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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:

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:

“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:

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:

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: Creating a COBJ

If another solution is not available, creating a COBJ requires several steps: