Chart of accounts
A series of short videos designed for new users as a guide through the USFR Chart of Accounts and the coding process.
1 . What revenue object code should be used to record Classroom Site Fund (CSF) and Instructional Improvement Fund (IIF) revenues?
Object code 3200—Restricted Revenue from State Sources should be used to record all CSF and IIF monies received from the State. Interest earned on CSF and IIF monies should be coded to object code 1500—Investment Income (1510—Interest on Investments).
2. What function and object codes should be used to record expenditures for staff training?
Function code
The appropriate training function code depends on who is being trained. The following table summarizes the correct training function codes for employees in each payroll function based on the descriptions in the USFR Chart of Accounts and nonemployees. Districts should use the USFR Chart of Accounts function descriptions to determine correct payroll functions for each employee, and then use the payroll function in the table below to determine the training function code:
| Function code | ||
| Training for: | Payroll | Training |
| Instructional staff (e.g., teachers, classroom aides, athletic coaches) | 1000—Instruction or 1900—Other Instructional Staff | 2200—Support Services—Instruction (2213—Instructional Staff Training) |
| Instruction-focused technology staff (e.g., technology staff assigned to implement technology in the classroom) | 2200—Support Services—Instruction (2230—Instruction-Related Technology) | 2200—Support Services—Instruction (2230—Instruction-Related Technology) |
| Noninstructional staff (i.e., all employees other than instructional or instruction-focused technology staff described above) | 2100–4000 (except 2230) | 2500—Central Services (2570—Personnel Services) |
| Governing board members | N/A | 2300—Support Services—General Administration (2310—Governing Board) |
| Parents or guardians when training on strategies to support students’ learning | N/A | 2100—Support Services—Students |
| Community members (including parents/guardians if purpose of training is other than described above) | N/A | Generally 3300—Community Services Operations |
Object code
Training costs paid to outside parties should be coded to object code 6300—Purchased Professional and Technical Services (6360—Employee Training and Professional Development Services if the training is for district employees).
3. What expenditure object code should be used to record conference registration fees?
Districts should code registration fees to object code 6300—Purchased Professional and Technical Services (6360—Employee Training and Professional Development Services). Districts should not code these fees to object code 6580—Travel. 6580—Travel includes only the costs of transportation, meals, lodging, and other expenses associated with traveling on business for the district. See the USFR Chart of Accounts for further details.
If a single amount is paid for a conference that includes registration fees and any lodging or meals, reasonable effort should be made to separate the costs for travel from the conference registration fees. If separation is not practical, the full amount should be coded to the area that represents the largest portion of the expenditure.
4. Can software be purchased from the Maintenance and Operation (M&O) Fund?
No. Software costs, including perpetual license fees, subscription-based information technology arrangements (SBITAs), and fees for updates/upgrades, may not be purchased from the M&O Fund. Software may be purchased from another allowable fund such as Fund 610—Unrestricted Capital Outlay.
5. What expenditure function and object codes should be used to record software purchases?
Refer to the USFR Chart of Accounts software coding tools to determine the appropriate function and object codes for instructional and noninstructional software, including subscription-based information technology arrangements (SBITAs).
Any separately identifiable service/support contract purchased with, or in addition to, software, regardless of license type, should be coded to object 6340—Technical Services.
Online access to research or assessment materials is not considered software and should be coded to object 6300—Purchased Professional and Technical Services.
6. What expenditure object code should be used to record monthly internet access charges?
Monthly internet access charges should be coded to object code 6531—Telecommunications.
7. How should school districts record the return of unused grant monies and interest earned?
Amounts received from federal or State sources that will require reversion if not spent should be recorded as cash and unearned revenues upon receipt, and later recognized as revenue simultaneously with the recognition of the expenditure. Upon the actual reversion of any unexpended portion of these monies, districts should reverse the initial entry for the amount reverted. (Alternatively, districts may choose to record such grants as revenues upon receipt, then at year-end reclassify the unspent portion from revenue to unearned revenue.) When interest that will be reverted is received, it should be recorded as a liability. The liability should be reversed when interest is reverted.
