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Glenn Hegar  ·  Texas Comptroller of Public Accounts

On the road with expenditure object codes

Originally Published in Statewise Oct./Nov. 2004

by Joni Sager

“Are we there yet?” Anyone who has taken a road trip with kids (or has been a kid) is familiar with this refrain.

You would hear that question a lot on a road trip with Comptroller expenditure object codes (COBJs). Agency personnel may only have participated in the beginning of the journey when each payment is assigned a COBJ. Some folks might believe that’s all there is to it, although this step is akin to loading the car for the trip to Grandma’s house. You can’t be there yet before backing out of the driveway.

The road may not go on forever, but there are plenty of stops ahead. Sightseeing all the places that COBJs go shows why it is important to select the right ones.

Honey, I rolled up the kids

Before the journey begins, meet the “children” in the COBJ family who are buckled in the backseat:

  • The baby is a newer COBJ created for a special purpose, such as Fees for Receiving Electronic Payments (7219) that was needed when the texas.gov portal was implemented. (See below for more on new COBJs.)
  • The sometimes overlooked middle child has had its definition changed to be more specific. For example, Waste Disposal (7526) was recently revised to cover document shredding and disposal services.
  • The eldest, such as Travel In-State – Mileage (7102), has been around for many years in essentially the same form — maybe even since the COBJs were born 35 years ago.

As in stories about the stork or the cabbage patch, there are myths about where COBJs come from. The truth is that these codes were born as a short numerical convention to post expenditure data to the general ledger (GL). With the advent of computers, COBJs began to go other places, although a chief purpose remains to accurately post expenditures to the GL.

The Expenditure Research and Assistance (ERA) section in the Comptroller’s Claims Division oversees assignment of new codes and works with the Fund Accounting Division to ensure that each COBJ hits all the right places, including GL debits and credits.

“There is a huge background of decision making that occurs when a COBJ is selected,” says Linda Stubblefield, who could be described as the expert COBJ mechanic in the ERA shop. “Each code has a different impact on the accounting system. For example, COBJs roll up into categories on the D10 screen in USAS for use in the Texas Annual Cash Report or the LBB's ABEST system.”

A travel journal

The Texas Annual Cash Report and the Legislative Budget Board’s (LBB’s) Automated Budget and Evaluation System for Texas (ABEST) are just two of the multiple COBJ destinations (see chart). Every dollar the state spends through the Treasury goes through a COBJ.

The codes are used to:

  • Generate accurate financial reports. Proper use of COBJs ensures that what the Comptroller’s office reports and publishes is accurate.
  • Track and measure critical expenditures. COBJs make it easier to compute the net result of cost-saving measures and prepare other types of special reports.
  • Monitor restrictions and limitations. For example, COBJs are used to review whether funds are being spent according to statute and policy.

“If a COBJ is used incorrectly, potential ramifications include your annual financial report being inaccurate, and then the state’s Comprehensive Annual Financial Report and other reports to the Legislature could be too,” says Tom Mathey, director of Comptroller’s Fund Accounting Division.

Don't take the GIGO detour

A coding mistake means much more than a type-two audit finding. As the saying goes, “Garbage in, garbage out” (GIGO). Since historical data reports are important for legislative research, a COBJ glitch can hang around for a long time, like fumes from bad gasoline.

“If it is inaccurate going into USAS, then it is inaccurate coming out,” says Fiscal Analyst Jim Smith in Fund Accounting. “When legislation is filed to increase or decrease expenditures, we need to have a proper series of data that we can analyze to project the impact of that legislation. If agencies are not using the right COBJs, then it will skew the data.”

Julienne Sugarek, who manages the Comptroller’s ERA section, concurs. “If what we report to the Legislature and other agencies isn't correct, then it would be difficult to gauge the effects of whatever changes they had in mind.”

For example, the Legislature mandated the Department of Information Resources (DIR) to report total spending by agencies on information technology (IT) resources. If DIR knows how much money the state is spending on IT, then the agency can negotiate contracts that may save the state money. An accurate baseline of IT expenses could be used to target areas for strategic sourcing.

“Agencies really need to take care that they post expenditure transactions to the correct COBJs,” adds Stubblefield.

