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Financial Management

Overview

This chapter focuses on the financial component of your responsibilities as an administrative officer (AO), and will teach you the fundamentals of financial management at MIT. The level of your financial involvement will depend on the financial responsibilities that you assume and the type of DLC (department, lab, or center) that you work for (see DLC Management chapter for information about different types of DLCs).

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Funding the DLC

As an administrative officer (AO), you will oversee all functional areas of your Department (or Division), Lab, or Center (DLC), each of which is defined by its function. by its function.

Sources and Uses of Funds

To understand financial management at your DLC, you must understand its sources and uses of funding. A DLC can receive funding from any of three major sources (and most DLCs receive at least some funding from each):

General Dollars are unrestricted funds supplied by the Institute. General dollars support general academic operations and the administrative activities that support them. Sources of general dollars include tuition, facilities & administration (F&A), cost recovery (which we will discuss later in this chapter), and investment income.

Gifts and Endowments are donated monies that are usually less restricted than funds from other sources. However, the donor is free to determine how restrictive the funding will be. For example, endowment funding may be specifically for the creation and support of a chair (a faculty position in a specific department; the faculty member's salary is paid by the endowment).

Sponsored funding comes from organizations - usually outside MIT - that generally apply restrictions on exactly how the money must be spent. For example, sponsored funding may be for a particular research project that interests the sponsor. Sponsored funding may also be for non-research activities, but again, the sponsor requires the funding to be spent in a specific way, such as for a workshop or a fellowship.

As we stated above, most DLCs receive at least some monies from each of these three funding sources. However, departments differ from labs or centers in an important way, and this difference determines some of your responsibilities as an AO. This difference is in the primary source of funding.

The primary source of funding for a department or division is from MIT itself, through general dollars. These general funds are the main support for a department's operations. The primary source of funding for a lab or center, on the other hand, is through one or more sponsors - organizations that provide the necessary revenue. Laboratories and Centers with specific volume thresholds may access Institute general funds for leadership costs and discretionary funds per the following criteria.

Mar-95
LAB/CENTER DIRECTORS
THRESHOLD
FOR ACCESS
(3/95)		 DIRECTOR ASSOC
DIR		 SUP
STAFF		 FUNDS
$2 MILLION 1 1 $30,000
$5 MILLION 1 0.5 1 $45,000
$8 MILLION 1 1 1 $60,000
$20 MILLION 1 1 1 $75,000

Later in this chapter, we will discuss how this difference in primary funding affects your participation in the annual budget cycle.

For more about the differences between departments, labs, and centers, see the chapter on DLC Management. For more about sponsored funds, see the chapter on Sponsored Funds Management.

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Cost Objects and Accounts

To understand financial management at MIT, you must have a fundamental grasp of cost objects. Strictly defined, a cost object is "a collection of revenue and expenses for a particular purpose or project." All funding, no matter what the source, goes into a cost object. (At one time, MIT cost objects were referred to simply as accounts, and you may find it helpful to think of them that way. Strictly speaking, however, MIT uses the term accounts to refer to general ledger accounts, or GL accounts. MIT adopted the term cost object in 1996 when the Institute began using SAP as its primary financial tracking system.)

Cost Object Categories

Cost objects come in several categories. The category is determined by the source and planned use of the cost object's monies. You must be able to distinguish between the different categories of cost objects, because you will treat each type differently.

The table below considers some of the cost object categories currently used at MIT (you will sometimes use additional categories as well, but those below are most common). Note how each is related to one of the sources of funding we identified in the table above. (Note also the SAP Cost Object Type; SAP is the Institute's primary financial management and analysis tool, and we will discuss it in more detail later in this section.)

Cost Object Category Source of Funding SAP Cost Object Type
General General Institute Dollars Cost Center
Fund Endowments and Gifts Internal Order
Fund-Sponsored Sponsored Funding WBS Element
Sponsored Research Sponsored Funding WBS Element

The General category is for revenue and expenses related to a general budget provided by the Institute - monies associated with academic activities and their administrative operations. Common sources of funds for General cost objects are tuition, investments, and F&A cost recovery. Common uses for these funds are instructional activities and their support - faculty salaries, department administration, undergraduate scholarships, graduate student summer tuition, etc.

The Fund category of cost objects is for revenue and expenses related to discretionary activities, scholarly allowances, and special instructional projects. Funds in this category generally have the fewest restrictions on how they are spent. Common sources of funds for Fund cost objects are endowments and gifts. Common uses include endowed chairs, professorships, and faculty/department discretionary accounts.

The Fund-Sponsored category is for revenue and expenses related to non-research activities that are funded by external sponsors. Common sources of funds for Fund-Sponsored cost objects are companies in industry, foundations, and government agencies such as the NSF. Common uses for these funds are fellowships, curriculum development initiatives, and workshops.

The Sponsored Research category (or organized research category) is for revenue and expenses related to research projects that are funded by external sponsors. This category is similar to the Fund-Sponsored category in that both refer to sponsored funding. However, the Sponsored Research category is used for research funding only. Common sources of funds for Sponsored Research cost objects are grants from industry (e.g., Ford Motor Company) or government (e.g., National Science Foundation). Common uses for these funds are clearly defined research projects. This category is probably the easiest to determine, because sponsors clearly define what your DLC must accomplish to receive the funding.

