Contents

A. Scope and Purpose

1. This policy outlines the process and requirements for establishing and approving Official Recharge Activities, and for annual review and approval of rates that Official Recharge Facilities charge.
2. Recharge refers to the accounting function that credits expense in one University department’s accounts and debits expense in another University department’s account when a service or good is provided to an internal customer. Recharge activities do not create income for the campus and are technically not income-producing activities, though they may have the effect of income to a department by reducing the use of financial resources of that unit. In the Kuali Financial System, recharge transactions use Internal Billing (IB), Service Billing (SB), which debit expense in the department receiving the good or service and credits contra-expense in the providing department.
3. Annual recharge facility/activity reviews enable the Accounting and Fiscal Services to monitor recharge budgets; provide UCI units with an opportunity to justify rates and rate changes; and provide information to the Provost and Executive Vice Chancellor regarding the annual status of campus recharge activities.
4. This policy does not cover:
   1. Auxiliary Enterprise & Medical Center Activities, BUS-72: Establishment and Review of Auxiliary Enterprises, A-59: Costing and Working Capital for Auxiliary and Service Enterprises;
   2. Letters of Agreement - A type of recharge activity enabling a department to use KFS Internal Billing that is not subject to the Official Recharge Facility/Activity review process. These are low risk activities with only incidental charges to federal awards (at most).
   3. Assessments – Central Campus Assessments. Examples include but are not limited to the General and Administrative (G&A) Assessment, Sales & Service Activities Indirect Cost, charges by Graduate Division and Registrar to Self-Supporting Graduate Professional Degree Programs, and other charges to self-supporting activities intended recover indirect costs.

B. Definitions

C. Policy

1. All University users of goods and services must be charged established and approved rates (Official Recharge Rates) to fully recover the direct costs of providing the goods or service.
   1. If a recharge activity begins before an Official Recharge Activity and Rate have been approved the UCI unit must charge the direct costs pending the next mid-year or annual review (at which time the unit must submit a request for recharge activity and rate approval as detailed in Part D.)
   2. Units, or the unit's approving authory can subsidize recharge activities, thereby not fully recovering all their direct costs, but only if unit has appropriate funds available to effectively discount their rate and only if the subsidy is applied before the Official Recharge Rate is approved.
   3. Non-university/external entities should be charged a higher rate to recover both direct and indirect costs as detailed in Sec. 701-23: Sales & Service Activities Policy. Note: Sales & Service Activities must not be conducted prior to complying with the requirements of Sec. 701-23.
2. A separate Official Recharge Rate must be established and approved for each class of goods or service provided to ensure that identical goods or services provided to University users have identical rates.
3. Since charges to another UCI unit may involve expenses to a federal award, Official Recharge Rates must be established based on allowable direct costs. Appendix R – Recharge Supplemental Information provides more detail.
4. Proposals to establish recharge facility/activities 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.
5. Official Recharge Rates are:
   1. Published in a schedule online once they are approved;
   2. Subject to annual review by the Recharge Rate Review Committee and approval by the Provost and Executive Vice Chancellor to ensure that they are operating on a no-gain/no-loss basis in compliance with UC policies and Federal regulations:
      1. Annual recharge rate review reports, based on the previous University fiscal year, are due once a year, usually in August (annual review cycle.)
         • Rate change requests submitted as part of the annual review cycle are effective as of October 1st (if approved.)
      2. If rate changes are not needed effective October 1st, an Official Recharge Facility’s annual recharge rate report can be submitted in December (mid-year review cycle) and still remain compliant.
         • Rate change requests submitted in the mid-year review cycle are effective as of February 1st (if approved.)

   D. Responsibilities and Authorities

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   1. The initiating UCI unit must:
      1. Submit Requests to Establish a New Official Recharge Facility and/or a New Official Recharge Activity/Rate(s) Within an Existing Official Recharge Facility
         1. Requests to establish a new recharge facility or activity may be submitted for implementation twice a year, Annual Recharge Review (August) and Mid-Year Recharge Review (December).
         2. Submit to the Accounting and Fiscal Services office for their review and approval:
            • A Recharge / Sales & Service Activity Information Sheet which:
              • Provides a scope of work and detailed description of deliverables;
              • Provides approval of the activity and certification from the relevant Unit's Approving Authority; and
              • Request the following if needed:
                • — Recharge Account;
                • — Debit Object Code; and
                • — If needed:
                  • - Reserve and Renewal Account
                  • - Subsidy Account
                  • - Differential Account.
            • A rate calculation using the Rate Calculation Template for a new Recharge. Further details are included in Appendix R – Recharge Supplemental Information.
         3. Obtain comments from anticipated UCI internal customers regarding the proposed recharge rates and include these statements in the request package.
         4. Circulate the request package for appropriate approvals and submit the request package to the Accounting and Fiscal Services.
         5. Transmit the rate schedules to UCI customers when notified by the Accounting and Fiscal Services that the recharge facility/rates has/have been approved.
      2. Manage Official Recharge Facility Operations and Financial Records
         1. Each recharge facility will review its fiscal operations to ensure it is operating all Official Recharge Activities on a fiscally sound basis, that expenditures are appropriate, and rates are being adjusted to reflect projected costs and appropriate volume projections.
         2. Follow UC policies in managing the resources available to it.
         3. Maintain records according to UC policies.
         4. Perform regular reconciliation of revenues and expenses.
         5. Assure costing and pricing policies are followed.
         6. Ensure that only the Official Recharge Activity’s own revenues/recharge income and expenses are recorded in the recharge accounts.
         7. Ensure activities maintain records to substantiate recharge and other billing transactions, including requisitions, purchase orders, or similar written verification of individual user requests for goods or services.
         8. Ensure activities provide users with a receipt or similar written confirmation for each sale of goods or services at the time the sale is made. In addition, recharge users will be provided a detailed monthly statement for each account number recharged.
         9. Ensure activities initiate recharge or other billing transactions when goods and services are provided. Activities will not initiate recharge or other billing transactions in advance of providing goods and services. Progress recharges or billings may be made for jobs in process.
         10. Conform to approved billings and recharge procedures.
         11. Ensure that capital expenditures, including cost of equipment, are not charged to the operating fund.
         12. Ensure that activity will charge all users of goods or services at established, approved rates.
         13. Update the asset detail “recharge indicator” field in KFS if the equipment is used in the recharge facility.
         14. Process Asset transfer document to move existing equipment to the new custodial code if needed.
         15. 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. Further details are included in Appendix R – Recharge Supplemental Information.
         16. All direct costs and (offsetting) recharge rate payments received related to the recharge activity should be applied to the appropriate recharge account.
             • If the activity is subsidized by the unit and the full cost of the good or service is not fully recovered in the Official Recharge Rate, a subsidy account must be used.*
             • Additionally, if the activity also requires reserve funds equivalent to equipment depreciation expense to be recorded a separate reserve account is to be established for each activity.*
               • * For detailed accounting instructions refer to Appendix R – Recharge Supplemental Information.
         17. After fiscal close, an annual report and review is required as detailed below.
      3. Submit Annual Report and Participate in Annual Review (Annual Recharge Review Process)
         1. The reports and forms below must be completed and submitted to the Accounting and Fiscal Services to document recharge activity review and approval. Annual status reports are required, even if no rate adjustments are requested.
            • Recharge Review Report (see instructions to find this report)
            • Rate Calculation Template
            • Annual Recharge Report Template, including the following worksheets:
              • Narrative Analysis
              • On-Campus Recharge Rate Data Form
              • Off-Campus Recharge Rate Data Form
         2. When completing the annual reviews, recharge managers should consider the following factors:
            • If the estimated workload proves to be materially incorrect (too high or too low) the rate will need to be adjusted during the review process. It is not acceptable for a recharge activity to yield a continuing surplus or deficit.
            • 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 via an annual rate adjustment.
            • 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.
         3. Submit annual recharge rate review materials via the Unit’s Approving Authority based on the prior full fiscal year.
         4. Participate in resolution of comments, questions, and objections to proposal.
         5. Notify Accounting and Fiscal Services of unacceptable surplus or deficit balance by Set Date following the fiscal year and provide an explanation and a business plan to correct the balances.
   2. Unit’s Approving Authority (Dean, Vice Chancellor) must:
      1. Approve and sign the proposal from originating UCI unit.
      2. Be responsible for the business management functions, such as budget control and the receipt, custody, and disbursement of revenues, accounting and financial reporting; and procurement of supplies, equipment, and services.
      3. Participate in resolution of comments, questions, and objections to request.
      4. Ensure that notification is sent to Accounting and Fiscal Services of unacceptable surplus or deficit balance by set date following the fiscal year.
      5. Forward proposal to Accounting and Fiscal Services.
      6. Review and final approve Assessment income waivers.
      7. Be responsible for any unfunded deficits of the activity.
   3. The Recharge Rate Review Committee Chair or Designee must:
      1. Initiate the annual review process.
      2. Review proposals for compliance to 2 CFR, Part 220 (formerly Office of Management, Cost Principles for Educational Institutions.)
      3. Provide policy interpretations and guidance for individuals/units responsible for preparing recharge proposals. Coordinate review process, including resolution of Committee comments, questions and objections.
      4. Submit Committee's recommendations to the Provost and Executive Vice Chancellor.
      5. Provide written confirmation of approved requests to originating UCI Unit, the Unit's Approval Authority, the Recharge Rate Review Committee, and Accounting and Fiscal Services.
      6. Identify any surplus or deficits that exceed two months operating expenses.
      7. Submit Committee’s recommendation for equipment depreciation waivers to the CFO and Vice Chancellor, Division of Finance and Administration for review and approval.
      8. Maintain the website for recharge activities.
   4. The Recharge Rate Review Committee will:
      1. Review and approve proposals and waiver requests distributed by Committee Chair.
      2. Provide policy interpretations and guidance for individuals/units responsible for preparing recharge proposals.
      3. Communicate comments, questions, and objections to Chair.
      4. Participate in resolution of comments, questions, and objections relating to proposal.
      5. When deemed appropriate, recommend approval of requests for equipment depreciation waivers distributed by Committee Chair.

E. Additional Information

Additional information about Recharge Facility and Activity Review and Approval is detailed in Appendix R – Recharge Supplemental Information.