Understanding Recharge Operations in Financial Services at the University of Chicago

Recharge Operations Training
Presented by Cost Studies, Financial Services Department
 
Training Objectives
 
Understand basic recharge concepts and the policies governing recharge
activities
Develop recharge rates in accordance with campus policy
Understand the annual recharge review and approval process at the
University of Chicago
Understand the guidelines and requirements necessary to successfully
manage your recharge activity
 
 
The University of Chicago’s Recharge compliance function is the responsibility of
the Cost Studies group within Accounting and Financial Reporting in the
Financial Services Department. It has two staff members that oversee recharge
compliance for the campus.
 
What is a Recharge Operation?
 
Recharge Operations are shared resources that provide access to
instruments, technologies, as well as expert consultation and
other services to scientific and clinical investigators, other
University personnel and the general public may be served
incidentally by the operation.
 
A Recharge Operation charges a fee directly related to the
recovery of the goods or services provided and must breakeven
over time.  In addition, only federally allowable expenses may be
included in recharge rates.
 
There are four types of Recharge
Operations
 
Recharge Center
: An operating activity established for the primary purpose of providing
goods and/or services to a segment of the University community for a fee, typically offered as
a convenience to the employees and students of a department/division rather than the entire
university community. Annual operating budgets to provide the goods and/or services will
normally be less than $100,000. Recharge Centers have annual charges to federal awards of
less than $10,000. Copy centers and stockrooms are examples of a Recharge Center.
Service Center
: An operating activity established for the primary purpose of providing goods
and/or services to the University community for a fee, typically intended for University wide
consumption and is not departmental/college based. Annual operating budgets to provide the
goods and/or services is greater than $100,000. Service Centers have annual charges to
federal awards of $10,000 or greater. The Cylinder Gas Shop and the Immunohistochemistry
Core are examples of a Service Center.
Specialized Service Facility:
 A Specialized Service Facility (SSF) is defined by Uniform
Guidance (see 2 C.F.R. §200.468) as a highly complex or highly specialized facility, whose
services are not typically available from an outside vendor. Specialized Service Facilities are
designed to include their allocable share of all F&A costs. SSF’s are governed by the Recharge
Operation policy. There are no Specialized Service Facilities at the University of Chicago at this
time.
Pass Through:
  A Pass-through provides goods and/or services to the University community
and the charge is equal to the purchase price with no mark up for administrative or other
recharge expenses.  The Pass-through purchases the goods/services from a vendor and then
recharges users.  While these operations do not need to submit a questionnaire and annual
rate template, they do need to submit an annual Pass-through Confirmation form that
confirms that they are still operating as a Pass-through. Dry Ice and Liquid Nitrogen are
examples of a Pass-through recharge operation.
 
Recharges should be established if:
 
 
Service is not available elsewhere on
 
campus.
Service is identifiable as opposed to general.
Separate costs and budgets can be clearly defined for
these 
activities.
Need for this service is
 
long-term.
Service is provided for or subsidized by a federal
 
award.
Service will be used by multiple client groups and
sources of funds within the University.
Volume of service is expected to increase over time.
Most of the users will be internal with possible incidental
external usage.
 
Policies that govern Recharge Operations
 
The University of Chicago
University Policy 1005
 
Federal
OMB Uniform Administrative Requirements, Cost Principals, and
Audit Requirements for Federal Awards (2 C.F.R. §200) (“Uniform
Guidance”)
.
Uniform Guidance
 
Federal Requirements
 
 
Rates must be based on actual usage of the services.
The schedule of rates should be established using a documented
method.
Rates may not discriminate against federally supported activities
of the institution, including usage by the institution for internal
purposes.
Rates must be designed to recover only the aggregate costs of
the services.  The costs charged for providing each service
generally consists of its direct costs only.
Rates shall be reviewed and if required adjusted at least every
other year and shall take into consideration any operating deficit
or surplus of the previous period(s).
Records must be retained and made available to federal officials.
 
Recharge Operations
 
 
 
 
Roles and Responsibilities
 
Recharge Financial and Operations
Management
 
Ensure that the recharge is Federally compliant per the 
Recharge
Operation Procedure Manual.
Perform necessary Accounting functions in support of the
recharge(includes preparing journal entries as needed).
Prepare and administer the recharge operation budget, maintain
adequate records, and accurately invoice customers on a timely basis.
Complete the annual recharge rate template(includes determining the
proper rate development methodology, preparing a schedule of rates
for services/products offered by the recharge to users).
Support data requests, audit requests, and other reviews that may
occur.
Maintain open communication with Financial Services regarding all
recharge operational issues.
 
