Session 4: expenditure allocation - finding your way around Back

When you enter the Expenditure allocation area, you will see something that looks like a spreadsheet.

The firsts two columns on the left side are headed Concordance with ABS National Accounts. These columns provide information derived from the National Accounts. The first column headed Sector contains the 344 industry sectors from the National Accounts. Your task is to convert all of your own account items into National Account categories.

To assist in locating the right category you can arrange the list of sectors in three different ways.

1. The default arrangement is the one used in the national accounts. At the top are raw or primary materials (e.g. rice, oats, iron ore), followed by processed or secondary goods (e.g. cereals, spirits, basic steel, steel sheets, vehicles), and at the end of the list are tertiary services that make use of people’s labour and goods (e.g. restaurant meals and transport). For example you will find a bag of ready-to-prepare rice bought in a supermarket in the middle section of the list, in the ABS product group ‘cereal foods’, because it is a processed or secondary good. It will not be found with ‘rice in the husk’, which is a raw or primary agricultural product straight off the farm and therefore comes at the beginning of the list.
2. Another way of organising the list is alphabetical. This can be useful if you have no idea where an item falls in the primary, secondary, tertiary groupings.
3. Or you can organise the list by weighted benchmark: the national accounts categories that are
   most frequently cited in your sector will appear at the top of the list.

If you are not sure into which National Accounts sector or product group an item falls click on the closest category that you can find and in the bottom panel of your screen you will see a full description of products covered by that category. A full list of of the ABS National account descriptors can also be accessed through this site.

Weighted Benchmark

The second column headed Weighted Benchmark holds the typical expenditure of an organisation similar to yours, calculated from National Accounts data of your benchmark sector and weighted to account for the size (or turnover) of your organisation. This is useful as a check for you when allocating your own expenditure to National Accounts categories. You can see where typically a similar organisation would allocate its expenses and you can also see how much, typically, they would allocate to each category. This might prompt you to seek more information about an item from your own accounts if it appears to be far greater or less than the benchmark.

Ideally, your purchases should be roughly similar to those estimated from your chosen industry sector, because you stated that your organisation is part of that sector. However keep in mind that

• the benchmark data is at least 4 years old, and things may have changed since then,
• the ABS doesn’t cover every single inter-industry transaction in their surveys, so that especially small numbers in the blue fields may not reflect the real value of those purchases.

What this means is that you may allocate to any product group more or less than what appears in the blue field, especially if that number is low, for example in the order of $10,000. But it is unlikely that you will over-allocate or under-allocate significantly on products where the purchase of your industry sector is in the order of $10 million. If you find that this has occurred you might have chosen the wrong benchmark sector.

The Weighted Benchmark has a second purpose. It is automatically assigned as your total allocation for each category until you tell the software otherwise. Therefore, if for example, you find it impossible to extract from your own expenditure accounts some of the information you need, you may choose to accept instead the benchmark for that particular category. This can be useful when you need to generate a report, have got all of the important data from your own expenditure accounts but lack some of the smaller items.

The coloured bar at the bottom of the table (the Estimation index) indicates how much of your expenditure is estimated by the software using the Weighted Benchmark and how much is actually entered from your own accounts. The accuracy of your final report will depend on how much you estimate and how much detail you actually enter from your own accounts.

Allocation

The next two columns are headed Allocation. These provide the total amount of expenditure allocated to a National Account category and the method of allocating amounts to categories.

Initially the Total column is populated with data from the typical (benchmark) expenditure of a similar organisation (you can see this in Figure 3 where the cursor arrow is pointing to the entry for vegetables).

The next column headed Method initially indicates that all expenditure has been Estimated from the typical (benchmark) expenditure of a similar organisation. Clicking on Estimated reveals the choices of Allocated or N/A. Choose Allocated when you have allocated your own expenses to that National Account category. Choose N/A if that item does not apply to your organisation and you do not want the Weighted Benchmark to appear in the Total column.

Account details

The remainder, or right-hand side, of the spreadsheet contains information from your organisation’s accounts and your own allocations to National Account categories.

Rows one to three were entered or imported from your accounting package.

1. The first row is the project number from your own accounts (in this example: 1000; 2000; 3000; etc).
2. The second row is the item description from your organisation’s accounts, in this example: Apples and pears; Eggs; Oilseeds; Milk etc.
3. The third row is the amount that your organisation has spent on each item over one financial year.

Completing the details

When you have finished allocating your expenditure items to National Account categories all columns that you have chosen to allocate should total 100% and all will be green. The total displayed at the bottom of the Total column will always display your organisation’s total turnover. This is because the figures appearing in the column are either your actual expenditure amounts or an estimated amount based on the difference between your turnover and the amount that you have allocated pro rata-ed for each item according to the benchmark.