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Handbook of Business Procedures

Date published: 
Last revised: 
Issued by: 

June 19, 2012
July 23, 2013
Costing and Analysis

 

Part 10. Costing - Table of Contents


10.3.8. SERVICE CENTER ADMINISTRATION

A. Records Retention Requirements

The records, operations, rates, and practices of all service centers are subject to audit by federal, state, and internal auditors, and by the Office of Accounting. Service centers must adhere to the following requirements for records retention:

  • Retain all costs, projections, and any other information used to develop rates to substantiate charges in the event of an audit.
  • Maintain billing records to identify funding sources charged for services or goods, budget group numbers, internal versus external users, service or good rendered, number of units sold, rate charged, total amount billed, etc.
  • Record retention procedures must comply with The University of Texas at Austin Record Retention Schedule (UTRRS). Refer to the schedule or contact Records Management Services at recordsmgmt@austin.utexas.edu or 512-232-5657 for complete details.   

B. Accounts

  • If the proposal is approved, C&A will forward the new account request form submitted by the department to Financial Accounting Services (FAS).
  • If equipment depreciation is included in the cost pool expenses, the new account form must include a request to open a 96-subaccount – Equipment Maintenance and Replacement to capture equipment depreciation returned to the service center via the approved billing rates and depreciation schedule.

C. Billing

  • Service centers must consistently and accurately bill all users.
  • Advanced billing for services or products is not allowed.
  • Users must be billed once services are rendered and no more than three months after services are provided.
  • Service centers must maintain a record of all billings to users to substantiate charges on all accounts in the event of an audit by federal, state, and/or internal auditors.
  • External service center rates are based on total operating costs, and the rate must include the 26.5 percent institutional surcharge used to cover institutional facilities and administrative expenses.

D. Balances

  • Balance reviews are conducted when rate changes are proposed, during the new fiscal year budget submissions, and when budget increase requests are made.
  • Service center managers must justify balances to C&A as part of the annual rate review process with the Budget Office.
  • Excess balances are reduced in the form of a rate reduction and/or a refund to users.
  • Excess balances cannot be utilized to purchase equipment, consumables or other expenses, salary increases, salary supplements, tuition, or to offset losses in another service center.
  • Fiscal year-end balances resulting from budgeted salaries or expenses that did not occur cannot be transferred and/or utilized for purposes unrelated to the operations of the service center.
  • Deficits are eliminated by a rate increase or a transfer of adequate funding to the service center (approved by the dean and associate vice president, budget director, and director of financial services).
  • Any transfer of funds made to a service center is accounted for as contributed capital and documentation related to the transaction that identifies the source, amount, date, reason, and authorization for the contribution must be retained for audit by federal, state, and internal auditors and by the Office of Accounting.

E. Multiple Service Centers

A unit may manage more than one service center providing various services or goods. Each service center must be separately managed along with the expenses and income associated with providing the services or goods. Revenue from one service center cannot be used to offset losses in another service center. The expenses associated specifically with one service center cannot be paid by another service center.

F. Working Capital

Working capital is an amount that is the lesser of 60 days or 20 percent of expenditures that a service center may retain to fund operations during fluctuations of revenue and expenditures. Service centers cannot acquire working capital by increasing rates for the express purpose of accruing a working capital balance. Any surplus balance after calculating the effective balance must be eliminated by fiscal year-end by reducing rates.

G. Transfers

The following rules govern transfers from service center accounts to other types of accounts.

  • Revenue from surcharges to external users must be transferred into the Institutional Portion of Service Center Income (19-0220-0696) account.
  • Transfers must have adequate justification and provide proper documentation for verification and validation.
  • Fiscal year-end balances resulting from budgeted salaries or expenses that did not occur cannot be transferred and/or utilized for purposes unrelated to the operations of the service center.
  • Transfer of funds to Designated Funds (19-accounts) or Plant Funds (36-accounts) must be approved by C&A.
    Note: Transfers to 36-Plant Fund accounts must obtain prior approval from C&A and are only allowable for major maintenance or remodel of a facility or building that is solely dedicated and utilized by the service center. Requests to transfer funds must be signed by dean/vice president and include documentation demonstrating what the expense will be used for, an estimate/quote for expense, and when the repair or remodel will occur.
  • A surplus in the operating account cannot be transferred to a non-service center account.
  • The records, operations, rates, and practices of all service centers are subject to audit by federal, state, and internal auditors and by the Office of Accounting.

H. Overdrafts

Overdrafts are used to provide temporary spending authority for an account for various reasons. If the increase in spending authority is due to a change to an approved service center proposal, a transfer document must be processed in the FRMS Transfer System to increase the department’s budget. Generally, overdrafts do not automatically carry over to the new fiscal year.

The guarantee account associated with the service center must be used to cover deficits prior to requesting an overdraft. An authorized signer on the budget group (*DEFINE GG5 command) should send a written request via email to Costing and Analysis (C&A) in Financial Services at oa.sc@austin.utexas.edu.

Overdraft approval requests must include the following information:

  • approval by the unit’s department head or chair
  • forecast for remaining fiscal year income and expenses
  • statement as to whether service center rates will be adjusted to prevent future overdrafts
  • account number
  • amount requested
  • proposed expiration date
  • reason for the overdraft
  • date the overdraft will be covered
  • how the overdraft will be covered (e.g. new income, transfer from another account, commitment from institutional funds, etc.)

Requests are reviewed by C&A with final approval granted by the director of financial services and the associate vice president. C&A will send an email to notify the requestor of whether the request is approved or denied. Approved overdraft amounts are added to the pool balance of an account by Financial Accounting Services (FAS).

For more information, see the Handbook of Business Procedures, 2.6. Overdraft Approval.

I. Off-Campus Sales

Off-campus sales must be approved by the Office of the Executive Vice President and Provost. Rates must exclude all subsidies offered to internal users and include a 26.5 percent surcharge to cover institutional facilities and administrative expenses. C&A corresponds directly with the vice provost regarding approvals of off-campus sales. Service centers that want to offer off-campus sales must provide a justification describing the following:

  • How the service center is unique and furthers the mission of The University of Texas at Austin
  • Why establishing the service center is more effective using than current methods
  • How the services or goods proposed are not readily available by an existing service center, outside entity/vendor, higher educational institution, or state agency
  • Why the service center is necessary and demand will be sustainable
  • How the service center relates to a research purpose/project and/or helps students further their education

 

 

Part 10. Costing - Table of Contents