The following journal entries illustrate the above transactions:
The following journal entries illustrate the above transactions:
| Object | Description | Debit | Credit |
|---|---|---|---|
| 0103 | Cash on deposit with county treasurer | 10,000 | |
| 0250 | Unearned revenues | 10,000 | |
| (federal grant monies received) | |||
| 6XXX | Expense | 9,000 | |
| 0103 | Cash on deposit with county treasurer | 9,000 | |
| 0250 | Unearned revenues | 9,000 | |
| 4X00 | Revenue from federal sources | 9,000 | |
| (federal grant monies expended) | |||
| 0250 | Unearned revenues | 1,000 | |
| 0103 | Cash on deposit with county treasurer | 1,000 | |
| (federal grant monies reverted) | |||
| 0103 | Cash on deposit with county treasurer | 700 | |
| 0215 | Due to federal government | 200 | |
| 1500 | Earnings on investments | 500 | |
| (interest revenue received) | |||
| 0215 | Due to federal government | 200 | |
| 0103 | Cash on deposit with county treasurer | 200 | |
| (excess interest revenue reverted) |
8. What is the appropriate coding for student tuition expenditures?
Districts must code tuition expenditures to function code 1000—Instruction and to the appropriate bolded object code as outlined in the USFR Chart of Accounts. Districts should not code tuition expenditures to object code 6560—Tuition as there are more detailed bolded object codes for tuition. For example, if the tuition was paid to other Arizona school districts, then 6561—Tuition to Other Arizona Districts would be used. If the tuition was paid to school districts out of State, then 6562—Tuition to Out-of-State Districts would be used.
9. How can monies in the Medicaid Reimbursement Fund be spent?
Since districts are accounting for the original expenditures that resulted in the Medicaid reimbursement in the M&O Fund and the reimbursement in the Medicaid Reimbursement Fund (290), the Medicaid reimbursement monies can be spent for any allowable M&O purpose.
10. What is the Indirect Costs Fund—570, and how should the transfer of monies to this fund be coded?
The Indirect Costs Fund accounts for monies transferred from federal projects funds and the Food Service Fund based on an approved indirect cost rate to recover a portion of the administrative costs incurred to support federal grant programs. Interest received on federal grants that is not required to be reverted should also be transferred to the Indirect Cost Fund and used for administrative purposes as described in the USFR Charts of Accounts. Object code 6910—Indirect Costs Transfers-Out should be used to transfer indirect costs and objective code 6930—Fund Transfer-Out should be used to transfer interest to the fund. Revenue object code 5200—Fund Transfers-In should be used to record the monies transferred into the Indirect Costs Fund. The amount transferred for indirect costs may not exceed the amount calculated with the indirect cost rate ADE established for the district. Please note that object codes 6910 and 6930 should be included as interfund transfers-out for reporting purposes on the district’s annual financial report and financial statements. The journal entry below illustrates a transfer from a federal projects fund to the Indirect Costs Fund for indirect costs only.
| Account Code | Description | Debit | Credit |
|---|---|---|---|
| 100-100-6000-6910 | Indirect costs transfers-out | 500 | |
| 100-000-0000-0103 | Cash on deposit with county treasurer | 500 | |
| 570-000-0000-0103 | Cash on deposit with county treasurer | 500 | |
| 570-000-0000-5200 | Fund transfers-in | 500 |
11. What function code should be used to record the salaries of "teaching coaches"?
"Teaching coaches" assist instructional staff in planning, developing, and evaluating the process of providing learning experiences for students and should be coded to function 2200—Support Services—Instruction (2210—Improvement of Instruction/2212—Instruction and Curriculum Development). If the teaching coaches' responsibilities also include actual student instruction, then their salaries should be split accordingly between function code 2200 (2210/2212) and function code 1000—Instruction.
12. What function code should be used to record fuel purchases?
If a district purchases fuel for district vehicles (other than student transportation vehicles), it should be coded to function code 2600—Operation and Maintenance of Plant [2650—Vehicle Operation and Maintenance (Other than Student Transportation Vehicles)]. Fuel purchases for student transportation vehicles (buses and vans) should be coded to function code 2700—Student Transportation (2710-Vehicle Operation). Costs involved with fueling vehicles, such as maintaining fuel pumps at a maintenance yard should be coded to 2730—Vehicle Servicing and Maintenance.
13. What program codes should be used for vocational and technical education transportation expenditures?
Districts that are not part of a Career Technical Education District (CTED) should code student transportation expenditures related to vocational and technical education programs during the school day (i.e., field trips) to program Code 470—Vocational and Technical Education. If a district is or later becomes part of a CTED, coding to this program code will help the district determine its base year expenditures and show compliance with the program's nonsupplanting requirements. This program code should not include transportation costs related to transporting vocational and technical education students to and from their residence.
