A financial entity is used when posting to the institution’s finances.A financial entity consists of the institution number with a 0 added at the end. Therefore, when posting to a financial entity, six digits are used.Example:
If the institution number is 12345, the financial entity is 123450.There are exceptions to this rule.

What can be posted to a financial entity?

Only financial account types may be used when posting to a financial entity.Financial account types are those that begin with:

• 1

• 2

• 3

A budget entity is used to link an institution to the budget authorization provided under the annual State Budget Act. A budget entity consists of three digits added after the institution number of the relevant institution.

A budget entity is also a parent entity. It is not permitted to post directly to a budget entity.

Creation of Budget Entities

Budget entities are created by Fjársýslan (the Financial Management Authority).

Budget entities are linked to a COFOG code. A COFOG code is used to classify and consolidate central government expenditure according to functional categories or policy areas.

A parent entity is a designated entity used by institutions to consolidate costs from the posting entities associated with that parent entity.

It is not possible to post directly to a parent entity.

When creating parent entities, it is important to ensure that they align with the organizational structure of the institution concerned.

An accounting posting code is used to track the operations of individual divisions, departments, or projects within an organization.

An accounting posting code consists of 10 to 14 digits.

It is made up of:

• the organization number

• the budget appropriation code

• an additional 2 to 6 digits

Before creating a new accounting posting code, consider whether the activity or project would be better managed using accounting dimensions in the financial system.