Skip to Search Skip to Navigation Skip to Content

Section 6: Accounting for Grants and Contracts

Establishment and Financial Management of Authorized Service Centers and Specialized Services Facilities

Effective Date:

02/01/08

Approved By:

Kerry Kennedy, Vice President for Business Affairs

Lenora Chapman, Associate Vice President for Financial Affairs

Last Revised On:

08/27/09

For Assistance Contact:

Director, Grants and Contracts Financial Services
(210)458-4229

Assistant Vice President for Financial Affairs and University Controller (210)458-4229

PURPOSE/SCOPE

This policy provides a framework for the fiscal operations of UTSA service centers to ensure compliance with federal cost principles and consistency in accounting and costing practices. All service centers must maintain common accounting and administrative practices despite variations in volume and complexity of goods and services rendered.

AUTHORITY

As a recipient of federal funds, UTSA must comply with OMB Circular A-21, Cost Principles for Educational Institutions, as published by the U.S. Office of Management and Budget (OMB).


UNIVERSITY GUIDELINES

Table of Contents

A. Establishment of Service Center and Specialized Service Facility

The request to establish a new UTSA wide service center or specialized service facility must be submitted to the Director, Grants and Contracts Financial Services (GCFS) for initial review using the UTSA Service Center and Specialized Service Facility Information Sheet. The same information sheet is to be used whenever a service center or specialized service facility intends to expand its customer base to include users external to UTSA, i.e., non-UTSA customers.

The approval of the Director of the unit involved and/or Dean and the appropriate Vice President is required. Specialized service facilities will also need the approval of the Vice President for Research or designee.

GCFS or designated costing personnel will meet with the initiator to review the request. Final budget and billing rates will be presented to the Vice President for Business Affairs and the Vice President for Research or designees for final approval.

B. Contractual Requirements for External Customers

A unilateral agreement signed by the client is required for all customers external to the University. See Appendix A. The basic agreement may not be revised or edited in any way. The billing schedule may be appended to the document along with a full description of the services to be provided. The Agreement should be reviewed by the official to whom the service center reports to determine the appropriateness of the proposed work. These agreements should be kept on file by the service center.

External clients who identify themselves as federally-funded must provide appropriate documentation that may include a copy of the federal award that is paying for the services.

  • Revenues from external clients must be tracked separately to avoid the perception of overcharging.

  • If services are charged to external clients, UTSA may have a liability for unrelated business income tax (UBIT) which would be paid by the service center.

C. Billing Rates

1. Internal Customers
  • For service centers, billing rates or user fees should be designed to recover the direct costs of the goods or services provided. Indirect costs of operating the service center that are paid by UTSA and not charged to the service center operating account cannot be included in the calculation of billing rates.

  • For specialized service facilities, billing rates must be fully costed to include both direct costs and the facility’s allocable share of institutional indirect costs.

  • All UTSA customers must be charged the same rate for the same level of service under the same circumstances.

  • Billing rates cannot be marked up to accumulate a reserve for equipment replacement or purchases.

2. External customers
  • Separate billing rates should be developed for external customers. These rates should recover all costs, both direct and the appropriate indirect costs. Rates charged to external, non-federal clients should include a surcharge at least the equivalent to the current approved F&A rate. This additional income is not used in the carry forward balances but will be recovered in a separate account that can be used to replenish equipment.

  • External rates should not be so low as to constitute unfair competition with private enterprise for similar services available in the area.

  • At no time should an external customer be charged less than internal (UTSA) customers or the federal government for the same service.

3. Federal Customers
  • Federal grants or contracts must be charged a rate equal to or lower than the rate charged to any other customer.

  • Federal grantors cannot be charged for services rendered free of charge to other customers.

4. Rate settings
  • Service centers and specialized service facilities are required to update their rates on an annual basis.

  • To determine the billing rate, the total annual costs to provide the goods or services plus or minus any surplus/deficit from the prior year is divided by total annual usage:

    EXAMPLE: Billing Rate (Fee)= Budgeted operating costs ± prior year adjustment/Expected units of activity (customer base)

  • All costs must be reasonable, allowable, allocable and consistently treated. Unallowable costs cannot be budgeted or expensed on service center accounts. See OMB Circular A-21, Section J for a complete list of all allowable and unallowable costs.

  • Allowable costs include but are not limited to:

    • Salaries, wages, fringe benefits

    • Materials and supplies

    • Equipment lease or rental

    • Equipment maintenance contracts/repairs

    • Postage and telephone

    • Non-capitalized equipment (unit cost less than $5,000)

    • Travel expenses related to center business

  • Unallowable costs cannot be included in the billing rate calculations. Typical unallowable costs include but are not limited to:

    • Advertising and public relations costs

    • Alcoholic beverages

    • Bad debts or uncollected billings

    • Contingency provisions

    • Cost of equipment $5,000 or greater per item

    • Entertainment costs

    • Fines and penalties

    • Goods and services for personal use

    • Insurance and indemnification

    • Memberships, subscriptions and professional activity costs of a social or individual nature

    • Selling and marketing costs

  • User rates must be supported by cost calculations based on historical costs and service levels. Estimated rates may only be used in the first year of service.

  • A service center and specialized service facility may have different measurable units for the different types and classes of goods and services offered. User rates consisting of flat fees that charge per range of actual use (e.g. light, medium or heavy) are not in compliance with Cost Accounting Standards. Centers providing multiple services may not subsidize the cost of certain services by charging excessive rates for other services.

D. Billing Procedures

  1. All customers must be billed consistently, timely and accurately for services received. User bills must have sufficient detail to identify the services provided. Billings must be based upon measured and documented use.

