FY 2012, the G/L team sent more than 2,000 unclaimed property letters to the MIT community.

To learn more about unclaimed/abandoned property, read the FAQs from the State of Massachusetts Unclaimed Property Division.

For specific questions regarding abandoned property at MIT, contact abandoned-property@mit.edu.