4. CUSTOMIZATION › 4.11 Implementing Monthly Zero Balancing

4.11 Implementing Monthly Zero Balancing

Zero balance accounting is the process by which an IS
organization recovers its monthly costs by distributing the
costs among that month's users of its services.  It is one of
the least expensive forms of computer charge-out to
administer because the normal rate determination process is
grossly simplified.  This simplicity may produce a number of
undesirable side effects, one of which is possible distortion
of the true cost of providing services.

The CA MICS approach to zero balancing employs standard
costing throughout the month to determine the actual, or
real, charges that users have incurred.  At month end,
special analysis is performed to determine how the actual
charges must be adjusted by credit or debit entries to
conform to a zero balance charging process.  This approach
enables management to realize the simplicity of monthly zero
balancing.  At the same time, it also maintains the actual
costs of services rendered, thus providing a more realistic
and consistent set of accounting numbers for short-term cost
analysis, trending, and budgeting.

Generally, the use of zero balance accounting is based on the
enterprise policy that a data center's charges to its users
will be the same as the data center expenditure amount.  The
actual expenditures of a computer center for a month are
usually not known to computer center management until the
following month.  Therefore, the charges distributed to the
users of computer center services in the zero balance process
will probably be based on the preceding month's expenditures.

We recommend the following costing approach if zero balance
accounting is required:

o Establish a standard set of costs (rates) that you use
  on a continuing basis to establish a consistent base for
  cost accounting.  These are the costs that are used in
  the standard daily costing processes in CA MICS.

o At the end of each month, apply an adjustment to each
  user's costs so that the sum of all users' net costs
  equals the installation's monthly recovery target.

o Review and adjust the rates periodically (for example,
  quarterly) to reflect the cost of providing services.


STANDARD PROCESSING

To understand the CA MICS implementation of zero balancing,
you must know what standard processing is already performed
by CA MICS Accounting and Chargeback.

Each DAILY run of CA MICS can create journal and ledger
records.  The journal records are created for each unit of
work.  These records have the applicable cost value
calculated for the various chargeable elements.

The ledger records are accumulated every day from the journal
records.  There is one Ledger File record for each invoice
category and charging element rather than for each unit of
work (for example, TSO session).  At the end of an accounting
month, the Ledger File contains the CA MICS-generated
computer center charges, summarized into the Ledger File
sequence.

The Ledger Files are input into the monthly reports (for
example, invoice).  Because of the existence of multiple
database units, with one Ledger File per database unit,
multiple Ledger Files may be used as input to the invoice
statements.

In addition to ledger charge records, you may manually enter
credit or debit entries to adjust charges or add charges that
are not processed by the CA MICS daily job. The combination
of the ledger charges, extra debits, and credits are the
ingredients of the invoice statements.


CA MICS ZERO BALANCE PROCESSING

CA MICS Accounting and Chargeback implements zero balance
accounting by processing all ledger files charges, debits,
credits, discounts, and surcharges for a given month.  The
combination of these charging records is compared to the
actual expenses that are to be recovered.  Based on this
comparison, the zero balance program generates offsetting
adjustments so that the total charges to computer center
users equal the total expense amount.

Any cost centers that are entered into the ACTCCA file with a
NOBILL status (Invoice Options Cost Center Selection,
MWF;4;2;1;1;2) are excluded from the zero balance process.
Consequently, the total of the charging records reflects all
COSTCTRs that have a BILL status or that have not been
entered into the ACTCCA file.

There are three ways to apply the expenditures and create
zero balancing entries.  Only one of these methods can be
used during a monthly run.

Method 1:  Total Amount--This method uses one expenditure
           amount as input and distributes to the various
           COSTCTRs based on their original set of charges.

Method 2:  INVCCAT Amounts--This method allows an expenditure
           amount to be entered for each INVCCAT category and
           to be distributed to the COSTCTRs based on the
           original set of charges for each INVCCAT.  Certain
           INVCCAT categories can be excluded from zero
           balancing in this method.

Method 3:  COMPCODE Amounts--This method allows expenditure
           amounts to be entered for each COMPCODE category
           and to be distributed to the COSTCTRs based on the
           original set of charges for each COMPCODE.
           Certain COMPCODE categories can be excluded from
           zero balancing in this method.

NOTE:  The zero balance adjustments records are created for
       each cost center invoiced in the current accounting
       period.  They have an RCPTYPE value of 60 and contain
       invoice categories and/or computation codes if the
       INVCCAT or COMPCODE methods were used.  The zero
       balance adjustment is shown at the bottom of each
       invoice.


RATE SETTING CONSIDERATIONS

The rates used to calculate the original charges play a
significant role in determining how the actual expenditures
are actually spread.

It is the charges, not the quantities, that determine the
proportion by which expenditures are distributed to the cost
centers.  Inequities in the rate structure will therefore
translate into inequities in expenditure distribution.


PERFORMING ZERO BALANCING

Zero balancing processing is requested on the General
Installation Accounting Options panel (MWF;4;2;3;2;1).  If
zero balance processing is requested, zero balancing is
performed whenever the Financial Recap File is created.  This
occurs when the FINRECAP or INVOICE job is run.  The zero
balancing process computes the appropriate credits and/or
debits to adjust the input charge amounts and adds them to
the Financial Recap File.  A report is produced at the same
time, showing the adjustments that were made.

Because zero balance processing occurs as an integral part of
the Financial Recap File creation, the ZEROBAL member in
sharedprefix.MICS.PARMS must be updated each month with the
target expenditure amounts, prior to running the FINRECAP or
INVOICE jobs.  The format of the ZEROBAL member has either a
TOTAL, INVCCAT, or COMPCODE keyword starting in column 1 of
each record.  Only one of these keywords may be used during
the zero balance processing.  The TOTAL keyword is followed
by a total expenditure amount (for example, TOTAL 50000.00).
The INVCCAT keyword is followed by the invoice category
number and then the expenditure amount for that category (for
example, INVCCAT 1100 2000.00).  The COMPCODE keyword is
followed by a computation code number and the expenditure
amount for that category (for example, COMPCODE 0021 30.00).
A sample is provided in the ZEROBAL member in
sharedprefix.MICS.HOLD.PARMS.

After creating the Financial Recap File, inspect the Zero
Balance Report to audit the effect of the zero balancing
process.  A sample report is shown in Section 6.1.1.4.  If
you need to make changes, adjust the ZEROBAL member and rerun
the job to create the Financial Recap File.  If you are
unsure whether the contents of ZEROBAL is accurate, run
FINRECAP and avoid creating the invoice print lines.


Figure 4-85 is the Zero Balancing Worksheet.


_____________________________________________________________


+-----------------------------------------------------------+
| Date: __/__/__           Administrator: ________________  |
+-----------------------------------------------------------+

     Create zero balance adjustments when the financial recap
     file is created? ===> ___

_____________________________________________________________


 Figure 4-85.  Zero Balancing Worksheet.


 Use the worksheet to make the following decision:

 CREATE ZERO BALANCE ADJUSTMENTS WHEN THE FINANCIAL RECAP
 FILE IS CREATED?

     Description:  This field specifies whether zero balance
     adjustments will be created when the Financial Recap
     File is created.

     Default:  NO

     Values:  Y, N, YES, or NO

     NOTE:  If YES is specified, you MUST define the zero
            balance parameter in the member ZEROBAL in
            sharedprefix.MICS.PARMS each financial period
            PRIOR to running the INVOICE or FINRECAP jobs.