Expense Monitoring

Gain visibility and manage spending on CGIC’s fixed assets—so you can track acquisition, maintenance, depreciation, and disposal costs in the CGIC App and maintain healthy budgets.

Prerequisites

• Assets exist under Assets > Asset List with correct Asset Code, Asset Category, Purchase Date, and Cost fields populated.
• Depreciation parameters (method, useful life) are configured under Assets > Asset Category List.
• Under Accounts > Chart of Accounts, you have accounts for:
  • Asset Acquisition (e.g., “Fixed Assets – Machinery”).
  • Asset Maintenance Expense (e.g., “Maintenance Expense – Equipment”).
  • Accumulated Depreciation and Depreciation Expense.
  • Asset Disposal Gain/Loss (if disposing).
  • Cost centers (e.g., by department, location) are defined under Accounts > Cost Center List.
• Under Accounts > Budget, budgets for key asset expense accounts or cost centers are set up for the fiscal year.
• If you plan to monitor monthly vs. annual budgets, ensure “Budget Frequency” is set (Monthly, Quarterly, etc.).

Step 1: Configure Financial Accounts and Cost Centers

1. Verify or Create Asset-Related Accounts
   • Navigate to Accounts > Chart of Accounts.
   • Confirm you have:
     • Fixed Asset Accounts (e.g., “Fixed Assets – Vehicles,” “Fixed Assets – Equipment”).
     • Expense Accounts (“Maintenance Expense,” “Repair Expense”).
     • Accumulated Depreciation and Depreciation Expense accounts.
     • Disposal/Gain-Loss accounts (for when assets are sold or retired).
   • If any are missing, click New to add them, specifying Account Type (Fixed Assets or Expense).
2. Set Up Cost Centers
   • Go to Accounts > Cost Center List.
   • Create cost centers to track expenses by location (e.g., “Plant A”), department (e.g., “Production”), or project (e.g., “Expansion Project”).
   • For each cost center, assign a parent if needed for roll-up reporting (e.g., “Production” → parent “Operations”).
3. Assign Default Cost Centers on Assets
   • Open an asset record under Assets > Asset List (e.g., Asset-1001 – CNC Mill).
   • In the Financials section, set the Cost Center where ongoing expenses should default (e.g., “Production”).
   • Save the asset so that any expense entry or depreciation linked to this asset automatically tags that cost center.

Step 2: Record Asset Acquisition and Capitalization

1. Create a Purchase Invoice for the Asset
   • Under Buy > Purchase Invoice > New, enter:
     • Supplier, Invoice Date, Due Date.
     • In Items, add the asset line:
       • Item Code (if you manage fixed assets via Item Master) or a generic “Asset – Equipment” entry.
       • Quantity = 1, Rate = Purchase Cost (e.g., $50,000).
       • In Expense Account, select the relevant Fixed Asset Account (e.g., “Fixed Assets – Equipment”).
       • Cost Center should default from the asset record, but you can override if needed.
   • Attach the vendor invoice PDF under Attachments for audit trace.
   • Click Save, then Submit to record the capital purchase.
2. Create Asset Record (If Not Already Created)
   • Go to Assets > Asset List > New.
   • Enter Asset Code, Asset Name, Purchase Date, and Cost (match the Purchase Invoice).
   • Link to the newly created Purchase Invoice under Supplier Invoice.
   • Set the Asset Category (which defines depreciation method and useful life).
   • Set Cost Center (verifies expense will flow correctly).
   • Save and Submit. The CGIC App will:
     • Capitalize the cost into the Fixed Asset Account.
     • Automatically create an Accumulated Depreciation schedule based on the category.

If you have multiple installments (e.g., part prepaid, part on credit), you can record multiple Purchase Invoices and adjust the Asset’s Cost field once fully paid.

