Cost Centers
A cost center defines whose money it is, the type of money it is, and the type of activity it is being spent to support. It is presented as a set of numbers specific to each defined field (fund code, department code and program). All University of Houston-Downtown (UHD) departments monitor entries in the financial system on a monthly basis (cost center verifications) to minimize the risk of unauthorized uses of funds and to ensure authorized transactions post to the correct cost centers.
Documented: July 27, 2022 - MJ
Cost Center Verifications
The following procedure explains the cost center verification process for the Library.
1. Each month, UHD Accounting Department will send an email letting the departments know when the previous fiscal year period has closed and to complete cost center verifications for the closed period.
2. The Administrative Staff runs a Department Verification Report (1074) for all active cost centers as highlighted on the 1063. The 1074 report and worksheet will be downloaded and saved in the department's monthly budget folder by fiscal year and month.
a. The Administrative Staff will attach the worksheet to the 1074 for each cost center, making sure that the total expense and revenue from the 1074 matches the amount on the worksheet. Detailed Transactions - Revenue/Expense can be found on 3b of the report.
b. The Administrative Staff will review each active cost center and attach (pin) a copy of the transactions generated at the department level, such as vouchers, SC vouchers, P-Card transactions, telephone report, and journals. The Library Book HEAF cost center does not need the contract, requisition or purchase order attached as back up.
c. Once all back up documentation has been added to each active cost center, the administrative staff will sign the verification report and inform the DBA that the cost center verifications have been completed.
3. DBA or designee reviews transaction spreadsheets to verify that all transactions belong to that department.
a. Review transactions that were generated at the department level, such as vouchers (expense only), SC vouchers, GL journals and requisitions and that all back up documentation has been added to the 1074.
b. Review P-Card which have the last four digits of the card number in the transaction description and that the back up for each transaction has been added to the 1074.
c. Review documents like vouchers created by Accounts Payable and verify the vouchers are for goods or services requested by the department. Review budget journals posted for correct encumbrance and / or budget.
d. Review postage, telecom, and other centrally billed charges to ensure that the charges belong to the department and are pinned to the 1074.
e. Review encumbrance balances to ensure the appropriate amount, release PO encumbrances that will not be used anymore.
e. It is not necessary to review system generated transactions, such as accounts payable liability, and payroll liability.
f. It is not necessary to review payroll-related expense transactions on the Verification Worksheet, which summarize transactions from the HR System. Run the BOB Report in the HR System. Verify that all employees on the report are paid from the correct cost center and research any negative BBA on the BOB report .
4. DBA or designee verifies that budget balances are not exceeded and equity balances are not in deficit.
a. Review the Verification Worksheet to verify that budget balances are not exceeded and to identify deficit equity balances.
b. If negative budget balances or equity deficits exist, DBA or designee should review revenue and expense budgets to determine whether the negative budget or deficit will be corrected by fiscal year end, and reduce budgets or transfer fund equity as needed for anticipated shortfalls.
5. Sign the 1074 Verification worksheet, document corrective actions taken (if any), attach 1074 report, pin necessary documents and upload to SharePoint before the due date. The detailed procedures for completing cost center verifications electronically can be found below.
Completion includes the following:
Updated: July 27, 2022 - MJ
Understanding the 1074
The Department Verification Report (1074) report will show the department's budget availability and how transactions affect the budget. It is important that managers and staff working with the department cost centers and accounts understand the sections and structure of the 1074 report. PeopleSoft Financial System Training is available through General Accounting.
Documented: July 27, 2022 - MJ