Cost Object Categories and Secondary Costs

As we mentioned above, different categories of cost objects are treated differently. For example, some cost objects can carry secondary costs that cost objects in other categories do not. Secondary costs are rates that the Institute charges to a cost object to cover various expenses. (You might think of these secondary rates as "taxes" that MIT applies to some cost object categories. Just as income taxes are important to pay for necessities such as roads, schools, and libraries, secondary costs are important to pay for MIT's essential infrastructure, programs, and services.) Depending on the type of cost object, MIT can apply the following secondary rates:

Secondary Rate Purpose
Employee Benefits (EB)* Recoups the cost of medical, vacation, tuition, and retirement plans available to Institute employees.
Facilities and Administration (F&A)* Covers the cost of facilities use and other "overhead." For a more detailed explanation, see F&A in the glossary of terms at the end of this chapter.
Lab Allocation Covers administrative and operating expenses specific to any one of 15 labs and centers around the Institute (see Lab Allocation to determine if your DLC is one of those).
Fund Fee Offsets indirect administrative and infrastructure costs.

*Note that the rates for on-campus and off-campus EB and F&A rates differ. For example, if a project funds a student who is pursuing research at a sponsor site or another university, then that student - from MIT's perspective - will incur substantially fewer F&A costs, or "overhead," than will a student working at MIT.

Fully explaining the rates that MIT charges to different categories of cost objects would require more space than we have here. For now, simply know that the cost object category determines the secondary cost assessed to the cost object.

Cost Object Categories and SAP

Let's look again at the Cost Object Category table we considered above. As an Institute AO, you will track financial transactions using several software applications. However, your primary application will be SAP, a financial management and analysis tool. When you use it, you will find that each MIT Cost Object Category maps to an SAP Cost Object Type. For your reference, we list the most common below:

Cost Object Category Source of Funding SAP Cost Object Type
General General Institute Dollars Cost Center
Fund Endowments and Gifts Internal Order
Fund-Sponsored Sponsored Funding WBS Element
Sponsored Research Sponsored Funding WBS Element

As the table above illustrates, General dollars are allocated to DLCs in cost centers. The funding amount appears in the budget column of the SAP Summary Statement.

Fund dollars (endowments, gifts, and funds for discretionary use) are deposited in internal orders. Checks received for these funds are deposited through the Gifts Office. See "Depositing Funds Received" below.

Sponsored Funding dollars acquired through the proposal process and intended for research projects are received by the Office of Sponsored Programs. Funding is made available to the DLC and Principal Investigator in WBS elements (WBS = Work Breakdown Structure). For more information on the sponsored funding process, see the chapter on Sponsored Funds Management.

You can learn more about cost objects, cost object categories, and secondary rates by attending the course Fundamentals of Financial Management. To learn more about primary and secondary rates, the course Sponsored Programs Rates: F&A, EB, and Allocation teaches you how the various rates are set.

Setting up a New Cost Object

Your DLC may need to set up a new cost object for any of a number of reasons. Examples include:

To set up a new cost object, you must first determine the cost object category. Then you can contact the office responsible for setting up that cost object. Cost objects are set up by one of two offices at MIT - the Budget Office or the Office of Sponsored Programs (OSP) - depending on the cost object category:

Cost Object Category SAP Cost Object Type Responsible Office
General Cost Center Budget Office
Fund Internal Order Office of Sponsored Programs (OSP)
Fund-Sponsored WBS Element Office of Sponsored Programs (OSP)
Sponsored Research WBS Element Office of Sponsored Programs (OSP)

To set up a new cost object, you need one of two request forms, depending on the cost object category. These forms provide instructions about where to send them.

Cost objects for the general category are set up by MIT's Budget Office using the Cost Center Request Form (Excel).

Cost objects for other categories are set up by the Office of Sponsored Programs (OSP). To initiate a cost object for an internal order (i.e., a cost object available for discretionary use or funded by a gift), submit the Internal Order Request Form (Excel) to OSP.

If your DLC receives funds as an award through the Office of Sponsored Programs, your OSP representative will set up the new cost object (as a WBS element). You will be informed when OSP receives a notice of award.

For help setting up a new cost object, contact your DLC's representative at the Budget Office or the Office of Sponsored Programs, depending on the cost object type.

Depositing Funds into Cost Objects

When funds are received from outside MIT, they are deposited into cost objects in one of three ways, depending on the money's source and use.

  1. Funds received from a sponsor for research purposes are usually received as payment on an invoice from MIT. The sponsor should send the checks directly to the Sponsored Research Accounting Office within the Comptroller's Accounting Office (CAO). If your sponsor sends checks directly to your DLC, you should forward them to your OSP representative for deposit in the sponsored research WBS element.
  2. Funds received as gifts should be deposited by sending the check to the Gifts Office within the Treasurer's Office. The Gifts Office assures that the donor will be properly acknowledged for the gift, and that the gift will be properly recorded. If you are unsure about the nature of a possible gift, consult the Gifts Office.
  3. All other funds - such as reimbursements made for charges on established MIT cost objects, or small payments for discretionary use - can be deposited directly to non-WBS cost objects at the Cashier's Office.

General Ledger Accounts

The General Ledger account (also called GL account or cost element) is a six-digit code in SAP that categorizes expenses and revenue. MIT uses hundreds of different GL accounts, which help you to track specific revenue and expenses in any given cost object.

