Recharge Standard Operating Procedures

 

SUBJECT:

Reporting Requirements for Recharge/Service Centers

SOURCE:

Cost Accounting, Financial Management Services

DATE ISSUED:

November 2015

DATE OF LAST REVISION:

June 2018

RSOP NO:

2.0 

RATIONALE:

To define the reporting requirements for different types of recharge/service center activity.

RSOP:

The reporting requirements for recharge/service center activities, excluding exceptions previously approved by the Chief Accountant, are determined by the amount of annual internal revenue the account recorded in the last completed fiscal year or the department is billing a contract and grant account. The requirements for each five different categories are summarized below.

  1.  Internal billings to Contract & Grant accounts.
  2. Activities with estimated internal revenues of MORE than or equal to              $5,000,000.
  3. Activities with estimated internal revenues of MORE than or equal to $100,000.
  4. Activities with estimated internal revenues of LESS than $100,000.
  5. Departments hosting conferences, which are not regularly carried on, and managed by IU Conferences (f/k/a OCERS),  
  6. The setup of a 67* or 69* account requires approval of the Chief Accountant or Controller. (These accounts are not permitted to bill or transfer costs to a recharge/service center 66* account.)

 1.      Internal billings to contract and grant accounts.

  • Indiana University departments that bill contract and grant accounts must be segregated into individual recharge/service center 66* accounts.
  • These accounts must use internal billings, service billings and/or ID billings to charge other university departments.
  • These accounts may NOT charge more than allowable cost for products or services sold internally. Internal rates may not exceed external rates for the same product or service.
  • The fiscal officer is required to submit a new recharge rate at least BIENNIALLY using an approved Rate Setting Template.
  • Any rate changes require resubmission to Auxiliary Accounting
  • The Rate Setting Template should be submitted to Auxiliary Accounting at auxacct@iu.edu.
  • Effective August 15, 2018, internal charges to federal contract and grant accounts from another IU account number will not be permitted until FMS has determined a compliant status in regards to Uniform Guidance.

 2.      Internal activities with estimated internal revenues of MORE than or equal to $5,000,000:

  • Internal activity above $5,000,000 must be segregated into individual recharge/service center 66* accounts.
  • These accounts must use internal billings, service billings and/or ID billings to charge other university departments.
  • These accounts may NOT charge more than allowable cost for products or services sold internally. Internal rates may not exceed external rates for the same product or service.
  • The fiscal officer is required to submit a new recharge rate ANNUALLY using an approved Rate Setting Template.
  • Any rate changes require resubmission to Auxiliary Accounting.
  • The Rate Setting Template should be submitted to Auxiliary Accounting at auxacct@iu.edu.
  • These units are required to meet ANNUALLY with Auxiliary Accounting to go over the unit’s rate setting methodology.

 3.      Internal activities with estimated internal revenues of MORE than or equal to $100,000:

  • Internal activity above $100,000 must be segregated into individual recharge/service center 66* accounts.
  • These accounts should use internal billings, service billings and/or ID billings to charge other university departments.
  • These accounts may NOT charge more than allowable cost for products or services sold internally. Internal rates may not exceed external rates for the same product or service.
  • The fiscal officer is required to submit a new recharge rate BIENNIALLY (every two years) using the Rate Setting Template.
  • Any rate changes require resubmission to Auxiliary Accounting.
  • The Rate Setting Template should be submitted to Auxiliary Accounting at auxacct@iu.edu.

4.      Internal activities with estimated internal revenues of LESS than $100,000:

  • Activities that have less than $100,000 in anticipated internal revenue will be required to use Distribution of Income and Expense (expense-to-expense transactions only), General Accounting Adjustment (expense-to-expense transactions only) or Transfer of Funds to complete transactions between university accounts. Please refer to RSOP 8.0 for additional information.  Note: The $100,000 is measured at the activity and/or account level, not the transactional level.
    • The billing department can use the General Accounting Adjustment document to distribute expenses to contract and grant accounts; however, they will likely be required to provide the supporting documentation.
    • A 67* or 69* account can NOT use a transfer of funds document to a recharge/service center 66* account to complete transactions between university accounts. Please see RSOP 7.0 for more information on Recharge/Service Center Transfers.
    • The fiscal officer will NOT be required to submit rates to Auxiliary Accounting and costs will NOT be required to be segregated into separate service center 66* accounts; however, the use of a service center 66* account is preferred for internal activity.
    • Any internal activity with estimated internal revenues of LESS than $100,000 that uses the internal billings, service billings and/or ID billings will be required to comply with the rate setting requirements above for internal sales greater than $100,000.

5.      Departments hosting conferences, which are not regularly carried on, and go through IU Conferences (f/k/a OCERS), require the following:

  • This activity is typically not considered auxiliary activity and is not required to be recorded in an account in the auxiliary sub fund group.
  • The activity may charge contract and grant accounts for conferences as long as the charges are allowable per the grant and approved by Office of Research Administration.
  • Any activity related to the sale of goods or services provided in conjunction with the conference must be maintained in an auxiliary account and segregated from the accounting for the conference activity.
  • Please refer to the Chart of Accounts Quick Reference Guide located on https://fms.iu.edu/auxiliary-accounting/reference-information/ to determine the correct account to record this activity.
  • The fiscal officer is NOT be required to submit rates to Auxiliary Accounting.

DEFINITIONS:

Federal Contracts & Grants Billing: When a department charges an expense to an account that belongs to a FEDR* sub fund group.

 

Rate Setting Template:  Each department is required to submit their rates for review using a template that has been approved by cost accounting. Exceptions to this rule must be approved by the Chief Accountant.

 

Recharge/Service Center Activity: 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.

CROSS

REFERENCE:

 

OMB Uniform Guidance "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards"

Policy FIN-ACC-400 Recharge and Service Center Activity

RSOP 7.0 Recharge/Service Center Transfers

RSOP 8.0 Processing Internal Transactions for Accounts Under $100K

RESPONSIBLE

ORGANIZATION:

 

Organizations that bill other Indiana University departments for goods or services