Expenditure type codes are used to properly code salaries, purchases, business and travel expenses and expense transfers in Oracle Financials System. Every expense transaction must be coded with an expenditure type code to indicate how the money was spent. 

This page describes the importance of properly recording expenses, the concept of allowable and unallowable expenditures and how expenditures are recorded and reported.

As a tax-exempt, non-profit education and research institution, Stanford is required to categorize expenses, such as program fees and administrative expenses (as indicated by the PTA - project, task and award - account), and record what the money was spent on (as indicated by the expenditure type code). A large percentage of university operating revenue comes from federal and non-federal sponsor sources and gifts from donors. It is Stanford’s fiduciary responsibility to appropriately spend and accurately record and report expenditures as intended by sponsored-research agreements and donor award documents.

Roles and responsibilities for proper stewardship of funds and management of expenditures is covered in the following administrative guide policies: 

Everyone who submits or approves any type of financial transaction at Stanford University must understand the difference between what can and cannot be paid for by the university (i.e., what is a permissible expense and within the category of permissible expenses) and what is defined as allowable or unallowable for reimbursement by the federal government, either directly or indirectly. Indirect costs — sometimes called overhead, facilities and administrative (F&A) costs, or shared expenses — are costs incurred in the conduct of externally-sponsored research that are shared across a large number of projects, as well as other functions of the university.

Since all university expenses are included in the indirect cost recovery calculations, it is therefore the primary consideration that they are properly coded as allowable or unallowable regardless of their funding source. The secondary consideration is that such expenses are coded to properly represent the type of expense (e.g., food vs. salary) and, where there is ambiguity about which type of code to use, that the choice is consistent over time and within a group.

For a list of unallowable expenses and activities, refer to What Are Unallowable Costs? on the DoResearch website. 

Each expenditure transaction that is entered in one of Stanford’s financial systems is recorded using a five-character numeric expenditure type code. With a few exceptions, expense codes are in the format of 5XXXX. The transaction preparer is required to enter the PTA account (defining the funding source and account for grouping transactions) and the expenditure type code (what the money is being spent on). 

Some financial systems, such as the Expense Requests system, have built-in controls to limit available expenditure type codes based on transaction type and category. Most financial systems display the expenditure type code title when entered. These controls can help preparers select the correct expenditure type code.  

Transaction preparers and approvers are responsible for ensuring that expenditures are appropriate under the terms of the award, and that expenditures are entered using the appropriate expenditure type code. Refer to Policy: Proper Use of Funds and Topic Overview: Find Existing Expenditure Type Codes for further information.

Completed expenditure transactions are available on Oracle Business Intelligence (OBI) Financial Reports the following business day. Transactions are classified on OBI expenditure detail reports by expenditure type code and report users can drill into transaction details. OBI expenditure detail reporting dashboards include:

For information about OBI, refer to OBI Financial Reporting.

In the event that an expenditure transaction is processed using an incorrect expenditure type code, a correcting journal can be completed using iJournals.

Expense Reconciliation and Review should be performed monthly and is the responsibility of the task manager as defined in PTA attributes. Reconciliation is the process of verifying that all transactions posted in the general ledger (GL) period are represented correctly in reporting after the month-end close and that no extraneous transactions appear. 

For sponsored projects, the principal investigator (PI) has overall responsibility for fiscal management of the project. The PI is defined during PTA setup as the task’s principal owner - the person or role ultimately responsible for oversight of financial activity occurring on the task segment of the PTA. The PI reviews and certifies project expenditures using the eCertification System, the official record of sponsored-project expenses and the basis for cost reimbursements to Stanford. Refer to PI Quarterly Review and Certification on the DoResearch website for further information.

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