Recharge and Service Center Activity

Scope

This policy governs any internal transaction that records income to one university account and expense to another.

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Policy Statement

A recharge/service center activity is an activity that furnishes goods or services to another Indiana University department for the convenience of the university and charges a fee directly related to, and not more than the allowable cost to provide the goods or services.

Recharge Standard Operating Procedures (RSOP) will be issued when necessary by the Chief Accountant or University Controller to facilitate the implementation of the requirements of this policy.

All recharge/service center activity must meet the following compliance criteria:

1. Revenue and related allowable expenses of a recharge activity must be segregated from other university activity into a dedicated recharge/service center (AUXSERV) account as required by RSOP 2.0.
2. Recharge billing rates for 66* accounts must be projected to recover no more than allowable and allocable costs, which benefit only the related recharge activity. Any residual fund balance of the recharge activity 66* account will be carried forward at year-end to reduce recharge rates in subsequent periods.
3. Recharge billing rates for 66* accounts must not exceed those rates charged to external customers for the same products and/or services.
4. Recharge/service center (66*) accounts must submit a proposed rate to Financial Management Services on at least a biennial basis, according to the standards set forth in RSOP 2.0: Reporting Requirements for Recharge/Service Centers. Rate proposals will be reviewed for methodology by University Cost Accounting.
5. Recharge/service centers can only recover depreciation expense as prescribed in RSOP 3.0: Including Annual Depreciation Expense in Recoverable Rate.
6. Transfers out of recharge accounts are not allowed except as outlined in RSOP 7.0 Recharge/Service Center Transfers.
7. Recharge/service center activity must adhere to applicable federal standards, including but not limited to, OMB Uniform Guidance and agency requirements; as well as, University Cost Accounting standards and applicable university policies.

Exceptions to this policy require the approval of the Chief Accountant or University Controller.

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Reason for Policy

Compliance with Federal OMB Uniform Guidance and related federal cost accounting standards.

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Definitions

Allocable Costs: Costs that can be assigned or charged to a federally sponsored project or other cost objective on the basis of benefits received or other such equitable or logical association.

Allowable Expenses: Costs that may be recovered in the recharge billing rate as defined by the guidelines of the sponsoring agency and in accordance to OMB Uniform Guidance and related federal cost accounting standards. Please refer to RSOP #6: Allowable/Unallowable Expenses for Recharge Centers for more details.

Depreciation: The method for allocating the cost of capital assets to periods benefiting from asset use. The method used must be in accordance with Generally Accepted Accounting Principles (GAAP.)

OMB Uniform Guidance:Code of Federal Register, Title 2, Subtitle A, Chapter II Part 200--- Uniform Administrative Requirements, Cost Principles, and Audit Requirements For Federal Awards

Renewal and Replacement (92) Account: Accounts used to set aside funds for replacement of renewable property (typically capital assets or desktop computers).

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Additional Contacts

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History

This policy replaces or updates policies I-370, I-400 and I-410.

The source to this policy is:

Cost Accounting Standards (CAS) 9905.501, Consistency in estimating, accumulating and reporting costs by educational institution, CAS 9905.502, Consistency in allocating costs incurred for the same purpose by educational institutions, CAS 9905.506 Cost accounting period --Educational institutions, and Chief Accountant

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