For districts that are part of a CTED, refer to CTED Cost Reporting FAQs for guidance on coding CTED expenditures, including transportation.
14. Should all athletic activities be coded to function 1000—Instruction?
No. Only costs directly related to instructing students should be coded to function 1000—Instruction, such as coaches and referees. Other costs associated with athletics should be coded to individual function codes appropriate for the activity. For example, since the bookstore processes gate receipts, employees taking and selling tickets at athletic events should be coded to function 3400—Bookstore Operations. Likewise, security guards at games and athletic equipment managers should be coded to function 2600—Operation and Maintenance of Plant (2660—Security/2640—Care and Upkeep of Equipment).
15. What functions and object codes should be used for student travel-related expenditures?
The coding for student travel-related expenditures (transportation, lodging and meals, and admission costs) is described below. Object code 6580—Travel should only be used for nonstudent travel.
Transportation
Function 2700—Student Transportation (2790—Other Student Transportation) should be used for student travel, which includes trips to and from school and trips to school activities. The following object codes should be used to record student travel transportation costs depending on the situation: 6150—Classified Salaries for employees driving district vehicle/bus, 6621—Natural Gas, 6626—Unleaded Fuel, or 6627—Diesel Fuel for fuel purchases, 6440—Rentals (6442—Rental of Equipment) for rental of a vehicle for an employee to drive, or 6519—Student Transportation Purchased From Other Sources for payments to other entities to provide transportation, such as chartered bus service.
Lodging and meals
Function 2100—Support Services—Students (2190—Other Support Services-Students) and object code 6890—Miscellaneous Expenditures should be used for student lodging and meals.
Admission costs
Function 1000—Instruction and object code 6890—Miscellaneous Expenditures should be used when the activity requires a fee and involves direct interaction between teachers and students, including athletics.
16. Has the Arizona Auditor General provided any guidance in addition to the information in the USFR Chart of Accounts on classifying expenditures in the executive administration and heads of components function codes?
17. Should districts classify equipment purchased with a federal grant that cost less than $5,000 as supplies (6610-General Supplies)?
No. While many federal grants use a capitalization threshold of $5,000, Arizona does not use a dollar threshold for determining whether an item is equipment or a supply. The USFR Chart of Accounts includes bold, required object codes under 6730 to separately identify equipment costing $5,000 or more from lower-cost equipment items. Districts should select the correct object code to separately identify equipment with a cost of $5,000 or more from equipment costing less than $5,000.
The criteria for determining whether an item should be classified as equipment or supply is included in the Uniform System of Financial Records for Arizona School Districts (USFR). For example, both a computer costing $400 and a network printer/copy machine costing $6,500 would be classified as equipment under state guidance. However, the $400 computer would be classified in either object code 6737 or 6738 as technology-related equipment with a cost of less than $5,000, while the $6,500 printer/copy machine would be classified in object code 6739 as technology-related equipment with a cost of $5,000 or more. Using the correct detailed equipment classifications allows these items to be correctly classified in accordance with the USFR Chart of Accounts and separately identified for reporting for federal grant purposes.
The bold codes in the USFR Chart of Accounts for equipment costing $5,000 or more are:
6733 Furniture and Equipment—$5,000 or More
6736 Vehicles—$5,000 or More
6739 Technology-Related Hardware and Software—$5,000 or More
The remaining bold codes in the 6730 range of 6731, 6732, 6734, 6735, 6737, and 6738 should be used for equipment purchases that cost less than $5,000 in each designated category.
18. Where can I find guidance that was previously in USFR Memo No. 185 for coding capital versus M&O expenditures?
USFR Memo No. 185 provided guidance for determining whether an expenditure was a capital expenditure or an M&O expenditure. As of May 2016, USFR Memo No. 185 has been incorporated into the USFR Chart of Accounts. Click here for a short video that shows how the guidance was incorporated into the USFR Chart of Accounts.
19. How should school districts use equipment expenditure object codes 6731 through 6739?
Districts must use expenditure object codes 6731 or 6732 for furniture and equipment costing less than $5,000. Districts may choose to use only 1 of the 2 available codes, or the codes may be used interchangeably. Districts may also choose to establish further detailed uses of the codes, such as using 6731 to code items costing less than $1,000 and using 6732 to code items costing $1,000 or more but less than $5,000. Any furniture and equipment items costing $5,000 or more are required to be coded to 6733. The same principles apply to object codes 6734 and 6735 for Vehicles and 6737 and 6738 for Technology-Related Hardware and Software.