  2. Billings to UTSA departments are done through Interdepartmental Transfers of expense (IDTs). Sufficient detail must be included to identify the services provided, billing rates and usage. A copy of the required unilateral agreement (Appendix C) should be attached as authorization to charge the account.

  3. Service centers and specialized service facilities must comply with university cash handling and billing procedures. All invoices to external customers must be on UTSA letterhead and include certain key elements as displayed at Appendix B. Each service center or specialized service facility may customize as necessary. All invoices and supporting documentation must be maintained by the service center or specialized service facility for a period of five (5) years.

  4. Advanced billings are not allowed. “Pre-billing” customers at year-end for services to be delivered in the next fiscal year is prohibited.

E. Accounting Guidelines

1. Accounts

University wide service centers and specialized service facilities may have multiple accounts in which to record revenue and expenditures depending upon their customer base.

  • If 80% or more of income is derived from internal customers, a single 18 account will be used to record all income and expenditures to include the 20% or less derived from external customers.

  • If income from external customers exceeds 20% of total income, a separate 19 account will be established for external customers.

    • A single 19 account will be used for multiple external agreements that are less than $5,000 per agreement.

    • Individual 19 accounts must be established for each external agreement totaling $5,000 or more.

2. Expenditures

All costs related to the operation of service centers and specialized service facilities must be recorded in specified accounts within fund group 18 or 19. This includes salaries, fringe benefits, supplies and related travel costs. See Section V for a listing of allowable and unallowable costs.

3. Fiscal Review

Service centers and specialized service facilities should target break-even goals through proper budgeting, rate setting and billing practices. Centers and facilities are responsible for comparing actual costs and revenues at the end of each fiscal year and taking appropriate action.

  • Deficit Balances: A service center or specialized service facility may not operate for more than one complete fiscal year with a deficit account balance unless justified and approved by the Associate Vice President for Financial Affairs. Any center with a deficit of more than 10% of operating costs must provide the Office of Grants and Contracts Financial Services with a written plan to eliminate the deficit. This plan may include one or a combination of the following:

    • Rate increases sufficient to liquidate the deficit

    • A transfer of funds from another university department

  • Surplus Balances: Surplus balances will be reduced either by rate reductions or refunds to all customers or both. Surplus amounts will not be transferred from service center accounts to subsidize other university operations or to purchase goods/services for operations unrelated to the service center or specialized service facility. However, such transfers are permitted if the transfer is to an account which previously provided a subsidy to cover an operating deficit or provided start-up funds.

Grants and Contracts Financial Services will conduct periodic reviews of the financial operations of existing service centers to review billing rates and practices, including the treatment of surpluses and deficits and the adequacy of record keeping procedures. A schedule of current billing rates must be maintained and made available upon request.

4. Subsidies
  • If fees cannot be set at a rate sufficient to recover operating costs, another department may not directly pay the operating costs of a service center or specialized service facility from other sources. The subsidy must be accomplished as a transfer of funds to the center or facility’s operating account. The transfer is not accounted for as revenue or negative expenses.

  • Any partial subsidy of a center either included as part of the budget or absorbed as a deficit at the end of the fiscal year, needs to be identified as an unallowable cost for F&A rate calculation purposes.

  • A class of users (e.g. students) may receive service at a reduced fee, if the discount is subsidized from another source, but not through a reduction or elimination of the billing. The subsidy must be deposited in the center account as income. This is necessary to avoid misstating either usage or revenue.

F. Records Retention

Records should be maintained by the center to document: the actual direct operating costs of providing the service; the units of service provided; revenues, billings and collections; and the annual surplus or deficit. Support for charges must be retained by the service center to answer user inquiries or in case of an audit. Records should be maintained for a minimum period of 5 years. Examples of documents that must be maintained are:

  • Work papers showing how the charge out rate(s) were calculated.

  • Approval of rate(s).

  • Records supporting the level of activity.

  • Billing records that identify the service provided to each user.


DEFINITIONS

Term Definition

External Customers

Use of UTSA resources for providing services to external customers: students, individuals or organizations outside of the University must be consistent with the primary missions of instruction, research, and public service. See Section IV for additional requirements prior to providing services to external customers.

Internal Customers

Internal customers are defined as those paying for goods and services through interdepartmental transfers (IDT) against funds held in a UTSA account. Services provided to internal customers require a unilateral agreement (format at Appendix D) signed by the requesting party. This agreement will serve as supporting documentation to be kept on file by the service center. A copy of the agreement should be attached to the Interdepartmental Transfer (IDT) as authorization to charge the account.

Service Center

An activity that performs specific technical or administrative services, primarily for the internal operations of the University and is authorized to charge users for its services. An authorized service center can provide services to external customers. A separate account is established and monitored to record all costs and revenues.

Specialized Service Facility

A service center that offers highly complex or specialized services that are not readily available from outside sources - for example, animal care facilities. A separate account must be established to record all costs and revenues associated with a Specialized Service Facility.

Pass-Through Operations

A unit within the university which re-allocates costs from a central account to users throughout the university. Charges include only the cost of the original product. No additional costs, however characterized, are allowable. No value is added to the product other than convenience. The activity represents a re-distribution of expenses and not a fee for services rendered. An example would be UTSA Mail Services.

REFERENCES/LINKS

RELATED FORMS/WORKSHEETS

  1. Service Center and Specialized Facilities Information Sheet


REVISION HISTORY

Date
Description
08/27/09
 Changed guideline section number from 2.5.2. Converted format from PDF to HTML. No  changes to content.
02/27/09
 Published guideline.

 


In All We Do, We Do With Excellence - Every Person - Every Day - Every Job