FI108 Umoja Cost and Management Accounting Overview CBT v15

FI108 Umoja Cost and
Management Accounting Overview
Umoja Cost and Management Accounting Overview Version 15

Last
Modified:
09-March-15
Copyright
United
Nations
Agenda
Course Introduction
Module 1: Umoja Cost and Management Accounting

Module 2: Cost and Management Accounting Master Data
Module 3: Cost and Management Accounting Processes
Course Summary
Course Assessment
Course Survey
Copyright United Nations
Course Overview
The purpose of the Umoja Cost and Management Accounting Overview course is to
introduce the cost and management accounting concepts and corresponding Master Data
elements. This course will also explain how cost and management accounting can be
used in efficient management of resources.
Prerequisite Review
You should have completed the following prerequisite courses:
Umoja Overview
Umoja Master Data & Coding Block Overview
Course Duration: 2 hours
Course Objectives
After completing this course, you will be able to:
Describe the Cost and Management Accounting process
Describe the benefits of cost and management accounting
Name the elements that constitute the cost and management accounting Master
Data
Describe the purpose of cost allocations
Agenda
Course Introduction

Course Summary
Course Assessment
Course Survey
Module 1 Objectives
After completing this module, you will be able to:
List the key roles and responsibilities in cost and management accounting
Describe the benefits of Umoja cost and management accounting
Describe the Cost and Management Accounting process within Umoja
Key Terminology
Key Term
Description
Expense associated with materials and services used to
produce a programme or activity. A cost can be:
Cost
Cash relevant or non-cash relevant (such as,

depreciation)
Budget consuming (real) or non-budget consuming
(statistical)
Controlling
Module within Umoja ECC that consists of all Master Data,

configuration and reporting required to analyze costs and
revenues of the organization
Cost and Management

Accounting
A branch of accounting that establishes the actual cost (or true

cost) of operations, products or services and the analysis of
variances. This information is used by the management to
plan, evaluate, control and ensure the appropriate use and
accountability of resources within an entity
Financial Accounting
A branch of accounting that involves preparing and publishing

financial statements for disclosure to stakeholders
Roles & Responsibilities

The following roles are involved in the Umoja Cost and Management Accounting process:
Financial
Accounting
Senior User
Creates and maintains cost and management accounting

allocation rules
Runs the batch that will post the billing documents coming from
the Sales and Distribution module
Inserts a long-text description for incoming payments for
voluntary contributions
Creates and posts General Ledger (G/L) documents that are not
subject to workflow, such as accruals, reversals and recurring
entries
Clears G/L documents

Financial
Accounting
Closing User
Responsible for the Year-End Closing process to close the

financial year at the company code level
Runs the fixed asset depreciation and financial accounting
revaluation, which is an International Public Sector Accounting
Standards (IPSAS) requirement
Reclassifies the receivables and payables and balances the carryforward processes on an annual basis
Manages the Special Period documents
Runs the revaluation of Purchase Orders (POs) and earmarked
funds, as well as other closing processes in Funds Management

The following Umoja Enterprise roles are involved in the Inventory Counting and
Controlling process:
Maintain Activity Type
Financial Accounting:
Master Data
Maintainer
Defines secondary cost element to use for cost

allocations
Maintains Statistical Key Figure
Defines whether statistical key figures and values, to be

posted are periodic or as of a certain point in time
Maintains Allocation Cycle
Services Delivery:
Master Data
Maintainer
Defines senders, receivers by activity type
Enter Activity Type Rate
Defines rate per cost centre, activity type and period
10

Services Delivery:
User
Financial Accounting:
Support User
(NEW ROLE)
Enter Statistical Key Figure Data
Defines statistical key figure value for each service

receiver coding block
Execute Allocation Cycle
Allocates costs from senders to receivers
11
Umoja Cost & Management Accounting

The cost and management accounting concept is new to UN. Umoja cost and
management accounting enables the following:
It lays the foundation for results-based management
It generates information for internal users, specifically for internal cost recovery
It allows UN to optimize the process of cost management, enable expense
prediction and assist in key decision making
12
Benefits of Umoja Cost & Management Accounting

Unlike legacy systems, Umoja provides the capability to capture expenditures as they
are incurred. This enhances the organizations ability to have a better view of costs and
provides a basis to make informed decisions for efficient use of limited resources.
Cost management will result in efficient utilization of resources and enhance reporting
to the Senior Management and legislative bodies
Organization will be able to recover full cost for the services provided to
outside/internal entities and allocate costs to voluntary funded projects
Umojas cost measurements will enable better budgeting and reporting on costs
for each component/programme. It will lead to result-based management
It will standardize the cost allocations across the organization
13
Cost & Management Accounting: Example