To use common examples at MIT, line items for a cost object might include faculty salaries, travel expenses, conference expenses, office supplies, and so forth.

For more information, see GL Accounts.

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Budgeting and Funding

Annual Budgeting Cycle

Earlier we pointed out that departments and divisions differ significantly from labs and centers. Departments and divisions engage primarily in instructional activities, so they rely heavily on Institute general dollars to operate. Labs and centers, on the other hand, receive most of their funding from outside sponsors.

Because departments and divisions depend heavily on Institute general funding, they must fully engage in the annual process that determines their operating budget - the annual budget submission schedule (PDF). If you are an AO working for a department, it is critical that you understand this cycle and fulfill your obligations to it.

The annual budgeting cycle is the process by which a department, lab, or center (DLC) requests and receives funding for the coming year. The process begins in September, when MIT's Provost requests proposals from each School. Subsequently, the Dean requests proposals from the DLCs and may request additional information. The department/division (as well as lab or center) then considers its budgetary needs, and in November submits its proposal to the Dean in accordance with instructions from the Dean and/or Provost. The proposal explains the DLC's needs and priorities for the next fiscal year (MIT's fiscal year runs from July 1 through June 30). Department/division budget proposals usually include sections on short-term issues, graduate student support, non-recurring budget needs, and faculty hiring plans.

As you prepare your proposal and consider funding for the coming year, you will consider two kinds of general funds. Base Dollars are for recurring expenses - costs that the DLC will incur on an annual basis, such as faculty salaries, administrative and supply costs, etc. Authorized Base budgets are recurring incremental allocations to fund academic operations. Non-Base Dollars are generally for non-recurring expenses, such as one-time equipment purchases, travel, etc.

Each November, while DLCs are preparing their budget proposals, Engineering Council (** placeholder to define Engineering Council under Terms**) meets to discuss faculty appointments. Each Council member makes a case for obtaining or renewing faculty slots. A ZBA (ZBA = zero based allocation) is a slot for which funding is withdrawn from the department or division at the time of a faculty departure. ZBAs are held in the SoE Dean's Office pending reallocation. A TBA (TBA = to be appointed) is a slot allocated to a department/division with funding and permission to conduct a search. Notification of approval by Engineering Council for TBA slots and funding coincides with the annual budget process. (For more information on academic appointments, refer to the MIT Policies and Procedures manual or Appointment and Search Processes.)

In February, the Provost sends his budgetary decisions to the Dean. The Dean, in turn, sends a budget authorization letter and budget table to School DLCs. At the end of February, each DLC enters its budget into NIMBUS - MIT's web-based system for submitting and maintaining budgets (all DLCs - including labs and centers - use NIMBUS to enter budgets). For more on NIMBUS, see Electronic Tools and Training below. The budgeting process ends in May with MIT's publication of the annual Budget Book.

All DLCs at MIT take part in the annual budgeting process, and all departments/divisions compete for the available funds. Therefore, it is crucial that your area submit a proposal that makes its case clearly and in a timely manner. The Office of Budget and Financial Planning offers a course "The Fundamentals of the Institute Budget Process" that explains this in detail.

Global Budgeting. Sometimes referred to as dollar budgeting, global budgeting is the process by which the Office of Budget and Financial Planning (OBFP) automatically updates the rates for salary increases and employee benefits (EB) on base dollars. When you submit your DLC's budget in February via NIMBUS, you don't need to calculate salary increase and EB for the coming fiscal year. The Global Budgeting process will do this automatically.

For more detail on the School of Engineering's budgeting cycle, see the outline by month (PDF).

Fiscal and Academic Year

MIT's fiscal year runs from July 1 through June 30. In SAP, months are referred to as periods, with period 1 being July, period 2 being August, and so forth through period 12, which is June. Note that the month of June includes an additional four periods. Period 12 is the usual month end for June, followed by periods 13, 14, 15, and 16. These are closing periods, and they conform to dates of the closing schedule determined each year by the Controller's Accounting Office (CAO).

MIT's academic year runs from September 1 through August 31. MIT's academic year is made up of three periods. The first is the Fall semester, which runs from September 1 through January 15. The second period is the Spring semester, which runs from January 16 through May 30. The summer term runs from June 1 through August 31.

Note: current MIT policy holds that unexpended general funds - monies that have not been spent by the end of the fiscal year - are carried forward automatically into the next fiscal year, unless the academic unit requests otherwise.

Budgeting Forms

You will find the tools below (the Salary Distribution Schedule in particular) important to your budgeting process. For a more comprehensive list of financial forms, see Forms and References in this chapter's appendix.

Salary Distribution Schedule

In the School of Engineering, every department and division regularly maintains and submits a Salary Distribution Schedule (Excel) (formerly known as an X-Schedule). This spreadsheet is an important budgeting tool; it tracks the salaries and positions of all academic, research, administrative, and support staff, as well as distribution of effort by cost object type.

The Salary Distribution Schedule should be submitted to the Dean's Office in October/November with the department's annual budget proposal. Departments/divisions receive notification of budget decisions in late February. During the budget submission period, February 1 - February 28, the Schedule is again used by the departments/divisions to enter the salary portion of budgets into NIMBUS. (Note: tracking with the Salary Distribution Schedule is required for departments and divisions, but is optional for labs and centers.)

