University of Vermont

Cost Accounting Services 

Cost Accounting Standards Insurance Expense Accounting Overview

The insurance costs for property protection and claims are managed by the Risk Management department. The allocation of the insurance costs are either directly allocated to a specific budget unit or pooled for a common-based distribution. The direct charging to specific benefit units typically occurs when the Risk Management department pays for the premium coverage. The common-based distribution of insurance costs and workers compensation insurance costs  are distributed by Cost Accounting Services (CAS). Upon receiving the appropriate information from the Risk Management department, common-based insurance costs are allocated to the appropriate chart strings in the following manner by CAS:

  • Building and Contents - Prior to allocating the costs, CAS obtains the updated building property valuation amounts and property additions/deletions from the Risk Management department. In addition, CAS contacts the receiving departments of the insurance costs to obtain the appropriate chart strings to charge. Insurance costs for building and contents are allocated based on the building property valuations.
  • Vehicles - Throughout the year, CAS works closely with departments to maintain a current list of active vehicles. All vehicles should have a record in the Asset Management Peoplesoft module and are inventoried on an annual basis. Prior to allocating the costs, CAS obtains the vehicle insurance costs by vehicle type from the Risk Management department. In addition, CAS contacts the departments who own the vehicle(s) and obtains the appropriate receiving chart strings. Insurance costs are allocated  based on the type of vehicle and its life. Vehicles that are older than 8 years or more are only charged for liability coverage.
  • Workers Compensation - Based on a periodical actuarial study, a cash reserve level is adjusted to insure adequate protection against workers compensation claims. The funding of the workers' compensation reserve is decided by Risk Management and CAS distributes the reserve increase to the University benefit rates based on the payroll bases of the benefit rates. Weekly workers compensation claims are posted by CAS against the workers compensation reserve throughout the year.

To ensure that sufficient time has passed in the fiscal year to allocate costs incurred during the year, the processing of these charges typically occurs in March. Vehicles acquired or disposed of during the fiscal year are assessed on whether its allocated costs should be prorated based on its use during the year or whether it should be charged for an entire year of cost.

Last modified April 02 2012 06:42 AM