The following is an example of how cost accounting could be used in the organization
for management reporting and decision making.
Example
Throughout the fiscal year 2012, the Aviation section
operates air services in the mission. Using the
Controlling module, the section will allocate the cost
of helicopter hours to military, political and
administration, enabling ascertainment of the true
cost of those components. Similarly, for training
conducted by the Integrated Mission Training Center
(IMTC), training costs could be allocated from IMTC
to various sections/components who utilized the
training services.
The usage and application of cost and management
accounting will be decided by the organization based
on the Managements reporting needs.
14
Cost & Management Accounting: End to End Process

The Cost and Management Accounting process begins with the maintenance of
Master Data.
Cost allocation methods are then used to move costs from the section that collected
the cost to the section that incurred the cost.
The end-to-end Cost and Management Accounting process flow is depicted below:
Maintain
Master Data
Analyze Cost
Allocation
Requirement
Update CO
Master Data
Perform Cost
Allocation
Post Allocation/
Update Monthend Activity
Schedule
15
Umoja Main Ledgers

The Controlling Ledger is integrated with the other three Umoja ledgers. These ledgers
are linked to each other through the coding block.
The four Umoja ledgers are:
General Ledger (maintained in the Financial Accounting module)
Budgetary Ledger (maintained in the Funds Management module)
Grants Ledger (maintained in the Grants Management module)
Controlling Ledger (maintained in the Controlling module)
General
Ledger (G/L)
Budgetary
Ledger
Grants Ledger
The G/L only records

actual postings. Every
financial transaction
conducted in Umoja
has a corresponding
posting within the
G/L.
The Budgetary Ledger

records budgetrelevant transactions
such as budget
allotments, budget
consumption, etc.
The Grants Ledger

records grantrelevant transactions
(trust funds).
Controlling
Ledger
The Controlling
Ledger records
postings used for
internal cost
allocation.
16
Umoja Controlling Module

Cost accounting is undertaken in the Controlling module of Umoja. This module
Captures the costs as they are incurred
Is highly integrated with Financial Accounting (Expenses entered into the G/L are
automatically posted to the Controlling Ledger)
Is integrated with Funds Management and Grants Management enabling
simultaneous entries in these modules
Allows the organization to move costs internally known as allocate costs, to the
responsible programmes, components and operations to ascertain their trust cost
of operation
17
Postings to Controlling Ledger

The postings to the Controlling Ledger also originate from other modules. The diagram
below illustrates the postings within Umoja.
PS
Project
Systems
Progen
MM/SRM
SD
Material
Management
Sales and
Distributions
RE
Real
Estate
Galileo
Actual Postings
FI
Financial
Accounting
Umoja ECC
CO
FM
GM
Controlling
(Cost Accntg)
Funds
Management
Grants
Management
18
Flow of Financial Information

The diagram below explains the type of entries that are posted in various modules. In
Controlling only the internal cost allocations are initiated, which are then posted to other
modules.
Accounting transactions
are always entered into FI
Revenue and expense

transactions
FI
Financial
Accounting
CO
Controlling
(Cost Accntg)
Internal cost
allocations
Balance Sheet
transactions
GM
Grants
Management
FM
Funds
Management
Budget transactions are only

entered into FM and GM. GM
only covers budget for
voluntary contributions
19
Controlling Ledger Posting Example

Here is an example of the postings created in various ledgers when purchasing goods
from a vendor:
Procure-to-Pay
Process
FI
FM
CO
1. Purchase
Requisition
No Posting
Pre-commitment
No Posting
2. PO from Req.
No Posting
Commitment
No Posting
3. Goods / Services
Receipt(GR)
DR Expense
CR GR/IR Clearing
Expenditure with
GR status
Actual
4. Invoice Receipt
(GR)
DR GR/IR Clearing
CR Vendor
Expenditure with
invoice status
Update expense if
required
5. Payment
DR Vendor
CR Cash and Bank
Expenditure with
payment status
No Postings
20
Learning Checkpoint 1
Which of the following are the benefits of Umoja cost and management accounting?
Select all that apply.

A.
B.
C.
D.
E.
Standardization of cost allocation processes across the organization

Efficient utilization of resources
Decreased accountability
Indirect integration with Supply Chain/Procurement/Logistics
Indirect integration with FI, FM and GM processes
21
Which of the following are the benefits of Umoja cost and management accounting?
Select all that apply.

A.
B.
C.
D.
E.
Standardization of cost allocation processes across the organization

Efficient utilization of resources
Decreased accountability
Indirect integration with Supply Chain/Procurement/Logistics
Indirect integration with FI, FM and GM processes
Options A and B are the correct answers.

Standardization of cost allocation processes and
efficient utilization of resources are the benefits of
Umoja cost and management accounting.
22
Where do the financial postings in the CO module come from?
Select the correct option.

A.
B.
C.
D.
GM Module
FI Module
FM Module
Cash Accounting Module
23
Where do the financial postings in the CO module come from?