All faculty salaries in the SoE are funded by the Institute, or "hardened." Faculty are not required to seek salary support from sponsored funds. Faculty salaries are, in general, funded by a combination of Institute general funds and professorships.

The Direct Salary Charging Plan (DSCP) [see the downloadable Word document], however, allows faculty to charge up to 10% of their academic year salaries - which normally would be charged to Institute general funds or professorships - to research. The resulting dollars that are released from Institute general funds or professorship funds are normally split (5% each) between the faculty member and the department for use as discretionary monies. Departments/divisions may choose to allot more than 50% of the released general funds to faculty discretionary monies and retain less for department/division use. Near the end of each fiscal year, the budget office asks department/division administrators to complete the DSCP Transfer Request form (Excel) and return it electronically to the School’s budget office with a copy to the financial administrator in the Dean’s Office before the specified deadline.

Whether a faculty member participates in the DSCP or not, the "hardened" salary distribution of each should be recorded on the salary distribution schedule. This ensures that the Institute preserves the hardened dollars so that faculty will not have to rely on soft dollars or externally sponsored dollars to fund their salaries. Therefore, when building the Salary Distribution Schedule, do not consider DSCP (not "hard") monies.

Student Costs Table

The Student Costs table (Excel) lists the current year rates for paying graduate students. Teaching Assistants (TAs) are paid from the DLC's general budget, and Research Assistants (RAs) are paid from sponsored funds. This table may not be crucial to the academic budget process, but it is a fundamental reference when developing the budget for a project or other activity.

EB and F&A Rates Table

Like the Student Costs table above, the table for EB and F&A rates FY03 (Excel) is an important reference when developing the budget for a project or other activity. The table lists current rates for employee benefits (EB) and facilities and administration (F&A) charges applicable to most expended funds.

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Authorizations

You must have authorization to access some MIT systems - SAP, NIMBUS, and the Data Warehouse, for example. In an Institute as large as ours, the job of maintaining current authorizations for numerous users on multiple computer systems can become complex and time-consuming. To track these authorizations, and to create new ones where appropriate, use the Roles database.

The Roles database is a centralized authorization system that lets selected users track, create, update, or delete authorizations for specific functions at MIT (note that the Roles application is different from the Web Interface for the Roles Database, which allows view-only access to the Roles Database).

Every DLC has a "Primary Authorizer" - generally the Administrative Officer or Fiscal Officer - who grants and maintains authorizations. If you are the Primary Authorizer at your unit, you can use Roles to grant authorization to other people in your DLC to perform specific business functions: create and approve requisitions, approve travel vouchers and invoices, report on DLC resources (cost objects, fund centers, etc.), and perform other SAP-related tasks.

However, the Primary Authorizer cannot grant authorization to all systems tracked by Roles. For example, MIT Information Systems provides authorizations for the Data Warehouse; the Budget Office provides authorizations for NIMBUS.

For help on Roles, visit the Database Help and Documentation web page. For help on maintaining SAP authorizations, talk to your DLC's Financial Administrator or to MIT's Business Liaison Team (BLT).

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Financial Analysis Tools

In the Electronic Tools and Training appendix below, we list the tools you will use most commonly as an AO. The two that you will use most often for financial analysis and reporting are SAP and the Data Warehouse.

SAP

SAP (Systems Applications and Products) is an online financial and administrative software system essential to your work as an administrative officer. SAP is composed of integrated modules that perform various organizational system tasks. MIT has customized these modules to suit the Institute's needs.

In all likelihood, SAP will be your primary financial reporting and analysis tool. SAP is the system of record for financial accounting and reporting at MIT. It is also used for purchasing goods and services, and for monitoring cost objects. Most network printers can print data directly from SAP.

For general information about SAP, such as accessing SAP and news updates about SAP, see SAP for MIT. For instructions and tutorials on how to use the system, see SAP Documentation. For information about SAP training, such as available courses and registration forms, see SAP Training. Questions on printing reports can be directed to the Business Liaison Team.

Data Warehouse

The Data Warehouse is the only site at MIT that combines information from many separate servers around the Institute into a single location. The data is current - loaded nightly from the data providers. And it's fast - Data Warehouse tables are designed for quick response time. If your duties require you to handle large amounts of data, the warehouse may be an ideal reporting tool for you.

Data from the warehouse is brought to your desktop by a query tool called Brio Query. It is particularly effective because it saves all formatting in your report from month to month or semester to semester. Unlike in SAP, you can customize reports in the data warehouse to meet your reporting needs. Find out more by taking BrioQuery classes.

Currently, the warehouse contains four main information types, each identified by its area of business: financial, general, personnel, and student. Once the data is stored locally in your computer, you can format it to your liking and create many different reports. Or, you can export the results of your query into other software programs - such as Microsoft Excel - and manipulate the data locally. You can also join the results with local information from your own files. This is especially useful in instances when you need to create custom reports with information that is not stored in any of MIT's current systems.

In addition to reporting, the Data Warehouse can relay data - allowing you to use it as a storehouse to move data between different systems at MIT.

Standard Reports. The Data Warehouse offers numerous ready-made standard reports. They can simplify the reporting process by guiding you through the report and prompting you with questions. Many reports supply the report creator's name, in case you need help modifying the report. To access standard reports, visit the warehouse website.

Learn more about standard reports by taking a BrioQuery class. The Data Warehouse staff is happy to help with your reporting needs, whether that means familiarizing your staff with downloadable reports or creating custom reports just for you.

Reports you may find especially useful for DLC management include:

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Compliance

Financial Review and Control (FRC)

Federal regulations require each DLC to reconcile its cost objects on a monthly basis. Until recently, this meant that every expense posted to a cost object had to be matched to paper. However, the Institute has developed a more efficient way to perform this reconciliation - the Financial Review and Control procedure (FRC).

FRC guidelines provide policies and practices for performing these monthly reviews. They take advantage of MIT's central controls, which include electronic controls provided by SAP. Monthly reviews at each DLC help to ensure that cost object expenses and revenues are accurate, timely, complete, and properly documented.

Your financial review should be completed within 30 days of the end of the month under review. Federal regulations limit the time allowed for transfers from one cost object to another, and errors caught promptly are much easier to correct. We therefore strongly recommend regular and timely reviews.

Each DLC's Administrative Officer, in conjunction with its Department Head, determines how best to implement the review. Some DLCs are highly centralized, allowing reviews to be performed at headquarters by a central accounting person or group. Most DLCs, however, tend to be decentralized. In such cases, reviews are more likely done both at headquarters and at detached locations by administrative staff supporting dispersed faculty members or researchers. In either case, numerous individuals may participate in the review.

For more information on the Financial Review and Control, see FRC. For compliance issues directly related to Payroll Reporting as described below, see FRC of Payroll Reporting.

The Payroll system generates a DLC suspense cost object for use when awaiting guaranteed funding, and this should be cleared on the SANDIs each month. (The system may charge to the suspense cost object when the cost object charged is terminated or is incorrect).

Payroll Reporting

Salaries and wages comprise approximately 85% of the Institute's budget. Therefore, accurate payroll reporting is critical to compliance with audit requirements.

MIT currently processes two types of payroll transactions: a monthly payroll and a weekly payroll.

The monthly payroll (also called staff payroll) includes faculty, other academic staff, sponsored research staff, administrative staff, graduate student research assistants (RAs), and teaching assistants (TAs). The system for reporting and approving monthly payroll is the SANDI (Staff Appointments and Distribution Report).

The SANDI lists all staff employees who hold current fiscal year appointments in a given DLC. It also lists — in the Transfer-in section — individuals who hold appointments in other departments and who are currently being charged to a cost object belonging to the DLC for which the SANDI was produced. (Note that the SANDI can be authorized electronically through ESANDI; visit the Controllers Accounting Office (CAO) website for information on using ESANDI (PDF)).

The weekly payroll includes support staff, service staff, MIT student employees, and voucher employees. The system for reporting and approving this payroll is the DINDI (Distribution by Individual). This monthly report shows the current distribution for employees paid weekly within a department. As with the SANDI, this report also notifies the Payroll Office of current distribution changes.

Review DACCA (lists all payroll activity for month), which must be signed by a designated individual who has direct knowledge of the work performed; communicate any changes to Payroll via hard copy turnaround document.

Retroactive changes to salary, especially on research grants, must be properly documented, with an explanation why this change is being made. There are time limits on after-the-fact salary transfers; thus, a timely review is important.

Note: for an explanation of SANDI and DINDI, see Acronyms and Terms in this chapter. For additional payroll information, please refer to Payroll in Human Resources Management.

For payroll-related schedules and forms, visit the Controllers Accounting Office website. If you have specific questions about payroll, visit the Payroll Office's contact page.

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Offices and Resources

MIT established numerous offices here at the Institute to streamline the financial management process, and to make your job as an AO easier.

Audit Division

The Institute's Audit Division sets internal auditing standards to comply with federal rules and regulations. The Division also makes public a variety of Institute records and codifies MIT's policy for financial record retention.

Business Liaison Team

The Business Liaison Team (BLT) supports those members of the MIT community who use business applications. Providing both telephone and e-mail assistance, the BLT can help you with applications such as:

The team can also help with other business-related computing activities such as printing and authorization requests. Full-service help is available during business hours, and self-service help is available around the clock.

Controller's Accounting Office

MIT's Office of the Controller oversees the Institute's financial transactions. For help navigating the Controller's Office or fulfilling any of its requirements, visit the website for Office of the Controller.

The Controller's office is composed of several smaller offices, each with its own function:

The Controller's Accounting Office (CAO) handles receipt and disbursement of funds, and maintains MIT's official financial records. The CAO is itself composed of a dozen separate offices, including Accounts Payable, Accounts Receivable, Payroll, Travel, and the Cashier's Office. For a full list of all functional areas in the CAO, visit the Controller's Accounting Office website above or the CAO Office Directory.

CAO Reporting produces financial data, does analysis, and provides reporting services to customers within and outside MIT. You may be most familiar with the monthly summary statement and Detailed Transaction Report (DTR) from CAO Reporting. In addition to cost object level reporting, CAO Reporting is responsible for general ledger accounting and "closing the books," pension accounting, tax, and other external financial reporting. Standards, policies, and procedures for accounting and financial reporting reside with this group. Working together with the Data Warehouse team and Financial Systems Services (FSS), CAO Reporting ensures that all standard reporting is consistent, timely, and accurate, whether delivered from SAP or using Brioquery with the Warehouse. CAO Reporting is available to work with you to help tailor your reporting views to support your business. Another aspect of financial standards work in CAO Reporting is the maintenance of SAP master data including general ledger (GL) accounts, cost objects such as internal orders (for balance sheet) and Work Breakdown Structure (WBS) elements(for capitalized software projects, and cost element groupings (unique groupings of GL accounts to support reporting formats). All such requests for master data should be sent to <cao-cost-objects@mit.edu>. (More information.)

