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Section 4: General Accounting

Auxiliary Enterprise Administrative Overhead Charge

Effective Date:

05/20/11

Approved By:

Janet A. Parker, Associate Vice President for Financial Affairs

Last Revised On:

06/29/11

For Assistance Contact:

Assistant Vice President, Financial Affairs and University Controller

(210) 458-6914

PURPOSE/SCOPE

The purpose of this guideline is to:

  • Establish the fiscal responsibility of auxiliary enterprises for a fair portion of the total cost of centrally provided support services, and

  • Detail the process for computing a rate and allocating administrative overhead costs to Auxiliary Enterprises.

The Auxiliary Enterprises included in this guideline are:

  • Athletics Fee

  • Child Development Center

  • Housing

  • Recreation Center Fee

  • University Center Fee

  • UTSA Card Fee

  • Parking Services

  • Transportation Fee

  • Bookstore Retail Operations

  • Vending Operations

  • Meal Plans & Food Service Retail Operations

  • University Oaks/Chisolm Hall

AUTHORITY

The General Appropriations Act specifically prohibits the use of educational and general funds appropriated to any institution to be expended to support auxiliary enterprises, unless specifically authorized in the Act.

Auxiliary enterprises are defined by the National Association of College and University Business Officers (NACUBO) as programs that "...furnish services directly or indirectly to students, faculty, or staff, and charge fees related to, but not necessarily equal to, the cost of services."


UNIVERSITY GUIDELINES

Table of Contents

A. Cost Study Used to Determine Assessment Rate

An overhead rate is established each year based on a cost study of expenditures in the accounts funded by Educational & General (E&G) funds or Designated Tuition that have administrative overhead costs that are appropriate for sharing with auxiliaries. These expenses include but are not limited to the salaries and operating expenses of the accounts shown in Appendix A.

For the first year of the assessment (FY 2012) the rate will be 2.46%. This rate is subject to change after each subsequent year's cost study.

B. Methodology

The expenditures of accounts listed in Appendix A were reviewed to determine an allocation basis:

  1. Employee Headcount: Services provided are more likely to be impacted based on the number of employees.
  2. Prior Year Revenue: Services provided are more likely to be impacted based on revenue collection.
  3. Prior Year Expenditures: Services provided are more likely to be impacted be based on total expenditures.

Employee headcount, revenue, and expenditure data for the fiscal year most recently closed is evaluated for each auxiliary area and a pro-rata share as compared to the entire campus is calculated. Based on those calculations, a total amount of expenditures to be allocated to auxiliaries is derived.

To determine the overhead assessment rate, the total expenditures to be allocated to auxiliaries is divided by the following year's budgeted revenue for each impacted Auxiliary Enterprise.

C. Assessment Basis

The computed rate is then applied to budgeted revenues that have been adjusted for internal transfers in from other auxiliary enterprises as well as transfers out for scholarship payments for student athletes and vendor payments for food service meal plans.

D. Accounting Treatment

Each month, Accounting Services credits the Salary Allocation & Payroll Related Costs account (19-02350723) for 1/12th of the annual allocation. The credit is considered a credit to expense and not revenue.

The auxiliary accounts that are changed are debited for 1/12th of the annual allocation. A -23 subaccount has been created for recording these transactions. Object code 1120 (Classified Salaries) is used for credit and debit amounts to assure that the total salary expense remains the same and reporting reflects the correct amount. This also ensures that the amounts recorded in the payroll system are tied to the general ledger.

Account mapping is reviewed to ensure that the overhead allocation maps to the correct columns and accounts for reporting purposes.

NOTE: The process will begin on September 1, 2011.

The allocation is recorded at the end of each month, prior to close out, with a VJ1 document. This entry is the same each month and can be uploaded into DEFINE through UT Direct.

Accounting Services is responsible for ensuring that the upload is created and the VJ1 is approved.

NOTE: The August entry for each year will be adjusted for rounding differences.


DEFINITIONS

Term

Description

Auxiliary Enterprise

An auxiliary enterprise exists to furnish goods or services to students, faculty, staff, other institutional departments, or incidentally to the general public, and charges a fee directly related to, although not necessarily equal to, the cost of the goods or services. Auxiliary services are self-supportive activities.

Administrative Overhead

Administrative overhead is an expense to auxiliary enterprises that covers such things as salaries and expenses of central offices that support auxiliary enterprises.

VJ1 document

DEFINE command used by Central Processing areas for journal entries used to record various types of transactions that cannot be recorded on any other document type. Examples of journal entries include: ACH, Incoming/Outgoing Wire Transfers, Credit Card Usage, Income Allocations, Tuition Set Aside Transfers, Inter-fund and Plant Fund Transfers and more.

REFERENCES/LINKS

RELATED FORMS/WORKSHEETS

None at this time.


REVISION HISTORY

Date Description

06/29/11

Revised section D. Accounting Treatment to address the Salary Allocation and Payroll Related Costs account. The revision also addresses the Object Code for Classified Salaries, monthly credits and debits to sub-accounts for salary expense, payroll, and the general ledger.

05/24/11

Published revised Appendix A - Accounts List (PDF).

05/20/11

Published guideline.
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