About Organizational Profitability
The Organizational Profitability page in Axiom Financial Institutions Suite allows you to load data, configure organizational allocations, and view organizational profitability reports. Organizational allocations allow for the allocation of expenses across departments. For example, you can allocate the cost of salaries and benefits within your HR department to all the departments that HR supports. Or, you can set up an allocation to spread salaries of C-level executives across branches or departments based on where they spend their time. Organizational allocations are set up by defining where costs originate, where they should be allocated and on what basis, and the sequence in which to process them. Allocations are defined in the Add or edit allocations page, and processed via the Cost Allocation Engine utility.
The Organizational Profitability page also allows you to populate the Management General Ledger (MGTGL) reference table, which stores post-allocation charges and offsets.
NOTE: Typically, expenses are allocated; you can, however, also use the Cost Allocation Engine to allocate income and balances.
The Organizational Profitability page is accessed via the Command Center. You can click the Organizational Profitability link in the Profitability section, or you can click the arrow to expand the section and then click the desired sub-section:
For details on using the Organizational Profitability features, see the following topics:
- Accessing Organizational Profitability
- Loading data for organizational profitability
- Managing allocation rules
- Viewing reports
Before you create allocations, it is important to understand how Axiom Financial Institutions Suite defines a cost pool. A cost pool is a collection of individual costs, typically grouped by department, GL account, and data type. Cost pools can then be allocated to other departments. Cost allocation rules define cost pools, target departments, the order in which costs are allocated, and other information to create instructions for allocating costs.
Cost allocation rules contain the following definitions:
- Costs to be allocated (cost pool)
- List of target departments to receive allocated costs
- How the costs will be allocated
- Target allocation and allocation offset GL accounts
TIP: Before creating allocations, you will first need to add allocation accounts to the Account dimension. Allocation accounts are only used for allocation records and are populated by the Cost Allocation Rule Manager utility. These accounts do not exist in your GL chart of accounts. It is best practice to create a new numbering sequence for these accounts to differentiate them from your native GL records (for example, start the account number with 999).
The Cost Allocation Engine utility is an Excel-based Axiom utility that processes organizational cost allocations. The Cost Allocation Engine uses allocation rules, which contain business logic that direct the system how to process allocations. These rules must be defined in the Cost Allocation Rules Manager before any allocations can be processed. The Organizational Profitability page allows you to process allocations and to review the calculations used by the Cost Allocation Engine.
NOTE: While the Axiom Financial Institutions Suite can allocate both expenses and income, the term cost pool is generally used throughout this documentation and for descriptions within the utilities because most allocations are related to expenses. The same steps, however, can be used to set up income allocations for income pools.
Management General Ledger (MGTGL) table
The MGTGL table stores data that is typically not included in the General Ledger (GL), including FTP and similar adjusting entries for management reporting purposes. The MGTGL table is the table to which the Cost Allocation Engine posts the following:
- Allocated expense entries to the target departments, by allocation ID
- Summarized cost allocation offsets to the allocating departments
The Load Data tab allows you to populate the MGTGL table by copying over the native GL entries from the GL table.