The Property Office (which is in two locations on campus) is responsible for the accounting and asset management of all moveable equipment (over 100,000 items), both MIT-owned and sponsor-owned. This office establishes policies for the handling, fabrication, transfer, and disposition of property, including procedures for the recycling of computer monitors. For more information, visit the website.

The Office of Insurance and Legal Affairs purchases insurance for the Institute and administers claims on the Institute's behalf. This office provides information on insurance-related issues such as reimbursement for damaged or stolen MIT property, the registration of MIT vehicles, and the filing of reports for damage to MIT vehicles.

The Procurement Office assists the Institute community in the procurement and purchase of goods and services. The office provides advice and counsel to ensure that MIT receives favorable prices and protective terms and conditions when purchasing. The office helps to ensure that DLCs comply with the Institute's government-approved procurement system, and provides the necessary request forms. The office also keeps a list of preferred MIT partners who provide quality products and services. As an Institute AO, you have several procurement options:

As noted above, you can purchase goods or services for your DLC through SAPweb or through the VISA credit card. You can also use the more general procedure of submitting a requisition to the Procurement Office. After any necessary authorization, Procurement will send you a purchase order with which you can make your purchase.

The Procurement Office offers a Quick Course on purchasing at MIT. To learn more about it, or about your procurement options, contact the Procurement Office or visit the SAPweb home page.

Financial Systems Services (FSS)

The office of Student and Administrative Information Services s (SAIS) bridges technology and business expertise in diverse functional areas, including financial, logistics, and human resources.

Also available is the Financial Systems Quick Reference, which presents an overview of the computer systems that MIT uses for performing and supporting financial work. The quick reference describes each system, what it is used for, how to obtain authorizations and access to the system, and what training, documentation, and support is available.

In addition, FSS provides numerous classes in SAP, BrioQuery, and other tools for financial management and reporting. These classes may be formal courses (class size is usually limited to a dozen students to maximize learning and personal attention). Classes may also be self-study modules, which may better suit your schedule and style of learning.

Payroll Office

MIT currently processes two types of payroll transactions: a monthly payroll and a weekly payroll.

The monthly payroll (also called staff payroll) includes faculty, other academic staff, sponsored research staff, administrative staff, graduate student research assistants (RAs), and teaching assistants (TAs). The system for reporting and approving monthly payroll is the SANDI (Staff Appointments and Distribution Report).

The SANDI lists all staff employees who hold current fiscal year appointments in a given DLC. It also lists — in the Transfer-in section — individuals who hold appointments in other departments and who are currently being charged to a cost object belonging to the DLC for which the SANDI was produced. (Note that the SANDI can be authorized electronically through ESANDI; visit the Controllers Accounting Office (CAO) website for information on using ESANDI (PDF)).

The weekly payroll includes support staff, service staff, MIT student employees, and voucher employees. The system for reporting and approving this payroll is the DINDI (Distribution by Individual).

Note: for an explanation of SANDI and DINDI, see Acronyms and Terms in this chapter. For additional payroll information, please refer to Payroll in Human Resources Management.

For payroll-related schedules and forms, visit the Controllers Accounting Office website. If you have specific questions about payroll, visit the Payroll Office's contact page.

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Acronyms and Terms

For a comprehensive list of acronyms used at the Institute, see Acronyms and Abbreviations Used at MIT. For a comprehensive list of SAP terminology, see SAP Glossary.

001 - An out-of-date term still widely used. 001 refers to the "Notice of New Cost Object" that CAO mails to supervisors and addressees of new cost objects when they are established. This form is also used to notify DLCs of changes made in master data and cost object status.

A21 - A circular from the Executive Office of the U.S. President, Office of Management and Budget. It defines the costs allowable as charges to government contracts and grants.

AO (Administrative Officer) - The person responsible for overseeing a DLC's administrative functions.

Base General Funds - Also known as recurring funds. These are the funds in a DLC's operating budget that are collected in cost centers and budgeted each year by the DLC in NIMBUS during the budgeting process. Unlike non-base general funds, base general funds recur each year at the beginning of the fiscal year. All known base general funds should be budgeted by the DLC each year. Adjustments may be made - usually by the Dean's Office - to reduce or increase base general funds. See the Annual Budget Cycle (PDF) for more information on budgeting these funds. Base general funds that are not used in one fiscal year are automatically carried forward to the next fiscal year as non-base funds. Expected carry-forwards should not be budgeted during the budgeting cycle.

Note: As with all general funds, base general funds are more important to academic departments than to labs or centers.

BLT (Business Liaison Team) — The MIT office that supports users of the Institute's business applications.

CAO — Controller's Accounting Office

Cost Center — A cost object containing general Institute funds.

Cost Collector — A term used interchangeably with cost object (see Cost Object below). Used most frequently in the Data Warehouse.

Cost Element — A six-digit number identifying a particular classification of expenses or revenue. Cost elements are equivalent to GL accounts. In the Controlling (CO) module, the term cost element is used. In the Finance (FI) module, the term GL account is used. See also GL Account.

Cost Element Group — A predefined grouping of related cost elements created so that SAP reports will display complete information for all cost elements in a standardized order. For example, CEMIT-EX would display only expenses and would exclude all revenue activity.

Cost Object — (also called a cost collector). A seven-digit number used to categorize costs and revenues associated with a particular project or activity at MIT. Cost objects have a yearly budget or authorized total of funds to be spent. They can be "budgeted against," and purchases are charged to them.

The three types of cost objects are cost centers, internal orders, and WBS elements.

DACCA — The Consolidated Salary Expense Analysis is a monthly report that lists all salary charges to a particular cost object, categorized by GL account. This report is not returned to the Payroll Office, but is kept on file in the department with appropriate approval signatures.

DINDI — The Salary Expense Analysis By Individual is a monthly report that shows the current month's distribution for weekly paid employees within a department. This is also used to report current distribution changes to the Payroll Office, as is the SANDI.

Direct Salary Charging Plan (DSCP) — A program that allows faculty to charge up to 10% of their academic year salaries - which normally would be charged to Institute general funds - to research. The resulting dollars that are released from Institute general funds or professorship funds are split (5% each) between the faculty member and the department for use as discretionary monies.

DLC — Department, Lab, or Center (can also refer to a division or program).

DSCP — See Direct Salary Charging Plan, defined above.

DTR — Detailed Transaction Report.

Engineering Council — The Engineering Council serves as the Dean's cabinet. Department/divison heads concerned with the overall administration of the School and the Dean meet to approve faculty promotion and tenure cases and to confer on matters of School policy. EC normally meets every Monday during the academic year and may have special sessions for promotion and tenure cases.

Extended Engineering Council includes laboratory and center directors. Extended Council meets on occasion during the academic year regarding School matters.

F&A (Facilities and Administration) — A rate that MIT charges to a sponsored project for the use of Institute facilities and administration (overhead). A percentage of every dollar that a sponsor awards to a project goes to F&A, paying for the use of MIT offices, staff, etc.

F&A is composed of two parts. The Facility portion of F&A covers building depreciation, equipment depreciation, interest expense, plant operation and maintenance, the library, etc. The Administration portion covers General & Administrative, Department Administration, Sponsored Programs Administration, etc. The largest component of the F&A rate goes toward the Facilities portion.

F&A Underrecovery — The difference between the F&A rate that MIT charges to a project, and the rate that the project's sponsor is willing to pay. For example, if MIT's F&A rate is 65%, and a sponsor agrees to pay only 50%, then the project's lab or center must find a way to pay for the 15% underrecovery.

Financial Review and Control (FRC) — A monthly financial review performed by each DLC to ensure that all cost objects are reconciled.

FO (Financial Officer) — The person responsible for overseeing a DLC's financial functions.

FSS (Financial ) —

General Dollars — Unrestricted funds supplied by the Institute. These are used to support general academic operations and the administrative activities that support them.

General Ledger (GL) Account — (also called cost element) An account that categorizes a cost object into budget line items.

In SAP, a GL account is a six-digit code that categorizes expenses and revenue for a given cost object. MIT uses hundreds of different GL accounts, each of which tracks a specific revenue/expense for various cost objects. Common examples include faculty salaries, travel expenses, conference expenses, office supplies, and so forth. For more information, see GL Accounts.

Global Budgeting — (also referred to as dollar budgeting) The process by which the Office of Budget and Financial Planning (OBFP) automatically updates the rates for salary increases and employee benefits (EB). Budgeted amounts in specific budget categories are automatically increased due to changes in salaries or in the employee benefits (EB) rate.

Note that Global Budgeting is more important to academic departments and divisions than it is to labs or centers.

Internal Order — A type of cost object containing monies for discretionary activities, scholarly allowances, and special instructional projects. Common sources of funding in this type of cost object include endowments and gifts.

Non-Base General Funds — (also referred to as Non-Recurring Funds) These funds are part of the DLC's operating budget, but are received for a one-time use and do not recur each year. These funds can be received by the DLC from various sources including the Dean's Office, Provost's Office, or other DLCs. Funds not spent in a fiscal year are automatically carried forward to the next fiscal year. Non-base general funds and expected carry-forwards should not be budgeted during the budgeting cycle.

Note: As with all general funds, Non-Base General Funds are more important to academic departments than to labs or centers.

OBFP — MIT's Office of Budget and Financial Planning.

OSP — Office of Sponsored Programs. The MIT office responsible for overseeing the sponsorship arrangements between Institute DLCs and outside sponsors. For more information, visit the OSP website or see the chapter on Sponsored Funds Management.

Primary Authorizer — A trained and designated user of the Roles database. Primary Authorizers have the authority to create and modify authorizations for their area's resources directly in the Roles database. Other users, who need only to view authorizations, can use the web interface.

Salary Distribution Schedule (X-Schedule) — A salary distribution spreadsheet completed and maintained by each academic area as the primary tool in budget preparation. It includes all academic, research, administrative, and support staff salaries and/or positions, and is used to establish all salary funding needs.

SANDI — The Staff Appointments and Distribution Report is a monthly report showing all employees who hold current fiscal year appointments in a particular department, lab, or center. SANDI is also used to report current distribution changes to the Payroll Office. In addition, it lists - in the Transfer-in section - individuals who hold appointments in other departments and who are currently being charged to a cost object that belongs to the DLC for which the SANDI is produced.

