Effective Date: |
January 12, 2017 |
Function: |
Cost Accounting |
Contact: |
Chris Wade |
The financial activities of RF-administered service centers are maintained by establishing an S and F award. In some cases, a Third Party Recharge award will need to be established.
Provides guidance on administering Service and Facility (S and F) and Third Party Recharge awards
The award classifications are based upon the user of the service center:
A rate for the use of the service center should be established. This rate is used for charging the costs back to the user of the service. Separate rates may be established for third-party users. Refer to the "Variable Billing Rates" section in the document the Service Center Policy.
This example shows how to develop a billing rate for a lab testing operation using direct operating costs.
The following table shows the components of the lab testing operation’s billing rate:
Expenditures |
|
Description |
Cost |
Salaries and Wages, and Fringe Benefits |
$85,000.00 |
Supplies and Expenses |
$15,000.00 |
Equipment Depreciation* |
$60,000.00 |
Total |
$160,000.00 |
Number of Lab Tests |
|
Description |
Use |
Lab Tests |
200 |
Rate |
|
Total cost ($160,000.00)/Number of tests (200) = $800/copy |
*The total equipment cost is $300,000 and must be excluded from the depreciation calculation of the indirect (F&A) cost proposal. The equipment depreciation is based on a 5-year amortization schedule or equivalent annual rate ($300,000/5=$60,000).
Back to Service Center Policy.
Service center award administration consists of the following activities:
The Research Foundation (RF) classifies service centers as S and F awards in the RF business system. These accounts will be classified by assigning an award purpose of "Service and Facility." A key principle for these awards is that only actual costs associated with the use of the service center are recovered. These costs may be supported from sponsored programs or third-party use.
Actual expenses and recharges must be recorded separately in the S and F award. The method selected should allow for separation of actual charges and recharges. To accomplish this, S and F awards can be set up in one of the following ways:
Award Element |
Description |
Funding Source Name |
Campus SF Accounts |
Award Type |
Non-Sponsored |
Purpose |
Service and Facility |
Billing Distribution Rule |
Event |
Revenue Distribution Rule |
Cost |
Burden Schedule/Rate |
TDC Zero/0.00 |
NACUBO |
Valid for all NACUBO codes |
Costs incurred for running the service center are recorded in the S and F award charging the appropriate project/task (e.g., salaries and supplies).
Expenses of the service center are charged back to the user of the service by producing a zero clearing invoice in accounts payable based on the rate established. A zero clearing invoice is created by processing an invoice with a positive charge to the sponsored program or third-party award and a negative charge to the appropriate project/task of the S and F award.
Recharge expenditure types have been established under the expenditure category of "Campus Services Recharges." These expenditure types (e.g., RCH Animal Care) should be used to record the charge on the sponsored program or third-party award when processing zero clearing invoices. For a complete list, review the expenditure types beginning with "RCH" in the document Expenditure Type.
All invoicing and cash application takes place in the award established for the user of the service based on the sponsored program or third-party award agreement. Invoices should not be created on S and F awards and cash should not be applied.
Surpluses and deficits on S and F awards should be reviewed and appropriate action taken. Refer to Service Center Policy for more information.
When a third party requests usage of a service center, an award must be established in the RF business system to record the activity of the third party. These "Third-party Recharge Awards" are classified using an award purpose and award type of "Third-party Recharges" and categorized as corporate activity for reporting purposes. Best business practices should be followed when allowing third parties to use service centers; agreement should be executed, an award/project/task must be established, and the cost of services must be invoiced.
An individual award may be established for each third-party user of the service center or one award may be established to record multiple third-party recharge activity (composite award). For composite awards, manual invoices may need to be created.
The following outlines the award setup elements applicable to third-party recharge awards:
Award Element |
Description |
Funding Source Name |
Name of third-party, |
Award Type |
Third Party Recharges |
Award Purpose |
Third Party Recharges |
NACUBO |
Valid for all NACUBO codes; however, it is recommended that the NACUBO code of General Institutional Support is used. |
Burden Schedule/Rate |
TDC Zero/0.00* |
Billing Distribution Rule/Revenue Distribution Rule |
Event/Event |
Budget |
Equal to the total amount in the agreement. |
Separate rates may be established for third-party users. Refer to the "Variable Billing Rates" section in the Service Center Policy.
Surpluses on the third-party awards should be used in support of the service center. To accomplish this, you may either:
None.
None.
None.
Date |
Summary of Change |
January 12, 2017 |
Updated procedure for new format. Also incorporated the Service Center Billing Rate document into this procedure. |
August 29, 2017 |
Made minor wording changes and made reference to the new Service Center Policy |
July 8, 2008 |
Revised "How to Establish an Award for Third party Usage" table |
June 21, 2006 |
Added the "Background" and revised the following sections: "Service Center Awards," "Service Center Rates," and "Overview of Service Center Award Administration." |
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