 
Division/Department/School
 
Ensure all recharge operations and users comply with recharge-related
policies and procedures per the Recharge Operation Procedure Manual.
Provide oversight and support to recharge Managers.
Facilitate communications to University of Chicago faculty and staff
about recharge operation rates and billing issues.
Fund deficits that cannot be recovered through the recharge operation
rates.
Approve all requests for new recharge operations and new recharge
account creation.
 
Financial Services/Cost Studies
 
Ensure compliance with Federal and University policies related to recharge
operations.
Review and approve recharge center rates, including mid-year rate
adjustments.
Maintain and update recharge operation policies and procedures, as
necessary.
Provide rate setting and other recharge related guidance to recharge
operations.
Review and approve the establishment and closing of recharge operations.
Recommend corrective actions to be completed by the recharge operation
based on periodic reviews and data verification.
Provide assistance to auditors regarding recharge operation issues.
 
Recharge Operations
 
 
 
 
Rate Calculation Basics
 
Recharge Rate Calculation
Annual rate calculations are required by Cost Studies.
The Recharge Rate Template is due on May 15
th
 each year
Approved
 rates are effective July 1
st
 of each year
 
Th
e
 
purpos
e
 
o
f
 
th
e
 
Recharg
e
 
Rat
e
 
Calculat
i
o
n
 
Templat
e
 
i
s
 
t
o
provid
e
 
unifor
m
 guidanc
e
 
t
o
 
Universit
y
 o
f 
Chicag
o
 
recharg
e
operation
s
 
fo
r
 
calculatin
g
 an
d
 
establishin
g
 recharg
e
 
rates
.
 
Basic Rate
Calculation
Methodology
 
There are two basic types of rates that a recharge
unit uses to generate revenue:
 
Internal
 
Internal users must be billed at
the same approved rate for the
same level of services or goods
purchased.
Internal rates may be equal to or
less than the calculated rate.
Internal users 
may not 
be
charged a rate higher than the
calculated rate.
 
External
 
External users may be charged
different rates.
External rates can be set higher
than the calculated rate.
External rates should be set
lower than market rates to avoid
competition with local businesses
providing similar services.
 
Recharge User Types
 
 
Internal UChicago Users
 
- 
This group of users would be academic and staff
employees of the University of Chicago that are purchasing recharge services for
work done on behalf of the University and have a University funding source/account
number.
External Academic Affiliated Users(Internal Rate)
 
- 
This group of users would
be users that are not purchasing recharge services as employees of the University
of Chicago or on behalf of the University but are affiliated with the University in
some way and would be ch
arged the internal rate
.
External Academic Non-Affiliated Users 
- 
This group of users would be users
that are not purchasing recharge services as employees of the University of Chicago
or on behalf of the University. They are academic users but are not affiliated with
the University and would receive the appropriate external rate.
External Commercial & Other Users
 
- This group of users would be users that
are not purchasing recharge services as employees of the University of Chicago or
on behalf of the University. These are non-academic commercial/other users that
would generally be charged a higher external rate.
 
 
 
Rate Template Components
 
General Information
Description of Services
Usage
Effort & Service Allocations
Effort Billable Hours
Salary & Fringe Benefit
Expenses
 
Non-Labor Expenses
Equipment
Depreciation Expense
SD in Aggregate
Rate Calculation Proposal
FB Coverage Calc
 
The Recharge Rate Calculation Template is composed of 12
sections that require some form of data entry:
 
The Financial data required to complete the rate template will
come from various sources:
 
Actuals
 
Workday
FAS
Business Objects
Usage Reports
Property Management System(PMS)
Capital Assets Accounting(CAA)
Other Supporting Documentation
 
Projections
Accuracy of projections depends on
the assumptions used such as:
 
Knowledge of recharge activity
Historical performance
Predicted future environment
Staffing requirements
Non-Labor expense estimates
 
 
Recharge Rate Proposal Review Process
 
Document Retention
 
Per 
University Policy 2708
, financial records associated with the
Recharge Operation must be maintained for 
7 years
. This includes:
 
Rate calculation and rate approvals
Usage documentation
Annual budgets
Annual financial statements, if produced
Financial backup information including lists of employees, equipment
used by the recharge and associated depreciation data.
Copies of invoices w/supporting documentation
Documentation is important because recharge activities may be subject to audits
by the Federal government, internal auditors, external auditors via a Single
Audit(formerly A-133 audit) or outside consultants.
 
