System Procedures
for Chapter 7- General Finance Provisions

In Support of System Procedure 7.3.4

for Board Policy 7.3

---

COST ALLOCATION IMPLEMENTATION
STEP BY STEP PROCESS

1. Establish campus objectives for allocation.
2. Identify direct and indirect costs to be allocated.
3. Identify cost centers where direct and indirect costs are to be posted
4. Identify and establish allocation methods using the following guidelines:
   

   a. Objective and Reasonable
   b. Based on documented principles and procedures
   c. Based on reliable financial and other information
   d. Applied consistently

5. Identify tools and methods to complete allocations

   a. Consumable Inventory (C\I) module
   b. Cost Allocation (C\A) module
   c. Spread sheets

6. Establish written procedures for allocation of direct and indirect costs, to include the method and timeline for posting cost.
7. Create templates for allocation of direct and indirect costs.
8. Create applicable journal entries for direct and indirect costs not already posted or moved.
9. Test allocation methods to ensure the method supplies the outcome desired to meet the campus objectives. (Item one of this list)
10. Implement system(s)

---

Related Documents:	Procedure 7.3.1 - Accounting and Payroll Procedure 7.3.2 - Auxiliary Operations Procedure 7.3.3 - Credit Cards Procedure 7.3.4 - Cost Allocation Cost Allocation Guidelines Attachment 1 - Optional Methods of Cost Allocation Attachment 2.1 - Required Transactions - Journal Entries - Direct Cost Allocation (Examples) Attachment 2.2 - Required Transactions - Cost Subsidy Option Journal Entries - Direct Cost Allocation (Examples) Procedure 7.3.6 - Capital Assets Procedure 7.3.12 - Scholarships Procedure 7.3.13 - Surplus Personal Property/Building Disposal Procedure 7.3.16 - Finance Exception Reporting Guidelines for 7.3.16 - Finance Exception Reporting Program Codes
Date of Approval:	June 7, 2002
Date & Subject of Revisions:

-