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== Basis and Purpose of the Policy == | == 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 [http://www.whitehouse.gov/omb/rewrite/circulars/a021/a21_2004.html Office of Management Budget (OMB) Circular A-21], "Cost Principles for Educational Institutions," and those required by the [http://www.whitehouse.gov/omb/procurement_casb/ Cost Accounting Standards Board]. As a major research university, UNMC cost accounting must be consistent for all operations.<br /> | ||
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== Definitions == | == Definitions == | ||
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* '''Student Fees''' - Student lab fees collected for lab supplies, technology, etc. Student fees are not subject to this policy. | * '''Student Fees''' - Student lab fees collected for lab supplies, technology, etc. Student fees are not subject to this policy. | ||
* '''Contract Auxiliaries''' - Auxiliaries that involve negotiated contracts with an internal or external entity. Contract auxiliaries are not subject to this policy. | * '''Contract Auxiliaries''' - Auxiliaries that involve negotiated contracts with an internal or external entity. Contract auxiliaries are not subject to this policy. | ||
* '''Specialized Service Facility (SSF)''' - A service center that provides services that are highly complex. UNMC does not have a SSF but does have an Animal Research Facility (ARF) which follows the rules and regulations stipulated in the National Institute of Health's Cost Analysis and Rate Setting Manual for Animal Research Facilities. | * '''Specialized Service Facility (SSF)''' - A service center that provides services that are highly complex. UNMC does not have a SSF but does have an Animal Research Facility (ARF) which follows the rules and regulations stipulated in the [http://www.ncrr.nih.gov/publications/comparative_medicine/CARS.pdf National Institute of Health's Cost Analysis and Rate Setting Manual for Animal Research Facilities]. | ||
'''Users''' - Purchasers of goods/services can be internal or external to UNMC. | '''Users''' - Purchasers of goods/services can be internal or external to UNMC. | ||
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* '''Service Center Child Account''' - A child account cost center is created to collect depreciation charges associated with capital equipment for a service center. Purchases of capital equipment for the service center should be capitalized through this account. Child should only be analyzed in conjunction with the operation cost center. Child accounts CANNOT be created or utilized without the approval of the Department of Financial Compliance and Cost Analysis (FCC). All depreciation entries will be calculated by FCC and booked by General Accounting. | * '''Service Center Child Account''' - A child account cost center is created to collect depreciation charges associated with capital equipment for a service center. Purchases of capital equipment for the service center should be capitalized through this account. Child should only be analyzed in conjunction with the operation cost center. Child accounts CANNOT be created or utilized without the approval of the Department of Financial Compliance and Cost Analysis (FCC). All depreciation entries will be calculated by FCC and booked by General Accounting. | ||
* '''Depreciation''' - The depreciation of capital equipment charged to service center operations is based on the straight line method over the useful life of the asset. | * '''Depreciation''' - The depreciation of capital equipment charged to service center operations is based on the straight line method over the useful life of the asset. | ||
* '''Useful Life''' - Service center capital equipment must be depreciated using the useful lives outlined in Capitalization Policy and Definitions section of the Accounting Information Manual. | * '''Useful Life''' - Service center capital equipment must be depreciated using the useful lives outlined in [http://info.unmc.edu/dept/accounting/index.cfm?CONREF=5#assets Capitalization Policy and Definitions] section of the Accounting Information Manual. | ||
* '''Unallowable Costs''' - Costs that cannot be charged directly or indirectly to sponsored programs. These costs are specified in the OMB Circular A-21. Common examples of unallowable costs include advertising, alcoholic beverages, bad debts, charitable contributions, entertainment, fines and penalties, goods and services for personal use, interest (except interest related to the purchase or construction of buildings and equipment), selling and marketing expenses. See Policy 6103, Unallowable Costs, for additional information. | * '''Unallowable Costs''' - Costs that cannot be charged directly or indirectly to sponsored programs. These costs are specified in the OMB Circular A-21. Common examples of unallowable costs include advertising, alcoholic beverages, bad debts, charitable contributions, entertainment, fines and penalties, goods and services for personal use, interest (except interest related to the purchase or construction of buildings and equipment), selling and marketing expenses. See [[Unallowable Cost Policy|Policy 6103, Unallowable Costs]], for additional information. | ||
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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. | ||
OMB Circular A-21: The Cost Principles for Educational Institutions are set forth in the Office of Management and Budget Circular A-21. Section J.47 of OMB Circular A-21 deals specifically with service centers and is explicit in the following two concepts: | [http://www.whitehouse.gov/omb/rewrite/circulars/a021/a21_2004.html OMB Circular A-21]: The Cost Principles for Educational Institutions are set forth in the Office of Management and Budget Circular A-21. Section J.47 of OMB Circular A-21 deals specifically with service centers and is explicit in the following two concepts: | ||
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Service centers also must follow three additional regulations stated in the A-133 Compliance Supplement (document page 3-B-39 & 3-B-40): | Service centers also must follow three additional regulations stated in the [http://www.whitehouse.gov/omb/assets/omb/circulars/a133_compliance/04/pt3.pdf A-133 Compliance Supplement] (document page 3-B-39 & 3-B-40): | ||
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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. | ||
Service center equipment must be depreciated using the useful lives outlined in the General Accounting Policy, 3000. | Service center equipment must be depreciated using the useful lives outlined in the [[General Accounting|General Accounting Policy, 3000]]. | ||
Service centers which include depreciation in their rates must have funds or activities associated with the equipment to capture depreciation. It is important that the government not be charged for the depreciation of a piece of equipment through a user charge and again through UNMC's federally negotiated Facilities & Administration rate. To avoid this duplicate charge, '''FCC will review and approve rates for any service center that includes depreciation in their rates.'''<br /> | Service centers which include depreciation in their rates must have funds or activities associated with the equipment to capture depreciation. It is important that the government not be charged for the depreciation of a piece of equipment through a user charge and again through UNMC's federally negotiated Facilities & Administration rate. To avoid this duplicate charge, '''FCC will review and approve rates for any service center that includes depreciation in their rates.'''<br /> | ||
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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. | ||
Any questions about this policy should be referred to Financial Controls and Compliance.<br /> | Any questions about this policy should be referred to [http://mailto:wlawlor@unmc.edu Financial Controls and Compliance].<br /> | ||
OMB Circular A-21 / Cost Accounting Standards Board / National Institute of Health's Cost Analysis and Rate Setting Manual for Animal Research Facilities / General Accounting Policy, UNMC Policy No. 3000 / Accounting Information Manual / Unallowable Costs Policy, UNMC Policy No. 6103 / A-133 Compliance Supplement / General Ledger Account Listings / Rate Setting Procedure | [http://www.whitehouse.gov/omb/rewrite/circulars/a021/a21_2004.html OMB Circular A-21] / [http://www.whitehouse.gov/omb/procurement_casb/ Cost Accounting Standards Board] / [http://www.ncrr.nih.gov/publications/comparative_medicine/CARS.pdf National Institute of Health's Cost Analysis and Rate Setting Manual for Animal Research Facilities] / [[General Accounting|General Accounting Policy, UNMC Policy No. 3000]] / [http://info.unmc.edu/dept/accounting/index.cfm?CONREF=5 Accounting Information Manual] / [[Unallowable Cost Policy|Unallowable Costs Policy, UNMC Policy No. 6103]] / [http://www.whitehouse.gov/omb/assets/omb/circulars/a133_compliance/04/pt3.pdf A-133 Compliance Supplement] / [http://sapphire.nebraska.edu/content/glaccountlistlinks/reference%20materials_doc/html/index.htm General Ledger Account Listings] / [http://info.unmc.edu/dept/fincompliance/index.cfm?L1_ID=2&CONREF=24 Rate Setting Procedure] | ||
This page maintained by dkp. | This page maintained by [http://mailto:dpanowic@unmc.edu dkp]. | ||