CLA Allocations Management for Nonprofits – Part 1
If you’ve seen the video of CLA’s Allocations Management application (here), you might wonder how you could potentially use allocations in your company. Today’s post will target Nonprofit companies as we start our three-part series on specific scenarios in which NFP’s can take advantage of the allocations management application, how to set them up in allocations management, and completely eliminate that which is the time-consuming month end process of allocations.
Scenario #1: Allocate Overhead to Programs
Scenario:
You incur certain overhead costs (accounting fees, legal fees, other professional fees, etc.) which you need to allocate to programs by the % hours worked per program.
You are using a statistical account to record the hours worked by program.
November Statistical Entry:
*For this example we are basing our allocation percentages on hours worked per program (recorded in statistical accounts within Intacct and therefore using a Statistical Calculation). (Need help with setting up and using statistical accounts – check out this blog post!).
However, Allocations Management is flexible and also allows you to base your percentages on the following methods:
So let’s get to the setup!
Setup:
Step 1: Setting up the Allocation Statistical Calculation
What is the CALCULATION?
The Calculation is the HOW portion of the allocation. What’s that? Once you find the amount to be allocated, the CALCULATION tells Intacct how to allocate that amount. In our example it will find the percent of hours worked per program.
How do we set it up?
- Go To: Allocations Management > + Allocation Statistical Calculations
- Fill out the Following:
- Stat Calculation ID: % Hours by Program
- Numerator Dimension: Project
- Statistical Account: S400–Hours
- Other Filters: You can leave the other filters blank for this example but note that you can filter for any standard dimensions.
That’s it! You just set up the GL Calculation and Intacct now knows how to calculate the % to multiply the total amount we are allocating.
Step 2: Create a new Allocation Definition
What is the ALLOCATION DEFINITION?
The Allocation Definition is the WHAT portion of the allocation (the amount being allocated). In any allocation you need to know the total of the original amount you need to allocate. This is what the Allocation Definition step does. It is exactly the same as if you were to run the General Ledger report for a certain account (or range of accounts and filters) for a specified time period. The Allocation Definition is essentially asking: what are the filters we will be applying (accounts, dimensions) to find the amount to allocate?
How do we set it up?
- Go To: Allocations Management > + Allocation Definitions
- Fill out the Following:
- Definition ID: Allocate Legal & Accounting Overhead Expense (6210) to Programs
- GL Journal: AJ (this is an allocation journal we set up to keep our allocation entries separate from our general journal)
- Description: Allocate Legal & Accounting Overhead Expense (6210) to Programs
- GL Accounts: Choose your legal & accounting expense account (in my example: 6210)
- Project: R-9999 — To Be Allocated (a “To Be Allocated” project which I use in recording my original expense in order to be able to tag them as amounts that will later need to be allocated).
Step 3: Add the Allocation Definition Lines
What are the ALLOCATION DEFINITION LINES?
The Allocation Definition Lines combine steps 1 and 2 above to create the journal entry template we’ll use monthly to post the allocation entry to the General Ledger.
How do we set it up?
- Go To: Allocation Management > Allocation Definitions > List > Click on the Allocation Definition you just created > Click on the Journal Entry Template Tab > Quick Create
- Fill out the Following (Line 1):
- Definition Line ID: 1
- Allocation Calculation: % Hours by Program
- Percent: 100
- Account: 9020–Allocation – Accounting and Legal Overhead (this is my allocation account for legal and accounting overhead expense)
- Rounding Offset: *check this box
- Click Quick Create to create line 2.
- Fill out the Following (Line 2):
- Definition Line ID: 2
- Allocation Calculation: *leave this blank*
- Percent: -100
- Account: 9020–Allocation – Accounting and Legal Overhead
- Project: R-9999 — To Be Allocated (this is simply a project which I use to code my original overhead expense)
- Rounding Offset: *do not check this box
You should end up with the following setup on your Journal Entry Template tab:
Allocation Results:
The Statistical Calculation Results:
(Check the above statistical entry in the scenario setup and notice that allocations management pulled the correct hours for November and calculated percentages correctly!)
The Balance Query Results:
The Allocation Journal Entry:
Reports:
Pre-Allocations (Expanded by Project):
Post Allocations (Expanded by Project):
While this setup is a little tricky to start, the benefit of course is that once it’s set up, you are a few button clicks away from creating your allocation entries eliminating what might have previously been a time-consuming monthly process. Interested in allocations management? You can find more information on the Intacct Marketplace!
Kathy Jastrzebski is a manager with CLA’s Intacct team. CLA is an Intacct Premier Partner with a partnership that spans over 20 years and more than 1,000 successful implementations. Kathy brings five years of accounting experience along with seven years of Sage Intacct implementation experience. Along with her accounting experience, she has a passion for leveraging technology to lead finance teams worldwide through system implementations with a mission of increasing department efficiency through business process improvements.