A.
B.
C.
D.
GM Module
FI Module
FM Module
Cash Accounting Module
Options B is the correct answer. The actual

postings in the CO module come from the FI
module.
24
Module 1 Summary
The key points covered in this module are listed below:
Umoja cost and management accounting allows UN to optimize the process of cost
management, enable expense prediction and assist in key decision making
The CO module maintains the Controlling Ledger for cost and management
accounting purposes
The CO module allows the user to move costs internally, or allocate costs, to the
responsible programmes, components and operations to show their trust cost
The actual financial posting is done in FI. Corresponding elements are created in
CO, FM and GM
25
Agenda
Course Introduction

Course Summary
Course Assessment
Course Survey
26
Module 2 Objectives
Describe the elements that constitute Cost and Management
Accounting Master Data
27
Key Terminology
Key Term
Cost Element
Description
A cost or revenue item that is linked one-for-one to an expense or
revenue G/L account. It is divided into primary cost element and
secondary cost element.
A primary cost element originates as a G/L account

A secondary cost element is used only for secondary cost
allocations within the CO module
An object within CO that collects costs and revenues, such as:
Cost Center: Identifies the areas of ongoing cost responsibility
within an organizations overall organizational structure
Cost Object
Internal Order: Collects costs and revenues of a specific event or

simple project that has defined start and end dates, is usually
temporary (unique) in nature and where costs should be
segregated from other events or on-going operations to enable
more detailed monitoring
WBSE (Work Breakdown Structure Element): Represents a project
with its structure (Covered in the Umoja Project Management
courses).
28
Key Terminology
Key Term
Description
Profit Center
It is an attribute of cost objects (Cost Center, Internal Order, WBSE) that

allows reporting of costs by organizational function (for example,
Medical, HR and IT). In revenue-producing areas, it supports reporting
on product and services.
Activity Type
It is a form of productive output by a cost center having a fixed rate per

unit used for allocating costs of internal activities from the providers of
the activities to the users of the activities.
Activity Rate
It is a rate that calculates the cost of performing an activity type. All

rates in Umoja are defined in USD.
Statistical Key
Figure
This refers Is a quantity (for example, helicopter hours or square meters

in a building). It can be used for reporting purposes or for cost
allocations.
29
Master Data Review

The diagram below illustrates the various cost and management accounting Master Data
elements. There are a separate set of users who maintain and update the Master Data.
Day to Day data that depends

on accurate master data
Key
Reference
Data
E.g. Cost Allocations

Master
Data
Only as good as underlying

information
Defines system bounds

Defines system bounds
E.g. Controlling Currency
E.g. Controlling Area,
(USD)
Controlling Currency (USD)
Fundamental business data

common and applicable across UN
E.g. Cost Elements, Cost Objects,
Profit Centers
Transactional Data
(Documents)
E.g. Operational, Statutory
30
Master Data: Cost Element

Cost Element
Cost Center
Internal Order
Profit Center
A cost element represents a cost or revenue item. There are two types of cost elements in
CO:
Primary cost elements are linked one-to-one to revenue and expense accounts from FI. It
originates as a G/L account. For example, a mission hires a consultant through IMTC to
provide training on handling hazardous goods to Aviation and MOVCON sections. The cost
of this service is charged to the G/L account 74141030 Training Consultant Substantive
Skills in the IMTC cost center. The account exists in CO as a primary cost element.
Secondary cost elements only exist in CO, and are used for internal transactions. They
may not have a G/L counterpart. For example, staff members from mission Aviation and
MOVCON sections attended the above training. UN will internally reallocate the training
cost from IMTC to Aviation and MOVCON sections based on the number of people from
each section. This can be done using a secondary cost element account 85021010
Internal Allocation Statistical Training. This would reflect the true cost incurred by
both the sections.
31
Master Data: Cost Element

Cost Element
Cost Center
Internal Order
Profit Center
The cost that is captured as secondary cost elements is either real (budget consuming) or
statistical (non-budget consuming).
Real posting consumes a budget in Funds Management (FM)
Statistical posting does not consume a budget in FM. In FM these postings are only for
information purposes and cannot be further allocated. Statistical posting uses cost
elements and FM commitment items that end in the letter S. For example, if IMTC
allocates the previous training cost to Aviation and MOVCON sections, this can be done
regardless of whether Aviation/MOVCON have the budget to receive this cost. A
statistical (non-budget consuming) posting reflects the true cost of managing these
sections
32
FI & Corresponding CO Accounts

The FI accounts and corresponding CO accounts are as follows:
GL Accounts in FI
Cost Elements in CO
Balance Sheet Accounts