Step 3: Link Expenses to Assets

1. Maintenance Tasks and Costs
   • When completing any Maintenance Task (preventive or corrective), ensure:
     • Consumed Items are logged (spare parts automatically move from inventory and debit “Maintenance Expense”).
     • Labor Hours and External Service Invoices are linked back to the Asset and tagged with its Cost Center.
   • After costs are approved (see the “Record Maintenance History” doc), the CGIC App posts journal entries that debit Maintenance Expense accounts and credit Inventory or Accounts Payable.
2. Depreciation Entries
   • Under Assets > Depreciation > Run Depreciation, run the depreciation process monthly or quarterly.
   • The CGIC App will:
     • Debit Depreciation Expense (expense account).
     • Credit Accumulated Depreciation (balance sheet contra-asset).
     • Reduce the Book Value on the asset record.
3. Asset Disposal or Retirement
   • When an asset is sold, scrapped, or retired:
     • Open the Asset record and click Dispose Asset.
     • Enter Disposal Date, Sale Proceeds (if any), and Cost Center for gain/loss posting.
     • The CGIC App calculates:
       • Book Value at disposal.
       • Gain/Loss = Sale Proceeds − Book Value.
     • It posts:
       • Debit Accumulated Depreciation to clear it.
       • Debit Cash/Bank (if sold) or write off.
       • Credit Fixed Asset Account for original cost.
       • Debit/Credit Disposal Gain/Loss account for the difference.

Always confirm that the Disposal Gain/Loss account is tied to the correct cost center to avoid misstatements in department budgets.

Step 4: Review Asset Expense Reports

1. Asset Maintenance Cost Report
   • Go to Maintenance > Reports > Asset Maintenance Cost Report.
   • Filter by Asset, Date Range, or Cost Center.
   • Click Refresh to see:
     • Total Maintenance Cost (broken into Materials, Labor, External) per asset.
     • YTD Maintenance Spend, comparing against any maintenance budget if configured.
   • Export to CSV/PDF for review by Maintenance and Finance teams.
2. Asset Depreciation Schedule Report
   • Under Maintenance > Reports > Depreciation Schedule Report, set:
     • From Date / To Date (e.g., Jan 1 – Dec 31, 2025).
     • Asset Category or specific Asset.
   • Click Refresh to view period-by-period depreciation amounts and cumulative accumulated depreciation.
3. Asset Value and Expense Ledger
   • Navigate to Assets > Reports > Asset Value and Expense Ledger.
   • Filter by Asset or Cost Center.
   • Click Refresh to see a consolidated ledger:
     • Acquisition Cost, Capitalized Date.
     • Maintenance Costs (sum of all related tasks).
     • Depreciation (cumulative).
     • Disposal Entries (if applicable).
     • Net Book Value at each period.
4. Budget vs. Actual Expense Report
   • Under Accounts > Budget > Budget vs Actual Report, filter:
     • Fiscal Year, Cost Center, and Expense Account (e.g., “Maintenance Expense – Equipment”).
   • Click Refresh to see:
     • Budgeted Amount vs. Actual Expense.
     • Percentage of budget utilized.
     • Variance amounts, highlighting overages.

Schedule a monthly expense review meeting. Share these reports with department heads to discuss variances and reallocate budgets as needed.

Step 5: Set Budgets and Expense Alerts

1. Create or Update Budgets
   • Navigate to Accounts > Budget > New (or open an existing budget).
   • Specify:
     • Fiscal Year (e.g., 2025–2026).
     • Cost Center (e.g., “Production – Plant A”).
     • Expense Account (e.g., “Maintenance Expense – Equipment”).
     • Budget Amount for each period (Monthly or Quarterly).
   • Save the budget—CGIC App will now track actual expense postings against these numbers.
2. Configure Expense Threshold Alerts
   • Go to Setup > Email Alert > New.
   • Set:
     • Document Type: GL Entry (to trigger on general ledger postings).
     • Condition: When Account equals “Maintenance Expense – Equipment” AND Cost Center equals “Plant A”.
     • Threshold: For example, if Debit Amount > $10,000 for that account and cost center in a single posting.
     • Recipients: Asset Manager, Accounts Manager.
     • Email Template: “Alert: High Maintenance Expense for cost_center .”
   • Save and Enable the alert.
3. Over Budget Notifications
   • CGIC App can automatically notify when actual expenditures exceed budget:
     • Under Accounts > Email Alert, create an alert with:
       • Document Type: Budget.
       • Condition: actual_amount > budget_amount.
       • Recipients: Finance Controller, Department Head.
       • Include fields like Cost Center, Account, Budget Period, Variance in the email template.