Budget Expense Object Codes

The chart of accounts (CoA) enables the University and local units to accurately record, analyze, and report financial data to assist with the financial management of award. Object codes are one segment of the CoA that help to classify transactions in the general ledger, such as expenditures. Budgeting and transacting using the correct object codes helps monitoring expenditures to ensure compliance with sponsor requirements.

A comprehensive list of all object codes is located on the HUIT Administrative Technology Services website.

Budget Entry and Object Codes

The Department/Local Level Managing Unit can enter sponsored budgets directly in GMAS by object code. These budgets feed directly into the general ledger to assist with monitoring and reporting. Budget entry is strongly recommended since it helps with the financial oversight of sponsored awards, which can:

  • Assist with tracking expenditures against sponsor budgets
  • Help to proactively manage and identify the need for re-budget requests
  • Reduce compliance requests related to expenditure allowability
  • Monitor spending rates and minimize over-spending
  • Facilitate the accuracy and detail of reporting in OBI and the PI Dashboard

Detailed instructions are available on the GMAS website for Submitting GL Budgets through GMAS.

Expense Object Codes

The Department/Local Level Managing Unit is responsible for reviewing, approving, and posting sponsored transactions in the general ledger. When posting transactions in the general ledger, it is important that the object code selected helps to identify the nature and classification of the transaction.

Direct cost transactions should be posted in the general ledger using the object codes entered during budget entry in GMAS and the general ledger.

Monitoring Budget to Actuals

By consistently and accurately updating budgets in GMAS and the general ledger, and by posting transactions using their appropriate object codes, additional reporting tools are available to assist with monitoring sponsored expenditures. The Harvard Analytics and Reporting Tool (HART) and PI Dashboard provide data analyze budgeted amounts against actual expenditures in the general ledger.

  • HART Grants Financial dashboard – provides balances by object code and subactivity to compares actual expenditures against the sponsored budget in the general ledger
  • HART Printable Grants Financial dashboard – similar to the Grants Financial dashboard, but data is presented in PDF format for use as an auditable record or additional support
  • HART Sponsored Accounts – identifies sponsored accounts that do not yet have a budget entered in the general ledger and any discrepancies between the budget amounts and the allocated amounts in GMAS
  • PI Dashboard – provides a projection for when sponsored expenditures will be exhausted by comparing general ledger budgets against actual and projected expenditures

Direct Costs

A direct cost is an expenditure that can be directly associated to a specific good or service that benefits the sponsored project. Direct cost expenditures should align with the object codes budgeted in the general ledger. When charging direct costs, the expenditure must be:

  1. Allowable and permitted as a cost under federal guidance and in accordance with the terms of the award
  2. Allocable to a sponsored award using a reasonable method for distributing and estimating the benefit of the expenditure to the sponsored award
  3. Reasonable in terms of the nature of the good or service and the price that a prudent person would pay in a similar circumstance
  4. Consistently treated as similar costs incurred for the same purpose and in like circumstances

In addition to the principles above, all costs must comply with the terms and conditions of the award, sponsor policies, and Harvard Policies. The strictest terms prevail. For example, if the sponsor’s policy does not require approval to re-budget costs between expense categories, but the terms and conditions of the award require re-budget approval, then approval to re-budget must be obtained.

Indirect Costs

Indirect costs (IDC) are expenses that relate to a sponsored project but cannot be directly and accurately associated with individual projects. These costs are assessed to cover expenses associated with supporting the research infrastructure at Harvard University. Depending on the type of research, the location of the research, and the source of funding, the indirect cost rates and amount allocable to an award will vary. Indirect costs may also be referred to as Overhead (OH) or Facilities and Administration (F&A) Costs. Additional information about indirect costs is available on the F&A and Fringe Benefits Rates page. Certain expense object codes asses IDC based on the IDC rate and the award’s IDC basis:

Charging Indirect Costs as Direct Costs

The charging of indirect costs as direct costs must be approved by the sponsor and allowable per the terms and conditions of the award. On federal awards, this is most common when the nature of the project requires additional administrative goods or services that would normally be considered part of the project’s overhead or indirect costs. As an example, local phone calls are typically unallowable as a direct cost, but if a project requires a phone survey of local residents, the sponsor may allow these costs to be charged directly.

Charging Project-Related Overhead Costs to Non-Federal Sponsors

Two expense object codes are available for Tubs to directly charge “F&A Fees” (Indirect Costs) as Direct Costs on Non-federal awards in the NE (200000-249999) and NG (250000-299999) fund ranges, but only if all the following apply:

  • The NE/NG award has an indirect cost rate that is lower than the Tub’s federally-negotiated indirect cost rate
  • The costs are budgeted in the award’s terms and conditions and approved by the sponsor

Tubs can charge the “F&A Fees” as lump-sum costs for specific line item expenditures or to recover additional costs due to the lower indirect cost rate on the award (commonly referred to as an “IDC Shortfall”. The “F&A Fee” object codes do not assess overhead and they can only be used to debit an NE/NG fund and credit a non-sponsored fund. The two “F&A Fee” object codes are listed in the table below and include one for facilities and another for library and network costs.

Table 1: F&A Fee Object Codes
Object Code Object Description Comments
8402 Tub F+A Fee on Non-fed G+C Facilities^Tub Ovhd Chgs for Spon Grts+Cntrct For non-federal accounts, used to charge for costs related to facilities that are not already included in the overhead rate. Includes, for example, operations and maintenance costs, depreciation, security, interest on construction loans. Only used when award F&A rate is lower than the federally-negotiated rate. The offsetting tub overhead recovery must also be credited to this code.
8404 Tub F+A Fee Non-fed G+C Netw+Library Cst^Tub Ovhd Chgs for Spon Grts+Cntrct For non-federal accounts, used for recovery of costs that are not reimbursed through the overhead rate. Only used when award F&A rate is lower than the federally-negotiated rate. The offsetting tub overhead recovery must also be credited to this code.
Tubs can estimate project-related overhead costs by category and submit proposal budgets that include the “F&A Fees” by line item. At each Tub’s discretion, a separate “8800 subactivity” value can be set up to track the “[IDC Below Minimum Rate]” (also known as IDC Shortfalls) in GMAS for the Tub to track and analyze.

Subcontract Object Codes

Three subcontract object codes are available in the general ledger for Department/Local Level Managing Units to track subcontract expenditures and their associated indirect costs. It is important to accurately record subcontract expenditures in the general ledger since these transactions impact the sponsored base for indirect cost calculation. The three subcontract object codes are: 

  • 8190 – records the initial $25,000 of subcontract expenditures (assesses OH)
  • 8191 – records expenses above the maximum threshold for assessing overhead, typically $25,000 but can vary by non-federal sponsor (does not assess OH)
  • 8192 – records expenses beyond the initial $25,000 but below the threshold at which overhead stops being assessed by the sponsor (assess OH)

Internal Billing Object Codes

When managing an award, one unit at Harvard may need to bill another unit for goods or services. It is important that the Department/Local Level Unit records these transactions correctly using the appropriate object codes and accounting practices. The Office of the Controller’s Internal Billing Transactions Policy outlines the policies and procedures for these types of internal transfers.