Other Resources
 
 
Recharge Operations Webpage
Accounting for Recharge Operations Checklist
Recharge Operation Procedure Manual
FAS User Manual
 
The
End
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The Recharge Operations Training presented by the Cost Studies group in the Financial Services Department at the University of Chicago aims to educate participants on basic recharge concepts, policy compliance, rate development, and annual review processes. The responsibility of ensuring recharge compliance lies with the Cost Studies team. Recharge operations, including Recharge Centers, Service Centers, Specialized Service Facilities, and Pass-Through entities, serve the University community by providing goods and services for a fee. Federally allowable expenses must be included in recharge rates to ensure financial sustainability.


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  1. Recharge Operations Training Presented by Cost Studies, Financial Services Department

  2. Training Objectives Understand basic recharge concepts and the policies governing recharge activities Develop recharge rates in accordance with campus policy Understand the annual recharge review and approval process at the University of Chicago Understand the guidelines and requirements necessary to successfully manage your recharge activity

  3. The University of Chicagos Recharge compliance function is the responsibility of the Cost Studies group within Accounting and Financial Reporting in the Financial Services Department. It has two staff members that oversee recharge compliance for the campus. Carla Bucci Manager Cost Studies Iesha Holmes Senior Analyst Cost Studies

  4. What is a Recharge Operation? Recharge Operations are shared resources that provide access to instruments, technologies, as well as expert consultation and other services to scientific and clinical investigators, other University personnel and the general public may be served incidentally by the operation. A Recharge Operation charges a fee directly related to the recovery of the goods or services provided and must breakeven over time. In addition, only federally allowable expenses may be included in recharge rates.

  5. There are four types of Recharge Operations Recharge Center: An operating activity established for the primary purpose of providing goods and/or services to a segment of the University community for a fee, typically offered as a convenience to the employees and students of a department/division rather than the entire university community. Annual operating budgets to provide the goods and/or services will normally be less than $100,000. Recharge Centers have annual charges to federal awards of less than $10,000. Copy centers and stockrooms are examples of a Recharge Center. Service Center: An operating activity established for the primary purpose of providing goods and/or services to the University community for a fee, typically intended for University wide consumption and is not departmental/college based. Annual operating budgets to provide the goods and/or services is greater than $100,000. Service Centers have annual charges to federal awards of $10,000 or greater. The Cylinder Gas Shop and the Immunohistochemistry Core are examples of a Service Center. Specialized Service Facility: A Specialized Service Facility (SSF) is defined by Uniform Guidance (see 2 C.F.R. 200.468) as a highly complex or highly specialized facility, whose services are not typically available from an outside vendor. Specialized Service Facilities are designed to include their allocable share of all F&A costs. SSF s are governed by the Recharge Operation policy. There are no Specialized Service Facilities at the University of Chicago at this time. Pass Through: A Pass-through provides goods and/or services to the University community and the charge is equal to the purchase price with no mark up for administrative or other recharge expenses. The Pass-through purchases the goods/services from a vendor and then recharges users. While these operations do not need to submit a questionnaire and annual rate template, they do need to submit an annual Pass-through Confirmation form that confirms that they are still operating as a Pass-through. Dry Ice and Liquid Nitrogen are examples of a Pass-through recharge operation.

  6. Recharges should be established if: Service is not available elsewhere on campus. Service is identifiable as opposed to general. Separate costs and budgets can be clearly defined for these activities. Need for this service is long-term. Service is provided for or subsidized by a federal award. Service will be used by multiple client groups and sources of funds within the University. Volume of service is expected to increase over time. Most of the users will be internal with possible incidental external usage.

  7. Policies that govern Recharge Operations The University of Chicago University Policy 1005 Federal OMB Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (2 C.F.R. 200) ( Uniform Guidance ). Uniform Guidance

  8. Federal Requirements Rates must be based on actual usage of the services. The schedule of rates should be established using a documented method. Rates may not discriminate against federally supported activities of the institution, including usage by the institution for internal purposes. Rates must be designed to recover only the aggregate costs of the services. The costs charged for providing each service generally consists of its direct costs only. Rates shall be reviewed and if required adjusted at least every other year and shall take into consideration any operating deficit or surplus of the previous period(s). Records must be retained and made available to federal officials.

  9. Recharge Operations Roles and Responsibilities

  10. Recharge Financial and Operations Management Ensure that the recharge is Federally compliant per the Recharge Operation Procedure Manual. Perform necessary Accounting functions in support of the recharge(includes preparing journal entries as needed). Prepare and administer the recharge operation budget, maintain adequate records, and accurately invoice customers on a timely basis. Complete the annual recharge rate template(includes determining the proper rate development methodology, preparing a schedule of rates for services/products offered by the recharge to users). Support data requests, audit requests, and other reviews that may occur. Maintain open communication with Financial Services regarding all recharge operational issues.

