The University of ArizonaThe University of Arizona
Financial Policies & ProceduresFinancial Policies & Procedures
 

6.17 Administrative Service Charge Policy

Policy Information

Policy Number: 6.17Effective Date: 01/20/2000
Responsible Unit: FSO-Financial ManagementLast Revised Date: 10/10/2016
Email: fin-mgmt@fso.arizona.eduPhone: 520.621.3220

Purpose and Summary

The revenues generated from the Administrative Service Charge (ASC) are used specifically to support overhead costs and administrative services that benefit the entire University, but are not easily assignable to any one unit.

Scope

University-Wide: The Administrative Service Charge is assessed on accounts that are within the Auxiliary and Designated fund groups.

Definitions

  1. Auxiliary Fund Group: All accounts assigned to Fund Group AX (Auxiliaries) in the chart of accounts.
  2. Designated Fund Group: All accounts assigned to Fund Group DE (Designated) or DR (Designated – Service Centers) in the chart of accounts.
  3. Overhead Costs: Activities that benefit the entire University, but that are not easily assignable to any one unit. Examples include utilities, payroll processing, human resources, information technology, budgeting and procurement.

Policy

  1. The University will assess administrative service charge to recover overhead costs incurred by the University on behalf of accounts which are not directly funded by either state appropriations or sponsored grants and contracts.
  2. Administrative Service Charge rates for revenues and expenses are set by the President’s Cabinet and can be altered at any time.

Procedures

Setting the Rate

The ASC rate is determined by the President's Cabinet. The rates are presently assessed on Designated and Auxiliary Fund Groups and are set as follows:

  • 9.5% on revenues from external sources
  • 1.0% on operational expenditures

Assessing Administrative Service Charge

The charge is assessed and automatically posted to UAccess Financials each month. Posting occurs on the last day of the month-end close process after all other transactions for the month have been processed. This method ensures that all increases and decreases to current month revenues and expenses are accounted for prior to the assessment. The ASC charges assessed on revenues and expenses are posted to object codes 7955 and 7956, respectively.

Calculating the Charge

  1. For the revenue based component, only revenues from external sources (DE, DR, and AX,) are used to calculate the ASC. The following revenues, identified as internal charges (by object code used), are excluded:
    1. Revenues from interdepartmental billings and gifts.
    2. Institutional fees (such as tuition, ABOR approved mandatory fees, course fees,, indirect cost, and utility pass-through charges).
  2. For the expenditure based component, the 1% ASC is charged on all expenditures from the Designated (DE only) and Auxiliary Fund groups with the following exceptions:
    1. Cost of goods sold - Including the cost of farm feed
    2. Student Aid – Object code beginning with 68xx
    3. ASC – Service charges against revenues
    4. Institutional Designated Accounts – Institutional mandated costs
    5. Bad Debt Expense- Object code 5510
    6. Allocated Funds (sub funds ALCASC, ALCINV, ALCPRG, and ALCSRF).
    7. Transfers Out (object codes 7930 & 7939)

Frequently Asked Questions

How are corrections made to an account?

If an error occurs, i.e. revenue or expense is posted to an account in error, prepare a General Error Correction (GEC) document to move the revenue or expense to the correct account. ASC (object code 7955 or 7956) should not be corrected on the GEC document. Once the revenue or expense is adjusted, ASC will automatically be credited on the one account and assessed on the other account and will post on the last day of the month-end close.