1xxxxxxx Current Assets
2xxxxxxx Non Cur Assets
3xxxxxxx Cur Liabilities
4xxxxxxx Non Cur Liab.
5xxxxxxx Net Assets
Revenue and Expense Accounts
6xxxxxxx Revenue
7xxxxxxx Expense
Primary Cost Element

6xxxxxxx Revenue
7xxxxxxx Expense
Secondary Cost Element

85xxxxxx-budget consuming
85xxxxxS-non budget consuming
33
Introduction to Cost Object

Cost Element
Cost Center
Internal Order
Profit Center
While the cost element defines the cost incurred, the cost object explains who is responsible
for incurring the cost. It is important to understand that every expense posting in FI must go
to a cost object in CO. The following cost objects, which are Master Data elements, are used
in Umoja:
Cost Center
Internal Order
WBSE (Covered in the Project Management course)
Though these cost objects are essentially cost collectors, Umoja also uses them to collect
revenue. This is because Umoja does not define separate revenue collectors, given UNs
limited revenue-generating activities.
34
Master Data: Cost Center

Cost Element
Cost Center
Internal Order
Profit Center
A cost center represents an area/unit of the organization that collect costs and revenues of
on-going operations or functions. It is:
An organization unit with financial responsibility for costs and budgets
A cost collector for more detailed cost monitoring requirements within an organizational
unit
A service or product of internal service providers
In our previous example, IMTC is responsible for training costs. IMTC is an example of a cost
center.
A cost center can be as small as UNIFIL Aviation, or as large as the mission UNIFIL. Cost
centers are part of a cost center hierarchy that follows the organizational hierarchy.
35
Cost Center Example

Below is an example of the UNIFIL cost centers and the cost center groups:
36
Master Data: Internal Order

Cost Element
Cost Center
Internal Order
Profit Center
An internal order is always linked to a cost center.
Within Umoja, an internal order is used:

To collect costs and revenues for short-term events, one-off events or projects
To collect costs for small capital projects for subsequent capitalization
As a cost object to capture costs of support service customers
For small grant-funded activities (otherwise WBSEs are used)
37
Master Data: Internal Order Example

Cost Element
Cost Center
Internal Order
Profit Center
Various examples where internal order can be used are:

Specific task/job of a department
Voluntary funded events or projects
Capital projects
Specific task/job
Capital projects
Costs
Internal
Order
Cost Center
38
Master Data: Profit Center

Cost Element
Cost Center
Internal Order
Profit Center
While a cost center is the primary cost and revenue collector, Umoja uses a profit center for a
different purpose. A profit center:
Represents, at a higher level, an organizational function (for example, Transport, Supply,
or Medical)
Is linked to similar functional cost objects (cost center, internal order and WBSE)
Supports reporting on product and services in revenue-producing areas
In a similar way to cost centers, profit centers are part of a profit center hierarchy.
39
Master Data: Profit Center Example

For example, a report of the profit center Supply allows the user to selectively
view all cost centers at UN that are categorized as a Finance cost center. This
provides the user with another way to view information.
Supply
Profit Center
Cost Centers
UNIFIL
Supply
UNFICYP
Supply
UNAMID
Supply
UNMISS
Supply
40
Master Data: Activity Type

Activity Type
Statistical Key
Figure
An activity type presents a quantity-based service provided by or managed by a cost center.

It:
Describes the activity carried out by a cost center (for example, helicopter service
provided by UNIFIL Aviation section, space provided by Engineering section)
Is measured in units of time or quantity (for example, helicopter hours, square meters)
for a defined period of time
Has a fixed activity rate (for example, dollar amount per hour, dollar mount per square
meter) for allocating costs to the service recipient
Is calculated by multiplying the activity quantity with the activity rate (see activity type
allocation)
Cost
Activity Quantity
Activity Rate
41
Master Data: Statistical Key Figure

Statistical Key
Figure
Activity Type
A Statistical Key Figure (SKF):

Is a quantity (for example, helicopter hours or square meters in a building)
Is used to allocate costs during the month-end process. Quantities are first posted as a
SKF (e.g. number of helicopter hours as they are incurred). At the end of the month,
costs are calculated and allocated to the appropriate cost center
It can be used for non-financial information that needs to be reported and is not
recorded in any other system or required for cost allocation. For example, reporting the
number of helicopter hours flown for a particular month at UNIFIL Aviation
Cost
SKF
Activity Rate
42
CO Master Data Integration Across Modules

As you recall from the Master Data and Coding Block course, the Master Data
elements from various modules are linked to each other.
Simultaneous Posting and Derivation

Umoja uses the concept of simultaneous posting in various modules. While all
modules get updated in real time, they store the data differently for different
analysis.
As every module has different fields for different analytical reasons, Umoja uses a
functionality called derivation to populate the dependent fields from the source field.
43
Simultaneous Posting & Derivation: Integration

