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Office of the University Controller Indiana University

Rate Submission Requirements for Recharge Centers

Prerequisites

Prior to reading the Rate Submission Requirements for Recharge Centers standard, it is beneficial to review the below IU Accounting Standards sections to gain foundational information:

  1. Accounting Fundamentals Section
  2. Auxiliary and Other Revenue Producing Activities Section
  3. Unallowable Expenses for Recharge/Service Centers
  4. Allocating Costs to Internal and External Activity Standard Section

Preface

To comply with Uniform Guidance, units that bill for goods or services provided to other university units or within their own unit may only do so with approved recharge rate(s) on file with the Office of the University Controller (UCO). This section discusses the importance of recharge activities and the reporting requirements of recharge/service centers. Recharge centers vary in the volume and complexity of services rendered and these procedures are designed to provide flexibility to meet the needs of a variety of operations.

Introduction

Recharge/Service Centers are units within Indiana University that furnish goods and/or services to other Indiana University departments for the convenience of the university and charge a fee directly related to, but not more than, the allowable cost to provide the goods or services.

Typically, any internal transaction that records income to one university account and an expense to another using any KFS document type effectively creates a recharge center activity. Exceptions to this rule include the following:

  • Departments Hosting Conferences that Use IU Conferences Services - This activity is typically not considered recharge activity, for the department hosting the conference, and is not required to be recorded in an account in the recharge sub fund group. The fiscal officer is NOT required to submit rates to Recharge Accounting.

    Any activity related to the sale of goods or services provided in conjunction with the conference must be maintained in a recharge account and segregated from the accounting for the conference activity. Contract and grant accounts can be charged for conferences as long as the charges are allowable per the grant and approved by Office of Research Administration. Please refer to the RC, Org, & Account Standard to determine the correct account to record this activity.

  • External Agencies - Indiana University (IU) may enter into a contractual agreement to serve as a fiscal agent for certain entities which are external to IU governance, for the purpose of facilitating mutual achievement of education, research and public services purposes and goals, but only in such instances where the purpose and function of the external agency relates to, and is consistent with IU’s mission. Any such arrangement must meet the requirements specified in the External Agency Agreement Policy. Occasionally, external agencies are allowed to use IU systems to streamline processes. The accounts associated with the external agencies are excluded from our financial statements and they are they considered an IU department.

  • Departmental activities that have an agreed upon, sponsored fixed price arrangement - These contracts must be specified in a formal non-federal, non-state, or non-pass through contract with the Office of Research Administration. The Office of Research Administration will confirm a formal contract exists.

  • Program Income Accounts - Gross income earned by the non-Federal entity that is directly generated by a supported activity or earned as a result of the Federal award during the period of performance except as provided in 2 CFR part 200.307 paragraph (f). Program Income includes but is not limited to income from fees for services performed, the use or rental or real or personal property acquired under Federal awards, the sale of commodities or items fabricated under a Federal award, license fees and royalties on patents and copyrights, and principal and interest on loans made with Federal award funds.

Importance and Impact of Submitting Recharge Rates

Recharge center operations may be subject to federal and non-federal audits of sponsored programs. As a recipient of federal funding, Indiana University must comply with OMB Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (2 C.F.R. §200) (Uniform Guidance). Uniform Guidance requires that recharge centers charge according to actual usage using nondiscriminatory rates, these rates should be calculated to recover no more than the actual costs of the good or service provided (§200.468). Non-compliance with Uniform Guidance could result in audit findings, reflect negatively on future award proposals, limit federal cost reimbursement and lead to repayments or fines to the granting agency.

Rate Setting Compliance Guidelines

Any IU department, unit or core activity operating a recharge center must comply with the rate setting guidelines defined in this standard. The rate submission requirements for recharge/service center activities are determined by the amount of annual internal revenue recorded in the last completed fiscal year or whether the department is billing a contract and grant account. The individual requirements for each category are summarized in the Requirements & Best Practices section below.

Requirements and Best Practices

Requirements

  1. Internal Activities with Internal Revenues of MORE than $5,000,000
    1. Internal activity above $5,000,000 must be segregated into individual recharge/service center AUXSER sub-fund accounts.
    2. These accounts must use Internal Billing or Service Billing documents to charge other university departments.
    3. These accounts may NOT charge more than the allowable cost of producing the goods or services. Internal rates may not exceed external rates for the same goods or services.
    4. The account fiscal officer is required to submit a new recharge rate ANNUALLY using an approved Rate Setting Template. Rate Setting Templates should be submitted to Recharge Accounting at rates@iu.edu.
    5. Any mid-year rate changes require resubmission to Recharge Accounting.
    6. These units are required to meet ANNUALLY with their campus controller to go over the unit’s rate setting methodology.
  2. Internal Activities with Internal Revenues MORE than $100,000
    1. Internal activity above $100,000 must be segregated into individual recharge/service center AUXSER sub-fund accounts.
    2. These accounts must use internal billing or service billing documents to charge other university departments.
    3. These accounts may NOT charge more than the allowable cost of producing the goods or services. Internal rates may not exceed external rates for the same goods or services.
    4. The account fiscal officer is required to submit a new recharge rate BIENNIALLY (every two years) using the Rate Setting Template. Rate Setting Templates should be submitted to Recharge Accounting at rates@iu.edu.
    5. Any mid-year rate changes require resubmission to Recharge Accounting.
  3. Internal Activities with Internal Revenues LESS than $100,000
    1. Activities that have less than $100,000 in anticipated internal revenue will be required to use Distribution of Income and Expense, General Accounting Adjustment (expense-to-expense transactions only) or Transfer of Funds to complete transactions between university accounts. Note: The $100,000 is measured at the activity and/or account level, not the transactional level. For more information regarding this activity, please see RSOP 8.0.
  4. Ensure each recharge center has submitted their rate setting template(s) prior to billing and in advance of the deadline according to the revenue limits on this page.
  5. Departments that meet the specified requirements for submitting a Process Narrative must submit the Process Narrative to the UCO Internal Controls function.

Best Practices

  1. Fiscal officers must continuously monitor the fund balance on recharge accounts and resubmit a new rate template if needed to prevent the fund balance from becoming a deficit or surplus.
  2. Submitters and preparers of Recharge Rates should be aware of potential changes to the rate setting requirements and monitor updates posted on the UCO website and in the UCO Fiscal Officer newsletter.
  3. Departments that do not meet the specified requirements for submitting a Process Narrative should document and periodically review their standard procedures to ensure they are complete and accurate.