萝莉社

Initiating Authority

Financial Operations and Office of Research

Purpose

As a recipient of federal funding, 萝莉社(鈥淯niversity鈥�) must comply with the U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 C.F.R. 搂200) (鈥淯niform Guidance鈥�). Non-compliance with the Uniform Guidance could result in government-imposed fines or disallowed costs. This policy supports University compliance by providing consistent costing and administrative standards among the University鈥檚 Service Centers and is consistent with and supports University and Kansas Board of Regents policies and state and federal regulations, as applicable.

Application of Policy

This policy applies to all University employees, departments, laboratories, Centers, and institutes. This policy does not apply to the following income sources:

• Income generated from educational or academic activities (e.g., tuition)
• Income generated from auxiliary operations or University affiliates

This policy does not apply to University student organizations.

Policy Statement

1. Definitions

   For the purpose of this policy only, the following definitions shall apply:

   1. Service Centers

      Service Centers (referred to as 鈥淐enters鈥� throughout this policy) are organizational units of the University that charge for research, testing, and/or goods or other services that directly support the research or academic mission of the University and recover costs through charges to Internal and/or External Users. Centers are expected to recover no more than the aggregate costs of their operations through charges to users. All Centers must be able to demonstrate compliance with federal requirements and cannot use fee structures that discriminate against federal funding sources.

   2. Internal Users

      Internal Users are organizations or individuals whose funds are sourced from within the University or are otherwise managed within the University (i.e., sponsored grants and contracts managed by the University鈥檚 Research Office). These include academic, research, administrative, and auxiliary units that purchase services in support of the University鈥檚 mission.

   3. External Users

      External Users are organizations or individuals whose funds are sourced from outside the University and are not managed within the University, including but not limited to external organizations and companies as well as students or members of faculty or staff acting in a personal capacity.

2. Establishing And Closing Service Centers

   1. Establishing a New Center

      A proposed Center should be able to justify an expected annual revenue of $25,000 or more to be considered for establishment, though exceptions may be requested. The director of the proposed Center must fill out and submit a Request to Establish a New Center form to the Office of Research to initiate the process. The form can be found at the Office of Research鈥檚 Financial Management website here.

   2. Closure of Centers

      Centers that do not meet the threshold of expected annual revenue of $25,000 in two consecutive years may be considered for closure due to inactivity. Further, significant deficits will be reviewed centrally and a resolution plan may be requested if the Center is not able to increase future year rates to recover the deficit. The department and/or college under which the Center is organized must cover any deficits remaining upon the closure of a Center. If the decision is made to not close the Center, further billing should be completed using actual costs for labor and other expenses, as opposed to using a billing rate. Exceptions to this policy will only be allowed upon written approval of the Vice President for Research and Technology Transfer.

3. Center Billing Accounts

   A Center will be provided at least two separate funds for accounting purposes. The first fund (鈥渙perating fund鈥�) is established to record the direct operating expenses and revenue of the Center. The second fund (鈥渞eserve fund鈥�) is established to record the Center鈥檚 revenue correlating to its F&A and depreciation expenses. The funds available in the reserve fund may only be used to further the mission of the Center.

4. Center Billing Rates

   1. Calculating a 鈥淏illing Rate鈥�

      A 鈥淏illing Rate鈥� is a rate at which a Center鈥檚 cost per unit of goods or services is sold. Billing Rates can be set based on hours, units, or any other metric that is the best approximation for utilization of resources to produce the good or service. It is calculated to recover the expenses of the Center and achieve a breakeven financial position over a set period of time (generally twelve months). Billing Rates are based on budgeted operating expenses, including the applicable prior period deficit or surplus, divided by projected levels of activity. Billing Rates are rounded to the nearest dollar. The general formula used to establish a Billing Rate is as follows:

      Budgeted Expenses + or - Carryforward Surplus or Deficit

      divided by

      Projected Level of Sales of Goods/Services (Billable Units)

      When like goods or services are offered by an organization outside of the University to principally the same customer base, the market price should be considered when setting the Center鈥檚 External User rate. It is not appropriate for a Center to charge substantially less than the market price for a like good or service.

   2. Billing Rate Components

      萝莉社鈥檚 financial system is the official financial database for the University and is the basis for financial related information used in setting Billing Rates. All operating costs included in a Center鈥檚 Billing Rate must be related to the functions of the Center and must not be included in the University鈥檚 institutional Facilities & Administration Rate calculation. Operating costs are included in setting the Center鈥檚 Billing Rate insofar as they are allowable, reasonable, allocable, and consistent with general University practice. Costs are split into the following categories:

      • Payroll (Salaries, Wages, and Fringes)
      • Non-Capital Expenses (Other Operating Expenses)
      • Depreciation (2 CFR 200.436)
      • Prior Period Net Surplus (less working capital allowance) / Deficit

   3. Approval and Periodic Review of Billing Rates

      All Center Billing Rates must be approved by the Office of Research prior to use. Per federal guidance, all rates must be re-calculated no less than every two years. However, it is recommended that a Center review its financial performance annually. Rates older than two years should not be used for new quotes or proposals unless approved in writing by the Vice President for Research and Technology Transfer.

      If a Center provides distinctly different types of services to users, separate Billing Rates may be established for each service that represents a significant activity of the Center. Costs, revenues, surpluses and deficits must be separately identified for each service using separate accounting funds for each identified service.

   4. Non-Discriminatory Billing Rates

      Rates established for Centers must be non-discriminatory and all users of the Center should be billed for services provided. Non-discriminatory means all Internal Users must be charged at the same rate(s) for the same level of goods or services provided. External Users cannot be charged a rate less than the Internal Billing Rate established for the Center for the same good or service.

5. Center Billing Practices and Record Keeping

   1. Billing

      Billing must be based upon documented utilization. All billing must be processed on a timely basis (generally monthly but can vary depending on award terms) and must be based on established Center Billing Rates.

   2. Tax Considerations

      Sales tax, when applicable, must be charged to all External Users who do not provide their tax-exempt certificates. Any questions regarding Unrelated Business Income Tax (UBIT), sales tax, or other transactions with External Users should be directed to the Office of Financial Operations.

   3. Record Retention

      Centers must retain documentation to support all charges, expenses, and usage. The required documentation may vary depending on the award terms of the project. These records must be maintained for a minimum of three (3) years from the end of the fiscal year in which the project was completed. The records are subject to audit.