Below are the coding block elements and corresponding entries in FI, CO, FM and GM:
Module
FI Financial Acct
CO Controlling
FM Funds Mgmt
GM Grants Mgmt
COMPANY CODE
CO AREA
FM AREA
GL acc related
GL Account
Cost Element
Commitment Item
Sponsored Class
Funding Source
Related
Fund
Grant
Fund
Grant
Fund
Grant
Fund
Grant
Business Area
Cost Center
(org structure: Department,
Division, Unit)
Funds Center
Funds Center
Internal Order
Work Breakdown Structure
Funded Program
Sponsored Program
Coding Block Elements
ENTERPRISE STRUCTURE CODE
Organizational and
activity related
Profit Center
Segment
Programmatic
Financial Period
Related
Functional Area
Functional Area
Functional Area
Functional Area
Fiscal Year
Fiscal Year
Fiscal Year
Grant Validity Period
Budget Period
Budget Period
Budget Period
Budget Period
Legend:
FI Entry
Derived
Derived or entered
Underlined items are owned

by corresponding module
44
Putting it Together
Using the earlier example, we would like to calculate the true cost of a missions various
sections and components, for the fiscal year 2012. We can start to piece together the
information using the Master Data elements.
In 2012, the various mission cost centers collected following costs:
Helicopter Expense
Generator Fuel Expense
Training Expense
The above costs need to be moved to the responsible cost centers to ascertain
operational cost of various components. The next module will cover methods to move
these costs. This is known as cost allocation.
45
Which of the following are cost objects for UN?
A.
B.
C.
D.
E.
F.
Cost Center
Internal Order
Work breakdown structure element (WBSE)
Cost Element
A&B
A, B & C
46
Which of the following are cost objects for UN?
A.
B.
C.
D.
E.
F.
Cost Center
Internal Order
Work breakdown structure element (WBSE)
Cost Element
A&B
A, B & C
Option F is the correct answer. Cost center,

internal order and WBSE are the cost objects for
UN.
47
A/an __________ represents a form of productive output by a cost center having a fixed
rate per unit used for allocating costs of internal activities.
Fill in the blank with the correct option.
A.
B.
C.
D.
Derivative
Activity Type
Activity Rate
Cost Object
48
A/an __________ represents a form of productive output by a cost center having a fixed
rate per unit used for allocating costs of internal activities.
A.
B.
C.
D.
Derivative
Activity Type
Activity Rate
Cost Object
Options B is the correct answer. An activity type

represents a form of productive output by a cost
center having a fixed rate per unit used for
allocating costs of internal activities.
49
Module 2 Summary
Primary cost element mirrors the income statement account posting from the FI
module
Secondary cost element is used for CO internal transactions only and does not have
a G/L account counterpart
The cost that is captured as secondary cost elements is either real posting (budgetconsuming) or statistical posting (non-budget consuming)
Cost objects are used to collect costs and revenues
An activity type presents a quantity-based service provided by or managed by a
cost center
A Statistical Key Figure (SKF) is a quantity used to allocate costs during the monthend process
50
Agenda
Course Introduction

Course Summary
Course Assessment
Course Survey
51
Module 3 Objectives
Define the types of cost allocation transactions
Define the types of cost allocation cycles
52
Key Terminology
Key Term
Cost Allocation
Description
It is a general term for CO transactions, which transfer costs
from a sender cost object to a receiver cost object, including
manual cost allocation, direct activity allocation and cost
allocation cycles.
Cost allocations may cross into FI in case certain FI dimensions

are crossed (see CO/FI integration).
Cost Allocation
Cycle
A cost allocation where multiple senders allocate certain costs

to multiple receivers based on the cost drivers or statistical key
figures, including indirect activity allocation, assessment cycle
and distribution cycle. It is normally run as part of the monthend closing process.
53
Introduction to Cost Allocations

Cost allocations are used to transfer costs from a sender cost object to a receiver cost
object. Umoja uses three types of allocations:
Manual Cost Allocation: An amount-based allocation where the specific amount
to allocate from the cost sender is entered
Direct Activity Allocation: A quantity-based allocation where activity amounts
are entered for a certain activity type
Cost Allocation Cycle: Multiple senders allocate certain costs to multiple
receivers based on cost drivers or statistical key figures. It is normally run as part
of the month-end closing process
Cost allocations may cross into FI in case certain FI dimensions are crossed. This will be
explained in the Level 3 course.
54
Manual Cost Allocation

Manual cost allocation enables entities to do amount-based cost and management
accounting within their entity (for example, to move costs to the responsible cost
object).
A manual cost allocation is a one-time allocation that credits one cost sender and
debits one cost receiver with a specific amount.
Example: Mission Aviation incurred $6,000 of fuel expense that needs to be moved to
Military cost center for patrolling flights. Military cost center is a secondary cost
element as it does not have budget, yet is real user of the fuel consumed.
Cost Sender
Aviation
Cost Center
Cost Receiver
Fuel
Expense
Credit $6,000
Military
Cost Center
Fuel
Expense
Statistical Secondary
Cost Element
Debit $6,000
55
Direct Activity Allocation