SAP (Systems Applications and Products) — SAP is the system of record for financial accounting and reporting at MIT. It is also used for purchasing goods and services.

TBA (To be appointed) — In the context of faculty positions, a TBA is an open faculty position. The position has the necessary funding to support a faculty member, but no one currently fills the position.

WBS Element (Work Breakdown Structure) — A type of cost object containing sponsored research funds. Most projects have at least several WBS elements associated with them.

X-Schedule — See Salary Distribution Schedule.

ZBA(Zero based allocation) — A faculty position that has been withdrawn at the time of a faculty member's departure.

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Contacts

Department Phone

CAO Request for Payments

 x8-8485

CAO Travel Office

 x3-3547

VIP Credit Cards

 x8-8366; x8-8360

CAO/SAP Journal Vouchers

 x3-2764

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Electronic Tools and Training

BrioQuery

BrioQuery is a tool for querying and reporting from Oracle databases, and in particular, from the Data Warehouse. The Data Warehouse provides the MIT community with integrated data from various administrative systems and stores it in one central location.

COEUS

MIT created the COEUS system to facilitate sponsored program award acquisition and administration. COEUS includes a comprehensive proposal development module that allows departmental users to create a full proposal (including science and budget), route the proposal through the institutional hierarchy, and then submit it to the sponsor - all online.

COEUS also includes a robust post-award module that stores detailed information on awards, agency contacts, reporting requirements, terms and conditions, and the required approvals for the award. For more information, see COEUS.

NIMBUS

NIMBUS is the web-based system required for submitting and maintaining budgets. Use it to submit the annual budget for your DLC.

NIMBUS was first introduced to MIT in February 1999 (replacing MITBUD and the legacy BEERS database). NIMBUS is implemented by the MIT Office of Budget and Financial Planning, in cooperation with MIT Information Systems, the Controller's Accounting Office, and the office of Reengineering and Management Reporting. For more information, see NIMBUS.

Roles

The Roles database stores and maintains authorizations - the access privileges required to use MIT systems such as SAP. Use the Roles front-end application to display, create, and modify authorizations. Use it also to grant certain authorizations to others in your DLC. Limited view-only access is also available via a web interface.

The Roles database does not enforce the access rules that it maintains. It only collects the information and distributes it to the appropriate applications - usually as a nightly data feed. Applications with an interface to the Roles database interpret the access rules from the Roles database and enforce them.

SAP

SAP is the system of record for financial accounting and reporting at MIT. It is also used for purchasing goods and services.

SAPweb

MIT developed and maintains SAPweb, a Web-based interface to SAP. Use SAPweb to manage and/or review procurement requisitions, purchase orders, VIP Credit Card charges, journal vouchers, and more. For further information, see SAPweb.

SumMIT

SumMIT provides user-friendly access to data residing on the MITVMA and MITVMC mainframes. As of June 1999, the only SumMIT applications that maintain current data are for payroll (E-Time, ESANDI) and property (SumProp).

Use E-Time to enter timesheets for weekly paid employees (support staff, service staff, and students), and to enter regular payroll vouchers. Use ESANDI to maintain staff salary distributions across the cost objects and G/L accounts to which monthly salaries are charged. Use SumProp to search the property database on MITVMA from your workstation, and display and print data on departmental property items.

For more information, see SumMIT.

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FAQs

How can I determine the financial status of my DLC?

As a new AO/FO, you are wise to ask this question! You can determine this information in several ways:

  1. Local knowledge. Ideally, you will have an opportunity to meet your predecessor, fiscal officer, and/or department head for an overview on your DLC's financial status. In these meetings, ask what financial issues need your immediate attention. You should also determine your DLC's current financial reporting tools.
  2. SAP/BrioQuery Reports. Familiarize yourself with the reports available in SAP and the Data Warehouse. Your DLC's financial reporting requirements will determine which reports to look at.

How do I gain access to the financial systems?

  1. Access to SAP. Authorization for you to use SAP was probably set up before your arrival. If you need assistance, you can contact the Primary Authorizor in your DLC, or the Business Liaison Team (BLT).
  2. Access to the Data Warehouse. New users can request access at the Data Warehouse website.
  3. Access to NIMBUS. To gain authorization to use NIMBUS, call the Office of Budget and Financial Planning's Senior Budget Officer (3-4797) or Senior SAP and Budget Process Officer (8-0689).

What are the financial reporting requirements for the faculty?

Reporting requirements for faculty that receive sponsored funds can vary from sponsor to sponsor. The Terms and Conditions section of the sponsor's award lists all reporting requirements. You can access this information in the Coeus Database, which is maintained by the Office of Sponsored Programs (OSP).

If you need to report on your faculty's general funds, check with your Assistant Dean for specific requirements.

How do I get reimbursed for an out-of-pocket expense?

If the expense is $50.00 or less, you can be reimbursed via a Petty Cash receipt at the Cashier's Office. If the expense is greater than $50.00, you can be reimbursed via a Request for Payment (RFP).

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Forms and References

The financial forms below can be accessed as PDF and Excel files for Windows and Mac. Visit the CAO financial forms web page:

The procurement forms below can be accessed from the procurement forms web page:

Other useful forms include:

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Expanded Table of Contents

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