The table below illustrates 2 options for using the various equipment codes.
| Type of equipment | Required object code based on cost | ||
| Less than $1,000 | $1,000 to $4,999 | $5,000 or more | |
| Furniture and equipment | 6731 and/or 6732 | 6733 | |
Vehicles | 6734 and/or 6735 | 6736 | |
| Technology-related hardware & software | 6737 and/or 6738 | 6739 | |
| OR | |||
| Furniture and equipment | 6731 | 6732 | 6733 |
| Vehicles | 6734 | 6735 | 6736 |
| Technology-related hardware & software | 6737 | 6738 | 6739 |
20. What function code should be used to record the salaries and benefits of teachers who are also department chairs?
Functions 1000 and 2400 (2490—Other Support Services—School Administration) should be used to report the salaries and benefits applicable to the separate responsibilities of instruction and chairing a department. Normally, the allocation of salary and benefit costs between functions is done proportionally based on the time spent performing the various duties. However, when a specific stipend is provided for added responsibilities, simply classifying that stipend in the correct function is a reasonable alternative. If a separate stipend is not provided and the teacher’s instructional responsibilities are not reduced related to the added responsibilities, proration between functions may not be practical. In that case, the full salary and benefit costs for the teacher/department chair should be coded to function code 1000.
21. Which fund numbers should be used for COVID-19 federal relief grants?
Entitlement grants have been assigned fund numbers in the USFR Chart of Accounts since most districts receive those grants.
Discretionary COVID-19 federal relief grants, including the grants listed below, must be tracked in a separate fund in the other federal projects fund range (300-399). This list is not all inclusive.
Grants identified by ADE
- Acceleration Academies (continue using fund 327, if already assigned)
- School Safety Program ̶ ESSER
- ARP Homeless I – Education for Homeless Children & Youth Expansion
- ARP Homeless I – Mini-Grant
- ARP Homeless II
- ARP school and community grants
Grants identified by the Governor’s Office of Strategic Planning and Budgeting
- Expansion and Innovation Fund microgrants
- Project Momentum
- Civic Innovation
- Education Plus-Up
- 100 Day In-Person Reimbursement
- AZ OnTrack Summer Camp
Grants identified by other agencies
- Federal Emergency Management Agency (FEMA) Public Assistance
- Emergency Connectivity Fund (Federal Communication Commission program administered by the Universal Service Administrative Company)
COVID-related monies received as a vendor or beneficiary, rather than a subrecipient, should not be recorded in a federal grant fund; they should be recorded in the appropriate fund depending on the grant’s purpose (e.g., gifts and donations or community school funds). If you are unsure whether your district is considered a grant subrecipient or vendor/beneficiary, contact the grantor/awarding agency to make the determination.
22. What function and object codes should be used for personal protective equipment (PPE) and other safety expenditures?
PPE such as gloves, face shields, and masks are often disposable or single-person-use items worn to minimize exposure to hazards for the wearer’s and others’ safety. Therefore, PPE expenditures should be coded to function 2600—Operation and Maintenance of Plant under optional function 2670—Safety and object 6610—General Supplies.
Other safety expenditures for cleaning and sanitizing supplies beyond normal purchases and for nonwearable supply items, such as plexiglass trifolds that sit on countertops or desks, should also be coded as general safety supplies (function 2670, object 6610).
Districts may purchase PPE and other safety supplies from federal relief grants, as allowable. However, if such items are not purchased entirely from federal relief grants, they can be purchased from the Maintenance and Operation (M&O) Fund or other allowable funds, but not from the Unrestricted Capital Outlay (UCO) Fund.
Other safety expenditures for more durable items, including freestanding or installed plexiglass wall-type barriers, should be coded based on how they are purchased and installed applying the detailed code descriptions in the USFR Chart of Accounts as described below:
- Function 4000—Facilities Acquisition and Construction, object 6610—General Supplies for construction materials that are assembled or installed by district personnel.
- Function 4000—Facilities Acquisition and Construction, object 6450—Construction Services for projects involving constructing, renovating, or remodeling.
- Function 2670—Safety, objects 6731-6733—Furniture and Equipment for equipment that does not require installation.