Direct activity allocation is a quantity-based allocation where actual quantities are
used. This quantity multiplied by the pre-determined activity rate is then charged to a
receiver using the defined secondary cost element.
Cost
Activity Quantity
Activity Rate
Example: Flight hours used by military component for patrol flights are used to
calculated a one-time, direct activity allocation.
Cost sender: Mission Aviation
Cost receiver: Mission Military
Activity Type: Helicopter flight hours
Actual hours flown (Activity quantity): 20 hours
Pre-determined flight hour (Activity) Rate: $1,000/hr
56
Direct Activity Allocation Example

Cost Sender
Aviation
Cost Center
Cost Receiver
Military
Cost Center
Helicopter
Expense
Helicopter
Expense
Activity Rate:
$1,000/hr
Activity Quantity:
20 hours
Secondary Cost
Element
Debit $20,000
Credit $20,000
57
Introduction to Cost Allocation Cycles

A cost allocation cycle is used where multiple senders allocate certain costs to multiple
receivers. It can be a one-time post or a periodic run as a monthly process. In UN these
allocations are performed during the month-end closing process.
Indirect Activity Allocation
A method used to automatically allocate actual activities for multiple activity users or
receivers
Assessment Cycle
A method of allocation used when the composite cost amount is transferred to the
receiver. Cost drivers may be already posted costs, SKFs, fixed percentages or in
proportion to service received. These postings are done on a secondary cost element
Distribution Cycle
A method of allocation similar to Assessment Cycle, using a primary cost element
58

An indirect activity allocation is used to automatically allocate activities for many
activity receivers (instead of entering a direct activity allocation for each receiver).
During a certain month, the activity quantities are first captured as a SKF. At the end of
the month, costs are calculated and allocated to the appropriate cost centers.
Cost
SKF
Activity Rate
Example: Helicopter hours for military patrol flights are recorded during a month as a
SKF. During the month-end closing processes, the hours are used to calculated the
indirect activity allocation.
Cost sender: Mission Aviation
Cost receivers: Mission Political and Military
Activity Type: Helicopter services
Statistical Key Figure that captures the activity quantity
Military: 80 hours; Political 20 hours
Activity Rate: $1000/hr
59
Indirect Activity Allocation Example

Cost Sender
Aviation
Cost Center
Helicopter
Expense
Cost Receiver
Political & Civil

Military
Cost Centers
Political and Civil

20 hours
Debit $20,000
Activity Rate: $1,000/hr
Military
Credit $100,000
80 hours
Debit $80,000
60
Assessment Cycle (Percentage)

Assessment cycle moves the cost from senders to receivers based on cost drivers.
Allocation rules may be based on an amount, Statistical Key Figures, fixed percentages
or in proportion to service received. These postings are done on a secondary cost
element only.
Example: $6,000 in generator fuel expense is to be allocated from the cost sender
based on a pre-calculated percentage.
Cost each office
Total transport
Percentage
receives
expense
Cost sender: Mission Engineering

Cost receivers: Mission Military and Humanitarian
Expense account: Generator Fuel Expense
Activity percentage
Military: 66%
Humanitarian: 33%
Total cost: $6,000
61
Assessment Cycle (Percentage) Example

Assessment Cycle
Cost Sender
Engineering
Cost Center
Cost Receivers
Military
Humanitarian
Cost Centers
Generator Fuel
Expense
Generator Fuel
Expense
66%
Debit $4,000
Credit $6,000
33%
Generator Fuel
Expense
Debit $2,000
62
Assessment Cycle (Proportion)

Alternatively, the assessment cycle can be performed in proportion to service received.
Example: The IMTC charges training expense based on the number of people from each
section who took induction training. $6,000 in training expense is to be allocated based
on the proportion of people who attended the training.
Cost each
office receives
Total training
expense
# of people
Total # of
people
Cost sender: Integrated Mission Training Center

Cost receiver: Mission Supply and Human Resources
Expense account: Training Expense
Activity proportion
Supply: 40 people (out of 60 people)
Human resources: 20 people (out of 60 people)
Total cost: $6,000
63
Assessment Cycle (Proportion) Example

