What is an object code?
At Stevens, budget line items and individual expense transactions are identified by a four-digit object code number. This object code classifies the transaction as salaries, fringes, supplies, travel, etc. To select the correct object code for sponsored project budget line items or expense transactions, the principal investigator and/or grant administrator should be familiar with Stevens’ object code structure.
A complete listing of Stevens object codes is maintained by the Division of Finance (Cost Analysis) and available in KFS.
Why the emphasis on proper object codes?
One of the elements most critical to successful financial administration of sponsored projects is the assignment of appropriate object codes to budget line items and expense transactions, for the following reasons.
- Miscoded expenses can result in incorrect indirect cost charges. The object code determines whether or not the cost will be included in "modified total direct cost" and therefore subject to indirect cost.
- Failure to identify capital equipment purchases can result in noncompliance with internal and external property management regulations. Federal regulations require that all capital equipment purchases be added to the central inventory system. The object code used on the capital equipment requisition is one method used by central equipment inventory offices to identify capital equipment purchases to be added to central inventories.
- Object code errors can result in inappropriate conclusions by the principal investigator and/or sponsor regarding financial status.
- Improperly coded expenses can result in inappropriate conclusions by auditors and can adversely impact Stevens ability to effectively monitor for compliance with federal regulations regarding allowability. In an internal or external review or audit, the object code determines the type of review or audit procedure to which the expense is subjected, and whether the expense is viewed initially as allowable or unallowable.
Do all proposal budgets need to be detailed at the object code level?
No, not all proposal budgets need to be prepared at the object code level. However, funded proposals must have budgets at the object code level per the May 8, 1996 revision to Office of Management and Budget Circular A-21, Section C.10.:
Section C. 10. Consistency in estimating, accumulating and reporting costs.
- An educational institution's practices used in estimating costs in pricing a proposal shall be consistent with the educational institution's cost accounting practices used in accumulating and reporting costs.
- An educational institution's cost accounting practices used in accumulating and reporting actual costs for a sponsored agreement shall be consistent with the educational institution's practices used in estimating costs in pricing the related proposal or application.
- The grouping of homogeneous costs in estimates prepared for proposal purposes shall not per se be deemed an inconsistent application of cost accounting practices under subsection a when such costs are accumulated and reported in greater detail on an actual cost basis during performance of the sponsored agreement.
What are some of the special circumstances related to object codes?
In many situations, there are several object codes that could appropriately be used, and it is up to the grant administrator, based on guidance from the appropriate Dean, Director, or Department Head, to choose the object code that best describes the good or service being acquired. Following are general comments on selected expense areas.
Personnel Costs: 5101 - 5403
Salaries and wages and related fringe benefit object codes, 5101 - 5403, are used for individuals hired and paid through the Stevens payroll system (Human Resource System - HRS), and the object codes used are determined by the job code assigned to the position. Payments for services outside the Stevens payroll system should be charged to the appropriate object code for Professional Services (6013). The Payroll Department or Human Resources will assist you in determining the appropriate job code for new positions or in reclassifying existing positions.
For allowability reasons discussed later, proper distinction between office supplies and lab/research supplies is critical, particularly on government-funded projects. Object codes 6171 "Materials/supplies-classroom,"6174 "Materials/supplies-office, and 6176 "Materials/supplies-other "are not appropriate for use, as they do not specifically identify the type of cost being charged.
Foreign travel should be charged to object code 6212 "Travel, Foreign". Any alcoholic beverages or entertainment costs to be reimbursed to a traveler must be charged to the appropriate entertainment object code, (6148 - Alcoholic Beverages, 6142 – Hospitality, 6141- Business Meals) and applied to an institutional operating account.
Participant Support Costs (PSC): 6041 - 6044
All participant support payments or costs should be charged to the appropriate object code: 6041 – Travel, 6042 – Stipend, 6043 – Subsistence, and 6044 – Other.
The first $25,000 in payments to a subcontractor on a sponsored project should be charged to 6022 "Sub-Cont Under $25K". Payments in excess of $25,000 should be charged to 6021 "Sub-Cont over $25K".
Capital Equipment: 7510-7511
Capital equipment funded by the sponsor should be charged to object codes in the range 7510 through 7511. Effective July 1, 1996, capital equipment is defined as "an article of nonexpendable tangible personal property having a useful life of more than one year, and an acquisition cost of $5,000* or more per unit."
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