Item Categories are used to select the correct expense account number, asset profile
and price tolerances for your purchases.
Item Categories List
Except for specific equipment categories, they generally cover a broad area or type of purchase such as "Athletic" or "Laboratory."
Most types are associated with three broad areas of expenditure; supplies, equipment and services.
This results in three Item Categories e.g.
- ATHLETIC SUPPLY
- ATHLETIC EQUIPMENT
- ATHLETIC SERVICE
In the system, the Item Categories provide the ability to add tolerances to the price of goods and services. These tolerances allow for a difference between the price on a purchase order and the actual amount invoiced.
Tolerances are placed on both the unit price and the extended total price of each line item on a Requisition and its subsequent purchase order.
Without tolerances, any variation of the price, even as little as one cent, will cause the system to create a "matched exception" and notify the department that the invoice cannot be paid because it was higher, or lower, than the price on the purchase order.
However, there are times when a price is firm and a department does not wish to pay any more than is stated on the order.
In order to accommodate both situations, a second Item Category was created for each type and expenditure. These Item Categories were prefixed with a "C" to represent "contract" but has been re-defined as "zero tol" for clarity. For example we have these two categories for athletic supplies:
- ATHLETIC SUPPLY (expense account is 53500)
- C ATHLETIC SUPPLY (expense account is 53500)
The "C" does NOT mean there is or has to be an actual contract in existence to use this Category.
There might be a verbal quote from the vendor or paying more than indicated might
not be desirable.
The "C" prefixed Categories are all set for a "0" (zero) tolerance ("Zero tol") for an increase in the price over that on the purchase order.
Due to the philosophy that getting a price break is always acceptable, the tolerance
for a decrease in price is set to 10%. This under-price tolerance is not set higher
because a vendor charging deal less than expected might very well mean the product
or service ordered is not what was ordered or expected and it should be checked out
prior to receipt.
Those Item Categories without a "C" are set for over and under tolerances of 10% with one or two exceptions such as Printing which only has one Item Category with 5% tolerance and categories for construction and subagreements which are automatically set for "amount only" receiving.
CODES, DESCRIPTIONS AND SEARCHING FOR AN ITEM CATEGORY
Item Category "codes" are limited to 18 characters with a 30 character description. A variety of words, synonyms and examples were used to make it easier to search for the right category. For example, the system displays:
Code: ATHLETIC SUPPLY Description: Athletic Supply Sports Team
Code: C ATHLETIC SUPPLY Description: Zero Tol Athletic Supply
Code: ELECTRONIC SUPPLY Description: Electronic Part Supply Battery
Code: C ELECTRONIC SUPPL Description: Zero Tol Electronic Part Supply Battery
This enables users to search on either the Code or Description. Using the "contains"
search criteria is the best way to use this particular Search. You can also utilize
your Windows "Find" feature to read through any long list your search criteria may
The Item Categories are not meant to be exclusive. For example, the ELECTRONIC SUPPLY categories are not to be used only for purchase of batteries and parts. These words were intended to aid you when searching. Definitions sometimes simply include the most common purchases of the type.
Each category has a General Ledger Account number associated with it.
Because the system automatically assigns the correct expense Account using the Item Category do NOT fill out the Account chartfield on Requisition Header Defaults when creating Requisitions.
This is especially important for Sponsored Research Grants. Funds are placed in allowable budget accounts that are split up into various expense accounts. If you use the correct Item Category for the product or service you are buying, the system will tell you if it is an allowable expense against that Grant. It does this by returning a "Valid" budget check status when the requisition is budget checked prior to approval.
If the item is not an allowable expense, the system will return an "Error" stating
"No Budget Exists." While some purchases may fit more than one Item Category (e.g.
'Participant Fees' account 51125 and 'Independ Contracto' account 51115) this error
does not mean that one should try various Item Categories until one is found that
passes budget checking regardless of the definition.
When the requisition reaches Purchasing, one of the things checked for is a match of the Item Category to the actual purchase and will change the Item Category if it does not fit. This may cause a budget error and the requisition will subsequently be denied back to the user.
A helpful resource for matching grants with proper categories is the Rosetta Stone.
Equipment or "OCO" (operating capital outlay) items are purchases that add to the
intrinsic, assessed value of the university. They are items that cost $5000 and up
and have a life expectancy of more than one year.
Replacement parts exceeding $5000 are not considered equipment as they simply replace existing pieces that are already evaluated.
Some Item Categories are set up for specific Equipment purchases in order to add the correct Asset Profile required for inventory reporting. These all have a choice of a 0% tolerance as well as a 10% tolerance although equipment prices should always have a firm quote from a vendor.
When purchasing equipment, use more specific words such as "microscope" and "van" rather than a general description such as "medical" or "automotive" to see if that specific item has its own category. This will provide more accurate information to Asset Management for assessing the University's net worth.