Assessment Cycle
Cost Sender
Integrated
Mission
Training
Cost Receivers
Supply
Human Resources
Cost Centers
Training
Expense
Training
Expense
40 people
Debit $4,000
Credit $6,000
20 people
Training
Expense
Debit $2,000
64
Distribution Cycle
The distribution cycle uses the same allocation method as assessment cycles.
Distribution cycles must use primary cost elements. This retains the original posting
details.
Example: A distribution cycle is used by UNHQ to collect staff assessment expense from
various missions.
Cost sender: UNIFIL, UNAMID
Cost receiver: UNHQ
Expense Account: Staff Assessment Expense
Primary cost: $10,000
UNIFIL: $6,000
International Staff = $1,000
Local Staff = $5,000
UNAMID: $4,000
International Staff = $1,000
65
Distribution Cycle Example

Distribution Cycle
Cost Senders
UNIFIL
UNAMID
Cost Receiver
UNHQ
UNIFIL
Staffing
Expense
Intl Staff = $1,000

Activity Rate:
$1000/hr
Credit $6,000
Intl = $2,000
Primary Cost Element
UNAMID
Debit $10,000
Intl Staff = $1,000

Credit $4,000
66
Cost Allocations Summary

Following is a summary of the Cost Allocation methods in Controlling:
Allocation Name
Description
Indirect Activity
Allocation
Amount-based allocation
Specific amount to recover is
No
entered
Quantity-based allocation
Activity quantities are entered for a No
certain activity type
Primary/Secondary
Cost Element
Secondary
Secondary
Allocate actual activities for

multiple activity users or receivers
Yes
Secondary
Cost drivers may be already posted

costs, Statistical Key Figures, fixed
percentages or in proportion to
service received
Yes
Secondary
Assessment Cycle
Distribution Cycle
Cycle
Similar to Assessment Cycle

Yes
Allocate using Primary Cost Element
Primary
67
Putting it Together
Returning to our original task to calculate the true cost of a missions various sections
and components, for the fiscal year 2012, we allocated the costs using Master Data
elements and Umoja cost allocation methods.
In 2012, the mission cost centers collected and allocated the following:
Helicopter Expense
Generator Fuel Expense

Training Expense
The various costs have been calculated and allocated to/from various
sections/components using cost allocations. At the end of 2012, the user can generate
a report on each section/component on its true operational cost.
In conclusion, Umoja cost and management accounting is a new and powerful tool that
will transform the way UN performs cost measurements and control. As UN
incorporates these new changes, policies will become more refined.
68
Former Cost Recovery Process at the UN

Many UN departments and offices provide services as part of their
mandates to both internal and external clients; however, not all
services provided are covered by their allotted budgets and require
them to seek cost reimbursement from their clients.
The former process involves preparing and submitting a memorandum

or file to Accounts Division to execute a financial transaction in the UNs
current systems. This transaction can be the issuance of an invoice and
recording of an account receivable, or the entry of a Journal Voucher
(JV).
Types of Works & Services engaged by the UN
Help Desks
Banking Services
Commissary/Gift Center/Newsstand
Mail, Pouch & Messenger
Supplies
Broadcasting Services
Book Shops
Medical Services
Public Information/Library
Training Services
Sales of Audio/Visual Products
Special Events
Sales of Publics/Ext. Publications
Building/Facilities Services
Space Mgt. & Map/Drawing Services
OPPBA
Catering
HR/Personnel/Counselling Services
DPI
Records & Archive
OHRM
Garage Administration
OCSS - Facility Mgt.
Common/Miscellaneous Services
Property Management
Accounting Services
Sales of Statistical Products
Financial/Treasury Services
Visitor Services
Insurance Services
Travel/MovCon/Aviation
ICT Services
Postal Services
Legal Services
DSS
Warehouse Operations
Security Services
DGACM
Procurement Services
OICT
PD
Transportation
Conference Services
OLA
OCSS - Commercial Services
There are many types of works & services provided by UN offices

Such works/services include ...
Document Services
Publishing
Interpreters/Translators
Some works/services are more internally focus, while others are for
general public & staff (i.e. Revenue Producing Activities)
Revenue Producing Activities (Outsourced in UNHQ)
Revenue Producing Activities (UN Owned Operations
in HQ)
Umoja Cost Recovery

In Umoja, cost recovery transactions can be carried out in several ways;
and charges can be applied at different stages of the service delivery
process. The appropriate method to use depends on:
whether the entity to be charged is an individual person on UN
payroll, an organization external to the UN Secretariat or an
organization internal to UN Secretariat (i.e. has implemented
Umoja) ;
type of transactions;
nature, volume and frequency of the service requests and/or
services being provided; and
type and regularity of the charges to be recovered.
Application of Controlling in Cost Recovery

Below are methods of Cost Recovery that exist in Umoja, one of which relates to
Controlling:
Cost recovered from
payroll?
HCM
Cost recovered from lease?
RE
CO (Controlling)
Ad-hoc service request with onetime cost to be recovered against

it?
Cost Recovery is performed

through Indirect Activity Cost
Allocation Cycle
PM
Cost to be invoiced to
external clients directly?
SD
Internal cost reimbursement in

relation to good issue/transfer?
LE
Cost for periodic services to be charged/

allocated to internal clients?
Reports
An example of a report used in cost and management accounting is:
Cost Center Line items
This report lists, for a certain posting period, cost centers,
cost element and the corresponding amount allocate to/from
each cost center.
For example, for the fiscal year 2012, this report can display
all cost centers in the UNIFIL business area and the total cost
accumulated on each cost center.
73
Direct activity allocation is a _________-based allocation

A.
B.
C.
D.
Quality
Quantity
Amount
Product
74
Direct activity allocation is a _________-based allocation

A.
B.
C.
D.
Quality
Quantity
Amount
Product
Options B is the correct answer. Direct activity

allocation is a quantity-based allocation.
75
Which one of the following is amount-based allocation where the specific amount to
recover from the cost receiver is entered, and can only be statistical?
A.
B.
C.
D.

Direct activity allocation
Distribution Cycle
76
Which one of the following is amount-based allocation where the specific amount to
recover from the cost receiver is entered, and can only be statistical?
A.
B.
C.
D.

Direct activity allocation
Distribution Cycle
Options A is the correct answer. Manual Cost

Allocation is the amount-based allocation where
the specific amount to recover from the cost
receiver is entered
77
Module 3 Summary
Cost allocation transactions credit the sender, debit the receiver and may create a
financial accounting transaction if a balancing dimension is crossed
A cost allocation cycle is used where multiple senders allocate certain costs to
multiple receivers. It can be a one-time post or run as a monthly process
78
Agenda
Course Introduction

Course Summary
Course Assessment
Course Survey
79
Course Summary
The key points covered in this course are listed below:
Umoja cost and management accounting allows UN to optimize the process of cost
management, enable expense prediction and assist in key decision making
The CO module maintains the Controlling Ledger for cost and management
accounting purposes
The CO module allows the user to move costs internally, or allocate costs, to the
responsible programmes, components and operations to show their trust cost
There are several important Master Data elements in CO, for example, cost
element, cost object, profit center, activity type and SKF
A cost allocation is a one-time allocation that credits one cost sender and debits
one cost receiver
A cost allocation cycle is used where multiple senders allocate certain costs to
multiple receivers. It can be a one-time post or run as a monthly process
80
Agenda
Course Introduction

Course Summary
Course Assessment
Course Survey
81
Course Assessment
Now that you have completed all the modules in this course, you can test your
knowledge by completing the Course Assessment.
To receive credit for completing this course, you must pass this assessment with a
minimum score of 90%.
To complete the assessment you must return to the Learning Management System:
1. Log into Inspira
2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning
3. Search for the name of the course under the My Learning Activities section
4. Click on the Start link of the course assessment
5. Click the Submit button once you have completed the assessment
82
Agenda
Course Introduction

Course Summary
Course Assessment
Course Survey
83
Course Survey
Your feedback is important to the continuous improvement of our training program.
Please complete the evaluation for this course using the following steps:
1. Log into Inspira
2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning
3. Search for the name of the course under the My Learning Activities section
4. Click on the Start link of the course survey
5. Click the Submit button once you have completed the course survey
84
Congratulations! You have successfully completed the
Umoja Cost and Management Accounting Overview

course.
85

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FI108 Umoja Cost and

Management Accounting Overview

Umoja Cost and Management Accounting Overview Version 15

Module 1: Umoja Cost and Management Accounting

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Module 1: Umoja Cost and Management Accounting

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Cash relevant or non-cash relevant (such as,

Module within Umoja ECC that consists of all Master Data,

Cost and Management

A branch of accounting that establishes the actual cost (or true

A branch of accounting that involves preparing and publishing

Roles & Responsibilities

Creates and maintains cost and management accounting

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Roles & Responsibilities

Responsible for the Year-End Closing process to close the

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Roles & Responsibilities

Defines secondary cost element to use for cost

Maintains Statistical Key Figure

Defines whether statistical key figures and values, to be

Maintains Allocation Cycle

Defines senders, receivers by activity type

Enter Activity Type Rate

Defines rate per cost centre, activity type and period

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Roles & Responsibilities

Enter Statistical Key Figure Data

Defines statistical key figure value for each service

Execute Allocation Cycle

Allocates costs from senders to receivers

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Umoja Cost & Management Accounting

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Benefits of Umoja Cost & Management Accounting

It will standardize the cost allocations across the organization

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Cost & Management Accounting: Example

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Cost & Management Accounting: End to End Process

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Umoja Main Ledgers

The G/L only records

The Budgetary Ledger

The Grants Ledger

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Umoja Controlling Module

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Postings to Controlling Ledger

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Flow of Financial Information

Revenue and expense

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Budget transactions are only

Controlling Ledger Posting Example

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Select all that apply.

Standardization of cost allocation processes across the organization

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