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[[Human Resources]] | [[Safety/Security]] | '''[[Research Compliance]]''' | [[Compliance]] | [[Privacy/Information Security]] | [[Business Operations]] | [[Intellectual Property]] | |||
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[[Sponsored Programs]] | [[Direct Cost]] | [[Facilities & Administrative Cost]] | [[Institutional Base Salary]] | [[Unallowable Cost Policy]] | [[Sponsored Project Cost Share]] | [[Effort Certification]] | [[Cost Transfer]] | [[Service Center]] | [[Subrecipient Policy]] | |||
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Policy No: '''6107'''<br /> | Policy No: '''6107'''<br /> | ||
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== Basis and Purpose of the Policy == | |||
The University at Nebraska Medical Center's (UNMC) policy for the financial management of service centers has been established to provide consistent operational practices among the various service center units and to ensure compliance with federal government regulations. This is important because UNMC conducts sponsored programs under federal government grants and contracts. Service center activities result in direct and indirect charges to sponsored grants and contracts. Therefore, Service Center policies and practices must reflect government regulatory costing principles such as those contained in the Office of Management Budget (OMB) Circular A-21, "Cost Principles for Educational Institutions," and those required by the Cost Accounting Standards Board. As a major research university, UNMC cost accounting must be consistent for all operations.<br /> | The University at Nebraska Medical Center's (UNMC) policy for the financial management of service centers has been established to provide consistent operational practices among the various service center units and to ensure compliance with federal government regulations. This is important because UNMC conducts sponsored programs under federal government grants and contracts. Service center activities result in direct and indirect charges to sponsored grants and contracts. Therefore, Service Center policies and practices must reflect government regulatory costing principles such as those contained in the Office of Management Budget (OMB) Circular A-21, "Cost Principles for Educational Institutions," and those required by the Cost Accounting Standards Board. As a major research university, UNMC cost accounting must be consistent for all operations.<br /> | ||
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== Definitions == | |||
'''Types of Auxiliaries at UNMC''' - | '''Types of Auxiliaries at UNMC''' - | ||
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== Policy == | |||
Service centers can result in charges, directly or indirectly, to sponsored programs at UNMC. As a recipient of federal grants and contracts, UNMC must comply with cost principles and cost accounting standards promulgated by the federal government. | Service centers can result in charges, directly or indirectly, to sponsored programs at UNMC. As a recipient of federal grants and contracts, UNMC must comply with cost principles and cost accounting standards promulgated by the federal government. | ||
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== Responsibilities == | |||
The Department of Financial Compliance and Cost Analysis (FCC) is responsible for reviewing service centers when there are more than $10,000 in federal charges within a fiscal year by a particular service center. FCC also must approve the use of depreciation in rate calculations for all service center that includes depreciation expense in their billing rate.<br /> | The Department of Financial Compliance and Cost Analysis (FCC) is responsible for reviewing service centers when there are more than $10,000 in federal charges within a fiscal year by a particular service center. FCC also must approve the use of depreciation in rate calculations for all service center that includes depreciation expense in their billing rate.<br /> | ||
== Guidelines == | |||
=== Service Center Billing Rates === | |||
Billing rates should be designed to recover the direct operating costs of providing the goods/services on an annual basis excluding all unallowable costs. Billing rates should be computed annually by the service center. The rates should be based on a reasonable estimate of the costs of providing the services for the year and the projected number of billing units for the one year period. The billing rate computation should be documented and maintained on file. Deficits or surpluses should be carried forward as an adjustment to the billing rates in the next fiscal year. Surpluses cannot exceed more than 60 days worth of operating expenses for the service center.<br /> | Billing rates should be designed to recover the direct operating costs of providing the goods/services on an annual basis excluding all unallowable costs. Billing rates should be computed annually by the service center. The rates should be based on a reasonable estimate of the costs of providing the services for the year and the projected number of billing units for the one year period. The billing rate computation should be documented and maintained on file. Deficits or surpluses should be carried forward as an adjustment to the billing rates in the next fiscal year. Surpluses cannot exceed more than 60 days worth of operating expenses for the service center.<br /> | ||
=== Service Center Billing === | |||
All billing must be processed on a timely basis at established service center rates. Billing must not occur until the service has been rendered. Prepayments are not allowed. The service center must retain documentation supporting the charges, including documentation of the expenses and usage.<br /> | All billing must be processed on a timely basis at established service center rates. Billing must not occur until the service has been rendered. Prepayments are not allowed. The service center must retain documentation supporting the charges, including documentation of the expenses and usage.<br /> | ||
=== Service Centers that Provide Multiple Services === | |||
Where a service center provides different types of services to users, separate billing rates should be established for each service that represents a significant activity within the service center. The costs, revenues, surpluses and deficits should also be separately identified for each service. The surplus or deficit related to each service should be carried forward as an adjustment to the billing rate for that service in the following period. The surplus from one service may be used to offset the deficit from another service only if the mix of users and level of services provided to each group of users is approximately the same.<br /> | Where a service center provides different types of services to users, separate billing rates should be established for each service that represents a significant activity within the service center. The costs, revenues, surpluses and deficits should also be separately identified for each service. The surplus or deficit related to each service should be carried forward as an adjustment to the billing rate for that service in the following period. The surplus from one service may be used to offset the deficit from another service only if the mix of users and level of services provided to each group of users is approximately the same.<br /> | ||
=== Cost Allocation === | |||
Where separate billing rates are used for different services provided by a service center, the costs related to each service must be separately identified through a cost allocation process. Cost allocations will also be needed where a cost partially relates to the operations of a service center and partially to other activities of a department or other organizational unit. | Where separate billing rates are used for different services provided by a service center, the costs related to each service must be separately identified through a cost allocation process. Cost allocations will also be needed where a cost partially relates to the operations of a service center and partially to other activities of a department or other organizational unit. | ||
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=== Service Center Accounting === | |||
To comply with the UNMC Accounting Policy, 3000, it is important that service centers use the correct general ledger account when recording revenue and expenditures. The complete list of general ledger accounts is located on Sapphire. For internal revenue transactions, general ledger account 481100, Sale Material & Service - Interdepartmental, should be utilized. External revenue transactions should use general ledger account 452100, Sale Material & Service.<br /> | To comply with the UNMC Accounting Policy, 3000, it is important that service centers use the correct general ledger account when recording revenue and expenditures. The complete list of general ledger accounts is located on Sapphire. For internal revenue transactions, general ledger account 481100, Sale Material & Service - Interdepartmental, should be utilized. External revenue transactions should use general ledger account 452100, Sale Material & Service.<br /> | ||
=== Equipment Purchases === | |||
Federal guidelines do not allow the purchase cost of capital equipment to be included in the calculation of the annual surplus or deficit. Also the equipment purchase cost may not be used in the rate setting calculation.<br /> | Federal guidelines do not allow the purchase cost of capital equipment to be included in the calculation of the annual surplus or deficit. Also the equipment purchase cost may not be used in the rate setting calculation.<br /> | ||
=== Depreciation Expense === | |||
Federal guidelines allow for the recovery of depreciation associated with the capital assets. If the service center has been approved by FCC to include depreciation in the rate calculation, separate child accounts will be established for service centers to collect depreciation charges. All capital equipment purchases must be made from this child account or another funding source, not the service center's general operating cost center. Depreciation of equipment purchased by the federal government cannot be included in the user rates. | Federal guidelines allow for the recovery of depreciation associated with the capital assets. If the service center has been approved by FCC to include depreciation in the rate calculation, separate child accounts will be established for service centers to collect depreciation charges. All capital equipment purchases must be made from this child account or another funding source, not the service center's general operating cost center. Depreciation of equipment purchased by the federal government cannot be included in the user rates. | ||
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=== Non-discriminatory Rates === | |||
A service center must charge '''all internal users''' the same rate for the same level of services or products purchased in the same circumstances. The use of special rates, such as for high volume work, is allowed, but the special rates must be equally available to all users.<br /> | A service center must charge '''all internal users''' the same rate for the same level of services or products purchased in the same circumstances. The use of special rates, such as for high volume work, is allowed, but the special rates must be equally available to all users.<br /> | ||
=== Services Provided to Outside Parties === | |||
If a service center activity provides services to individuals or organizations outside of the University, the billing rates may include institutional indirect costs even though these costs are not included in the rates for internal University users. Any amounts charged to outside parties in excess of the regular internal University billing rates should be excluded from the computation of a service center's surpluses and deficits for purposes of making carry-forward adjustments to future billing rates.<br /> | If a service center activity provides services to individuals or organizations outside of the University, the billing rates may include institutional indirect costs even though these costs are not included in the rates for internal University users. Any amounts charged to outside parties in excess of the regular internal University billing rates should be excluded from the computation of a service center's surpluses and deficits for purposes of making carry-forward adjustments to future billing rates.<br /> | ||
=== Transfers of Funds Out of Service Centers === | |||
It is normally not appropriate to transfer funds out of a service center account to the University's general funds or other accounts. If a transfer involves funds that have accumulated in a service center account because of prior or current year activity, an adjustment to user charges to compensate for the surpluses may be necessary. In the case of surpluses due to premiums charged to external users, these funds, once identified, may be transferred out to other accounts.<br /> | It is normally not appropriate to transfer funds out of a service center account to the University's general funds or other accounts. If a transfer involves funds that have accumulated in a service center account because of prior or current year activity, an adjustment to user charges to compensate for the surpluses may be necessary. In the case of surpluses due to premiums charged to external users, these funds, once identified, may be transferred out to other accounts.<br /> | ||
=== Subsidized Service Centers === | |||
In some instances, the University, or a school or department, may elect to subsidize the operations of a service center, either by charging billing rates that are intended to be lower than costs or by not making adjustments to future rates for a service center's deficits. Service center deficits caused by intentional subsidies cannot be carried forward as adjustments to future billing rates. Since subsidies can result in a loss of funds to the University, they should be provided only when there is a sound programmatic reason. | In some instances, the University, or a school or department, may elect to subsidize the operations of a service center, either by charging billing rates that are intended to be lower than costs or by not making adjustments to future rates for a service center's deficits. Service center deficits caused by intentional subsidies cannot be carried forward as adjustments to future billing rates. Since subsidies can result in a loss of funds to the University, they should be provided only when there is a sound programmatic reason. | ||