  11. Division/Department/School Ensure all recharge operations and users comply with recharge-related policies and procedures per the Recharge Operation Procedure Manual. Provide oversight and support to recharge Managers. Facilitate communications to University of Chicago faculty and staff about recharge operation rates and billing issues. Fund deficits that cannot be recovered through the recharge operation rates. Approve all requests for new recharge operations and new recharge account creation.

  12. Financial Services/Cost Studies Ensure compliance with Federal and University policies related to recharge operations. Review and approve recharge center rates, including mid-year rate adjustments. Maintain and update recharge operation policies and procedures, as necessary. Provide rate setting and other recharge related guidance to recharge operations. Review and approve the establishment and closing of recharge operations. Recommend corrective actions to be completed by the recharge operation based on periodic reviews and data verification. Provide assistance to auditors regarding recharge operation issues.

  13. Recharge Operations Rate Calculation Basics

  14. Recharge Rate Calculation The purpose of the Recharge Rate Calculation Template is to provide uniform guidance to University of Chicago recharge operations for calculating and establishing recharge rates. Annual rate calculations are required by Cost Studies. The Recharge Rate Template is due on May 15th each year Approved rates are effective July 1st of each year

  15. Basic Rate Calculation Methodology Salary $8,000 Benefits $2,400 Non-Labor Expense $10,000 Equipment Depreciation $3,125 Total Cost $23,525 Projected Usage(# of hours) 500 Calculated Recharge Rate per Hour $47.05

  16. There are two basic types of rates that a recharge unit uses to generate revenue: Internal External Internal users must be billed at the same approved rate for the same level of services or goods purchased. Internal rates may be equal to or less than the calculated rate. Internal users may not be charged a rate higher than the calculated rate. External users may be charged different rates. External rates can be set higher than the calculated rate. External rates should be set lower than market rates to avoid competition with local businesses providing similar services.

  17. Recharge User Types Internal UChicago Users - This group of users would be academic and staff employees of the University of Chicago that are purchasing recharge services for work done on behalf of the University and have a University funding source/account number. External Academic Affiliated Users(Internal Rate) - This group of users would be users that are not purchasing recharge services as employees of the University of Chicago or on behalf of the University but are affiliated with the University in some way and would be charged the internal rate. External Academic Non-Affiliated Users - This group of users would be users that are not purchasing recharge services as employees of the University of Chicago or on behalf of the University. They are academic users but are not affiliated with the University and would receive the appropriate external rate. External Commercial & Other Users - This group of users would be users that are not purchasing recharge services as employees of the University of Chicago or on behalf of the University. These are non-academic commercial/other users that would generally be charged a higher external rate.

  18. Rate Template Components The Recharge Rate Calculation Template is composed of 12 sections that require some form of data entry: General Information Description of Services Usage Effort & Service Allocations Effort Billable Hours Salary & Fringe Benefit Expenses Non-Labor Expenses Equipment Depreciation Expense SD in Aggregate Rate Calculation Proposal FB Coverage Calc

  19. The Financial data required to complete the rate template will come from various sources: Actuals Projections Accuracy of projections depends on the assumptions used such as: Workday FAS Business Objects Usage Reports Property Management System(PMS) Capital Assets Accounting(CAA) Other Supporting Documentation Knowledge of recharge activity Historical performance Predicted future environment Staffing requirements Non-Labor expense estimates

  20. Recharge Rate Proposal Review Process Financial Services notifies the recharge units that the rate template has been uploaded to the Recharge Operations webpage. Financial Services notifies the recharge unit of rate approval via email. Recharge unit prepares the rate calculation template. Recharge unit answers follow up questions per instructions and returns answers and updated rate template to Financial Services. Recharge unit submits rate calculation template to Financial Services before or by the May 15th deadline. Financial Services sends Recharge Rate Review Form to the recharge unit with follow up questions(if necessary). Financial Services begins reviewing the rate template for completeness, accuracy and adherence to policy.

  21. Document Retention Per University Policy 2708, financial records associated with the Recharge Operation must be maintained for 7 years. This includes: Rate calculation and rate approvals Usage documentation Annual budgets Annual financial statements, if produced Financial backup information including lists of employees, equipment used by the recharge and associated depreciation data. Copies of invoices w/supporting documentation Documentation is important because recharge activities may be subject to audits by the Federal government, internal auditors, external auditors via a Single Audit(formerly A-133 audit) or outside consultants.

  22. Other Resources Recharge Operations Webpage Accounting for Recharge Operations Checklist Recharge Operation Procedure Manual FAS User Manual

  23. The End

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