Create Cost Objects for Special MIT Activities


MIT departments and/or faculty will periodically require the creation of cost objects to capture expenditures related to an activity for which MIT will be reimbursed.

Although Central A/R will not participate in the billing of these amounts, they are part of MIT's total accounts receivable. Therefore, A/R will set up and monitor the balance of such cost objects.

Additionally, because there is inherent risk involved in MIT's outlay of funds subject to later reimbursement, faculty must designate, at inception, another cost object which will alleviate any possible deficit.

Procedure

1. A faculty member realizes a need to create a cost object within the parameters above.

2. The faculty member drafts a letter explaining the need and designating another account to cover any shortfall and forwards it the Director of Conference Services.

3. The Director of Conference Services reviews the request and forwards it to the Assistant Controller responsible for A/R requesting creation of a new cost object.

4. The Assistant Controller reviews the request and either requests more information or approves the creation of the cost object.

5. The approved request is forwarded to A/R and an internal order is created (order type 0010 - Accounts Receivable).

6. Monthly, A/R personnel will review balances of all type 0010 internal orders. Based on their knowledge of the particular event (some involve significant outlay prior to reimbursement, some collect large amounts of revenue prior to expense) balances will be noted and, where appropriate, the Account Supervisor/Addressee will be contacted and requested to bring the balance to zero by depositing funds against the account at the Cashier's Office.

7. All type 0010 internal orders will be settled to G/L account 101225 monthly. At month/year end, after settlement, this balance and the balance of account 101200 - A/R General will represent the balance of all outstanding general accounts receivable.

8. When the activity which prompted the creation of the cost object has ended (i.e., the conference has been held):

  • Any positive balance (profit) will be transferred, by means of a journal voucher, to another cost object in the same department;
  • Any negative balance (loss) will either be recovered from the sponsor of the event as final billing or transferred from the cost object originally designated for this purpose (as noted in step 2) by means of a journal voucher.