- Function 4000—Facilities Acquisition and Construction, objects 6731-6733—Furniture and Equipment for fixtures or nonmovable equipment installed by district personnel or a vendor.
Similar to less durable safety items, districts may use federal relief grants, as allowable. However, if such items are not purchased entirely from federal relief grants, they can be purchased from the UCO Fund or other allowable funds, but not from the M&O Fund.
23. What is a subscription-based information technology arrangement (SBITA)?
A SBITA is defined in GASB Statement No. 96, and is a contract that conveys control of the right to use another party’s IT software, alone or in combination with related capital assets, for a specified period of time. An entity has control of the right to use the related capital assets if it is allowed to temporarily use the asset and determine the nature and manner of use of the asset as specified in the contract. A SBITA differs from other technology arrangements that don’t have a specific expiration, such as perpetual licenses, that can be used indefinitely in the purchased form. When a SBITA subscription expires, access to the software is no longer available.
GASB Statement No. 96 does not apply to the following:
- Perpetual licensing arrangements. In the perpetual license model, customers pay a one-time fee for the software, although annual update/upgrade fees may occur. Perpetual licensing software purchases are subject to GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets, as amended.
- Contracts that convey control of the right to use a combination of IT software and tangible capital assets when the underlying tangible capital asset meets the definition of a lease in GASB 87 and the software component is insignificant compared to the cost of the capital asset. For example, a smart copier that is connected to an IT system or a computer with operating software.
- Other exceptions listed in GASB 96, paragraph 4, that are less common among school districts.
GASB Statement No. 96 provides more information on:
- Subscription terms in paragraphs 9 through 12.
- Short-term SBITAs in paragraphs 13 and 14.
- Subscription asset and liability recognition and measurement (full accrual accounting) for SBITAs greater than 12 months in paragraphs 15 through 41.
- Incentives provided by a SBITA vendor in paragraphs 42 and 43.
- Contracts with multiple components in paragraphs 44 through 49.
- Contract combinations in paragraphs 50 and 51.
- SBITA modifications and terminations in paragraphs 52 through 57.
- Financial statement reporting requirements (modified accrual accounting) in paragraphs 58 and 59.
- Notes to Financial Statements in paragraphs 60 and 61.
See FAQs 4 and 5 above for information on coding software purchases, including SBITAs.
24. How should districts treat SBITA prepayments incurred to obtain a pricing discount?
Prepaying the entire subscription balance does not mean the agreement is no longer a SBITA. Districts that prepay SBITAs to obtain a pricing discount should record the entire prepayment amount as an expenditure in the year the payment occurs to ensure the expenditure is appropriately subjected to the district’s expenditure budget limit. To record the prepayment, districts must debit the applicable principal and interest codes described in the USFR and instructional and noninstructional software coding tools for SBITAs (more than 12 months) and credit cash. See the example journal entry for a 4-year noninstructional software subscription prepayment below:
| Account Code | Description | Debit | Credit |
|---|---|---|---|
| 610-100-5000-6832 | Redemption of Principal—Other | $100,000 | |
| 610-100-5000-6842 | Interest—Other | 6,000 | |
| 610-000-0000-0103 | Cash on Deposit with County Treasurer | 106,000 |
For purposes of recording the transaction on the government-wide statements, which are prepared using the economic resources measurement focus and the accrual basis of accounting, assuming the prepayment was made when the SBITA contract term began, the district should still record an intangible right-to-use subscription asset. However, since the district made the full payment at the beginning of the subscription term, there would be no corresponding subscription liability as there are no subsequent payments due. The subscription asset should be amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying IT assets. The amortization of the subscription asset should be reported as an outflow of resources (for example, amortization expense), which may be combined with depreciation expense related to other capital assets for financial reporting purposes. Amortization should begin at the commencement of the subscription term.
For purposes of recording the transaction on the fund-based statements, which are prepared using the current financial resources measurement focus and the modified accrual basis of accounting, if a SBITA is expected to be paid from general government resources, the SBITA should be accounted for and reported on a basis consistent with governmental fund accounting principles. Normally, an expenditure and other financing source should be reported in the period the subscription asset is initially recognized. However, since the entire amount of subscription payments was paid at the beginning of the subscription term, there would be no corresponding other financing source.
Districts should refer to GASB 96, paragraphs 26, 27, 58, 59, 60, and 61, for additional information.
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