The Cost Allocation functionality provides a flexible mechanism to allocate costs and/or revenues. This process is based on the concept of allocating costs and revenues from entity-defined pool accounting distributions to base accounting distributions on a dollar-for-dollar basis. At the time costs are initially recorded in AFIS, the grant, project, or operational accounting distributions to which those costs should be recorded are not always known. AFIS tracks these costs, and then later, using the automated Cost Allocation Process, distributes the costs to the proper programs based on instructions defined in the Cost Allocation hierarchy.
The Cost Allocation hierarchy identifies the costs or revenue to be allocated, how the allocation must be made, and the recipients of the allocation. This hierarchy can be as simple or complex as necessary to meet agency needs. Costs and/or revenues can be allocated using the follow methodologies:
Fixed Percentage – Used when the percentage to be allocated to each base is known and/or manually calculated. For example, if IT Service Desk expenses must be allocated to departments based on a manually assigned percentage, Fixed Percentage Type is utilized.
Statistical –Used for allocation by any statistical method (square footage, number of employees, number of telephones). For example, if utilities must be allocated to departments based on the square footage occupied by the department, this allocation type would be used to record each allocation recipient’s square footage.
Direct Financial – The allocation percentage is calculated by AFIS based on actual expenditures during a specific time frame. This may be referred to as a spending-based allocation because the allocation percentage is calculated by the amount each base contributes to the total expenditures defined and accumulated during a specific time frame.
Direct and In-Stream Financial - Direct and In-stream Financial Type is a two-step allocation process. The first step may be an allocation calculated using any one of the Base Types. The output of the first allocation (in part or in total) is then included in the accumulation for a Direct Financial allocation that constitutes the second step of the allocation.
Cost Allocation jobs can be scheduled to run monthly, quarterly, or annually, depending on agency needs. Jobs will be run during month-end close, after all expenditure and revenue transactions have been processed.
The following resources listed below will assist with processing and navigation for Cost Allocation: