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| Alpha Index : Table of Contents : Official University Policies & Procedures : Questions : UC Irvine |
UC IRVINE ADMINISTRATIVE POLICIES & PROCEDURES |
| Responsible
Office: Planning and Budget Revised: January 2008 |
UC Business and Finance Bulletins
UCI Administrative Policies & Procedures
OMB Circular A-21 defines direct and indirect costs for purposes of accounting for federal funds. Under A-21, recharges are considered direct costs to users. As such, no recharge activity shall be approved which shifts A-21 indirect costs to direct costs in violation of the Circular.
Other Definitions Used in Recharge Operations
1. Requests to Establish New Recharge Account (New Recharge Account Process)
Requests to establish new recharge accounts may be submitted for implementation anytime during the year. All requests shall be forwarded to the Budget Office 60 days prior to the proposed implementation date.
a. Proposals to establish recharge accounts should be based on the following criteria:
1) There exists a demand for the particular service by more than one department/unit/activity/project.
2) There will be a significant volume of recharging, both in dollar amounts and in number of transactions.
3) Service will be provided on a regular and continuing basis.
4) Service is unique or specialized (for example, a glassblowing shop or a machine shop) as opposed to general administration or other institutional support services.
b. Originating unit completes the following forms and actions:
1) Request to Establish/Link/Delete Fund or Revenue Account.
2) Provide a short narrative description of the proposed recharge activity (1-2 pages).
3) On-Campus Recharge Rate Data Form and Off-Campus Recharge Rate Data Form. Recharge rates must be based on projected actual costs.*
4) Proposed Budget for New Recharge Account Form
Allowable Costs
Unallowable Costs
We currently ensure that the appropriate share of the overhead associated with any unallowable cost is excluded from the development of the indirect cost rate by putting these costs into the Other Institutional Activities category.
*Repairs/alterations which cost in excess of the University threshold for capitalization are unallowable because they are capitalized.
5) Obtain comments from anticipated user organizations regarding the proposed recharge rates and include these statements in the request package.
6) Coordinate the request package for appropriate organizational approvals and submit the request package to the Budget Office.
7) Transmit the rate schedules to customers when notified by the Budget Office that the recharge account has been approved.
FORMS AND EXAMPLES ILLUSTRATING HOW TO DEVELOP A REQUEST FOR RECHARGE ACCOUNT ARE AVAILABLE FROM THE BUDGET OFFICE X7676.
c. The Budget Office will:
1) Screen each new recharge account request package for accuracy, completeness, and consistency with the approval criteria. Unacceptable submittals will be returned to the originating office stating reasons for the rejection.
2) Consult as necessary with the advisory group of budget representatives from all coordinating points. (Recharge Review Committee)
3) Submit appropriate requests to the Executive Vice Chancellor for approval.
4) Notify originating office when request for new recharge account is approved by the Executive Vice Chancellor.
5) Update the Central File and publish new rates.
Table of Current Recharge Rates
6) Establish the approved budget for the recharge service function.
d. The Accounting Office will:
1) evaluate the recharge operation in terms of choosing the appropriate system for processing the recharge transactions (Departmental Recharge System or FS Online Recharge System);
2) establish a new fund number for the recharge activity and create account/fund linkages if necessary (see Section 701-11); and
3) establish a journal number associated with the recharge activity and its sub 9 account on the Departmental Recharge System, OR authorize use of FS Online Recharge System and expedite processing of Security Profile changes to Administrative Computing Services.
2. Reviewing and Evaluating Recharge Activities (Annual Recharge Review Process)
a. Recharges initiated by a unit with an approved recharge account are governed by the following general guidelines:
1) All elements of cost resulting from the goods or service provided shall be recharged to users based upon a previously authorized established price or standard pricing method uniformly applied to all users.
2) Recharge shall be related to the cost of goods or services furnished and must provide for the recovery of actual costs, including equipment depreciation. Recharge rates should be adjusted annually, to eliminate any deficits or unwarranted surpluses over as short a period as possible (not to exceed 3 years).
3) Consistent with the need to maintain reasonable stability in charges to users, every effort should be made to ensure that year-end surpluses and deficits do not exceed 60 days of operating costs. (Deficit Policy)
4) Acquisition costs of inventoriable equipment purchases are not allowed in recharge activities. (However, depreciation of such equipment is allowed.)
5) All inventoriable equipment shall be depreciated on a straight line basis with no salvage value and shall be included as a cost element when establishing rates.
6) The cost of leave benefits should be considered as wage-related costs to be recovered in the recharge rate.
7) It is University policy not to sell goods or services to outside consumers except where such goods or services are unique or where such sales would not compete with commercial sources. In this case, the unit would be assigned an income account to correspond to its fund designation.
8) Rates applied to non-university users should be higher than for campus users and should recover appropriate indirect costs. (Contact the Budget Office, 824-7676 for the incremental charge to be added to campus rates in order to capture the indirect cost which the campus is providing in support of the delivery of these goods or services.)
9) Operating Cycle - annual status report is based on the last completed fiscal year for the University.
10) Information from user organizations (customers) plays a significant role in the evaluation process, so care should be exercised in obtaining comprehensive information from users.
b. The Budget Office initiates the annual review process by distributing the forms needed to complete the annual review:
On-Campus Recharge Rate Data Form
Off-Campus Recharge Rate Data Form
Annual Recharge Rate Review - Quantitative Analysis
Annual Recharge Rate Review - Equipment/Renovation Reserve Account
Annual Recharge Rate Review - Narrative Analysis
When completing the annual reviews, recharge managers should consider the following factors:
1) The impact of major workload shifts on recharge expenditures and revenue collections - Significant workload growth without a concomitant increase in operating costs can yield an account surplus. A substantial decrease in workload without a commensurate curtailment of expenditures can produce an operating deficit.
2) The need to adjust recharge rates to reflect changes in the cost of goods used in providing services - For some centers, such as fleet services and telecommunications operations, material and vendor service charges are extremely volatile. Therefore, it is imperative that major changes in these costs be transferred periodically via a rate adjustment to recharge users.
3) The need to modify rates - The actual cost of items, such as salary range adjustments, might differ from the estimates used to develop recharge rates.
d. Annual recharge reviews enable the Budget Office to monitor recharge budgets; provide justification for rates and rate changes; and provide information to the Executive Vice Chancellor regarding the annual status of campus recharge activity.
e. The Budget Office will review all requests for recharge rate modifications; return all unacceptable requests to originating units with an explanation of the reason for rejection; and submit to the Executive Vice Chancellor for approval recommendations to alter selected recharge rates. Once approval of the requested rate changes is secured from the Executive Vice Chancellor, this information is transmitted to the affected recharge units. All users are informed annually of the approved rates for recharge services.
f. Definitions and guidelines for reporting income and expenses:
1) Sales and Services Income (see Section 703-14)
Revenues received from non-University sources for standardized services rendered by a campus recharge unit.
2) Differential Income
Funds representing indirect cost recovery from sales of goods or services to non-University individuals or entitles. This differential income may be used to fund non-operating costs, such as equipment and capital improvements, of the activity. This income should be segregated and recorded in a separate fund from the recharge account.
3) Reporting of Accrued Income and Expenses
To simplify the Annual review, report only income and expenses that appear in the year-end General Ledger reports. However, if there is any significant amount of income earned (or expenses incurred) during the review period which does not appear in the General Ledger, it should be included on the Annual Recharge Rate Review - Quantitative Analysis form and marked with an asterisk (*). A description should be provided on the Annual Recharge Rate Review - Narrative Analysis form.
3. Functional responsibilities
Recharge/Service Center is responsible for:
Dean/Director/Vice Chancellor is responsible for:
Budget Office is responsible for:
Executive Vice Chancellor is responsible for:
4. Appeals
The requesting recharge office may appeal a rate decision by submitting a letter of justification to the Executive Vice Chancellor through the Budget Office.
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