Potholes to avoid

According to Sugarek, there are as many ways for an agency to take a wrong turn into the mix master of miscoding. For instance, some people:

  • Don’t realize that searchable definitions are available online in the Comptroller Manual of Accounts.
  • Enter the code they think is appropriate without verifying it. Maybe they will ask a co-worker how to code the expense, and that code may or may not be correct. Just because that's “how it's always been done” doesn't mean that the code is correct.
  • Work at agencies that don»t interact directly with USAS. The agencies have their own internal accounting systems that are programmed to roll up to COBJs in USAS, and sometimes the programming is off. It can be difficult to catch programming errors and then have them set correctly.

Roadside assistance available

Need help finding the appropriate code?

“We have a number of ways to help agencies,” says Sugarek. “Agencies are assigned a specific contact in the ERA section, and you can call or email with questions about a particular situation. If the circumstances are unusual, we will get input from the auditors to make sure that we give you the right information.”

The Comptroller’s office also offers training on COBJs as part of the Basics of Purchase Rules and Guidelines class, and specialized training is available upon request.

Defensive driving tips

Here are a few pointers from the purchase basics class:

  • Beware of similar short titles in the alphabetical listing in the Comptroller Manual of Accounts. Always double-check to ensure you have the correct title when cross-referencing. For example, Smoke detector (7334) and Smoke detector – maintenance (7266) are similar titles but different codes. No matter how close, the wrong COBJ is still an audit finding!
  • Double-check the code you enter. Code 7010 is a completely different object code from code 7001.
  • Read carefully. Make sure the description completely details the type of purchase you are trying to make. The notes can point you in the right direction by listing related codes. Read through them to see if there is a better fit for the expenditure.
  • If you are still in doubt, call ERA at (512) 475-0966. Provide your name, agency name and number and all the relevant circumstances. Always document the action you take when determining how to code an unusual situation.

In the market for a new COBJ?


Do none of the existing Comptroller expenditure object codes (COBJs) appear to meet your needs? Fewer new ones are created than you might think. Anyone who has hefted a printout of the Comptroller Manual of Accounts lately understands why. Changes by the Legislature rarely require a new expenditure COBJ since the Comptroller's office can often change the description of an existing code to cover a broader use.

You may not realize that COBJs are not the only way to track specific expenditures. For example, if there is an appropriation number unique to the type of payment that you want to track, then voilá! You already have a tool that accomplishes your goal. All you need do is use the financial inquiry screens and reports in the Uniform Statewide Accounting System (USAS).

Quiz time

Only about one in 10 requests for a new COBJ is approved. If you think that you need a new COBJ, ask yourself these questions first:
  • Is this a cash or non-cash accounting event? Are you looking under the right descriptions?
  • Is there already a closely related code?
  • If so, could the description be modified to meet your situation?
  • What do you want to accomplish? (Remember, COBJs are not the only way to track expenditures.)
Creating a COBJ

If another solution is not available, creating a COBJ requires several steps:
  • First, the Comptroller’s office finds an available number. The number should be within the range of similar items — for example, the 7100 series for a travel expenditure. We check the number’s history to make sure it hasn’t been used in the last eight years. This freeze on reusing numbers makes open record requests easier to answer.
  • The Comptroller's office works with the requestor to draft the COBJ’s purpose and any special notes. What are sample uses for the COBJ, and what should it not be used for? Does the COBJ need to be restricted for use by certain agencies? Are action codes such as agency oversight approvals needed?
  • We also evaluate whether payments under the new COBJ are subject to interest under the Prompt Payment Law and whether 1099-MISC reporting to the Internal Revenue Service is required.
  • Then other state agencies get into the act. The Texas Building and Procurement Commission (TBPC) determines whether the new COBJ is subject to historically underutilized business (HUB) reporting requirements. The Legislative Budget Board (LBB) includes it in the Automated Budget and Evaluation System for Texas (ABEST) instructions. The oversight agencies have to determine if the new code is applicable to their business purposes.
  • Lastly, we set up the COBJ in the statewide accounting systems and update the Comptroller Manual of Accounts.
Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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